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

[JSmith43]

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.

For those that want specifics, effective 1/1/05:
SFR current conforming limit 359,650; 2 unit $460,400; 3 unit $556,500; 4 unit $691,600 For Alaska, HI & Virgin Islands, conforming limits are increased 50%.

Fannie & Freddie use the same limits. Non-conforming loans are typically 1/8% higher in most loan sizes & categories. They are a bit harder to package.









Warning! LO Lurking on forum

 

[Stone]

This is part of what I quoted above, and is from the USPAP FAQ's (2005 version). This isn't contradicting what you quoted from Alabama, it is only clarifying it, and identifying what is and isn't regulated.

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.”

 

[Carnivore]

Roger,

Thanks! When you say non-conformng, do you mean to include the GSE's in the pool of money sources? In other words, do they loan more than $359,600?


This is interesting in that its important for the appraiser to know the loan amounts so as to apply the correct standards(Supplemental Standards Rule).

Here is another question. If the laon amount exceeds fannie Mae then how can a FRT use desktop underwriting to determine the minimum type of collateral valuation?.

It seems to me that nothing short of an interior 1004 type report be completed regardless of credit.

looking for answers. Where am I wrong?

 

[Stephen J. Vertin MAI]

Here is the definition from the US Code Collection TITLE 12 > CHAPTER 34A > § 3350 § 3350. Definitions

(4) Federally related transaction
The term “federally related transaction” means 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.
(5) Real estate related financial transaction
The term “real estate-related financial transaction” means any transaction involving—
(A) the sale, lease, purchase, investment in or exchange of real property, including interests in property, or the financing thereof;
(B) the refinancing of real property or interests in real property; and
© the use of real property or interests in property as security for a loan or investment, including mortgage-backed securities.
(6) Federal financial institutions regulatory agencies
The term “Federal financial institutions regulatory agencies” means the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporations, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the National Credit Union Administration.
(7) Financial institution
The term “financial institution” means an insured depository institution as defined in section 1813 of this title or an insured credit union as defined in section 1752 of this title.

If you would like to varify the link is below.

http://assembler.law.cornell.edu/uscode/se...50----000-.html

 

[JSmith43]

Thanks! When you say non-conforming, do you mean to include the GSE's in the pool of money sources? In other words, do they loan more than $359,600?

As far as I know, Fannie & Freddie don't play with loans above their limits that I referenced. I don't pay much attention to secondary market players & would actually have to search to see who the other big players might be. Lehman Brothers/Aurora plays there, but I don't know market share, etc.

Non-conforming loans are either over the Fannie/Freddie size limits or are in need of expanded criteria. A no doc program with no requirement to sign a 4506 (authorizing pulling of tax info) would be an example of expanded criteria/niche loan

I really don't know how the heck an appraiser is going to know for sure if a loan will end up going to Fannie or Freddie or somewhere else :blink: Property conditions can eliminate those options as can borrower qualifying needs. But, an educated guess is always possible.

 

[Carnivore]

Roger and others,

I guess where I am going with this is pretty simple. If the loan is over 359K then it seems that Fannie/freddie are now out of the picture, plus FHA, VA also.

Then this comes down to a matter of who the client actually is. If BIG BANK(FDIC) is named as the client then it is a FRT. An appraisal IS required, PERIOD.

If I am correct so far, then there must be something missing.

We hear it on this forum all the time about AMC's, FDIC type Lenders ordering 2055 Exteriors or worse 2075's on loan amounts if my memory serves me correctly greater than a GSE maximum.

How can this be? Have we fell for the trap. Have we succumbed to lender pressure of bending USPAP on scope of work. I understand what it means to determine the scope of work necessary for a credible result. What I dont understand is how this got changed even though "TITLE XII" is unchanged.

Why would a FDIC lender utilize desktop underwriter on loans greater than 359K.

What am I missing here?

Not to labor the point, but in this country maximum mortgage is good strategy for tax planning. This effects almost all households. One of my sub-market areas its not uncommon for houses to be well in excess of $359,000. I am in little ole North Carolina(trailer trash country), Imagine if your in New York, California, Hawaii. $250,000 and higher houses are becoming very common place.
Even if your market is under the Deminimus. Again tax strategy, consumer debt less than the perfect credit are quite common place.

So how can AVM's be taking all the easy stuff? What am I missing here?

 

[mbrunson]

What everyone is missing is that it is the appraiser's responsibility to ASK their client at the time of engagement if the assignment is FRT or non-FRT. If this question is not answered, then you have not properly identified the problem to be solved (the first step of the appraisal process), therefore your scope of work cannot be accurate (the rules are different) and everything you do from that point forward is a violation of USPAP.

Ask... If the client does not know and your questions do not provide information that indicate one way or the other, you can always inform the client that you will be completing the assignment under the extraordinary assumption that it is a FRT.

USPAP indicates getting this in writing is "good business practice."