George Vann - Phoney baloney figure head

[CANative]

His latest proclamation is just BS and doesn't dovetail with the LSI policy of hiring based on low fee and fast turns. It's disingenuous CYA/Marketing lies designed to get THEM more business.

GV should retire and move to a condo in Florida.

Subjects:
• State Requirements for License and Certification
• Fannie Mae’s Competency Requirements
As many will recall, a licensed appraiser is one who is authorized to handle appraisals up to $1 Million in transaction value. For assignments for lending purposes, most define transaction value as the value of the loan. Appraisers are made aware of the transaction value by virtue of having the sales contract to review. In refinances, however, the appraiser is not advised of the loan amount.
Because of these questions as to what is and what is not the transaction value, it is LSI policy to avoid consistency conflicts by making the appraised value the transaction value, such that, for LSI, the licensed appraiser may perform valuations for property worth no more than $1 Million. Properties worth more than $1 Million should be completed by a certified appraiser.
There will be instances when the licensed appraiser is not sure of the eventual appraised value when he first accepts an assignment. While this is totally understandable, in most instances, the general range of value will be found very early on in the assignment, from identifying the property and its sales history, the beginning a neighborhood analysis or starting a comp search. If the value appears to be approaching the licensed limit, the licensed appraiser is encouraged to step down from the assignment to assure he does not waste productive time performing an assignment beyond the permitted range of value of the appraiser’s state requirements.
As for certified appraisers, when performing appraisals for intended users that include Fannie Mae, only competent appraisers may accept assignments. Despite USPAP’s more flexible stance that permits the appraiser to disclose lack of competency and what steps will be taken to gain competency before conclusion of assignment, it is Fannie Mae’s position that the appraiser must be competent before accepting the assignment. Fannie Mae’s expectation is that the appraiser should disclose his/her lack of competency and step down from the assignment so that the lender has the opportunity to determine if another appraiser who has all the necessary data sources, who is already experienced in that unique property type, geographic area, or other assignment complexity which caused the competency question, may be retained to perform the assignment. This requirement is found in Fannie Mae’s Appraisal Guidance dated April, 2009. As Fannie Mae is a typical intended user, it is incumbent upon LSI to communicate these requirements to you and hold all appraisers accountable to them.

 

[Kevin Mc]

Greg, you have a problem with LSI? Weren't you lauding them praises a few weeks back about their due diligence and FHA testing? Why the hard left turn all of a sudden?

 

[CANative]

Why do so many see things only in black and white, negative or positive, good or bad?

I accept orders from a client willing to pay an appropriate fee and under acceptable assignment conditions. LSI only meets these terms a couple of times a year. I'm usually sorry I accepted the order but not always.

Quizzing appraisers is okay with me.

 

[Tim Hicks (Texas)]

I have a problem when you have idiots administering the quiz.

 

[hastalavista]

Greg-

I don't have a problem with a client requiring a certain license level for certain types of assignments and I think value can be a threshold. Recall that Downey (long before its collapse) required that all 2-4's be completed by certified appraisers (this was changed during the rush to increase market share; now Downey's portfolio is being digested by US bank since Downey has failed). The similarity is that the client requires a license level for certain assignments that is not required by Fannie or the state.

I do have an issue with this statement:

There will be instances when the licensed appraiser is not sure of the eventual appraised value when he first accepts an assignment. While this is totally understandable, in most instances, the general range of value will be found very early on in the assignment, from identifying the property and its sales history, the beginning a neighborhood analysis or starting a comp search. If the value appears to be approaching the licensed limit, the licensed appraiser is encouraged to step down from the assignment to assure he does not waste productive time performing an assignment beyond the permitted range of value of the appraiser’s state requirements.

The bolded part implies that if the licensed appraiser works on an assignment and determines it exceeds the one-million value range, the appraiser will not be paid for any of the work on that assignment. The phrase "not waste productive time performing an assignment beyond the permitted range of value", as I read it, is that the time will be wasted because the appraiser will determine the value is higher than one-million and if he/she completes the assignment, he/she will not get paid. IMO, it is productive (and not wasted) time to determine if the assignment can be completed or not.

