Real Estate Appraisal News

Fannie Mae Announcement 09-11 Requires Submission of Electronic Appraisal Reports in MISMO XML Standard

Brian Davis (Brian J. Davis & Associates) — Sun, 31 May 2009 06:47:06 -0500

In Announcement 09-11, New Data Delivery Requirements, Fannie Mae announced changes to the loan delivery file and the Uniform Residential Loan Application (Form 1003) to accommodate new data elements required by the Federal Housing Finance Agency (FHFA).

Download Fannie Mae Announcement 09-14-Electronic Appraisal Reports

These changes are intended to result in enhanced identification and accountability of key parties in the mortgage transaction and are another step in Fannie Mae’s ongoing efforts to improve loan quality.

In the coming months, Fannie Mae will announce a series of other policies intended to improve loan quality, including the implementation of a robust collateral valuation analysis process, enhanced credit policy guidance, improvements to Fannie Mae’s quality control processes, and additional guidance on lender quality control activities.

In support of the loan quality initiative, this Announcement includes information about the following:

Submission of Electronic Appraisal Reports
Enhancements to the Loan Delivery File Format
Mortgage Fraud Reporting

Sarah Vetault of Tucson, AZ - www.ComplineGroup.com asked on the WinTOTAL Users Group:

"I just got this announcement from Fannie Mae requiring submission of electronic appraisal reports in MISMO XML format by 2010. I wonder what this means from our end. Is the good old industry standard emailed PDF going bye-bye, forcing us to use slice/dice/rip-the-data portals for mortgage work? Or will the lenders rip the data themselves out of our pdf files for submission to FNMA? We are definitely living in interesting times. "

What are YOUR thoughts?

Post-HVCC Implementation: Are appraisers still feeling the pressure?

Brian Davis (Brian J. Davis & Associates) — Sat, 16 May 2009 08:25:25 -0500

As most of you know by now, the Home Valuation Code of Conduct went into effect on May 1st. Its primary purpose is to insulate the appraiser from outside influences that would apply pressure to the appraiser to inflate values.

Unfortunately, I have been receiving complaints from our members (ICAP) regarding lenders and AMC’s asking appraisers to reconsider their values. Some of the lenders and AMC’s have even created a form for this purpose. It appears that these forms are being completed by lenders agent or the borrower in most instances. Clearly the borrower is unhappy with the value conclusion and they are looking for a higher value.

QUESTION: HOW IS THIS NOT PRESSURE

ANSWER: IT IS!

The HVCC allows the homeowner to now receive a copy of the appraisal before the closing. I’m afraid this has added fuel to the fire. In some instances, the homeowner has a legitimate complaint if they feel the appraiser made an error or omission regarding the improvements, but others are going so far as to rewrite the appraiser’s sales comparison analysis to show the appraiser how to get a higher value. Although as appraisers we appreciate all the help we can get when gathering data, this is going a little too far.

I am also being told that certain AMC's are sending the appraiser a list of sales, calling them comparables, and asking the appraiser to write an explanation as to why they did not use any of these in the appraisal. This list usual shows up after the appraisal has been completed not before, so it is not part of the original scope of work, such as in relocation appraisals.

I have been corresponding with Fannie Mae regarding some of the new problems that the HVCC has created.I would like to provide them with examples of this latest form of pressure aimed at appraisers. I can only assume that lenders are trying to skirt around the requirements of the HVCC by having their agents or their clients (the borrower) engage the appraiser. In politics this is known as plausible deniability.

The lender should be filtering this information and determining what should be passed along to the appraiser. Requests to an appraiser for corrections, additional comments, more explanation and additional market data in the form of sales, listings, etc. has always been acceptable practice.

However, I am concerned about the lender, AMC or homeowner who is sending the appraiser sales data and asking the appraiser to consider using them in the appraisal and if not, provide an explanation as to why the appraiser did not use these sales instead of those reported in the appraisal.

Please email any value dispute/reconsideration of value forms you have received to tj@tjmccarthy.com and I will pass them along to Fannie Mae. We need to work together as an industry to stop this before it gets out of hand.

AUTHOR: TJ McCarthy, SRA - Tim (TJ) McCarthy serves on the Illinois Real Estate Appraisal Board This email was originally sent to members of the Illinois Coalition of Appraisal Professionals – ICAP.

Illinois "Appraisal Bill" HB 1015 Passes Unanimously

Brian Davis (Brian J. Davis & Associates) — Thu, 14 May 2009 09:33:01 -0500

After three years of trying, it finally took a new Governor and a persistent ICAP to get Appraisal Bill - HB1015 passed. The Bill passed in the Senate yesterday unanimously! It will now go to Governor for signature.

This is not a new law, but an amendment to the existing law. Brian Weaver will be covering many of the changes the new law brings to the appraisal industry in Illinois at ICAP's summer seminar.

You can read the bill as introduced here: http://tinyurl.com/oh9ec4

The following is a brief Synopsis of some of the changes.

Synopsis As Introduced Amends the Real Estate Appraiser Licensing Act of 2002.

Makes changes throughout the Act that mark the transfer of authority to administer and enforce the Act to the Department of Financial and Professional Regulation (rather than the Office of Banks and Real Estate).
Replaces "associate real estate appraiser" with "associate real estate trainee appraiser" throughout the Act.
Changes the Real Estate Appraisal Board to the Real Estate Appraisal Administration and Disciplinary Board.
Provides that a person who violates certain licensure provisions for a second or any subsequent time is guilty of a Class 4 felony.
Sets forth additional education requirements for licensure under the Act.
Removes a provision allowing a person who holds a valid license as a licensed real estate appraiser, issued pursuant to a predecessor Act, to convert that license to an associate real estate appraiser license.
Removes a provision concerning licensed real estate appraiser's licenses issued pursuant to a predecessor Act and provides that an associate real estate trainee appraiser license may not be renewed more than 2 times.
Adds a provision concerning temporary license suspension.
Provides that an education provider may use an instructor who is a faculty member in good standing with an accredited college or university or community college or who is an approved appraisal instructor from an appraisal organization that is a member of the Appraisal Foundation. Imposes conditions on any rulemaking authority.
Makes other changes.
Repeals a Section concerning identifying a client. Effective Immediately

Source: http://www.ICAPweb.com

Approved Bill (Mark-up) Download IL Real Estate Appraiser Licensing Act HB1015

Zaio Establishes New Terms with Zone Owners for United States Launch

Brian Davis (Brian J. Davis & Associates) — Wed, 13 May 2009 08:09:43 -0500

CALGARY, May 12, 2009 Zaio Corporation("Zaio" or the "Company") announced today that the Company has signed a letter of intent and term sheet ("Terms") with the Zaio Zone Appraisers in the United States to proceed with a plan to complete the Company's national valuation database and offer services to lenders across the country.

The new Terms are expected to solve certain barriers that Zaio experienced in the past while compiling the world's first appraiser certified national valuation database.

