1004D Form, Appraisal Update

[dane84094]

I have been asked by one of my clients why I didn't provide a value on an appraisal update as I had stated on the update that the subject was in a declining market. I did the appraisal in May 2011. They want to know a new value. I told them to order a new appraisal. A second client just asked the same thing on an appraisal I did at the end of September.

Here is Fannie Mae's definition of the scope of work for this update.

Scope of Work for an Appraisal Update

The appraiser must, at a minimum:

1. concur with the original appraisal,
2. perform an exterior inspection of the subject property from at least the street, and
3. research, verify, and analyze current market data in order to determine if the property has declined in value since the effective date of the original appraisal.

Am I missing something or are the lenders finding a new/cheaper way of getting a new value on these properties? I have never mentioned a new value on an appraisal update... am I wrong here? I have to make a rebuttal as son as I can. HELP! m2:

 

[residentialguy]

Bingo. Charge accordingly.

But if there is a "hint" of decline, I will not concur based upon the limited scope of work given and request a full appraisal, which they will have to do. Now you just got an extra $150-200 on top of that next order. woohoo

 

[NORTON]

ask them where that new value would be placed on the form?

 

[Scott R Marshall]

My question would be, if you determined that the market was declining and that the decline affected your original opinion of value, did you not already run enough data to determine by how much, at least on a percentage, if not on an actual dollar amount, basis?

You're not required within the 1004D to provide a second opinion of value, as that would imply a change in the original effective date of the appraisal report. But you should have already completed enough work to know what the property is worth on the date of the 1004D "update".

The 1004D update section is very problematic and many appraiser here on the forum would tell you to avoid that section of the report. What it entails is a second appraisal which the client generally tries to get for a steep discount, hence the ordering of a 1004D. I've done them, but the client has paid for them and my workfile has all the data of a second appraisal in it.

I guess ultimately, rendering the second opinion of value is a business decision with any and all associated fees. Your workfile must meet USPAP minimum requirements and whether it is a resticted use or summary will be based both on what you and your client are comfortable with..

 

[Ca Ar Independent]

I just got one of these requests yesterday for an appraisal I did in August. I asked for a fee increase due to the requirement of the exterior inspection and the required market analysis. They have yet to respond!! Interesting scenario. This was a high value property that I know they did 2 appraisals on at the time and there were many initial requests for more data, more commentary, calls from the "review appraiser" and so on. I guess the 2 appraisals must have been far enough apart in value that they are trying to determine which is more accurate. In my opinion, in order to properly answer the question of value change, a completely new analysis must be made of the market including reviewing new data, hence a reasonable fee is appropriate. But then, I always think a reasonable fee is appropriate!

 

[dane84094]

On the first one, I sent the update with the market analysis, declining market. No value! They want a value. The second request is for a "value" update. I just told both to order a new appraisal if they were after an updated "value" thanks to your help.

Thanks again for your help!

 

[residentialguy]

On the first one, I sent the update with the market analysis, declining market. No value! They want a value. The second request is for a "value" update. I just told both to order a new appraisal if they were after an updated "value" thanks to your help.

Thanks again for your help!

No...they don't get a value with 1004D. That is just a declining market indicator. If they want a hard value, then tell them to order a full appraisal. You can't state a value on the 1004D. Seriously. They need to order another appraisal.

 

[Mike Kennedy]

Suggest you folks actually read the SOW for the 1004D Update of a prior appraisal - section.

If you report the value has declined (OR in a "declining market" aka less than the original value opinion) as of the NEW EFFECTIVE DATE (i.e. the date of the update) keep in mind that an appraisal opinion may be expressed as a point of value, range of values, or as a DIRECTION in value - you MUST attach full support for that opinion, SR 1 and 2 kick in


USPAP 2010 FAQ

240. FANNIE MAE UPDATE REPORT FORM 1004D/FREDDIE MAC FORM 442

I have been asked to provide an update of a previous appraisal assignment and to
report the results on Fannie Mae Form 1004D/Freddie Mac Form 442. The form
asks me to check yes or no in response to the question “Has the subject’s market
value declined since the original appraisal date?” I have the following two questions.

Question: (1.) Does this constitute a new appraisal of the property?

Response: Yes; this is a new appraisal with a new effective date. Additional guidance can be found in
Advisory Opinion 3, Update of a Prior Appraisal.

Question: (2.) How much of my analysis must I include in the report?
Response: Form 1004D is labeled as a Summary Appraisal Report. Therefore, the appraiser must provide a summary of the analysis conducted in the assignment.

The analysis will vary from assignment to assignment, so the information required in the report will also vary. In some cases it might be possible to summarize the analysis using the three lines provided on the form itself. If the space provided is insufficient, then the appraiser must supplement the form.

As with any written appraisal report, the appraiser is also required to include a signed certification.
For Fannie Mae Form 1004D, which would be used for a real property appraisal assignment, the signed certification must be similar in content to that required in Standards Rule 2-3. If the certification included on the preprinted form does not cover all of the points required in Standards Rule 2-3, the appraiser must supplement the certification.


AO-3 UPDATE OF A PRIOR APPRAISAL

http://www.USPAP.org/AO/ao01_10/ao_03.htm

 

[Ca Ar Independent]

My people have yet to get back to me. I can see them sitting at their desks scratching their heads wondering what to do now that the appraiser did NOT just agree to "check the box". I think the 1004 form as an "appraisal update" should be "retired" and if the UW and all involved can't get a file processed in a reasonable amount of time (4 months in this case) then of course they should order a new appraisal instead of trying to take the short and cheap route.

 

[Mike Kennedy]

1. Appraisal Update and/or Completion Report (Form 1004D)
   
   www.efanniemae.com/sf/formsdocs/forms/1004d.jsp
   This report form is intended to provide the lender/client with an accurate update of a prior appraisal and/or to report a certification of completion. The appraiser ...
   Scope of Work for an Appraisal Update
   The appraiser must, at a minimum:
2. concur with the original appraisal,
3. perform an exterior inspection of the subject property from at least the street, and
4. research, verify, and analyze current market data in order to determine if the property has declined in value since the effective date of the original appraisal.

Required Exhibits

• For new or proposed construction, clear, descriptive photographs (either in black and white or color) of the completed improvements must accompany this report form
• Any other data--as an attachment or addendum to the appraisal report form--that are necessary to provide an adequately supported opinion of market value $$$ <<<<<<<<<
  

1. [PDF] Guidance for Lenders and Appraisers (4.1.09)
   
   www.efanniemae.com/sf/guides/ssg/.../pdf/appraisalguidance.pdf
   File Format: PDF/Adobe Acrobat
   requirements in the Fannie Mae Selling Guide for performing and ... Fannie Mae Appraisal Forms. ...... Form 1004D, Appraisal Update and/or Completion Report ...