New USPAP Q & A October 2009

[CANative]

An appraiser cannot accept an assignment under those conditions because an appraiser must not allow assignment conditions to limit the scope of work to such a degree that the assignment results are not credible in the context of the intended use.

The verbiage in the HUD letter is non-sense.

 

[hastalavista]

To effect a client name change, the second lender and the original appraiser may engage in a new appraisal
assignment wherein the scope of work is limited to the client name change. A new client name should include the name of the client (lender) and HUD."


Doesn't this name only change insist on a predetermined value?

One could argue it does not.
The value was not predetermined; it was analyzed and concluded as of the effective date of the appraisal. The SOW change (per HUD) is not to change any of the analysis and just to change the client name. A better description of the scenario (IMO) would be the lender is accepting a previously established value, not a predetermined one.

However, because of the logical limbo-dance needed to explain the above, the bottom line (again, IMO) is this: HUD's instructions are intended to circumvent the re-assignment issue which has been an open and shut case per USPAP (one cannot do it).

A better instruction by HUD that accomplishes its mission and is compliant with USPAP would be this:
A. HUD will accept an appraisal from lender B if it was originally completed for lender A and as long as it complies with FHA guidelines within a six (or three) month period following the effective date.
B. There is no reason per HUD requirements for the appraisal to have a name change.
C. If Lender B requires the name change then that constitutes a new assignment per USPAP.
D. HUD will accept an new appraisal completed for lender B with the existing FHA case number if the appraisal is (a) a new assignment with a (b) retroactive date. If no other changes in the SOW process other than client name are required then HUD would expect the appraisal report to be the same except for the client name, the signature date, and a statement indicating that report is a new assignment with a retroactive date.
E. If the appraiser determines that additional data is available and should be considered then the retroactive appraisal is not acceptable by HUD and the case number cannot be transferred to it; it must be declined by the appraiser.
F. If the lender requires additional assignment conditions other than a client name-change that are outside of the original SOW, then the retroactive appraisal is not acceptable by HUD and the case number cannot be transferred to it; it must be declined by the appraiser.
G. HUD has determined that the above process can be completed using the current 1004 form with the necessary comments/disclosures.
H. If the lender requires a new assignment, the cost for that new assignment cannot be passed on to the borrower and must be paid by the lender.

(All you legal-beagles can refine the language, but I think the gist is clear)

 

[CANative]

A better instruction by HUD that accomplishes its mission and is compliant with USPAP would be this:
A. HUD will accept an appraisal from lender B if it was originally completed for lender A and as long as it complies with FHA guidelines within a six (or three) month period following the effective date.
B. There is no reason per HUD requirements for the appraisal to have a name change.
C. If Lender B requires the name change then that constitutes a new assignment per USPAP.
D. HUD will accept an new appraisal completed for lender B with the existing FHA case number if the appraisal is (a) a new assignment with a (b) retroactive date. If no other changes in the SOW process other than client name are required then HUD would expect the appraisal report to be the same except for the client name, the signature date, and a statement indicating that report is a new assignment with a retroactive date.
E. If the appraiser determines that additional data is available and should be considered then the retroactive appraisal is not acceptable by HUD and the case number cannot be transferred to it; it must be declined by the appraiser.
F. If the lender requires additional assignment conditions other than a client name-change that are outside of the original SOW, then the retroactive appraisal is not acceptable by HUD and the case number cannot be transferred to it; it must be declined by the appraiser.
G. HUD has determined that the above process can be completed using the current 1004 form with the necessary comments/disclosures.
H. If the lender requires a new assignment, the cost for that new assignment cannot be passed on to the borrower and must be paid by the lender.

(All you legal-beagles can refine the language, but I think the gist is clear)

A better instruction by HUD that accomplishes its mission and is compliant with USPAP would be this:

A. HUD will accept an appraisal from lender B if it was originally completed for lender A and as long as it complies with FHA guidelines within a four month period following the effective date.

C. If Lender B requires an appraisal made specifically for them then a new appraisal can be ordered from the same appraiser or a different appraiser.


H. If the lender requires a new assignment, the cost for that new assignment cannot be passed on to the borrower and must be paid by the lender.

(All you legal-beagles can refine the language, but I think the gist is clear)

Not an expert and did not stay at a Holiday Inn Express.

 

[hastalavista]

Not an expert and did not stay at a Holiday Inn Express.

Ok, you get my sign-off. Now will you send it to HUD for me so they can get squared-away! :laugh:

 

[carol109]

The new lender can accept appraisals from another lender (without a client name change) as long as they receive assurances that they were HVCC compliant (throw that into the mix and you have total confusion). However, to get their name on the report, their best avenue might be to request an Update, which is considered a new appraisal, in the new lender's name, which incorporates the old report and has the same effective date. So far, I have found nothing in USPAP which would prevent this as long as it is not the appraiser releasing the report to the new lender. Anyone else? Of course, none of this should be necessary for an FHA file.

 

[hastalavista]

The new lender can accept appraisals from another lender (without a client name change) as long as they receive assurances that they were HVCC compliant (throw that into the mix and you have total confusion). However, to get their name on the report, their best avenue might be to request an Update, which is considered a new appraisal, in the new lender's name, which incorporates the old report and has the same effective date. So far, I have found nothing in USPAP which would prevent this as long as it is not the appraiser releasing the report to the new lender. Anyone else? Of course, none of this should be necessary for an FHA file.

If it is an "update" then why would it have the same effective date?

 

[NC Appraising]

According to my phone conversion from HUD:

The secondary market and investors are pushing HUD to make the changes. They want to see the actual lender who is originating the loan on the appraisal.

The guy at HUD said the appraisal better have a new effective date and the subject must be re-inspected.

Lender A ordered the appraisal on 10/1/2009. Borrower goes to lender B because they offer a better rate. Lender B orders an appraisal on 10/15/2009. According to the guy at HUD, the effective date needs to be on or after 10/15/2009. Thus, a new assignment, new effective date, new inspection, new comparable search, etc.


We are already hated enough. If Fannie Mae, Freddie, and other investors are OK with the original effective date, and the scope of work is the same, we should be allowed to "transfer" the appraisal. We need to put common sense back on the table. But then again, the AMC's would charge the borrower $75.00, and expect the appraiser to do it for free.:laugh:

 

[CANative]

The guy at HUD said the appraisal better have a new effective date and the subject must be re-inspected.

That would be beyond the scope of work for an FHA name change only assignment.

 

[NC Appraising]

What was interesting is that I had to tell him about the mortgagee letter and I helped him find it.

He read it for the first time on the phone with me and that was his conclusion.


Anybody going to Valuation Expo in New Orleans?
Fannie Mae and HUD/FHA will be there. May be someone could get some clarification or someone could call Doug Walters.

I wonder what Fannie Mae's stance is on the issue? Do they allow for a "retrospective" effective date before the new lender ordered the "new(transferred) appraisal? Or was this invented by the LO, MB, or lender because they knew that investors or Fannie would never find out?

 

[LindaSL]

This is a conflict that will have to be resolved.

So what is to be done in the meantime? I was asked this question a few days ago, before I saw the Oct Q&A FAQs and gave the wrong advice! If it is a new assignment, do you have to do a new inspection and new photos, or can you use the same report with a new sign date and new intended users?