Appraisal Scoop

Fannie Mae Selling Guide Update SEL-2011-11: UAD and Uniform Collateral Data Portal Requirements

The affected topics (and specific paragraphs) are noted for each policy change. Lenders should review each topic to gain a full understanding of the policy changes. The updated topics are dated October 25, 2011.

Uniform Appraisal Dataset and Uniform Collateral Data Portal Requirements

On July 26, 2011, Fannie Mae issued Announcement SEL-2011-06, Selling Guide Updates, which contained information concerning the Uniform Appraisal Dataset (UAD) and the Uniform Collateral Data Portal (UCDP®). The UCDP is the joint portal through which lenders will be required to submit electronic appraisal reports to Fannie Mae and Freddie Mac. The UCDP was made available on June 27, 2011, for customers and their designated agents to begin to submit selected appraisal data files.

With this update of the Selling Guide SEL-2011-11 (10/25/2011), Fannie Mae is clarifying the following requirements:

• Lenders must ensure all applicable appraisals have been completed in compliance with Appendix D of the Fannie Mae and Freddie Mac Uniform Appraisal Dataset Specification (“UAD Specification”). (Previously, the Selling Guide referred to the entire UAD Specification.) Appendix D lists the requirements for the data that must be included in specific forms and how the data must be communicated on the appraisal report.
• In addition to submitting the required Fannie Mae appraisal reports forms to the UCDP, lenders must also receive a “Successful” status from UCDP before the delivery date of the mortgage loan to Fannie Mae.

Updated Selling Guide Topic

B4-1.2-05, Requirements for the Appraisal Report

Effective Dates

As a reminder, the following effective dates are applicable:

• The four UAD appraisal report forms with effective dates on or after September 1, 2011, must be completed utilizing Appendix D of the UAD Specification when reporting the results of an appraisal for a conventional mortgage loan.
• For all conventional mortgage loans for which an appraisal report form is required and with an application date on or after December 1, 2011, and a delivery date on or after March 19, 2012, selected appraisal report forms, including all exhibits, addenda, and photographs, must be submitted to the UCDP and receive a “Successful” status from UCDP before the delivery date of the mortgage loan to Fannie Mae.

In addition, the Selling Guide has been updated as follows:

• A2-5.1-03, Electronic Records, Signature, and Transactions (Uniform Collateral Data Portal™(UCDP™)): Information concerning the UCDP has been added to this topic.
• B4-1.4-12, Appraisal Report Review: Actual and Effective Ages of the Improvements: This topic has been changed to clarify that whenever adjustments are made to an appraisal for the year the dwelling was built, the appraiser must provide an explanation for the adjustments.
• B4-1.4-18, Appraisal Report Review: Lender Review of the Adjustment Grid (Proximity to Subject Property and Location, Date of Sale and Time Adjustments): The description of the proximity of the comparable sales to the subject property must now be reflected in “miles” and include the applicable directional indicator. This topic also requires the lender to provide the month and year of the sales contract and settlement or closing for comparable sales.

Effective Date

These changes are effective immediately.

Source: https://www.efanniemae.com/sf/guides/ssg/2011annlenltr.jsp

ASA and NAIFA Send Joint Letter to FHFA, Fannie Mae & Freddie Mac Expressing Concerns on HARP Program Reliance of AVMs and Requesting a Meeting

On October 25, the American Society of Appraisers (ASA) and the National Association of Independent Fee Appraisers (NAIFA) submitted a joint letter in response to yesterday’s announcement by the FHFA and the Government Sponsored Enterprises (GSEs) of changes to the Home Affordable Refinance Program (HARP) involving greater reliance on automated valuation models (AVMs) to value collateral property. In the letter, ASA and NAIFA expressed concerns regarding the GSEs quality control standards being used to ensure that the AVMs they utilize are reliable

On Monday, the Obama administration announced an expansion of their Home Affordable Refinance Program (HARP), which helps homeowners underwater on their mortgages to refinance into terms that lower their monthly payment. As part of this renewed effort, the Obama administration has approved reliance on “reliable” automated valuation models (AVMs) used by Fannie Mae and Freddie Mac (collectively termed the GSEs or Enterprises) to determine the value of the underlying collateral. Where a “reliable” AVM is not available, however, they must use an appraisal.

