VA Alternative Valuation Methods
On August 1, 2022, the Veterans Affairs released Circular 26-22-13 announcing new procedures for alternative valuation methods, effective immediately.
The takeaway:
“Desktop Appraisal means a valuation where neither the VA fee panel appraiser nor the appraiser’s designee under the AAPP has physically viewed the exterior or interior of the property and the VA fee panel appraiser has determined an opinion of value based on information obtained from public records, the Veteran, homeowner, realtor, and other appropriate data sources (as determined by the appraiser).”
“The use of a Desktop Appraisal may allow an appraiser from outside the market area, but with appropriate credentials for the jurisdiction of the property, to complete the assignment when no local VA fee panel appraiser is available.”
“Appraisal Assignment Waterfall. With consideration for the high demand for appraisal services and limited availability of appraisers in certain local market areas, VA is providing lenders, servicers, and appraisers with a procedural waterfall that clarifies acceptable valuation methods when certain conditions exist. Lenders and appraisers can also refer to Exhibit A for more information. VA continues to explore opportunities for expanding the use of Exterior-only Appraisals and Desktop Appraisals and will update this procedural waterfall, as appropriate.”
Appraisal Assignment Waterfall
Important: VA’s willingness to accept appraisal reports completed via Exterior-only Appraisals and Desktop Appraisals is not a substitute for an assessment by a VA fee panel appraiser as to the appropriate Scope of Work and whether a credible report may be delivered for the subject property.
| Mortgage Purpose: | Appraisal Required? | Down Payment | Acceptable Appraisal Types |
| Purchase 1 | Yes | 20% | Interior Appraisal Interior Appraisal under Assisted Appraisal Processing Program (AAPP) Exterior-only Appraisal Exterior-only Appraisal under AAPP Desktop Appraisal |
| Purchase | Yes | None or less than 20% | Interior Appraisal Interior Appraisal under AAPUnder limited circumstances 2
|
| Cash-out refinance | Yes | – | Interior Appraisal Interior Appraisal under AAPP |
| Interest Rate Reduction Refinancing Loan (IRRRL) | No | – | Appraisal waived |
1 Exterior-only Appraisals and Desktop Appraisals are acceptable if all of the following is true:
- Down payment of 20% or more
- Lender is Lender Appraisal Processing Program (LAPP)-approved
- Purchase price does not exceed the conforming loan limit for the property jurisdiction
- Dwelling is a single family (1-unit) home that is not:
- A manufactured home or condominium
- Located on a leasehold estate
- Undergoing renovation
2 Lenders may also opt for an Exterior-only Appraisal or Desktop Appraisal when a case for a purchase transaction remains unassigned in VA’s system for more than 7 business days and all of the following is true:
- Lender is LAPP-approved
- Purchase price does not exceed the conforming loan limit for the property jurisdiction
- Dwelling is a single family (1-unit) home that is not:
- A manufactured home or condominium
- Located on a leasehold estate
- Undergoing renovation
- FHFA’s Appraisal Waivers Expansion - October 29, 2024
- Lack of Evidence, Appraiser Challenges Discrimination Claims - October 24, 2024
- NFHA’s False Narrative Undermines the Appraisal Industry - October 18, 2024
WOW, what a slippery slope they are heading down. No appraisers in the market area or don’t want to wait three weeks due to high demand?? I have tried before, over the past several years, to join the VA panel with no success. Guessing the rural areas I cover are over saturated. Not by what my clients are telling me. I’m glad there is not an overabundance of us out there. You know why? Because the last time that happened (early 2000’s) our fees went down to amounts that were given in 1990 as told to me by my mentor. Aaaah sweet retirement will be here soon..lol
When I began as a trainee FHA was $20 and VA $25 including one photo, an inspection, the interior drawing and verified sales comp’s: The VA fee had just increased, and they had to hire another trainee, the three partners had a member move out to a political appointment.
Things change! whoda thunk
The whole appraisal system needs reform as there are no way to challenge a bad report. I got screwed with an appraiser who didn’t do his job and didn’t even use current but old information and my reconsideration was blown off. I am a veteran who feels let down again by the VA
FHA will most likely be next. Homeowner: “I want to file charges against the appraiser.” Why, “because not only is he a racist but because he has never even looked at my property.” But the government has said that it is okay from him to not look at your property. Owner: “I do not care the appraiser has E&O Insurance, and I want some of that money.” But what if he did not do anything wrong? Owner: “I do not care this is America and I am entitled to some of that cash, besides the Feds are making it easy for me to get my hands on it. so, they must want me to have it.” Okay just fill out this form, I am sure the E&O insurance company will cut you a check shortly.
Appraiser: “I might be retiring very soon. I was hoping to make it 3 more years, but it looks like I will not renew my license. I will let others deal with this.”
Dreams do come true, now I can buy an even bigger catamaran and make VA money anywhere I am in the world.
To all you na sayers, Don’t be afraid, fear is a choice.
This is shocking move for VA. I have talked to the Denver VA RLC over the years and they said this was coming. I’m pretty sure Covid put a halt to the roll out of these products across the board. The VA has said that appraisal expediency and sloppy and careless appraisals would facilitate change, and here we are.
What happens when the appraiser initiates Tidewater on a desktop or exterior? The agents and homeowners are going to be super pissed-off! (The appraiser never physically inspected the property!)
The VA used to be the gold standard, but now they are just like everyone else.
The VA is still a separate enterprise with independent oversight. One can still hope that unlike FNMA & HUD, that when the end effect of discounted services is observed to further decrease appraisal reliability rather than increase quality or somehow shore up problems, there may be reconsideration. They’ll probably go all the way to hybrids before that happens though.