Now, obviously, there are situations where it should be a slam dunk; if the subject is located in Atherton, Ca., the presumption should be that the value is going to exceed one-million dollars. But if the assignment comes in for Walnut Creek, Ca., there is no presumption. And, with the way the market is, what was $1,200k a year ago could be $900k now.

I'd argue that there are too many cases where it is not a slam dunk and the subject needs to be analyzed first (H&BU) before the market range of the likely comparables can be determined. And, in many of those cases, the value may fall above or below the $1,000,000 limit and cannot be determined until the analysis is completed.
Also, this type of assignment-condition creates its own type of value pressure; in this case, the pressure may be to come in below $1,000,000 so that there are no issues with completing the assignment.

I'm not disparaging licensed appraisers, although I think the writing is on the wall that more and more mortgage finance appraisal work is moving toward the certification level.

LSI's appropriate process should be this:
A. If it thinks it prudent, then set a $1,000,000 value limit as a condition of assignment-acceptance for completion by a non-certified, licensed appraiser.
B. If work needs to be done by the licensed appraiser to determine if the $1,000,000 threshold is crossed, then pay the appraiser for that work.

Otherwise, don't send any assignments to licensed appraisers.

Note: I'm not advocating LSI not send work to licensed appraisers. IMO, that would be foolish. I am saying that they have the right to impose an assignment-condition. But IMO, much of that assignment-condition concerns information discovered in the course of the assignment, and not prior to acceptance. If that is the case, and LSI should acknowledge that is the case, then payment for the work completed by the appraiser to determine that portion of the assignment must be made.

BTW, I think this requirement certainly contradicts the spirit of the HVCC: There is pressure here to hit a value (less than $1,000k) in order to receive and get paid for an assignment.

 

[CANative]

You don't have to take DMV tests in Texas?

 

[Mike Kennedy]

It is the Lenders' direct responsibility, whether executed directly or via an AMC agent, to determine the estimated TRANSACTION VALUE i.e. loan amount, PRIOR to selecting an Appraiser with the requisite License Level.

 

[hastalavista]

It is the Lenders' direct responsibility, whether executed directly or via an AMC agent, to determine the estimated TRANSACTION VALUE i.e. loan amount, PRIOR to selecting an Appraiser with the requisite License Level.

Mike-

That would make sense in general. The term "estimate" is wide enough to drive a truck through :laugh:. But, can you cite a source where this is explicitly stated? (I'm not aware of one or may have forgotten:Eyecrazy.

Thanks

 

[Mike Kennedy]

The above governs Refi's, HELOCs etc. On purchases - Market Value is the cutoff. Considering under OCC Regs & FDIC Regs for FRTS, the LENDER is tasked with providing a copy of a contract TO the Appraiser - in BOTH circumstances

above - the LENDER possesses both the applicants requested LOAN Value AND/ or Contract Price.

http://www.FDIC.gov/regulations/laws/rules/6000-1700.html

m) Transaction value means:
(1) For loans or other extensions of credit, the amount of the loan or extension of credit;

(2) For sales, leases, purchases, and investments in or exchanges of real property, the market value of the real property interest involved; and

(3) For the pooling of loans or interests in real property for resale or purchase, the amount of the loan or the market value of the real property calculated with respect to each such loan or interest in real property.
[Codified to 12 C.F.R. § 225.62]
[Source: Section 225.62 added at 55 Fed. Reg. 27771, July 5, 1990, effective August 9, 1990; amended at 59 Fed. Reg. 29500, June 7, 1994]

§ 225.63 Appraisals required; transactions requiring a state certified or licensed appraiser.
(a) Appraisals required. An appraisal performed by a state certified or licensed appraiser is required for all real estate-related financial transactions except those in which:
(1) The transaction value is $250,000 or less;
(2) A lien on real estate has been taken as collateral in an abundance of caution;
(3) The transaction is not secured by real estate;
(4) A lien on real estate has been taken for purposes other than the real estate's value;

