Hybrid

[hastalavista]

I make no interpretation.

I just read the regulations.

Me too. Like this from the IAEG:


Gee , what does it say?
It says what you and I both say: The appraiser is responsible for the SOW.
It says what I say: The Institution is responsible for ensuring the appraisal is commensurate with the risk.
It says what we should all know: The nature and extent of the inspection must be disclosed.
It references what you posted regarding HPML; for that type of loan, an appraisal inspection is required.
But I'll tell you what it doesn't say: It doesn't say the appraiser must personally inspect the property. That decision is left to the appraiser if the institution believes, given the risk, that an inspection by the appraiser isn't necessary.

So you are correct that the regulations require an appraiser to inspect the property if the appraiser believes it is necessary because, otherwise, a SOW without that is unacceptable to the appraiser. You get to turn down these assignments on that basis with a "no harm/no foul" outcome.
But what you cannot say (although I have no expectation that you will stop saying it ) is that the regulations require all appraisals to be performed with an appraiser inspecting the property. Because another appraiser may look at the SOW that includes a 3rd party inspection, and determine it is appropriate.

 

[Meandering]

My orange underlines to your post.

 

[Meandering]

So if you want to start with the IAEG

III. Supervisory Policy

When analyzing individual transactions, examiners will review an appraisal or evaluation to determine whether the methods, assumptions, and value conclusions are reasonable. Examiners also will determine whether the appraisal or evaluation complies with the Agencies' appraisal regulations and is consistent with supervisory guidance as well as the institution's policies. Examiners will review the steps taken by an institution to ensure that the persons who perform the institution's appraisals and evaluations are qualified, competent, and are not subject to conflicts of interest.


OH my, not the client, the examiners,

VIII. Minimum Appraisal Standards

An institution should obtain an appraisal that is appropriate for the particular federally related transaction, considering the risk and complexity of the transaction. The level of detail should be sufficient for the institution to understand the appraiser's analysis and opinion of the property's market value. As provided by the USPAP Scope of Work Rule, appraisers are responsible for establishing the scope of work to be performed in rendering an opinion of the property's market value. An institution should ensure that the scope of work is appropriate for the assignment. The appraiser's scope of work should be consistent with the extent of the research and analyses employed for similar property types, market conditions, and transactions. Therefore, an institution should be cautious in limiting the scope of the appraiser's inspection, research, or other information used to determine the property's condition and relevant market factors, which could affect the credibility of the appraisal.


According to USPAP, appraisal reports must contain sufficient information to enable the intended user of the appraisal to understand the report properly. An institution should specify the use of an appraisal report option that is commensurate with the risk and complexity of the transaction. The appraisal report should contain sufficient disclosure of the nature and extent of inspection and research performed by the appraiser to verify the property's condition and support the appraiser's opinion of market value. (See Appendix D, Glossary of Terms, for the definition of appraisal report options.)

IX. Appraisal Development

While an appraiser must comply with USPAP and establish the scope of work in an appraisal assignment, an institution is responsible for obtaining an appraisal that contains sufficient information and analysis to support its decision to engage in the transaction. Therefore, to ensure that an appraisal is appropriate for the intended use, an institution should discuss its needs and expectations for the appraisal with the appraiser. Such discussions should assist the appraiser in establishing the scope of work and form the basis of the institution's engagement letter, as appropriate. These communications should adhere to the institution's policies and procedures on independence of the appraiser and not unduly influence the appraiser. An institution should not allow lower cost or the speed of delivery time to inappropriately influence its appraisal ordering procedures or the appraiser's determination of the scope of work for an appraisal supporting a federally related transaction.


Oh my, not limit the scope of the work, but discuss it, and too much information is okay, so long as sufficient information and analysis and support is there. And let's not unduly influence the appraiser in their scope of the work decision which USPAP requires the appraiser to make. See, there is no, it's okay to dictate and limit the scope of the appraiser's work.

X. Appraisal Reports

USPAP provides various appraisal report options that an appraiser may use to present the results of appraisal assignments. The major difference among these report options is the level of detail presented in the report. A report option that merely states, rather than summarizes or describes the content and information required in an appraisal report, may lack sufficient supporting information and analysis to explain the appraiser's opinions and conclusions.