Zaio will be issuing a national license for its patent pending technology to a new US entity which will be owned and operated by approximately 350 appraisal firms that currently hold Zaio

Zone licenses in most major US cities.

Zaio will receive a royalty equal to 50% of the profits generated by the sale of products from the growing appraisal and photo database.

Zaio will no longer incur the cost and management obligations of running a large US appraisal operation and will be able to focus on further development of its own technology.

From the Zone Owner's perspective there will be greater incentive to complete the respective market value research and data collection in each Zone. In addition, the unification of these skilled appraisers will create one of the largest national appraisal networks in the United States powered by Zaio's award winning appraisal database technology.

Randy S. Kass, Chairman of the Zone Owners' Advisory Committee says: "We are convinced that the Zaio system offers a revolutionary platform through which real estate appraisals and data can be provided with local market expertise and delivered in a manner that will offer significant improvements to valuation and service excellence."

Bradley Stinson, CEO of Zaio stated: "The Zone Owners are an organized group of entrepreneurial appraisal firms. We are very pleased to work with professionals that have exhibited a passion for market value research."

The Company also wishes to confirm that Bradley Stinson, founder and inventor of the Zaio technology concept, has been officially appointed CEO of Zaio Corporation.

Source: Zaio (www.zaio.com)

Zaio develops and maintains a secure database of site-verified photos, property information and appraisals of virtually every property in entire cities. Leading local appraisers inspect, and appraise entire neighborhoods, one residence at a time from the street using a proprietary "GeoScore(TM)" rating system. Zaio: a public corporation trading under the symbol "ZAO" on the TSX-V Exchange in Canada.

<< The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. >>

This news release contains forward-looking statements which may include financial and business prospects, as well as statements regarding the Company's future plans, objectives or economic performance and financial outlooks. Such statements are subject to risk factors associated with the real estate industry, and the overall economy in both Canada and the United States. The Company believes that the expectations reflected in this news release are reasonable but actual results may be affected by a variety of variables and may be materially different from the results or events predicted in the forward-looking statements. Readers are therefore cautioned not to place undue reliance on these forward-looking statements.

In evaluating forward-looking statements readers should consider the risk factors which could cause actual results or events to differ materially from those indicated by such forward-looking statements. These forward-looking statements are made as of the date hereof, and unless otherwise required by applicable securities laws, the Company does not intend nor does it undertake any obligation to update or revise any forward-looking statements.

SOURCE: Zaio Corporation Bradley Stinson, CEO, or Rodney Mitton, CFO, (877) 318-0537 For full details for ZAO click here.

Join the iPhone Real Estate "Twibe"

Brian Davis (Brian J. Davis & Associates) — Sat, 09 May 2009 06:39:10 -0500

You've probably seen my Appraiser's Water Cooler Group - Appraiser Tribes ? There I've promoted the POWER of groups of real estate appraisers joining together for common goals on a local or regional basis.

Here's ANOTHER form (or forum) of collaboration that harnesses the power of http://www.Twitter.com by pulling "Tweets" from group members whenever they use one or more keywords.

The service is http://www.Twibes.com and I've create one especially for those of us that are using our iPHones in our appraisal, sales, or inspection businesses.

The Twibe is: http://www.twibes.com/group/iPhoneRealEstate

Once you've joined . . . Anytime you "Tweet" about an iPhone or new App . . .your post will be automatically added to our iPhone Real Estate Twibe. Pretty slick huh?!

All you need is a free http://www.Twitter.com account and a membership to the Twibe!

Here's another Twibe that you might be interested in: http://www.twibes.com/group/iPhone

iPhone GPS for Appraisers - GeoTagging Location / Photos

Brian Davis (Brian J. Davis & Associates) — Sat, 09 May 2009 06:37:26 -0500

Ever been out taking rural comp photos and then want to accurately plot them on a map? Maybe one of the many iPHone GPS apps would be the key? They range from FREE! to $4.99 on up! Here's a couple that I've played with: Simple GPS This is great if you just want to know where you are, look at a map, and then send yourself (or someone else) a link to that location. It's super fast and easy. Cost: $.99 Motion X GPS Lite There are both FREE (Lite) and paid ($2.99 limited time offer) versions. This is a MUCH more full featured app that allows your to: * Track your performance * Share Waypoints and Tracks (up to 303) * Share Geotagged Pictures * One-click Facebook Shares * Live Navigation (compass) Have YOU found a good GPS app? Would you use these tools in your appraisal business?

Follow Me on Twitter and Join the Appraisal Scoop "Twibe"

Brian Davis (Brian J. Davis & Associates) — Sat, 09 May 2009 06:30:47 -0500

Are YOU interested in building a Tribe? Consider Twitter! Twitter is a micro-blogging platform and it's a little different from any other online or social media tool. When people first begin using it, it can seem overwhelming and confusing.

How can you really type anything of substance in 140 characters or less?

The first thing I usually advise is that you take some time getting familiar with how it all works.

Put up a picture of yourself, find some others to follow, and "tweet" some updates. It may seem a little like you are talking to yourself to do this especially if you are not being followed by anyone else. But it helps to see activity when someone comes upon your page and is making a decision whether to follow you or not.

Once you have observed and participated a little, there are a few things you can do to help you build relationships. Why is that so important? It all goes back to establishing that know, like and trust factor. People like to do business with those they know, like and trust, right?

I also have a "Twibe"! What is a twibe? A twibe is a group of Twitter users interested in a common topic who would like to be able to communicate with each other. On each twibe's page, there is a list of twibe members. There is also a tweet stream that lists tweets from twibe members which contain key word tags. Tags are set by the twibe founder and are listed just above the tweet stream.

Appraisal Scoop's key word tags are: appraisal, appraiser, AppraisalScoop You can browse through twibes that have already been created by going to www.twibes.com/twitter-groups.

Here are some of the ways to use Twitter to create rapport and get more visibility for your business:

1) Give value. Share links, offer advice and answer questions. I usually suggest a balance of 85% non-promotional tweets to 15% promotional tweets. When you are sharing interesting tidbits, they do not (and should not) be all about your services and offerings. On Twitter, people are looking to learn more about you the person, not just you the business owner. Of course, once they feel that they know you better, they are more willing to eventually buy from you!

2) Engage others. Ask questions, use the @ function to spark conversations and re-tweet others' messages. This helps people get to know you, but it is also a chance for you to demonstrate your expertise. You don't need to outright sell in order for others to see that you have something of value to offer them. Before you know it, others will be re-tweeting (sharing) your helpful information with others, leading to more visibility for you.

3) Use your profile to your advantage. You are able to link to your website in your profile as well as include a small blurb about who you are and what it is you do. Although you don't have a ton of space to write here, be sure to give a little snapshot of your personal self as well as your professional self. This is a great way to get others to explore your offerings, become your subscribers or clients and boost your traffic.

Most of all, remember that Twitter is a place to be you, listen, respond and be helpful. The results for your bottom line may not be immediate, but you are building your reputation and strengthening relationships each time you participate. And that's great for business!

