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Define 'federally Related Transaction'

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Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Could I please have a good definition of what a 'Federally Related Transaction' is, and how would an appraiser know if they are doing an appraisal that would fall under that category?
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
The way I have always been taught is that any loan where the feds would have a vested interest. Any FDIC lending institution, Fannie, Freddie, etc., FHA and VA. I believe there are some on the forum that don't consider FHA or VA federally related but in my recent USPAP class instructor said it was so and I agree because the feds insure the loans. Fannie and Freddie are because they have federal charters. As to how you would always know that is a different issue. You would have to know the ultimate lender in every case then you would need to know if they were FDIC. A bank like WaMu is not FDIC but they might as well be so I treat them like it is a federally related. The easiest thing for me is to treat any appraisal I do as if it is a federally related transaction.
 

Jo Ann Meyer Stratton

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Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Appraisal Standards Board
USPAP Q&A
September 2002

A real estate related transaction and a federally related transaction are legal terms prescribed by law (the law refers to Title XI of the Financial Institutions Reform, Recorvery, and Enforcement act of 1989) and defined in the agencies' appraisal regulations. In general, our appraisal regulations apply to real estate related financial transactions entered into by the agencies or by federally regulated financial institutions (This includes commercial banks, savings and loan associations, credit unions, bank holding companies, and the nonbank subsidiaries of bank holding companys)

---Under the agencies' regulations, transactions that qualify for sale to a United States Government agency or United States government sponsored agency (e.g., FHA, VA, Fannie Mae, Freddie Mac, Farmer Mac and Salle Mae) are exempted and as such are not federally related transactions.---
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Thanks Larry, that's pretty much what I was taught.
If this is correct, then there's no way an appraiser can be sure if the end user will fall under that category, so it would seem prudent to treat every appraisal in a refi or purchase situation as if it will be a federally related transaction.

Any other opinions?
 

Dee Dee

Elite Member
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Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Jo Ann,
As usual you dazzle me with your ability to pull up that perfect (and verifiable) answer. :lol:
Could you give your opinion on how if an appraiser would be able to know if their appraisal might end up with a federally regulated institution? Or can they? Is it common for such institutions to buy loans that were originated outside of their institution?
Sorry for the bombardment of questions. :redface:
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Larry & Jo Ann - good answer's


Dee Dee - look at it this way, if ever You think you know where your appraisal is going to wind up - aim it for a non Faderal transaction; ifn yer like me, just do the prelude and write em as if there all Faderally related :mrgreen: Thats the way I've done every one of mine since I started and why I elude to FNMA guidelines a lot here B)


:ph34r:
 

Oregon Doug

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Joined
Jan 15, 2002
Professional Status
General Public
State
Oregon
Larry - FYI. If you look at the lettering on the door of your local branch, you will see "Washington Mutual Bank fsb". That little "fsb" stands for federal savings bank. Basically, WaMu is one of those S & L's from way back in the 1980's.

When we had that little issue with the S & L back in those days, so many of them went belly up that it sunk the FSLIC (Federal Savings & Loan Insurance Corporation). The S & Ls scrambled to find insurance coverage for their demand deposits and finally were allowed to obtain coverage under the FDIC (Federal Deposit Insurance Corporation) to the consternation of the banking industry. The conservitive ole' banking industry had its insurance rates inflated by all those fly-by-nite S & L's and I can tell you, they were none to happy about it!

It was determined that the nation would be better off if folk's deposits were insured rather than to let them go down the drain and thus, many of the S & L's were converted to "fsb"s.

It was policy in those days that "one great big failed S & L was easier to manage than a bunch of little failed S & L's" so a lot of those companies were merged. (I was in that industry at the time and remember merging State S & L in CA with American S & L).

As part of the process, the large "non performing" assets (bad loans)were pulled out of the portfolios and the balance sheets cleaned up. The "non performing" assets were transferred to "bad banks" - that is, banks that held no deposits, had no customers and were instructed to re-structure the "non performing" assets into viable assets so that they could be re-inserted into the banking main stream. New West Federal was one of those "bad banks" - but I'm beginning to wander a bit.

The short answer is that you are wise to treat all appraisals for WaMu as federally regulated - they are.

I do miss the good ole' days...... Oregon Doug
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
With so many of our 'Rules', 'Regulations', 'Laws', 'Guidelines', etc adnauseum, written for 'Appraisals completed for a "Federally Related Transaction"'.....

How in the hell are we supposed to know when they apply and when they don't??????

:twisted:

I know that doing every appraisal as if it's going to be a 'Federally Related Transaction' is the best policy, but how could any of us possibly know???? Some state laws are written that non-appraisers and trainees can complete appraisals on their own for non-federally related transactions. How does ANYONE know which is which???
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Originally posted by Pamela Crowley (Florida)@Apr 22 2003, 07:35 PM
I know that doing every appraisal as if it's going to be a 'Federally Related Transaction' is the best policy, but how could any of us possibly know???? Some state laws are written that non-appraisers and trainees can complete appraisals on their own for non-federally related transactions. How does ANYONE know which is which???
Which is exactly the question I had, and tied to a point I wanted to make.

A licensed appraiser could find themselves in underwriter hell if they were to disclose that an unlicensed assistant did the bulk of the work in their report, so I doubt that most would voluntarily admit it in writing if this were the case.

Yes, it seems that we should all treat our reports with the assumption that the end user will be a federally regulated institution. Given that, any trainee or unlicensed appraiser would really have a tough time finding work on their own that is mortgage related.
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
The craziest thing about this whole issue to me is that Fannie, Freddie, etc., VA and HUD loans are exempt from being a federally related transaction. Criminy, isn't it the Feds that would have to bail all of them out if they got into deep doo doo. Too much of this appraisal, USPAP, federally related transaction, lender pressure hokey pokey just doesn't make a lot of sense to this old farm boy. :eyecrazy:
 
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