How Does "box 4' Work?

[CANative]

When checking box 4 requiring inspections for unknown conditions (based on the EA that the condition or deficiency does not need alteration or repair) does the appraiser have to do anything later on in the process? For example a professional inspects something and certifies that all is well. Or are lenders going to call back and demand we change the report based on the new information or include additional comments or a 1004D?

I'm thinking about checking this box for a property I'm appraising. The domestic potable water is a developed system which draws water from a nearby creek. The first appraiser on this one (I'm providing a second appraisal because the property is very atypical and remote) just described the water as "onsite/typical." It is not typical... in fact it is almost unheard of except for really, really old properties. The property owners state they were unsuccessful in finding water by drilling.

The laid piping several feet under Tobacco Creek and a pumping system draws water through 5 filters and stores it in a large tank. The water then goes to a pressure system and another set of filters. But the water can be cloudy and I know these creeks up in this area can get a lot of tannin in them from the redwood trees.

Would any of you require an inspection? I came in lower on the purchase price than the last appraiser and the client is going to be pretty grumpy anyway.

 

[Carnivore]

Greg,

I Used check box four for a thirty year old house, equally old septic system and pvt well. basically requiring , a home inspector for the house, county inviro health for the well and septic.

I understand that this makes the UW make a decision. Waive all that or require it. Essentially, its not our problem anymore. Takes the responsibility away, takes the pressure away from Loan sharks asking us to ignore conditions.

What do you think?

 

[CANative]

I was thinking the same thing.

 

[Ted Martin]

I checked both the repair and inspection boxes with the following comments, on the last appraisal.

A termite inspection, and an engineering inspection of the floor framing with compliance with any repair or treatment recommendations which may result from either inspection.

Was I right?

It was an old bungalow that had a spongy floor in the dinning room, stone foundation, and some siding in contact with the ground. I suspect the problem is termite damage but I don't have xray vision and I'm to big to fit in the crawl space. I gave it a condition rating of average, which it would be if there are no termites or if the damage is repaired. I'm having a real problem with the new form and these two check boxes.

What do I do with a home that has a flawed foundation in terms of a condition adjustment? If the engineer comes back and says Yea, it's got cracks but it's safe, sound and sanitary and doesn't need to be repaired. My value will be too high because he doesn't think it needs repairs. His concern is structural integrity, mine is marketability and they do not necessarily move in lock step. I can hear the lender / broker screaming at me that because it doesn't need to be addressed at this time it's worth as much as the one next door that doesn't have any cracks.

I really hate the new forms, especially since Fannie has made everybody and their dog an intended user who can rely on the report for what ever.

 

[Chris Colston]

According to Kelly Vespucci of Fannie Mae, check Box 4 may require the appraiser to reconsider certain items after the inspection. It may even require the appraiser to change the value depending on the findings of the inspector. That's what form 1004D is for. It will be up to the client and/or underwriters to submit the request to the appraiser. If no changes are required by the inspector, then your job is done.

Check Box 3 is the same as SUBJECT TO always was, the value is as if the repair or condition has already been completed. The loan won't be funded until the repair is made.

 

[Steve Owen]

I think Chris hit the nail on the head.

Would any of you require an inspection?

I don't know about your market, but if that was the water supply for a house in my market you bet I would.

 

[Robert Anderson]

Originally posted by Greg Boyd@Nov 24 2005, 08:09 AM
When checking box 4 requiring inspections for unknown conditions (based on the EA that the condition or deficiency does not need alteration or repair) does the appraiser have to do anything later on in the process? For example a professional inspects something and certifies that all is well. Or are lenders going to call back and demand we change the report based on the new information or include additional comments or a 1004D?...

Greg,

Fannie Mae details the process in Announcement 04-04:

In situations where a condition may need repair but the appraiser may not be qualified to make that decision, the property must be appraised subject to a satisfactory inspection by a qualified professional. In such cases, the lender must have the property inspected and any material conditions repaired before it delivers the mortgage loan to us. The appraiser may be asked to revise his or her appraisal based upon the results of the inspection, in which case the appraiser would incorporate the results of the inspection and measure the impact, if any, on his or her final opinion of value.

Bob Anderson

 

[CANative]

Thanks Bob.

I think I'm more curious about matters less concerned with repair items and more concerned with legal issues, zoning issues, possible illegal improvements where a municpal authority may have to study the issue and make a decision, water rights, access, soil stability in areas not mapped by FEMA but in areas known locally to have problems, etc., etc.

I can almost see the future where MB type clients may get some sort of sign off by someone and then want the appraiser to "take it out of the report" or issue a new report with no mention of the condition.

I'm just asking the question to get a discussion going.

 

[Otis Key]

Greg, I see your point and have also wondered about some of those similar situations. However, I think one out for us is that statement in the report where it goes "Are there any adverse site conditions or external factors....". At that point I believe I'd disclose some of the concerns that you know or have experienced in the past about the site.

I just did a report where the storage/laundry is attached to the house and is accessed from the kitchen and outside. I included it in the SF, as is typical for the market, and it has a wall furnace panel for heat. The only problem was that the heaters wasn't vented to the stack. I mentioned it and sent the report off with a note that it had potential for danger and death. Lender stipped it and I had to go back twice (HO had head up.......). I'm just going to continue to clear state what I observed and let them make the decisions. I'm not playing enforcement cop any more. When the LO calls up and screams that I didn't let him/her know about the repairs I'm going to say "Jeez, you had the appraisal report - you didn't read it?"

 

[Steve Owen]

The appraiser may be asked to revise his or her appraisal based upon the results of the inspection, in which case the appraiser would incorporate the results of the inspection and measure the impact, if any, on his or her final opinion of value.

Once again, Fannie proves her ignorance of USPAP.

Once my appraisal is done it is done! There will be no revisions.

Oh... I misunderstood you, Fannie. You must have meant you wanted an update, which USPAP defines as a new assignment.