2055 Exterior - Source For Interior Condition

[KeyWhiz]

Since every assignment includes the assumption that the data sources used are correct, that would be an ordinary assumption - the kind that you make regarding the comps in every assignment.

So rather than arguing this back and forth for the rest of the day, I'm going to ask you what you think about approaching the assignment this way.

I make no extraordinary assumptions about the interior. I state that my quality and condition ratings are based solely on the exterior and that no assumptions are made about the interior of the property one way or the other since no public records exist and I was not allowed to contact the borrower.

 

[RSW]

Why would Fannie be accepting any of these loans in the first place, then? But yes. I'd certainly like to know how many appraisals have been dinged because of an EA regarding interior quality/condition.

Seriously? Are we supposed to believe the Fannie doesn't accept such reports as credible but yet has never stepped forth to address the issue directly for TEN YEARS? It would take them ten minutes to send out an announcement page telling appraisers to not do this.

Maybe that is why Fannie retired the 2055 and 2075 a few years back.

 

[KeyWhiz]

Maybe that is why Fannie retired the 2055 and 2075 a few years back.

well, I DID receive an order from Fannie for a report on a 2055 last week. (An REO). Obviously they still have SOME use for it.

But if it's not being used for loan origination purposes any longer, then no lender looking to sell a loan to Fannie would order such a report. In which case, it kind of makes the whole topic a moot point, doesn't it?

 

[23Degrees]

Moot with regard to the 2055 but there is still the question of whether or not one can base a report on an EA without checking CB4 on the other forms.

If you are right and insertion of an EA at appraiser discretion without checking CB4 is a care free exercise at least with regard to SOW decisions then that would be surprising to me as that would not mean just for the 2055 or interior condition but many, many other situations as well. That would be some very strange, albeit very good news.

 

[KeyWhiz]

Moot with regard to the 2055 but there is still the question of whether or not one can base a report on an EA without checking CB4 on the other forms.

If you are right and insertion of an EA at appraiser discretion without checking CB4 is a care free exercise at least with regard to SOW decisions then that would be surprising to me as that would not mean just for the 2055 or interior condition but many, many other situations as well. That would be some very strange, albeit very good news.

So you've never used an EA on any report? Or do you always require an inspection when you do? Your clients allow you to require inspections?

 

[RSW]

Why would Fannie be accepting any of these loans in the first place, then? But yes. I'd certainly like to know how many appraisals have been dinged because of an EA regarding interior quality/condition.

Seriously? Are we supposed to believe the Fannie doesn't accept such reports as credible but yet has never stepped forth to address the issue directly for TEN YEARS? It would take them ten minutes to send out an announcement page telling appraisers to not do this.

Maybe that is why Fannie retired the 2055 and 2075 a few years back.

So you've never used an EA on any report? Or do you always require an inspection when you do? Your clients allow you to require inspections?

I never make an EA without recommending an inspection of something: CB4

 

[KeyWhiz]

I never make an EA without recommending an inspection of something: CB4

Recommending yes. But CB4 speaks of REQUIRED inspections. By what authority can the appraiser require an inspection? And if you check that box and only recommend one rather than require one.... how is that any less of a violation of the rules than would be checking the as-is box when using an EA?

 

[CANative]

Seriously? Are we supposed to believe the Fannie doesn't accept such reports as credible but yet has never stepped forth to address the issue directly for TEN YEARS? It would take them ten minutes to send out an announcement page telling appraisers to not do this.

Good question. For most of those years Fannie Mae did not process the appraisals in loan packages. They didn't even see them until the loan wen belly up. I think UAD came on line in what, 2012 or 2013?

Also, the issue is virtually invisible. If appraisers are doing it like you have been then one of the three "subject to" boxes will not be checked so there will be no requirement for clearing the issue. So they continue to sail through unless and until something goes wrong.

 

[23Degrees]

I've based a number of reports on an EA and to the best of my memory always with CB4 checked - at least post 2005. When a situation arises where I believe an EA is necessary or at least needs to be considered as an option I will always contact the client prior to proceeding. At that point an appropriate discussion regarding the course of the SOW can be had. Usually there are options as to whether or not to proceed either "as is" without the EA or "subject to" with it. Ensuring that the SOW followed is acceptable to the appraiser and agreeable to the client is necessary.

The determination of whether or not an EA is true would always require an inspection of some sort whether it be a roof inspection, a recovery and "inspection" of permits, a foundation inspection, to name a few. And it was my understanding that Fannie put the "no modification etc." language in the 2005 forms to stop the endless barrage of buried EA's not verified via an inspection of some sort or at least made conspicuous or "unburied" via the checkbox in CB4 but perhaps I'm wrong here.

The appraiser is ultimately the one responsible for the SOW so if the appraiser determines that an EA is necessary for a credible SOW the form does require an inspection but the client is free to waive that requirement and proceed if they are able to do so.

Is anyone else questioning this declaration that the appraiser is "never" allowed to require an inspection? I'm not saying KW is wrong here but I don't recall that mandate being exclusively with the client. I would never blindside a client with a CB4 report and we might again be back to differing over how the form verbiage should be interpreted but that is the appraiser's signature on the report that is requiring the inspection, I don't see anything on the form indicating that it is the client or Fannie requiring the inspection although I suppose the appraiser could make clear that the client is the one requiring it in response to the appraiser's EA.

 

[KeyWhiz]

Also, the issue is virtually invisible. If appraisers are doing it like you have been then one of the three "subject to" boxes will not be checked so there will be no requirement for clearing the issue.

But that's the lender's call as to whether it needs to be cleared or not. Not ours. If they are fine with an appraisal "as is" with an EA over some issue or another, then they don't see it as a something that would change the value enough to make or break the loan. If it is, they'll want an inspection and we then make the report "subject to" and check CB4.

In this manner it's similar to needed repairs. We can make the report "as is" and provide a cost-to-cure. If it's regarding an item where the value is so low as to not make or break the loan, that's what they will ask for. If it's a bigger deal, they'll want it fixed and we then make the report "subject to" and check CB3 and use a hypothetical condition.

It really seems to me you're taking the use of the these boxes beyond what they pretty clearly marked for without any substantiated basis for doing so.