Intended use

[hastalavista]

The answer is presented very clearly in the response to FAQ 100.

Yes, it is clear. Thanks, Danny.

Vetteman, it looks like I'm wrong and you can (and maybe should) make your client the only intended user.

Well, usually I agree with the FAQs while others disagree. I always tell them the FAQs are there to assist us and if you don't like the answer, tough (I really don't say tough, but I certainly imply it!). Now the shoe is on the other foot. So while it isn't the answer I'd conclude, I'll take it and run with it! :new_smile-l:

 

[Webbed Feet]

I have used "Value Inquiry" as an intended use on assignments of this type.

Then you produced a misleading report in regards to the intended use..

 

[Webbed Feet]

Greg
I agree with your wording for intended use. It mentions that there may (or may not?) be a private, third party involved. The way I look at it, the as yet identified third party should have ordered the appraisal. By not doing so, they have relinquished any rights as a client/potential user and are relying upon the borrower to obtain the report. By the way, during the inspection I was informed the third party lender wants "either a 1004 or a 2055 Desktop Underwriter." Because they mention FNMA forms, do you suppose this private lender wants the Market Conditions Addendum as well? Guess what, ex post facto that will be an additional charge. Re-assign the report to the "lender" at a later date? No way, order a new appraisal...pricing subject to any discounts in effect at the time.

Brother Vetteman,

Do yourself and loved ones a really big favor.. BEFORE you sign and send that report, engage your right to renegociate the SOW by informing your client in writing and insisting on the client's acknowledgement in writing that in any case of the unidentified lender attempting to sell the loan in a package of loans, or any other manner, to other lenders or GSE that this unidentified lender should have refused to accept a real estate appraisal with the borrower selecting the appraiser and named as the appraiser's client.... Verify, in writing, that your borrower/client wishes to proceed anyway after having acknowledged the above.

Fail to do this and later you may only have yourself to blame for not having done it.

 

[Vetteman]

I wouldn't subscribe to the theory of the less said about the intended user, the better.

Disclose everything you know and appraise the property to the best of your judgement. Dont be misleading.

My opinion is: If you are afraid of liability (probably because you are not confident in your opinion of value), turn down the assignment.

I was referring to the intended use, not the intended user. The thread began as a discussion of intended use wording.

I always disclose everything (that I am aware of) and do my best to provide a report that is not misleading.

Your opinion is wrong...what does confidence in my opinion of value have to do with this thread?


I wish to thank the others for their sage advice.

 

[Vetteman]

Brother Duck,
Thanks. Drafting the advice and request for consent to proceed letter now.

 

[Webbed Feet]

A moving SOW is not a target we should try to hit. Ever. Not while it's moving!

Just would like some suggested wording for the following situation, which I have never encountered before and don't know how to phrase it:

A private individual (intended user) is planning on using any potential equity in an older SF property as collateral with a private investor for financing on another newly-constructed property. The investor told him to get an appraisal of current market value on this older property. What would you state as minimum for the intended use? I subscribe to the theory that less you say, the better.

BTW, I have no intention of listing the un-named private investor as an additional intended user and I plan on using a non-FNMA URAR report with my own market analysis.

Greg
<...snip....> By the way, during the inspection I was informed the third party lender wants "either a 1004 or a 2055 Desktop Underwriter." <.....snip....>

Brother Vettman, after sleeping on this something was still bothering me... This morning I felt the situation is not clear as to if this piece of work is going to be used for a personal loan, or a mortgage loan. If hired by a private party regarding a personal loan, I don't think any 2005 Fannie form should be used at all. Sorry the SOW seems to be a moving target for you on this one. I don't think you should proceed until it is no longer a moving target.......

You should read the following on page 10 from my board..

http://oregonaclb.org/aclb_prod/images/stories/pdf/Spring2008Newsletter.pdf

So far, I don't see how it is that you know, or don't know, that this is for a mortgage finance transaction, and you can't "addendum" your way out of that. One coulld "redact" the pee waddins out of a 2005 form, but if one doesn't have a way to do that then leaving that preprinted language on those forms for something other than mortgage work is very ill-advised. Just can't have preprinted language saying one thing in one place in a report, and then addendums saying something else somewhere else in the same report... Very bad. Not good!

 

[Vetteman]

Webbed Feet
The intended use is definitely a moving target, but coming into focus. I sent the consent request to my client and received a call from him at a land title company. They explained to me that the lender is a major bank that holds the existing purchase mortgage. FYI, since being purchased by my client, the property has been divided into two lots and a new house (with a new legal description, address and folio number by the County) was built by the client on the other lot. I appraised this property last fall for a construction loan by a local bank, my best customer. That is evidently why the client selected me for this appraisal. The major bank holding the purchase mortgage is only trying to allocate (or whatever they plan on doing) the mortgage between the two properties, so that they can be individually sold. Therefore my intended use is something to the effect "evaluation of collateral after subdividing lot" and my intended user (the client) remains the same.

My client signed the consent and asked in writing that I send the report to the land title company. If the mortgage lender doesn't like it, wants their name on it or whatever, they can order their own appraisal. Who pays for that is not my problem. My client was warned.

This language issue is a serious problem down here in Miami. Most of the time it only involves setting an appointment. When the actual client is the homeowner or developer, it can get more complicated...especially when they don't speak a word of english. Only in America, my friend.

 

[Webbed Feet]

Dang, I called that right! Ok, you should act on the assumption that some dimwit manager in the loan department has no idea what a FIRREA violation is. Proving in writing that you advised your client that the lender should reject this real estate appraisal certainly aids you if you later face a board complaint. That will not alter the reaction the banks appraisal and UWing department might have if they finally figure out they might face a $20,000 fine per instance for acting on an appraisal obtained via a borrower selected real estate appraiser... I am telling you, if this happens, they will do everything in their power to insist that it was you who did something wrong and not them...

Man up your work file for a possible board complaint on this one... You might consider demanding to know specifically who at the bank is telling the borrower to order the appraisal. After that, then demand that persons upper manager send to you in writing that this is NOT for a federally related transaction and their legal staff has determined FIRREA does not apply. But it's all up to you.. .... I'll tell you why to go overboard on this one. I have in my workfiles a case where I took my own advice many years ago, and boy... once the certified letters between myself and that "major bank's" appraisal QC vice pres. started flying back and forth, after it dawned on them their managers had caused a FIRREA violation for the bank,.. with them claiming I was responsible for managing their own managers and they weren't.... I was glad I took my own advice... You might be glad if you take it too! Just saying!

P.S. I had two written communications on bank letter head from two of their own managers informing both me and the borrower that their instructing the borrower to select the appraiser and obtain an appraisal as the appraiser's client was appropriate and allowed per requirements of the lending situation.... Plus, I had the borrower/client's written acknowledgement that I had warned the borrower the bank should reject the appraisal and my belief these bank managers may be incorrect.. I promise you, you want all that when the certified letters start showing up a month later and the bank's upper upper management is using words like "blacklist," while trying to tell you it was your job to manage their managers and what their managers tell their borrowers to do.