Evaluation Liability

[Dale Floyd]

Danny is exactly right. TN appraisers are covered by law if they perform evaluations...

I know evals are a sore subject with some appraisers but those completed by real professionals are a much better fit than BPO's or non-appraiser evals for lenders. There are times a full appraisal just isn't required.

 

[Terrel L. Shields]

whn an "evaluation" is ordered the decision to use something other than a "full" appraisal has already been made

Not when the bank cannot find an appraiser stupid enough to cut their own throat...and the only evaluators here were either in house appraisers (few) or evaluators working under an MAI, something that only came into existence in this neck of the woods since about 2011. 100% of the work my assistant and 50%+ my own until 3-4 years ago would have qualified as evals.

 

[PL1957]

We do evaluations for several clients. As Danny said, these are done in full compliance with USPAP as restricted appraisals. Typically, these reports replace internal valuations which were done by a loan officer, as part of the loan monitoring process. Several clients persist in using either unlicensed internal personnel or unlicensed outside services to meet the requirements. Response from our clients is that reports prepared by licensed professionals are more reliable (duh!).

 

[J Grant]

Danny is exactly right. TN appraisers are covered by law if they perform evaluations...

I know evals are a sore subject with some appraisers but those completed by real professionals are a much better fit than BPO's or non-appraiser evals for lenders. There are times a full appraisal just isn't required.

Two reasons "evals" are a sore subject with me ...fee (low) and turn time ( fast) on res side...unless your experience is different! The fees offered I have seen so far are about $45 ...touted as only need 1/2 to 1 hour to complete...yeah right, unless one is running an AVM/ type set up, it will not take a half hour, even if part of information is pre filled in. A problem uploading to a website ( and it happens with AMC portals ) can soak up time... that aside, downloading the order, downloading/ viewing notes and photos sent over, , finding/researching comps...how can that take a half hour? Possibility of appraisers gaming the system might outsource it to a trainee/ staff for $10 and make the $35... not that any of us would, just saying.....low fees encourages low end solutions.

The liability issue for me at least is a non issue, and to my knowledge these products are not a substitute for a traditional appraisal, they are a substitute for an AVM or BPO type product...since with regs an AVM alone can no longer be used for lending purposes, must be upgraded to at least an evaluation with inspection such as exterior...thus the photo runner aspect . Of course we all know the lender can call it an evaluation, but if we place any value with our name on it, for us it is an appraisal...abiet a short form appraisal, it is still an appraisal.

 

[DWiley]

Two reasons "evals" are a sore subject with me ...fee (low) and turn time ( fast) on res side...unless your experience is different! The fees offered I have seen so far are about $45 ...touted as only need 1/2 to 1 hour to complete...yeah right, unless one is running an AVM/ type set up, it will not take a half hour, even if part of information is pre filled in. A problem uploading to a website ( and it happens with AMC portals ) can soak up time... that aside, downloading the order, downloading/ viewing notes and photos sent over, , finding/researching comps...how can that take a half hour? Possibility of appraisers gaming the system might outsource it to a trainee/ staff for $10 and make the $35... not that any of us would, just saying.....low fees encourages low end solutions.

The liability issue for me at least is a non issue, and to my knowledge these products are not a substitute for a traditional appraisal, they are a substitute for an AVM or BPO type product...since with regs an AVM alone can no longer be used for lending purposes, must be upgraded to at least an evaluation with inspection such as exterior...thus the photo runner aspect . Of course we all know the lender can call it an evaluation, but if we place any value with our name on it, for us it is an appraisal...abiet a short form appraisal, it is still an appraisal.

Fees were not an issue with the ones I did. As I noted earlier, the hourly rate was actually higher than what we would make doing "regular" appraisals, mainly because the SOW was so much less. If the fee offered wasn't acceptable, I would tell them what was acceptable. That could take it or leave it.

Turn time was not an issue for us. I always had multiple staff appraisers and in almost every case there was someone who could use an "eval" to fill in open time in their schedule. I can see, however, how it could be a challenge for a one person company.

 

[BRCJR]

It is either an Evaluation or an Appraisal.

If you do an "Evaluation" as a "Restricted Appraisal" it no longer is an "Evaluation".

Call it what you want. If I am correct, someone will point out if I am not, a Restricted Appraisal will have a certification signed by an Appraiser as an Appraiser.
I do not believe an Evaluation, per the IAEG, requires any type of certification or limiting conditions be included.
The Restricted Appraisal may be used in place of an Evaluation but, that does not make it an Evaluation.
Cannot have reference to appraisal in an Evaluation. If so, it becomes an appraisal.

Someone straighten me out if need be.........

 

[BRCJR]

We do evaluations for several clients. As Danny said, these are done in full compliance with USPAP as restricted appraisals. Typically, these reports replace internal valuations which were done by a loan officer, as part of the loan monitoring process. Several clients persist in using either unlicensed internal personnel or unlicensed outside services to meet the requirements. Response from our clients is that reports prepared by licensed professionals are more reliable (duh!).

So which is it? An Evaluation or a Restricted Appraisal you are doing? There is a difference.

 

[SpartanAG]

So which is it? An Evaluation or a Restricted Appraisal you are doing? There is a difference.

The client would see the product as an evaluation. If a non-licensed or certified person developed the product, then it is an evaluation. If a licensed or certified appraisers develops the product it is technically an appraisal...and the client will still call it an evaluation. Either way you want to look at it, the client is going to call the product an evaluation and expect the product to meet IAEG guidelines and they won't give a rip about USPAP.

 

[Michael P Jacobs MAI]

Call it a restricted appraisal report if you can and submit it. As an appraiser you have to cover yourself. I know this would work in commercial narratives but don't know form software.

 

[hastalavista]

The last evaluation I did had a fee similar to an appraisal (mainly because what I did was an appraisal); covered under my E&O insurance policy (my broker is Landy).

Forget about the nomenclature. Focus on the SOW and that if done by an appraiser who was hired because s/he was an appraiser (as I was) it is an appraisal.

In my case, the bank who hired me has non-appraiser staff who do many of their evaluations. However, the IAG guidelines for evaluations requires competency. The bank, while confident of their staff's ability to do the property type, was not confident in their staff's knowledge of the specific market. Therefore, they hired me.
They call it an evaluation and they probably log it as an evaluation. What they received was a USPAP compliant appraisal with a limited SOW (which I made clear upon acceptance). The SOW for the evaluation was not the same as the SOW for an origination loan.
They didn't care what I called it or how I completed it as long as it met their requirements.

Not that hard to differentiate.

Landy's position (I presume, since I didn't listen to the podcast) is that appraisers who complete assignments that require a value and are not completed consistent with the USPAP requirements for such assignments will not be covered as the E&O policy covers appraisers with the condition that they are performing their assignments in compliance with the USPAP and all other applicable regulations (my bold for emphasis).
Act as an appraiser, follow the USPAP, and you are covered.