Evaluation Liability

[Meandering]

What makes you think I'm not giggling my *** off, watching you try to defend paying appraisers less than a couple of hundred dollars for appraisals?

I'm not upset at all.

Actually took a break and went down to the local bank to laugh at them.



You guys crack me up.

I used to think it was just Joan, and then Danny, but now you too???



Trust me. I'm here for the laughs to watch you people try and defend your BS.



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[Terrel L. Shields]

So, how do you think an Evaluation can become an Appraisal?

What the bank calls an evaluation is any product that is either an appraisal or an evaluation written to evaluation standards in the IAG involving property not considered an FRT. RIght? To a bank, anything under $250,000 is an "evaluation" whether it is an "appraisal" created by an appraiser, or an evaluation created by a non-appraiser. But my interpretation is that appraisers cannot create an evaluation by definition (see Page 1 of definitions lines 20-21). And an evaluator who creates an appraisal, in most states, is practicing appraisal without a license. In Arkansas that means they need to be registered with the state as a "Registered" appraiser - which either means a TRAINEE or it means a person who is practicing outside of USPAP independently or if they wish, they can claim to comply with USPAP...but doing so means they fall under the regulation of the state board. CG0002, Dave Reinhold believes therefore, all evaluators must register with the state as registered appraisers if performing public practice - which most of the evaluators I see are doing exactly that. They are not in house bank employees. Most of those do reviews only.

I believe there is nothing I can put into an evaluation that would not wind me up at a tea party with two state boards, costing me much more money than the nominal price of a cup of tea.

I agree with what I think is Marion's point. Appraisers are doing "appraisal practice" whether they call it evaluation or appraisal. If the evaluation is high graded to the point of being USPAP compliant, it is no longer an evaluation period, it is an appraisal for an appraiser. As the forum byline. Just because the cat has kittens in the oven, doesn't make them biscuits.

"The use of other nomenclature for an appraisal or appraisal review assignment (e.g.- analysis, counseling, evaluation, study, submission, or valuation) does not exempt an appraiser from adherence to the [USPAP]."​

[UNLESS] USPAP is changed to eliminate evaluation as part of the definition of appraisal practice

Yes, appraisers can call it anything they want but it is still what appraisers do according to USPAP - and since the states adopt or don't adopt, TN is unique in allowing appraisers to bypass USPAP in regard to evaluations...which begs the question why, but I am not to ponder. Obviously, it is a violation of USPAP whether a violation of state law or not. Carving out exceptions to USPAP...isn't that why we have a bunch of threads about the demand of AI for exactly that? How much sense does it make for TN to say you MUST comply with USPAP on the one hand, but ignore that and let appraisers NOT comply with USPAP by calling an evaluation something outside of appraisal practice when USPAP clearly intended for it to be within?

Evaluation is just another bank exemption carved out to bypass small loans...except for most people, $250,000 is not a small loan. $50,000 like we started out with when evaluations were first instituted...well, you can make a better case for that I believe. 90% of this area would qualify as "evaluation" territory, and only the fact FHA, VA, Fannie, etc. didn't have such a "de minimus" issue, well, that is a different issue. Further, the very definition of evaluation in IAG and USPAP is so obscure, who the heck knows? Why were these definitions not made crystal clear in the FIRREA legislation? What idiot at USPAPland couldn't see the definitions were in conflict with IAG, or at the least, left an area of undefined ambiguity?

In either case, call it what you may. But the notion you can compete with the evaluator ON THE VERY SINGLE BASIS OF LIABILITY is nuts. That is the title of the thread. You are liable for errors and omissions for your work and hiding behind the evaluation target is like hiding behind a cardboard box when someone is shooting at you. It won't work. You are as liable as ever and your E & O may have different ideas about coverage. The quality of the report is suspect whether an evaluation or a "Restricted Appraisal Report" because the only way the RAR can compete is to ignore the workfile rules and hope you can reconstruct that workfile if called over the carpet. Lord help me, but I hope I am never called over that carpet over a $175 fee.

 

[Meandering]

The Appraisal Foundation, USPAP, IAEG and the regulators are all clear on the matter: Appraisers can perform evaluations for lenders.

Now see,

And appraisers get sanctioned for violating USPAP.

Shall we start over with USPAP definitions of Appraisal and Appraisal Practice?

After all,

If all those entities think appraisers can preform evaluations, the USPAP would not say that evaluations are appraisal practice, and they would change it.

Not like they don't change the darn thing every two years anyway.


So,
Please, cause I'm dying to know,
WHY,
if, everyone agrees,
Appraisers can do evaluations, that are not appraisal practice, requiring adherence to USPAP,

WHY\
has the USPAP not been changed?



Too busy thinking about draft reports???



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[SpartanAG]

Appraisers can do evaluations, that are not appraisal practice, requiring adherence to USPAP,/QUOTE]

Slow down there spark plug. No one has claimed that evaluations aren't part of appraisal practice were appraisers are concerned, nor has anyone claimed that evaluations performed by appraisers don't have to comply with USPAP, with the exception of two states.