Oh my, bi-f isn't one of those report options, and ghee, all they back there in section III it said that exaimers where using the appraisal reports to determine the safe and sound practices of the lender. Oh my a second intended user, so Restricted Use is not an option, you're only left with Appraisal Report option. But let's gone with this set of regulations, okay?

Generally, a report option that is restricted to a single client and intended user will not be appropriate to support most federally related transactions. These reports lack sufficient supporting information and analysis for underwriting purposes. These less detailed reports may be appropriate for real estate portfolio monitoring purposes. (See Appendix D, Glossary of Terms, for the definition of appraisal report options.)



Appendix D—Glossary of
Credible (Appraisal) Assignment Results—According to USPAP, credible means “worthy of belief” used in the context of the Scope of Work Rule. Under this rule, credible assignment results depend on meeting or exceeding both (1) the expectations of parties who are regularly intended users for similar assignments, and (2) what an appraiser's peers' actions would be in performing the same or a similar assignment.



Point #1.
When Peer actions for similar assignments is the key, you can't introduce new products to the market, because not PEERS have used them either, and this was an issue with the UAD first came out, so TAF dropped that Peers and Experience with crap, yet, IT EXISTS IN THE IAEG AND THEREFORE IS STILL ENFORCEABLE.

Point #2
There is absolutely no regulation, study or "working paper" that any int3ened users for smiliar assignments have any expectations beyond the GSE standard forms.

Point #3
CREDIBILITY as required in the IAEG is a 2 part test, the first part of expectations of intended users, nobody has any evidence of those expectations, and new products can'[t be introduced into the market, because peers have to be using those new products while performing similar assignments, you have a chicken and egg scenario of which comes first, and dang, you got that nasty USPAP THINGY AGAIN.

Point #4
USPAP's definition of credible is not the same as the IAEG definition of Credible Appraisal Assignment Results.

USPAP DEFINITIONS: CREDIBLE: worthy of belief.
Comment: Credible assignment results require support, by relevant evidence and logic, to the degree necessary for the intended use.

Point #5
USPAP COMPETENCY RULE requires relevant evidence that credible assignment results require relevant evidence for the intended use, to which, you have no evidence that intended users

COMPETENCY RULE
Being Competent
The appraiser must determine, prior to accepting an assignment, that he or she can perform the assignment competently. Competency requires:
recognition of, and compliance with, laws and regulations that apply to the appraiser or to the assignment.

Point #6
And because the appraiser has to comply with the regulation applicable to the assignment, and the regulation applicable to the assignment requires evidence from intended users and peers, that appraisers don't have beyond standard Fannie forms, you can not produce a credible assignement with a bi-f product.

But let's go on

 

[Meandering]

More USPAP

Management:
.
An appraiser must not accept an assignment, or have a compensation arrangement for an assignment, that is contingent on any of the following:
a direction in assignment results that favors the cause of the client;

SCOPE OF WORK RULE
An appraiser must properly identify the problem to be solved in order to determine the appropriate Scope of work. The appraiser must be prepared to demonstrate that the scope of work is sufficient to produce credible assignment results.

(AND according to the IAEG it's the EXAMINERS that determine the credible assignment results, not the client)

Problem Identification
An appraiser must gather and analyze information about those assignment elements that are necessary to properly identify the appraisal or appraisal review problem to be solved.

Communication with the client is required to establish most of the information necessary for problem identification. However, the identification of relevant characteristics is a judgment made by the appraiser that requires competency in that type of assignment.
(not unknown inspectors)

Assignment conditions include assumptions, extraordinary assumptions, hypothetical conditions, laws and regulations, jurisdictional exceptions, and other conditions that affect the scope of work. Laws include constitutions, legislative and court-made law, administrative rules, and ordinances. Regulations include rules or orders, having legal force, issued by an administrative agency.

Not limitations to the Appraiser's Scope of the Work which is then consistent with the IAEG Sections IX and X

Not limit, but insure the at least the amount necessary is there.

Scope of Work Acceptability
The scope of work must include the research and analyses that are necessary to develop credible assignment results.

Comment
the expectations of parties who are regularly intended users for similar assignments; and
The scope of work is acceptable when it meets or exceeds:
what an appraiser’s peers’ actions would be in performing the same or a similar assignment.

