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Uspap Revision Recommendation

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by Mike Kennedy, Jul 19, 2007.

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  1. Mike Kennedy

    Mike Kennedy Elite Member

    38
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    http://www.hud.gov/offices/hsg/sfh/res/resindus.cfm

    RESPA 15. C[FONT=Verdana, Geneva, Arial, Helvetica, sans-serif]an a flood zone certification company examine a lender's existing loan portfolio for free or at a reduced rate, in exchange for the lender sending the company future business?[/FONT]
    [FONT=Verdana, Geneva, Arial, Helvetica, sans-serif]
    [/FONT][FONT=Verdana, Geneva, Arial, Helvetica, sans-serif]No. Flood zone certification is a covered settlement service (24 CFR 3500.2), therefore RESPA would apply to agreements by companies or persons providing portfolio reviews. Providing free or reduced reviews is a thing of value. [/FONT]
    [FONT=Verdana, Geneva, Arial, Helvetica, sans-serif][/FONT]
    [FONT=Verdana, Geneva, Arial, Helvetica, sans-serif]Providing this service in exchange for referrals of future flood insurance business would violate Section 8(a) of RESPA which provides that "[n]o person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person."[/FONT]
    -----------------------------------------------------------------------
    USPAP SHOULD BE REVISED AND SUBSTITUTE - Appraisal for Flood Cert. and CLEARLY state,without Equivocation (i.e. AO-19), that an Appraisal (verbal or written) IS A THING OF VALUE .........with exactly the same language as above.

    End then "comp check" debate once and for all. THEN ENFORCE THE LAW.
     
  2. Randolph Kinney

    Randolph Kinney Elite Member
    Gold Supporting Member

    32
    Apr 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Great post Mike. Adding that to USPAP would go a long, long way in cutting out the inflated appraisals or hitting numbers.
     
    Last edited: Jul 19, 2007
  3. Lawrence R.

    Lawrence R. Senior Member

    0
    Mar 27, 2007
    Professional Status:
    Certified General Appraiser
    State:
    South Carolina
    Mike,

    That may be the clearest, most concise statement I have ever seen that goes toward settling this debate.

    I would only add that RESPA makes it ilegal for party A to offer and for Party B to accept.

    USPAP only governs party A. However, it would go 99% of the way to correcting the issue.

    Thanks, I feel smarter having read this.
     
  4. leelansford

    leelansford Elite Member

    24
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    Mike, the ASB will consider suggestions such as yours for revisions to the USPAP. You need to be the person to offer your suggestion.

    Lee
     
  5. George Hatch

    George Hatch Elite Member

    48
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    It would probably be easier and more effective to amend the rgulation, since that regulation applies only to lending and not to all appraisal practice. It would be nice if, for once, the cause of the problem were addressed instead of the symptom.
     
  6. Mike Kennedy

    Mike Kennedy Elite Member

    38
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    DONE. THANKS FOR YOUR SUGGESTION.

    E-mail: comments@appraisalfoundation.org
    JULY 19, 2007

    As a State Certified Residential Appraiser in NY State, and an active Member in www.appraisersforum.com, I wish to proffer a valid solution which would unequivocally End the "hot debate" regarding "Comp Checks" across the country. Kindly refer to the RESPAP Regulation below applicable to "A THING OF VALUE" i.e. a flood certification. It is my opinion, that clear, concise, USPAP Revision to the Ethics Rule incorporating similar Language will clarify the often misunderstood, and/or, ignored Language in AO-19 which Requestors, and thousands of Appraisers across the country INTENTIONALLY misinterpret. On behalf of Ethical Appraisers, I request serious consideration of the following recommendation:


    http://www.hud.gov/offices/hsg/sfh/res/resindus.cfm

    RESPA 15. C[FONT=Verdana, Geneva, Arial, Helvetica, sans-serif]an a flood zone certification company examine a lender's existing loan portfolio for free or at a reduced rate, in exchange for the lender sending the company future business?[/FONT]

    [FONT=Verdana, Geneva, Arial, Helvetica, sans-serif]No. Flood zone certification is a covered settlement service (24 CFR 3500.2), therefore RESPA would apply to agreements by companies or persons providing portfolio reviews. Providing free or reduced reviews is a thing of value. [/FONT]

    [FONT=Verdana, Geneva, Arial, Helvetica, sans-serif]Providing this service in exchange for referrals of future flood insurance business would violate Section 8(a) of RESPA which provides that "[n]o person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person."[/FONT]
    -----------------------------------------------------------------------
    RECOMMENDATION:

    USPAP SHOULD BE REVISED SUBSTITUTING - Appraisal for Flood Cert. and CLEARLY state, without Equivocation (i.e. AO-19), that an Appraisal (verbal or written) IS A THING OF VALUE .........with exactly the same language as above.

    End then "comp check" debate once and for all. THEN ENFORCE THE LAW.

    Thank you for your consideration of this recommendation.

    Regards,

    MEK

    ******************************************************************************************************************************************************************************************************
    Michael E. Kennedy
    NY State Certified Residential Appraiser/Owner

    KENNEDY APPRAISAL COMPANY

    LEGAL, MORTGAGE, AND REVIEW APPRAISALS
    EXCLUSIVELY SERVING ROCKLAND & ORANGE COUNTIES
    IN THE SOUTHERN HUDSON VALLEY NY STATE SINCE 1993

    email MEK2@frontiernet.net phone/fax (845)782-1996
    ******************************************************************************************************************************************************************************************************
     
    Last edited: Jul 19, 2007
  7. MBD

    MBD Member

    0
    Jan 10, 2005
    Professional Status:
    Certified General Appraiser
    State:
    New York
    :icon_idea: This suggestion makes too much sense. Therefore, it will never get implemented.
     
  8. George Hatch

    George Hatch Elite Member

    48
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    AO-19 isn't the law (nor is it part of USPAP, per se) and it can't be enforced as such unless the states adopt it into law. You're also addressing this problem from the supply side instead of the demand side; it is an indirect approach that would have commensurate results.

    You are effectively saying that no appraisal, regardless of use or user, can be performed without charge. Welcome to the People's Republic of China.
     
  9. Lawrence R.

    Lawrence R. Senior Member

    0
    Mar 27, 2007
    Professional Status:
    Certified General Appraiser
    State:
    South Carolina
    I think it would be clear to all, at least to me, that we are talking about FRT's, not all appraisals. If it can be contexted(sp?) as the RESPA ruling was, there would be no ambiguity.
     
  10. Lawrence R.

    Lawrence R. Senior Member

    0
    Mar 27, 2007
    Professional Status:
    Certified General Appraiser
    State:
    South Carolina
    And PS George,

    In China, they would have executed the ASB by now....:rof:
     
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