Next up is the commercial appraisers and those whom refuse any gse work in general. There is no safe haven and will be no safe haven for any licensed appraiser, until such time as all appraisers get with the program and resist the more for less amc automated volume based hybrid reduced duty and increased liability type programs. The non licensed self appointed appraisal industry managers are coming for your working segment next. For every person the amc industry and every other third party help industry hired, there is one appraiser that never materialized but would have materialized if appraisers would have only been more self reliant.
Reliable appraisal development that can not be scrutinized, criticized, or discounted in such a manner takes time, there is no way to get around that development requirement. We warned all of you for the past decade this was a real possibility. Take a stand for the future of this industry and those still participating in it. Tens of thousands of appraisers will not very long from now be wishing you still had the opportunities available when you were younger. Catch me at a real job with benefits or doing field services or something. We did not sign up as an independent appraisers and trade away all pension, paid days off, and promotional opportunities to be tied to a desk all day. I think these people have given themselves quite enough promotions at our expense, and now It’s our turn.
As usual they are late to the table to fix the last problem. With current interest rates I doubt there is a shortage of appraisers in most areas.
We did desktops during the quarantine with no issues.
I have tried to get on the VA panel 3 times over the last 40 years, every time they told me that they did not need any more appraisers. After the last rejection I never wasted my time with them again. I always thought it was funny that every VA appraiser I know has less experience than me. Most of the newer (10-20 years) lady appraisers I know are all on the VA panel.
That’s the problem CJK. If they just asked for other appraisers to join the panel, they’d be flooded with applications. Their shortage of appraisers is self imposed. Now is not the time to relax standards. The real estate market appears to be setup for a big hit soon. Some downward price pressure is already happening in the Portland, Oregon market. Some forecast rates at 7%+ by December. If that happens along with a downturn in the economy, it can’t be good.
I am starting to see it in my market, the appraisal gap provisions are starting to disappear, some lenders are back with buydowns, open house showing have increased and some sellers are paying concessions again. One of my builder friends told me that the only money they make is on the bogus lot markups. One of my lender friends told me that they are in a panic because the loans are starting to dry up and some of the staff will be let go. Hopefully I will be retired by the time of the next crash.
The slide back is on. Rates just refreshed higher too. As the fed tests highest tolerable levels in an attempt to mitigate the damage caused by trillions of newly created subsidy dollars in a very short time frame. We’re just getting started so get ready.
Yet VA doesn’t approve new VA panel appraisers. This is a self imposed problem.
I would not know the last time I tried was about 20 years ago when they sent out a request for additional appraisers. I responded right away and was never added to the panel. I am not sure how all of the new people within the last 10-20 years got on the VA panel (or whatever it is called now). I do know this every lady appraiser I know does VA appraisals, funny how that works. Like I said I do not waste my time with VA anymore, so I do not really care about them.
VA does not let you turn down an order. The pace can be relentless. VA panel is good but not quite the mythical golden egg people think it is. And because there are different rules, with every order comes a hundred phone calls as vip’s and such request you treat that veteran borrower like gold. I’ve never had as many email and phone call workfile entries. The thing that you realize being an VA appraiser is that the exact same lenders that run appraisers through the amc grinder, then turn around and readily assign full fee orders via the VA web management platform. They all know darn well how easy it would be to swap order management to mercury scope ap or whomever, and they still purposefully do not do that. Despite having active personnel whom actively manage orders internally for VA lending. It’s sort of a light bulb moment for any appraiser whom has wondered why lenders continue to grind appraisers down with amc’s.
There was a time in 2015-2016 that I had 15+ VA appraisals in my queue at one time. No joke. This was in addition to the other orders I had. I called the RLC and they literally told me ‘do the best you can’, and this is when they had 10 day turn times.
Later 2018 or so, VA came out with a directive that reduced the timeliness to 7 days in our area. They started adding appraisers like mad to the panel and recruiting existing VA panel to our area, then asked the older panel members to go cover rural areas outside of the normal coverage area. Honestly, I was insulted. VA gave the new guys the easier assignments in my area and sent the normal area appraisers off for the hard stuff-all for the same fee. Total clown show.
@Baggins – you now can ask for a re-assignment from VA. Its not easy and you must give a solid explanation for doing so.
I am a lady appraiser and tried several times to get on panel and no luck. But I am not a young appraiser. Been in the biz 30 years. I should cry discrimination since that seems to be the call for everyone these days!
Just tell them that you are a minority or that you have a disability, and you might get approved.
Thrue story in the 1980s FHA gave an appraiser in my area twice as many requests as the other appraisers. When I asked the head guy for the appraisal section in Denver why was this, he said quotas. The appraiser was busted by the state for lying about his continuing education not once but twice, they finally took his license. One of my friends worked for him and he said that whenever they world take a class this appraiser could never pass the test (remember when we had a test) and yet he received twice the FHA work as the rest of us. Now that is our tax dollars being put to good use.
There is a new question on many vendor forms; GLBT company? It rides right along all the other minority women owned veteran companies. Basically everyone gets to be included as a special exception candidate except for me. Equitable equality!
“Basically everyone gets to be included as a special exception candidate except for me.”
I was refused employment twice because I am a white male. Once by the Feds the other time by the county.
When you’re the last one left being denied fair access…
Oh who bothers with literal definitions anymore.
We are dealing with a VA appraiser issue where fraud is involved in the VA home loan. Would had been immediately discovered and addressed had the appraiser done his done as required by the then VA federal inspection and appraiser rules. And, he was a physical location appraiser.
Physical inspections are a must — UNLESS, VA gives potential veteran homeowners a true viable option.
With issues of concealed and/or improperly documented home issues the veteran is left holding the bag with a gaping hole in it.
is this VA no physical appraisal plan another brain-dead biden action?