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  #1  
Old 06-29-2007, 10:51 AM
xm72mhd xm72mhd is offline
 
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Default Rels and cert 23

Got this in the mail today. What think you?
Quote:
From: Valuation Support Services Management [mailto:VSS@rels.info]
Sent: Thursday, June 28, 2007 12:25 PM
To: undisclosed-recipients:
Subject: Clarification on Certification # 23



To all Appraisal Partners:

Since FNMA/FHLMC released the new versions of their appraisal report forms, a year and half ago, many challenges have arisen. One of the most significant challenges is the desire by many appraisers to change some of the textual statements in the preprinted portions of the forms. Specifically related to this communication are modifications to Certification #23 in the 2005 forms.

The following is quoted directly from the form in Certification #23:

“The borrower, another lender at the request of the borrower, the mortgagee or its successors and assigns, mortgage insurers, government sponsored enterprises, and other secondary market participants may rely on this appraisal report as part of any mortgage finance transaction that involves any one or more of these parties.”

It should be noted that FNMA and FHLMC have indicated appraisers may not modify any of the certifications at any time. Modifications of any certifications make the loan ineligible for sale to FNMA/FHLMC.

Over the past year and a half, the Quality Assurance Department has seen an increase in the number of comments addressing certification #23. Some of the comments are acceptable to FNMA and FHLMC; and, some are not acceptable.

Examples of the comments we have seen in the past which are not acceptable include the following:
  • <LI class=MsoNormal style="TEXT-ALIGN: justify">“This appraisal is not intended for third party use” <LI class=MsoNormal style="TEXT-ALIGN: justify">“which is intended only for the use of the named lender/client” <LI class=MsoNormal style="TEXT-ALIGN: justify">“This report has been prepared for mortgage lending purposes and is intended for the sole use of the client indicated on page one of the URAR” <LI class=MsoNormal style="TEXT-ALIGN: justify">“This appraisal should not be used or relied on by anyone other than the stated intended user” <LI class=MsoNormal style="TEXT-ALIGN: justify">“The use of this report by anyone other than the intended user, or any other use than the intended use is prohibited”
  • “No other use by any other party is intended or authorized.”

As you are likely aware, most appraisal reports are used by a variety of other service providers in many residential lending transactions. For example, the lender may assign an appraisal report to another lender. This is permitted by the federal government and does not require appraiser permission. Additionally, many transactions require PMI; and, as such the appraisal report is utilized by the PMI provider to determine whether insurance will be issued. FNMA has written commentary that is permissible because it clarifies the language; but, does not modify the certification..

The following text is the language written by FNMA which is acceptable:

The Intended User of the 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 stated 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.”

As a result of modifications to certifications, such as the examples previously mentioned, the reports are deemed to be unacceptable and thus rated as QA4 rating. Numerous QA4 ratings will result in sanction of the appraiser, up to and including removal from the appraiser panel.

In all future reports, please remove any commentary that modifies any of the certifications. If you wish to use additional commentary to clarify the language in Certification #23, please add your narrative to the report addendum and use only approved commentary as directed by management or from the secondary market, such as the one provided herein from FNMA.

Thank you for your continued cooperation in providing quality appraisal products.

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  #2  
Old 06-29-2007, 10:56 AM
Otis Key's Avatar
Otis Key Otis Key is offline
 
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State: New Mexico
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Sooooooo Edd. Are you saying you've been making "modifications" to the certification rather than just "appending" them?
  #3  
Old 06-29-2007, 11:16 AM
xm72mhd xm72mhd is offline
 
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Quote:
Originally Posted by Otis Key View Post
Sooooooo Edd. Are you saying you've been making "modifications" to the certification rather than just "appending" them?
Actually all I have advised around here is to "clarify" the darned thing with some language rather similar as follows:

Quote:
INTENDED USER(S)-CLARIFICATIONThe pre-printed form language in this report with respect to the intended use(s) and intended user(s) and the pre-printed language in Certification #23 is conflicted and confusing and possibly contrary to USPAP, and therefore the following clarification is made: This report is intended for use only by @@@@@.
The appraiser does not intend use of this report by others.
It is not verbatim, but does it do violence to anything other than an underwriter's sensibilities?

I sense Fannie must have awakened from hibernation again. I thought this would go away with Mark Simpson. NOT?

