HAS something changed in the last few weeks with FNMA 1004 that I have missed??? Just received a call saying that my SOW is unacceptable: The purpose of the appraisal is to offer an opinion of market value for the subject property as defined herein. The intended use of this appraisal is to assist the lender/client named in the report in evaluating the subject property as collateral for a mortgage lending decision only. The Intended User of this appraisal report is the Lender/Client. No additional Intended Users are defined by the appraiser. The lender/client is the only intended user. The client as defined in the Uniform Standards of Professional Appraisal Practice is the party or parties that engaged the appraiser by contract in this specific assignment and is identified in this report. I have been using this since 12/2005 without a single call to edit. HUNDREDS OF REPORTS WITH THIS TEXT. I TOLD HIM THAT I FEEL BETTER PLACING LENDER NAME / MTG BROKER ON THE 1004 REPORT RATHER THEN EDITING MY TEXT. I THINK THIS IS A SAFER APPROACH?? I ASKED IF HE WAS SELLING TO FANNIE HE SAID "yes" This is what THE LENDER's "LEGAL DEPT" is telling them RESPECTIFULLY SUBMITTED, TRAVIS DOWNEY SAVINGS MEMORANDUM TO: Ken Parsley CC: Denise McCoy, Don Smith, Denise Moeller, Jane Smallwood, Ned Altemus, Lillian Gavin FROM: Herb Cuesta, Chief Appraiser DATE: August 24, 2006 RE: Intended User There is confusion over the intended user identified in appraisal reports submitted to Downey Savings. Downey has received appraisals containing verbiage that limits the use of the appraisal “solely” or “exclusively” to the Lender/Client named on the front page of the Fannie Mae form appraisal and/or the stating the appraisal can not be provided to any other parties without the advance written permission of the appraiser. These are both unacceptable as Downey must be able to use and rely upon the appraisal for a mortgage finance transaction; and provide a copy of the appraisal to the borrower. Additionally, the appraisal must be able to be relied upon by investors in the secondary market. Below are some relevant definitions from the Uniform Standards of Professional Appraisal Practice (USPAP) on this topic: Client: the party or parties who engage an appraiser (by employment or contract) in a specific assignment. Intended User: the client and any other party as identified, by name or type, as users of the appraisal report by the appraiser on the basis of communication with the client at the time of the assignment. It is typical in the lending environment for a broker to originate a loan and broker the loan to an institutional or other type of lender to fund the loan. In this environment it is unrealistic for the appraiser to limit the use of the appraisal exclusively for the used of the identified Lender/Client. Verbiage contained in the appraisal limiting or not allowing Downey or secondary market investors to use the appraisal is unacceptable. Appraisals containing such verbiage will be rejected; requiring the verbiage be removed or a new appraisal without such verbiage to be obtained. The following verbiage from Fannie Mae is unacceptable on appraisals completed for mortgage brokers that will broker the loan to Downey Savings. “The Intended User of this appraisal report is the Lender/Client. The Intended Use is to evaluate the property that is the subject of this appraisal for a mortgage finance transaction, subject to the Scope of Work, purpose of the appraisal, reporting requirements of this appraisal report form, and Definition of Market Value. No additional Intended Users are identified by the appraiser.” Page 2 of 2 The Fannie Mae explanatory comments pertaining to the use of this verbiage state it is applicable “when the appraiser believes the Lender/Client is the only Intended User.” In the case of brokered loan transactions the noted Lender/Client will not be the only Intended User. Outlined below are some solutions regarding the Intended Users of appraisal reports submitted to Downey Savings: · Make no changes or modifications to the Fannie Mae certifications on the printed appraisal forms. This includes adding supplemental limiting conditions in an addendum or elsewhere that effectively change or modify the printed certification. Suggested verbiage: · The Intended Users of this appraisal report are the Lender/Client, mortgagee or its successors and assigns, mortgage insurers, government sponsored enterprises, and other secondary market participants. · The Intended Users of this appraisal report are the Lender/Client and others involved with this mortgage finance transaction. The above are not the only possible versions of acceptable verbiage. However stated, Downey Savings and others involved with the mortgage finance transaction must be able to use the appraisal report. All Downey Approved Brokers should be notified of this requirement and advised to inform the appraiser when the order is placed that Downey Savings and/or some other lender or users will be Intended Users of the appraisal for the mortgage finance transaction. This should minimize the unacceptable verbiage. Please distribute to all relevant personnel.