A few questions on REO Appraisal Procedure

[Webbed Feet]

<......snip.....> after the property is restored to as is condition. <.....snip.....>

Yeah, I once had a property that was completely remodeled and just lovely, but I had to require that they restore it to it's as is condition too.

 

[ZZGAMAZZ]

I probably used the wrong verbiage, in the wrong context, although a property would be restored to its as is condition if the property requires no repairs, and so the as is status is identical to the as repaired status??? (hard to admit I'm wrong but probably best to do so NOW)

 

[CANative]

If the property requires no changes then it is simply as is. The value on the #2 line (as repaired) would simply be NA or if the AMC monkey needs a number simply because they need something in that box it would just be the same as the #1 line (as is).

Same with the #3 and #4 boxes although they might be different than the #1 and #2 box because there is a client stiplulated time frame.

If typical exposure is the same or less than the client stipulated time and the property needs no changes then all 4 values are the same.

 

[ZZGAMAZZ]

Thanks for clarifying...

Does a client-imposed exposure time of, say, 60 days, mean that the client wants to know the as-is and as-repaired values of the property on the effective date, based upon 60 days of market exposure?

If so, what is the value to the client to know these two values on the effective without knowing the actual market-based exposure? I honestly don't understand the intended use. Even if I am finally understanding the process, wouldn't it make more sense for the client-imposed values be stipulated "relative to" the market-based exposure? Say, the client-imposed values are based upon 30-60 days MORE than the actual exposure, or, conversely, 30-60 less. The client has no way of knowing the true exposure and so it's somewhat pedantic to ask for an alternative exposure when the alternative exposure might be defined the same as the actual exposure.

This is a tangled web and I have a difficult time understanding things that don't make sense, i.e., low tolerance for ambiguity, although it's possibly the wrong profession for that sort of intolerance.

Please continue to clarify. I'm wondering why the remainder of the Forum is extraordinarily mum on this thread...maybe pitying my inability to understand???

 

[joe huffman]

I agree with Boyd on this one, the REO addendum should not and cannot be used especailly with Fanniemae, goes against all common sense and the SOW...just my two cents worth

 

[CANative]

Does a client-imposed exposure time of, say, 60 days, mean that the client wants to know the as-is and as-repaired values of the property on the effective date, based upon 60 days of market exposure?

Yes. That's what they're saying.

But we can't be sure what they mean and expect by "market exposure" because it's just a couple of words on a pre-printed form and not instructions from the client. And these two words are not defined in this configuration.

I have been assuming it simply means exposure time which precedes the date of value. My comp selection will be based on sales which required the same or less time than the client specified. In a 180+ day market, for example, less than 60 days sales will almost always be distress sales of some sort or even auction sales. There are two problems (IMO) with that. 1) It unnaturally funnels the sales into categories in which they might not belong, and; 2) if what the client really wants is our advise on marketing the property under their conditions then the conclusions could be dead wrong.

 

[Webbed Feet]

Thanks for clarifying...

Does a client-imposed exposure time of, say, 60 days, mean that the client wants to know the as-is and as-repaired values of the property on the effective date, based upon 60 days of market exposure?

That depends. The first thing you have to do is get them to provide the definition of "day" that they are using. Because the entire problem could be you are using a different one.

If so, what is the value to the client to know these two values on the effective without knowing the actual market-based exposure?

Now remember, value is an opinion. So whatever the opinion of the client is regarding the two opinions is ok, because they get to have their own opinion if they want to.

I honestly don't understand the intended use.

If you don't understand the intended use, then you probably don't know what the intended use is. If you don't know they intended use, USPAP says you can't proceed until you do. So to understand the intended use, and comply with USPAP, all you have to do is ask the client what the intended use is. After that, you might understand it AND know what it is both. Problem solved!

Please continue to clarify. I'm wondering why the remainder of the Forum is extraordinarily mum on this thread...maybe pitying my inability to understand???

Of course I would have no idea why more members are not posting in this thread. But I'd have to guess the main cause would be if they did you would stop posting pondering all of this and then the fun would stop.

 

[CANative]

They intend to use the appraisal for developing a marketing plan in getting rid of the subject property.

What does "market exposure" mean?

 

[Webbed Feet]

<.......snip........>then the conclusions could be dead wrong.

But remember, the dead are not a protected category of citizen in the U.S. so it's ok to use that word in your reports. But don't refer to a "Dead Value" as then USPAP would require a definition for that. And whatever you do, don't ever use "Fair Dead Value" as that definition has been dead to mortgage related work for years now and can lead right into having to explain using a dead fair dead value, or "DFDV" for short.

 

[CANative]

Be serious Web.

I see this issue as being the most "dangerous" assignment type occuring at this time. The goal is not assessing risk for purposes of setting LTV, the goal is to mitigate loss. There are some complicated HBU issues to work through.