Appraisal Scoop

UMDP/UAD: Road to Ruin? (Working RE Magazine)

The Editor of Working RE Magazine, David Brauner, notes in the attached article: "In this opinion piece, appraiser Andy Anderson expresses what many of his colleagues are thinking about the upcoming UMDP requirements."

Excerpt:

"Local appraisers should be able to continue to complete a report in English with terminology that the local borrower and lender can understand. Especially since the Dodd/Frank Reform Bill requires each borrower to receive a copy prior to the close of escrow.

No appraisal client other than the GSEs and lenders want to see “codes” in the reports.

Without a substantial addenda with an explanation, the new codes will be misleading to any reader of the report not familiar with the UAD requirements. It is a disappointment that the VA and FHA government agencies have agreed to the GSE mandates. The new requirements appear to have the potential of creating a misleading report to anyone not trained in the new codes and requirements.

It is much more important to have qualified and experienced underwriters and reviewers reading the report for clarity than to streamline the reports and loan files with “fast and easy.” That is what got us into the financial mess we are in. Some uniform standards may be an asset but the appraiser who puts misleading or inaccurate quality, condition, etc. statements in a report will also put misleading and inaccurate codes in the report. A lie is a lie and changing to the mandated format will not change the character of the person who completes the report."

About the Author Mr. Anderson is a taxpaying American citizen, a Vietnam-era Marine Corps veteran and independent fee appraiser. He is an appraisal education author and instructor and the founder of Integrity~ An Association for Real Estate Professionals, which is a grassroots effort created to promote the public trust through the use of honest, ethical and reliable real estate professionals and sound business practices.

Source: Working RE Magazine

 

ASA/ NAIFA/ ASFRMA Letter to House Financial Services Subcommittee Urges Federal Agencies’ Reliance on Credentialed Appraisers

ASA/ NAIFA/ ASFRMA Letter to House Financial Services Subcommittee Urges Federal Agencies’ Reliance on Credentialed Appraisers, Criticizes Loophole In Federal Reserve Proposed Rule

On August 4th, ASA, joined by the National Association of Independent Fee Appraisers (NAIFA) and the American Society of Farm Managers and Rural Appraisers (ASFMRA) sent a letter to the House Subcommittee for Insurance, Housing, and Community Opportunity, expressing their views regarding the Subcommittee’s July 13 “Mortgage Origination” hearing.
 
In the letter, ASA, NAIFA and ASFMRA asserted that professional appraisals provide a “critical safety and soundness and consumer protection”, and pointed to a recent Government Accountability Office (GAO) report concerning real estate appraisals in support of the role played by appraisers in the underwriting process. The GAO found that real estate appraisals “play a critical role in mortgage underwriting by providing evidence that the market value of a property is sufficient to help mitigate losses if the borrower is unable to repay the loan”.

The letter also addressed the Federal Reserve Board’s implementation of the Appraisal Independence Provisions of Dodd-Frank, describing its Interim Rule as being flatly incompatible with the statutory requirement of Dodd-Frank that appraisers be paid customary and reasonable fees that exclude consideration of fees paid by AMCs to appraisers.

The letter also voiced serious disagreement with the criticisms leveled by the Appraisal Institute (AI) against The Appraisal Foundation (TAF) and the Federal Appraisal Subcommittee (ASC). The letter states that ASA, NAIFA, and ASFMRA firmly back TAF, arguing that its work is a fundamental asset to the continued growth of appraiser professionalism and the reception by federal and state agencies of Uniform Standards of Professional Appraisal Practice (USPAP). The letter goes on to voice support for the newly created Appraisal Practices Board (APB) of TAF, stating that the need for a uniform set of best practices for the professional real estate appraisers (particularly the roughly 70,000 unaffiliated appraisers) is critical.

The letter did, however, also concur with AI’s assessment of the ongoing implementation of the Dodd-Frank Act, specifically as it relates to the issues of customary and reasonable fees, separate fee disclosures on the HUD-1 form, and the use by Fannie Mae and Freddie Mac of the Uniform Appraisal Dataset (UAD).
 
About ASA
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. 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, D.C. area. To find an accredited appraiser near you, visit http://www.appraisers.org or call (800) 272-8258.

