Customary and reasonable fees - 90 days

[Non Sequitur]

I assume you are a good guy/gal and a legit appraiser. That said, I swear that if you were told that you just won the lottery, you would find some reason to be negative about it.

If I were an AMC trying to demoralize appraisers, I would hire your to post to this forum.

Your negativity may turn out to be correct, however, always being on the negative side insures that nothing will ever change.

I truly hope that your real life has more light in it than your posts to this forum.

What's so negative about looking at HR 4173, all 2,000+ pages, as a whole? Even if, and that's a BIG if, AMC appraisers get a pay raise just what was the trade off? The ones who support HR 4173 still refuse to even discuss the other major provions that affect appraisers.

NS-

I just finished a day-long seminar in Monterey, CA, sponsored by our local AI chapter. It was all-residential topics. Our Forum's own, Rich Heyn, gave a presentation he and is partner is developing for a webinar on the new law.

The presentation was excellent and covered a lot of information (without hype or slant). Unfortunately, while Rich was able to go over all the highlighted points of the law, no one really has a good idea how this is going to actually be rolled out. He did cover the points you raise above, and I think most of us at the presentation were a little concerned about what the consequences will actually be. Two things I believe will happen:
A. Expect our fees to to be registered with the ASC to increase (a mandatory increase is part of the law).
B. Expect that the fees that AMCs are going to have to pay for each appraiser they have registered as contractors to be passed-on to the appraiser direct. If I recall correctly, it is $25 per appraiser; so if one works for a lot of AMCs, one can do the math.

Thanks for the info, it's anyone's guess how this mess is going to turn out. But there's one thing I'll bet on: Appraisers will carry the costs of any additional regulatory burdens.

Was there any discussion as to who will handle the complaints against appraisers which HR 4173 manadates any person involved in a real estate transaction make if they think the appraiser violated USPAP?

Almost without exception the people I speak with in the lending industry believe HR 4173 will further consolidate the banking industry, which isn't a good thing for appraisers. Client lists have shrunk enough already and may shrink to only a few.

And a few are excited with the prospect of having official standards for AVMs and the likely "de facto" if not true licensing of the programs.

 

[Meandering]

Look!

Stop thinking money for a minute and read this.

Every appraiser producing an appraisal for ANY LOAN that is federally funded transaction needs, under USPAP Standards, to be following the GSE's Guidelines.

So stop thinking about how much money you're gonna get and do your job correctly.

The Fannie Mae Selling Guide (www.efannie.com) newest version is August 2010. Get it, look at it, if you cannot get it email me and I'll send you the link.

NOW.
on Page 473 you will see this section.

B4-1.1-02, Lender Disclosure of Information to Appraisers
(10/30/2009)

Lender Disclosure of Information to Appraisers[/B]
The lender must disclose to the appraiser any and all information about the subject property of which it is aware, if the information could affect either the marketability of the property or the appraiser’s opinion of the market value of the property.

The lender must provide the appraiser with all appropriate financing data and sales concessions for the subject property that will be, or have been, granted by anyone associated with the transaction. In addition, the lender must provide the appraiser with a copy of the complete,
ratified sales contract and all addenda for the property that is to be appraised, therefore ensuring that the appraiser has been given the opportunity to consider the financing and sales concessions
in the transaction and their effect on value. If the lender is aware of additional pertinent information that is not included in the sales contract, the lender must inform the appraiser. If the sales contact is amended during the process, the lender must provide the updated contract to the appraiser.

Information That Must Be Disclosed

The table below provides a list of required information that must be disclosed to appraisers.

settlement charges

loan fees or charges

discounts to the sales price

payment of condo or PUD fees

interest rate buydowns

below-market-rate financing

credits or refunds of borrower expenses

absorption of monthly payments

assignment of rent payments

non-realty items included in the transaction

any environmental hazard information obtained from the borrower, the real estate broker, or any other party to the transaction so the appraiser can consider any influence the hazard may have on the value and marketability of the property. Lenders must disclose environmental hazard information that is in or on the subject property, or in the vicinity of the property.

SEE THE WORD MUST?

Do your job correctly. ASK FOR THE MANDATORY DISCLOSURE OF THIS INFORMATION.


Keep it in your work file, because now you have proof of the C&R Appraisal Fee the borrow paid, and Fannie can not come back with a USPAP violation on you.

If you have not received the mandatory disclosures You need one sentence in your report.

"The client provided, to this appraiser, (or me) the agreement of sale and no other information concerning the property or the loan for which this appraisal has been ordered."


You want to do this because all appraisals you produced already, that this information was not disclosed to you, are not GSE compliant and available for them to purchase.

That means BUY BACK TIME.

And, the requirement is for them to disclose to you, not you to ask them, however, we have a responsibility to diligence, so ask, or just state they did not give it to you.


Plus, you will see what borrowers are really paying for your services, which is going to come in really handy for you in the not to distant future.


Peace out.

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[hastalavista]

Was there any discussion as to who will handle the complaints against appraisers which HR 4173 manadates any person involved in a real estate transaction make if they think the appraiser violated USPAP?