Christine Gallagher, MLS, MSIS, founder of CommunicateValue.com, teaches solopreneurs and small business owners how to use online marketing and social media to communicate effectively and authentically and attract more business. For FREE tips on how to build profitable relationships, leverage technology and create your own successful online business, visit http://CommunicateValue.com Original Article Source: http://EzineArticles.com/?expert=Christine_Gallagher

NAR Calls For 1-Year Delay on Home Valuation Code of Conduct - Letter to Fannie and Freddie

Brian Davis (Brian J. Davis & Associates) — Mon, 20 Apr 2009 16:27:05 -0500

Download Williams Fannie Mae HVCC Delay 04202009

Download Koskinen Freddie Mac HVCC Delay 04202009

This is a Call to Action! Please contact your Senators and Representatives TODAY and urge them to STOP or DELAY (for at least 12 months) the implementation of the Home Valuation Code of Conduct ("HVCC") which is de facto regulation, forced on Freddie Mac and Fannie Mae by New York Attorney General Cuomo. The file below contains a list of key talking points to bring to the attention of your legislators.

Please contact your legislators today at their in-district offices, as Congress is currently in recess. You can access the contact information for your legislator here. We encourage you to keep trying to contact them if you are not initially successful. It is vital to the overall effectiveness of this call.

Please forward the Call To Action pdf below to your mortgage broker and appraiser contacts.

Download CAMB Call To Action

Allegedly Inflated Appraisal Made Prior to Construction of New Home Cannot Support a Fraudulent Misrepresentation Claim: Court Endorses "Cost Approach" - TN

Brian Davis (Brian J. Davis & Associates) — Sun, 28 Sep 2008 10:49:06 -0500

I think that appraisers will find this case very interesting from a variety of perspectives! The case went all the way to the Court of Appeals in Nashville, TN and was ultimately decided in favor of the appraiser, but not without some interesting twists and turns along the way.

View my page on The Appraiser's Water Cooler

JOSEPH AND KIMBERLI DAVIS v. PATRICK J. MCGUIGAN, ET AL. (Tenn.Ct.App. September 11, 2008).

One of the key elements in the case was a citation Byrd v. Hall, 847 S.W.2d 208, 215 n.5 (Tenn. 1993).

To sustain a cause of action for fraudulent misrepresentation, the Homeowners must show:

the Appraiser made a representation of an existing or past fact;
the representation was false when made;
the representation was in regard to a material fact;
the false representation was made either knowingly or without belief in its truth or recklessly;
the Homeowners reasonably relied on the misrepresented material fact; and
Homeowners suffered damage as a result of the misrepresentation

Download Davis_v_McGuigan_091108.pdf

"The Appraiser contends that the appraisal is an estimation or opinion, and is not a representation of an existing or past fact. Therefore, the Appraiser argues, an essential element of the Homeowners’ claim for intentional misrepresentation is conclusively negated and summary judgment was proper on this claim. Homeowners argue that the appraisal value was not the opinion of the Appraiser, but rather an opinion he gave which the Appraiser did not have or knew to be false. Although Homeowners’ argument applies to the fourth element for fraudulent misrepresentation, their contention does not change the requirement of the first element - that the defendant make a representation of an existing or past fact. In Tennessee, appraisals are not considered facts, but rather estimates or opinions." Id.

"Further, we note that when the Appraiser conducted the Appraisal, he was appraising a home that had not yet been constructed. The Appraiser used the “cost approach” analysis, and referred to, among other resources, the specifications and building plans provided by the Homeowners. At that point, the Appraiser only had plans for the future Home on which to base his appraisal; he could not verify that the materials planned for in the Home were actually used in the construction or examine the workmanship of the construction. In Tennessee, conjecture or representations concerning future events are not actionable even though they may later prove to be false." Id. (citations omitted).

To read the FULL case . . . click here: Download Davis_v_McGuigan_091108.pdf

Tip of the hat to the Tennessee Construction Law blog for finding and reporting this judgement.

NAR recognizes "The Appraiser's Water Cooler" as a Facebook For Appraisers

Brian Davis (Brian J. Davis & Associates) — Thu, 18 Sep 2008 12:05:51 -0500

Thanks to NAR's Appraisal Insight blog for a "shout-out" on The Appraiser's Water Cooler!

Facebook for Appraisers

For those of you who want the social interaction of Facebook without all the poking, status updates, and lame pictures of high-school friends, Appraisal Scoop has the answer. It's called:

The Appraiser's Water Cooler

This is a social networking forum for appraisers. It appears useful, and anything that increases appraiser interaction and communication is a plus in my book. So sign up.

Source link: click here

While you're visiting NAR's Appraisal Insight blog check out these hot topics:

VA Circular 26-07-4: Valuing Properties During Periods of Declining Market

Brian Davis (Brian J. Davis & Associates) — Thu, 13 Dec 2007 16:15:30 -0600

Facing a declining housing market, the U.S. Department of Veterans Affairs (VA) distributed a document (Thursday, December 06, 2007) reaffirming that the agency requires appraisals at fair market value for properties used as security for a VA loan. Download Circular 26-07-4 -Valuing Properties During Periods of Declining Market.pdf

In a document signed by Judith Caden, Director of the VA's Loan Guaranty Service, the VA provides the following guidance to appraisers (Chapter 11, Section 8, Lender's Handbook):

A summary of market trend indicators to consider when performing an appraisal is provided below.

Determine whether sales or financing concessions are being offered in the subject property's market area. If so, determine the effect on the sales price of comparable properties.
Consider the supply and demand for available housing in the subject market and compare the average listing price to the sales price ratio in the subject market area.
Consider the marketing time trend (increasing or decreasing) in the subject marketing area.
Analyze sales listings, contract offers, and unsettled sales to determine if market conditions changed between the date each comparable sold and the date of the subject property appraisal. Provide an addendum if a significant market transition is indicated due to changes in employment opportunity, housing supply/demand, average marketing time, seller concessions, etc. However, appraisers should certify in the appraisal report,

"I have considered relevant competitive listings/contract offerings in performing this appraisal, and any trend indicated by that data is supported by the listings/offering information included in this report."

General Guidance: Certain areas around the country are experiencing what is frequently referred to as a "declining market." We recognize that some lenders may object to receiving appraisal reports that contain comments or analyses of negative market conditions and, consequently, may request that such items be removed. VA expects appraisal reports to contain negative comments when they accurately reflect market conditions.
Be assured that VA has no objection to guaranteeing a VA loan in a declining market area as long as the appraiser has properly documented the facts of the case. Furthermore, secondary market sources have indicated that they will purchase VA loans in declining markets as long as the appraisal analysis is proper and complete.