Christy Jones
American Society of Appraisers
(703) 733-2124

Source:  Reston, VA (PRWEB) August 15, 2011

APPRAISALS vs. BPOs: Can we please put an end to this insanity? (Active Rain)

GUEST AUTHOR: Patty Da Silva, CDPE - Davie REALTOR® - Certified Distressed Property Expert BROKER of Green Realty Properties® - 12555 Orange Drive, Davie, FL

Today I want to address a question that I have long wondered about and have no good answer for, and that is why are BPOs ordered by lenders for short sales instead of appraisals?

Let’s think about this, and look at a few examples. When an investor, such as Fannie Mae, "invests" in a mortgage loan, they won’t accept a loan without an appraisal. Similarly, before a lender approves a loan, they don’t order a BPO, they order an appraisal. The most puzzling and irrational example is when the buyer and seller have the same lender...which is common with the larger lenders. I have seen the same lender, in the same transaction, order a BPO on the seller’s side, and then turn around and order an appraisal on the buyer’s side. Of course the BPO is always inflated, and somehow the same property has suddenly lost $50,000 in value in the weeks it took for that lender to approve the short sale. Why do BPOs even exist as the deciding factor on a short sale transaction?? Why can’t appraisals be ordered by all sides? Some can argue because they save time and money, but do they really?

For argument’s sake let’s say it costs $100 to hire a BPO agent to do a BPO, and roughly $400 to hire an appraiser to do a proper appraisal. It costs $100 to hire someone who isn’t necessarily licensed (and definitely not regulated), to spend less than 5 minutes in a house, and to not take into account all the factors an appraiser would. I have heard BPO agents say that they do 500-600 BPOs a month. That’s impossible for ONE person to do! We have all heard that some of these BPO agents hire (unlicensed) people to drive around and take pictures of the outside of the property, and I have actually seen BPO agents recruiting these drive-by photographers on Craigslist.

Now let’s juxtapose the BPO agent against the appraiser. An appraiser is a qualified professional who goes through serious training, and then is supervised for two years before being able to work on their own. Plus the appraiser’s sole objective is to appraise the property; they don’t do it in hopes of getting REO listings from the banks. Appraisers are qualified to appraise, take the time to take all factors into consideration, and generally speaking, give fair market values. They are regulated and are subject to consequences if they don’t do their job right.

Don’t get me wrong, I know that there are bad appraisers and great BPO agents, but that’s not the norm. We are in a serious mess and its being exasperated for what? Lenders think that they are saving time and $300 per property, but in reality, thousands of hours are wasted disputing BPO values and getting nowhere. There is rarely a file that I don’t have to dispute the value on, and sometimes it takes months to resolve the issue with the lender…months that the property sits on the lender’s books, the sellers and buyers are left in limbo, and the values continue to drop.

Can’t we put an end to this insanity? Please! Lenders/Investors are losing thousands and thousands of dollars on short sales and foreclosures, yet they are worried over a $400 appraisal? Am I the only one who is confused about this lack of common sense?

Lender and Investors: PLEASE…JUST ORDER AN APPRAISAL AND HELP US HELP YOU!

Source Blog: Green Realty Properties® Blog

GUEST AUTHOR: Patty Da Silva, CDPE - Davie REALTOR® - Certified Distressed Property Expert BROKER of Green Realty Properties® - 954-667-7253 Address: 12555 Orange Drive, Davie, FL, 33330 Office Phone: 954 667-SALE

NAR Seeks to Bar AMC Indemnification Clauses

NAR President Ron Phipps sent the attached letter to heads of government agencies today.

Here’s an excerpt :

Appraisers provide an independent and impartial analysis of the market, and a credible opinion of the value of real property. This analysis is a critical component of the mortgage transaction and, in recent months, has become the subject of unnecessary pressure. The mounting use of indemnification clauses by AMCs may be interfering with the appraiser’s independence and objectivity. In many cases, appraisers are asked to sign contracts that include language to indemnify and hold harmless the AMC against any suit, threat, or claim on any work product or service provided as part of the contract agreement. In some instances, the appraiser is even required to indemnify the lender and the AMC for amounts equal to their costs in repurchasing a mortgage loan, regardless of any proof of culpability on the part of the appraiser. 