ASA’s and NAIFA’s letter says that given the fragile condition of the mortgage markets, the financial stress of many homeowners, and the temporary nature of the HARP program, the two professional appraisal organizations do not oppose the change. However, the letter expresses serious concerns over the reliability of AVMs in general and the GSEs’ AVMs in particular; and, it urges much greater transparency in the quality control systems that the Enterprises will be using to weed out unreliable automated valuation models in refinance transactions. The letter also states that the professional appraisal community, including the Appraisal Standards Board of the Appraisal Foundation, should have been, and should still be, consulted by the GSEs on their AVM quality control requirements.

ASA and NAIFA believe that safety and soundness and the interests of consumers and taxpayers in mortgage-related transactions are best served when collateral values are determined by professional, independent appraisers.

Jack Washbourn, President of ASA, stated that “while we generally support reliance on professional appraisals for determining collateral values for refinance transactions, we recognize that the scope and nature of this specific program might warrant limited use of AVMs. Still, it is imperative that quality control standards be implemented that protect homeowners, taxpayers, and the housing market from further losses when relying on an AVM, and we feel strongly that the professional appraisal community must be involved in crafting those standards."

Download: ASA and NAIFA Joint Letter to the FHFA, Freddie Mac, and Fannie Mae

About the American Society of Appraisers - The American Society of Appraisers is an international organization of appraisal professionals and others dedicated to the education, development and growth of the appraisal profession. More than 2,000 of its 5,000 members are business valuation appraisers. ASA is the oldest and only major organization representing ALL disciplines of appraisal specialists, originating in 1936 and incorporating in 1952. ASA’s headquarters is in the metropolitan Washington, DC area. To find an accredited appraiser near you, visit http://www.appraisers.org  or call (800) 272-8258.

NAHB House Price 'Estimator' model updated

Economist Paul Emrath of NAHB has updated a model he developed that estimates the value various features add to a home. The updated research paper and estimating tool enables builders, developers, prospective home buyers and home owners to see the impact that various physical features and neighborhood characteristics might have on the price of a home.

Looking at location factors, the updated NAHB tool finds a general tendency for house prices to be higher in the Northeast and West, as well as in central cities and suburbs. Meanwhile, prices tend to be lowest for homes built outside of a metro area, though some regional variation exists regardless of urban status.

Here's an interesting conclusion from the article:

Among other important findings, the estimator reveals that the greatest impact on a home’s value comes from adding a third full bathroom, which boosts the estimated price of a standard new home built in a Southern suburb by about $43,000. Meanwhile, eliminating the fireplace reduces the estimated price by about $24,000.

If you're still adjusting baths at $2,000 and fireplaces at $1,500 . . . You MIGHT want to go back into the market to check those out!!

Source: NAHB

2012-13 Edition of USPAP Released

October 13, 2011 WASHINGTON, DC—The Appraisal Foundation, a congressionally-authorized nonprofit organization dedicated to the advancement of professional valuation, announced that the 2012-13 edition of the Uniform Standards of Professional Appraisal Practice (USPAP) has been released. USPAP is the generally accepted standards of practice for the appraisal profession in the United States. 

The 2012-13 edition of USPAP will be valid for two years, effective January 1, 2012 through December 31, 2013. As with the prior edition, the new edition includes the standards of professional practice for all appraisal disciplines as well as guidance from the Appraisal Standards Board (ASB) in the form of USPAP Advisory Opinions and USPAP Frequently Asked Questions (FAQs). 

Changes to the document include:

• Revisions to DEFINITIONS of “Client,” “Extraordinary Assumptions,” and “Hypothetical Condition,” as well as a new definition of “Exposure Time”;
• Creation of a new RECORD KEEPING RULE and related edits to the Conduct Section of the ETHICS RULE; 
• Revisions to Advisory Opinion 21, USPAP Compliance; and, 
• Revisions to STANDARDS 7 & 8: PERSONAL PROPERTY APPRAISAL, DEVELOPMENT & REPORTING.

