Interagency Guidelines, FDIC and AS IS Values

[Ken B]

And I fixed that for you....direct from Appendix A..

But wait! There's more!

While your "limited application" quote is, in fact from Addendix A, it regards the "Abundance of Caution" (Paragraph 2) exemption. Why do you ignore the rest of Addendix A, particularly, discussion of the exemptions that actually pertain to the VAST majority of residential loans? Here, let me point out what you missed/intentionally ignored.

From Addendix A:

Under Title XI of FIRREA, the Agencies were granted the authority to identify categories of real estate-related financial transactions that do not require the services of an appraiser to protect federal financial and public policy interests or to satisfy principles of safe and sound lending. Therefore, in their appraisal regulations, the Agencies identified certain real estate-related financial transactions that do not require the services of an appraiser and that are exempt from the appraisal requirement. This appendix provides further clarification on the application of these regulatory exemptions and should be read in the context of each Agency’s appraisal regulation.


Regarding those transactions that are specifically exempt from IAEG:

9. Transactions Insured or Guaranteed by a U.S. Government Agency or U.S.Government-sponsored Agency (HUD, VA, and similar agencies for those that may be wondering)

This exemption applies to transactions that are wholly or partially insured or guaranteed by a U.S. government agency or U.S. government-sponsored agency. The Agencies expect these transactions to meet all the underwriting requirements of the federal insurer or guarantor, including its appraisal requirements, in order to receive the insurance or guarantee.

10. Transactions that Qualify for Sale to, or Meet the Appraisal Standards of, a U.S. Government Agency or U.S. Government-sponsored Agency
This exemption applies to transactions that either (i) qualify for sale to a U.S. government agency or U.S. government-sponsored agency,58 or (ii) involve a residential real estate transaction in which the appraisal conforms to Fannie Mae or Freddie Mac appraisal standards applicable to that category of real estate. An institution may engage in these transactions without obtaining a separate appraisal conforming to the Agencies’ appraisal regulations. Given the risk to the institution that it may have to repurchase a loan that does not comply with the appraisal standards of the U.S. government agency or U.S. government-sponsored agency, the institution should have appropriate policies to confirm its compliance with the underwriting and appraisal standards of the U.S. government agency or U.S. government-sponsored agency.
10(i) An institution that relies on exemption 10(i) should maintain adequate documentation that confirms that the transaction qualifies for sale to a U.S. government agency or U.S. government-sponsored agency. If the qualification for sale is not adequately documented, the transaction should be supported by an appraisal that conforms to the Agencies’ appraisal regulations, unless another exemption applies.
10(ii) To qualify for this exemption, transactions that do not conform to all of Fannie Mae or Freddie Mac underwriting standards, such as jumbo or other residential real estate loans, must be supported by an appraisal that meets these government-sponsored agencies’ appraisal standards for the applicable property type and is documented in the credit file or reproducible.

But I repeat myself...

 

[mark hurlock]

By not being aware of, and complying with, assignment conditions you are violating the Ethics and/or the Competency Rule.

Please indicate where you found anyone in this thread in violation, thanks.

 

[mark hurlock]

In other words you are unable and incapable of contradicting my observation that you mischaracterized my comments by reading into them a reference that isn't there. Even after I tried to get you back on point.

It's okay, you don't have to be embarrassed. We all make mistakes. That's an easy hole to climb out of - but your first step would be to stop digging.

Nothing embarrassing about pointing out the fact that I don't believe for one second that regulators originally intended for institutions to require anything they don't need.

But you can keep trying to convince me if you wish.

If I recall, you yourself said that regulators expected institutions to develop and follow their own guidelines. The appendix was obviously written after those institutions failed to meet regulator's expectations.

 

[CANative]

Please indicate where you found anyone in this thread in violation, thanks.

If you do an appraisal for a regulated institution for a transaction that requires the services of an appraiser and employ a hypothetical condition and you fail to provide an "as is" value because you didn't know you had to you have violated the competency rule. If you did know it was required but they didn't ask and you thought it was a hassle you are probably violating the ethics rule.

Take your pick.

