Frts...i Know, Beaten To Death But...

[doug martin]

Would someone be so kind to post a Federally Related Transaction Identifier For Dummies sticky? I've read everything about it a zillion times! I just don't get it, so I treat EVERYTHING like a FRT.

Here's an example: Appraisal Request:
-Refinance
-SFR
-Client=Small Local Bank (8 branches total)
-Est. of value= $175,000
-Appraised value= $180,000
Simple, straightforward appraisal. Don't know what happens to the loan after the bank gets my appraisal. I assume the bank is FDIC insured, like most banks are, but do I ask if the appraisal is federally related transaction? Would they even know?

Is this a FRT? Explain.

 

[Elliott]

Don't know what happens to the loan

Unless its mafia money, its federally related.

elliott

 

[bobby462]

At which point you have a whole batch of different concerns, we don't know who you are, and can we sell you some life insurance with the group as a benefactor?

 

[John SRA]

This was covered in some detail at the USPAP update I attended. The term Federally Related Transaction (FRT) has a specific meaning in the federal bank regulations. Just because a transaction involves money from a federally regulated lender does NOT mean it it an FRT.

Things specifically exempted as NOT FRTs include:

loans less than $250,000
loans that qualifify for sale to Fannie or Freddie
loans insured by FHA or VA

So, given what you have provided, you do not have a federally related transation.
By the way, this is also covered in the FAQ book put out by the ASB.

Have a good day

JC

 

[Terrel L. Shields]

And Z wiener (1st place in a Mexican horserace) is John...who is quite correct as i understand it

 

[Stone]

John and Terrel are correct. This is a frequently misconstrued concept:

Question: STATEMENT No. 10 (SMT-10) only applies to Federally Related Transactions. Can the Interagency Work Group provide guidance on how an appraiser can determine if a transaction is, or is not a Federally Related Transaction? More directly, what is a Federally Related Transaction and do certain entities (FHA, VA, Fannie Mae & Freddie Mac) have exemptions in this regard?

Response from the Interagency Work Group:

“A real estate-related transaction and a federally related transaction are legal terms prescribed by law(note1) and defined in the agencies’ appraisal regulations. In general, our appraisal regulations apply to real estate-related financial transactions entered into by the agencies or by federally regulated financial institutions(note2). However, not all real estate-related transactions are considered federally related transactions. A real estate-related financial transaction is a federally related transaction unless the transaction is specifically exempted from the agencies’ appraisal regulations.

Our appraisal regulations list specific categories of transactions that do not require the services of an appraiser and, therefore, are not considered to be federally related transactions. Under the agencies’ appraisal regulations, federally regulated institutions have the responsibility to determine if a transaction meets the legal definition of a federally related transaction or is otherwise exempted. If a real estate-related transaction exceeds $250,000, the appraiser may presume that it is a federally related transaction, unless specifically notified by the institution that it is not a federally related transaction.

In response to the second part of your question as to whether certain entities are exempted from the regulations, the entities listed in your letter (FHA, VA, Fannie Mae or Freddie Mac) are not under our supervision and, therefore, are not subject to the agencies’ appraisal regulations. Federally regulated financial institutions do engage in real estate-related transactions with these entities, such as the sale of loans. Under the agencies’ regulations, transactions that qualify for sale to a United States government agency or United States government sponsored agency (e.g., FHA, VA, Fannie Mae, Freddie Mac, Farmer Mac, and Sallie Mae) are exempted and as such are not federally related transactions. Our regulations also contain an exemption for transactions that involve a residential real estate transaction in which a regulated institution’s appraisal conforms to the appraisal standards of Fannie Mae or Freddie Mac.”

 

[Richard Carlsen]

WHAT IS A FEDERALLY RELATED TRANSACTION, AND WHO ARE THE FEDERAL FINANCIAL AGENCIES?

FEDERALLY RELATED TRANSACTION" means any real property related financial transaction in which a federal financial institution regulatory agency or the resolution trust corporation engages in, contracts for, or regulates and which requires the services of a State Licensed, Certified Residential or Certified General Appraiser.

"FEDERAL FINANCIAL INSTITUTION REGULATORY AGENCIES are:

The Federal Deposit Insurance Corporation (FDIC)
The Board of Governors of the Federal Reserve System
The National Credit Union Administration (NCUA)
Office of the Comptroller of the Currently (OCC)
The Office of the Thrift Supervision (OTS)
The Resolution Trust Corporation (RTC)

******************

From State of Michigan FAQ Appraisers

 

[Stone]

Richard - what that list doesn't explain, and this is where the confusion seems to come in for many, is all the exceptions that John listed above.

 

[Carnivore]

The nuance is the lender must tell you that its being sold or considering it to be sold to fannie mae. The issue becomes sticky when after you view the property you discover that it does not meet the prerequites for derived from the fannie mae Selling guide.

Also, i might point out that Fannie mae has loan limits. the last I saw was $344,000 and change. Anything over this and its an FRT assuming its from a FDIC lender.

does that help to make any sense.

 

[Elliott]

Dog Fight!

From the Alabama Appraisal Board's Statutes....

(a) Introductory Statement. All 1 to 4 unit transactions less than $1,000,000 are assumed to be non-complex. If a property, its form of ownership, or market conditions are atypical, the regulated institution requesting the appraisal analysis will make the determination as to whether it is a complex or non-complex transaction. Alabama requires compliance with the Uniform Standards of Professional Appraisal Practice by all persons who perform real estate appraisals in the State of Alabama. There is no differentiation as to the scope of appraisal activity on federally related and non-federally related transactions. The appraiser must at all times comply with the Ethics Provision and Competency Provision of the Uniform Standards of Professional Appraisal Practice.

The definition of a federally related transaction both in the Alabama law and FIRREA is "any real estate-related financial transaction which (a) a federal financial institutions regulatory agency or the Resolution Trust Corporation engages in contracts for, or regulates; and (.B.) requires the services of an appraiser." Non-federally related properties are those properties which are the subject of appraisals for non-federally related transactions.

elliott