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Deleted member 130081
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Ok. I think I posted a bit hasty on the last one. You did not dodge the question as I stated. So, if you will, let me apologize for that accusation and phrase it another way.
I think you're wrong.
Now I am playing lawyer here too. I like to do that too. I wanted to be a lawyer, though likely would have been horrible at it, for many a reason. However, not because I have difficulties reading or grasping concepts.
So, I will concede some things here. I think it is possible an appraiser could get in trouble, by way of accepting an assignment condition that included a reference to the Selling Guide. In fact, that is exactly why I incessantly harp about sales grid adjustments, but that's another topic. I will concede that a state board may very well conclude the Selling Guide pertains to appraisers, and considering a state board is made up of usually appraisers, I think that may even be the likely outcome.
But legally, and when I say legally I don't mean a state board, I mean a criminal or civil case, how would the Selling Guide come into play? You did say required. That's a pretty strong word.
You say, unless I interpret you wrong, by assignment condition, appraisers are required to comply with the Selling Guide. However, take a step back for a second and consider which party the Selling Guide is written for. What is the Selling Guide anyways?
The Selling Guide is a component of the legal contract between FNMA and an originating lender. FNMA says, hey, we will purchase each and every loan you have, sight unseen, we will take your word for it, so long as, the loan meets all criteria set forth in the Selling Guide. And, if at any time we find out that you have sold us a loan that does not meet all criteria in the Selling Guide, we reserve the right to make you buy the loan back.
What is being overlooked is the relationship. FNMA does not have a direct relationship with any appraiser (unless of course they hire them directly, but that's not what were talking about). They have a direct relationship with the lender. Why? They do business with the lender, not the appraiser. In fact, the appraiser is supposed to be an independent, unbiased, uninfluenced party. That's part of what makes it all work,
What is supposed to happen, the plan if you will, is that a lender will engage an appraiser. Once the appraisal comes back, the originating lender will then test the appraisal for worthiness. How does an originating lender know what FNMA considers worthy? Well, FNMA spells it out in the Selling Guide, under the section called "Unacceptable Appraisal Practices". There are other protocols too, and the OP's question is handled there, which you have graciously helped us all out with - thank you. From there, either the appraisal is worthy or it is not. If it is not, the loan is not eligible for sale to FNMA.
Now, what originating lenders like to do, is cut some protocol corners and forward the list of Unacceptable Appraisal Practices, along with any other regs that may have been published on the matter too, to appraisers and then they say "Give me an appraisal that meets all these".
Are you with me so far?
A couple of things have happened here. First, the originating lenders, by sending us the "regs" under the guise of "assignment conditions" have undermined the process, by asking us to appraise to the regs, instead of using the regs to test the appraisal. The second thing that has happened, as you have pointed out, is that appraisers have become sucked into something they never should have been, and by that fun USPAP clause that says we must comply with assignment conditions, we may in fact as you stated be on the hook for all of them.
But the question I pose to you, if we are to play 2-penny lawyers, is it enforceable? If the Selling Guide and all of the announcements that have come along with it were never intended for appraisers, rather rules for underwriters, couldn't a clever lawyer argue the relationship dismisses the appraiser due to relevance and misconduct?
I don't think this stuff because I think I am a lawyer and came up with this all by myself - far, far from it. I think this because I had the chance to work on the FNMA buy-back project. That was where I learned an entirely different side that appraisers never know about. That was where I learned about what holds in court and what doesn't when it comes to the Selling Guide. Out of the billions, I said billions of dollars FNMA recovered through buy-backs, care to guess how many appraisers got sued? FNMA sued zero.
So, that is why what you said rubbed me the wrong way my friend. It is not the job of any appraiser to know the Selling Guide. Is it helpful? Of course. Could an appraiser be sanctioned by a state board for not complying? That could very well happen. Could an appraiser with a clever lawyer get out of it? I dunno. I like to think they should. But, you never know what a judge will judge.
IMO, the best answer to the OP's question is (LOL even though I did not say this outright either - sorry OP), ask the lender how they would like it handled. It is their responsibility in the end.
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