Form PACE Pro – Appraisal or Evaluation?

Dave Towne

Dave Towne

Certified Residential RE Appraiser at Towne Appraisals
AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003.
Dave Towne on e-AppraisersDirectory.com
Dave Towne

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PACE Pro Form is an appraisal

Frankly this form is so screwed up!

To First American Mortgage Solutions…(copy to appraisers around the US):

Do you folks really understand what your PACE form report REALLY is??  It is not an Evaluation report. It is an actual appraisal, disguised very poorly as a so-called Evaluation.

Here’s what I found in your form, after actually reading it:

“This report is provided for the benefit of the named customer only and is not intended to be, nor shall it be deemed to be, an appraisal or any form of an appraisal.”

OK, fine, not an appraisal. The main form page says it’s an Evaluation. Perfectly fine.

Then it says:

“USPAP Departure Provisions have been utilized by the certifying appraiser, specifically 1-2(B), 1-2(D), 1-3 and 1-4 and this report is subject to further certifications, definitions, and assumptions retained for the customer on file by the appraiser.”

‘Departure’ has not been a part of USPAP since 2006, (thanks Bob Keith for disclosing the year in your WorkingRE article).

Then later in this form it says this:

“This Restricted Appraisal is subject to statement of assumptions and limiting conditions, and certifications.

This is a Restricted Appraisal Report which is intended to comply with the reporting requirements set forth under S.R. 2-2 of the Uniform Standards of Professional Appraisal Practice.

…that were used in the appraisal process to develop the appraiser’s opinion of market value.”

Then it says:

“The intended user of this evaluation report is limited solely to the identified lender/client. This is a Restricted Use Report (that report type name is no longer valid, as of USPAP 2014) and the evaluator’s opinions and conclusions set forth in the report may not be understood properly without additional information in the evaluator’s work file.

The PACE Report appraiser must analyze all agreements of sale, options, and listings of the subject property current as of the effective date of the appraisal, and analyze all sales of the subject property that occurred within the three years prior to the effective date of the appraisal.”

Frankly this form is so screwed up, appraisers should not complete this kind of report until the form is corrected.

Image credit flickr - David Goehring
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on e-AppraisersDirectory.com

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11 Responses

  1. ValleyGal says:

    A whole $70 for me???? Where do I sign up….NOT!

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  2. bubba jay / Retired Appraiser II bubba jay / Retired Appraiser II says:

    i am surprised you even saw the form. as soon as i saw the $70 fee, the whole thing would have been thrown in the trash.

    the raping continues . . . . .

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  3. Donna says:

    This is a personal thing with me; i don’t place a value on any property that I haven’t put my eyes on personally.  How do you know the inside of this property is not burned out or been vandalized?  At one time 2055’s were the big thing in my area.  After I almost got deceived twice by drive by assignments, I stopped doing them all together.  1 property was burned out in the rear of the dwelling and the other was new construction, pristine and beautiful on the exterior, i walked around to the back of the house, looked through the windows and all there was was stub walls.  The lender said the home was 100% complete.  Both times the lender INSISTED i not get down and view the property, just drive by, take my pic and submit my report.  The lenders strong insistence i NOT get down and view the property up close is what made me do it.  I just had an uneasy feeling.  I’m glad I did get down and view the properties more closely.

    Like Bubba Jay, $70, are you serious!!

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  4. Diana N. says:

    Drive By or not, I get out of the car and walk around the building, look in windows, etc. it’s called CYA. If the owner comes out and asks what I’m doing, I tell them exactly what I’m doing and for who. I may be trespassing, but I am working for the client. Several years ago I had an FHA multi foreclosure in New Haven, got there and the place was boarded up, except for the front door which was wide open. Sitting in the car trying to decide what to do, a police car pulled behind me and wanted to know what I was doing in the neighbd. I showed him my order and explained the ppty was supposed to be vacant, obviously there were squatters there and would he accompany me inside. He immediately refused, told me I was on my own, Gee thanks!! I told him if I got shot, the onus was on him, of course he left.  Stood at the front door, told everyone to go out the back door, and I’d let them know when I was finished. They did, I did, and got home safe & sound. Didn’t even bill extra. I guess this would be a $225 job today.

