Evaluation Liability

[Meandering]

IF a non appraiser performs an evaluation, that person does not have to be USPAP compliant.

Wrong
Wrong
Wrong

this is what happens when you don't read the regulations, and just rely on what other people tell you, without VERIFYING the information.

More lack of verification from appraisers,

truly sad, and makes one wonder if this is a profession worth saving from itself.

.

 

[Terrel L. Shields]

If one does provide a restricted report to a lender the report content will have to be expanded to include more than the bare minimum that USPAP requires. For example, a restricted report that provided only the results and did not include the supporting data and analysis to show how those results were derived would not be acceptable, because it would not meet the IAG.

The stupidest move of 1994 was creation of the three ring circus. And I don't know what crybaby it was that insisted the restricted appraisal report survive the demise of the three reporting options. It was the first one that should have gone. It requires wordsmithing beyond belief...and as you point out. cannot meet the IAG therefore has to be supplemented. So what do we call it? "Super Restricted Appraisal Report"? "Enhanced Restricted Appraisal Report"? If it becomes a summary report, then why waste the effort to limit it to the single user? This is the sort of convoluted crap USPAP is excellent at muddying the waters. So we just create some hybrid BS report and be held accountable whereas the evaluator can be held unaccountable.

the real angst with evaluations is with fees. The simple answer to that is to set the fee at a level that is acceptable to you and don't accept anything less.

That's pretty much like saying the Restricted appraisal can compete with the evaluation when it cannot, has never, and won't ever...so you basically are saying the same as reviewers who charge what a review is really worth...about the same as the appraisal...hence, you get no work...ever. So saying you CAN create Appraisal LIte and do so competitively is only meaningful if you are willing to do twice the work, with 100x the liability, and do so for exactly the same as an evaluation costs.

 

[Dale Floyd]

Advisory Opinion 13

Marion - You make multiple good points about this. You've shared information in a manner that I've not
considered before, so allow me to thank you for spending time out here and for sharing.

Just curious - Do you complete evaluations as restricted reports, like Danny and some of the others advise or do you
simply avoid doing them due to the regulations? I've not personally completed an evaluation or a drive-by in a very long
time, but my firm does and I want to look closely at the compliance side.

 

[Meandering]

Marion - You make multiple good points about this. You've shared information in a manner that I've not
considered before, so allow me to thank you for spending time out here and for sharing.

Just curious - Do you complete evaluations as restricted reports, like Danny and some of the others advise or do you
simply avoid doing them due to the regulations? I've not personally completed an evaluation or a drive-by in a very long
time, but my firm does and I want to look closely at the compliance side.

I am licensed as both a CG and a RE sales person in PA.

PA Law does not allow for either appraisers to perform appraisals that are not compliant with USPAP, nor, allow Salespeople or Brokers to complete valuations. PA convolutes the entire issue by claiming that BPOs are really just mis-named CMAs, which can be completed by salespeople and brokers, for a listing.

So, for a listing, as a salesperson, I complete CMAs and caveat that even though I am also an appraiser, the CMA is for listing consideration purposes only, is not USPAP compliant, and is not an Appraisal and does not opine Market Value, but rather provides a suggestion of a range of possible list prices that might attract a ready, willing and able buyer.

Other than that, to do as Danny, PL, JGrant, and Denis suggest, would be to risk sanction by two state boards for me, not to mention that the ASC was seeking the power to additionally sanction appraisers (Federal Register), so no, I do not do any "evaluations" for lending, that are established in the IAEG 2010.

If the state should reconsider it's appraiser protectionist laws, that the real estate values of the state are at greater risk, via the federal allowance of evaluating property values, by non-licensed, non-certified people, who may or may not be citizens of the state, and who only need to answer to questionable experience and education in the field of valuation, I may consider them, only if, additionally the USPAP is changed, that requires me to comply to USPAP for the valuation, when the IAEG does not require USPAP compliance from any other "valuer" who is not an appraiser.

Until then, the state can sit back, smug with their egos, and watch the whole thing disappear as FRTs are not all that common for residential properties in most of the state, or rather are a small percentage of loans produced for residential properties in the state.

Also,

Don't forget that this is not just for residential lending. The IAEG and evaluations apply to commercial, industrial and raw land properties as well. So, because those types of properties are not regulated by the TILA, and consequently, C&R law, I just can not see myself performing commercial appraisals, being called "evaluations" for a couple of hundred dollars, and consider myself a professional that cares about my profession.

Short answer,
No.

.

 

[J Grant]

http://www.appraisalinstitute.org/assets/1/7/guide-note-13.pdf

https://www.FDIC.gov/regulations/laws/rules/5000-4800.html

 

[hastalavista]

IF a non appraiser performs an evaluation, that person does not have to be USPAP compliant.

I agree with you.
The Interagency guidelines clearly differentiates between what is required from an appraisal and what is required from an evaluation.

From the Federal Registry:


There is no argument that an appraisal must comply with the appraisal standards (USPAP). Further, the guidance stipulates that appraisers must be licensed or certified. Those who perform evaluations can be appraisers but do not have to be appraisers.



As I posted earlier, the requirement for being an evaluator is competency, not an appraisal license.

No where in the IAG does it say an evaluation must comply with the USPAP while an appraisal is clearly required to follow the USPAP:


However, due to the nature of licensed appraiser's regulations, an evaluation completed by an appraiser must meet the USPAP minimum.

When discussing the appropriateness of an evaluation, the guidelines indicate the when an evaluation can be used in lieu of an appraisal...


After that, no where in the development or reporting requirements for an evaluation does it require compliance with the USPAP.

There is nothing in the IAG or Federal Register that requires evaluators to follow the USPAP. Non-appraisers could do so if they chose to do so (voluntarily); further, I don't see any reason why a lending institution couldn't require their evaluations to follow the USPAP regardless of whom completed it. But that would somewhat defeat the purpose of having two different valuation processes/standards.

 

[Meandering]

Selective copying and pasting again Denis.

Post from the IAEG, section,
VI. Selection of Appraisers or Persons Who Perform Evaluations

with the footnotes.


And please note that "or" is not "and".


.

 

[hastalavista]

It isn't selective reading.
It is reading with a common understanding of the Queen's English.

I work with federally regulated institutions that use evaluators for some of their evaluations.
They do not require the evaluators to follow the USPAP.
I know of no lending institution (and I work in this space to a degree) that does require their evaluators or evaluations to follow the USPAP.

You are interpreting the requirement incorrectly but I have learned over the years that despite what happens in the real world, when you have made your interpretation, no amount of information to the contrary will change your opinion. I can live with that. But I'll point out these errors (as I see them) in my post so others can evaluate (pun intended) on their own. I'm confident your intent is the same when you post in argument.

 

[hastalavista]

And, just to close this out....
From a FDIC PP presentation; who can be an evaluator (my highlight for emphasis)?



Nothing in the PP regarding evaluations following the USPAP.

Further differentiation provided in their "Supervisory Insights" publication (Winter, 2011):



You see, because evaluations are not required to follow the USPAP, the regulators have provided guidance on the development and reporting process (which isn't necessary to the same degree for appraisals because the USPAP Standards covers that for the most part).

However, confusion is not limited to this discussion; apparently even some regulated institutions get confused.

 

[hastalavista]

Whoops... one more. Very definitive: https://www.FDIC.gov/news/news/press/2016/pr16017a.pdf



Case closed.