Hybrid Appraisal Extraordinary Assumptions

[Michigander]

I have a question, which might be a bit stupid so bare with me please.

If the appraisal process has not changed, and USPAP follows the appraisal process, other than eliminating the need for the appraiser to go into the field and look at the property (and therefore relying on another persons/trained or not, descriptions of the property), what has changed in the process? To me, the data gathering and analysis leg of the process is probably at least half, to 3/4 of the work, with maybe 15-20% being the site observation and the remainder the reporting part. I am not seeing where the big time saving issue is accept for maybe getting someone in to see the property quicker, but still at least 75% of the work isn't at the site.

What am I missing?

 

[nstanbru]

so bare with me please.

I was half way out my clothes when I realized this was an appraisal related question.

 

[Meandering]

I have a question, which might be a bit stupid so bare with me please.

If the appraisal process has not changed, and USPAP follows the appraisal process, other than eliminating the need for the appraiser to go into the field and look at the property (and therefore relying on another persons/trained or not, descriptions of the property), what has changed in the process? To me, the data gathering and analysis leg of the process is probably at least half, to 3/4 of the work, with maybe 15-20% being the site observation and the remainder the reporting part. I am not seeing where the big time saving issue is accept for maybe getting someone in to see the property quicker, but still at least 75% of the work isn't at the site.

What am I missing?

 

[Joyce Potts]

I received a copy of a sample hybrid report. Below is part of the Assumptions and Limiting Conditions (I didn't reproduce it all; just those sections I thought were significant to the hybrid process).

The scope of work is specific as to what the appraiser did and didn't do (including not personally inspecting the property; relying on a 3rd party, etc.).

The intended use is for "financing transaction with a federally related transaction." (don't know about that wording, but that's what it says).

There is an argument about how reliable the 3rd party inspector is and to what level of the appraiser has to evaluate that inspector in order to rely on the data. I don't make that argument; from my reading, this appraisal is customized for a lender who, presumably, has the wherewithal to understand the SOW and the limitations of the analysis, etc. The assumptions (general and extraordinary), IMO, limits the appraiser's liability to the credibility of the analysis and not the reliability of the inspection.

Interestingly enough, I'm one that believes an EA isn't necessary; everything can be adequately covered in the SOW & General Assumptions. But this particular party has included EAs, which isn't necessarily a bad thing.

May not necessary based on the engagement letter, but why in the world would you not add your own well worded EO for those who typically do not interpret the language in the SOW portion of ANY appraisal?

 

[Dale Floyd]

Hello Danny?




Dale is looking for you,

He can't list the laws appraisers must recognize and comply with, for residential lending appraisals either.

.

You do a good job of listing laws. But you need to brush up on the application of them. I think Danny would agree with me.

USPAP is our guide, but it does not tell banks what to do. The OCC tells its chartered banks what to do, but not appraisers.

Prudent Banking Practices also mentions many things about appraisals, but the ABA isn't in charge of us either.

The various state Department of Financial Institutions, Department of Commerce and Insurance, FDIC, etc. all have regulations pertaining to appraisals. All are aimed at financial institutions however, not the appraisers.

Have a great rest of your day Marion.

 

[Meandering]

You do a good job of listing laws. But you need to brush up on the application of them. I think Danny would agree with me.

USPAP is our guide, but it does not tell banks what to do. The OCC tells its chartered banks what to do, but not appraisers.

Prudent Banking Practices also mentions many things about appraisals, but the ABA isn't in charge of us either.

The various state Department of Financial Institutions, Department of Commerce and Insurance, FDIC, etc. all have regulations pertaining to appraisals. All are aimed at financial institutions however, not the appraisers.

Have a great rest of your day Marion.

Hey Dale,
That’s why I always ssy everyone should read them for themselves and post a link.

I don’t make a penny from how anyone else, interprets anything else, so I’ve got nothing to hide from, nor any need to tell anyone else what to think.

Consider that.

.

 

[glenn walker]

Hey Dale,
That’s why I always ssy everyone should read them for themselves and post a link.

I don’t make a penny from how anyone else, interprets anything else, so I’ve got nothing to hide from, nor any need to tell anyone else what to think.

Consider that.

.

Marion quotes laws and regulations BUT she has issues when it comes to understanding how laws are regulated or enforced and it's obvious she has no education in law or has never been in courts or worked with regulators ** Because if she did it would be a big wake-up call- Money Center Banks and Government Agencies are not constricted by non-sensible conversation about USPAP or if Evaluations are legal or not because they have the gold and Marion and a few others believe just because something is in print it's law. If I was on death row I would never want her representing me because as she was reciting laws and regulations the executioners would be strapping me in the chair ** LMAO

 

[Meandering]

Hey Glenn,

You just wish you could find those laws all by yourself, before I do.



And yet nobody answered the question.

Ah but I got an answer for someone else.

.

 

[Meandering]

I have a question, which might be a bit stupid so bare with me please.

If the appraisal process has not changed, and USPAP follows the appraisal process, other than eliminating the need for the appraiser to go into the field and look at the property (and therefore relying on another persons/trained or not, descriptions of the property), what has changed in the process? To me, the data gathering and analysis leg of the process is probably at least half, to 3/4 of the work, with maybe 15-20% being the site observation and the remainder the reporting part. I am not seeing where the big time saving issue is accept for maybe getting someone in to see the property quicker, but still at least 75% of the work isn't at the site.

What am I missing?

What you are missing is that nobody wants to pay appraisal prices for evaluations and nobody wants to buy MBSs that are backed by evaluations.

.




http://www.mortgagenewsdaily.com/mbs/

Need more scape goats.


.

 

[Meandering]

Oh and Glenn,

Just in case you don't understand the above post, here you go.


https://www.blackrock.com/fp/documents/MBS.pdf


Oh man,
and that principal was
valued from a desktop,
by an appraiser who relied on the information provided by someone else, the appraiser doesn't know.

So as interest rates rise,
there is a longer maturity to MBSs,
and a greater risk.

Quick get more appraisals and less evaluations, that'll mitigate the investor's risk.



'Cause wes B professionals.
with E&O insurance.
and licenses to blame.