Appraisal Scoop

Agencies Release Revisions to Interagency Questions and Answers and Proposed New Questions Regarding Flood Insurance

The federal bank, thrift, credit union, and Farm Credit System regulatory agencies today released revised interagency questions and answers regarding flood insurance and requested public comment on several new ones.

The Interagency Questions and Answers Regarding Flood Insurance (2009) supersedes the 1997 interagency questions and answers document and supplements other guidance or interpretations issued by the agencies and the Federal Emergency Management Agency (FEMA). The Interagency Questions and Answers Regarding Flood Insurance (2009) consists of 77 questions and answers, which were revised based in part on comments received during the public comment period.

The agencies are also proposing for public comment five new questions and answers on determining insurable value in calculating the maximum limit of coverage available for the particular type of property and the timing of force placement of required flood insurance by lenders. After receiving and considering public comment on the five new proposed questions and answers, the agencies intend to incorporate them into the Interagency Questions and Answers Regarding Flood Insurance (2009).

The Federal Deposit Insurance Corporation, Federal Reserve Board, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Farm Credit Administration invite comment on the five proposed questions and answers and, more generally, on other issues and concerns regarding compliance with the federal flood insurance statutes and regulations.

Comments specific to the proposed questions and answers regarding determination of insurable value and force placement of required flood insurance are requested by September 21, 2009. The Federal Register notice is attached with instructions on how to submit comments.

Picher, OK - Superfund Buyout Appraisers "Dogged By Complaints"

The buyout and relocation of families from the Tar Creek Superfund Site in Northeast Oklahoma is the culmination of more than 30 years of struggle for the people of Picher and Cardin. The Picher Mining Field, one of the richest lead and zinc deposits in the world, was the site of intense underground mining nearly 100 years ago. The mining took place during a time when environmental regulations were virtually non-existent.

When the mining companies ceased operations in the 1970s, the region was left with an uncertain legacy of pollution problems that impacted the health of local residents. Children were especially vulnerable to a toxic mix of heavy metals. The lead-poisoning rate among children at one time was as high as 30 percent.

A $100 million effort by the U.S. Environmental Protection Agency to remove lead from residential yards damaged many homes. The region¹s status as a Superfund site further devalued properties. A recent federal study by the U.S. Army Corps of Engineers found that large areas in Picher and Cardin could collapse at any time. That finding triggered the $50 million buyout of more than 700 properties that is now under way.

Picher's Peril: Some claim buyout undervaluing homes by Wally Kennedy of The Joplin Globe  (JOPLIN, Mo.) describes in detail many of the stories the Picher, OK families have with regards to the way their properties have been valued for the trust. 

Though trust members and a state official overseeing the buyout have repeatedly said the acceptance rate on offers is as high as 95 percent and that only a vocal minority is causing trouble, records show the independent appraisers hired by the primary contractor, Cinnabar Services of Tulsa, have been dogged by complaints from the start of the buyout process last year.

Some residents say they are accepting whatever is offered because their properties in Picher and Cardin essentially have no value because of where they live. Any offer to get out is a good offer because it is likely to be the only offer they will get.

“It’s desperation. It’s like having a gun held to your head,” said Missy Beets, who believes her house was undervalued by thousands of dollars even after a review appraiser increased the offer from $70,000 to $75,000.

ARTICLE UPDATE: 2/23/2008 - Nearly 100 people attended an organizational meeting Saturday morning in the community room at the Picher Housing Authority.

The group intends to create a database of written examples of how they felt they were treated unfairly by the appraisers and the trust. Several attending the meeting said the appraisers hired by Cinnabar spent no more than five to 10 minutes at their properties. Others said the appraisers didn’t even go into their homes and instead relied heavily on often outdated descriptions of properties on record with the county appraiser.

New Orleans - Road Home Rethinks Appraisals

Scrambling to head off another broad revolt over Road Home grant calculations, state officials said Wednesday they have overhauled methods used in estimating pre-storm values of homes. The new procedures shift emphasis from computer-generated assessments to traditional appraisals by people.

The moves came as some citizens say they think the Road Home program has low-balled them in estimating pre-storm property value, a figure critical to the ultimate size of grant awards because it sets a ceiling from which deductions for insurance and FEMA real estate grants are made. The problems seem most acute in Orleans Parish, where neighborhoods with checkerboard demographics and home values aren't well-suited to "average" calculations of value used in the automated assessments.

Rather than the automated appraisal methods, officials now will use a combination of pre-storm appraisals obtained from private assessors or government agencies. For appraisal years before the storm, a formula will be used to calculate appreciation in a home's value.

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Casualty Loss Appraising

Casualty Loss appraising is cyclical, not a steady stream of business like loan production work is. Yet, it is a book of business that can be developed and can help even out cash flows when lender work slows down as it is doing now.

Earth, wind, flooding and fire issues can create opportunities. Below are some links that are referential.  Developing contacts that would be the source of business from these types of valuation needs, includes understanding the two main areas or sources of work in this area.

While my office is a general practice, doing all types of appraisals for all types of clients, there are some who specialize in doing appraisals on properties that have been damaged in one way or another. One of the first firms I knew of was Real Estate Damages, www.realestatedamages.com Check out their web site to see the range of things they are involved in. Their work might involve an individual property or an entire town that has been impacted by a sudden even, or negative event.

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