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  #1  
Old 05-16-2007, 04:12 PM
travis charlton travis charlton is offline
 
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State: Florida
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Question cert 23 again. HAS SOMETHING CHANGED?

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.
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  #2  
Old 05-16-2007, 04:36 PM
Rudy Canoza's Avatar
Rudy Canoza Rudy Canoza is offline
 
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“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.”

That's all you can say...since 11/2005.
  #3  
Old 05-16-2007, 04:47 PM
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Colorado Guy Colorado Guy is offline
 
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I want to watch this one carefully - all my reports have similar verbage.
  #4  
Old 05-16-2007, 05:26 PM
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Mike Kennedy Mike Kennedy is offline
 
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Solution ......Downey Savings no longer requires appraisals on 1004_05 FANNIE form............ which ONLY permits the language above.

Recommend utilizing GENERIC forms or Narratives instead for their purposes........

(should the loan EVER need to conform to Fannie - new assignment!)
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  #5  
Old 05-16-2007, 06:15 PM
travis charlton travis charlton is offline
 
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Default just got off the phone with the "CHIEF APPRAISER" at DOWNEY

just got off the phone with the "CHIEF APPRAISER" at DOWNEY

He was very presistent in having me remove the entire verbage on pg3

and "rely" on the pre-printed cert's in the form

I told him that I was not comfortable removing ANYTHING but only to "add to" intended users as I analyzed each and every additional "reader" and that he can send via fax all of these people or organizations or what not that I am becomming responsible to. He said he didn't know who they were. I told him
"...perhaps you truely believe that what you are saying is 'right', however there may be some departments in the back ground at your operations that have alternative plans for the report that they are not disclosing to you" a pause....then reverts to continue to argue that I am violating FNMA requirments by adding this text.

I just DO NOT understand how I have shipped soo many reports and never had a issue like this one. We do honest work, credible work, defensible work, I am not afraid to defend anything that has shipped from this office if ever required....I only feel skeptical, and that is what I told Him about these UNUSUAL requests. Cert 23 has been out there for well over 1 year, why the big deal NOW May 16, 2007.

Prior to the last conversation, Some exec asst person was asking if I am on their "APPROVED" list and I said what approved list WE ARE INDEPENDENT FEE APPRAISERS within the STATE OF FLORIDA. Is DOWNEY on our "APPROVED LIST" " and he just laughed.

PS
I dont know how much more of this 'pressure' I can handle within the appraisal industry.

Not really making a living funny I just read a quote in one of the newletters today that said something to the effect " show me a (financially) poor appraiser and I'll show you an honest appraiser..."
  #6  
Old 05-16-2007, 06:31 PM
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George Hatch George Hatch is offline
 
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If you know it's going to Downey and that they are selling it on the secondary market then you know that Downey cannot possibly be the only intended user. They have identified several other users by type, so I would identify them in my report (by type) as well and further note that the only appraisal policies and requirements that you are specifically aware that apply to the assignment are Downey's. The other users may have requirements, but you cannot be resonsible for them unless they are specfically identified. We are not required to be mindreaders.

The two things we are most concerned about is that other primary lenders besides Downey might use and/or judge the appraisal based on their own criteria instead of Downey's; and that the homeowners or borrowers might think they are an intended user when they aren't.

Technically, Downey's problem is that they have identified other intended users but they haven't identified what the requirements are, if any, of those other intended users. We are forced to assume that following Downey's policies will render a workproduct that is also sufficient for these other users. While that may not be an unreasonable assumption to make, in a perfect world a client would not compel us to make such an assumption.
  #7  
Old 05-16-2007, 06:59 PM
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Colorado Guy Colorado Guy is offline
 
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The identification of intended users has to be done up front - not on the back end - this is a ridiculous request IMO.
  #8  
Old 05-16-2007, 07:04 PM
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Joyce Potts Joyce Potts is offline
 
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Travis,

I limit many of my reports even more harshly and like you I've delivered hundreds of them. Just goes to show that most are not read through thoroughly.

Once in a while I do get a call to remove my restrictive language and I take it on a case by case basis.

The "intended user" issue will continue to be a hot topic and is at the heart of several ongoing lawsuits as we speak.
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  #9  
Old 05-16-2007, 07:22 PM
Colorado Guy's Avatar
Colorado Guy Colorado Guy is offline
 
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Joyce,

Is this not a SOW issue. If I get a request for a residental appraisal from XYZ Mortgage - they are my intended user - I have no fore knowledge on what they will do with the appraisal or who they will give a copy of the appraisal to - and I do not consider that my business.

I have one lender that places a very specific list of intended users on the appraisal request form and every other request gives me nothing but the name of a bank or MB.
  #10  
Old 05-16-2007, 07:30 PM
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Joyce Potts Joyce Potts is offline
 
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I don't see this is as a SOW issue. If you don't consider the intended user your business--as to whom you designate as your intended user(s) and/or a what constitutes or restricts a third-party beneficiary, you're opening multiple doors of liability, IMO.
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