Appraisal Scoop

Zaio Establishes New Terms with Zone Owners for United States Launch

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) 

Arizona Court Rules Appraiser Owes Duty to Buyer/Borrower

In an April 30 decision, the Arizona Court of Appeals has ruled, for the first time in an Arizona published opinion, that an appraiser hired by a lender owes a duty to the buyer/borrower in that transaction. In its decision, the Court focused on the reality that the buyer would likely never hire a separate appraiser. For that and several other reasons, the appraiser owes a legal duty of care to the buyer/borrower.

"Finally, adopting Blagg’s contention that an appraiser retained by a lender owes no duty to the buyer/borrower would mean that a prospective homebuyer who seeks to rely on a prepurchase appraisal must contract separately with an appraiser for that purpose.

In the purchase in this case, as is not uncommon, the buyer was obligated to reimburse the cost of the appraisal ordered by the lender. Even if we were to assume such an arrangement were not the general rule, we see no reason to impose on the parties to a transaction the burden of paying twice for the same information simply so that the buyer may join the lender within the scope of the appraiser’s duty of care.

Public policy and common sense compel the conclusion that when a lender to which a prospective homebuyer has applied for a loan contracts for an appraisal of the home, the appraiser the lender hires owes a duty of due care not only to the lender but also to the homebuyer."

The decision was rendered in a Sage v. Blagg Appraisal Company, in which the buyer/borrower sued the appraiser for overvaluing the home because he used the incorrect square footage, among other things. The trial court had dismissed the action concluding, under two prior Court of Appeals decisions, that an appraiser hired by someone other than the buyer/borrower did not owe any duty to the buyer/borrower. In its unanimous decision, the Court of Appeals disagreed and allowed this case to proceed.

The case opens the door for buyers to sue appraisers even when the appraiser was hired by the lender.

Daphne Reaume of Berk & Moskowitz, P.C. argued the appeal for the buyer/borrower. For a PDF of the court’s decision, visit www.berkmoskowitz.com/documents/CV080331.pdf .

Shareholders File Class Action Suit Against eAppraiserIT / WaMU For "Requesting" Artificially Inflated Appraisals

SANTA ANA, Calif. (CN) - First American Corp. provided 260,000 false and inflated appraisals to Washington Mutual in the past 2 years, inflating its own share price through false and misleading statements, according to a shareholder derivative class action. The class claims First American did this through its subsidiary, eAppriaseIT.

The class claims WaMu was eAppraiseIT's largest customer. Plaintiffs claim that Santa Ana-based

"eAppriaseIT, at Washington Mutual's urging, provided materially false and inflated appraisals for properties where Washington Mutual sought to originate a mortgage. This enabled Washington Mutual to engage in real estate mortgage transactions that would otherwise have been untenable had the property at issue been correctly appraised.

Senior executives at First American were aware of and willing to accommodate the request to falsify appraisals. Washington Mutual's competitive place in the market and profit were driven in large part by the number of mortgages it issued based upon artificially inflated appraisals issued by eAppriaseIT."

The complaint adds: "On Nov. 1, 2007, the New York Attorney General filed a complaint alleging that beginning in Summer 2006, Washington Mutual put pressure on eAppriaseIT to increase the appraised value of homes. ...

Defendants' improper appraisal practices during the relevant period [April 26, 2007 to the present]:

1.  rendered the company's statements about its compliance with ethical and legal guidelines materially false and misleading;

2.  rendered defendants' statements about the adequacy of the company's internal controls materially false and misleading;

3.  caused certain of the company's reported financial information, including revenues associated with home appraisals, to be materially overstated throughout the relevant period;

4.  caused the company's loan loss reserves, provisions for doubtful account and contingent liabilities to be materially understated during the relevant period; and

5.  caused defendants to report financial results that were in violation of GAAP."

 Plaintiffs are represented by lead counsel Glancy, Binkow & Goldberg of Los Angeles.

Source Document - Click here

Article Source:  Courthouse New Service

The 1004MC-71 Industry Update Part 3; What Goes Where and Why?

