Evaluations & USPAP - Question from a bank staff appraiser

[jay trotta]

The purpose of the evaluation was to create a format that involved less reporting. It is for circumstances where an institution may not want to pay for or determine they do not need a higher-level of valuation service provided by a USPAP compliant appraisal format. However, Standard 2 of USPAP pertains to communicating an appraisal analysis. Standard 2 of USPAP outlines the minimum requirements for reporting an appraisal. Standard Rule 2-1, General Reporting Requirements, details that an appraisal report “MUST clearly and accurately set forth the appraisal in a manner that will not be misleading”. It also states the report “MUST contain sufficient information to enable the intended users of the appraisal to understand the report properly (2020-2021 USPAP, Effective January 1, 2020 – December 31, 2021, pg. 20, Lines 573-579)“. For the past few years, a lender looking to secure an opinion of value in the form of an evaluation in the State of Connecticut had to use a licensed/certified real estate appraiser but, by law, the licensed/certified real estate was, until recently, bound by USPAP and could not provide an evaluation format without creating a report compliant with USPAP.

This conflict has now been resolved, as the CT Department of Consumer Protection adopted updated Real Estate Appraisal Regulations. The updates were approved by the CT Attorney General on July 19, 2021 and the Legislation Regulation Review Committee on September 28, 2021 becoming effective September 30, 2021. The changes were prompted by the Connecticut Real Estate Appraisal Commission. Section 20-504-2 (4) was added, which states: “..when an evaluation of real property collateral is required in lieu of an appraisal, a Connecticut certified appraiser may perform such evaluations outside the scope the USPAP by following Section XII (evaluation Development) and Section XIII (evaluation Content) of the Interagency Appraisal and evaluation Guidelines…”. The bottom line, in Connecticut, a lender can now use a licensed/certified real estate appraiser to complete an evaluation and a CT licensed/certified real estate appraiser can perform an evaluation and still comply with State of CT Law.

Not to be a pain, but as far as I can tell, this relates to State License Law, Not Lender Law

 

[BRCJR]

Clients or users like to label valuations a certain way -usually to avoid paying more for them. They might call it a short-form report, an evaluation, and so on.

Does not matter what THEY call it - if an appraiser offers an opinion of value it is an appraisal and should be USPAP compliant.

You are mistaken in your belief.

An Evaluation (opinion of value) is not an Appraisal (opinion of value), period. I understand many do not like it, but the fact is it is legal and is a used product for making loans. Both have regulatory provisions they must follow, and they are not one in the same.

Appraisal – As defined in the Agencies’ appraisal regulations, a written statement independently
and impartially prepared by a qualified appraiser (state licensed or certified) setting forth an
opinion as to the market value of an adequately described property as of a specific date(s),
supported by the presentation and analysis of relevant market information.

Evaluation – A valuation permitted by the Agencies’ appraisal regulations for transactions that
qualify for the appraisal threshold exemption, business loan exemption, or subsequent
transaction exemption.

 

[BRCJR]

AO-13

View attachment 92157

They key in this situations is, "are you acting as an Appraiser?"

It is no different than a sales agent that also has an appraiser license.

Which hat are you wearing when performing the task at hand.........

 

[Zoe]

If you are in charge of the appraisal department, you need to be real careful. Call some other chief appraisers that are over the appraisal department of the bank. They are in similar positions as you are in. Is it federally insured bank or State insured bank?

Somebody on your State appraisal board could help you talk your boss. There are probably other Head appraisers that are employees of banks that could help you and guide you.

You need to be careful. Don't think State laws don't make a difference. Or Federal or State Regulators of the lender.

 

[Zoe]

If you PM me, I will give you the name and phone number of a guy that is over a big bank appraisal department and employee of the bank. He is past president of NAIFA. PM me. He will take your call. He is not in your State in though.

That's why I say you might want to talk to your State appraisal board 1st. You can't be the first to be in the position you are in within your State.

 

[Terrel L. Shields]

Talked to a bank appraiser today. They do their in-house evaluations to a Restricted report standard because most of the properties they do now are actually worth more than the de minimus minimum. And they do not do the origination loans. All outsourced to their vendors list unless it is out of their area of expertise, then they engage the AMC. Basically, they do updated values and loan renewals in house only.

 

[Tiffany Gibbons]

Have to love a profession where there’s a half dozen names for the same thing. With the sole purpose to skirt rules, regulations, licensing, etc.

And pay.

 

[JTip]

They key in this situations is, "are you acting as an Appraiser?"

It is no different than a sales agent that also has an appraiser license.

Which hat are you wearing when performing the task at hand.........

Agreed.

But if the lender recognizes you as an appraiser, engages you as an appraiser or expects appraiser type services, then you have the hat on in their eyes even if you took it off.

"I know a good CG that can do an eval on this 20 unit building for us at ABC Bank." Calling you out just like that, they see you wearing that hat.

I'd be curious and not even surprised if the bank/client asked for a resume/certification/E&O (that would CLEARLY define you as an appraiser) to be provided in an evaluation report. Wouldn't put it past them.

 

[George Hatch]

Agreed.

But if the lender recognizes you as an appraiser, engages you as an appraiser or expects appraiser type services, then you have the hat on in their eyes even if you took it off.

"I know a good CG that can do an eval on this 20 unit building for us at ABC Bank." Calling you out just like that, they see you wearing that hat.

I'd be curious and not even surprised if the bank/client asked for a resume/certification/E&O (that would CLEARLY define you as an appraiser) to be provided in an evaluation report. Wouldn't put it past them.

Govt-speak operates off of the definitions which are legislated into law. Completely valid within the context of that benchmark.

Appraiser-speak operates off an entirely different set of definitions which are concepts and principles-based and which are acknowledged by the profession. Not just in USPAP but in all or almost all of the other appraisal standards that have been promulgated by other appraisal orgs.
I have a pdf of a partial scan of a 1929 appraisal text, published almost 100 years ago, which addressed appraisal standards being promulgated by the "National Association of Real Estate Boards". The verbiage is different but the parallels are both obvious and consistent to what the current versions are saying WRT the role of the appraiser and the expectations for their conduct.

My point being that USPAP itself wasn't created out of thin air or in an arbitrary manner. It is a derivative work which is based off of reasoning and explanations previously developed - by appraisers at various professional orgs going back many years. There's more detail and elaboration at hand now but the underlying fundamentals remain fixed and intact.

Here's a screengrab of part of the 1st page:

 

[Mejappz]

I am a certified general appraiser who is employed as a full time employee by a mid-sized bank. I currently order, manage and review all commercial appraisals.

The bank would like to expand the scope of my responsibilities and have me start handling some evaluations for loans that meet the criteria.

Do evaluations completed by an appraiser, who is an employee of a bank need to conform to USPAP?

Are there any bank staff appraisers the perform evaluation duties? How do you deal with USPAP?

Check with your state regulations. Some states allow appraisers to complete evaluations without adhering to USPAP.