Download Circular 26-07-4 -Valuing Properties During Periods of Declining Market.pdf

Author: Brian J. Davis, ARA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoop blog and the Win TOTAL Users Group an email forum for appraisers

Leica DISTO™ D3 - Pocketable - Light Sensing - Tilt Measurement - Area Calculation

Brian Davis (Brian J. Davis & Associates) — Tue, 16 Oct 2007 12:29:11 -0500

Matt Johnson of www.lasermeters.com and ww.appraiserdepot.com has announced the introduction of yet another product to the Leica line of laser measuring devices.

The new DISTO™ D3 is a multi-functional "pocketable" measuring device with an integrated tilt sensor and a lighting detector that automatically switches on the display and keypad illumination. THAT should help when working in those dark REO properties!

Matt Johnson says: Once the price is finalized for the US, I'm guessing it will be around $349.00 and will probably start shipping in November. I got the chance to play with the D3 a few weeks ago. The keypad reminds me of the Nokia cell phones from a few years ago.

Measuring made easy – your versatile partner with a modern look!

Tilt measurement The instrument's inbuilt tilt sensor quickly and simply determines tilts up to ± 45°. The tilt sensor can also provide you with true horizontal distances. Reliable measurements are therefore guaranteed.
Multifunctional end piece Aim the instrument straight at the target point, whether measuring out of corners, slots or from edges: with this end piece you are prepared for all measuring situations. The instrument detects the end piece automatically, which helps you avoid expensive measuring errors.
Automatic keypad and display illumination A built-in sensor detects if the environment is dark and switches on the illumination of the keypad and display. You can also measure in the dark without any problem.
Multiple functions The Leica DISTO™ D3 can also calculate areas, volumes, room dimensions and various types of Pythagorean functions. A time delay release and enough memory for up to 20 measurements finish off the instruments wide range of functions – a concept designed to make
your work easier.

Included items - practical and clever:

Holster: Stows everything away neatly
Target plate: Allows accurate measurement on a non-reflective surface.
Wrist strap: Secures the instrument at all heights

Video - Ride the "Home Value Roller Coaster"!

Brian Davis (Brian J. Davis & Associates) — Tue, 16 Oct 2007 12:24:28 -0500

Would you like to FEEL the Irrational Exuberance of Robert Shiller's A History of Home Values 2nd Edition housing values (from 1890 to present) plotted to a realistic roller coaster?!

Come on! Take a BREAK! Climb aboard the Home Value Roller coaster . . . .

If you'd like to take a peek at what the data REALLY looks like, here it is in the traditional graph:

DOJ Antitrust Division Launches Web Site on Competition In The Real Estate Brokerage Industry

Brian Davis (Brian J. Davis & Associates) — Wed, 10 Oct 2007 16:40:52 -0500

WASHINGTON -- The Antitrust Division of the Department of Justice launched a new Web site today to educate consumers and policymakers about the potential benefits that competition can bring to consumers of real estate brokerage services and the barriers that inhibit that competition.

Among its features, the Web site includes:

maps identifying states with real estate laws that can inhibit competition,
a calculator to help consumers tally their potential savings when brokers pursuing new business models compete for their business, and
links to additional government resources.

The address is: http://www.usdoj.gov/atr/public/real_estate/index.htm

"Buying or selling a home is the largest financial transaction most Americans will ever undertake," said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division. "This Web site will help consumers and policymakers understand the benefits of increased competition among real estate agents."

The estimated median commission paid by home sellers in 2006 was $11,672, according to the Antitrust Division. New real estate brokerage models have the potential to reduce that amount by thousands of dollars. For example, in states that allow open competition, some buyer's brokers rebate up to two-thirds of their commission to the customer, and some seller's brokers offer limited-service packages that let sellers list their homes on the local multiple listing service (MLS) for as little as a few hundred dollars.

In a number of states, however, laws have been passed making it illegal for brokers to offer rebates, or requiring them to offer a full package of traditional services regardless whether all consumers want them. The Antitrust Division Web site contains data showing that if these sorts of barriers to competition were eliminated, consumers could save thousands of dollars in real estate commissions when selling one home and buying another.

The Web site also explains how consumers are harmed when states forbid competition between lawyers and non-lawyers to conduct real estate closings, and when brokers tailor the rules governing local multiple listing services to exclude lower-cost rivals.

Consumers are encouraged to contact the Antitrust Division of the Department of Justice if they have information concerning anticompetitive conduct in the real estate brokerage industry.

Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoopblog and the WinTOTAL Users Group an email forum for appraisers.

Top 10 Reasons Appraisers Decline Assignments (2003 vs 2007)

Brian Davis (Brian J. Davis & Associates) — Wed, 03 Oct 2007 18:20:07 -0500

Appraisal Foundation says appraisers are NOT responsible for altered reports!

Brian Davis (Brian J. Davis & Associates) — Sun, 30 Sep 2007 07:23:37 -0500

The September 2007 USPAP Q&A has been issued by the Appraisal Foundation and covers the following questions: Download September 2007 USPAP Q&A pdf (29.8K)

Can I authorize someone else to sign an appraisal report for me?
Is an appraiser required to use software that allows the user to authenticate the appraiser's signature?
Does giving someone my signature password give up "sole personal control"?
If a software company creates signature file for use with their software, does that give up "sole personal control" of my signature?
If a signature is stolen, am I in violation of USPAP for failing to have "sole personal control of my signature?

As I read each of the responses, I was thinking . . .Yeah, "technically" that's probabaly true, but what are the real world consequences if I accept and act on that advice?

I'm just not sure that I agree with most of the rationale of these responses, but it's the last Q&A that really baffles me?! (see below)

Appraiser identity theft, and related mortgage fraud, are at serious levels. I would have thought that the Appraisal Foundation would have addressed those topics, in this latest Q&A, on a practical level. At least acknowledge the risks involved with giving somone else your signature password or knowingly transmitting reports to clients that are redacting signatures and altering reports that others are relying on.

Question: When I transmit my residential form report electronically I have heard that some of my clients are opening the appraisal file and removing my signature file, reformatting the data, and in other ways altering my appraisal report for the client's use. What are my responsibilities under USPAP if I know or believe such actions are occurring after my report is delivered to the client?

Response: USPAP does not specifically address who "owns" an appraisal report, the research necessary to produce that report or the report's supporting documentation. Once an appraisal report is delivered to a client, a client may do a variety of things, including redacting or removing the appraiser's signature, or converting data from the report into a format more functional to the client, etc. Once the appraisal report has been transmitted to the client, USPAP does not place further responsibility on the appraiser for the client's use of that report.

Click here to Download September 2007 USPAP Q&A pdf (29.8K) and see if YOU agree with the latest Q&A!

State Appraisal Experience Enforcement: ASC Policy Statement 10G

Brian Davis (Brian J. Davis & Associates) — Sun, 30 Sep 2007 07:16:34 -0500

Earlier this year the ASC, (Appraisal Sub Committee), ordered all states to comply with their Policy Statement 10: The Scope of State Agency Enforcement Programs. This statement requires every state to perform a work product review on every licensee issued a Certified Residential or Certified General license since January 1, 2005. Download ASC Policy Statement Paragraph 10G.pdf (39.3K)

T.J. McCarthy of the Illinois Coalition of Appraisal Professionals (ICAP) said: "Needless to say, this is a huge task for the IL Appraisal Division of the Department of Professional Regulation."