Why is this of concern again?
  #4  
Old 06-29-2007, 11:41 AM
Mike Boyd Mike Boyd is offline
 
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I see nothing wrong with RELS/FNMA statement. I also agree with them that there are many people connected with the mortgage transaction that might need to use the appraisal report. They do not mention hazard insurers as a user and that would be my only objection if that was intended.
  #5  
Old 06-29-2007, 11:58 AM
xm72mhd xm72mhd is offline
 
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Quote:
Originally Posted by Mike Boyd View Post
I see nothing wrong with RELS/FNMA statement. I also agree with them that there are many people connected with the mortgage transaction that might need to use the appraisal report. They do not mention hazard insurers as a user and that would be my only objection if that was intended.
Well, of course you don't, it is verbatim the compromise language struck between Fannie and the mob. And if your appraisals are not being used to establish insurance value monkeys don't swing in trees.

All this was hashed on here through and through even before the thing became effective, but why is it rearing its stupid head again?
  #6  
Old 06-29-2007, 12:19 PM
Mike Boyd Mike Boyd is offline
 
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Quote:
Originally Posted by eddgillespie View Post
Well, of course you don't, it is verbatim the compromise language struck between Fannie and the mob. And if your appraisals are not being used to establish insurance value monkeys don't swing in trees.

All this was hashed on here through and through even before the thing became effective, but why is it rearing its stupid head again?
YOU brought it up, Edd....that's why it is "rearing its stupid head."
Why would hazard insurers want the market value? Granted: they, the insurers, would like the cost replacement value but Fannie says it is not needed. So, where is the conspiracy?

If you are required by the client to perform the cost approach and you decide you want to be a good guy and do it, charge for it and make damn sure it is correct. However, Edd, as an attorney, can you not devise a simple disclaimer that says "not valid for hazard insurance purposes?
  #7  
Old 06-29-2007, 12:23 PM
Joyce Potts's Avatar
Joyce Potts Joyce Potts is offline
 
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Quote:
Originally Posted by eddgillespie View Post
Got this in the mail today. What think you?
Just pass the Vaseline, please.
__________________
If you have something to say,
keep your mouth shut!
  #8  
Old 06-29-2007, 12:39 PM
Mike Boyd Mike Boyd is offline
 
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Talking

Quote:
Originally Posted by Joyce Potts View Post
Just pass the Vaseline, please.
Joyce!!!! Are you THAT easy? LOL
  #9  
Old 06-29-2007, 12:56 PM
BOB PADRICK BOB PADRICK is offline
 
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Quote:
Originally Posted by Mike Boyd View Post
YOU brought it up, Edd....that's why it is "rearing its stupid head."
Why would hazard insurers want the market value? Granted: they, the insurers, would like the cost replacement value but Fannie says it is not needed. So, where is the conspiracy?

If you are required by the client to perform the cost approach and you decide you want to be a good guy and do it, charge for it and make damn sure it is correct. However, Edd, as an attorney, can you not devise a simple disclaimer that says "not valid for hazard insurance purposes?
hmmm...I think its likely because of the secondary b & c market failures on wall street...they're looking for anything else they can use to try to blame anyone other than themselves...otherwise they have to buy all the bad loans back.

Note that the July 2005 USPAP Q&A appeared to settle this before it ever became an issue. Further, many of the state appraisal boards have universally rejected cert 23, with their own recommended language.

I'd say if you use it as scope of work identification, you'll do fine. Per the above Q&A, you have to id the intended use/user at the start of the undertaking of the assignment. As such, you can either id mortgage use, or insurance use, etc...or not.
  #10  
Old 06-29-2007, 01:01 PM
xm72mhd xm72mhd is offline
 
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Quote:
Originally Posted by Mike Boyd View Post
YOU brought it up, Edd....that's why it is "rearing its stupid head."
Why would hazard insurers want the market value? Granted: they, the insurers, would like the cost replacement value but Fannie says it is not needed. So, where is the conspiracy?

If you are required by the client to perform the cost approach and you decide you want to be a good guy and do it, charge for it and make damn sure it is correct. However, Edd, as an attorney, can you not devise a simple disclaimer that says "not valid for hazard insurance purposes?
Let me try again. Rels brought it up by sending it to one of the guys here on their panel. I am sharing it with you. The RELS stuff says cert 23 modifications are a problem and then identifies all those things that it considers a modification, then says appraisers can clarify with the negotiated language.

Frankly, it is curious to me why RELS even mentioned it. Sorry, that's what I meant by "rearing its stupid head", I wasn't talking about yours. I guess you knew that.

I don't know anything about a conspiracy. Do I?
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