Appraisal Scoop

Dave Towne Offers Appraisers. . . "Some thoughts to pass along"

GUEST AUTHOR: Dave Towne, Certified Real Estate Appraiser - Towne Appraisals.  16422 Britt Rd., Mount Vernon, WA  Phone: 360.708.1196   eMail: [email protected] Web: http://www.TowneAppraisals.com

 

Some thoughts to pass along:

Attorneys –

Attorneys will attempt to get you to do work for free.  They can be subtle about the way they ask for info.  I learned via the school of hard knocks this year to be extremely cautious in the future.  I strongly recommend whenever an attorney contacts you about an appraisal assignment [that is not a legitimate
engagement] or request for info (which normally requires research time), that you start with a retainer (payment in advance) prior to doing any work.  They charge their clients for similar work – you should also.

 AMC assignments –

When I was graciously accepted as a trainee by my mentor, we were paid “X” for each assignment, and
more if the property was complex.  Once AMC’s began to proliferate, we were paid ‘less than X’ for doing the same work … the AMC’s were stealing part of our customary fee to pay their overhead.

 But since the Dodd-Frank law was passed, most of the better AMC’s now pay customary fees to
appraisers.  My income per assignments is now back to “X” and in some cases ‘more than X’.  But I ABSOLUTELY REFUSE to accept assignments for less than X.’  Those clients who don’t want to pay “X” can find someone else.  That means ‘you’ who are afraid to charge more, but could earn more
if you would only ask for a higher fee.

 I know appraisers in my area who are getting ‘better than X’ … in other words, paid more now than they were just a few years ago.  This is because they stand firm on their fee.

The point of this is to evaluate your business practice.  Then go to the foundry to get some brass.  You can and should demand to be paid a fair fee today that is at least equal to or above what you were paid a few years ago before the stealing began.

 Review assignments –

Many desk and field review assignments are being placed these days.  Foreclosures on loans made in
2006+ have caused the GSE’s, FDIC and banks to re-evaluate the appraisals that were initially used to justify the mortgage loan.

Review assignments are not difficult, but they are more time consuming.  Thus, your fee for doing a
review should be AT LEAST what your “X” figure is.

Doing 1.5 – 2x+ the work for .5 to .75 (or less) of a customary fee, and to take on the additional
liability, is ridiculous.

Too many appraisers have agreed in the past to severely low-ball the review fee, and that has rippled
through the industry.  Frankly, if you are unwilling to charge – at a minimum - what your customary “X” fee is, then let someone else do the assignment.  Only when all appraisers wake up to this will be when the review fees will move higher at the time of the initial request.

And from first-hand experience the FDIC and GSE reviews have increased reporting requirements.  So be sure to carefully read the engagement instructions before agreeing to a fee in advance.  These assignments often require extra data documents to be included within the report.

Associate with other appraisers –

Resolve this coming year – as early as possible – to get outa your bathrobe, bunny slippers and basement and actually interact with other appraisers.  They really are nice people!  Join your state appraiser association, join a national association, and try to meet with your local appraisers casually over breakfast, lunch or dinner during the year.  (I can help you learn ‘how to do that if necessary.’) 
Don’t discuss who the individual clients are, but do discuss challenging assignments and the type of work your peers do.  Your peers are your source for referrals – both in and out.  So don’t be afraid! 
Associating with your peers is really a positive experience.  Really!

 

Hope your 2013 is as productive in terms of income (or more so!) than ’12 has been for most
of us.