In an effort to facilitate the process for people upgrading before the January 1, 2008 AQB licensing criteria change, the state of IL will only be auditing work product on new applications for certified licenses from now until December 31, 2007.
Illinois will begin the process of reviewing the work product for all licensees issued a Certified Residential or Certified General license from January 2005 through August 2007 after the first of the year.
Illinois began sending out audit letters on new applications in early August. The audit letter directs the applicant to send in copies of three appraisals selected by the state of IL from their experience log.

T.J. McCarthy (ICAP) offers these tips:

Send in a complete copy of the report including all addenda.
The reports need to have a signed certification page.
DO NOT attempt to make changes to the reports in an effort to clean them up. It has to be a true copy.
Respond to the state within the requested two week time frame.
DO NOT send in your workfile.
The appraisals have to meet USPAP reporting requirements and be compliant with Illinois Appraisal Law and the Administrative Rules.

Based on the audit, the state will either;

approve your application, defer your application pending additional clarification of the work product submitted,
defer your application pending review of additional work product selected from your log by the state, or
deny your application for non compliance.

The IL Board is working on policies and parameters for an applicant to reapply to the state if their initial application is denied based on non compliance of the applicants work product. In the meantime, Brian Weaver has posted a Q & A on the ILDPR website to help answer many of the questions appraisers have been asking regarding the audit.

You can read the Illinois Q & A here: The Illinois Appraisal Experience Audit
Click here for the complete ASC document: Letter to All States Transmitting ASC Policy Statement Amendment re Experience Validation and USPAP Compliance, Comment Summary, and Policy Statement 10 G 08.13.07
Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoopblog and the WinTOTAL Users Group an email forum for appraisers.

H.R. 2535 "Homebuyer's Protection Act of 2007" Proposes Changes To FIRREA - Requires Appraisals On ALL "Real Estate Related Financial Transactions"!

Brian Davis (Brian J. Davis & Associates) — Tue, 25 Sep 2007 09:31:58 -0500

Rep Paul W. Hodes introduced House Bill H.R.3535 to create the Homebuyer's Protection Act of 2007 on 9/14/2007:

To amend the Truth in Lending Act to require escrow accounts for the payment of property taxes and insurance for all subprime loans, and to expand the coverage of the appraisal requirements under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, and for other purposes.

The second section of the bill is MOST important to appraisers! It would significantly change the language in FIRREA regarding when appraisals are required .

The current language only requires appraisals on `federally related transactions'.
The proposed language requires appraisals on ALL `real estate related financial transactions'.

What could that mean for AVM and BPO products? This bill is in the first step in the legislative process. Introduced bills go first to committees that deliberate, investigate, and revise them before they go to general debate. The majority of bills never make it out of committee.

But if it were to pass . . .Would that mean that ALL real estate transactions would have to be performed by a licensed appraiser? What do you think the chances are that a bill like this will make it out of committee?

Here's a clip from Rep. Hodes website:

This bill amends the Truth In Lending Act, or TILA, to ensure that all subprime loans have an escrow for the life of the loan, like prime loans. Because subprime loans do not require escrow accounts, borrowers can be hit with huge tax bills at the end of the year, contributing to foreclosures.

The second part of the bill would require a licensed appraiser to appraise all residential homes when a consumer seeks a mortgage. Currently, licensed appraisers are only required when a federally regulated bank originates the loan. However, with the increase in non-bank mortgages (like warehouse lenders) some loans are not "federally related" and therefore do not require a licensed appraiser.

Without an accurate appraisal, a homeowner would not know the true value of their home and could be taxed at a higher rate by the city. Additionally, if the mortgage is later purchased by an investor on the secondary market, that purchaser would not know the true value of the home either. If a foreclosure occurs, the investor who purchased the debt (mortgage) would be unable to recoup their whole loss since the property was appraised at a higher value than it was actually worth.

The bill would change federal law to require a licensed appraiser in all real estate transactions by amending Financial Institutions Reforms, Recovery, and Enforcement Act 1989, also known as FIRREA.

Here's an excerpt from the bill:

SEC. 3. SCOPE OF APPRAISAL REQUIREMENTS.

(a) In General- Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended by striking `federally related transaction' and `federally related transactions' each place each such term appears and inserting `real estate related financial transaction' or `real estate related financial transactions', as the case may be.

(b) Technical and Conforming Amendments-

(1) The heading of section 1120 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3349) is amended by striking `federally related transactions' and inserting `real estate related financial transactions'.

(2) Section 1121 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350) is amended--

(A) by striking paragraph (4); and

(B) in paragraph (5), by striking `any transaction involving' and inserting `any consumer transaction involving'.

Download HR3535_Homebuyers_Protection_Act_2007.pdf (42.4K)

Latest Major Action: 9/14/2007 Referred to House committee. Status: Referred to the House Committee on Financial Services.

Thanks to Joan Trice of http://www.AppraisalBuzz.com and washingtonwatch.com for ferreting out this legislation!
Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoopblog and the WinTOTAL Users Group an email forum for appraisers.

Video: Real Estate Appraisal - Excel Regression Analysis Add-on Module (Beta)

Brian Davis (Brian J. Davis & Associates) — Sun, 16 Sep 2007 14:45:15 -0500

The concept of regression might sound strange because the term is normally associated with movement backward, whereas in the world of statistics, regression is often used to predict the future. Simply put, regression is a statistical technique that finds a mathematical expression that best describes a set of data.

David Braun's excellent article Market Modeling and the Real Property Appraiser on a la mode's Labs site, part I of II, has garnered a lot of interest and feedback. Included with the article is a downloadable Excel utility (please right click and download to your computer to use) and an instruction sheet.

David has also produced a new three-part video tutorial that can be viewed right here. Each part is around 5-6 minutes long.

Part 1 of the introduction to Regression Analysis, starts off with MLS data exported to a standard Excel spreadsheet. Once the appraiser has the download, he or she, would open up David's application to import the data into a "Raw Sales" workbook and then "Scrub" the data in preparation for analysis.

The appraiser can then designate which sales they want to work with and which columns of property characteristics. Once that is done, you load the sheet for analysis and manually clean up any blank fields. The model will help identify them if any are missed.

Part 2 will pickup with running the model.

Part 2 of the introduction to Regression Analysis Add-on Module. We're ready to run the application which will generate a regression model which will be applied to the sales and subject property. The application will create a chart with actual sales prices and predicted values. The appraiser can then remove outliers (bad data - large value differences) to improve the results.

Once the appraiser has at least 15 to 30 sales and the model predicted values in the +/-10% range we're ready to move on. By the end of this section, David has 42 sales, and a 94% "Confidence" score, and a 97 R-Squared rating.

