Form 2006 Reviewer's Recommendation question

[RCADC136]

Is marking the "Reviewer's Recommendation" section "N/A" acceptable?
If you put a number in that section what additional work and documentation might you need to put in the report?

I recently completed a form 2006 Desk Review for a client. The appraiser did a decent job and his comparables and value conclusion were reasonable so I marked "Accept as is." I marked the "Reviewer's Recommendation" section of the report N/A.

The client has come back and now wants me to put a number in that section.

 

[hastalavista]

Is marking the "Reviewer's Recommendation" section "N/A" acceptable?
If you put a number in that section what additional work and documentation might you need to put in the report?

I recently completed a form 2006 Desk Review for a client. The appraiser did a decent job and his comparables and value conclusion were reasonable so I marked "Accept as is." I marked the "Reviewer's Recommendation" section of the report N/A.

The client has come back and now wants me to put a number in that section.

If you put a number in that section, you've completed an appraisal as part of the review assignment. So, if you do put a number (your opinion of value) there, you need to comply with the appraisal standards that are applicable for its development.

To your primary question, "Is marking the "Reviewer's Recommendation" section "N/A" acceptable?", the answer to that is, it depends.
A review consists of one thing (for sure) and another thing if it is part of the assignment-conditions:
1. The one thing it has for sure is a quality evaluation of the work under review.
2. The one thing it might also have is a requirement that the review appraiser provide her/his opinion of value along with the quality evaluation. But this is necessary only if the client and your SOW require it.

The 2006 short-form is flexible such that both quality and quality/reviewer's value can be presented in its format. So, there is nothing about the "form" that requires a reviewer's opinion of value; it is all about what the client's assignment-conditions require.

Did you have an engagement agreement (many do not, I know) or at least a set of instructions (assignment conditions) from your client that allowed you to ensure your SOW was sufficient to meet its expectations? The answer to your question lies there; what did the client tell you it wanted to begin with?

Good luck!

 

[RCADC136]

Here's the relevant portion of the engagement letter;

Form 2006 Desktop Review (FHA Only)
Customer Requirements:
ALL REVIEW ASSIGNMENTS (including HUD reviews)
1. If the review appraiser disagrees with the original opinion of value, the appraiser is requested to provide a reconciliation value.

Product Requirements: FORM TYPE: FNMA 2006

Please decline this appraisal order if you do not have the geographic or product competence necessary to complete this assignment or if this assignment falls outside of your scope of practice restrictions.

1. Form: Please complete on National Association of Review Appraisers and Mortgage Underwriters Review form No. 2006.
2. Check Boxes: Please select Acceptable, Unacceptable, or N/A for each available check box in the Review Analysis section.
3. Please include remarks for each section in the appropriate spot.
4. Please indicate if the appraisal report is good, fair, or poor in the appropriate check box of the Reviewer's Summary portion of the form.
5. Please check a box for RECOMMENDATION in the Reviewer's Summary portion of the form.

a. If ACCEPT WHEN REVISED is checked, please indicate the numbers or items that should be revised.

6. Please include comments on the appropriate line of the Reviewer's Summary; portion of the form.
7. Please include a signed Limiting Conditions page with the report. Please be sure the Certification provided does NOT indicate an exterior/interior inspection was completed. These conditions should apply to only Desktop products.

 

[hastalavista]

5. Please check a box for RECOMMENDATION in the Reviewer's Summary portion of the form.

This is a requirement of the engagement agreement. The problem is, is that the "Recommendation Section" includes the reviewer appraiser's value. Further, the requirement isn't as clear as it should be.

The first part of the recommendation section has four check-boxes. Simply completing the first part does not not mean that you are completing an independent review valuation.
The four recommendation check-boxes are: (1) accept as-is, (2) accept when revised, (3) have another appraisal prepared by someone else, and (4) "other".
If this were a quality-review only, you'd check "accept as-is" if you think the appraisal is reasonable and credible. Checking this box does not constitute your own review opinion of value.
Refer to AO-20; specifically, refer to lines 167-186.

