Confused about USPAP, Marketing &/or Exposure Time

[Rich Heyn]

But I use the term "exposure" time in my narrative comments.

Assuming typical lending assignment, why bother to comment on exposure time?

 

[George Hatch]

I make a distinction between the neighborhood summary, to which the "marketing time" checkboxes apply, and the opinion of exposure time linked to the Market Value of the subject itself. If our subject is always like the "average" home for a given neighborhood the two would probably be very similar or the same, but we often appraise properties that are not typical.

 

[Couch Potato]

I see your point.

Rich, I agree the impact on reporting is minimal, but it is clearly an addition to the reporting requirements and it does "add to the intent, purpose and content of USPAP" in that USPAP has little to nothing to say about marketing time (only mentioned in Statement 6 where it refers to AO7 and Advisory Opinion 7 which is not part of the standards.) The analysis for marketing time is very similar to the analysis for exposure time, but not exactly the same and under certain circumstances can be very different. I think the strogest argument I can make for calling it a supplemental standard would be the content of AO7 itself.

 

[Rich Heyn]

Rich, I agree the impact on reporting is minimal, but it is clearly an addition to the reporting requirements and it does "add to the intent, purpose and content of USPAP" in that USPAP has little to nothing to say about marketing time (only mentioned in Statement 6 where it refers to AO7 and Advisory Opinion 7 which is not part of the standards.) The analysis for marketing time is very similar to the analysis for exposure time, but not exactly the same and under certain circumstances can be very different. I think the strogest argument I can make for calling it a supplemental standard would be the content of AO7 itself.

It has to add to the intent, purpose and content of USPAP and have a material effect on development and reporting.

Personally, I don't think it meets the test of "material effect" but it's really kind of an acedemic issue. Any appraiser worth his or her salt will be doing it anyway. I just like to make the point whenever I can that not every utterance from Fannie, Freddie, FHA or VA is a supplemental standard. Too many apprasiers labor under the misconception that the entire content of Fannie or Freddie's selling guides or in FHA's guidelines should be treated as supplemental standards. And Fannie and the others seem to do little to disabuse that misconception.

Frankly, I wouldn't be surprised to see the Supplemental Standards Rule retired at some point in the future. Given the new Scope of Work Rule and the focus on using all assignment elements (including assignment conditions, of which supplemental standards are one) as the basis of problem identification, the supplemental standards rule seems redundant. Perhaps it always was.

 

[Fred]

Assuming typical lending assignment, why bother to comment on exposure time?

So the intended user knows that the appraiser is not using 10 years as “reasonable” exposure?
Because Std 2 requires appraisers to report how the value definition is being applied?
Because it is part of the scope of work?

I wouldn't be surprised to see the Supplemental Standards Rule retired at some point in the future. Given the new Scope of Work Rule and the focus on using all assignment elements (including assignment conditions, of which supplemental standards are one) as the basis of problem identification, the supplemental standards rule seems redundant. Perhaps it always was.

I don’t see how the SOWR makes it any more or less redundant. Std 1 already said everything the SOWR says.

If a single binding imperative to do the necessary makes the supplemental standards rule redundant, then that single imperative makes the other individual “assignment conditions” requirements - like those for JE’s, HC’s or EA’s - just as redundant. Requirements to develop an approach when necessary and to develop HBU analysis when necessary would be just as redundant.

It would be hard to find a document more redundant the USPAP, except maybe that book the Jack Nicholson character was writing in The Shining. Necessary to produce a credible appraisal, necessary to produce a credible appraisal…

I have some fear that the ASB sizing up the SSR like it's a turkey near Thanksgiving may have something to do with the little tug of war that is going on between them and Fannie over things like "intended user." Because if the enemy is only redundancy, I can get rid of 200 of the 250 pages in the USPAP document. How did the SSR get to the head of the list when the new SOWR itself is redundant?

 

[hastalavista]

I have some fear that the ASB sizing up the SSR likes it's a turkey near Thanksgiving may have something to do with the little tug of war that is going on between them and Fannie over things like "intended user." Because if the enemy is only redundancy, I can get rid of 200 of the 250 pages in the USPAP document.

(my bold & underscore)

I have this same belief and have made this same point.
I don't have a fear (yet) about it because, right now from my perspective, it's like thunder and lightning in the clouds; I can hear it and see it, and sometimes I get rained on. However, for now, the likelihood of getting hit by the lightning is remote.

 

[Brad Ellis]

Moh, Steve, Rich, Denis

First, I do not believe at all that Fannie is asking for a forecast in the typical assignment. Given their own definition of market value contained right in the certification pages, they clearly intned this to be exposure time- hence, not marketing time.

The fact that Fannie gets it terminology wrong is not a surprise given all the hand wringing over terminology and wording going on right now, as Denis notes.

I think Moh hits the nail right on the head on the foreclosures. But what Fannie, and other FC/REO clients want are really three values- one assumng typical exposure time on the market- i.e., exposure time (as is), AND a forecasted value assuming a subsequent reduced marketing time ( you could call this quick sale or liquidation value- and you do need to define it- again, as is) and finally an "as repaired" value under the same reduced marketing time- normally 120 days.

Brad

 

[Fred]

First, I do not believe at all that Fannie is asking for a forecast in the typical assignment.

One way or the other, there should be no doubt. There is no shortage of hair-trigger adjudicators ready to scream high crime if you deviate from "the form."

On the other hand, I don't think you can say Fannie is using "marketing time" wrongly. I am not even going to get into the theory that the ASB has no authority to redefine recognized terms, and even if they did AO's are not binding on anyone, etc. I'll just point out that when I look my USPAP's that pre date the 1993 (Fannie, VA, HUD) 1004-form and I don't see the paragraph on "marketing time."

I would insist, though, if you agree with Greg M that this is a forecast, then how can you use a single effective date, like July 1. If this is a forecase, then the effective date is more linke July 1 to Oct 1 or Jul 1 to Jan 1. I think some folks are reporting this, even if unconsiously. I write "value on July 1," but I do see some write "as of Juy 1," which certainly makes it sound like the value became "effective" on that date and runs forward at that level in perpetuity.

 

[Couch Potato]

Neighborhood not the subject in particular.

Steven, the fallacy of your thinking in regards to effective date is that the marketing time required by FNMA is not for the specific property that is the subject of the report, but for properties in general in the subject properties neighborhood. Marketing Time for the subject may be more, less or the same as the neighborhood. FNMA does not ask for that analysis.

 

[Webbed Feet]

Neighborhood Data Versus Subject Statements.

Mr. Myers,

If I am not incorrect, your "Supplemental Standard" is referring to a statement of the general "Marketing Time" for the neighborhood, not the subject. I believe Mr. Heyn had specifically the subject in mind when he said he knew of no supplemental standard requiring a statement of marketing time. (LOL ok.. more in this thread than I caught.. Mr. Myers stated the above already.)

As an aside, does anyone remotely understand why a statement of exposure time was taken out of SMT-6?

Barry Dayton