While the effective date for this publication is January 1, 2012, The Appraisal Foundation is encouraging appraisers to familiarize themselves with the changes now. To assist appraisers in this regard, earlier this summer the Foundation released a video featuring the Chair and Vice-Chair of the ASB discussing the changes to USPAP. The video, A Preview of Changes to the 2012-13 Uniform Standards of Professional Appraisal Practice (USPAP), is a 23-minute interview with the 2011 Chair and Vice-Chair of the Appraisal Standards Board, J. Carl Schultz, Jr. and Barry Shea, respectively.  Please visit the following link to access the video on the Foundation’s eLibrary:

CLICK HERE TO VIEW THE VIDEO ON 2012-13 USPAP CHANGES 

Copies of the 2012-13 edition of USPAP are now available for purchase via the Foundation Store at http://www.appraisalfoundation.org/.   The 2012-13 edition of USPAP is available in printed, spiral bound copy for $75 and the electronic PDF download for $60.  

In the coming weeks, USPAP will be available in Flipbook format and for eReaders including the iPad, Kindle, Nook and the Sony Reader. 
 

* Alternate Link for Video:  http://www.globalpres.com/mediasite/Viewer/?peid=ae8192ef41804f23a498bf7b30458189 

* Alternate Link for Foundation Store: https://netforum.avectra.com/eweb/Shopping/Shopping.aspx?Cart=0&Site=TAF

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About The Appraisal FoundationThe Appraisal Foundation, a Congressionally authorized non-profit organization established in 1987, is dedicated to the advancement of professional valuation.  The Foundation accomplishes its mission through the work of its three independent Boards:  the Appraisal Practices Board (APB), the Appraiser Qualifications Board (AQB) and the Appraisal Standards Board (ASB).  More information on The Appraisal Foundation is available at www.appraisalfoundation.org.

NAIHP Files Formal Complaint Against Fannie/Freddie Regulator Over HVCC Alleged Cover-Up

WASHINGTON, DC, Oct 14, 2011 (MARKETWIRE via COMTEX) -- NAIHP has filed a formal complaint with the Inspector General's Office, alleging Fannie/Freddie and their regulator agreed to the terms of the Home Valuation Code of Conduct (HVCC) as part of a plea bargain like agreement to avoid further investigation by the New York Attorney General's Office.

In December of 2008, Fannie Mae, Freddie Mac and the Federal Housing Finance Agency (FHFA), agreed to the final version of HVCC on the condition then New York Attorney General Andrew Cuomo, drop the GSE's from his valuation fraud investigation.

"In May of 2008, I met with Fannie Mae General Counsel Beth Wilkinson. During our meeting, I asked the G.C. why Fannie signed on to the HVCC agreement. Her exact words were, 'Cuomo has his foot in our throats.' 

Amongst other evidence, this supports our allegation that the GSE's only signed the agreement to escape further investigation by Cuomo," said NAIHP President Marc Savitt.

NAIHP is vigorously pursuing copies of the tens of thousands of public comment letters received by the GSE's and the FHFA, with respect to the HVCC. NAIHP has made numerous requests for these letters, all of which have been denied. A formal request through the Freedom of Information Act (FOIA) is being
prepared.

In a May 19, 2010 letter to Andrew Cuomo, FHFA Acting Director Edward DeMarco stated, "The Home Valuation Code of Conduct deployed by Fannie Mae and Freddie Mac was implemented after taking extensive market place comments." "Refusing to release the comment letters after admitting they relied upon them when implementing the HVCC suggests the letters fail to support the code's implementation and the FHFA is deliberately withholding this information from the public and Congress," said Savitt.

According to the NAIHP: Since HVCC was implemented on May 1, 2009, valuation fraud has risen by over 50%, appraisal quality has decreased substantially, thousands of appraisal professionals have been forced out of business and home values have continued to decline. Additionally, new appraisal rules have created a sharp increase in settlement costs for consumers.

Although, the HVCC agreement expired late last year, it's been replaced by similar language in the Dodd-Frank Act and GSE guidelines. NAIHP will continue to work with Congress and the CFPB on this important issue.

