Real Estate Appraisal Forum

appraisersforum.com logo
The Premiere Online Community for Real Estate Appraisers!
 Fastest Way to Find a Real Estate Appraiser Enter Zip Code:
 
 
Go Back   Appraisers Forum > Real Estate Appraisal Forums > Fannie Mae, Freddie Mac, USPAP
Register Help Our Rules Calendar Archives Mark Forums Read


Closed Thread
 
Thread Tools
  #1  
Old 09-11-2007, 10:20 AM
Stephen J. Vertin, MAI's Avatar
Stephen J. Vertin, MAI Stephen J. Vertin, MAI is offline
 
Join Date: Jan 2002
Location: 203 North LaSalle Street, Suite 2100, Chicago, Illinois
State: Illinois
Professional Status: Certified General Appraiser
Posts: 2,628
Default Scope of Work Responsibilty

I took USPAP seven hour update yesterday. The AI class really hit hard the appraisers responsibility in controlling the scope of work. The bottom line was "the appraiser is responsible for scope selection and implementation". There is no doubt this point was hammered hard.

This aspect of USPAP seems really out of touch with the realities of the modern biding and puts an uncontrollable strain on appraisers. Especially on RIMs'. These systems provide much of the scope already. Their instructions are always spelled out, i.e., a drive-by, one approach to value, two approaches, etc......., I fully understand why the client would want this control. They are trying to get a handle on pricing appraisals in order to get the lowest fees. You simply can not have people making up scopes in the bid process due to fee spreads.

What I do not understand is how the appraiser is suppose to provide a logical scope of work without pertinent information (remember you are totally responsible). The most important of which is credit worthiness. If I am a lender and have a client who has $2 million in the bank, a house that is paid for and excellent credit I may only want a drive-by for a $20,000 loan secured by a $500,000 property. However, I may want a complete report if it is a sub-prime loan where the property is near 100 percent financed. These are obvious scope of work issues. However, there are examples where latter loans only had drive-bys. Loan goes bad, regulators now can go after appraisers due to inappropriate scope of work.

Everyone realizes value confidence intervals change depending on credit worthiness and security held. Much of the scope is based on the value confidence interval required. But we have little relevant information as to this issue.

When I questioned the instructor on this issue his response was to call the client and inquire as to the borrowers financial means and credit worthiness. Are other people doing this?

Further it was the instructor's opinion this is freeing allowing us greater ability to produce credibly. However, I see it as a step backwards. For the most part I think it will pigeon hole most appraisers into one product, complete self-contained reports due to liability. What do you think?
Sponsored Links

  #2  
Old 09-11-2007, 10:29 AM
Pamela Crowley (Florida)'s Avatar
Pamela Crowley (Florida) Pamela Crowley (Florida) is offline
 
Join Date: Jan 2002
Location: Wherever We Are Parked
State: Florida
Professional Status: Retired Appraiser
Posts: 25,254
Default

I agree with you. We have 'choices', but they will hurt us.
__________________
All that is necessary for the triumph of evil is that good men/women do nothing.
Fight Back!
  #3  
Old 09-11-2007, 10:32 AM
PropertyEconomics's Avatar
PropertyEconomics PropertyEconomics is offline
 
Join Date: Jun 2007
Location: Central New Mexico
State: New Mexico
Professional Status: Certified General Appraiser
Posts: 18,855
Default

Quote:
Originally Posted by Stephen J. Vertin, MAI View Post
I took USPAP seven hour update yesterday. The AI class really hit hard the appraisers responsibility in controlling the scope of work. The bottom line was "the appraiser is responsible for scope selection and implementation". There is no doubt this point was hammered hard.

This aspect of USPAP seems really out of touch with the realities of the modern biding and puts an uncontrollable strain on appraisers. Especially on RIMs'. These systems provide much of the scope already. Their instructions are always spelled out, i.e., a drive-by, one approach to value, two approaches, etc......., I fully understand why the client would want this control. They are trying to get a handle on pricing appraisals in order to get the lowest fees. You simply can not have people making up scopes in the bid process due to fee spreads.

What I do not understand is how the appraiser is suppose to provide a logical scope of work without pertinent information (remember you are totally responsible). The most important of which is credit worthiness. If I am a lender and have a client who has $2 million in the bank, a house that is paid for and excellent credit I may only want a drive-by for a $20,000 loan secured by a $500,000 property. However, I may want a complete report if it is a sub-prime loan where the property is near 100 percent financed. These are obvious scope of work issues. However, there are examples where latter loans only had drive-bys. Loan goes bad, regulators now can go after appraisers due to inappropriate scope of work.

Everyone realizes value confidence intervals change depending on credit worthiness and security held. Much of the scope is based on the value confidence interval required. But we have little relevant information as to this issue.

When I questioned the instructor on this issue his response was to call the client and inquire as to the borrowers financial means and credit worthiness. Are other people doing this?

