Divorce Appraisals

[Brian Weaver]

Don, appraisers use the 1004 for all sorts of things. I've seen someone try to cram a 300 acre working farm into one...I've seen appraisers try to value mini-mart gas stations on them, and on and on.

The point is, the NEW URAR is NOT to used for anything other than mortgage lending.

When I review "form" reports for my law clients the first thing I do is attack the form and the language that comes with it.

I go after ALL of the "lender" language before I start to dissect the development and reporting.

These forms are NOT a hammer for all nails.

 

[DonRico]

Brian-

When you say you go after "Lender Language".....do you mean the pre-printed Certifications and Intended Uses on pg 4 and 5??

Is there anything specifically Lender-oriented in the body (pg 1, 2 & 3) of the 1004 form?

As I asked in my original post.....if FNMA is not involved in the transaction, could a Scope of Work and Intended Use be put together to clearly and concisely state the purpose "ESTABLISH MARKET VALUE FOR DIVORCE PROCEEDINGS"?

Did I mention that I wanted to stimulate a discussion on this topic?

 

[Brian Weaver]

The URAR is NOT your form to take apart and cobble together for your own use. Fannie is quite clear on that point.

In my own narratives I never refer to the "comparables"...only as improved or unimproved sales. The word comparable means something else outside of lenderland.

I don't care for the grid as its laid out. I have my own. I don't think I need to put in all that crud about One-Unit Housing value ranges or Present Land Use percentages. I don't need to address census tract stuff, map references...I don't need to address half the crud on the URAR because most of it isn't at issue in a divorce.

But...if I'm reviewing somebody's "form"...you bet I'm checking for ALL of those items. If this is the format YOU as an appraiser chose...then everything is fair game.

 

[DonRico]

I wouldn't be taking a 1004 apart only to cobble it together on my own.

I would be using page 1 to "identify the subject by Block & Lot and by MSA, and identify the Real Property Ownership Interest." I would give a brief description of the Neighborhood and the Site, and then list the Subject's Improvements. All important things in establishing an opinion.

On page 2, I would list the Subject's Salient Features and then compare them to three or more similar homes in the aforementioned Neighborhood.
(The word comparable means something else outside of lenderland?? Now I'm really curious.....What does the term Comparable Sale mean to a lawyer.)

In your narrative, how did you change the standard grid?? Did you add/delete some of the Features List? Or just re-arrange things?

Did FNMA expressly forbid the use of the 1004 for non-lender reports?
A quick search of their web-site produced no such prohibitions. If they forbid such use, they've done a good job of hiding the restriction.
The form isn't copyrighted to Fannie, is it? I'm just asking.

The very top line of the 1004 states "The purpose of this summary appraisal report is to provide the lender / client with an accurate, and adequately supported opinion of the market value of the subject property."

I'm interpreting the slash between lender and client to mean "either/or" in which case the client would be one of the parties in a divorce proceeding. The 1004 would provide an excellent vehicle to provide such an opinion.

Again, I'm not looking to re-invent any wheels here. I'm trying to get to the root of why a form familiar to many cannot be used to provide an opinion of value.

 

[Lee Lansford]

Don, why, oh, why would you waste your time screwing around with the Fannie Mae (3/05) form to use in a matter other than an appraisal headed for the secondary market?

Don't waste your time...really.

 

[Brian Weaver]

What follows is a paraphrased thread from a long time ago...Don, I suggest you CALL Fannie and find out exactly what their gripe is with appraisers using their forms for assignments outside of lending. As I recall this was news in the Spring of 2005.

November 17, 2005, Charlottesville, Virginia
AI Meeting with Joe Minnich of Fannie Mae
Meeting notes:

This was the meeting of the Central Virginia Chapter of the AI. Approximately 23 people were present; mostly MAI’s attending the installation of officers meeting to follow this class. Probably less than 15 residential appraisals in attendance. Two former Virginia chairmen of the appraisal board that teach a class on the new form were present. They had the same issues with cert 23 as everyone else.

