Are BPOs used for lending purposes required to be USPAP compliant?

[Francois K. Gregoire]

I'm running a little slow this morning, but if someone with an appraiser ticket and a real estate sales or broker ticket does BPO work, evaluations, whateverthehell we want to call them, must these be completed in compliance with USPAP or no?

It's my understanding that they do. I could be wrong though, it happened before once. ONCE (LOL).

Good question :icon_wink:

This would depend on a complaint being filed and the individuals sitting on the FREAB. I have heard several interpretations form several different members.

My own view (not that it means anything any longer) is that the assignment would be examined in light of the Ethics Rule of the USPAP. Specifically (as stated in lines 204 - 207 of the 2008 edition) is the individual representing that he or she is performing the service as an appraiser.

If I was making the decision, I would examine how the assignment was secured, what representations were made to the client, and why the client selected the individual for the assignment.

"I'm better for this assignment because I am a certified appraiser."

"We selected this individual because of their experience as an appraiser."

Examined in context, statements such as those above, would help me make a decision.

My question to all is this:

Are you really interested in this type of work?

Don't most of the BPO assignments come from the dreaded and hated Appraisal Management Companies?

 

[Francois K. Gregoire]

Thanks Frank. Still a little fuzzy on how USPAP applies to RE brokers/sales assoc, but I have a better grasp. I'm still blown away that appraisals for any amount or complexity can be completed by other than certified/licensed appraisers unless congress or bank agencies say different.

Keep in mind, this is a result of the fact that Florida was one of the states that required a real estate license to appraise long before Title XI of FIRREA was enacted. Real Estate licensees were always allowed to appraise anything in Florida.

It was a result of US Congressional action that real estate licensees could no longer provide appraisals for the newly created category of Federally Related Transactions.

To illustrate my learning curve, I once thought that any loan made by a bank or lender whose funds were insured by the FDIC were FRTs.
So thanks again.
Oh, one more question concerning the deminimus amount. How is it that they can determine $250k in advance of knowing what the estimate of value is? I've always thought it was important to go into the appriasal assignment with no preconceived notions or bias. You know, like not assigning fees to property values etc. Can I burden someone for some light on this too? Thanks for all you do.

The $250,000 deminimus refers to the amount of the loan transaction, not the value of the property.

§ 323.3 Appraisal not required; transactions requiring a state certified or licensed appraiser.

(a) Appraisals required. An appraisal performed by a state certified or licensed appraiser is required for all real estate-related financial transactions except those in which:
(1) The transaction value is $250,000 or less;
(2) A lien on real estate has been taken as collateral in an abundance of caution;
(3) The transaction is not secured by real estate;
(4) A lien on real estate has been taken for purposes other than the real estate's value;
(5) The transaction is a business loan that: ...etc., etc., etc...

http://www.FDIC.gov/regulations/laws/rules/2000-4300.html

 

[Kenneth Reynolds]

Thanks so much Frank. You have cleared up all my questions on this issue and I couldn't have asked for a better explanation. I'm sure our FL board will miss you. Thanks again.