Download Letter to Regulators on Appraiser Indemnification FINAL 08112011

If you are not comfortable downloading the attached pdf, there is an online version at this link: http://appraiseractive.blogspot.com/2011/08/nar-encourages-bar-of-amc.html

Thanks to Frank Gregoire for providing the link -

Francois (Frank) K. Gregoire IFA RAA
Gregoire & Gregoire, Inc.
Realtor - Appraiser
Office 727-344-3393
Mobile 727-420-3804
Fax 727-344-3395
francois@tampabay.rr.com
http://fl.living.net/Realtor/gregoire
http://appraiseractive.blogspot.com

Humor/Video: The Forecloser - The Daily Show

John Oliver meets with a Florida couple and rookie lawyer who foreclosed on Bank of America and turns their incredible story into a movie.

The Daily Show - The Forecloser
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Sample URAR With Populated UAD Fields - Courtesy T.J. McCarthy

Good Morning Appraisers,

Here is a little something T.J. McCarthy put together to help his appraisal pals better adjust to the upcoming UAD format change that is about to hit the residential industry.

"This is a sample URAR with all the UAD fields populated. You will see many blank fields in this sample because not all fields are UAD specific. I have inserted instructions to further explain the rational behind some of the UAD required fields. The instructions have all been highlighted in yellow and placed in comment sections throughout the report."UAD URAR Helper

 

Click on the following link to access the PDF... Download TJ McCarthy's UAD HELPER

 

Special thanks to my friends Rich Heyn and Dawn Molitor-Gennrich for allowing me to borrow their expanded scope of work statement.

All appraisals performed for Fannie/Freddie/FHA and VA with an effective date on or after September 1, 2011 will need to be completed in UAD format.

Good luck everyone, Tj

TJ McCARTHY & ASSOCIATES
Real Estate Appraisers & Consultants
7903 West 159th Street, Suite B
Tinley Park, Illinois 60477

Email: appraisal@tjmccarthy.com
Phone: (708) 614.7200
Fax: (708) 614.7228

FDIC Sues LPS and CoreLogic Over Appraisal Fraud

From The Subprime Shakeout Blog:

In another sign that the Federal Government is turning its focus towards prosecuting the securitization players who may have contributed to the Mortgage Crisis, the FDIC filed separate lawsuits against LSI Appraisal (available here) and CoreLogic (available here) earlier this month. 

In the suits, both filed in the Central District of California, the FDIC, as Receiver for Washington Mutual Bank (“WAMU”), accuses vendors with whom WAMU contracted to provide appraisal services with gross negligence, breach of reps and warranties, and other breaches of contract for providing defective and/or inflated appraisals. 

The FDIC seeks at least $154 million from LSI (and its parent companies, including Lender Processing Services and Fidelity, based on alter ego liability) and at least $129 million from CoreLogic (and its parent companies, including First American Financial, based on alter ego liability).

Click Here to continue reading the full article from The Subprime Shakeout blog.

 And then there are those pesky Indemnification Clauses!  YES!  Apparently even LSI and CoreLogic have to sign them.

 

Video Humor: How Bad BPO's Kill Short Sales

One Cause of the Uneven Recovery: The Home-Buyer Credit - The Atlantic

Housing stimulus programs are history. Home buyer tax credits are water under the bridge. Still, they're part of explanation for why we're where we are, economically speaking, trying to extract ourselves from a funk the likes of which only those who lived through the Great Depression can remember.

Here, the Atlantic's Daniel Indiviglio tries to shed light on the distortive effect of the home buyer tax credit on reisdential investment, and therefore, the economy, by regraphing the quarters and pulling out the stimulus' impact.

 

Indiviglio's chart takes actual

" GDP growth (red) and then imagined what GDP would have looked like without the credit (blue). In my estimate, residential investment dropped to $321 billion in the third quarter of 2009 -- where it fell to when the home buyer credit was removed last summer and has hovered around ever since.

Here, you see that the third quarter of 2009's pop looks a little weaker. But growth looks better in most of the quarters that followed -- especially the third quarter of 2010, during which time the big fall in residential investment due to the credit's expiration cut GDP.

Better home sales would have had some effect on other aspects of GDP as well -- but just like you're seeing here, removing those effects in later quarters would have created an adverse effect."

Like other important economic events, we'll need more history to run its course before we'll be able to say it's positive or negative.

Source: The Atlantic