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  5. Retired Appraiser Retired Appraiser says:

    Yet as you finish reading this article an AMC out there is scheming and rubbing their hands together as they devise a method of turning a $50 profit on these forms.  How?  By using their in house (out house) appraiser staffs of course.  If $20 sounds appealing you can always join one of these appraisal sweat shops.  They’ll be happy to cover you in orders.  One that comes to mind is the William Fall Group.  The Appraisal Institute’s job board was consumed with sweat shop job offers years ago.  I would be amazed if you can find a real appraiser job advertised on the AI’s web site today.

    I personally would take the advice of Dustin Harris and out source everything to a foreign country.  Forget India…they charge 48 cents an hour.  Go with Madagascar where you can hire out for 18 cents an hour.  Yes folks that’s 40 hours of slave labor for $7.20.  You can’t go wrong by screwing people you’ll never meet…right AMCs?

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    • Bill Johnson says:

      Why does Dustin Harris need to out source? How does an Idaho mandated $450 VA appraisal fee compare to the SAME fee that is paid in my area of San Diego/Carlsbad? If you apply a cost of living increase (80% higher / Bankrate calculator) then to make the same amount that CA appraiser SHOULD BE PAID $810 AND NOT $450. If you turn it around and say that Idaho appraiser should make 80% less than the CA appraiser, THEN ARE YOU STILL IN BUSINESS AT $90 PER APPRAISAL in Idaho? No reason to out source unless your going to make $300,000 per year like Dustin while claiming to work 30 hours a week.

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      • Retired Appraiser Retired Appraiser says:

        I understand where you’re coming from Bill.  I also enjoyed your reply to Mr. Harris on his latest AppraisalBuzz article.  Some people just can’t grasp the fact that this is a regional business.  One guy could be covered up with appraisal work and not touch an AMC order and his competitor 500 miles away may not be able to buy a job (except AMC orders) due to extreme competition.

        My primary goal was to point out that AMCs and appraisal sweat shops are essentially doing the same thing that apparel manufacturers do by outsourcing their work to the lowest bidding appraiser.   Manufacturers use places like Madagascar while appraisal sweat shops & AMCs are outsourcing to Cheap Charlie’s Appraisal Shop.  My secondary goal was to poke fun at Mr. Harris’s teachings of yesteryear where he advised appraisers to do the same by outsourcing their meaningless tasks overseas.  I know he has good intentions and I’m sure he’s right on many things but the fact is that most appraisers do well to afford a yellow page ad these days.

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  6. In my state if an appraiser signs this report, then it IS an appraisal…albeit one that fails to meet my states MINIMUM appraisal standards; and despite the embedded & contradictory verbiage it also fails to comply with USPAP.

    So, for $70 an appraiser has to ‘do whatever it takes’ to make this comply to USPAP and their states regulatory laws. $70 would not compensate anyone for ONLY determining it’s inherent deficiencies for use in their state!

    Simply claiming it is a not an appraisal does not satisfy most states requirements. Further, it appears to be an intentionally MISLEADING, shoddy appraisal (template).

    I could have SWORN I sent a copy of this along with First Americans link to an article describing PACE Pro originating out of Santa Ana California to Mr. James Park, Executive Director of ASC via email to jim@asc.gov . I’ll have to double check , I guess. If not, I think we all should let him know our (serious) concerns about this product intended for clients described as “AnyBank Credit Loan Department”. Maybe FFIEC needs to send an industry wide advisory out to regulated institutions as to whether this meets any known regulatory requirements. Same with CFPB as to the “reasonableness of a $70 fee for an appraisal.”

    I wonder if there are like minded appraisers out there that share my concerns about the propriety and legality of this type of report being promoted by a “super-player” in the Mortgage/Settlement/Escrow/AMC assembly line of one-stop-shop services?

    He would not of course be the person or agency to investigate this but he did say he would forward our complaints and concerns to the correct agency (FFIEC or CFPB) during the public hearing of TAF in Las Vegas last week.

    A better copy of the form is found by searching the “appraisers” name in Ohio.

    Maybe Kirk could explain how this thing is supposed to be used, in a manner that is not misleading? Heck, he may not even know anyone stuck his name and info on this thing!