National Association of Independent Housing Professionals. 601 Pennsylvania Ave NW. Ste. 900 Washington, DC 20004

Contact: Marc Savitt 540-550-4496

SOURCE: National Association of Independent Housing Professionals

Cuomo v. eAppraiseIT: New York's Highest Court Held Oral Argument on eAppraiseIT's Appeal

Cuomo v. eAppraiseIT: New York's Highest Court Held Oral Argument on eAppraiseIT's Appeal Today: By Peter Christensen - Appraiser Law Blog

Today, four years after New York's then Attorney General Cuomo filed his state's lawsuit against First American eAppraiseIT (now part of CoreLogic), the New York Court of Appeals (the state's highest court) heard eAppraiseIT's appeal of the trial court's denial of its motion to dismiss. 

eAppraiseIT's argument on appeal, as it was to the trial court, is that New York is preempted by federal savings and loan laws and regulations from pursuing state law claims against appraisal management companies (AMCs) in state court.  The trial court's denial of the motion to dismiss was previously upheld by the lower New York appellate court.

The Court of Appeals' ultimate decision can't be predicted based on the questioning during oral argument today.  In the meantime, any future trial of the case will remain stayed until a final decision by the Court of Appeals.

Source: Appraisal Legal Defense and Insurance Blog by Peter Christensen and Robert Wiley - Legal issues and insurance matters affecting residential and commercial real estate appraisers   Click Here to Read Full Post

Full copies of the original complaint filed in 2007 and the Appellate Division's (the lower level appellate court) June 8, 2010 opinion can be found here.

It's Time to Add 'e' to PITI and Appraisal Equations: EcoHome

EcoHome's Rick Schwolsky is his own case study on the frustrations of trying to get appraisers to add value for energy-saving features homeowners and home builders put in their houses.

Special energy-saving items should be recognized in the appraisal process. The appraiser should compare the energy-efficient features of the subject property to those of the comparable properties in the ‘sales comparison analysis’ grid to ensure that the overall contribution of these items is reflected in the market value of the subject property. (Source: Fannie Mae 2011 Selling Guide)

Schwolsky writes, "It’s been years since I had a good argument with an appraiser. So when I found myself engaged yet again a few weeks ago, making the case for my new 4.2-kW PV system, it felt frustratingly familiar. I’ve been arguing the value equation of energy improvements with appraisers since back in the 70s, when I was building super-insulated, passive solar, PV-powered homes that passed comfortably through Vermont winters on the BTUs generated by a large dog." 

To read the FULL article, click here: Source: EcoHome

APB: Exposure Draft: Adjusting Comparable Sales for Seller Concessions - 10/3/2011

The Appraisal Practices Board (APB) is seeking public comment in response to this exposure draft and based on the comments received, may make revisions to the guidance and issue subsequent exposure drafts. Once the Board believes it has received all relevant comment on this topic, it may vote to adopt the material as official guidance from the APB.

Download Adjusting Comparable Sales for Seller Concessions Exposure Draft Final

The Draft includes comments and detailed examples on:

• Verifying Concessions
• When Does an Appraiser Adjust for Concessions
• Methodology
• Concessions and Non-residential Property (other than 1-4 unit properties)
• Impact and Application of Concessions in the Cost and Income Approach

All interested parties are encouraged to comment in writing to the APB before the deadline of December 2, 2011. Respondents should be assured that each member of the APB will thoroughly read and consider all comments. Comments are also invited at the APB public meeting on December 12, 2011, in Atlanta, Georgia.

Written comments on this exposure draft can be submitted by mail, email and facsimile.

When commenting on various aspects of this exposure draft, it is very helpful to reference the line numbers, fully explain the reasons for concern or support, provide examples or illustrations, and suggest any alternatives or additional issues that the APB should consider.

Mail: Appraisal Practices Board The Appraisal Foundation 1155 15th Street, NW, Suite 1111 Washington, DC 20005

Email: APBcomments@appraisalfoundation.org  

Facsimile: (202) 347-7727

If you have any questions regarding the attached exposure draft, please contact Staci Steward, Practices Administrator at The Appraisal Foundation, via e-mail at staci@appraisalfoundation.org  or by calling (202) 624-3052.

 

Appraiser Independence - Where Do We Go From Here?

