BPO and Appraisal

[J Grant]

DMZ, if you care to revisit the enless several month old thread on using REO's, those links to FHA and Fannie were posted several times. I don't feel the need to look them up and repost them because you can look them up there, I am surprised you don't remember them...as to who is correct or not...time will tell, see whose values hold up etc. There is, to be honest, validity on both sides of the argument, I still think proper use of REO's reflects true market activity when they are present, but I see where you and Res Guy and Mentor make some good points, even though I don't always agree with them.

I am starting to hate appraising in this market and wish I could be a bear and hibernate till it all goes away and gets better...like for the next 3-5 years?woohoo

 

[coolhandluke]

Whats missing

DMZ, if you care to revisit the enless several month old thread on using REO's, those links to FHA and Fannie were posted several times. I don't feel the need to look them up and repost them because you can look them up there, I am surprised you don't remember them...as to who is correct or not...time will tell, see whose values hold up etc. There is, to be honest, validity on both sides of the argument, I still think proper use of REO's reflects true market activity when they are present, but I see where you and Res Guy and Mentor make some good points, even though I don't always agree with them.

I am starting to hate appraising in this market and wish I could be a bear and hibernate till it all goes away and gets better...like for the next 3-5 years?woohoo

JG, et al- The point that everyone is missing is the function of the appraisal that the original poster was referring to. She had received a request to perform an appraisal for the purpose of REO valuation, not for mortgage financing. Under these circumstances the dreaded FNMA appraisal guidelines, which were developed to aid mortgage U/W's spot possibly flawed appraisal methodology, are not relevant.

Back before SOW when 'departure' was an option in appraisal reporting, we used to write a brief description identifying the client/intended user(s) and purpose or function of each individual appraisal report, i.e; mortgage financing, tax appeal, estate settlement, divorce or asset valuation for REO.

I think everyone will find it much easier to appraise a property for the purpose of REO valuation if they remember that Fannie Mae mortgage origination guidelines do not apply. Just as they don't apply when appraising a home for the purposes of tax appeal, estate settlement, divorce, etc, etc.

 

[DMZwerg]

I think everyone will find it much easier to appraise a property for the purpose of REO valuation if they remember that Fannie Mae mortgage origination guidelines do not apply. Just as they don't apply when appraising a home for the purposes of tax appeal, estate settlement, divorce, etc, etc.

If what you state is correct then the 1004 forms should NOT be used and the FIRREA Definition of Market Value would NOT be applicable. Note that my comments apply to the FNMA 1004 and the FIRREA DoMV contained therein. Thank you for your support.

 

[J Grant]

JG, et al- The point that everyone is missing is the function of the appraisal that the original poster was referring to. She had received a request to perform an appraisal for the purpose of REO valuation, not for mortgage financing. Under these circumstances the dreaded FNMA appraisal guidelines, which were developed to aid mortgage U/W's spot possibly flawed appraisal methodology, are not relevant.

She did not say that, what she said is received an appraisal order for a 1004 report, on a subject that is lender owned. Since her client ordered it on the 1004 form , the form does not say, "Purpose of the appraisal, REO valuation", the form says, "purpose of the apprasial, to derive an opinion of market value"...

Back before SOW when 'departure' was an option in appraisal reporting, we used to write a brief description identifying the client/intended user(s) and purpose or function of each individual appraisal report, i.e; mortgage financing, tax appeal, estate settlement, divorce or asset valuation for REO.

Isn't an appraiser still allowed to do that? Isn't that what an appraiser does when they do it as a narrative and not on a form?

I think everyone will find it much easier to appraise a property for the purpose of REO valuation if they remember that Fannie Mae mortgage origination guidelines do not apply. Just as they don't apply when appraising a home for the purposes of tax appeal, estate settlement, divorce, etc, etc.

Where did you get info that Fanie Mae mortgage guidelines don't apply when a client orders on a 1004 form, when the subject is an REO? It is not so much about the MORTAGE guidelines, it is about Fannie guidelines, and FIRREA, and unless you state otherwise in the report, those are the guidelines the client is expecting.

If an appraiser appraises for tax, estate, divorce, etc, they should use a general purpose form and not a 1004 form, and though Fannie standards would not apply, USPAP and proper development of value principles would still apply.

 

[residentialguy]

the form does not say, "Purpose of the appraisal, REO valuation", the form says, "purpose of the apprasial, to derive an opinion of market value"...

If an appraiser appraises for tax, estate, divorce, etc, they should use a general purpose form and not a 1004 form, and though Fannie standards would not apply, USPAP and proper development of value principles would still apply.

I agree with the above. The problem may be that the bank ordering it was assuming: that because it is a REO and because the bank is ordering it to find the market value, they assume that the appraiser will find the market value as it is (or will be) - the value as a REO sale. But, the appraiser wasn't a mind reader and appraised it according the the presumed sale defined in the 1004...the BPO was based on probable price of an REO sale...surprise, the BPO is lower.

 

[JSmith43]

I'd join in, but who needs an enema?

 

[CANative]

I don't see how the old departure rule figures in.

 

[residentialguy]

I think they mean departure from the pre-printed form defining MV.

 

[J Grant]

I have no idea if the appraiser's report was good or not or if the correct or best comps were used. But the BPO being lower...wow who woulda thought? BPO's are for the most part crap, I have seen them much lower, and then much higher than appraisals. If the appraiser believes in her value, then she just needs a brief comment to the lender why the BPO comps are not the best comps and why the BPO value was not credible. It seems this lender is perhaps ignorant of REO appraisal ordering, normally it is ordered on a 1004 form for market value, and then an REO addendum with a quick sale value.

The OP does not seem very interested in particpating in her own thread, which gives a lack of feedback for all the effort posters have put in.

 

[residentialguy]

The OP does not seem very interested in particpating in her own thread, which gives a lack of feedback for all the effort posters have put in.

Yeah. makes you wonder.