Further it was the instructor's opinion this is freeing allowing us greater ability to produce credibly. However, I see it as a step backwards. For the most part I think it will pigeon hole most appraisers into one product, complete self-contained reports due to liability. What do you think?

Mr Vertin ... thank you so much for your post ... I believe it is in the wrong place ... as I believe this to be URGENT and I hope the moderators move it there ... only because it deserves URGENT ATTENTION ...

The Update is not available in my market yet, however, I forsee appraisers being in a position of not being able to obtain the data as it is most probably covered by Graham/Leigh/Bliley ... and is a privacy issue ... my initial reaction is that this is the final nail in the appraisers coffin as now we are responsible for appraisal of the borrower as well as the collateral. I have long said that in the old days of lending two appraisals were done ... one for collateral and one of the borrower for credit-worthiness ... if this is the new rule .... I will take some lending / finance classes, I will raise my fees, and I will plan for my demise within this industry.
This is a prime example of the ASB not giving one damn iota of care about the health or well being of an appraiser ... but rather is further proof that more burden shall be borne on our backs for things for which we have no control.
I fully believe your posting ... and if it is true ... heaven help us.


ADD: Doesnt this further fly in the face of USPAP in that the appraisers are to be unbiased in their analysis of the property value ... wouldnt knowing the credit worthiness of the borrower have a tendency to sway an appraiser toward more conservative values in instances where we question whether the borrower can pay the loan back? Maybe I am reading too much into this but it seems to me this is agasint other provisions of USPAP requiring the appraiser to NOT know certain things for fear of being swayed. Im at a complete and utter loss here. The implications are astounding and very far reaching.

Is there ANY CHANCE the instructor was wrong????
__________________
Foxtrot, Uniform, Charlie, Kilo Cancer ... In memory of our friend Bill Waite!

Last edited by PropertyEconomics : 09-11-2007 at 10:57 AM.
  #4  
Old 09-11-2007, 10:33 AM
Joyce Potts's Avatar
Joyce Potts Joyce Potts is offline
 
Join Date: Feb 2005
Location: Central Florida
State: Florida
Professional Status: Certified Residential Appraiser
Posts: 8,382
Default

Was the appraiser's responsibility and/or liability also addressed as to their 'control' over the 'intended use' and the 'intended user' when using pre-printed FNMA forms?
__________________
If you have something to say,
keep your mouth shut!
  #5  
Old 09-11-2007, 10:49 AM
David Wimpelberg's Avatar
David Wimpelberg David Wimpelberg is offline
 
Join Date: Mar 2005
Location: Hamptons, NY
State: New York
Professional Status: Certified General Appraiser
Posts: 15,830
Default

Quote:
Originally Posted by Stephen J. Vertin, MAI View Post
What I do not understand is how the appraiser is suppose to provide a logical scope of work without pertinent information (remember you are totally responsible). The most important of which is credit worthiness. If I am a lender and have a client who has $2 million in the bank, a house that is paid for and excellent credit I may only want a drive-by for a $20,000 loan secured by a $500,000 property. However, I may want a complete report if it is a sub-prime loan where the property is near 100 percent financed. These are obvious scope of work issues. However, there are examples where latter loans only had drive-bys. Loan goes bad, regulators now can go after appraisers due to inappropriate scope of work.
Interesting point, especially in the current market. More and more the appraiser is not being given estimated values and LTVs, so the appraiser doesn't know what type of confidence level that lender needs. The appraiser can certainly prepare a drive-by report, but IMHO, the burden of responsibility falls entirely on the lender. They got what they asked for.

Fact is, lenders are still going to try to blame the appraiser. I've personally avoided that situation by not doing drivebys for lenders, with the occassional rare exception (about one every two years).
  #6  
Old 09-11-2007, 11:05 AM
Ross (CO) Ross (CO) is offline
 
Join Date: Jan 2002
Location: Colorado Springs
State: Colorado
Professional Status: Certified Residential Appraiser
Posts: 4,154
Default

The race to the bottom.....is quite fast and verifiably furious.
  #7  
Old 09-11-2007, 11:07 AM
Carnivore's Avatar
Carnivore Carnivore is offline
 
Join Date: Jan 2002
Location: Queen City
State: North Carolina
Professional Status: Certified Residential Appraiser
Posts: 12,769
Default

Steven,

I always found the lender SOW input based on credit and job history, etc was rather foolish and really none of our concern. As everyone knows real property market value is usually not very volatile. Whats determined MV today is probably going to be good several months in the future. On the other hand credit score or job history can disappear over night!

This is where the ASB I think has failed. TO me the client only has input by providing conditions under which an appraisal can be done. Thats not making a SOW decision, thats should only be viewed as parameters for an appraiser to develope his/her SOW. I think this is a fine point and not very well understood by many appraisers and clients.

