CONSTRUCTION APPRAISAL

[Steve Owen]

Jo Ann, Statement 7 of 2002 USPAP says (Lines 3481 to 3483):

The term "Recertification of Value" has been mistakenly used in lieu of the term "Update of an Appraisal" by some clients. A Recertification of Value is performed to confirm whether or not the conditions of an appraisal have been met. (emphasis added) A Recertification of Value does not change the effective date of the value opinion.

What is there that says it is obsolete? It very clearly says that you do it and under what circumstances.

This is identical wording as in the 2001 USPAP, by the way, but if it was different, it would be 2002 you would need to follow.

 

[Steve Owen]

Ben, you made me work on this one. My last USPAP update class indicated that this had to be done, and up to now I have just taken it for granted that that was right.

See Statement 10, D. 2 (page 115; lines 3963 to 3965):

<u>Failing to indicate the "as is" value of the property as of the date of the report and how the "as is" value differs from the value conclusion under a hypothetical condition</u>

Since FANNIE MAE appraisals are federally related transactions, I believe this applies.

 

[Jo Ann Meyer Stratton]

If on 08-18-2002, the client wants to know if the home was completed per plans and specs, they did put in the ceramic tile as planned and did you really and truly did say the value on 01-01-2002 was $1, that is a Recertification of Value.

If on 08-18-2002, the client wants to know if the home was completed per plans and specs, they did put in the ceramic tile as planned and the value as of todays date 08-18-2002 is $1, that is an Update to an Appraisal.

However, many lenders still have not updated their supplemental standards to the current meaning of the differant terms, their minimum wage office clerk calls the appraiser asking for a "recert". So then the appraiser has to ask questions. Do they only want to know if the work was completed per plans and specs or do they also want to know if the market has changed and the current opinion of value. About 99.99% of the time that is the real question the lender is asking (making the term recertification of value obsolete in that circumstance).

Wonder how long it will take for some lenders to read 2003 USPAP, since they still haven/t bothered to update their supplemental standards for years regarding "recerts".

 

[Ben Vukicevich SRA]

Steve,

USPAP class?? You stayed awake??? You should have slept through that one you took and been oblivious to Statement 10. It would have worked out better for you and saved you some time completing residentials with "as-is" values. Hmm. Think that's why some 40+-% of the USPAP instructors can't pass the new national test??? Great document, huh. Better off reading/interpreting it yourself.

Read Statement 10's title:

SUBJECT: Assignments for Use by a Federally Insured Depository Institution in a Federally Related Transaction

Neither FHA/VA/FNMA/or FHLMC are depository institutions. They are not under the regulators that wrote Statement 10. In addition, their loans are not considered federally-related transactions so you don't have to comply with Statement 10 for your run-of-the-mill URAR appraisal. In fact, the regulators have written some more junk stating that even if the loan was portfolioed by the depository institution but was originally underwritten for sale to FHA/VA/FNMA/FHLMC, they are still exempt from the regulatory agencies requirements.

Of the many hundreds of appraisals I have completed this year, I have not completed one residential for a federally-related transaction. I'll bet you haven't either, if you think about it after reading this, along with 99% of the appraisers in the US. Now that would be an interesting poll on the forum. How many residential appraisals have you completed for federally-related transactions in 2002?

So my next question is and always has been, what the hell do we need USPAP for in the residential world when the regulators accept the existing underwriting guidelines of FHA/VA/FNMA/FHLMC as being OK/adequate to protect the public and thus, not in need of their oversight/protection?

The correct answer is, we don't. FHA and VA are not even mentioned in Title XI. We know they really don't need USPAP because their appraisal guidelines require more than basic USPAP. Same really goes for FNMA/FHLMC. Did FHA/VA/FNMA/FHLMC cause the savings and loan collapse. Nope. I just think of USPAP as the instruction book for appraisals completed for depository institutions that porfolio loans: commercial or in a very few instances some residential.

As far as the main users we work for, they require USPAP probably because they've required at least those standards or more in their appraisal guidelines since day one. It was just a nice addition to their manuals to say they want USPAP. Do they need USPAP? Not really or they wouldn't have their own appraisal guidelines.

So now the appraiser has two instruction books to mess with when in reality, the old method worked fine, still does and has not lost the US taxpayers any money via a savings and loan collapse.

Ben

 

[jtrotta]

Ben, agreed :!:


in regards to new construction, if it's; proposed / under construction / or incomplete in any way, the final "Estimated Value" as of the day your there - "IS" ------ "Subject To" - completion. If it's not 100% complete, it is INCOMPLETE :!:

there are no questions, only answers,

And there are endless encounters with mistakes, thats why ya'll have a "Learning Curve" - jes like Attorney's, thas why we're "practicing appraiser's"

8)

 

[Ben Vukicevich SRA]

Hey Trotta,

You're still "estimating" value??? 8O 8O You old USPAP bad dog, you. You gotta get out of that snow globe once in awhile. :lol: :lol: I thought we were supposed to "opine" value to be politically correct in 2002...... :idea: :idea:

Now I'll have to write another addendum for the URAR to change "estimate" in the Reconciliation section to be USPAP correct......nah....

Ben

 

[Jo Ann Meyer Stratton]

Since I am being nit-picky today. Appraisers no longer estimate value--thats what machines do, for example AVMs. Appraisers offer an opinion of value. Now Ben, you just have to put a canned statement on all your forms like mine: "In compliance with USPAP the term "Estimate the Market Value" in computerized forms shall mean "Opinion of Market Value" and you will be in the good graces of the USPAP police.

 

[Ben Vukicevich SRA]

JoAnn,

I'm fully prepared to plea bargain should the USPAP police come after me for that infraction.....:lol: :lol: The punishment will probably be to take another USPAP class 8O 8O 8O

Ben

 

[Farm Gal]

:lol: :lol:

Ben:
Doesn't that fall under the "practice as the majority of the peers do" defense?!?!? :twisted:

You gotta love it. :roll: :wink:

 

[Ben Vukicevich SRA]

Lee Ann,

I was just being bad as usual. Estimate is OK cause if you really want to get down with it, Webster defines estimate as:

es·ti·mate Pronunciation Key (st-mt)
tr.v. es·ti·mat·ed, es·ti·mat·ing, es·ti·mates
To calculate approximately (the amount, extent, magnitude, position, or value of something).
To form an opinion about; evaluate: “While an author is yet living we estimate his powers by his worst performance” (Samuel Johnson).

n. (-mt)
The act of evaluating or appraising.
A tentative evaluation or rough calculation, as of worth, quantity, or size.
A statement of the approximate cost of work to be done, such as a building project or car repairs.
A judgment based on one's impressions; an opinion.


So since "opinion" is in the definition of estimate, we're still covered by the good old FNMA form.....I don't think the USPAP police would stand a chance..

Right now I'm pondering the words "credible value." So if we don't produce a credible value, the opposite must mean we've produced an "incredible value...." Yeah, I like that term.......incredible value....it should be in USPAP....

Ben