2055 & USPAP

[J Grant]

USPAP references EA be credible, it does not specifically advise which box to check on a 2055 form.

OF course a report can be "As is" and have extraordinary assumptions. In fact, virtually every report has this...for example, even when we do an interior inspection, we don't know if there is mold or ground contamination etc. We make the extradoniary assumption that there are no unseen adverse conditions present that would affect value.

Same goes for a 2055. We make an extraordinary assumption that interior is in average or good condition, or that based on our sources, it has 5 bedrooms and 3 baths (while disclosing that we have not inspected the interior).

I am not crazy about doing 2055 reports but when I do them, I do them "as is" (unless I observe ext repair issues), and I make an EA about condition and # of rooms etc. I then also state that should it be discovered that the condition is not average or that there is an unknown adverse condition present, the MVO would not be reliable.

 

[ddnma]

I have now received 2 calls about this file. The head people are telling me that the Head appraiser has talked to USPAP, Fannie and Freddie, and that it is not a USPAP violation to use EA and still mark the report "AS IS" I believe some USPAP instructors on this form have said that since they have added the 3rd box stating the EA portion, this is the box that must be used. The firm is now saying that they may not be able to pay if the report is no marked "AS IS" since the lender requires the report to be completed only "AS IS". Any comments about this.

If this is for mortgage finance... the EA of regarding the interior (similar to the interior of the walls with a 1004) has already been taken care with the scope of work on the pre-printed form. If you were unable to provide a credible report without more knowledge of the interior, the appraiser is to turn down the assignment.

 

[J Grant]

Well put, Ddnma

 

[Doug Trites]

This is to determine market value for a home they got back I believe. If we can use the "AS IS" box, why was the 3rd box added that talks about EA and some of he USPAP instructors on this form that have talked about using this box when you are using EA. I have stated through out the form that EA has been invoked and that if the condition of the interior is not in average condition, this would have an impact on the report, and the report would be null and void. Is this a battle I should not be fighting about which box should be checked? I just want to know if I am in violation of any standards by checking the "As Is" box when using EA.

 

[Webbed Feet]

You're right. but you're wrong!

I am doing a 2055 Exterior and have checked the box, subject to the following required inspection based on the extraordinary assumption that the condition or deficiency does not require alteration or repair. I have checked this box because I have used the extraordinary assumption due to not knowing the interior condition of the subject and using the assumption that the interior is in average condition. The lender wants me to check "as is". It is my understanding that when we are invoking an extraordinary assumption, we are to use the box I used and spell out why, which I did. Am I wrong with this point. I thought USPAP required we do it this way. Any information on this matter would be of great help.

No, the USPAP did not make any such "requirement."

I have now received 2 calls about this file. The head people are telling me that the Head appraiser has talked to USPAP, Fannie and Freddie, and that it is not a USPAP violation to use EA and still mark the report "AS IS" I believe some USPAP instructors on this form have said that since they have added the 3rd box stating the EA portion, this is the box that must be used. The firm is now saying that they may not be able to pay if the report is no marked "AS IS" since the lender requires the report to be completed only "AS IS". Any comments about this.

LOL! Ahhhhh the "head appraiser" needs their head checked because the USPAP is NOT a person... making "talked to USPAP" rather impossible, unless the head appraiser is a medium and somehow USPAP is a spirit.

Talked to "Fannie and Freddy" .. ? Yeah, sure. I'd like to see all that in writing on official letter head. Please, invite this "Head Appraiser" to post on this forum and identify themselves. The very first thing we will beat this person over the "head" with is they are NOT your state licensing authority. Therefore, this person should stop getting appraisers into potential trouble by their incorrect interpretations of the USPAP. Or what I said.

Comment on getting paid thing to follow.

This is to determine market value for a home they got back I believe. If we can use the "AS IS" box, why was the 3rd box added that talks about EA and some of he USPAP instructors on this form that have talked about using this box when you are using EA. I have stated through out the form that EA has been invoked and that if the condition of the interior is not in average condition, this would have an impact on the report, and the report would be null and void. Is this a battle I should not be fighting about which box should be checked? I just want to know if I am in violation of any standards by checking the "As Is" box when using EA.

Ok, the real issue here is you are asking the wrong questions because you've utterly failed to comprehend where the starting point of using or not using an EA should have taken place.

