Hybrid Appraisal Extraordinary Assumptions

[Dale Floyd]

Of course our concern is about the fee..... Ding ding... Some of us have invested our lives and careers into this profession, and most are not a fan of the "less than" products being propelled to the front as replacements for the real deal.

I believe the fee is also the culprit behind the companies pushing so hard for these hybrid products. I grow sick of hearing third party pushers saying this is to allow appraisers to make more money per hour or to do what they are best at - as though others are so concerned about our jobs... That's just pathetically ignorant. This is all about money, and the desire of everybody else to get more. For the lenders, it's more about control than the money.

My firm was solicited by an AMC for a 2nd desktop recently because they were unhappy with the 1st they received from some other appraiser. I quizzed the caller and she said the prior report was rejected because the appraiser did not do a good job in researching the subject's prior listing. No kidding - That's what she said. I asked her why not ask for a revision, and she had no response other than they wanted us to step in.

We aren't doing these products at this time in my firm. I'll never say never, but there has to be a line drawn somewhere. The process, format, and the fees would have to improve.

 

[Mr Rex]

That is pretty plain to my way of thinking and I just finished a class last week that was on the very subject of Evaluations and FRTs...The instructor has been teaching FDIC, OCC, etc. examiners since 2001. You do understand what "at a minimum" means don't you, @Mr Rex ?

You do understand the difference between and and or don't you? You do understand "as applicable" don't you. Words have meanings and sometimes people read things into those words that aren't there. If the AI document correctly duplicates the original documents verbatim, then the words as printed do not correctly convey the requirements that you claim.

 

[BRCJR]

I was in High School English class type settings in the 3rd grade. Go back through what you just posted and note the paragraphs, sub sentences etc and get back to me. I'll even give you an easy starting place. Some of the sentences/paragraphs had a large period in front of them, some had a circle. Can you go through and exam and explain the differences?

Reading is fundamental...

My post is cut and paste from Interagency Appraisal and Evaluation Guidelines.
That is not my layout so complain to The Federal Reserve.
I know what is REQUIRED for an Evaluation. I communicate with the Federal Reserve Examiners and State Examiners frequently/as needed, do you?
Matter of fact, I will see about 7 of them Monday morning. I will tell them you said, "hey".

 

[Terrel L. Shields]

@BRCJR is exactly correct. We've both posted the exact language found in the IAG. The man who teaches the examiners in Washington DC and elsewhere, does it pretty much full time now, and has since 2001. I took his class last week. He was absolutely explicit that someone has to inspect the property and a photo has to be taken. Period, no ifs, no ands, no ors, & no buts . And that is exactly what he is teaching the examiners to look for when looking at an evaluation in the file.

 

[BRCJR]

@BRCJR is exactly correct. We've both posted the exact language found in the IAG. The man who teaches the examiners in Washington DC and elsewhere, does it pretty much full time now, and has since 2001. I took his class last week. He was absolutely explicit that someone has to inspect the property and a photo has to be taken. Period, no ifs, no ands, no ors, & no buts . And that is exactly what he is teaching the examiners to look for when looking at an evaluation in the file.

I, once upon a time, asked them (examiners) to define the word "should".
They did.
They indicated, if the word "should" was used it equals will, must and shall. Therefore, should you do it? Yes....

 

[Meandering]

You didn't say it explicitly but you damn sure implied it.

Nope.

I implied that the "free market" system is at work,

And those that figured out, how to be competent simply because they own a computer with internet access, and can certify to not knowing anything their client pre-prints they don't know,

And can explain all the EAs and SOW in a court room setting, and escape the liability that others see,

Well then,

They deserve to corner and monopolize the market, under the "free market" and capitalism system.

Not,

Go on the internet and tell you how to do it, yet, they themselves are not going to capitalize on what they figured out.

So,

where in the heck you find any implication of inspections and USPAP in there, I guess you were valedictorian of Joan's reading comprehension class.

Do you need a safe room and a puppy now?

.

 

[ucbruin]

I, once upon a time, asked them (examiners) to define the word "should".
They did.
They indicated, if the word "should" was used it equals will, must and shall. Therefore, should you do it? Yes....

I'm not here to argue with anyone...
But I'm curious if you asked a follow up question?
Did you ask the examiners why the word "should" was employed rather than "must" since "must" is what the examiners want?

 

[BRCJR]

I'm not here to argue with anyone...
But I'm curious if you asked a follow up question?
Did you ask the examiners why the word "should" was employed rather than "must" since "must" is what the examiners want?

It was in a debatable circumstance and my defense was "should" means "should".
Cannot go into detail but, if you don't already know, you do what they tell you to do. You do not try to appeal insignificant issues with them.
They, generally, are the judge and jury.

 

[Meandering]

For an appraisal. For an evaluation an inspection is required along with photos. Does not say the evaluator has to inspect or take photos. But someone has to. You don't blend the eval. with an appraisal. You are doing one or the other. And if you have an appraisal license in my state it needs to be an appraisal that meets USPAP. If you are not licensed or only registered then the report has to state it is not for an FRT to comply with our state law. And it still has to meet the IAG for evaluations.

It is a choice. Evaluation or Appraisal. And again in all mandatory states, if you are an appraiser you must have the proper certification required and comply with USPAP, with rare exception.

Just using your post as a good starting point, anchor, and reason why I'm posting below.

12 CFR 1026.35 - Requirements for higher-priced mortgage loans.

This is an awesome piece of legislation, part of the Truth in Lending Act, if you aren't familiar with the 12 CFR notation.