 

GUEST AUTHOR: Dave Towne, Certified Real Estate Appraiser - Towne Appraisals.  16422 Britt Rd., Mount Vernon, WA  Phone: 360.708.1196   eMail: [email protected] Web: http://www.TowneAppraisals.com

GAO Report: Residential Appraisals - Opportunities to Enhance Oversight of an Evolving Industry

Thanks to Dave Towne of Towne Appraisals for sending this document:

Per the Dodd-Frank law, the General Accounting Office (GAO) was required to produce a report concerning appraisals. It has been released. You can access a copy at this link: http://www.gao.gov/new.items/d11653.pdf  

What GAO Found

Data GAO obtained from the enterprises and five of the largest mortgage lenders indicate that appraisals—which provide an estimate of market value at a point in time—are the most commonly used valuation method for first-lien residential mortgage originations, reflecting their perceived advantages relative to other methods. Other methods, such as broker price opinions and automated valuation models, are quicker and less costly but are viewed as less reliable and therefore generally are not used for most purchase and refinance mortgage originations. Although the enterprises and lenders GAO spoke with do not capture data on the prevalence of approaches used to perform appraisals, the sales comparison approach—in which the value is based on recent sales of similar properties—is required by the enterprises and the Federal Housing Administration and is reportedly used in nearly all appraisals.

Recent policy changes may affect consumer costs for appraisals, while other policy changes have enhanced disclosures to consumers. Consumer costs for appraisals vary by geographic location, appraisal type, and complexity. However, the impact of recent policy changes on these costs is uncertain. Some appraisers are concerned that the fees they receive from AMCs—firms that manage the appraisal process on behalf of lenders—are too low.

A new requirement to pay appraisers a customary and reasonable fee could affect consumer costs and appraisal quality, depending on how new rules are implemented. Other recent policy changes aim to provide lenders with a greater incentive to estimate costs accurately and require lenders to provide consumers with a copy of the valuation report prior to closing.

Conflict-of-interest policies, including HVCC, have changed appraiser selection processes and the appraisal industry more broadly, which has raised concerns among some industry participants about the oversight of AMCs. Recently issued policies that reinforce prior requirements and guidance restrict who can select appraisers and prohibit coercing appraisers. In response to market changes and these requirements, some lenders turned to AMCs to select appraisers.

Greater use of AMCs has raised questions about oversight of these firms and their impact on appraisal quality. Federal regulators and the enterprises said they hold lenders responsible for ensuring that AMCs’ policies and practices meet their requirements for appraiser selection, appraisal review, and reviewer qualifications but that they generally do not directly examine AMCs’ operations. Some industry participants said they are concerned that some AMCs may prioritize low costs and speed over quality and competence.

The Act places the supervision of AMCs with state appraiser licensing boards and requires the federal banking regulators, the Federal Housing Finance Agency, and the Bureau of Consumer Financial Protection to establish minimum standards for states to apply in registering AMCs. A number of states began regulating AMCs in 2009, but the regulatory requirements vary. Setting minimum standards that address key functions AMCs perform on behalf of lenders would enhance oversight of appraisal services and provide greater assurance to lenders, the enterprises, and others of the credibility and quality of the appraisals provided by AMCs.

Conclusions

Because appraisals provide an estimate of market value at a particular point in time, they are affected by changes in the housing and mortgage markets. In recent years, turmoil in these markets has heightened attention on residential property valuations, and appraisals in particular. The prominent role of appraisals in the mortgage market underscores the importance of efforts to better ensure appraisal quality. HVCC, the Act, and federal banking regulator guidance have sought to address some of the factors that can affect appraisal quality, including appraiser independence and compensation. In addition, the enterprises are undertaking an initiative to collect detailed and standardized appraisal data that could provide them with greater insight into appraisal practices for the mortgages they purchase.

Partly in reaction to appraiser independence requirements, lenders have increasingly relied upon AMCs to perform certain functions. Despite the increased use of AMCs, direct federal oversight of AMCs is limited because the focus of regulators is primarily on lenders, and state-level requirements for AMCs are uneven, ranging from no laws to laws with specific standards for registering with the state. Some appraisal industry participants have raised concerns that the management practices of some AMCs may be negatively affecting appraisal quality.

Among the areas of concern are AMCs’ practices for key functions, including selecting appraisers for assignments, reviewing completed appraisal reports, and establishing qualifications for appraisal reviewers.