Determining the scope of work is an ongoing process in an assignment. Information or conditions discovered during the course of an assignment might cause the appraiser to reconsider the scope of work.
An appraiser must be prepared to support the decision to exclude any investigation, information, method, or technique that would appear relevant to the client, another intended user, or the appraiser’s peers.

There's those sneaky examiners again, oh and they can file a SAR on the appraiser if the scope of the work is insufficient.

An appraiser must not allow assignment conditions to limit the scope of work to such a degree that the assignment results are not credible in the context of the intended use.

Residential Lending is the intended use, find the regulation that allows for this type of product to be credible.

Comment
If relevant information is not available because of assignment conditions that limit research opportunities (such as conditions that place limitations on inspection or information gathering), an appraiser must withdraw from the assignment unless the appraiser can:


modify the assignment conditions to expand the scope of work to include gathering the information; or
use an extraordinary assumption about such information, if credible assignment results can still be developed

An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be biased.

But again,
You have NO LENDING REGULATION that says CREDIBLE RESULTS can be obtained through the Appraiser relying on 3rd party inspections and comments, that the appraiser can not verify beyond the data the interested party (AMC as agent of the lender)provided.
(violation of the scope of the work rule, violation of the management rule, IAEG VIII. Minimum Appraisal Standards )


And that's all the time I have for now. If I get free time later, I'll be back with more thrilling regulations very few read.


.

 

[hastalavista]

We just talk right by each other (c'est la vie).

Nothing you posted contradicts what I've said, yet as far as your concerned, nothing I've posted agrees with what you've said.

Regardless, there is nothing in the regulation (HPML or other-type programs excepted) or in the USPAP which requires the appraiser to physically inspect the property for all mortgage-finance related appraisals. The only way you get to that position is by concluding that a SOW without the appraiser personally inspecting the property is unacceptable... which you are free to do for you. To get to that position for everyone else, then you have to interpret the regulations as meaning since you don't think it is acceptable, no one else should either... which you are also free to do. But your interpretation isn't binding on another appraiser. And that's the way it is.

 

[Carnivore]

Marion, all the stuff you showed is Cool! But it is behind the times and they did not get the memo!

Now we use the time Proven method; KISS....

 

[djd09]

First they divided the appraiser from their client, then their fee, now the inspection. What will be left, 3 sales and cross state signature. Better wake up.

 

[hastalavista]

By the way, Marion, if you (or anyone of like mind) want to make the argument you are making, then the best place to make it is to the financial regulators overseeing the lenders, the GSEs, FHA & VA.
If they agree that, for any lending purpose by a FRI or GSE/etc., any time an appraisal is required then, at a minimum, the inspection must be done by an appraiser, hybrids then disappear from the lending universe; and i'd be happy with that.

Otherwise, just arguing with me may convince other appraisers who are reading our discussion that the SOW for these assignments is inappropriate and they therefore cannot be completed, but it isn't going to have much of an impact anywhere else.

 

[Terrel L. Shields]

I have a problem understanding how the appraiser, who is charged with the responsibility of "establishing the scope of work", can do so when someone else is dictating the extent of the inspection. "Bald headed men in Washington speak with forked tongue."- usually attributed to Chief Joseph

 

[Carnivore]

Seems like there will be limits with some assignments for using a desktop SOW. It would have to be something like obvious deferred/needed maintenance as an example. Lets take this to an extreme. Charlie the part time Can Collector drives by and takes a picture, fills out a short sheet and sends it in and the AMC sends it to you the Appraiser. You see the Roof issue and from your experience know this is real bad and your report will suck for credibility. Not because you ignore them roof, but more you cant possibly know the real condition or extent of damage to an interior.

1. You could guess
a. You could EA it away
B. You could Hypothetically Opine a AS-IF Value
2. You could act like you did not see it
3. You could notify the AMC and wait and in turn AMC tells client and wait
4. Client tells AMC to cancel

I know the Correct Answer. I'm just throwing out the what ifs.

How much of the $75 bucks do you get if they cancel?
What if you are given the Do Inspect type of Assignment, Do you get the 75 bucks for appraisal results plus the 450 buck for the new report.

So lets go to Risk Management as it relate to your fee and SOW. Do they tell you it is a small loan, lets say 20% of a possible MV. Meaning if the loan goes south they wont be like Chase and go after every appraiser for defaults, or simply because they wont lose any money as a result of default.

Here is what I think; there is not going to be a whole lot of Desktops in any one area