This was discussed but without resolution. Per the presentation, it will be up to the ASC to set-up a complaint hot-line if some other entity does not do it (and why would another entity want to?). And, all the complaints (without filter- so those with merit and those without) must be passed on to the state appraisal regulatory agencies for investigation.

We also discussed the language of the section that requires anyone involved in the mortgage transaction to report a USPAP violation if one thinks one has occurred. Our discussion focused on reviewers, and exactly what this means? If one reads the section literally, then anytime a reviewer thinks there is a USPAP violation, the reviewer needs to pick-up the phone and call the hot-line (sounds scary!). Others felt the proper way to handle the situation was to advise the reviewer's client that there are some USPAP concerns, and then it becomes the client's responsibility.
I'm thinking it is a nightmare.

And a few are excited with the prospect of having official standards for AVMs and the likely "de facto" if not true licensing of the programs.

I made this same argument against licensing/regulating AMCs. When you license/regulate them, you embed them into the system; with licensing comes responsibilities but it also creates rights.
I've tempered my position a bit and I think there is some positive outcomes to licensing. Philosophically, I'm opposed, but it is what it is.

So, the licensing and regulating of AVMs will (IMNSHO) create an approved-alternative for an appraisal. But, I don't have a problem with that: in some of my markets, under certain conditions, an AVM is probably reliable enough in terms of value for some lending-decisions. Guys like me in suburban markets with mega-tract developments will lose some of our business to AVMs. Urban and rural appraisers probably have nothing to fear.

Rich brought-up another point which I did not fully consider until I heard him talk about it and then I became convinced he is correct (again, I may have some of the exact technical details incorrect, so correct me if that is so, but I think in sum I have it right):
The new law will require that the borrower receive a copy of the appraisal at least 3-days prior to close of escrow. Rich's suggestion is that appraisers develop a written policy (one that could be handed to the borrower at the time of inspection) stating something to the effect that

It is the appraiser's policy to discuss appraisal issues only with the client, and that if the borrower has any issues, questions, or concerns about the appraisal report, to please contact the lender.

Or something like that. He also suggested not to try to rely only on USPAP and confidentiality. He suggested it would be better to simply state it is the appraiser or appraisal firm's policy, blah, blah, blah.

His concern (which I did not fully appreciate until I thought about it) was this: Can you imagine how many calls appraisers are going to receive from borrowers asking questions, saying you missed the wood molding in the hallway, complaining that the measurements are off by at least 20-feet, etc. Even if the LTV is 30% and the loan is approved, how many homeowners are going to call and complain that the appraised value is too low (we get those now; collateral value is more than enough but the owner calls up and wants to dispute the value!).
So, his suggestion was to head this off at the pass and develop the policy up-front and advise the borrower in a written manner.

BTW, for anyone in the Bay Area, Rich and his partner, Dawn Moliter, will be giving the full presentation at the Northern California AI Chapter's Fall Conference. This is a big, one-day event that draws 400 to 600 appraisers, has multiple break-out sessions, and covers residential, commercial, and appraisal topics in general. It is well worth the cost.
As fate would have it, Rich's presentation will be on 10/20; the day the C&R fees policy is due.

 

[DTB]

"Lender Disclosure of Information to Appraisers[/b]
The lender must disclose to the appraiser any and all information about the subject property of which it is aware, if the information could affect either the marketability of the property or the appraiser’s opinion of the market value of the property."


This weasel wording does not leave me warm and fuzzy.

 

[Hondo]

Mike, you are correct the law does not exactly say loans going to Fannie & Freddie and I should have said probably will only cover the base fee for loans going to Fannie & Freddie.

(i) CUSTOMARY AND REASONABLE FEE.—
(1) IN GENERAL.—Lenders and their agents shall compensate
fee appraisers at a rate that is customary and reasonable
for appraisal services performed in the market area of
the property being appraised. Evidence for such fees may be
established by objective third-party information, such as
government agency fee schedules, academic studies, and independent
private sector surveys. Fee studies shall exclude
assignments ordered by known appraisal management companies.

(3) EXCEPTION FOR COMPLEX ASSIGNMENTS.—In the case
of an appraisal involving a complex assignment, the customary
and reasonable fee may reflect the increased time, difficulty,
and scope of the work required for such an appraisal and
include an amount over and above the customary and reasonable
fee for non-complex assignments.


The only government fee schedule that I am aware of is the VA schedule and the VA is very similar to Fannie in the type of loans it covers. And in paragraph 3 it says to include an amount over and above the C&R fee for non-complex assignments, which to me means that the fee schedule will be for non-complex assignments only, i.e. loans going to Fannie.

 

[hastalavista]

"Lender Disclosure of Information to Appraisers[/b]
The lender must disclose to the appraiser any and all information about the subject property of which it is aware, if the information could affect either the marketability of the property or the appraiser’s opinion of the market value of the property."


This weasel wording does not leave me warm and fuzzy.

If nothing else, a lot of appraisers (myself included) now read regulatory language a little closer and are becoming adept at finding the "ifs" and "mays", which can really modify (modify to the point of irrelevance) the "shalls" and "musts" that come afterward.

