1004 for HELOCs

[Tom4value]

Was typing an appraisal for a HELOC and something popped into my noggin that I never thought of before. My clients who want these (HELOCs) want them done on a 1004, which I have always done. It occurred to me that lenders who do HELOCs keep them in house and don't sell them to Fannie/Freddie. Should I not be doing these on a 1004 and a generic report? What does everyone else do?
Thanks

 

[Renee Healion]

Maybe they are just comfortable with seeing a 1004 or maybe they want to keep using appraisers for diligence reasons and that is what they associate with appraisers.
Some who keep loans in-house use a less comprehensive reporting format.
If the appraisal is only for one intended user (an institution being one intended user under this circumstance) then why not a restricted report? Isn't a valuation developed as an appraisal, however reported, better than an evaluation, for one?

 

[Amy Perkins]

I recently had a request to check other and Heloc instead of refinance. I was wondering if this was wrong, because it does technically finance the property. I think that for loan purposes they want it on a 1004 and that's the way it's always been done as far as I know.

 

[Renee Healion]

A second mortgage or line of credit is not the same thing as refinancing the first mortgage. Lien priority.

 

[bnmappraisal]

Maybe they are just comfortable with seeing a 1004

This is my take on the topic
I don't do many HELOC assignments, but that's what I was thinking

I guess I see Tom's point of view, too. Sort of like with private/non lending - you don't use the 1004 due to the pre printed comments
Good topic, Tom.

 

[Tom4value]

Please keep in mind, I am not arguing to my client that I don’t want to do it on a 1004. Quite the contrary. It is a great reporting format. I never thought twice about it because it is an appraisal for lending purposes.

I want to know if I am wrong for doing It on a 1004 since it is not for Fannie or Freddie. My thought process is we use the 1004 for FHA appraisals, which of course is not a Fannie/Freddie transaction, either. Why is that ok?

 

[Addie]

This report was done on a 1004 form as a client specific requirement. The client is built to uptake data on a 1004 form. Due to these reasons, a 1004 form has been used.

 

[Renee Healion]

I think Fannie is the drum major leading the parade. Lenders are used to their forms. Industry standard. So, I do not share your concern. I have my own goblins! lol

 

[glenn walker]

Please keep in mind, I am not arguing to my client that I don’t want to do it on a 1004. Quite the contrary. It is a great reporting format. I never thought twice about it because it is an appraisal for lending purposes.

I want to know if I am wrong for doing It on a 1004 since it is not for Fannie or Freddie. My thought process is we use the 1004 for FHA appraisals, which of course is not a Fannie/Freddie transaction, either. Why is that ok?

You are NOT appraising the loan! You are appraising the property and you are assuming they portfolio their first mortgages. Most lenders hold both the first and the heloc and often borrowers either pay the heloc off or combine both into one loan by doing a refinance and the lender always wants the option of selling a loan in the future.

Also appraisers never know where a loan is going to , when you do a 1004 and the lender sells it to Fannie you dont know it because loans are typically not sold one by one to Fannie they are packaged into a bundled or portfolio and it can be long after you ever did a report. The only time you ever find out who actually holds that bad-boy is when it defaults and that's when you often hear from the investor ** Just use the 1004 and don't give yourself and your client a headache

 

[mike32716]

The FNMA forms specify the use as mortgage lending. Since it's a HELOC it will not be going to the GSEs, but unless you modify the certs you are still under the obligation to follow FNMA assignment conditions (cert #21 indicates can send to GSEs) which means UAD formatting too. The client may keep the HELOC in house or sell it off (but not to the GSEs -- see cert #21 "...other secondary market participants"). Your only concern is that the intended user and use match what is in the certs. I've used the GPAR with my own certs for HELOCs and the lender was fine as they were keeping them in portfolio. Your client may be using automated review tools to check your appraisal (thus the 1004 requirement), and/or may want to sell it to the private MBS market which has standarized on FNMA assignment conditions.

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