GUEST AUTHOR: Larry Benjamin “Benji” Brossette, is an Independent Licensed Real Estate Appraiser Trainee #T1925.  Benji currently attends Strayer University working towards an Economic Degree.  Benji specializes in the valuation of Land, Residential, and Commercial Properties in the Central Louisiana Region.

Buyer Beware! Where is the Value?   (PART 1)

In the years of 2007/2008, the ideologue of, “Appraiser Independence” had become popular for the real estate market’s economic agents and the processes it relies on to function properly. The idea gained respect, due to the perseverance of Real Estate Appraisers carrying out their Independence, during the decade of 2000-2010.

The Home Valuation Code of Conduct (HVCC) was introduced according to prevailing design and initiative:  the advancement of a market in need for an inspired and renewed sense of competition and freedom, but with sensible regulation to assist in reducing adverse affects of pure unattainable greed, to allow economies the ability to evolve and/or progress.

In retrospect, Fannie Mae and Freddie Mac—these secondary financial power houses, were placed into the center of attention with a well deserved, controversial lawsuit—instead, a decade worth of accomplishments were somehow mismanaged and/or changed, thwarting a sincere Independent Real Estate Appraisal Process. Wall Street Firms failed; they backed fraudulent/misleading documents—paying a premium while looking for unattainable returns; however, the most daunting reasoning, are artificially/manufactured (high) values, maximizing an unattainable greed, at once, cycle after cycle, and unfortunately without missing a beat.

The Dodd/Frank Financial Bill continues to have an impact on real estate economies, and its processes. In the Financial Bill’s failure to effectively and faithfully execute Appraiser Independence to its fullest, the Financial Bill inherited the exploited spirit of the HVCC. Now, the spotlight is on Appraisal Management Company’s (AMCs) liability to the real estate market’s overall value.

Before the real estate market went into a recession, then depression, and before the implementation of the exploited HVCC (Appraiser Independence), the general public was no-where near being knowledgeable (well informed or well advised).

I would like to share a summary—a professional description of the standard for which our real estate market typically operates—“Market Value.” Value definitions are pertinent to any Appraisal. Unfortunate events can occur when the real estate market is not operating within its full, socio-economic, and morally ethically, capacity to deliver an interpretation of a credible, but meaningful value. Value, in general definitions, strongly suggests a knowledgeable buyer and seller (well informed or well advised)

“…The definition of "Market Value" in its strictest sense is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably (well informed or well advised) and assuming the price is not affected by undue stimulus.”

A market cannot experience freedom and sincere growth, the Real Estate Appraiser cannot experience true Independence, and the buyer/seller cannot be knowledgeable when value is pre-determined, biased, dictated, pressured in any way, enslaved, blackmailed, or manipulated and exploited, recreated and replaced.

Between the years of 1998 and 2000, the prevailing issues were acknowledged. Changes were accepted as a necessity to avert a foreseen crisis, by a small group of Real Estate Appraisers who were historically and spontaneously joined by social technology (www.appraisersforum.com). Economically speaking, the logic is simple: tinkering with or outright playing with real estate value is pure economic suicide. Many Independent Real Estate Appraisers, over the prior decade, were hard at work eliminating commissioned driven, and profit motivated professionals; from selecting, retaining, and managing/controlling the Real Estate Appraiser (thus, estimates of value) during the run-up to the economic crisis; subject to the duress from the content outlined in the opening sentence of this paragraph.

If we are to comprehend and deal with what is needed today for a healthy real estate market, we must all understand the complications of its history (most importantly, recent history). No profession that actively participates in the real estate market banded together to protect the general public, the value of the market, investor confidence, and the containment of the unattainable we call greed—making a difference by being open and honest—only the Real Estate Appraisal Profession portrayed that courage.