When I use this form (and I do) to complete quality reviews only, I add some specific language in my report... something like this:
"I've indicated that my client accept the report as-is. My appraisal review does not include my own, independent opinion of value. 'Accept as is' is consistent with AO-20's example of an appraisal review report without an opinion of value (see AO-20, lines 167-186, 2014-2015 USPAP). Specifically, 'Accept as is' is consistent with 'the value opinion stated in the appraisal report is adequately supported' (line 170), and 'I accept (or approve) the appraisal report for use by my client' (line 182) from AO-20".

However, in my case, my client is much clearer on its expectations; it does not want an independent value. It only wants a quality analysis and a recommendation to accept, reject, or fix with x,y, and z.


As I said, I think the assignment conditions for your assignment are poorly written. Here is their item #1:

1. If the review appraiser disagrees with the original opinion of value, the appraiser is requested to provide a reconciliation value.

This certainly implies that the expectation of the review is for the appraisal review to agree or disagree with the value. Agreement or disagreement is an appraisal, and to state "I agree" or "I disagree, and here is my value..." would require SR1 and SR2 to be followed (as necessary).

You'd have to argue that the "IF" condition limits developing your own opinion of value to only "IF" you disagree.
They could argue (plausibly) that you cannot make the "IF determination unless you do complete your own value analysis, and the requirement is if you do disagree, than provide your reconciled value; if you do not disagree, then you don't have to provide us with that reconciliation but you do have to state your value on the form. That section is clearly labeled "Reviewer's Recommendation" and that's what we want."

To clear this up and assuming they want a review opinion of value, they should have said something like:
1. We require the review to agree or disagree with the value. If the review appraiser disagrees with the original opinion of value, the appraiser is requested to provide a reconciliation value. If the review appraiser agrees, then no reconciliation is necessary; the reviewer indicates agreement by inserting the original value amount in the "reviewer's recommendation" section.


So, this sounds like a misunderstanding between you and the client (unless the UW doesn't know what she/he is talking about).
If it were me, I'd decide if I want to keep this client for the fee I'm charging, and then clear-up exactly what they expect going forward. If they expect an independent value with every review, and they want the reconciliation presented when I disagree with the original report's value, then I'll have to decide if my fee I'm charging is sufficient enough for that work and risk.
In other words, at this stage, it is a business decision.

You have an argument to make that the assignment conditions only require a review value if there is a disagreement.
They have an argument that it isn't possible to agree or disagree unless you've formed you own opinion of value, and that the requirement is for you to complete the reviewer recommendation with your opinion of value (and no reconciliation) when you agree, and your opinion of value (with reconciliation) when you don't.

Comply and keep the client.
Refuse and potentially lose the client.

That's how I see it; good luck in how you handle this!!

 

[23Degrees]

As I've been seeking out desktop work due to disability it is becoming apparent that many AMC's/clients always expect that "recommendation" box to be filled in, sometimes regardless of disagreement, and yet the fees involved could only be described as commensurate with not having that field filled in. It might not be fair to call it a form design problem but there is a disconnect between fee expectations and the understanding of what the SOW involves when that box is filled in - and that goes for the clients and also appraisers. Many clients seem to look at it - see a box and require it to be filled in, end of story.

How many appraisers filling out that form understand that when they supply that recommendation they are now responsible for Standard 1 and Standard 2.2? Call me cynical but I bet the number is very low.

In this case while some of that engagement could be described as poorly written, at the very top of it is a pretty clear statement that answers the OP's question right off the bat. The engagement required an OMV in this case and the appraiser needs to complete it, keep the proper work file and now make sure that standard 1 and standard 2.2 are completely accounted for either directly in their report or in the original report by reference.

 

[JamesRockford]

Bottom line is the client wants BOTH the original appraiser and the reviewer on the hook for the opinion of value and they want to get that out of the reviewer as cheaply as possible.

 

[23Degrees]

And they seem to have it made due to widespread ignorance over the jump in SOW that occurs when a review assignment includes a value.