(5) The transaction is a business loan that:
(i) Has a transaction value of $1 million or less; and
(ii) Is not dependent on the sale of, or rental income derived from, real estate as the primary source of repayment;
(6) A lease of real estate is entered into, unless the lease is the economic equivalent of a purchase or sale of the leased real estate;
(7) The transaction involves an existing extension of credit at the lending institution, provided that:
(i) There has been no obvious and material change in market conditions or physical aspects of the property that threatens the adequacy of the institution's real estate collateral protection after the transaction, even with the advancement of new monies; or
(ii) There is no advancement of new monies, other than funds necessary to cover reasonable closing costs;
(8) The transaction involves the purchase, sale, investment in, exchange of, or extension of credit secured by, a loan or interest in a loan, pooled loans, or interests in real property, including mortgaged-backed securities, and each loan or interest in a loan, pooled <A name=fdic6110.22>loan, or real property interest met Board regulatory requirements for appraisals at the time of origination;
(9) The transaction is wholly or partially insured or guaranteed by a United States government agency or United States government sponsored agency;
(10) The transaction either:
(i) Qualifies for sale to a United States government agency or United States government sponsored agency; or
(ii) Involves a residential real estate transaction in which the appraisal conforms to the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation appraisal standards applicable to that category of real estate;
(11) The regulated institution is acting in a fiduciary capacity and is not required to obtain an appraisal under other law;
(12) The transaction involves underwriting or dealing in mortgage-backed securities; or
(13) The Board determines that the services of an appraiser are not necessary in order to protect Federal financial and public policy interests in real estate-related financial transactions or to protect the safety and soundness of the institution.
(b) Evaluations required. For a transaction that does not require the services of a state certified or licensed appraiser under paragraph (a)(1), (a)(5) or (a)(7) of this section, the institution shall obtain an appropriate evaluation of real property collateral that is consistent with safe and sound banking practices.
(c) Appraisals to address safety and soundness concerns. The Board reserves the right to require an appraisal under this subpart whenever the agency believes it is necessary to address safety and soundness concerns.

(d) Transactions requiring a state certified appraiser.--
(1) All transactions of $1,000,000 or more. All federally related transactions having a transaction value of $1,000,000 or more shall require an appraisal prepared by a state certified appraiser.
(2) Nonresidential transactions of $250,000 or more. All federally related transactions having a transaction value of $250,000 or more, other than those involving appraisals of 1--to--4 family residential properties, shall require an appraisal prepared by a state certified appraiser.
(3) Complex residential transactions of $250,000 or more. All complex 1--to--4 family residential property appraisals rendered in connection with federally related transactions shall require a state certified appraiser if the transaction value is $250,000 or more.

A regulated institution may presume that appraisals of 1--to--4 family residential properties are not complex, unless the institution has readily available information that a given appraisal will be complex.
__________________________________________________________________________________________________
The regulated institution shall be responsible for making the final determination of whether the appraisal is complex.
_______________________________________________________________________________________

If during the course of the appraisal a licensed appraiser identifies factors that would result in the property, form of ownership, or market conditions being considered atypical, then either:

(i) The regulated institution may ask the licensed appraiser to complete the appraisal and have a certified appraiser approve and co-sign the appraisal; or
(ii) The institution may engage a certified appraiser to complete the appraisal.
(e) Transactions requiring either a state certified or licensed appraiser. All appraisals for federally related transactions not requiring the services of a state certified appraiser shall be prepared by either a state certified appraiser or a state licensed appraiser.
[Codified to 12 C.F.R. § 225.63]
[Source: Section 225.63 added at 55 Fed. Reg. 27772, July 5, 1990, effective August 9, 1990; amended at 58 Fed. Reg. 15077, March 19, 1993; 59 Fed. Reg. 29500, June 7, 1994; 63 Fed. Reg. 65532, November 27, 1998 effective December 28, 1998] <A name=fdic6000sec.225.64>

 

[CANative]

Denis... keep reading the Vann-O-Gram.

There is more to being out of the scope of license than transaction value. There is more to transaction value the the amount of the loan or extension of credit.

There is your point...

BTW, I think this requirement certainly contradicts the spirit of the HVCC: There is pressure here to hit a value (less than $1,000k) in order to receive and get paid for an assignment.

Vann is citing the Fannie Mae position that the USPAP lack of competency disclosure and plan to become competent is merely "flexibility."

Why didn't Vann cite more of the Fannie Guidance which states:

Fannie Mae recommends lenders require the appraiser or appraisal service that makes the selection to assume full responsibility for the quality of the appraisal. (Note: Imposing this responsibility on the appraiser or appraisal service does not relieve the lender of its warranties related to the appraisal or the condition of the property.)