Veterans Administration on Hybrid Appraisals
See the announcement by the Veterans Administration basically telling lenders and appraisal management companies we are going to protect our Veterans with sound appraisal practice.
…the person providing property information to the appraiser must have entered into an agreement with the appraiser to do so.
…the person who provides to the VA fee panel appraiser information must sign the appraisal report in the “Appraiser” section of the left side of the appraisal report.
Assisted Appraisal Processing Program (AAPP)
This section authorizes the Department of Veterans Affairs’ (VA) Secretary to issue guidance explaining the conditions under which VA permits VA fee panel appraisers to rely on information provided by another person when making appraisals for VA’s home loan guaranty program… VA views this legislation as a unique opportunity to lead the industry in developing an appraisal program that enables VA to better serve Veterans in rural areas and/or reduce overall appraisal turn times while also encouraging more individuals to join the appraisal profession……Appraisals and valuations are of the highest quality, protecting the integrity of Veterans’ home loan benefits delivery;
(1) Appraisal means an appraisal report authorized under 38 U.S.C. 3731 that complies with USPAP and
(a) That is “non-complex,”
(b) Where the sales price or value is below 1 million dollars, and
(c) That is not for a new construction property.
(2) Information means any information that conforms to the standards of USPAP, is necessary to determine reasonable value as defined in 38 CFR 36.4301, and upon which federal housing entities (including VA), prudent lending institutions, informed buyers, and attorneys, generally, in the community in which the property is situated, would rely.
(3) A person is an individual who may perform appraisal-related work in compliance with VA policies, USPAP, state, and local laws. This could include, for example, another VA fee panel appraiser licensed in that jurisdiction, a non-VA fee panel appraiser licensed in that jurisdiction, or an appraisal trainee/apprentice registered or otherwise authorized to provide valuations in that jurisdiction. Additionally, the individual must demonstrate to the VA fee
panel appraiser that the individual has the ethical and moral character that would not jeopardize the safety of the property or its occupants. Under no circumstances may an individual who is, or has any background as, a registered sex offender qualify under this definition. Evidence to support the ethical and moral character may include, but is not limited to, a criminal and/or financial background check or proof of employment in an industry that requires regular background checks.(a) To be a person acting in the capacity as an agent of the assigned VA appraiser, the person must be otherwise permitted to sign an appraisal report as “Appraiser” on any of the approved VA forms. This person must understand the certifications, and ramifications thereof, that they will be signing. Such person must also be knowledgeable of all VA requirements and Minimum Property Requirements (MPRs). While acting as an agent of the VA appraiser it is imperative that such person not intentionally or unintentionally mislead any Veteran, real estate agent, lender, or homeowner into believing that he or she is the VA fee panel appraiser assigned to the case…
c. VA Fee Panel Appraiser Requirements. As noted above, a VA fee panel appraiser participating in AAPP must continue to follow all applicable VA statute, regulations, and policies, as well as the policies and procedures outlined in this Circular. It is also important to note that any person with whom the VA fee panel appraiser enters into an agreement is acting in the capacity of an agent for the VA fee panel appraiser. In all cases where the VA fee panel appraiser relies on another person for information, the VA fee panel appraiser is ultimately responsible for the character and behavior of that person while that person is conducting business for a VA assignment. In addition to all applicable statutes, regulations, and policies, the VA fee panel appraiser must:
(1) Maintain an Errors & Omission insurance policy in an amount that is reasonable and customary for the appraisal jurisdiction during the period that the VA fee panel appraiser participates in AAPP.
(2) Upon VA’s request, provide VA with relevant documents relating to a person who will provide or has provided to the VA fee panel appraiser appraisal-related information under AAPP. This includes, for example, a copy of the agreement and all evidence the VA fee panel appraiser relied upon in determining that such person met the ethical and moral character requirement.