In Part 3 of this Introduction to Regression Analysis Add-on Module we'll be able to look at the actual output of this model's predictions.

The output ends up generating a table of adjustments to each comparable.

We can then review the adjustment levels to see what is reasonable.

You'll see that the appraiser can then delete columns of data an re-run the analysis if he finds any adjustments that do not appear reasonable and adjust the sales if necessary.

From my personal experience, this will force the adjustments into another area which then proxies for the original characteristic.

The application will then generate a "Valuation By Multi-Linear Regression" report.

The appraiser can then modify the table with his knowledge of the market.

Once that's done, the regression report can be saved to a work-file or included as part of the appraisal report.

Would YOU like to try this out? You can!

If you have Excel loaded on your computer you can download the application and the user instructions.

It is set to run until the end of this year. It is presented in a module that is an addition to an appraisal and is not intended to be a stand alone appraisal.
Have you used the utility? Do you have an ideas, feedback or comments? Leave them here or on the a la mode labs blog

Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoopblog and the WinTOTAL Users Group an email forum for appraisers.

Appraisal Scoop.com makes the Top 100 Real Estate Blogs List!

Brian Davis (Brian J. Davis & Associates) — Fri, 14 Sep 2007 10:04:23 -0500

Who can forget the famous line from "The Jerk" where Steve Martin's character Navin R. Johnson first sees his name in the phone book?
"The new phone book's here! The new phone book's here! This is the kind of spontaneous publicity I need! My name in print! That really makes somebody! Things are going to start happening to me now."
That's how I felt when the AppraisalScoop.com blog made it onto the Top 100 Real Estate Blogs list from International Listings. Here's the setup for the list . . .
Despite the funk that the subprime crisis has brought down on Wall Street and financial institutions, this sector represents only one portion of an entire industry. Some financial analysts such as James DiGeorgia, 21st Century Investor publisher, advises investors to keep an eye on the real estate industry as an opportunity. And, savvy homeowners or those who seek to purchase houses as residences or as investments might be wise to stay on top of some of the best names in the industry. Who knows where real estate will go from here?
To find an answer, we’re treating you to the top 100 bloggers who focus on every real estate subtopic from appraisals to the title industry. You won’t find real estate listings in this article, although some blogs focus on individuals who work in real estate and others focus on consumers. Please note that the blog numbering is not meant to be a ranking–each real estate subtopic is simply listed in alphabetical order, with blogs then listed in alphabetical order within that topic.
Thanks to the power of "alphabetical listings" . . .The "Scoop" made it to the top of the list. Thanks to International Listings for including Appraisal Blogs!!
Author: Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoop blog and the WinTOTAL Users Group an email forum for appraisers.

Key elements of the new FHA Secure program to help homeowners avoid foreclosure: Appraiser Responsibilities / Declining Market

Brian Davis (Brian J. Davis & Associates) — Tue, 11 Sep 2007 18:11:49 -0500

On Aug. 31, President Bush announced Federal Housing Administration (FHA) changes called "FHASecure" to help homeowners avoid foreclosure. In a key policy shift, the federal mortgage insurer FHA is allowing subprime borrowers with good payment histories and at least three percent in home equity to refinance to safe FHA financing.
FHASecure, a program announced on Aug. 31, 2007, will be underwritten to ensure the borrowers have the ability to repay the loan, will require escrow for taxes and insurance, and will offer unprecedented foreclosure prevention assistance.
The risk-based insurance premium structure will further expand FHA's reach to additional underserved borrowers. The move to risk-based premiums ensures that FHA remains on solid financial footing as a self-financed agency for the long-term.
The mortgagee letter extends eligibility to borrowers who became delinquent under their current mortgage following the reset of the interest rate.
To qualify for FHASecure, eligible homeowners must meet the following five criteria:
a history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
interest rates must have or will reset between June 2005 and December 2009;
three percent cash or equity in the home;
a sustained history of employment; and
sufficient income to make the mortgage payment.
Appraiser Responsibilities under the FHASecure program:
From: MORTGAGEE LETTER 2007-11
September 5, 2007

TO:    ALL APPROVED MORTGAGEES
      ALL FHA ROSTER APPRAISERS
Appraisal Practices in Declining Markets

Historically, FHA has provided a counter-cyclical force in helping to stabilize declining housing markets and will continue to do so. In fact, much of FHAs business activity this year has been in those states (e.g., Ohio, Michigan, Indiana) that have suffered sustained depreciation of home prices due to job losses and increased foreclosures. Nevertheless, recent property value declines in certain markets suggest the need to reiterate our guidance to mortgage lenders to ensure that appraisers are providing accurate property valuations. A declining market could be as small as a neighborhood or as large as an entire state, and no standard definition exists other than home prices are falling.

Appraiser Responsibilities

The purpose of the appraisal is to provide the lender/client with an accurate, and adequately supported, opinion of market value.á It is the appraisers responsibility to determine whether a property being appraised is located in a declining market.

The neighborhood section of each property specific appraisal form contains a housing trends section where the appraiser marks a box indicating property values are increasing, stable or declining.- Whichever box is selected, the appraiser is certifying that he/she has performed an objective analysis of quantifiable data supporting the observations made.

If a property is located in a declining market, the appraiser must provide an explanation in the Market Conditions section of the appraisal report that includes relevant information in support of the conclusions relating to trends in property values, demand/supply and marketing time. The appraiser must also provide a description of the prevalence and impact of sales and financing concessions and/or down payment assistance in the subjects market area. Other areas of discussion may include days on market, list-to-sale price ratios, and/or financing availability.
Author: Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoop blog and the WinTOTAL Users Group an email forum for appraisers.