The federal banking regulators have emphasized the importance of these functions in guidelines that apply to lenders’ appraisal functions. The Act requires the federal banking regulators and other federal agencies to set minimum state standards for registering AMCs, which provides an opportunity for the regulators to address these areas of concern and promote more consistent oversight of these functions, whether performed by lenders or AMCs. Doing so could help to provide greater assurance to lenders, the enterprises, and federal agencies of the quality of the appraisals provided by AMCs.

 Recomendation for Executive Action

To help ensure more consistent and effective oversight of the appraisal industry, we recommend that the heads of FDIC, the Federal Reserve, FHFA, NCUA, OCC, and the Bureau of Consumer Financial Protection— as part of their joint rulemaking required under the Act—consider including the following areas when developing minimum standards for state registration of AMCs: criteria for selecting appraisers for appraisal orders, review of completed appraisals, and qualifications for appraisal reviewers.

   Click HERE for the complete GAO Report

The New Threat to Appraiser Independence

Guest Post: Charles R. (Chuck) Dettling is a Certified Residential Real Property Appraiser licensed in Alabama and Florida. Chuck and his son, Seth, also a Certified Residential Real Property Appraiser, operate a small firm, Dettling & Associates, covering seven counties in Southwest Alabama and the Florida panhandle. Their practice includes single family, small commercial, condo, and land, with a specialization in REO assignments. Email: [email protected]  

As most appraisers and mortgage market participants are aware, the Board of Governors of the Federal Reserve published an Interim Final Rule in the Federal Register on October 28 2010, Volume 75, Number 208, Pages 66554 through 66587, that implements Section 129E of the Truth in Lending Act (TILA) U.S.C. 1601, which was enacted on July 21, 2010 as Section 1472 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Rule is to take full effect on April 1, 2011, and among other things, intends to establish new requirements for appraiser independence, and better consumer protection in all finance transactions that involve their principal residence.

As appraisers, we generally applaud the efforts of Congress and the Federal Reserve to implement rules and procedures that enhance appraiser independence, help to protect the integrity of our profession and increase public trust in the appraisal process. From the appraisers’ point of view, some of the more popular provisions of the Rule include the elimination of the HVCC, and mandated payment of “reasonable and customary compensation” to the appraiser. Other provisions attempt to strengthen already existing ethics rules and regulations. As with many extremely complex federal regulations, there are often unintended consequences. In this appraiser’s view, the mandate that “… parties involved in the transaction report appraiser misconduct to state appraiser licensing authorities” could lead to a new breed of pressure on appraisers, i.e., the threat of a board complaint. Most of us would agree there are unethical and poorly trained appraisers out there competing with the rest of us, and those should be reported when warranted. But, what unintended consequences could result from enactment this provision?

Over the course of the past several years, I have found the relationships between appraisers and real estate brokers, agents and sales staff to be increasingly strained. One need only recall the visceral reaction by the real estate sales profession after the implementation of HVCC. The national news media was filled with so-called ‘horror stories” of appraisers “low-balling” appraisals in order to avoid liability in what was (and is) clearly a tragically devastated real estate market. Agents complained bitterly that they could not get their deals done because those naughty appraisers were intentionally valuing their pending sales too low. One of the more obnoxious examples was a report on Fox Business News wherein David Asman interviewed Dolly Lentz, the Real Estate Vice Chairman of Prudential Douglas Elliman. Asman asked Lenz what needed to be done to “fix the problem” and incredibly she replied, “…I think for one, they should have to provide comparable sales.” Earth to Dolly!!

Section 226.42 42(g) Mandatory Reporting “TILA Section 129E(e) requires certain persons to report an appraiser to the applicable state appraiser certifying and licensing agency if the person has a reasonable basis to believe the appraiser is failing to comply with USPAP, is violating applicable laws, or is otherwise engaging in unethical or unprofessional conduct. 15 U.S.C. 1639e(e). This provision applies to creditors, mortgage brokers, real estate brokers, appraisal management companies, and any other persons providing a service for a covered transaction.”

