AMC 1004D Update Shenanigans
Why wasn’t the original appraiser asked to do the 1004D Update?
Here it is the new year, and the potential games played by some AMC’s have already started.
On January 3, 2018, I received word from an appraiser that this “substitute” appraiser was asked by an AMC to do a 1004D Update on ain September 2017. The AMC provided the original appraisal with the assignment request.
I see mentions of this kind of assignment on various forums I read, and the posters always question these requests.
On the surface, it was not a highly unusual request, until a little more assignment and report analysis was done by the “substitute” appraiser before accepting (which ultimately it was not accepted but declined).
- Why wasn’t the original appraiser asked to do the ‘Update’, i.e. “has the property value declined since original appraisal”?
- Could it be that the AMC/Lender were just trying to ‘hide’ the semi-review of the prior report from the original appraiser?
- Is it possible that the AMC/Lender knew there were report issues and did not want to pay for a legitimate desk or field review, but instead tried to sneak the 1004D Update under the nose of a “substitute” appraiser at a much lower fee.
- Remember, to do a 1004D Update, you have to do the same comp research necessary as would be done for a review or a new report.
- Yes, doing a 1004D Update on a prior report is valid. The 1004D ’Update’ can be done when an appraisal is 4 months or older, but the original appraisal must have been done within 12 months of the original Date of Mortgage and Note (FNMA Selling Guide B4-1.2-02).
The “substitute” appraiser took time to observe the original report. Negative issues were found with various reporting aspects and the stated value was questioned due to those issues.
That’s when it became apparent to the “substitute” appraiser that there was more going on with the report and assignment than just doing a relatively simple 1004D Update on the original appraiser’s report. The appraiser told the AMC that either a formal review, or a brand new assignment, would need to be done. The AMC declined to upgrade the assignment. The “substitute” appraiser then declined the 1004D Update assignment request.
The kicker in this kind of assignment is what FNMA expects when a “substitute” appraiser completes the 1004D Update, per the Selling Guide:
The original appraiser should complete the appraisal update; however, lenders may use substitute appraisers. When updates are completed by substitute appraisers, the substitute appraiseron the date of the original appraisal report. The lender must note in the file why the original appraiser was not used.
Thus, FNMA expects the “substitute” appraiser to do a technical review of the original report when completing a 1004D Update. This technical review is a NEW ASSIGNMENT, and the appraiser should be properly compensated.
The point of this is to recommend that you watch out for hidden shenanigans clients try to slide under your nose. You have NO obligation to accept every assignment that comes your way.