Evaluations & USPAP - Question from a bank staff appraiser

[Zoe]

"Cannot legally do an eval as an appraiser" is factually incorrect.

That depends sir where you are. Your personal opinion is not factually correct in some jurisdictions.

 

[Zoe]

Evaluations and appraisals are two different animals. Totally different definitions.

Jurisdictions apply is a fact. Question?

 

[bsilver]

That depends sir where you are. Your personal opinion is not factually correct in some jurisdictions.

Indeed, that very well could be the case. I have found no such jurisdiction which prohibits appraisers from preparing evals as long as the eval is prepared consistent with the Interagency Guidelines, are supplemented with at least the minimum USPAP requirements of a restricted appraisal, and that the SOW appropriately describes any limitations, references, data sources, and so forth maintain compliance with both sets of standards and deliver a credible report which is consistent with the intended use. I have found states that exempt lic or cert appraisers from complying with USPAP when preparing evals, but I have found no jurisdictions which prohibit appraisers from preparing evaluations as described, with the exception being that the subject of the evaluation must be of a property category which the appraiser's license level allows for. Because an evaluation prepared as described is equivalent to a USPAP compliant restricted appraisal also subject to supplemental Interagency standards, that would mean the jurisdiction prohibits licensed and certified appraisers from preparing USPAP compliant restricted appraisals. Can you cite any jurisdictions where this is the case?

 

[Zoe]

Indeed, that very well could be the case. I have found no such jurisdiction which prohibits appraisers from preparing evals as long as the eval is prepared consistent with the Interagency Guidelines, are supplemented with at least the minimum USPAP requirements of a restricted appraisal, and that the SOW appropriately describes any limitations, references, data sources, and so forth maintain compliance with both sets of standards and deliver a credible report which is consistent with the intended use. I have found states that exempt lic or cert appraisers from complying with USPAP when preparing evals, but I have found no jurisdictions which prohibit appraisers from preparing evaluations as described, with the exception being that the subject of the evaluation must be of a property category which the appraiser's license level allows for. Because an evaluation prepared as described is equivalent to a USPAP compliant restricted appraisal also subject to supplemental Interagency standards, that would mean the jurisdiction prohibits licensed and certified appraisers from preparing USPAP compliant restricted appraisals. Can you cite any jurisdictions where this is the case?

I am not sure. When you provide an opinion as a licensed appraiser, you are providing an appraisal. An appraisal and an evaluation are different.

 

[Zoe]

Give you an example. I do plumbing work. I am not a licensed plumber.

I do surgery. I am not a licensed physician or surgeon.

I do brain surgery. I am good.

 

[bsilver]

I am not sure. When you provide an opinion as a licensed appraiser, you are providing an appraisal. An appraisal and an evaluation are different.

Yes, an evaluation provides an opinion of value. Therefore, except in a handful of states, a lic or cert appraiser preparing an evaluation has the added obligation to follow USPAP. The minimum requirements for a restricted appraisal must be developed, reported and attached to the properly completed eval (to Interagency and any in house standards) as supplemental report content as required under USPAP Standard 1 and Standard 2-2(c). As eval reports have expectations for specific intended uses, the requirements to provide a credible appraisal that fulfills the expectations of the specific intended use is equivalent to the Interagency standards, and in house standards as the lender expects the evaluations from any preparer. Appraisers need to add the USPAP supplemental restricted appraisal content, but the total of their efforts will still likely be more credible and prepared similarly as to time as non-pro preparers. Again, I really do not understand the controversy here. I'm not making this up or communicating my best guess interpretation. The Appraisal Institute and USPAP itself have reported this interpretation, I'm just repeating it. Preparation of an evaluation in the manner described, in a legal respect, is nothing more than a USPAP compliant restricted appraisal with supplemental standards requirements in addition. Not work I'm waiting by the phone to hear about, but it is perfectly legal, unless the property is above your license grade.

