Confusion with Exterior Only Appraisals....

[Tom D]

Ex

Exactly -- so if evaluating for lender's books... only lender needs to be listed as the intended user and then explicitly state who ins't an IU -> i.e. FNMA, FHA, HUD, etc...

with FHA, HUD is always one of the intended users. there is a servicing company that handles the mortgage payment who is ordering the drive by for their book keeping. and on that FHA driveby HUD has a different definition of value than a conv pre forclosure drive by.

NO INTERIOR INSPECTION WAS MADE, APPRAISER ASSUMES UTILITIES ARE ON, FUNCTIONING. NO APPARENT STRUCTURAL DEFECTS. MECHANICAL SYSTEMS ARE IN WORKING ORDER, FUNCTIONING. APPLIANCES ON, BUILT-INS & KIT CABINETS FUNCTIONING. ADEQUATE ELECTRIC SERVICE. HEAT SOURCE IS PERMANENTLY ATTACHED. THE DWELLING IS ASSUMED TO BE IN AVERAGE CONDITION WITH UTILITIES ON & FUNCTIONING. Any difference from these assumptions may negatively, or positively affect the value. This is an extraordinary assumption: an assignment-specific assumption, as of the effective date regarding uncertain information used in an analysis, which if found to be false, could alter the appraiser’s opinions or conclusions.

you have to state the ea, or the state board will burn you.

 

[PrincessLeia]

If an appraiser is


Fannie/Freddie has the prohibition against an appraiser invoking an EA unless X'ing the "subject to" box. It's been that way forever. So, if the assignment calls for such adherence (e.g., most appraisals for a loan that's headed to the secondary market), no EA (unless X'ing the box). The prohibition is found in the paragraph immediately prior to the SCOPE OF WORK paragraph in the appraisal report form. However, your assignment is not for the secondary market; Fannie/Freddie are not parties to the appraisal. Thus, you are not limited by the prohibition; thus, why it is that I suggested a particular course of action in my earlier post. What else?

@leelansford I was looking back over this post and saw something I missed last time. Sorry, I was pulling a lot of late nights earlier with no sleep, etc.

REO/Pre-foreclosure 2055's are on the rise. Obviously, these are not for Fannie/Freddie. But most AMCs and lenders order them on a FNMA 2055 form. So, would the correct action be to propose a GP 2055 form with the correct disclosures instead? I am under the assumption (not sure if I'm correct), that if I do an exterior only on a FNMA 2055 form, it HAS to adhere to FNMA requirements because of the pre-printed certifications. So the ONLY option on a FNMA 2055 form is to check the "subject to" box, which most lenders/AMCs don't want. They just want to know a value. So, if there is no recent MLS with which to get interior data, would proposing a GP 2055 form be the correct route to use an EA on interior quality/condition?

Thanks for being patient with me. Really, I'm not retarded. Sometimes, I just over-think things in wanting to make SURE I get it right.

 

[PrincessLeia]

Would never work. No lender would agree to that. It would be months before you could go back and do an interior. Why would you need a pre foreclosure appraisal to begin with. Just wait until you have possession.

agreed. Never got an order trying it this way :-/

 

[PrincessLeia]

with FHA, HUD is always one of the intended users. there is a servicing company that handles the mortgage payment who is ordering the drive by for their book keeping. and on that FHA driveby HUD has a different definition of value than a conv pre forclosure drive by.

NO INTERIOR INSPECTION WAS MADE, APPRAISER ASSUMES UTILITIES ARE ON, FUNCTIONING. NO APPARENT STRUCTURAL DEFECTS. MECHANICAL SYSTEMS ARE IN WORKING ORDER, FUNCTIONING. APPLIANCES ON, BUILT-INS & KIT CABINETS FUNCTIONING. ADEQUATE ELECTRIC SERVICE. HEAT SOURCE IS PERMANENTLY ATTACHED. THE DWELLING IS ASSUMED TO BE IN AVERAGE CONDITION WITH UTILITIES ON & FUNCTIONING. Any difference from these assumptions may negatively, or positively affect the value. This is an extraordinary assumption: an assignment-specific assumption, as of the effective date regarding uncertain information used in an analysis, which if found to be false, could alter the appraiser’s opinions or conclusions.

you have to state the ea, or the state board will burn you.

Even IF you state the EA, (which you should always do anyway), you're still violating the pre-printed certifications by using the FNMA 2055 form in the first place. If you make an EA, you don't have "adequate information about the physical characteristics) in order to perform the appraisal.

 

[TerryRohrer]

When the purpose is for servicing/REO/pre-foreclosure, that provision doesn't apply. Just be sure those are the uses...sleazy lenders will occasionally try to slip them by your where that provision should be observed. I put an addendum page on the front of my report and include something like the following statement on that page:

"The subject was inspected from the nearest public road and alley only, and only portions of the subject improvements could be seen from those perspectives. Information in the following report pertaining to the subject is based on what we could see, relying completely on public records, which we assume to be accurate, for size, age, structural components, etc. We assume the subject has been maintained in a manner that has protected the structure and that no significant structural issues are impacting the continued use of the improvements for the current highest and best use, but also assume there have been no significant, recent updates to the subject beyond those noted in the following report. We assume that the subject is most competitive with properties that have been maintained and with some updates since originally constructed, but less competitive with properties having significant deferred maintenance or those with very recent, extensive remodeling and updating. If any of these assumptions, or those noted throughout the report, are found to be inaccurate, we expect that our opinion of the value of the subject would change."

