Predetermined Value USPAP

[breakmaker]

What is considered predetermined?
I have a new client that sent and engagement letter for a refinance and this is on the letter.

Estimated Value: $450,000
Loan Amount: $330,000

Would this be considered a predetermined value?
My thought is this is a predetermined value as how can I ever prove I didn't accept this order with out having an expected value.
How is this different than a contract price?
My thoughts are a contract price is a fact set by 2 opposing parties.

Thanks,

 

[George Hatch]

I don't think that someone expressing their wishes to you causes a problem for you. If they're a lender it could cause a problem for them, though; so that's how I would approach it with them.

The way you prove that you don't rubber stamp every deal that comes through is by keeping track of how many appraisals you've returned that are either higher or lower than what someone else thought. And by doing your level best to do the same on this assignment.

 

[breakmaker]

From what I can tell it comes from the bank and the AMC writes a few things on it and emails it to me.

 

[Tawfik Ahdab]

This stinks of the mortgage broker tactics of the 2000s. I had enough of those for one lifetime. Send it back and insist that they remove any estimate of value since YOU tell them the value and not the other way around.

 

[Overimprovement]

Life is too short to get bothered much by this, IMHO. I don't think anyone is breaking any rules. A lender is entitled to state what they think something is worth. They are not saying 'needed value, etc. USPAP doesn't speak to what others do, it speaks to what you do. A client cannot be guilty of USPAP violations.

Do your job, opine a solid, supportable value, and if it less than what they are hoping for, and they stop sending you orders, so be it. I have lost a few good clients in the last couple years over that. I could fight it, but lets be honest, all the players and decision makers are in cahoots and any case would get swept under the rug.

Good luck!

 

[Tom D]

This stinks of the mortgage broker tactics of the 2000s. I had enough of those for one lifetime. Send it back and insist that they remove any estimate of value since YOU tell them the value and not the other way around.

the problem wasn't the mortgage brokers, it was the appraisers who couldn't be adults, and just say no to high wanted values. the brokers i dealt with never put pressure on me. but then i knew who the *****s were and didn't have them as clients. i can remember them, now gone. and some of the companies who bought them, are now gone. at that time i reviewed more bad appraisals than bad brokers. broker's world was much better than AMC's model. we were free to look for their business, and nobody ate part of the fee, and it was paid at door. let's not revise history to be so horrible before AMC's.

 

[djd09]

Appraiser Independence Requirements

(6)Providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the Borrower, except that a copy of the sales contract for purchase transactions may be provided

https://singlefamily.fanniemae.com/media/4711/display

 

[J Grant]

What is considered predetermined?
I have a new client that sent and engagement letter for a refinance and this is on the letter.

Estimated Value: $450,000
Loan Amount: $330,000

Would this be considered a predetermined value?
My thought is this is a predetermined value as how can I ever prove I didn't accept this order with out having an expected value.
How is this different than a contract price?
My thoughts are a contract price is a fact set by 2 opposing parties.

Thanks,

Doing an appraisal to arrive at a predetermined value (or value direction ), is an appraiser issue, not a client directed issue. This is stinky of the client and I am not sure they are allowed to do this. But they did it, so if you accept assignment, just know a client this low in their standards might challenge results below 450k.

Also know that with this client is probably a sleaze that gets audited, (and writes targets on orders ), so your appraisal might be challenged in a review at some time. So whatever $ amount MVO you opine, support it well and comment that you reviewed additional sales as well as the comps used in the report.

A statement I often put in appraisals regarding additional sales reviewed : (example)

"The appraiser reviewed other sales in addition to the comps used on the grid. There are properties that sold for higher amounts and properties that sold for lower amounts in the area. The higher priced sales tend to be larger, newer and have a pool or lake view. The lower price sales tend to be smaller, older, and of inferior upgrade houses. The comps on the grid are the more similar to the subject."

A client trying to influence value is what we have here... which is not the same thing as the appraiser shaping their appraisal results come to a pre determined value or value direction . But again, the fact that the client expressed a value they expect adds another level of possible scrutiny to this assignment.

 

[djd09]

it is not shocking that the posters that hated the scum bag mortgage brokers and the number hitters are not applauded by putting a target number. who could of imagined.

 

[Mark K]

A holdover from the 'good ol' days'.

I received no less than a few thousand appraisal requests with the same exact wording 'back in the day' so I suppose that I'm mostly immune to this.

If it offends you send it back. Otherwise simply do your job and don't worry about it.