 

[Dale Floyd]

It's a business decision in rural America, as many appraisers in Tennessee perform evaluations for local banks. Again, evaluations were supposed to only involve in-house mortgages that fall within the parameters deeming a full appraisal to be unnecessary. Our law was specifically written to allow evaluations permitting licensed/certified appraisers to complete them. Our state's AG issued a supportive finding that evaluations are not appraisals, nor should be considered as such in any proceedings. They are truly for bank audits alone, when extracting the purposes they were created.

Our state went further and solidified the facts that the appraiser doesn't have to hide who he/she is in performing evaluations. That was an initial question in the beginning, because if an appraiser signed a piece of paper, are they signing as an appraiser doing an appraisal or as citizen Joe who is not acting in a professional capacity?

What exactly does that mean for us? Well, since an evaluation must say the words "NOT AN APPRAISAL" on the front page to prevent misleading the public, one must be very careful as to the language and manner in which they are completed. An evaluation is a very high overview of data to aid the FDIC and state/OCC auditors when looking at a bank's mortgage files, to assure compliance with LTV protections that are policy driven. There are cases when appraisals are overkill, because George wants a $30,000 HELOC using the equity in his $8,000,000 mansion in California. Tax records are not considered applicable for bank protections as they lack any recent specificity of a property. An evaluation fits that need, and appraisers are the most suited to complete them in my view. Just don't mislead anybody into thinking an evaluation is the same thing as a full analysis of a property's value with respect to specifics. If you aren't in Tennessee, you'll have to look to USPAP in completing an evaluation. Tennessee is different because of the law. Other states have copied our TCA for their own evaluation inclusion.

It works here. And it doesn't matter if other appraisers agree with it or not, it's been the law since FIRREA was enacted in Tennessee and has passed legal scrutiny more than once. Other states wanting evaluations may not have a state law allowing the same for them, so this truly is a state issue.

 

[George Hatch]

The states are free to add extras of their own.

 

[bsilver]

It's a business decision in rural America, as many appraisers in Tennessee perform evaluations for local banks. Again, evaluations were supposed to only involve in-house mortgages that fall within the parameters deeming a full appraisal to be unnecessary. Our law was specifically written to allow evaluations permitting licensed/certified appraisers to complete them. Our state's AG issued a supportive finding that evaluations are not appraisals, nor should be considered as such in any proceedings. They are truly for bank audits alone, when extracting the purposes they were created.

Our state went further and solidified the facts that the appraiser doesn't have to hide who he/she is in performing evaluations. That was an initial question in the beginning, because if an appraiser signed a piece of paper, are they signing as an appraiser doing an appraisal or as citizen Joe who is not acting in a professional capacity?

What exactly does that mean for us? Well, since an evaluation must say the words "NOT AN APPRAISAL" on the front page to prevent misleading the public, one must be very careful as to the language and manner in which they are completed. An evaluation is a very high overview of data to aid the FDIC and state/OCC auditors when looking at a bank's mortgage files, to assure compliance with LTV protections that are policy driven. There are cases when appraisals are overkill, because George wants a $30,000 HELOC using the equity in his $8,000,000 mansion in California. Tax records are not considered applicable for bank protections as they lack any recent specificity of a property. An evaluation fits that need, and appraisers are the most suited to complete them in my view. Just don't mislead anybody into thinking an evaluation is the same thing as a full analysis of a property's value with respect to specifics. If you aren't in Tennessee, you'll have to look to USPAP in completing an evaluation. Tennessee is different because of the law. Other states have copied our TCA for their own evaluation inclusion.

It works here. And it doesn't matter if other appraisers agree with it or not, it's been the law since FIRREA was enacted in Tennessee and has passed legal scrutiny more than once. Other states wanting evaluations may not have a state law allowing the same for them, so this truly is a state issue.

Absolutely correct. There are six or seven states that have this exemption law. Note, however, even in those states, most professional appraisal organizations require their designated appraisers to follow USPAP if they provide any opinion of value. Even in exempt states, USPAP requirements as I have outlined and as discussed in AO-21 and AI Guide Note 13 are regardless.

 

[George Hatch]

Even if you didn't use the label you could still hit all the other requirements.