    We should ask him. Please be respectful. Consider the time of day…only normal business hours, Cuyahoga County time Ohio.

    Fair being fair on phone numbers being published, if he has any concerns he wants to direct to me personally I’m still available at (714) 366 9404.

    In the meantime, I’m filing a complaint or at least a ‘concern’ with my states AMC regulatory Agency (BREA; or at its found on the internet OREA). 1st American HAS advertised this PACE Pro product here.

    ALL of us can & should try to do something about this kind of product being perpetuated in our profession. IF 1st American has ANY concern for its public image, it should immediately discontinue promoting use of this inherently misleading form & garbage product. Clearly they forgot to run it by their legal department first.

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  7. I did a little homework after reading a few snarky comments from ACIs founder on the FNMA Under The Hood Article. They seemed gratuitous rather than heartfelt constructive criticisms. You folks know me, and that I am not a stranger to disagreement or different views. I try hard to keep them impersonal; or at least kiddingly critical if they are personal.

    But these brief barbs appeared to stem from basic intellectual dishonesty. It surprised me because many in the country (aside from Bradford and A La Mode); think highly of him and ‘his’ product.

    What would cause this apparent or perceived sophistry?

    Conflict of interest perhaps? Or ignorance. Meaning the Emperor’s New Clothes fable is applicable? This showed up on an email from him to me today.

    “ACI’s 2016 Compliance Series

    As we develop new products for appraisers, compliance with industry standards is always front and center. Our objective is to help improve appraisal quality and provide efficiencies to the process. Everybody wins by connecting industry needs with appraisal reporting techniques through technology, industry guidance, and practical advice. This is ACI’s contribution to the industry – and we hope you find it informative and helpful. Enjoy.”

    It was under an article about why FNMA requires us to read the purchase contract. I urge all to read it, and let me know IF you agree with him that the purchase contract is where we first learn about the property characteristics?

    I’m not by any means downplaying the importance of purchase contract analysis but I DO have to take exception about it being the first place we learn about property characteristics. I NEVER use the PO to determine the legal description.

    Actually, I use it to understand the terms and conditions of the sale it is describing and whether those terms are typical in the marketplace; or whether there are special or unusual conditions that affect cash equivalence. It MAY or may not give me insight into restrictions on ownership or rights. Then again it may not. It may or may not address items of personal property.

    No, LONG BEFORE I ever see a contract, I have already determined the property’s characteristics as are described in the Deed (legal description); property profile, title company prelim or similar substitute, MLS, and its neighborhood economic data. The PO may confirm certain aspects of its economic characteristics (like its price), but its hardly a starting point.

    While it would be nice if all AMCs sent the PO including ALL addendums with the order, the truth is many do not. In fact, they are often continuing to negotiate changes via addendums throughout the appraisal process.

    It’s  possible the authors description may eventually get around to why FNMA requires contract analysis, but it doesn’t happen in the first page of his email/ad.

    But from what I received the only question raised was whether the author really knows why FNMA and sound appraisal practices dictate careful contract analysis?

    You decide…NOT COPYRIGHTED, copied direct from my email

    sales contract

    A question generated as a result of an earlier blog on this issue was “Okay, I understand I need to analyze the contract because it’s a USPAP requirement. But why is it a USPAP requirement?”  One short answer is that contract analysis is part of property identification, which is necessary to establish an acceptable scope of work.

    Contract analysis is where you begin to identify the property and get your first look at a property’s relevant characteristics. Remember, relevant characteristics are not limited to physical characteristics.  Legal and economic attributes are included as well. According to AO-23, relevant characteristics “define the subject property and, together with the type and definition of value and intended use of the assignment results, provide the basis for deciding what data and analysis should be included in the scope of work.”

    USPAP Standards Rule 1-2 (3) speaks to an appraiser’s obligations related to property identification:
    (e) identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal, including:
    (i) its location and physical, legal, and economic attributes;
    (ii) the real property interest to be valued;
    (iii) any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal;
    (iv) any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, or other items of a similar nature; and
    (v) whether the subject property is a fractional interest, physical segment, or partial holding;

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