 

[George Hatch]

Just in case you didn't know, "RIF" means "reading is fundamental".

How is:

"Nothing embarrassing about pointing out the fact that I don't believe for one second that regulators originally intended for institutions to require anything they don't need. "

a meaningful response to:

In other words you are unable and incapable of contradicting my observation that you mischaracterized my comments by reading into them a reference that isn't there. Even after I tried to get you back on point.

It's okay, you don't have to be embarrassed. We all make mistakes. That's an easy hole to climb out of - but your first step would be to stop digging.

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Either the the subject of my comment eluded your intellectual grasp or you are deliberately using a fairly dishonest and aggressive mode of debate just to score points on whatever internal scoreboard you're keeping in your head.

This is becoming a pattern with your conduct on this forum, and I'm not the only poster whose comments you have attempted to twist. I dunno if you understand it or not, but we are not engaged in campaigning for political office here where the candidate has to be perceived as omniscient in order to win the election.

Credibility in these types of discourses comes in part from acknowledging the merits of the opposition's perspective even when we disagree with some of the details. The starting point is acknowledging our common ground; what we mutually accept to be true.

Acknowledge the obvious first and then develop your reasons for disagreeing. It's the same way we work in our appraisal assignments or our review assignments. You're not losing any credibility by acknowledging that even a broken clock is right twice a day.

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In this case we should be able to agree that - regardless of when the feds issued the requirements outlined in that appendix - which by definition is used to clarify and elaborate upon the regs to which it refers and not supercede them - those requirements have already been in print for a long time. Way longer than a sizable percentage of appraisers have been appraising.

If we can agree on that much then sitting here and squabbling about when those requirements actually kicked in serves no useful purpose to the topic at hand, which is that appraisers are required to identify the readily known and knowable assignment conditions that apply to their assignments. We should both be able to agree with the idea that a published reference to which an SMT that was issued issued in 2000 referred (in the past tense, no less) and to which a current AO refers can be categorized as "knowable" even if an appraiser is inexperienced with such work and doesn't already know about these requirements. (aka incompetent)


Some of us were already in the business 25+ years ago when the feds first started instructing their regulated institutions on these requirements. You apparently don't believe us when we tell you that's how far back it goes, which is your prerogative to believe even if it does amount to you calling us liars. But that entire tangent of "when" is irrelevant to the central question of what's expected of appraisers in performing certain appraisal assignments in 2014.

So can we at least agree that in 2014 these requirements are readily knowable by any appraiser who at least asks the question "do any of the intended users need an 'as is'?" ???

 

[George Hatch]

If you do an appraisal for a regulated institution for a transaction that requires the services of an appraiser and employ a hypothetical condition and you fail to provide an "as is" value because you didn't know you had to you have violated the competency rule. If you did know it was required but they didn't ask and you thought it was a hassle you are probably violating the ethics rule.

Take your pick.

BTW, that's not CANs personal opinion. He's repeating the ASBs position as articulated in the current AO, that position being based on their application of the fundamentals in the SOWR and SR1.

If you've got a beef with the ASBs position then that's where lies your conflict; not with us.

 

[BRCJR]

IAEG page 9 of 45 states "as is" values "should" be included in all appraisals.

Now the $64,000 question---what does should mean?

 

[George Hatch]

Banking regs apply to the lenders.

To an appraiser engaged in such an assignment it means its an expectation to be met, not an option for the appraiser to pick-n-choose at their own discretion.

 

[alex gilbert]

IAEG page 9 of 45 states "as is" values "should" be included in all appraisals.

Now the $64,000 question---what does should mean?

My interpretation of "should" is do it when possible. There may be situations when an "as-is" value cannot be quantified. For example, if the value a new condominum is subject to completion of the unit and creation of condominium assocation, it may not be necessary to provide the as-is value the entire project. Or if value a residential property subject to a repair when the cost of repair cannot be reasonably estimated.

 

[Ken B]

If the particulars of a given transaction are such that the transaction is exempt from the IAEG, do the requirements/guidelines/suggestions/wishes/best practices of the IAEG apply to that transaction?