By the way, notice how the new law is strangely silent on the responsibilities and professional conduct of real estate sales professionals. Could it be that the massive National Association of Realtors lobby was able to convince congress that everything was just hunky-dory on their end. Just fix the appraisers and everything will be just fine.

So, now we have several million people described in the above code section who are required by law to report appraisers when they “have a reasonable basis to believe that an appraiser has not complied with USPAP or ethical or professional requirements…” Unfortunately, the Fed forgot to define “reasonable.” Question. With (hopefully) the exception of licensed or certified appraisers, who in this group knows squat about USPAP, really? When is the last time you heard Jane Q. Public espouse the many virtues and complexities of USPAP? I had a dream the other night. I was talking to a homeowner about the appraisal process and that rascal looked over his bifocals, leaned toward me, smiled (exposing all six of his teeth), and said: “So, doesn’t the Scope of Work Rule in USPAP require you to include the research and analyses that are necessary to develop credible assignment results?” 

A couple of years ago I had a property owner file a complaint against me. The complaint letter stated rather adamantly that I had refused to consider “comparable sales” that she had provided. Those “comparables” were in another state and were so superior that it was ridiculous. I expected the case to be dismissed immediately. But according to the Board they are required by the Appraisal Standards Board to conduct a full investigation into every aspect of the appraisal assignment. Six months later and with ten years of my life eliminated, I was completely exonerated, with not even a private warning.

Armed with this new “weapon” it is easy to imagine a huge surge in complaints by irate real estate agents, unhappy property owners, and others to the state boards. What is going to happen to E&O insurance rates when over-zealous state boards launch World War III against the appraisers to protect the public (oh, yes, and raise some much-needed revenue)? Will appraisers quickly discover that simply “tweaking” the numbers to accommodate real estate sales contracts or consumers’ wishes will minimize or eliminate the risk of complaints? Will too many appraisers end up with frivolous complaints that result in fines and reprimands, tainting the valuable reputations of our colleagues, and driving the best of our lot from this profession? In short, will this codified mandate to report appraisers become the new threat to appraiser independence?

About The Author: Charles R. (Chuck) Dettling is a Certified Residential Real Property Appraiser licensed in Alabama and Florida. Chuck and his son, Seth, also a Certified Residential Real Property Appraiser, operate a small firm, Dettling & Associates, covering seven counties in Southwest Alabama and the Florida panhandle. Their practice includes single family, small commercial, condo, and land, with a specialization in REO assignments. Email: [email protected]  

Using Analytical Technology Upfront, Before The Appraisal Has Been Completed - via Mortgage Technology

 “In the appraisal space, technology definitely is the key to ensuring better quality control—but we need to remember that technology's effectiveness is determined by how it's used,” added Jeff Bradford, CEO of Bradford Technologies (creator of AppraisalWorld). “Currently, review and analytic technology is being applied to ensure the quality of appraisals. 

"However, the problem with this practice is that the technology is applied after the appraisal is produced."

“The way we can ensure better quality control would be to add analytical technology upfront, before the appraisal has been completed. That way, the appraiser can produce statistically supported appraisals with an inherent higher quality than traditional appraisals. Plus, because the data is transmitted via XML, the statistics and conclusion can be validated on the back end. It’s a win for the entire appraisal industry.”

 Read the complete article via www.mortgage-technology.com

Best Practices: Appraisals - Freddie Mac Single-Family Guide Bulletin 2009-18 Highlights Requirements and Best Practices for Sound Mortgage Underwriting

Although Freddie Mac has seen improvements in credit quality over the last few months, we are still seeing a number of deficiencies in the underwriting process. To address this concern, we are issuing Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-18 to help you enhance your underwriting processes and controls, and mitigate the risk of defaults and repurchases.

