Appropriate definition of Market Value

[CANative]

There was a Q&A from the ASB a few years ago the issue of whether the fact that the definition was printed on a Fannie/Freddie form was in itself considered citing the source as the GSEs. If I recall correctly, the answer was that no additional citation was needed as the source was obvious.

Imagine that!

 

[timd354]

The reviewer is technically correct. No where on the pre-printed form does it indicate where the definition of market value comes from. FWIW, the forms use the Title XI FIRREA definition of 1989.

The definition of value comes from the Fannie Mae/Freddie Mac pre-printed appraisal form itself that the appraiser was undoubtedly required to use as an assignment condition - thus the source of the definition is self-evident and has already been provided without further comment from the appraiser. There is no need to further explain where from or why Fannie and Freddie adopted it. USPAP FAQ 159 states that if the source of the definition of value is the engagement letter, it is okay to cite the engagement letter as the source of the definition of value....I think that this is a analogous situation.

 

[Francois K. Gregoire]

"Once again, the hardwired definition of Market Value within the 1004 does not cover this?"

Assuming the Bank required utilization of the Fannie Summary Report format -

Yes it does. refer them to form 1004_2005 Page 4, pre-printed and required DOMV, Source FNMA

Background: The Source for the Definition of Market Value utilized herein was published by Federal Regulatory Agencies pursuant to Title XI of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989 between July 5, 1990 and August 24, 1990, by the Federal Reserve System (FRS), National Credit Union Administration (NCUA), Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), and the Office of Comptroller of the Currency (OCC). This definition is also referenced in regulations jointly published by the OCC, OTS, RFS, and FDIC on June 7th 1994, and in the interagency Appraisal and Evaluation Guidelines, dated October 27, 1994. To whit

“Market Value” is the value Appraisers are required to use when appraising property for a Federally Regulated Transaction, unless clear statements to the contrary are used. The definition is included in every FNMA appraisal

Not to split hairs, but the Interagency Appraisal and Evaluation Guidelines have been updated. Published date is December 2, 20XX (correction) 2010. (Thanks Mike!)

 

[Francois K. Gregoire]

I have the following comment in my Expanded Comment Section:

SOURCE OF THE DEFINITION OF MARKET VALUE IN THIS REPORT:
Fannie Mae Single Family, 2002 Selling Guide, Part XI: Property and Appraisal Guidelines (06/30/02) XI, Chapter 2: Appraisal (or Property Inspection) Documentation (06/30/02), XI, 205: Definition of Market Value (06/30/02)

To be more accurate, it might be best to cite the latest version of the Fannie Mae Selling Guide. As of this morning, the published date for the latest version is June 26, 2012. The Definition of Market Value is in B4-1.2-03, Definition of Market Value.

 

[Mike Kennedy]

Not to split hairs, but the Interagency Appraisal and Evaluation Guidelines have been updated. Published date is December 2, 2012.

http://www.FDIC.gov/regulations/examinations/supervisory/insights/siwin11/siwin11.pdf

See FIL-82-2010, Interagency Appraisal and Evaluation Guidelines, December 2, 2010, at http://www.FDIC.gov/
news/news/financial/2010/fil10082a.pdf.

http://www.FDIC.gov/regulations/laws/rules/5000-4800.html

P.S. I used the older quotation to indicate how long the Definition has existed i.e. "Background".

 

[MgmtCoReviewer]

Wouldn't FAQ 203 address this issue, showing that the information preprinted in the FNMA 1004 form is adequate?

 

[Meandering]

681 (v) state the type and definition of value and cite the source of the definition;
682 Comment: Stating the definition of value also requires any comments needed to
683 clearly indicate to the intended users how the definition is being applied.
684 When reporting an opinion of market value, state whether the opinion of value is:
685 in terms of cash or of financing terms equivalent to cash, or
686 based on non-market financing or financing with unusual conditions or
687 incentives.

The preprinted form does not meet all the USPAP requirements.

.

 

[Terrel L. Shields]

Glendower:

I can call spirits from the vasty deep.

Hotspur:
Why, so can I, or so can any man;
But will they come when you do call for them?

much ado about nothing

 

[Meandering]

T,

Agree with you. But it's the details that some boards will use to step on your throat.

Being an appraiser is like being the duck in the shooting gallery, but your target is much, much bigger.

.

 

[BRCJR]

The reviewer is technically correct. No where on the pre-printed form does it indicate where the definition of market value comes from. FWIW, the forms use the Title XI FIRREA definition of 1989.

Correct. The source is not cited. But really.......................the reviewer needs to move on.