This isn't a question of have you handled applying an EA correctly, versus a 2005 Fannie 2055 appraisal form, because you have. Where you mucked this up is not having followed the USPAP in the SOW Rule when and where you were required to COMMUNICATE with your client BEFORE you made a SOW determination to use an Extraordinary Assumption.

What should have occurred was YOU should have TOLD your client you wanted to use and needed to use an EA at the time of engagement. At that point, if the client started demanding that no EA be used and that CB1 (as is) had to be used.... then YOU should have turned down the assignment with explaining to them their view on how to approach it is an unacceptable assignment condition.

Because of all the stupidity Fannie put into the 2005 version 2055, you should have suggested to this client that everyone could be happy IF they approved their acceptance of the old 1996 2055 version of the form for reporting of the appraisal instead. However, all the above said, because YOU failed to communicate with your client to get their agreement to the use of an EA, and as a result of that YOU failed to properly determine the SOW for the assignment by NOT being clear about the INTENDED USE before you accepted the assignment... I'd say yes, I would think they can get away with not paying you.

 

[residentialguy]

Good points, WF. However true that is, it is more than the Head Appraiser, (lol) knows. They haven't come at OP with the last point you made, therefore I wouldn't suggest going there. Battle them on their ammo, which is a joke.

Talked to USPAP and F&F

I'll bet he has a blue man avatar

 

[Webbed Feet]

Another tactic.

...is to make them read the report..

This appraisal report is subject to the following scope of work, intended use, intended user, definition of market value, statement of assumptions and limiting conditions, and certifications. Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted. The appraiser may expand the scope of work to include any additional research or analysis necessary based on the complexity of this appraisal assignment. Modifications or deletions to the certifications are also not permitted. However, additional certifications that do not constitute material alterations to this appraisal report, such as those required by law or those related to the appraiser’s continuing education or membership in an appraisal organization, are permitted.

So I would challenge them to prove Fannie is contradicting her own forms. Fannie herself preprinted that an EA cannot be added and then CB1 used. Regardless, many state boards consider a report that says a thing in one place of the report, and then contradicts itself somewhere else in the report, to be a violation of the USPAP as a misleading report.

Again, I would suggest the solution is to allow reporting on the 1996 year version 2055 form that does not prohibit the addition of EA or HC when done outside of the use of check boxes 2, 3, and 4.

 

[sputnam]

EA's have to be disclosed in the report. Assuming that you do that, there is nothing that prevents you from appraising a property as-is, but based on the assumption that the quality and condition of the interior of the subject is average...or...if you prefer, consistent with the observed condition of the exterior.

The certifications and assumptions pre-printed on the 2055 are already designed to deal with the exterior only inspection. They may, or may not, do it in a way that makes you happy. You'll need to decide for yourself. Might be a good idea to read them thoroughly.

 

[J Grant]

Appraisers make assumptions (extraordinary assumptions ) on Virtually ALL "as is" reports. Read the five ASSUMPTIONS and limiting conditions for an interior inspection on a URAR form. Even though we inspected the interior, the report is based on the assumption that no non visible adverse site or env or structural deficiencies are present, that there are no matters of a legal issue affecting value, etc.

Doing an ext inspection just adds another assumption (EA). Whether or not one wants to sign off on this is another matter, however, the assumption about interior is compatible with an as is report for a 2055 .

 

[Webbed Feet]

The only way possible that any appraiser could believe that the 2005 year version of the 2055 is designed for exterior only inspections is if that appraiser just cannot comprehend what "Modifications, additions, or deletions to ... assumptions ... are not permitted." means. That and not bothering to read certification number ten of that appraisal form.

When that form came out the next wave of CE classes and statements by state board administrators all reflected the same view. The view was that for all practical purposes Fannie had just said she didn't want exterior only inspections any longer except in rare cases. The view of the time was expressly stated to be due to the prohibition against the use of EA's and certification number ten. There was no quibbling over what the form was "designed for," it clearly was designed to stop most exterior only inspection based appraisal development and reporting.

As the years have gone forward, the licensees in this trade have massaged and brainwashed themselves into believing otherwise as a means of getting paid for more appraisal assignments. Of course, once the massaging and brainwashing gets started it never stops. The more that "Good" trade members join in with the massaging and brainwashing of themselves on what they think are small matters they can rationalize away, the more Skippies are encouraged as the general message becomes "Everyone does it!"