With this Guide Bulletin, we are announcing changes to our underwriting requirements, providing additional guidance and emphasizing existing requirements for underwriting a borrower and appraisals, and sharing underwriting best practices that will help strengthen the quality of the mortgages you deliver to Freddie Mac.

Today's Guide Bulletin is aligned with our efforts to work with you to rebuild a strong mortgage finance system. By promoting responsible lending standards that withstand market fluctuations, we can work to ensure that you and your borrowers are successful throughout the entire life of a mortgage.

The revised underwriting requirements announced in today's Guide Bulletin are effective for all mortgages with applications dated on or after October 1, 2009, and settlement dates on or after January 1, 2010. While the new requirements are not effective until October, we strongly recommend that you begin underwriting mortgages with these new requirements to help strengthen your origination processes and enhance the quality of the mortgages you deliver to Freddie Mac.

We encourage you to thoroughly review the Bulletin to learn more about the requirement changes and best practices.

Underwriting appraisals. We recognize the challenges that current market conditions pose in connection with determining accurate property values. To help you address these challenges, we strongly recommend that you become familiar with our appraisal requirements detailed in Guide Chapter 44 and the best practices outlined in today's Bulletin.

Our reminders include information about selecting qualified appraisers, maintaining qualified staff to underwrite appraisals, and ordering appraisal reviews. We recommend the use of Home Value Explorer®, Home Value Calibrator® or other validated and tested automated valuation models (AVMs), as well as other collateral valuation tools, to assess the quality and accuracy of appraisals.

 

 

Unfair State Board Complaints by a National Lender

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

 

We've observed a new pattern by a certain national lender. "Risk Management" at this lender has been submitting numerous complaints to state boards based only on single review appraisals which merely indicate "potential violations" of USPAP. I think the lender wants to show that it's "getting tough" on appraisers.

In general, I don't think the tactic of filing numerous board complaints based on "potential violations" of USPAP indicated by a single review is the right way for this or any lender to show good appraisal management practices. For one thing, the practice may backfire on the lender: appraisers subjected to the tactic may claim that it is being used to intimidate appraisers -- just as the blacklisting practices of other lenders have fueled lawsuits against those lenders by both appraisers and borrowers.

I think the better practice for lenders to deal with alleged appraisal performance problems is for a knowledgeable in-house appraiser to obtain and fairly consider the appraiser's view without any threatened action; if there are real issues, then the in-house appraiser should counsel the appraiser and give the appraiser specific usable advice as to how performance should be improved. Only where fraud or genuine incompetence is apparent should the lender file a state complaint.

"Sending anonymous, vague letters threatening appraisers with blacklisting and using form letters to file numerous board complaints about "potential violations" are not the answer."

The most troubling aspect of this particular lender's practice, however, is reflected in the lender's statement in the form letter that: "We are unable to provide any additional information for your investigation."

That's false. In several cases of which I am aware, the lender possessed written explanations from the accused appraisers which fairly defended the subject appraisal reports against dubious review appraisals. But the lender withheld this information from the state boards.

This is an unfair tactic, especially in those states that don't inform appraisers of the nature of the complaint against them and keep the identity of the complaining party anonymous. A lender like this shouldn't file a complaint, while withholding relevant information from the state and claiming "we are unable to provide further information."

Indeed, I've seen an instance where a related lender filed a board complaint in the same manner even after being informed by the accused appraiser that the subject appraisal was a forgery.

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

URARS Part 4: Three Basic Rules - Patience Persistence and Compromise

Getting back to the original story, Dorothy, the Tin Man, Scarecrow and Lion arrived at OZ with great expectations. After all, the Wizard was known for his powers, however they quickly discovered that he wasn’t about to grant their wishes without some showing of worthiness on their part. He gave them a test to measure their patience; their persistence and in the end, their willingness to compromise.

The same holds true for us. To be successful, we will need patience with others (and trust on both sides), we will need to be persistent (continue to get appraisers involved) and we will need to recognize that in the end, compromise will be necessary to develop a version of the URARS that will be acceptable to a widespread group of professionals. 

