Federal Transaction Appraisal!

[Meandering]

and paragraph B is:

(b)Exemptions. Unless otherwise specified, the requirements in paragraphs (c) through (f) of this section do not apply to the following types of transactions:

(1) A loan that satisfies the criteria of a qualified mortgage as defined pursuant to 15 U.S.C. 1639c;

(2) An extension of credit for which the amount of credit extended is equal to or less than the applicable threshold amount, which is adjusted every year to reflect increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers, as applicable, and published in the official staff commentary to this paragraph (b)(2);

(1) A qualified mortgage as defined in 12 CFR 1026.43(e).

(3) A transaction secured by a mobile home, boat, or trailer.

(4) A transaction to finance the initial construction of a dwelling.

(5) A loan with a maturity of 12 months or less, if the purpose of the loan is a “bridge” loan connected with the acquisition of a dwelling intended to become the consumer's principal dwelling.

(6) A reverse-mortgage transaction subject to 12 CFR 1026.33(a).

(7) An extension of credit that is a refinancing secured by a first lien, with refinancing defined as in 12 CFR 1026.20(a) (except that the creditor need not be the original creditor or a holder or servicer of the original obligation), provided that the refinancing meets the following criteria:

(i) Either -

(A) The credit risk of the refinancing is retained by the person that held the credit risk of the existing obligation and there is no commitment, at consummation, to transfer the credit risk to another person; or

(B) The refinancing is insured or guaranteed by the same Federal government agency that insured or guaranteed the existing obligation;

(ii) The regular periodic payments under the refinance loan do not -

(A) Cause the principal balance to increase;

(B) Allow the consumer to defer repayment of principal; or

 

[Meandering]

C) Result in a balloon payment, as defined in 12 CFR 1026.18(s)(5)(i); and

(iii) The proceeds from the refinancing are used only to satisfy the existing obligation and to pay amounts attributed solely to the costs of the refinancing; and

(8) A transaction secured by:

(i) A new manufactured home and land, but the exemption shall only apply to the requirement in paragraph (c)(1) of this section that the appraiser conduct a physical visit of the interior of the new manufactured home; or

(ii) A manufactured home and not land, for which the creditor obtains one of the following and provides a copy to the consumer no later than three business days prior to consummation of the transaction -

(A) For a new manufactured home, the manufacturer's invoice for the manufactured home securing the transaction, provided that the date of manufacture is no earlier than 18 months prior to the creditor's receipt of the consumer's application for credit;

(B) A cost estimate of the value of the manufactured home securing the transaction obtained from an independent cost service provider; or

(C) A valuation, as defined in 12 CFR 1026.42(b)(3), of the manufactured home performed by a person who has no direct or indirect interest, financial or otherwise, in the property or transaction for which the valuation is performed and has training in valuing manufactured homes.



Sorry for the multiple posts, but all this was more than 2,000 characters.

 

[Howard Klahr]

.the market place doesn't necessarily seem to agree.

It is not a market place decision.

the agencies haven't defined what "should" or "should not" qualify as an FRT?

The agencies have absolutely nothing to do with should or should not. The term and therefore the transactions that fall under the definition have quite clearly been defined for over 25 years. What part do you find that is unclear?

Ignorance is bliss says the Ostrich!

So says the Pied Piper ... Maybe you should learn more about the issue beyond just reading headlines.

 

[Howard Klahr]

Sorry Howard

Sorry for the multiple posts, but all this was more than 2,000 characters.

Sorry Marion but ABSOLUTELY nowhere in your entire post of over 2,000 characters, does it reference FRT

 

[Meandering]

Sorry Marion but ABSOLUTELY nowhere in your entire post of over 2,000 characters, does it reference FRT

No problem Howard.

I posted more based on Joan's BS, but didn't want to be accused of picking on her, so I included you, as you had also called her out.

.

 

[gregb]

Real Estate Related Transactions

Title XI [12 U.S.C. 3350(5)] also defines a real estate related transaction as "any transaction involving:

1. the sale, lease, purchase, investment in or exchange of real property, including interests in property, or the financing thereof;
   
2. the refinancing of real property or interests in real property; and
   
3. the use of real property or interests in property as security for a loan or investment, including mortgage-backed securities."

Therefore, in determining whether an assignment is a federally related transaction , an appraiser must begin by answering two questions. First does the appraisal involve the transfer of an interest in real property, the financing or refinancing of a transfer of an interest in real property, or the use of an interest in real property as security for a loan or for mortgage-backed securities.

Second, does the financial transaction for which the appraisal assignment is to be performed involve a federal financial regulatory agency or one of the agencies specifically named in Title XI that require the services of a licensed or certified appraiser.

Federal Financial Regulatory Agencies

Title XI identifies the following agencies as federal financial regulatory agencies :

(A) the Board of Governors of the Federal Reserve System (In addition to the 12 member banks, the Federal Reserve has regulatory authority over state-chartered banks and bank holding companies);

(B) Federal Deposit Insurance Corporation (FDIC) (In addition to insuring the accounts of depositors in member banks, the FDIC regulates savings banks and state-chartered banks that are not members of the Federal Reserve System);

(C) Office of the Comptroller of the Currency (OCC) (The OCC regulates more than 2,500 national banks all across the U. S.);

(D) Office of Thrift Supervision (OTS) (The OTS regulates the nation's savings and loan or thrift institutions); and

(E) National Credit Union Administration (NCUA) (The NCUA insures the accounts of depositors in federally chartered credit union and regulates those institutions).

