Interagency Guidelines, FDIC and AS IS Values

[Terrel L. Shields]

It would make no sense for a Bank to request an AS IS value of a home under construction, since they are not making a loan on the construction of the home, but, on the final product only!!!

It doesn't have to make sense. It only has to be a regulation.

appraisers are not formally trained in underwriting guidelines

No, but what we used to call "supplemental standards" do apply in that we must be aware of those parts of regulations that apply to us and we do that by knowing what is in FHA Handbook, for instance. That applies to bank regulation. The fact we are ignorant of these regulations or that they are insensibly stupid isn't an issue. It's what we do...follow dumb procedures because the law says we are obliged to.

 

[George Hatch]

George, you did add clarification, the GSE's are exempt....

Therefore, if I am doing an appraisal for Chase, on a new home, to be purchased by an individual, the IA guidelines of AS IS as a supplement for the appraisal do not apply.

My reasoning stands is that I have done hundreds of appraisals for major N GA Banks, which sell directly to Fannie and Freddie, and for Chase, Wells, Flagstar, US Bank, that have never asked for an AS IS value of a home under construction, since, they do not care what that value is!!!! All they care is about what the home will be worth at completion, so it can be security for the mortgage.

George, if you have more insight on why a Bank in my above scenario would want an AS IS value, please tell me. I am baffled at this....seriously. It would make no sense for a Bank to request an AS IS value of a home under construction, since they are not making a loan on the construction of the home, but, on the final product only!!!

Am I missing something here? If you ask my wife, kids or grandkids, they might tell you yes!!!

Hopefully not.....It is still my opinion that the IA Guidelines have not been clearly written or understood by those, especially the AMC's in regards to how to apply them.

Ummm, the individual lenders also write their own appraisal policies and it's important to *know* what those policies are when doing work for them. One thing these lenders do get written up for is not following their own internal policies, even for elements that are not required by the feds. That's one reason it's not smart for a lender to write an appraisal policy that overreaches too much for extra content.

I know of some lenders who submit to the GSE pipelines who still require an "As Is" in their appraisal policies, their attitude being that if they touch it then they have to answer to their regulators.

Unfortunately, some of their own employees (and their AMCs) aren't as familiar with their internal policies as they should be so they don't always ask for everything they need.

There's no substitute for making the effort to become as informed as is possible about each assignment, and to refrain from operating on autopilot on the basis that one size fits most. If you're doing work for Chase you should keep a copy of their policy onhand. Don't rely on the AMC or even an appraisal coordinator at Chase to be conversant on everything they require.

IMO appraisers should be teaching their clients about appraisals, not the other way around.

 

[Ken B]

Ummm, the individual lenders also write their own appraisal policies and it's important to *know* what those policies are when doing work for them.

True dat. Know the policy even if you don't understand the reason. As an appraiser, I don't need to completely understand the reason for the needs. I just need to understand the needs.

 

[CANative]

George... You're suggesting that appraisers should volunteer for more work to fulfill a lender requirement that they don't even know they have and won't pay for in order to feel more professional in an industry that doesn't care about professionalism.

 

[mark hurlock]

. Not whether we can get away with refusing to comply with those expectations on the basis of the "unenforceable" verbiage in the regs.

.

Wow, is that was has your panties in a bunch.

I don't recall giving any legal advice that suggested anyone try and get away with anything that was required of them.

I simply distinguished the difference between what is enforceable and what is not and that the guideline was changed due to controversy over it's intent.

I really don't see your problem here.

 

[mark hurlock]

Unfortunately, some of their own employees (and their AMCs) aren't as familiar with their internal policies as they should be so they don't always ask for everything they need.


IMO appraisers should be teaching their clients about appraisals, not the other way around.

The lender's own employees don't know their own rules but you expect the appraiser to educate their employees for them?

I have heard of pretty far reaching expectations but my obligation to educate the client's employees is way out there, George.

 

[George Hatch]

George... You're suggesting that appraisers should volunteer for more work to fulfill a lender requirement that they don't even know they have and won't pay for in order to feel more professional in an industry that doesn't care about professionalism.

I think that's a fair way to sum it up.


Let me put it this way - when the feds audit these loan files if they keep seeing the same appraiser's name on problematic appraisals they have been known to "suggest" that the lender find other appraisers to work with.

These regulators have the authority and the means to basically force lenders to fire loan officers and other personnel, executives, board members, and switch vendors at just about all levels of their business. The appraisers working with the big box lenders that churn out thousands of appraisals every week have the anonymity of the mob to protect them, but the appraisers who work for the regional and local lenders are operating as members of fairly small approval panels - there's no hiding in those groups.

Long story short and WRT to these types of issues, I aspire to instill reader confidence in my work so that I don't pop up on their radar as an appraiser whose work needs to be closely scrutinized. The folks go from bank to bank, too; so I know these same auditors are seeing my work in more than one location. I literally cannot afford to get on their bad list.

 

[George Hatch]

The lender's own employees don't know their own rules but you expect the appraiser to educate their employees for them?

I have heard of pretty far reaching expectations but my obligation to educate the client's employees is way out there, George.

LOL, I think you've communicated your sentiment on that pretty clearly.

 

[Terrel L. Shields]

basically force lenders to fire loan officers

a former director and vice president was effectively banned from banking.
***** *, who managed ***** operations, entered into a consent order with the Federal Deposit Insurance Corp.

The order, entered on Dec. 21 and released on Jan. 25, prohibits ***** from further participation in banking, and he accepted a civil fine of $7,500 without admitting or denying any of the charges.

The charge was "unsafe and unsound banking" over a loan that went south....waaaayyy south. One officer of that bank was to be arrested but due to his health was not, rumor has it. Only one loan officer from this bank survives without a sanction.

 

[mark hurlock]

LOL, I think you've communicated your sentiment on that pretty clearly.

George, I appreciate that some people want to excel at their occupation and be the best at what they do, and you are certainly in that category, but seriously? That is an unrealistic expectation.

Don't blame the messenger, sorry to burst your bubble and that stuff.