Buying a Condominium? Do Your Homework First

Brian Davis (Brian J. Davis & Associates) — Fri, 31 Aug 2007 13:43:53 -0500

In the last 20 years, condominiums have become more popular among those wanting to buy a home. Condominiums make great affordable first homes. They also make great homes if downsizing from a large family house to a smaller residence. Before purchasing a condominium, there is information a person should know to ensure a good homeowner experience.
What is a Condo?
Condominiums are buildings in which individuals separately own the air space and structures inside their unit as well as the surfaces of floors, walls and ceilings, but they jointly own an interest in the common areas that they share such as the elevators, hallways, dividing and outer walls, swimming pool, and parking lot. Maintenance of these areas and allocation of funds becomes the responsibility of a condominium association, also known as a unit owners' association.
How the Condo Association is Organized and Conducts Its Business
Every owner has a share or interest in the association, plus an obligation to pay monthly dues or special assessment fees for larger maintenance problems. Decisions may be made in monthly board meetings which may cost individual owners more money, but not necessarily deliver equal benefits for all. Condo owners will be affected by one or more board decisions, so active participation in meetings and discussions may be beneficial.
Condominiums are governed by the condominium declaration as well as by a set of rules called Covenants, Conditions and Restrictions (CC&Rs). They set forth particular rules that must be followed by the condo owner. They may impose restrictions on pet ownership, remodeling projects, and leasing of the condo. Rules are necessary in condominium communities and they must be fairly enforced on a regular basis. CC&Rs must be disclosed prior to the sale of a condo. Taking title to a condo is viewed as the agreement of the owner to abide by the CC&Rs and the condominium declaration.
Condo associations vary in their organization and expertise. They have the power to regulate and monetarily penalize owners for violations. Examine the association records, budgets and financial statements and ask questions before purchasing a condo. Carefully review the latest financial statements to determine the financial
stability of the condo association. Make sure the complex isn't losing money. Much can be revealed about the association by taking a look at past minutes of the condo association's board meetings.
The Illinois Condominium Property Act states that with a resale of a condo by a unit owner other than the developer, the seller shall make available for inspection to the prospective buyer, upon demand, a number of important documents (i.e., the declaration, bylaws, financials, etc.). Buyers should be sure to obtain a copy of these documents before making a final decision on the purchase of a condominium.
Examine the association records, budgets and financial statements and ask questions before purchasing a condo.
Buying a Condo in a Newly Constructed Building
With regard to new condos, developers do not generally retain a long-term interest in a building, but the work that they put into it is important. Many developers provide buyers a one-year warranty. It may be wise to have an attorney review the warranty in order for the buyer to completely understand what is covered, what is not, and what happens when the warranty expires.
An inspection of the building from top to bottom is recommended as this can turn up major structural flaws. This is especially important for newly constructed condos and rehabs. Areas of importance in an inspection include masonry, tuck-pointing, window flashings, and the proper sealing of cinder block. Buyers should ask questions about the types of materials used in construction. However, don't just rely on the inspection. Buyers should research the developer's track record, and find out if there have been any problems with its previous developments. Also, find out if the developer is still in business and whether it is financially stable. If the developer is no longer in business, the condo association may have little or no legal recourse if major flaws are discovered in the property.
Inquire about the proposed assessment amount for the individual units. The amount may be set too low and may not provide for enough funds to cover the basic expenses. All condo buildings-whether they are brand new or 90 years old-have the same types of expenses: heating, water, property insurance, general maintenance, etc.
Be sure to inquire what services are included in the assessment payment.
Physical Management of the Building, Grounds, and Individual Units
Find out if the association keeps the building in good repair. Determine if they handle repairs and maintenance before they become big problems or if they have a schedule for preventative maintenance. Before buying, it's a good idea to have an inspection done on the unit of interest. Ask for copies of any architectural or structural inspection reports that relate to the entire condominium complex.
Property insurance. Get a copy of the certificate of insurance, which is a summary of the association's policy. Then make sure that the policy has a building-ordinance clause, which means that the insurance will cover the cost of bringing the building up to code if there is any rebuilding to be done. On older buildings, there may have been many code upgrades since the time of construction. Buyers should understand exactly what the association policy covers and what they are responsible for. Condo owners should insure their personal belongings, along with any other items within the unit that are not covered by the association's policy.
Who manages the association? Some condo associations hire a management company. It might cost more to hire a professional company, but in the long run it tends to save money. Generally, professional managers wield more bargaining power when negotiating for services such as bids for gardeners or general maintenance because they represent such a large number of complexes. If the condo is professionally managed, buyers can also check out the management company.
Some condo associations are completely self-managed, particularly those with a smaller number of condo units. Find out if this is the case. In a self-managed association, individual owners usually have to take on and divide up many of the necessary management duties: maintain the grounds, deposit assessments, keep financial records, pay the association's bills, etc.
Other Management Issues Worth Checking Into
Determine if the development has any pending legal actions. Are there any disputes between owners, with developers or with the association? Check to see if the development has received any notices from the city or village for code violations.
What is the association's reputation in the building? Talk to other owners for comments or complaints about the association's activities.
Find out the extent to which the condominium is owner-occupied. If most owners rent the units out, they may be less concerned about day-to-day issues than if it is largely or entirely owner occupied. If the renter population is over 10%, there should be clear rental policies, either listed in the bylaws or as an amendment. Does the management company find renters? In addition, it may be difficult to obtain financing if there is too high of a percentage of renters vs. owners. Many lenders want to see a minimum of 85% of the units owner-occupied.
Assessments/Monthly Fees
Knowing the monthly assessment amount is an important part of the condo purchase. The monthly amount for assessments is usually considered by the lender in the mortgage application process since it is a significant portion of the monthly housing costs (mortgage payment, property taxes, etc.). Also, be sure to inquire what services are included in the assessment payment, such as central heat, water, air conditioning, and cable T.V.
Check the association's history of assessments to see how many increases have been made in the past 10 years and how large they have been. This information will help to gauge the likelihood of increased assessments in the near future, and indicate how well-managed the building is. Find out if the association maintains a reserve fund to pay for unexpected and potentially expensive repairs. Depending on the building's age and anticipated repairs, if reserves are inadequate, a large special assessment might be levied on each condo owner when an unexpected cost arises. Find out if there are any special assessments in place and what the duration of the special assessment is.
When searching for a condominium, DON'T GO IT ALONE.
Choose a REALTOR® who can assist you in finding a condo that suits you. Your REALTOR® can help you obtain much of the information that is recommended in this brochure. A REALTOR® will also help you:
Determine your buying power and financing options.
Investigate all available condos in your market area and find the best home at the best price.
Arrange a home inspection and point out any issues of concern with the property.
Illinois Association of REALTORS®
www.illinoisrealtor.org

Backing Up Your Blog

Brian Davis (Brian J. Davis & Associates) — Wed, 29 Aug 2007 19:42:18 -0500

Do ALL you folks reading my blog back up your computer files? I believe most people do.
NOW . . . How many bloggers backup their blog? To be honest, until recently, I didn't either. I've read other people's horrifying stories of how they lost their blog and went scrambling for help to retrieve all those precious thoughts and images!
Can you image if you'd been blogging for two years, and posted 500 posts, and one day it was GONE? Everybody's posts are different and unique so we need to backup our posts to ensure we don't lose our data if the web server crashes.
I found this FREE web service called BlogBackupOnline that's basically an Insurance Policy for Blogs!
http://www.blogbackuponline.com/ is a application that will backup your blog, including jpeg, gif files etc. Signup is simple, and after your registration, they will maintain your blog with daily incremental backups so there's no more sleepless nights.
Getting Started
You get started by filling out a simple registration form. An email will be sent to your email account verifying your status.
Full Backup
After completing the registration of your blog URL you're ready to do your first full backup. Times for this process will vary depending on quantity of posts and number of images. This first one may take a while? My http://www.AppraisalScoop.com blog has 520+ posts and about as many comments and (I didn't sit and WATCH) I'm pretty sure it was done in well under 30 minutes?
Daily Backups
After the first Full Back up, BlogBackupOnline will do the rest. Daily backups will continue automatically, saving any amendments, new posts or comments. Sooooo, at worst, you'd only lose one day's data.
Restoring Blogs
After you have fully backed up your blog it can be restored to the same blog location or you can send it to another blog platform. Current maximum storage is 50Mb and from what I see most blogs should be with this limit.
Switching Blog Platforms
BlogBackupOnline has 11 supported blogging services (Blogger, Friendster, LiveJournal, Movable Type, Multiply, Serendipity, Terapad, TypePad, Vox, Windows Live Space, or WordPress). The site is a great tool if you ever decide to move your blog from one platform to another. After you've backed up your blog, BlogBackupOnline can bring all of your old entries into the new service.
Now that my site's backed up I don't need to worry and can sleep easy at night, Can You? Not often you can get free insurance but using this free web application there's nothing to lose.
A blog for webmasters and bloggers alike, daily updates on SEO and any other articles interesting and of course some money making schemes too http://yeepage.com/
Article Source: http://EzineArticles.com/?expert=Simon_Hemmings

