FIRREA "As is" Requirement

[Adam Smith]

Can someone direct me to the text of the requirement in FIRREA to include an analysis of a subject property AS IS value. For example, when conducting a prospective value analysis. I believe FIRREA states that an examination of the subject under current market conditions and zoning is required.

I'm looking for the specific passage in FIRREA, an update, or Appraisal Board or OCC document.

Thanks in advance for this priceless information.

Adam Smith

 

[Don Clark]

Don't believe you will find that in FIRREA. Try the ASC web site

http://www.ASC.gov/html/frameSet.aspx?assetPath=/uploads/Title%20XI\TitleXI.htmlhttp://www.ASC.gov

 

[Fred]

Adam,
There are no appraisal standards in DIRREA (sp). Try the Interagency Guidelines, October 27, 1994

 

[Adam Smith]

Very valuable help - thanks.

Don and Steven, thanks much for the quick help. Based upon a review of the info. you provided, I've come to the conclusion that at best, the necessary inclusion of an "As is" value is a supplemental standard, although perhaps not specifically required by lending (for federal purposes) institutions, but nonetheless implied and therefore required in any appraisal of a "to be built" or "under construction" property, when analyzed for a federal related transaction.

Thanks again sincerely,

Adam

 

[Brad Ellis]

Adam,

Read SMT 10- it is in there.

Brad

 

[Fred]

Brad,
Some material related to the interagency guidelines is in SMT-10. That creates a conflict, doesn't it. How can standards be supplemental to and contained within USPAP at the same time? Love that ASB.

I have been struggling since SMT-10 came out ca 2000 to figure out how to write my way around that conflict in stating what standards are necessary for an FRT assignment.

 

[ttaM kooC]

Statement 10(D)2 refers to "failing to indicate the 'as-is' value" (USPAP 2006, line 3161). Lines 3350-3361 discuss the requirement to provide a current as-is value "when possible," and states that "if it is not possible to provide an opinion as to the current market value of the property in its atual physical condition...the appraier must clearly explain the circumstances and reasons why such an opinion could not be developed..."

I would think that if proposed construction is on an existing sitesuch as a vacant lot or a tear-down, an as-is value would be required. If it were a case where the lots had not been assembled or subdivided or whatever and did not actually exist, you would simply be required to explain why you cannot provide an "as-is" value.

What about all the properties we see with evidence of physical conditions that we require to be subject-to because we cannot just give them an as-is value? A house with a roof leak, for example, where we are not qualified to determine the extent of the damage (if any) and make the appraisal subject to appropriate inspection and repairs? Anyone see a problem explaining why there is no as-is value on those?

 

[Mike Kennedy]

no problem at all......."when possible" ......means exactly that.

 

[Brad Ellis]

Steven,

I concur. From the day it was published I believed that SMT-10 does not belong in USPAP, at least in its form. It is a simple rehash of things lenders find missing from appraisals.

Sometimes, those things do not actually belong in the appraisals, so I find no real good guidance in there. What appraisers need to know is already in the agency and inter-agency publications.

Brad