Then again, I may just be all wet and stupid.
  #8  
Old 09-11-2007, 11:12 AM
The Matrix The Matrix is offline
 
Join Date: Apr 2003
State: Colorado
Professional Status: Certified General Appraiser
Posts: 1,071
Default

Unfortunately, the public does not understand--Scope of Work--many believe an appraisal is an appraisal, is an appraisal. I believe, appraisals should be standardized in their level of research and quality. What the public is currently looking for is lower price, not understanding lower price and lower quality often go hand in hand. If scope of work were standardized..appraisers could re-establish their trust with the public, and lenders and the public could once again place trust in an appraisals bottom line. Currently, appraisals have too many disclaimers and limiting conditions. Many appraisals are written with the intent of freeing appraisers from all responsiblity for the content and the value conclusions in the appraisal report.

A borrower's credit history should not determine SOW.
  #9  
Old 09-11-2007, 11:13 AM
Lawrence R.'s Avatar
Lawrence R. Lawrence R. is offline
 
Join Date: Mar 2007
Location: Winchestertonfieldville
State: South Carolina
Professional Status: Certified General Appraiser
Posts: 3,571
Default Fickle Forumites and the Mobilus Vulgarus

I brought this point up about a month ago and was basically landbasted for it. I asked if anyone was considering creditworthiness during any part of the appriasal process--be it development or whether or not you would accept an order.

I got shill cries and catterwalls about what would creitworthiness have to do with market value.

Which anyone knows it has nothing to do with value, but may have a whole hell of a lot to do with whether or not you would accept an assignment.

As for me, hell yeah, I don't want to "cosign" somebody who is barely hanging on finance 99.99% of full market value. I may not know I have, but if I could know, I would want to.

Now, truth is, you can't be disclosed that info, GLB says no way. But You can know the loan amount and the bank involved, which may clue you in.

I don't think credit will be a big factor in the short term...b/c paper is finding it hard to get approved these days.

But, I wish I could know.
__________________
It is never too late to do the right thing. If you want what you do to matter, it's the only way.
  #10  
Old 09-11-2007, 11:51 AM
Stephen J. Vertin, MAI's Avatar
Stephen J. Vertin, MAI Stephen J. Vertin, MAI is offline
 
Join Date: Jan 2002
Location: 203 North LaSalle Street, Suite 2100, Chicago, Illinois
State: Illinois
Professional Status: Certified General Appraiser
Posts: 2,628
Default

Quote:
I believe it is in the wrong place ... as I believe this to be URGENT and I hope the moderators move it there ... only because it deserves URGENT ATTENTION ...
I believe this is the most important issue in new USPAP changes and something to seriously be considered by all appraisers. You are correct that the USPAP section is not a very well read segment of this forum but I have to obey the rules for posting. I wish I could post it on more widely read segments.
Quote:
Was the appraiser's responsibility and/or liability also addressed as to their 'control' over the 'intended use' and the 'intended user' when using pre-printed FNMA forms?
No, there is so little time in the update course.
Quote:
The appraiser can certainly prepare a drive-by report, but IMHO, the burden of responsibility falls entirely on the lender.
It did in 2005 but not in the updates of 2006. You are now responsible.
Quote:
TO me the client only has input by providing conditions under which an appraisal can be done. That's not making a SOW decision, that's should only be viewed as parameters for an appraiser to develop his/her SOW.
Could you elaborate on this? I do not understand.
Quote:
I believe, appraisals should be standardized in their level of research and quality.
I think there are to many types of assignments and market area difference for this. Verification alone has so many meanings depending on the data sources available and specific location.
Quote:
A borrower's credit history should not determine SOW.
I disagree. I believe it is a tremendously important factor in the value confidence interval sought by the client. My first post exampled the two loans where such issue is important. Further the 2005 USPAP indicated scope was both an appraiser and client decision. Not simply an appraisers decision.

Last edited by Stephen J. Vertin, MAI : 09-11-2007 at 11:54 AM.
Sponsored Links

Closed Thread


Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump




Copyright © 2000-, AppraisersForum.com, All Rights Reserved
     Terms of Use  Privacy Policy
AppraisersForum.com is proudly hosted by the folks at AppraiserSites.com

Fastest Way to Find a Real Estate Appraiser Enter Zip Code:
Partner Sites:
AppraiserUSA.com - National Appraiser Directory AllDomainsUSA.com - Domain Name Registration
DeadbeatListings.com - Deadbeat ListingsAppraiserSites.com - Web Hosting for the Professional Real Estate Appraiser
Find FHA Appraisers - FHA Appraiser Search Commercial Appraisers - Commercial Appraiser Search
Relocation Appraisal - Find Relocation Appraisers Domain Reseller - Business Opportunity
Home Security Buzz - Home Security Info Radon Testing - Radon Gas Info
My Medicare Forum - Medicare Info Stop Smoking Help - Help Quitting Smoking
CordlessPhoneStore.com - Great Cordless Phones AndroidTabletCity.com - Android Tablet Computers

Follow AppraisersForum.com:          Find us on Facebook            Follow us on Twitter


All times are GMT -5. The time now is 01:27 PM.

SiteMap: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93