1004d When I Didn't Do Previous 1004

[Deleted member 128537]

I've been asked to do a final inspection (no appraisal update) on a construction loan. Someone from 3.5 hours away did the previous report over a year ago. The previous report is riddled with errors just on a cursory reading. Example the report gives no adjustments for site differences when the previous report gives a value of $25,000 to the subject's site. And that's about right, actually. But comp #2's site is worth at least 165,000 with a a bluff view of Green Bay. That is clearly stated in the MLS. And all the other 2 sites are in an area where those sites sell for 60,000 to 65,000.

So what am I supposed to do? I really don't want my name on a 1004D and connected to a totally BS report like this. I'm kind of wondering what my responsibility to the lender is at this point. I know my assignment is not to do a review of the previous report. But glaring deficiencies are evident.

 

[Walter Kirk]

Don't do it!!

 

[hastalavista]

My 2-cents (and I know you know most if not all of what I'm going to say; but it is good to flesh out the issue):

The 1004D Certification of Completion (IMO) is typically an appraisal practice (one is acting as an appraiser) but does not include an appraisal. I say "typically" because there is a language in the form that could flip that.
Here is what the form states:



So, let's say the subject-to completion is the house is built to whatever the original appraisal says how it was valued.
The liability to the appraiser is to confirm that the house was built as represented in the HC of the original report; value is not an issue and whatever the original report concluded is not linked to the certification of completion (as long as the house is complete as represented).

On the other hand, (a) if the house is not completed as the original report indicates, (b) the client wants a 1004D to confirm that, and (c) the lender wants an opinion of how what has been done impacts value, then that flips the assignment into an appraisal.

I don't think you have any liability in regard to what the appraisal report valued the subject if whatever you need to certify has been completed.
If it hasn't been completed and you have to opine the impact on value, then I think you do accept liability (unless you did a new appraisal, etc.).

So, that's what I say on the technical side.

On the business side, if I thought the original report was not credible, I wouldn't touch the 1004D (or, if I did, I'd write a page specifically identifying what I was engaged to do and that my only linkage to the original appraisal was to confirm that the subject-to items were completed).
It would have to be a very good client for me to do it if I had doubts about the original appraisal report.

Good luck!

 

[Evincere]

I've been asked to do a final inspection (no appraisal update) on a construction loan. Someone from 3.5 hours away did the previous report over a year ago. The previous report is riddled with errors just on a cursory reading.

So what am I supposed to do? I really don't want my name on a 1004D and connected to a totally BS report like this. I'm kind of wondering what my responsibility to the lender is at this point. I know my assignment is not to do a review of the previous report. But glaring deficiencies are evident.

Decide. Tough it sounds like you have already decided - agonizing a minute more based on what you have said already makes no sense.

 

[spittman]

I've been asked to do a final inspection (no appraisal update) on a construction loan. Someone from 3.5 hours away did the previous report over a year ago.

Over a year ago. I wonder why they don't just order a new appraisal? Most lenders I know get an appraisal update or order new appraisal if it's been over 4 to 6 months.

Don't do it! Run!

 

[Elliott]

In my policy manual it says,

"17. The appraiser shall not do 1004D inspections or updates when the appraiser for this company has not completed the original appraisal because of potential liability issues."

 

[RSW]

Over a year ago. I wonder why they don't just order a new appraisal? Most lenders I know get an appraisal update or order new appraisal if it's been over 4 to 6 months.

Don't do it! Run!

Someone at at the Bank most likely forgot to order the final when they closed the loan and they found the lack of a final when there was an audit. The original appraiser most likely refused to do the final since it was so long ago.

 

[The Bob]

I do them. Usually can name your fee.
And I add this comment.

"The scope of work for this assignment (1004D) is to verify completion of items in original appraisal dated xx/xx/xxxx"

 

[Mr Rex]

I wonder how hard it would be for one of those computer saavy AMC appraisal review phone jockeys from Mumbai or Karachi to add an X to the upper section of the form and add a canned comment that the market had not declined etc. as the report passes through the AMC on the way to the lender?

 

[Mark K]

I'd have no problem doing it and have done so many times in the past. Its a final inspection.

My only caveat is that I require a copy of the plans and specs to be sure the property was constructed accordingly. A couple of times I pulled up to a home under construction that looked nothing like the plans. Owner and builder had changed the design (cheaper). That makes it interesting.