This is the third in a four-part series dealing with the new 1004MC form (MCF) by David Braun, MAI, SRA.  In Part 1 of this series, David began with a discussion of where appraisers are NOW . . .and gave some direction on where we're headed.  In Part 2, David looks at appraiser's frustration with the 1004MC and in Part 3, he gives us a "What Goes Where and Why" look at the 1004MC.

The 1004MC-71 form (MCF) is primarily a trending analysis. Perhaps the most important trend is property values over time. The MCF investigates this directly and indirectly. It does directly by trending prices (closed, listed, and SP/LP as a percentage) over time. It does this indirectly by trending the “months of housing supply”, “days on market”, and “sales activity”; and by monitoring seller concessions, and “the number of sales that were foreclosed properties”.

This writing is too limited to address each of these issues; however, I do want to discuss a couple of issues to help appraisers avoid reaching incorrect conclusions about the market. The first, addresses the limitations of trending the sales price per property over time.

In Part 2 we discussed that we are trying to trend the value of a specific property type over time. However, often the data collected will not be as tight a property fit as hoped for. In this case, the appraiser must consider that there may be factors other than market conditions (time) that are causing the trend. Trending the sales price per square foot will typically be more accurate as it considers the differences in size for the data. In very slow markets keep in mind that one or two sales that are low or high may not be fully representative of the market. So, the appraiser should consider the entire body of evidence that is available before coming to a conclusion.

The second issue addresses the calculations which the “months housing supply” (MHS) is based on. In the brief discussion above I have tried to point out that a correct opinion on the state of the market’s condition will have to be based on a body of evidence. The logic for this is based the probability that any one indicator by itself could be indicating an incorrect trend. If the analysis is to have any credibility it is especially important to address the data that is meaningful with a high degree diligence.

The appraiser must be able to recognize the data that is meaningful, organize the data into information, and analyze it in such a manner that the data ends up contributing to a credible market conditions analysis. While some data like the days on market are suspect, the MHS is based on quantifiable data and is typically a good indicator of what is going on in the market. This is data that closely monitors the relationship of supply and demand over time.

Click here to continue reading . . .

Update on HVCC's Independent Valuation Protection Institute (IVPI)

We are reminding you that the Home Valuation Code of Conduct (Code) goes into effect today, May 1, 2009, and Freddie Mac will no longer purchase mortgages from Sellers who have not adopted the Code. Additionally, for all mortgages with application dates on or after today you must represent and warrant that all appraisal reports are obtained in a manner consistent with the Code.

If you have any questions regarding the Code, please submit them through our online form and we will respond as quickly as possible.

Update on Independent Valuation Protection Institute

Plans for creating the Independent Valuation Protection Institute (IVPI) are ongoing and we will keep you informed on the timing for its establishment.

The IVPI will offer, among other services, a telephone and e-mail hotline to receive and process complaints from appraisers, individuals and entities on noncompliance with the Code. Until the IVPI assumes this responsibility, we will provide an interim solution for reporting and registering complaints from individuals and entities. We will provide information on this process in an upcoming announcement. 

Until the IVPI is established, the provisions regarding it in the Code are not effective.

Get More Information

• Review the Code.
• Find answers to frequently asked questions on our Web site.
• Visit the Learning Center for courses and educational resources on the Code.

 

 

HUD Releases New 4155.2, Lender’s Guide to the Single Family Mortgage Insurance Process

HUD recently released a new handbook - HUD 4155.2, Lender’s Guide to the Single Family Mortgage Insurance Process.

Click here or the link below to view handbook. Pay particular attention to Chapter 4 - Property Valuation and Appraisals.

The new FHA (Federal Housing Administration) portal contains the online version of the new Information Mapped Handbooks as well as links to corresponding forms and resources on the HUD (Housing and Urban Development) website.

The online 4155.1 and 4155.2 handbooks incorporate and consolidate guidance from Handbooks 4155.1 REV5, 4000.2 REV-3, 4000.4 REV-1, 4165.1 REV-2 and related Mortgagee Letters through ML 08-39. Although these Handbooks are available for informational purposes only at this time, you are encouraged to become familiar with how to use them.

Lots of good info for FHA appraisers.

I recommend you take the time to print out this Chapter or place it on your Internet favorite list.

http://www.fhaoutreach.gov/FHAHandbook/prod/contents.asp?address=4155-2 

Source: http://www.ICAPweb.com