1004D in a declining market..

[jennifergrootegoed]

I appraised a $3,350,000 tract home in socal 05/2006 and now they requested a recert of value. Property declined by $120,000. They still want it. On new form I do not see where I put the new value..just a box and some lines for a declining market. Any suggestions. They told me they don't want a new report just cert of old. Lot of value to do the loan.

Thanks,

Jennifer

 

[Mike Seward]

I have not run into this yet, but why not check "yes" and in the space below, say it has declined by $120,000?

 

[Tony Blackburn]

Look here...http://commerce.appraisalfoundation.org/html/2006 USPAP/ao3.htm

Realize that the form doesn't dictate what you do, USPAP does....The form is just FNMA's format.

If the value has declined, you need to explain that market conditions have changed, add new, relevant comparables, and the rest of what has to be done to be compliant...

it is probably easier to do a new appraisal and give them a slight discount because you have inspected it before.

Careful of what they want and what you give them...make sure you are on the same page. I've never done a "Cert. of the old report". That would be pretty unusual. They are probably calling it a "Recertification." which is different than an update of value. Regardless, it's a new assignment, not an extension of the old appraisal.

 

[George W Dodd]

Jennifer,

I think you mean an "update" and not a recert. If there have been significant market changes (sounds like it) than an "update" should include the current market data on a new sales grid. An update is more than just a check box on a form.

 

[Marcia Langley]

Jennifer,

Also, remember that the 1004D Update has a new effective date. For myself, I would not be willing to make the Extraordinary Assumption that the condition of the property had not changed. This is a new assignment with a new effective date and different market data in the grid. Once you have made the 1004D totally compliant, it is as much work as simply using the 1004. Even if I were to report my appraisal on a 1004D (which I would not), the cost would be the same as a 1004. There is just as much work and just as much liability in the new assignment, either way.

 

[Jim Onderisin]

George: I think she means what she says. Fannie Mae has resurrected the old "recert" but now call it by another name.

 

[Tony Blackburn]

FYI...FNMA's guidelines for an update of value call for at least a drive by inspection anyways. as you have to go out anyways, might as well do a new interior inspections and a new appraisal.

 

[Kevin Mc]

I agree.....

Jennifer,

Also, remember that the 1004D Update has a new effective date. For myself, I would not be willing to make the Extraordinary Assumption that the condition of the property had not changed. This is a new assignment with a new effective date and different market data in the grid.

An appraisal dated 5/2006 has no relevance 7 months after the fact. New appraisal, inspection(even if it is a quick walk-thru assuming nothing has changed),new comparables,new effective date. You can tell them that is your version(and your E&O provider) of an "update".

 

[Ross (CO)]

Has the original Intended Use from the report in May still NOT yet been fulfilled ?......and is that why the request has been made to join an opinion offered 7 months ago with today ? That's one heck of a nice loan-lock to endure 7 months before taking papers to the closing table. Is there a chance.....that there might be an Intended Use today which is different from the Intended Use back in May and this client will simply now consider a $3,230,000 value statement as enough merit to fulfill a "new" business decision ?

If an amount of $120,000 (3.6%) LESS value is found to be pertinent to express a change-in-value of this same, and unchanged, property........then what market data review substantiates this $120,000 amount ? Only an appraisal process might render a value change conclusion. Was a "declining" market indicated in the May report ? Any client making a business decision today, and faced with a property's status as being IN a declining market, is surely going to want to see more direct market evidence about that decline. No ? Chuck the 1004D, and offer a new 1004 after the client clearly expresses the Intended Use of your new report as of....let's say, the 5th of January.

One might guess that a new 1004 done today......is going to (have to) indicate that the market is "Declining". Can this client handle that fact ?

 

[Kendall Jackson]

$3,350,000 tract home?
My gosh I'd hate to see what custom homes sell for in that market..