Goals of new form:
1. Increase responsibility and accountability. It was reported by Minnich and the two state instructors in the class that many appraisers in Virginia have the opinion that the new form is a new short and easier to use form only. They have no idea of the added responsibility and accountability requirements not to mention legal exposure. If you think this is just a new form you are in for a rude awakening.
2. Improve quality
3. Improve accuracy & relevancy of the information.

Accuracy means as supported. No more of that canned BS is allowed. If you write something in the blank it has to be in relation to some factual observation you made. No addenda of pages explaining BS like how 9/11 affected home prices in MI. No more explain, explain, explain.

If you go to the Fannie Mae Wet Site there is a place at the bottom of the appraisal section to report violations and Joe asked that we do so. You can ask Minnich question by E-mail at: joseph _1_minnich_iii@fanniemae.com or by phone at 202 752 5566.

Scope of work statement can be expanded but not reduced as examples will be addressed later.

The only purpose of the new form is for mortgage loan purposes. If you are doing estate, divorce or other uses of the form, you can use the OLD 1004, but you must make a new certification. If you ever used the old 1004 for other than mortgage loan purposes and used the Fannie certification, you screwed up.

 

[Brian Weaver]

I'm really not inclined to give a "divorce appraisal" primer here. As for what I consider relevant...have learned what is and what isn't relevant in the areas that I appraise in...may have a lot or very little to do with your area.

As to what I place in my "grid"...it varies from assignment to assignment. The grid is similar in appearance to an URAR but I've omitted what I find pointless and added other things.

As to the comparable question...comparables emerge from improved sales. I may have three to five improved sales but maybe only ONE might be comparable. If I call everything on the grid "a comparable" that opens up a new set of potential problems.

The short answer is: create your own format that makes sense for the assignments you take on.

I just finished a case where the lawyer needed values across three different dates. I wouldn't know how to jam all of that into a URAR (old one or new one) without it looking like crud and having it make sense.

 

[The Warrior Monk]

Did FNMA expressly forbid the use of the 1004 for non-lender reports?

Don,

You're missing the point. Stay away from lending forms for anything that could end up in litigation. Whenever someone on the other side is using Fannie forms for cases that I testify in, I know my day is going to be easy and theirs is not.

Every single box or line, whether you fill it in or not, is up for discussion in a courtroom. So prepare to have support for every single box and line that you did or did not fill out.

Same thing with the grids. If you make an adjustment, make sure you have support for every adjustment; after all, your credibility is at stake.

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The way I view it is that the appraiser leads the reader. If you use a form, then the appraiser has let the form lead the reader. IMO, that puts a limit on the appraiser's presentation. Especially when the form was not designed for your intended use.

The appraiser can expand on sections of the form, but then the appraiser has created a situation where the reader has to jump back and forth to understand things in the form. That is less readable, and, IMO, less professional. We may have to suck it up and do that for lenders because they require the use of the form, but it doesn't mean that it has to be done that way for everything else.

I keep it simple...here's the scope of work, here's my thought process for the valuation process, here's the valuation process, here's my certification and my signature, and have a nice day!

 

[Pamela Crowley (Florida)]

Stay away from lending forms for anything that could end up in litigation. Whenever someone on the other side is using Fannie forms for cases that I testify in, I know my day is going to be easy and theirs is not.

Totally agree. I have done exactly that and would again. Way too easy to discredit some other appraiser just for using a lending form for a case that even MIGHT end up in court.

 

[Brian Weaver]

David, Pam and Lee are correct. If you come away with nothing else...stay away from forms for court work.

No matter what someone tells you...as soon as somebody "guarantees" that you'll never be called to appear...you will.

Its just like trying to get that last comp (improved sale) picture...you KNOW its going to be the house with the kids playing in the yard or somebody staring out the window. You know it a block away.