 

[BRCJR]

As of July 1, 2017 you can add Virginia to the list (TN and VA-possibly GA, not recalling if that is correct or not) allowing Appraisers to do Evaluations.

 

[Meandering]

Slow down there spark plug. No one has claimed that evaluations aren't part of appraisal practice were appraisers are concerned, nor has anyone claimed that evaluations performed by appraisers don't have to comply with USPAP, with the exception of two states.

So you agree?
Evaluations, are appraisal practice, and by the USPAP which is part of FIRREA, the Federal LAW, and has been adopted by some states, as state law, and has been adopted by some states, as regulation, that,

according to USPAP, when preforming appraisal practice, adherence to USPAP is REQUIRED.

and adherence to USPAP, means there are only two reporting options,

Appraisal Report, and Restricted Appraisal Report,

And so, when the Appraisal has been performed for a loan secured by a principal dwelling, it is subject to both Regulations X and Z, hence,

Customary and Reasonable fees for an appraisal are due the appraiser,

And, NOT following Regs X and Z will land the AMC in Registry heck with state boards ACROSS the country,

Even if, the AMC only ordered an "evaluation" from an appraiser?

Oh wait?

Doesn't the Final AMC rule say something like AMCs have to make sure everything complies with USPAP?

Darn,

Regulatory circles again.

.

 

[Meandering]

As of July 1, 2017 you can add Virginia to the list (TN and VA-possibly GA, not recalling if that is correct or not) allowing Appraisers to do Evaluations.

Was USPAP adopted into state law,

If so, best check that verbiage that says "unless required by law or regulation"

Cause that's the one that's the smoke and mirrors bingo chip, everyone is hoping ya'll won't understand that USPAP is the law or regulation that is required, that you might believe is no longer required if the state says it's not required,
"unless required by law or regulation"

Gotcha!

Can't catch mice without mouse traps.

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[SpartanAG]

So you agree? .

Evaluations, are appraisal practice, and by the USPAP which is part of FIRREA, the Federal LAW, and has been adopted by some states, as state law, and has been adopted by some states, as regulation, that, according to USPAP, when preforming appraisal practice, adherence to USPAP is REQUIRED.

Evaluations are used when the transaction is a not a federally related transaction. Since it isn't federally related, FIRREA doesn't apply; therefore, an appraisal isn't required. However, most states require appraisers providing a valuation service, which includes evaluations, to comply with USPAP.

and adherence to USPAP, means there are only two reporting options, Appraisal Report, and Restricted Appraisal Report,

Agreed. There are two reporting options stated in USPAP. No one is arguing otherwise.

And so, when the Appraisal has been performed for a loan secured by a principal dwelling, it is subject to both Regulations X and Z, hence,

No. If an evaluation is being used, the transaction is not federally related, so the appraisal requirements in those regulations do not apply.

Customary and Reasonable fees for an appraisal are due the appraiser,

Customary and reasonable for an evaluation product is different than that of a traditional appraisal. Evals probably pay better on an hourly basis.

And, NOT following Regs X and Z will land the AMC in Registry heck with state boards ACROSS the country, Even if, the AMC only ordered an "evaluation" from an appraiser?

Two points here:

1. If an evaluation is being used, the transaction is not federally related, so the appraisal requirements in those regulations do not apply.

2. All the lenders that I know of that use an evaluation product order that product in-house. They do not use AMC's. However, even if they did...see point 1 above.

Oh wait?

Doesn't the Final AMC rule say something like AMCs have to make sure everything complies with USPAP?

If an evaluation is being used, the transaction is not federally related, so the appraisal requirements in those regulations do not apply.

Darn,

Regulatory circles again.

No, just a gross misunderstanding of how the different valuation standards and regulations apply in given situations.

 

[Meandering]

Hey Spartan,

Not to pick on you personally,

But you seem like a curious guy, so, let me play Andy Rooney here.


Did you ever wonder why.............................????????

The IAEG is 7 years old and this "evaluation" thing only now comes to the forefront?


Wouldn't have anything at all to do with the GSEs releasing the reps and warrants for below threashold loans, leaving only appraisers to hang when the loans go bad,

Would it?


Oh darn,

Smoke blown away.


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[hastalavista]

Evaluations, are appraisal practice, and by the USPAP which is part of FIRREA, the Federal LAW, and has been adopted by some states, as state law, and has been adopted by some states, as regulation, that, according to USPAP, when preforming appraisal practice, adherence to USPAP is REQUIRED.

Evaluations are used when the transaction is a not a federally related transaction. Since it isn't federally related, FIRREA doesn't apply; therefore, an appraisal isn't required. However, most states require appraisers providing a valuation service, which includes evaluations, to comply with USPAP.

Just to save you some time, Spartan...

https://www.FDIC.gov/regulations/laws/rules/2000-4300.html


"and" is different than "or".