Contract Amendments… When?

IDFPR Board

IDFPR Board

Illinois Appraisal Newsletters at IDFPR
Provided as a service to licensed and registered Illinois appraisal professionals as well as Illinois course providers and users of appraisals. Illinois Appraiser Newsletters promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois.promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois.
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Amendments To Sales Contract - Contract Amendments... When?

Amendments to Sales Contract & Updates to the Appraisal…

Fannie Mae recently issued the following:

Currently, we require the lender to provide the appraiser with all amendments made to a sales contract, including amendments that are made after completion of the appraisal. With this update, we have clarified when the appraiser must be provided with updates to the sales contract and circumstances that warrant updates to the appraisal.

For example, if the contract is amended in a way that affects the description of the real property used by the appraiser, then the lender must provide the updated contract to the appraiser and the appraisal should be updated.

However, minor updates to the contract, such as changes to seller paid closing costs or changes to the contract price, do not require an updated appraisal.

In addition, we have updated the policy to require disclosure of changes to financing information (such as loan fees and charges, and subordinate financing provided by interested parties) to the appraiser only for purchase transactions.

Let’s be clear.

While a lender may not be required by Fannie Mae to share changes to the contract price with the appraiser; it would be a good idea for you to keep what is provided to you in your workfile.

Because AMCs are conduits for lenders who use them, this Fannie Mae requirement is for them as well.

We receive numerous complaints about appraisers who “missed the sale price”. Those complaints come from both consumers and lenders/AMCs. It would be to your advantage to be able to say, definitively, that the contract you relied upon was the last one provided by the AMC or lender.

Multiple Iterations

For years the Board has been urging licensees to adopt good computer housekeeping habits. One of the enduring problems that we still see are complaints that include three, four, five or even nine versions of the same report.

The appraiser, when asked to produce each version for investigation, is unable to comply because the only report in existence was the last version they created. All of the others were overwritten using the same file number.

Your workfile needs to be complete.

This means all versions of the report that were tendered to the client. Get in the habit of assigning unique file extensions so as to distinguish between the first and fifth version. This will go a long way toward saving you and your E&O provider, major headaches.

Source Illinois Appraiser Newsletters – Volume 10, Issue 1 – January 2017

IDFPR Board

IDFPR Board

Provided as a service to licensed and registered Illinois appraisal professionals as well as Illinois course providers and users of appraisals. Illinois Appraiser Newsletters promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois. promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois.

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4 Responses

  1. B P says:

    I don’t understand the reasoning behind the comments above from Fannie Mae regarding the complaints they receive about appraiser’s who “missed the sales price”. It is certainly not ever my job to “hit the sale price” and as far as I am concerned, I don’t need the sales price because my reports are strictly based on the CURRENT MARKET VALUE for my subject… PERIOD. That’s the unbiased part that AMC’s, consumers, lenders and even Fannie Mae appear to forget about. Yes I understand we must analyze the contract for pertinent information but really, the sales price should not be a consideration nor a factor in the appraisal.

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  2. The biggest problem is the word, “update”. What does it mean? To an amc and lender it means changing the report for nothing. According to the AI, dictionary of real estate, it means a new assignment. AF is silent as usual on the subject. The problem is that words mean things. As a profession, they mean something to us that is different from lenders and amc’s. The powers that be just don’t seem to want to get on the same page.

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  3. Jman says:

    no “updating” of an appraisal should be made without a new effective date. If its a correction to the appraisal or the change occurred before effective date thwn u can change the actual appraisal. I also include an addendum explaining these changes  but if the change was made after the appraisals effective date then the original appraisal should not be changed but an addendum can be added for clarity. All of the above will create a new Date of signature and Report.  To me an update is a new assignment with a new effective date.  35 years as an appraiser.

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  4. William Kittilstad says:

    It does not make sense to withold any closing help amendments as I does not allow appraiser to accurately analyze for undue inflence on price if subject were to be utilized as a comparable.

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Contract Amendments… When?

by IDFPR Board time to read: 2 min
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