Help Requested From Appraisers or Others in the Know

Looks like you got a bad appraisal from a very lazy appraiser. The comps were poor and the lack of a signature on the report shows a total lack of professionalism. Not acceptable.

Hi Maggie,

I'd like to piggyback on Jessie's response.  FHA requires that the appraiser be certified to be FHA approved.  You may have had a trainee or licensed appraiser who inspected the property who works for a certified appraiser.  This appraiser then simply signed the report as if it was completed by him/her  (This is all based on an assumption I don't know the specific facts)  If this is the case it is FRAUD and the appraiser would face serious disciplinary action as a result.  This type of activity is just one of the root causes of the mess we are in and a few bad apples are doing "business as usual"  With lower fees and out of area appraisers appraising properties outside of there expertise as a result of the HVCC guidelines.  You will be confronted with these types of issues unfortunately until some changes are made.

Interview the appraiser when they call to inspect ask them if they are familiar with the area, where are they coming from? I would make it a point to provide the appraiser with comparables you feel are comparable to your home at the inspection and a list of the attributes.  "That's not my job, it's the appraiser's doesn't cut it anymore" your job is to assure the successful outcome for your clients.  This will not solve this problem 100% but will help from it happening more often than not.

I am going through the same thing right now! I've been working with a buyer who is on house #2. Our first deal fell apart because the underwriter required a "desk review" that cut our value by $9K. We weren't able to make it work with the seller.

With house #2, the initial appraisal came in fine but because it was purchased by the seller less than 6 months ago and is now being sold for 100% more, the underwriter is requiring a second appraisal.

It's getting very complicated to sell properties, especially in low price ranges where the neighborhoods have been heavily affected by foreclosures. I wish you the best because I understand what you're going through!

It's important to at least have the appraisers information handy.  That way if something is wierd in the report, then you can at least contact the appraiser to discuss the matter. 

Loan officers often mention that they cannot in no way be in contact with the appraiser.  If you find an error and the buyer is paying for it, then every effort should be made to dispute the findings.

Hope that helps.

My understanding is that you can't challenge the appraisal.  Only the underwriter can file the actual challenge...  And it does follow the property for 6 months.  I have just been through this.  The appraiser gave NO value for 3+ acres of land... 

You guys have to stop believing that it's the appraisal that's "killing the deal!"

I hear that a lot, or other phrases like "contentious appraiser."

You say they're "just the facts," but your writing is very emotional.

So take a deep breath and do the following:

1 - Demand a copy of the current report--the one with no checkbox checked.
2 - Demand the name of the person doing the inspection.
3 - Research (through the state) both names.  Determine their status: trainee, licensed, certified res, certified gen, etc., and ascertain if there have been any previous violations.
4 - Make a list of all errors in the report.  Consider having another appraiser help you, or pay for a Review.
5 - Look at all the comp photos.  Determine if they were taken by the appraiser or are from the MLS.

Your chief goal is to determine if the appraisal is truly faulty.  If it is, demand that the mistakes be corrected.

Your second goal is to make sure this doesn't happen again. And by that I mean getting a sloppy, not low appraisal.

The person inspecting (for FHA) must be a Certified Residential or General Appraiser.

Comp photos (for FHA) MUST be taken by the appraiser.

With regards to Jesse's comment, I don't believe that is the case.  I just took the USPAP update, and I would swear that this isn't the case.  The person signing the report is the one who certifies that everything in it is true.

Let's just assume for example that both appraisers were Certified and on the FHA roster, but one did the inspection and one wrote the report.  I believe that the one doing the inspeciton, by signing the report, would be certifying all these other opinions about things he didn't even research. 

I believe that it is possible to have inspected the property but then not sign the report. 

Anyway, these are things that most of us never think about, because we end up doing it all. 

In this case, it's important that she find out the name of the person who did the inspection.  If that name isn't on record with the state, then there is a problem.

Palmetto and Everyone Else Having this Problem,

Most of what needs to be said on this has already been said (call your FHA Home Ownership Center, contest through your lender, everything Richard said, etc).  The only thing I would add is that a DE underwrter IS the person who comes up with the value for HUD/FHA loan purposes while the appraiser comes up with the estimate of value.  Big difference!!!