(3) Ensure that the person who provides to the VA fee panel appraiser information under AAPP signs or has signed the appraisal report in the “Appraiser” section of the left side of the appraisal report. The VA fee panel appraiser must sign the appraisal report as the “Supervisory Appraiser.” Further, the VA fee panel appraiser must provide a written statement of certification within the appraisal report that contains the following language:
“I participated in VA’s Assisted Appraisal Processing Program to complete this appraisal report. The final opinion of value for the subject property is based upon my supervisory status and analysis of all available information. The person who provided information to me to assist in the opinion of value is: Full name (First/Middle/Last), license number, date of expiration, state of issuance of the person. I take full responsibility for any errors in and/or omissions from this appraisal report.”
(4) Pay all fees charged by a person who provides a VA fee panel appraiser with information under AAPP…
e. Tidewater Value Cases and Reconsideration of Value Cases. In instances that Tidewater may apply, the assigned VA fee panel appraiser may only contact the lender to invoke Tidewater if he/she has performed the site visit of the subject property and verified the condition of the property. If the assigned VA fee panel appraiser did not conduct the site visit, the VA fee panel appraiser must make a site visit to the subject property at no additional fee to the lender or Veteran. VA fee panel appraisers utilizing the AAPP process must continue to adhere to VA’s timeliness policy.
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If the rest of the lending world would practice the same reasonable methodology and procedures as the VA, there would be more reliability in the final appraisal product, hybrids would be a nightmare finally over and lender risk would be considerably lower.
I attended a conference earlier this year and the speaker representing the VA cited their adverse tolerance for risk as the reason why they did not experience as significant losses during the last recession.
that is because their mission is to protect the Veteran….and rightly so.
TOP COUNTIES FOR VA PURCHASE LOANS
Rank County State Loans
1 Maricopa Ariz. 4,850
2 Bexar Texas 3,899
3 El Paso Colo. 3,822
4 San Diego Calif. 3,792
5 Clark Nev. 3,297
6 Riverside Calif. 2,591
7 Pierce Wash. 2,083
8 Hillsborough Fla. 2,018
9 Harris Texas 1,981
10 Tarrant Texas 1,839
No more runners with VA. What will the volume guys do? Runners are common with volume firms, especially since FNMA allowed that. The volume guys used runners anyways when it was not permissible and everyone knew it. Rather than penalize appraisers whom had broken the rules, gse’s changed the rules to accommodate them instead. Nice to see this guarantee program state clearly that such inspection running from non appraisers is not allowed.
They forgot to address typing services. All this attention to safety of the home owner and the inspection. What about data security when they send the borrowers address, personal, and real property information to some overseas or even domestic but still non licensed typing service?
People making this policy perhaps don’t get the various appraisal magazines, there is a typing service or amc advertisement every other page.
Nice article-horrible title. It would be nice if people read the embedded articles before labeling them. The VA is NOT describing a hybrid appraisal here!
What they ARE describing is a REAL Appraisal…just like the kind we all learned under. The trainee (inspector) is hired by the appraiser. Repeat “IS HIRED BY THE APPRAISER”. He or she is the trainee of the appraiser. A trainee has to be able to sign on the left, with the supervisor signing on the right. Full USPAP compliance required. Full responsibility required. Ther is nothing hybrid about the process at all.
It IS, however, ‘bifurcated’ regarding the inspection though that term has come under such disrepute I hesitate to use it. The program is great as near as I can tell.
Real Appraisals. Send your COMPETENT appraiser trainees out to inspect when they are ready to solo inspect; review and discuss their work with them when they return. Analyze the data and write hte report. Old School.
Nothing complicated about it at all.
PLEASE STOP CALLING IT A VA HYBRID PROGRAM! iT HAS NOTHING TO DO WITH THE HYBRID CRAP BEING PROMOTED AROUND THE COUNTRY such as 1004P; Mueller, Clear Val etc.
Nothing better than an agreement or is there? If property information person is qualified to observe the property might as well do the appraisal.
Is the VA now allowing trainees to do the inspection for LAPP’s, as long as they are competent and sign? Or is this just for AAPP’s?