CONSTRUCTION APPRAISAL

[Steve Owen]

Ben:

Interesting. So, I suppose by that that they don't need any part of USPAP. In my case, however, a great number of the residentials I do actually are for portfolio loans. A lot of the time, I actually don't know - two of the banks I work for a lot, don't know at the time they order the appraisal whether they are going to sell the loan.

I like to err on the side of being conservative. There is nothing that says you cannot use that language. Actually, I frequently have to say that I cannot estimate the value "as is" because there is no identifiable market for half finished houses.

-------

"I was gratified to be able to answer promptly, and I did. I said I didn't know.

Mark Twain

 

[Ben Vukicevich SRA]

Steve,

It gets crazier yet. If your banks underwrite the loans to FNMA/FHLMC guidelines and portfolio them, Statement 10 still doesn't apply. I guess that the reasoning is, if the bank goes under, the regulators will dump the loans to FNMA??

Ben

 

[David C. Johnson]

Ben,

I am looking forward to not being quite so busy before too long to get a chance to reread your post I have hyperlinked below (and also read this thread better). It broke my heart to have to turn down another particular appraisal job today. Man, where were they all last month!

This is your intriguing post:

http://www.appraisersforum.com/forums/view...p?p=25416#25416

I have never even considered some of the ideas you have crammed into it!

dcj

 

[bradellis]

Ben,

The regulators tell me that it does apply, even if the loan is ultimately sold to Fannie Mae.

It applies because the loan is actually made by the lending institution. Whether or not they decide to sell it to Fannie Mae is a decision that is not always made up front. Sure, sometimes it is, but not always.

Further, what does the institution do when Fannie Mae determines the loan- for whatever reason- does not meet their buying guidelines and forces a repurchase?

For the regulated institution- not always banks- there is a two part question:

a) Does it meet the guidelines we publish that conform to federal regulations, and
b) to whom will we sell it? Fannie or Freddie? Wall Street? Not sell it at all?

I had one yesterday that was simply rife with errors. Frankly, I believe that they may well have stumbled upon a reasonable value- but I cannot figure out how. Maybe just a guess. My underwriter asked the question. "Can we sell it to Fannie with this appraisal?" Answer. No. Even if the value might be correct, it would not get past anyone's review process.

So, if we made that loan, we'd have to make sure it conformed to our guidelines (it did not) even if we could not sell it to Fannie.

Brad Ellis, IFA,RAA