The Basic Setup

The original intent of the URARS was to compliment the URAR – Uniform Residential Appraisal Report by specifically addressing reporting requirements related to residential mortgage transactions as opposed to a more comprehensive addendum that would cover a wide range of issues related to residential appraising in general.

To get us started and as a general direction to take, the focus here will be on Fannie Mae, Freddie Mac, HUD and VA appraisal guidelines along with USPAP, to develop both the URARS addendum and to create the URARS.org website.

• The URARS addendum can serve as a general outline of what the appraiser did and did not do (clarifying the scope of work), cite general definitions and reference material used in development of the report and direct the reader to the URARS.org website for more specific and definitive references (along with examples, publications, etc.), to provide the users of appraisal reports with "the actions of our peers" and "generally accepted appraisal practices" that are "verifiable and measurable"

Click here to continue reading . . .

The "Right Start" - Step 4 - Reviews

AUTHOR:  Patrick Egger is a Certified General Appraiser located in Las Vegas, NV. He teaches continuing education classes on the housing market, appraisal issues for real estate agents and appraisers. Click on Outside The Boxes for a collection of Patrick's articles on Appraisal Scoop!

Most appraisals are for home loans that involve some form of Federal underwriting (purchase or sponsorship by Fannie, Freddie, HUD, VA, regulated lenders, etc.) and therefore, the taxpayers underwrite the risks. As such, it would only seem logical that taxpayers should get something in return.

The argument is the GSEs and others provide the taxpayers with “loan availability” and that is true, however when those same taxpayers continuously have to foot the bill for bailouts, I am not sure that this is such a good deal. In this morning’s news, “Fannie & Freddie bailout expected to be $100-Billion”. I do not think “America” had that in mind.

No one expected housing to lose money, including Congress, when the GSEs were authorized. That was then and this is now, so we need to look at this more as a taxpayer’s investment. We want “return on” and “return of” of our money, so what else should we be getting if not our money back?

Since County Assessors are “government sponsored” as well, why not give them “some help” in the form of a copy of each appraisal completed? I have heard the arguments that appraising for assessment purposes is “way different than for loan purposes”, but we share basic value principles and techniques. Essentially, the elements of valuation are the same, the applications slightly different. Even if we stock county assessor offices with “reviewers”, it would be a step in the right direction.

Click here to continue reading . . .

Adventures in Reviewing New Construction Appraisals

AUTHOR: Anthony Blackburn is a Certified Residential Appraiser in Martinez, CA and one of the co-owners of Apple Appraisal, Inc. -  811A Ferry Street, Martinez, CA 94553 - Apple Appraisal, Inc. does Appraisals and Reviews Throughout California.

So many times, when I am reviewing an appraisal of proposed new residential construction, I find that appraisers don’t put the necessary information in the appraisal for me to make a good judgement about the quality of their work.

There are several key pieces of information in an appraisal of a new home in a tract, that must be included in the report.

1.       Base price of the subject and comparables.

Being able to compare the base price of the subject and sales of the same model, is the best way to track prices over time, discounts and incentives notwithstanding. For example, with all else being equal, if the subject’s base price is $200,000 and the same model, with a different contract date has a base price of $190,000, then the difference in base price of -$10,000 is a time adjustment.

2.       Lot Premiums.

Because buyers in new subdivisions pay for difference between properties on a dollar for dollar basis, the lot premiums paid for things like views, large lots, cul-de-sac locations, etc., become the site size or location adjustments. If your subject has a $2,000 lot premium for it’s larger lot, as compared to a comparable in the same tract with no lot premium, then your lot size adjustment to your comparable would be $2,000. Remember, that $2,000 is exactly what the buyer paid for that larger lot. By definition, the adjustment is $2,000. What could be easier?