I have personally spoken to an appraiser whose license got yanked over a $100 desk review. Because an OMV was required they became the owner of Standard 1 which was very lacking in the original report. Although the review opined a much lower OMV and was very critical, they did not recognize the need to cover all bases of Standard 1 and Standard 2.2 under those circumstances and took the same fall as the original appraiser who also lost their license.

There is a big reservoir of sanctions within review appraisals that include an OMV for any state board interested in going on a killing spree. There is just no way the typical SOW of including OMV with the current typical fee structure for these could result in anything else.

 

[JamesRockford]

And they seem to have it made due to widespread ignorance over the jump in SOW that occurs when a review assignment includes a value.

I have personally spoken to an appraiser whose license got yanked over a $100 desk review. Because an OMV was required they became the owner of Standard 1 which was very lacking in the original report. Although the review opined a much lower OMV and was very critical, they did not recognize the need to cover all bases of Standard 1 and Standard 2.2 under those circumstances and took the same fall as the original appraiser who also lost their license.

There is a big reservoir of sanctions within review appraisals that include an OMV for any state board interested in going on a killing spree. There is just no way the typical SOW of including OMV with the current typical fee structure for these could result in anything else.

Excellent post and I hope the OP reads it BEFORE he completes the review.

This is one of the two reasons I do not accept these "form" reviews.

The other is I have not yet found a client that is willing to pay a reasonable fee for the work involved in a thorough review.

I simply tell them I would provide them a complete and brand new appraisal for LESS than my review fee.

 

[hastalavista]

With reviews, it isn't so much the form (in fact, I'd say it isn't the form at all); it is the intended use, assignment requirements, SOW, and engagement agreement. This is, of course, true for any appraisal, but for origination work, the GSE forms really drive the SOW; and their SOW, limiting conditions, assumptions, etc., cannot be modified. For reviews, any of the review forms can be tailored to fit the specific requirement; if you read the GSE review pre-printed limiting conditions, unlike the origination report forms, there is no stated prohibition against modifications. So, unlike the origination report forms, review forms can be modified and customized.

The form 2006 is only 1-page and is not USPAP compliant by itself. At a minimum, a certification (including a prior services comment) and SOW comment needs to be added; and, if one is going to provide an independent opinion of value, then one is going to have to supplement the form with whatever additional analysis and reporting requirements are needed, plus appropriate reference to which parts (if any) of the original report are incorporated into the review appraisal's valuation/report.
But compared to the GSE review forms, I think the 2006 is far superior.

I'm looking forward to the AI developing a review form. When that happens, that will be the residential review form of my choice. Until then, for residential origination work, I'm happy to use form 2006.
For specialty assignments, I'll write a narrative.

For what it is worth, the clients for whom I do review work give me their requirements, and then I write the SOW to meet those requirements, which they agree to. I understand not all clients requesting reviews are that cooperative.

As posts on review assignments go, my impression is that the OP is more savvy than many regarding what is and isn't required. But, I think in his/her case, the assignment conditions are a bit ambiguous and the OP assumed X when the client wants Y and thinks Y is clearly spelled out. That happens. If we are lucky, it only happens once.

 

[23Degrees]

If one has clients that understand the SOW implications we are discussing and recognizes the limitations of the form and the unwise decision to just stick to the format of the form without further consideration to USPAP then the form works fine. Actually more than fine for some of the reasons you cite.

Lacking those clients and the further consideration of having to compete against dingbats that don't understand the SOW implications of providing an OMV within a review and routinely do so for peanuts without following a necessary SOW, one's situation is not so fine. Particularly when said clients have no reason to change due to an abundant supply of dingbats.

Anyone care to take a guess which situation is more common.

SOW abuse is alive and well in the lending world - from both AMC and non AMC sources and it is only too readily apparent that most appraisers either don't care or don't know enough to care. Today I was reviewing an agreement with an AMC and it actually indicated that when an EA is relied on and cited within a report the report was still to be completed with CB1 checked. I guess because clients desire an "as is" report to keep the deal alive. Unbelievable. Just unbelievable.