 

[Meandering]

Denis,

The lender must provide the appraiser with all appropriate financing data and sales concessions for the subject property that will be, or have been, granted by anyone associated with the transaction. In addition, the lender must provide the appraiser with a copy of the complete, ratified sales contract and all addenda for the property that is to be appraised, therefore ensuring that the appraiser has been given the opportunity to consider the financing and sales concessions in the transaction and their effect on value.

The lender must disclose to the appraiser any and all information about the subject property of which it is aware, if the information could affect either the marketability of the property or the appraiser’s opinion of the market value of the property."

Must provide the things in the list and must provide any other information that impacts value, like:

past due HOA fees where the HOA has or is going to file a lien.
past due taxes,
toxic waste

You know, those things that if the seller cannot or will not take care of and the buyer will pay less because the buyer has to take care of those things, they too must be disclosed, but the list of musts, is the musts, and then additional info.

 

[hastalavista]

Denis,

Must provide the things in the list and must provide any other information that impacts value, like:...

Marion-

I hear what you are saying. I can read it as you do and take-away the same understanding.
I can also read it (without making a leap of faith, IMO) the way the section is set-up:

The lender must do X if Y. Under Y conditions, Z must be done.
Where
X= disclose information
Y= If information affects value or marketability
Z= Here's the list of things that must be disclosed when the "Y" condition is met.

I'm not making this stuff up. If you look at the 2010 selling guide and reference the original Announcement Letter, read that, you'll see nothing in the announcement about all of the above. Follow the link in the announcement to the selling guide it was updating (2007) and you'll see almost the same as the 2010 selling guide but in a slightly different format. However, the format change is significant as the new format does seem to differentiate between a list of "if" requirements and "must" requirements.

My point is not to argue for argument's sake. I acknowledge your interpretation is a reasonable and plausible interpretation based on what is written in the selling guide. I would argue, however, that the word "if" in the context of the requirement is a qualifier (a big one) that determines "what" must be done.
I'm OK that you read it different. You might be right and I could be wrong.

If you are right, however, then Fannie (and, I presume Freddie) can push-back any loan it wants to the originator because I have never received a copy of the settlement charges for the subject in a purchase transaction or refinance transaction (I'm not sure if you have either?). And the original guideline in the 2007 selling guide was published in 2002. So that is 8-years of lenders specifically violating a GSE requirement and the GSEs not once saying anything about it.
Does that sound right to you? Because for your interpretation to be correct, that would have to be the case, no? Maybe it is.

It doesn't sound reasonable to me. That's why, when I read the same thing you do, I come to a different conclusion. And my conclusion is consistent with the process as has gone-on for the last 8-years. So, if I'm wrong, that means the GSEs can push back any loan they want to. That's not what's happening.

Anyway, I know this isn't personal between you and I and I think fleshing out these differences is productive and useful as we all try to wrap our heads around the issue.

If there is a significant difference between us, it may be this:
You are convinced that there is only one way to interpret the language.
I'm not. :new_smile-l:

 

[Green Hornet]

What's so negative about looking at HR 4173, all 2,000+ pages, as a whole? .....

Non,

Nothing negative about researching and balancing what is in the bill. What is negative is when even the positive parts are viewed as negative and any progress is never enough.

 

[Meandering]

Denis,

I see your point and truly it is a point I cannot argue. We see it differently.

The previous (over the last 8 years) guide, said, "should" disclose, and "may" disclose.

This new guide, effective this month says "must".

So considering the receivership of the GSEs, why would we change an 8 year policy from "should" and "may" to "must" and sometimes "if"?

However, just as a general question, not a point of argument. The settlement costs, moved up to the number one position in this guide, so why, and when do the settlement costs impact value? and,

If they are not disclosing the information to appraisers, who is determining "if" any of it impacts value?? Appraisers, are the only people licensed or certified to determine "if" something impacts value.

When the subprimes were up and running, "IF" appraisers had the loan information and saw that purchases were being made with 105% financing, and had the evidence, most likely, adjustments would have been made in the sales grid for this favorable financing.

But disclosure of the settlement costs, points, and parameters of the loans was not mandatory, and many brokers did not know what those loan parameters were going to be before the loan was placed, conveniently after the had the appraised value.

Your posts are always good, full of good information and advice, and you always are on the side of public trust. With this in mind, how is the public trust protected if we do not even ask for this information or disclose that it has not been provided to us?

Also, the previous guide said that all items to be disclosed too appraisers can be accomplished by providing the appraiser with a copy of the sales agreement.

This new Selling Guide does not say that.

Too me, it appears that this Selling Guide is more direct and is mandating certain information always be disclosed and then if applicable, certain other information must be disclosed, Similar to saying there is no call for the lender to disclose they don't know of any toxic waste, or unpaid HOA dues, unless they do.

But in my mind, there is no relief of disclosure based on an "if", unless the "if" is proven to not impact marketability of the property, or the appraiser’s opinion of the market value. And there is no mandate for anyone to determine the possible impact of the information prior to deciding when and if to disclose the information.

To me, the verbiage changes are significant in this edition of the selling guide and I have to believe that it is for good reason that the verbiage is different and not just because Rodger Mudd's kid wasn't around to write this edition.



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