Other Affected Financial Institutions

In addition, Title XI specifically requires appraisals by licensed or certified appraisers for financial transactions for the Federal National Mortgage Association (Fannie Mae); the Federal Home Loan Mortgage Corporation (Freddie Mac); or the Resolution Trust Corporation (RTC), the agency created by the Congress to liquidate the assets of the nation's failed savings and loan institutions. Although not specifically mentioned in Title XI, loans insured by the Federal Housing Administration (FHA) and loans guaranteed by the Veterans Administration (VA) are also considered federally related financial transactions.

Requiring the Services of an Appraiser

The final consideration in determining whether an assignment involves a federally related transaction is whether the transaction requires the services of an appraiser. Title XI [12 U.S.C. 3341(b)] provides that each federal financial regulatory agency can establish a threshold below which a licensed or certified appraiser is not required for performing an appraisal in connection with a real estate related financial transaction . In 1992 the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Office of Thrift Supervision individually adopted appraisal guidelines that included a threshold transaction amount below which an appraisal would be required. Two years later those agencies formally and jointly adopted a threshold of $250,000, commonly referred to as the " de minimus ."

Therefore, in theory a real estate related financial transaction having a value of $250,000 or less is not a federally related transaction . However, the federal financial regulatory agencies and their regulated institutions may require appraisals by licensed or certified appraisers for real estate related financial transactions with values at or below the de minimus , effectively making those transactions federally related . Alternately in lieu of an appraisal, they can order an evaluation of the property containing an opinion of value. According the appraisal guidelines adopted by the federal regulatory agencies, evaluations do not require the services of licensed or certified appraisers and do not have to conform to USPAP.

Georgia law requires that a person who engages in the valuation of real property for a fee must have an appraiser classification unless that person falls under the exceptions to the classification requirements. Therefore, any a person performing such an evaluation in Georgia would need to be classified as an appraiser, a real estate licensee, or otherwise exempted from the classification requirements. Moreover, the Appraisal Standards Board has issued an opinion that although an appraiser performing an evaluation could depart from USPAP where departure is permitted, the appraiser would otherwise have to conform to USPAP. Consequently, upon receiving an assignment, an appraiser in consultation with the client should carefully answer the questions regarding the three elements of a federally related transaction :

• Does it involve a real estate related financial transaction ?
  
• Does it involve an federal financial regulatory agency?
  
• Is an appraisal required by a federal financial regulatory agency?

Even if the answers to all three questions are "no," the appraiser may still be required to conform to USPAP — if the client requires it.

 

[LANoble]

What part do you find that is unclear?

That the market place doesn't recognize what's been in place for 25 years, as you kindly described. That the banking agencies have not agreed. Simply.........that no one truly agrees.
Except for maybe a very select few to sell their wares.

 

[Howard Klahr]

Other Affected Financial Institutions

In addition, Title XI specifically requires appraisals by licensed or certified appraisers for financial transactions for the Federal National Mortgage Association (Fannie Mae); the Federal Home Loan Mortgage Corporation (Freddie Mac); or the Resolution Trust Corporation (RTC), the agency created by the Congress to liquidate the assets of the nation's failed savings and loan institutions. Although not specifically mentioned in Title XI, loans insured by the Federal Housing Administration (FHA) and loans guaranteed by the Veterans Administration (VA) are also considered federally related financial transactions.

This is not referenced in any of the Federal legislation and consequently is an interpretation but someone as opposed to representing the actual law as written.

Here are links to the actual text of the legislation. Please provide the references to the "Other Affected Financial Institutions" and where any of the agencies that you refer to are listed as FRTs. As you know, it is not contained anywhere in the actual legislation. Anything else is just someones unsubstantiated interpretation.
FIRREA
Dodd Frank

the banking agencies have not agreed.

You generic reference to "Banking agencies" does not identify any specific banking agency. Please provide a specific reference and source as to what banking agency does not agree on the definition of FTR?

 

[Terrel L. Shields]

Which by the way they are currently pursuing. Mortgage defaults are at an all time low, less then 1% and they believe they can absorb a 3-5% default rate. Therefore, they want change their criteria by bypassing and/or relaxing the appraisal requirements. Thereby, making home ownership available to many more people.

You do understand that the reason default rates are low is because borrowers were vetted more and have "skin in the game"-their own money and that scraping the bottom of the barrel for people with no money or vetted well invites the most venerable to take an enormous risk with no skin in the game..i.e. no risk to themselves. A recession changes their status overnight. Lending to people living hand to mouth means every bobble of the economy results in an uptick in defaults.

 

[Ariba]

According to Fannie Mae, there is nothing to worry about when increasing the DTI from 45% to 50% as of July 29.