3.       Upgrades.

Here again, the adjustments, or differences between the subject and comparables in the same tract are on a dollar for dollar basis. I usually make this adjustment at the bottom of the grid, where I can put my own line title of “Upgrades”, but putting it in the “Quality of Construction” field works too, as long as you explain that the adjustment is for upgrades and not the overall quality of the home.

4.       Incentives

This is the most difficult item in a new home appraisal to quantify. IF you can get the builder to fully and accurately disclose all the incentives, sometimes it can take some work to see where they fit in the appraisal. Incentives can be loan related, like rate buy-downs, prepaid payments, closing costs and more. Other incentives can be a little easier to quantify, like free upgrades. Sometimes an incentive is just a discount on the total package. The best way to handle adjusting for these is to find out the total incentive, what it was made up of, like free upgrades or discount points being paid, and split them up into their proper places in the adjustment grid.

5.       Prices of different models in the same tract.

The difference in base price, in the same time period, of one model, vs. another, is generally related to size. If you have model A in a tract that is a 3/2 and 1,200 sf, base price of $200,000 and Model B, which is a 4/2 and 16,00 sf, base price of $215,000, then your total “Size” adjustment is $15,000.

There are other pitfalls to watch out for. Sometimes a builder will have homes in “Standing Inventory” and need to move them. These can be great deals for home buyers, but tricky for an appraiser, as many of the options are pre-decided by the builder and the incentives or discounts can be greater than on other homes.

What does FNMA say about appraising new construction?

Click here to continue reading. . .

Most Common FHA Appraisal Report Compliance Issues

Anthony Blackburn, of Apple Appraisal, Inc., in Martinez, CA responded recently to a WinTOTAL Users Group forum question about common errors with FHA appraisals. The following was his response.  At the bottom of this blog post is a "bookmarked" pdf highlighting the references to his list.

"I'm reviewing a batch of about 25 reverse mortgage appraisals, post funding. Not a single one complies will all of HUD's guidelines!"

Most commonly, the reports that I review fail to:

1. Include patios, porches, garages, breezeways and other offsets on the sketch. Failure to state "covered" or "uncovered" to indicate a roof or no roof (such as over a patio).
2. Have the street scene photo include a portion of the subject site.
3. Enter a legal description of the property.
4. To state that the use of the appraisal is to support FHA's decision to provide mortgage insurance on the real property that is the subject of the appraisal; and intended users include the lender/client and FHA.
5. Clearly define the boundaries - north, south, east and west - of the subject's neighborhood. Providing a description of neighborhood boundaries by physical features such as streets, rail lines, other man-made barriers or well defined natural barriers (i.e. rivers, lakes, etc.) details the make up and understanding regarding neighborhood composition.
6. To adequately and accurately describe current market conditions in the subject's neighborhood.
7. List all dimensions of the site beginning with the frontage. If the shape of the site is irregular, show the boundary dimensions (85' X 150' X 195' X 250')
8. Describe the view from the property (None is not an acceptable response).
9. Include the CORRECT zoning
10. To correctly report the number of COMPARABLE sales in the past 12 months and active listings on page 2.
11. To correctly calculate time adjustments from the contract date of the sale, and report both the contract and closing dates when time adjustments are made.
12. Enter the name of the subdivision or PUD in the location field of the sales comparison approach.
13. Describe the view from the site on the sales comparison approach, i.e. similar homes, commercial area, water view, scenic view, etc. Such terms as "Average" or "Good" are only to be used as adjuncts, i.e. "Residential/Average", "Water view/Good".
14. To enter ONLY the actual age of the subject in the age field of the sales comparison approach.
15. To accurately report the subject's condition as "Fair" when it is indeed "Fair".
16. Research prior sales or transfers of comparable sales
17. To analyze and report the analysis of the subject's prior sales

Download 41502appdHSGH.pdf - This appendix to HUD's 4150.2 has been bookmarked to correspond to the list above.

Thanks to Anthony Blackburn, of Apple Appraisal, Inc., of Martinez, CA for compiling and sharing this list!