Ladies and gentlemen, it all starts with real estate value—this is about power and greed—beyond the majority’s wildest imagination.  As a group, between 1998 and 2000—Real Estate Appraisers stood up and said, “ENOUGH!” A petition was lobbied for by a young man aspiring to be an Independent Real Estate Appraiser, and then argued among a small group of Real Estate Appraisers in a newly formed virtual forum. Eventually soon after, a brave Independent Real Estate Appraiser ended up writing a petition, and Real Estate Appraisers had begun to realize their Independence. I am privileged to have played an important role in Appraiser Independence. Along with the excerpts quoted below, a website which hosts this very petition (over 10,000 signatures) is provided. The petition was publicly introduced in the year 2000, while staying open for nearly a decade: http://appraiserspetition.com/

 “…Lenders (meaning any and all of the following: banks, savings and loans, mortgage brokers, credit unions and loan officers in general; not to mention real estate agents) have individuals within their ranks, who, as a normal course of business, apply pressure on appraisers to hit or exceed a predetermined value.”

“…This pressure comes in many forms and includes the following:

• the withholding of business if we refuse to inflate values,
• the withholding of business if we refuse to guarantee a predetermined value,
• the withholding of business if we refuse to ignore deficiencies in the property,
• refusing to pay for an appraisal that does not give them what they want,
• black listing honest appraisers in order to use "rubber stamp" appraisers, etc. “

Disclosure: Appraisal Organizations and Government were not involved. Individual Appraisers had everything to do with realizing Appraiser Independence, banding together for the social interest, putting it on the table, and advancing it. (I know—I was there—I am here today!).

Buyers and sellers are still too important to be influenced in a negative way. Main Street must be confident and knowledgeable, and investors must know for sure they can rely on the interpretation and true spirit of value. Instead, Main Street, and investors must feel assured the opinion of values are competently executed, ethically estimated, reconciled by the appropriate professional, and delivered in confidence—without pressure, predetermination, and without recreating and replacing, we largely experience today.

Automatic Valuation Models (AVMs) and Broker Price Opinions (BPOs) are physical reflections of “recreating and replacing” by the lending industry/data mining companies such as Zillow (AVMs), and real estate brokers/agents (BPOs). Unattainable greed forces unfound negligence upon the economy, as a whole—mocking capitalism, and depriving everyone of a meaningful study of value; a perception which conveniently allows the dictation of future market endeavors (supply/demand/value). Independent Real Estate Appraisers, today, can help protect the value of the real estate market by assisting the buyer and seller, being well informed or well advised.

Protecting and representing the real estate market’s value and relying on a knowledgeable buyer and seller, is an “Appraiser Independence” issue—today, and tomorrow. Without it, Appraiser Independence will be destined to fall. The unexploited HVCC (the original) did not go far enough in protecting the real estate market’s value, by creating a knowledgeable market and releasing the pressure from the profit driven who look to data mining for recreating and replacing, and of course to push loans through in the lending industry.

Appraisal Management Companies (AMCs) are the hubs/arms for carrying out real estate value “control” and “exploitation” within the real estate market, as of today (the profit driven—pressuring values, and data mining). An unknowledgeable market (buyer and seller), is one of several problems we all face, together, as a market; however, it is the core problem in defining value, as it is missing today.

Independent Real Estate Appraisers understand what unknowledgeable buyers and sellers do not——it is certain, and the most troubling: an unknowledgeable buyer and seller. The Real Estate Appraisal profession has an opportunity to do something great, in the midst of realizing and capturing Appraiser Independence, whatever that may come to be.

GUEST AUTHOR: Larry Benjamin “Benji” Brossette, An Independent Licensed Real Estate Appraiser Trainee #T1925. I currently attend Strayer University, in order ascertain, or earn, an Economic Degree. I am on path to earn a General Certification in Real Estate Appraisal.

 

Housing Wire: AMC Appraiser Loft Closes its Doors

Insiders told HousingWire's Jacob Gaffney yesterday that AppraiserLoft is closed for good.

"On Friday employees were notified the company was insolvent," according to a source inside the AMC. "They were told they would be paid later. [CEO] Aman [Makkar] told them at lunch they will get paid next week, and they won't," the source alleged.

Rumblings about AppraiserLoft's financial woes have swirled for months. A number of entities have said they are owed money from AppraiserLoft and haven't been paid, including HousingWire. Others noted slow payments for some time.

When questioned about payment timelines Makkar said the government-sponsored enterprises were taking 90 to 120 days to compensate his AMC and this impacts his payment timelines.

Source: HousingWire