If I have MLS photos, I include those as the basis for my assumptions regarding condition and updates (and provide the date of the listing in comments). Shortly after I started including the verbiage pertaining to structural issues, I appraised a property with an exterior inspection and then appraised the same property 6 months later with an interior inspection and found the basement floor was heaving and walls were falling in, though there were no apparent indications of that from the street. Needless to say, it goes in every one now.

Regarding the violation of the pre-printed certification prohibiting EAs, that would only be a problem if a new loan is being proposed. With the agreement of your client, it is standard practice to override preprinted verbiage. For example, adding FHA as an intended user is not in keeping with the prohibition of "modifications, additions, or deletions to...intended user" in the second paragraph of Page 4 of the 2055. Yet, you cannot get an FHA appraisal accepted without that addition.

 

[J Grant]

Lenders order a pre foreclosure for their own internal reasons. Who knows why - maybe if they try to negotiate a short sale with the owner, or maybe if they intend to list it with a RE agent, or maybe to see how much loss they might expect. IDK. But they have their reasons, and clearly they do not want to wait until later to do it . LAter with interior access they might order a second appraisal. But right now they need the pre foreclosure appraisal, which often means no interior inspection.

We can't make an EA on a URAR so stop doing it. Stop making assumptions we can't verify, such as utilities are on. Just state the information you have an ext inspection indicates the probability it is in Average (or other ) condition, and that a buyer purchasing it as of the effective date also would have limited information and would be buying on that basis. Then state if an interior inspection were to reveal a different condition, then the effective date value opinion might not reflect that and a new appraisal would be recommended.

 

[Bobby Bucks]

Does anyone else remember the Landsafe 2055 3 page addendum created just for exterior pre-foreclosure assignments? I would post it, but as George Thorogood told the land lady while leaning on a post, “But I’m tired.”

 

[Red Flint]

“But I’m tired.”

"Tell you a story, about the house-man blues"

 

[J Grant]

with FHA, HUD is always one of the intended users. there is a servicing company that handles the mortgage payment who is ordering the drive by for their book keeping. and on that FHA driveby HUD has a different definition of value than a conv pre forclosure drive by.

NO INTERIOR INSPECTION WAS MADE, APPRAISER ASSUMES UTILITIES ARE ON, FUNCTIONING. NO APPARENT STRUCTURAL DEFECTS. MECHANICAL SYSTEMS ARE IN WORKING ORDER, FUNCTIONING. APPLIANCES ON, BUILT-INS & KIT CABINETS FUNCTIONING. ADEQUATE ELECTRIC SERVICE. HEAT SOURCE IS PERMANENTLY ATTACHED. THE DWELLING IS ASSUMED TO BE IN AVERAGE CONDITION WITH UTILITIES ON & FUNCTIONING. Any difference from these assumptions may negatively, or positively affect the value. This is an extraordinary assumption: an assignment-specific assumption, as of the effective date regarding uncertain information used in an analysis, which if found to be false, could alter the appraiser’s opinions or conclusions.

you have to state the ea, or the state board will burn you.

Why would you elect to make a specific list of assumptions that you have no idea if true or not ????? you have no idea if the utilities are on and functioning, or no structural defects etc etc so why assume this liability ?????? We also are not allowed to make an EA on a URAR form so I don't get that either.

Just tell the truth - that due to lack of interior inspection, the details wrt utilities, mechanical systems etc are unknown. THE END. State house appears to be in average condition per ext observe and known data , but that if further inspections or information reveal a different condition, then the MV opinion of this eff date appraisal reflects would not apply and a new appraisal would be recommended.

 

[TerryRohrer]

Why would you elect to make a specific list of assumptions that you have no idea if true or not ????? you have no idea if the utilities are on and functioning, or no structural defects etc etc so why assume this liability ?????? We also are not allowed to make an EA on a URAR form so I don't get that either.

Just tell the truth - that due to lack of interior inspection, the details wrt utilities, mechanical systems etc are unknown. THE END. State house appears to be in average condition per ext observe and known data , but that if further inspections or information reveal a different condition, then the MV opinion of this eff date appraisal reflects would not apply and a new appraisal would be recommended.

First, the conversation is about 2055s, which are not URARs. Assuming that is what you are claiming, who says "we" can not make an EA when reporting on a 2055? And, on a URAR, how do you include FHA as an intended user when, in the same place the form says you cannot add EAs, it says you cannot change the intended users or intended use?

You also demand that "Just state the information you have an ext inspection indicates the probability it is in Average (or other ) condition,". USPAP also requires that you state all assumptions and limiting conditions you relied on. How do you "indicate the probability it is in Average (or other) condition" without seeing it? You make assumptions, and those you are claiming are doing it wrong state those assumptions to the reader understands them. They don't mislead by hiding them in an unsupported "probability" statement.