Author: Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoopblog and the WinTOTAL Users Group an email forum for appraisers.

Promises . . .Promises: If you'll just do this ONE "Comp Check"!

Brian Davis (Brian J. Davis & Associates) — Wed, 29 Aug 2007 07:37:18 -0500

Everyday appraisers across the country are called by potential clients with offers of work IF they'll just to this one FAVOR!
Yesterday I blogged about my call from a mortgage broker in Chicago. She asked, "What's your fee for an appraisal in Danvers, IL?" I told her. Then she asked, "How you you feel about charging an extra $100 so that I could make a little something-something on the deal?"
Today I've got a great example of how one broker went Fishing For Appraisers. As you read the letter below, ask yourself: Is the mortgage broker looking for a free appraisal or is he really just shopping for the appraiser with the highest Comp Check value?
After-all, he knows the appraiser ". . .can't hit every one" but if the value "looks good" the appraiser will qualify for their list. Read on!
Dear Sir:
I am a mortgage banker with XYZ Home Loans and need QUALIFIED APPRAISERS ASAP.
We are a mid-sized lender performing just shy of 1 billion annually in loan volume and have just recently entered your state. We originate mortgages in half the country with over 150 mortgage bankers centrally located in Anytown, USA. In addition we have just started a sister company XYZ Home Settlement Services that provides title and appraisal services for our company and a list of others.
We have just begun to market in your area, which means at present we do not have any appraisers in your area. We drop over a million pieces of mail on a monthly basis and to test your region we dropped 50K mailers last week with overwhelming response.
For any new area we break into, we must find competent appraisers. Since we do not have any appraisers in your area, you could be the first approved appraiser in XYZ APPRAISAL NETWORK, which could mean anywhere between 10 to 25 appraisals per month.
However, let us go one-step at a time. Let us start by running a comp check. If it looks good, we will go forward.
I also need a copy of your current E&O, appraiser's license, W-9 tax information, area of coverage, and contact information.
If you can legitimately get some values and of course, we know you cannot hit every one but if it looks good, we can get you in as an approved member of XYZ APPRAISAL NETWORK.
Once that happens then all 150 Mortgage Bankers that have workups will call you first because you will be the only one approved in your area.
So let me give you the name and address of the property in "ANYWHERE" County where I already have a deal:
123 Your Street
Any Town, USA
I look forward to doing more business with you in the future.
Have a great day,
John Doe

Author: Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoop blog and the WinTOTAL Users Group an email forum for appraisers.

Appraisal Fee - Markup or Kickback? - Part 3

Brian Davis (Brian J. Davis & Associates) — Tue, 28 Aug 2007 15:58:14 -0500

Appraiser Question: "I received an order from an Appraisal Management Company (AMC) that requested I bill the client $75 more than my standard fee and return $75 to them. I've never heard of this before, but I haven't worked with many management companies. Is this common?" "Do I need to make a statement in the appraisal report that I have paid $75 to the AMC?" "Are there any other USPAP or legal concerns that I should consider to cover myself?"
Part 2 of this series answered our appraiser's question from the perspective of USPAP - The Uniform Standards of Professional Appraisal Practice - but left us with a question about whether a RESPA violation may come into play.
Why? Because it "appears" the appraiser is involved with collecting or paying additional fees for which "appraisal services" have not been provided.
Just What IS a "Markup"? Markups involve the practice of ordering services for a customer from a third-party vendor and then, without providing an additional service, adding an additional fee to the vendor's charge. READ ON . . . .
Money Magazine published a multi-part story a while back about the "The Bunk Behind Junk Closing Fees" by Stephen Gandel where he says, "RESPA was also meant to stop realtors from taking kickbacks for steering customers to favored lenders, title companies, appraisers or home inspectors."
The Closing Cost Scams section asks "Ever bought a house? Then you know what it's like to be confronted, while making the biggest financial transaction of your life, with a bundle of fees you don't quite understand. They're enumerated on what's called your HUD-1 document, the mortgage settlement statement you get the day you close, as required by the Department of Housing and Urban Development."
"The charges listed include mysterious things like title insurance, settlement fees, appraisal fees, processing fees, document-preparation fees and others, as well as charges paid by the seller, like your broker's commission."
"Home buyers now pay eight times as much in closing costs as they did 40 years ago."
There is an excellent paper Pricing of Settlement-Related Services in Residential Mortage Transactions: Second Circuit Decision Threatens to Upset Widespread Industry Practices by James L. Thompson and Hanna L. Stotland. Click here for the full paper.
In their conclusion they recognize the confusion both by the mortgage industry and the conflicting court decisions with regards to RESPA. The Conclusion says:
"Where does this patchwork of rulings leave the mortgage professional, especially one with a nationwide customer base? First, lenders, brokers and anyone making assessments at a closing should play it safe. Given the current split, it will be impossible to predict how any new court will interpret Section 8(b) of RESPA."
"Second, mortgage professionals and their attorneys and compliance offers must keep a close watch on developments in RESPA interpretation.The Supreme Court may grant certiorari to resolve the obvious circuit split, and its decision will inevitably upset the standards in some part of the country. It is certainly possible that, if the split persists, Congress will intercede with clarifying legislation."
I agree. There does appear to be much confusion regarding regarding what constitutes a RESPA violation and how appraisers fit into the whole picture.
I personally feel that it's easy for appraisers to innocently get caught up in the "markup" game. Some appraisers feel that we're just collecting a fee on behalf of the client but would the borrower understand that? At what point does a minor $50-$75 per assignment become considered a "kickback" by a potential borrower?
The bottom line for me is at a minimum . . .comply with USPAP.
Management (ETHICS RULE)
The payment of undisclosed fees, commissions, or things of value in connection with the procurement of an assignment is unethical.
Comment: Disclosure of fees, commissions, or things of value connected to the procurement of an assignment must appear in the certification and in any transmittal letter in which conclusions are stated.
Author: Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoop blog and the WinTOTAL Users Group an email forum for appraisers.