I am primarily a loan officer but I spent the better part of today completing a HUD Form 54114 on a manufactured home appraisal in the middle of Wisconsin (argh).  As a DE underwriter (when I actually do underwrite a file), I have the authority to increase or decrease the value as justified (in this case, I had to lower it by 8500).  I highly encourage everyone concerned with this issue to download and retain a copy of this form becuase it will be the stick by which your appraisal is judged.  Should something like this happen, collect all the evidence, give it to the loan officer and tell him or her to get it to the DE underwriter and appeal to him/her to apply a more reasonable value for the "value for HUD/FHA loan purposes."

If you're really feeling nerdy, you can sift through these: http://www.hud.gov/offices/hsg/sfh/ref/chap1.cfm.

As a loan officer, I use a good AMC for these.  If this appraisal was ordered through a halfway decent AMC (and it may not have been but it's worth looking into), there's probably a built in appeal system at this company.  Yeah, I can't talk to the appraiser but I can submit a written appeal with attached evidence and if it's a serious issue, I can get on the phone with the AMC's chief review appraiser.  You might want to see if that's an option because if an AMC found out that one of their appraisers was doing work like this, they'd get fired on the spot.

Good luck.

-Charles Dailey

I wish I knew the answers to these questions.  I have a situation where 2 appraisals came in significantly over asking price, triggered a review appraisal, which then cut the value by a huge amount.  I spent several hours preparing a rebuttal and am awaiting the outcome while a foreclosure hangs in the balance.

I can't add anything that hasn't been said already, some good advice here.

@Rick:

On form 1004, the certification the appraiser signs contains the following:

Scope of Work states (in part):

The appraiser must, at a minimum (1) perform a complete visual inspection of the interior and exterior areas of the subject property, (2) inspect the neighborhood, (3) inspect each of the comparable sales from the street, (4) research, verify and analyze data from reliable public records and/or private sources, and (5) report his or her analysis, opinions and conclusions in this appraisal report.

Certification #2 states:

"I have performed a complete visual inspection of the interior and exterior areas of the subject property.  I reported the condition of the improvements in factual, specific terms.  I identified and reported the physical deficiencies that could affect the livability, soundness, or structural integrity of the property."

Anyone who signs this certification as the appraiser but does not inspect the property has willfully committed fraud.  Anyone who inspected the property but did not sign the certification for someone else who did sign the certification has entered into a conspiracy to commit fraud.

Andrea - Keep in mind that the Field Review did not have the benefit of an interior inspection which enables the appraiser to note the updates you mentioned.  As stated by Pam, lenders often use appraisers as the scapegoat for declining a loan for reasons they prefer not to disclose.  My suspicion is that this is the case since the original appraiser not only estimated the value, but supplied additional comparables requested by the underwriter, very likely expecting that they were not available. 

Maggie - I'm glad this is working out for you.  While it may not culminate in closing this deal, it's imperative that you follow through and get this appraiser out of the profession so this doesn't continue.  (Having Pam advise you is similar to having the Yankees bat for a Little League Baseball Team - she's the best!)

Jesse - As always, your comments are right on the mark.  I may add that the appraiser who signed and should have inspected the property was assigned in the FHA docs for this file and obligated to complete it personally.

Rick - Some questionable statements in my opinion with a couple redirects: I believe FHA does now allow use of clear MLS photos but comp must have been viewed within legal limits (important clarification in my rural market where often homes can't be seen on wooded acreage).  Second, even if two Certified Appraisers worked on a file, the one who signs and must have inspected the property is the one to which the FHA case number is assigned.

Final comment: When contesting an appraisal, it is best to look for factual errors within the report where errors cannot be viewed as subjective.  For example, subject age, site dimensions, or size are way off or comparable data does not agree with sources listed such as the MLS.  Also defining a neighborhood but using comparables from outside defined area without explanation.  There are appraisal guidelines but the key element is explanation since the appraisal report must be, according to USPAP, understandable to the Intended User.

Jesse,

Noted, re the cert line.  I still think there's techincally a way, within USPAP to do both ... but once you throw the fannie mae form into the mix, you're correct--you must follow 25 more items.  Anyway, like I said, it's just one of those things that I never bothered to learn b/c there's really no reason in my small office of two people to do it any other way :)  But thanks for pointing that out. 

Maggie,

Glad you found out the answers.  It's not actually "fraud," but it is a "cheating" of sorts, and there are some pretty in-place penalties for appraisers who take shortcuts like those.  And still, it would be interesting to find out if the woman you met at the property is licensed, a trainee, or otherwise just a helper.  I think the state will come down harder on the guy if it's the old case of the unlicensed trainee.  In VA it's a pretty steep fine and a loss of license for a certain period and then a restricted license after that.