Every residential appraiser should read it. It is plainly written in "the Queen's English", is not all that long, albeit, too long to copy and paste here, so I've pasted some of the high lights here. But you can find it, in bigger than micro legal print and easy to read print, from this link. You will also find the definition of "Rural" as used in regard to mortgages, and I'll bet, most of you would never have thought, this is the legal definition, for the work you are doing.
https://www.law.cornell.edu/cfr/text/12/1026.35

Anyway, from the link:

(a)Definitions. For purposes of this section:


(1) “Higher-priced mortgage loan” means a closed-end consumer credit transaction secured by the consumer's principal dwelling with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction as of the date the interest rate is set:


(i) By 1.5 or more percentage points for loans secured by a first lien with a principal obligation at consummation that does not exceed the limit in effect as of the date the transaction's interest rate is set for the maximum principal obligation eligible for purchase by Freddie Mac;


(ii) By 2.5 or more percentage points for loans secured by a first lien with a principal obligation at consummation that exceeds the limit in effect as of the date the transaction's interest rate is set for the maximum principal obligation eligible for purchase by Freddie Mac; or


(iii) By 3.5 or more percentage points for loans secured by a subordinate lien.

These are the loans that lenders make more money on, than your everyday, "qualified mortgages".

(3)Appraisals required -


(i)In general. Except as provided in paragraph (c)(2) of this section, a creditor shall not extend a higher-priced mortgage loan to a consumer without obtaining, prior to consummation, a written appraisal of the property to be mortgaged. The appraisal must be performed by a certified or licensed appraiser who conducts a physical visit of the interior of the property that will secure the transaction.


(ii)Safe harbor. A creditor obtains a written appraisal that meets the requirements for an appraisal required under paragraph (c)(3)(i) of this section if the creditor:


(A) Orders that the appraiser perform the appraisal in conformity with the Uniform Standards of Professional Appraisal Practice and title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended ( 12 U.S.C. 3331et seq.), and any implementing regulations in effect at the time the appraiser signs the appraiser's certification;


(B) Verifies through the National Registry that the appraiser who signed the appraiser's certification was a certified or licensed appraiser in the State in which the appraised property is located as of the date the appraiser signed the appraiser's certification;


(C) Confirms that the elements set forth in appendix N to this part are addressed in the written appraisal; and


(D) Has no actual knowledge contrary to the facts or certifications contained in the written appraisal.


(4)Additional appraisal for certain higher-priced mortgage loans -


blah, blah, blah.
Here is the federal law, where appraisals are still REQUIRED.

Now

Did anyone read anything about somebody not the appraiser visiting the interior of the property????

.

 

[residentialguy]

(i)In general. Except as provided in paragraph (c)(2) of this section, a creditor shall not extend a higher-priced mortgage loan to a consumer without obtaining, prior to consummation, a written appraisal of the property to be mortgaged. The appraisal must be performed by a certified or licensed appraiser who conducts a physical visit of the interior of the property that will secure the transaction.

Here are the exceptions in paragraph (c)(2)
(2)Exemptions. Unless otherwise specified, the requirements in paragraph (c)(3) through (6) of this section do not apply to the following types of transactions:

(i) A loan that satisfies the criteria of a qualified mortgage as defined pursuant to 15 U.S.C. 1639c;

(ii) An extension of credit for which the amount of credit extended is equal to or less than the applicable threshold amount, which is adjusted every year to reflect increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers, as applicable, and published in the official staff commentary to this paragraph (c)(2)(ii);

(iii) A transaction secured by a mobile home, boat, or trailer.

(iv) A transaction to finance the initial construction of a dwelling.

(v) A loan with a maturity of 12 months or less, if the purpose of the loan is a “bridge” loan connected with the acquisition of a dwelling intended to become the consumer's principal dwelling.

(vi) A reverse-mortgage transaction subject to 12 CFR 1026.33(a).

(vii) An extension of credit that is a refinancing secured by a first lien, with refinancing defined as in § 1026.20(a) (except that the creditor need not be the original creditor or a holder or servicer of the original obligation), provided that the refinancing meets the following criteria:

(A) Either -

(1) The credit risk of the refinancing is retained by the person that held the credit risk of the existing obligation and there is no commitment, at consummation, to transfer the credit risk to another person; or

(2) The refinancing is insured or guaranteed by the same Federal government agency that insured or guaranteed the existing obligation;

(B) The regular periodic payments under the refinance loan do not -

(1) Cause the principal balance to increase;

(2) Allow the consumer to defer repayment of principal; or

(3) Result in a balloon payment, as defined in § 1026.18(s)(5)(i); and

(C) The proceeds from the refinancing are used solely to satisfy the existing obligation and amountsattributed solely to the costs of the refinancing; and

(viii) A transaction secured by:

(A) A new manufactured home and land, but the exemption shall only apply to the requirement inparagraph (c)(3)(i) of this section that the appraiser conduct a physical visit of the interior of the new manufactured home; or

(B) A manufactured home and not land, for which the creditor obtains one of the following and provides a copy to the consumer no later than three business days prior to consummation of the transaction -

(1) For a new manufactured home, the manufacturer's invoice for the manufactured home securing the transaction, provided that the date of manufacture is no earlier than 18 months prior to the creditor's receipt of the consumer's application for credit;

(2) A cost estimate of the value of the manufactured home securing the transaction obtained from an independent cost service provider; or

(3) A valuation, as defined in § 1026.42(b)(3), of the manufactured home performed by a person who has no direct or indirect interest, financial or otherwise, in the property or transaction for which the valuation is performed and has training in valuing manufactured homes.