Interagency Guidelines, FDIC and AS IS Values

[Mike P]

Hi Danny Wiley, Mike Power, I started this thread. We met years ago in DC at the one and only Fraud Conference in Wash DC.

Anyway, what you posted goes back to my central theme 14 pages ago.

If I am doing a home that is being renovated and the Lender is not loaning out any money until all the renovations are complete, then no AS IS value is required.

That is what I said from the very beginning!!!!! Now, if I am doing work for a Bank or Lender that is financing that renovation, then I must do an AS IS value, which makes perfect sense.

However, I have not done a construction loan appraisal since 2007!!! Prior, I most definitely did an AS IS value, generally, when proposed it was lot value, since that is what was there, just the dirt.

Now, If am doing a purchase appraisal of new construction and for example Wells Fargo is going to do the mortgage for the new folks buying the home, and it is under construction, no AS IS value is required, since Wells Fargo is not funding the construction of the home, just the first mortgage for the new buyers when the home is 100% complete.

I have said this for several years now.....common sense ladies and gentleman!!!

The bank or lender that is doing a mortgage for a buyer of new construction has no "SKIN IN THE GAME", until that home is 100% finished and the Final Inspection is completed. So why in the heck would they care about an AS IS value.

In my situation, I believe it was more of a marketing tool by this individual AMC trying to separate themselves from other AMC's...hmmmm...sound familiar to anyone?

Jumping thru worthless hoops for the AMC, when the Client/Lender does not care or even know.

Have a great week everyone and enjoy Memorial Day Weekend.

Mike P.

 

[Terrel L. Shields]

They care because the FDIC cares so they adopted the policy of 'as is' value on every appraisal.

 

[Mike P]

However, as noted, that is not correct. AS IS is not required on every appraisal under construction, renovation or repair.

Time to "update" ourselves!!!

 

[mark hurlock]

However, as noted, that is not correct. AS IS is not required on every appraisal under construction, renovation or repair.

Time to "update" ourselves!!!

That is difficult when you have CE instructors confusing the issue.

 

[Terrel L. Shields]

AS IS is not required on every appraisal under construction, renovation or repair

The estimate of market value should consider the real property's actual physical condition, use, and zoning as of the effective date of the appraiser's opinion of value. For a transaction financing construction or renovation of a building, an institution would generally request an appraiser to provide the property's current market value in its "as is" condition, and, as applicable, its prospective market value upon completion and/or prospective market value upon stabilization.24 Prospective market value opinions should be based upon current and reasonably expected market conditions. When an appraisal includes prospective market value opinions, there should be a point of reference to the market conditions and time frame on which the appraiser based the analysis.25 An institution should understand the real property's "as is" market value and should consider the prospective market value that corresponds to the credit decision and the phase of the project being funded, if applicable.

dream on, if it requires an APPRAISAL it does....if it does not require an APPRAISAL then it doesn't.

 

[Ken B]

dream on, if it requires an APPRAISAL it does....if it does not require an APPRAISAL then it doesn't.

Why do you insist of twisting the Interagency Guidelines into something they are not? As a result of your insistence, you lose credibility among those who understand them and, worse, you mislead those who do not.

 

[Terrel L. Shields]

Can you not read? I sat through the presentation of an OCC regional examiner who made the very point that for new construction YOU MUST PROVIDE AN AS IS VALUE IF IT IS AN FRT. If it is below the de minimus or not for LOAN ORIGINATION, then sure, it does not apply. BUT when is new construction NOT GOING TO BE for loan origination?

Examiners are being trained day by day to start really looking at appraisals. The absence of enforcement does not mean the rules are suspended. So show me, oh wise one, where these guidelines are suspended....

The GSE's are a totally DIFFERENT animal. Don't BS me with that. The OP asked about the guidelines. Since many of the new construction loans are held in house and then only sold into secondary market AFTER the dwelling is built, the IAG are your responsibility.

 

[Ken B]

Do you really want me to repost most of the posts I have already made in this thread?

 

[Terrel L. Shields]

Read your own posts. As I clearly state, the only exemptions are those where the bank does not need an appraisal....which is all your post ever said. If the bank makes the loan and it is a FRT, the as is value is required....always.

 

[Ken B]

If the bank makes the loan and it is a FRT, the as is value is required....always.

That statement is not correct, as made. For the very reason you supplied immediately preceding that statement.

Let's try this one more time. If a transaction is such that it is exempt from the appraisal requirements of the Interagency Guidelines, could the lender still request an appraisal in which the "as is" value is not a required component of that assignment?

The obvious answer is "Yes."

And the exemptions are not simply limited to those transactions in which a GSE or other agency, as previously identified, are involved. Even you provided a quote from the exemption related to "Abundance of Caution." You presented the quote out of context in relation to the reason you provided it, but still, you recognized there are exemptions other than those related to the GSEs, et al.

The gross misunderstanding of the exemptions to the Interagency Guidelines is why I have to constantly remind those who think that simply lowering the De Minimus will create more work that such an action will have zero impact on the very vast majority of residential transactions. The exemptions for those transactions are not related to the De Minimus exemption.