July 2008 ASC Q&a- Wink Wink Comp Comp

[Mike Kennedy]

George Hatch;1650115] "Same client, different SOW in both situations. Other than the improper contingencies in the one, what's not similar?"

The HC variable is not applicable nor relevant to comp checks on a SFR mortgage loan for FRTs.

"BTW, the intended use and intended users for the comp check request is almost completely different than for the mortgage underwriting appraisal"

The Intended Use and Users in the context of this thread {mortgage underwriting appraisals} are exactly the same: mortgage broker with a SFR mortgage loan application, residential mortgage lender(s), a "formal" appraisal order predicated on an advance preliminary range or point of value opinion which indicates either a minimum point, range, or direction in values sufficient to "do the deal".

 

[Mike Kennedy]

If only the topic would stay still long enough to draw a bead on it.

"Draw down" on OP, #34 and #533.:icon_lol:

 

[Mike Kennedy]

I can interpret with the aid of a dictionary.

So, you caught that. Compared the opening post, I don't write "normal" sentences. Blatherskite.
Here's Mike's QA in green, and my answer in "normal."

IS A RANGE OF VALUES EXPRESSED EITHER VERBALLY OR IN WRITING OR VIA ELECTRONIC TRANSMISSION BY A LICENSED APPRAISER AN APPRAISAL ???
SOMETIMES. SOMETIMES NOT. POSSIBLY. COULD BE - MAYBE NOT..........
Yes.

IS ACCEPTING AN ORDER FOR A "FULL" APPRAISAL CLEARLY CONDITIONAL UPON PROVIDING A RANGE OF VALUES I.E. SOME SALES OR ALL SALES WHICH DEMONSTRATE CURRENT RANGE OF VALUES IN A NEIGHBORHOOD - REALLY CONDITIONAL ????
WELL - YES AND NO
Yes, an appraisal conditional on providing a range of values is conditional upon providing a range of values.

IS AN APPRAISERS' EXPERTISE AND EXPERIENCE WORTH ........ZILCH?
EVIDENTLY.
If I answer that, I’d be doing an appraisal. Or were you just requesting a free comp check?

Evidently, this time, a dictionary wasn't required. Congratulations. Gold Star on the way. Keep up the good work.

 

[Ken B]

"Draw down" on OP, #34 and #533.:icon_lol:

Fine. The OP was a sarcastic and irresponsible post which used yellow journalism and sensationalism to refute what was a responsible and factual answer to a question some here wanted answered. Although it was not the response most of those persons desired for their own protectionist reasons, there was nothing ethically or factually incorrect with the ASB's response.

The ASB's response to the question can be summarized as follows:

"Although providing an appraisal is not an unethical action, accepting an assignment contigent on a specific direction in value is unethical."

So don't do it.

Isn't that simple? Not really that much more to discuss, is there?

 

[Mike Kennedy]

Bill Potts;1650432 -

"Mike - first, lets remove the phrase, contingent order"

Bill - Let's not - the second is most assuredly contingent.

"and look at the intended use and user."

Sure. A MB representing a Residential Mortgage Loan Applicant who has asked for the MB to represent his/her/their to one or several Lenders (and/or subsequent Investors in residential mortgage loans) and facilitate securing 1 loan on 1(or more) Residential Properties stated as collateral.

"On the first order, the MB sends over or calls. Would like a "comp check". Needs to see if the borrowers estimate of value is in the ball park before he wastes any more time or money. (pretty close to their vernacular?)."

Pretty Close

Variants include: "if you can get me $XXXX the appraisal order is yours, and, btw we have 30 loan officers here - do this one and I'll pass your name around".

"Intended User: MB
Intended Use: To ascertain a value from a desktop appraisal before committing resources to move forward with a residential mortgage loan."

As other AF threads and postings demonstrate, the leap above to requesting a "desktop" and paying for one - is sheerly conjecture. Many have offered - few, if any, have EVER been paid for one. ( verbal is as verbal does).

You send in your "comp check", USPAP legal, either written or verbal.

There is no need to "send in" a verbal "point, range, or direction in value" demonstrating advocacy of the customer.

The MB is satisfied and says it looks like the HO was pretty close, lets go ahead with a regular appraisal. (There is no guarantee of value anywhere here).

The Reality: No preliminary $$$ which is sufficient - no "actual" appraisal order.

Accepting an order for a "regular" appraisal predicated on a communicated direction in value, point, or range of values developed and reported by a licensed (a)ppraiser is a violation of the USPAP.

The only scenario in which it becomes a problem is if the second order has a contingency to reach the same value as the first or any value for that matter.

Agreed. See above.


Go after the value shoppers and the appraisers that make it possible. Can we at least agree that that is the issue?

Absolutely that is the issue - and PRELIMINARY comp checks were, are, and evidently will continue to be, their Tool.

Collusion is what collusion is.

 

[Mike Kennedy]

ring...... "hey Mike, I'm Joe from "youbetchawecangetyoumoney". I got a loan app on a property in your town and need your help. I wanna see if the HO estimate is even close before I order an appraisal. Can you help me?"

"I'll be glad to do a Desktop Appraisal for you the Fee is $100. and there is NO guarantee a second appraisal will meet or exceed the value opinion developed by the DA. What's your credit card number?"

CLICK.

 

[Mike Kennedy]

ring........ "Hi Mike, this is Tony from "mortgagesgalore" I need a ballpark - can you tell me what the range of sale prices in 10901 zip during the past 6 months is - I need to pre-qualify this loan app I got on a SFR there"

{ao-19} "Sure Tony - hang on, okay got 11 sales, I'll email em right over - then you can review them and let me know IF you want to order an appraisal".

"um Mike - I just need a verbal I got the guy sitting right here......whats' the range?"

"Tony, under the USPAP I can send "raw sales" right over - no charge or you can order a desktop the fee is $100."

"um.........Tony...............are you there?

"Tony ?????????"

 

[Ken B]

Congratulations. You are an ethical appraiser. Although you do realize that the fee is strictly a business decision. So the only part about "...no guarantee a second appraisal will meet or exceed..." is necessary.

I suppose the point of the post was the "Click."

Guess what? If Joe finds an appraiser who will guarantee the "second appraisal", that appraiser violates USPAP. I have to assume that the appraiser took a USPAP at some point in their career. So they have the knowledge that USPAP prohibits such a "guarantee."

What more do you want from the ASB? They can't exactly visit the potential client and kneecap them.

 

[Mike Kennedy]

Attorney: "Mr. Jones, did you apply for a mortgage loan at XYZ Mortgage?"

Mr. Jones: "Yes".

Attorney: "and can you tell the court what occurred at the time you applied"?

Mr. Jones: "Yes. Well I met with Mr. Smith who had me fill out some preliminary paperwork. I gave him my address and while I sat at his desk He called an appraiser to see if my house was worth enough to get me the money I needed."

Attorney: "Ok, so Mr. Smith phoned an appraiser and ordered an appraisal?"

Mr. Jones: "Well, before Mr. Smith called him, He told me "no problem, I'll call My appraiser to find out what ballpark we are in and whether we can get you what you need".

Attorney: "So Mr. Smith contacted the appraiser and ordered an appraisal?"

Mr. Jones: "Well, Mr. Smith told the appraiser my address and asked what the prices of recent sales in my neighborhood were".

Attorney: "Then what happened?"

Mr. Jones: "Mr. Smith wrote down what the appraiser told him on the phone and I heard him say, "great Mike YOU DA MAN! I'll send over the appraisal order in a few minutes".

Attorney: "Mr. Jones, please tell the court what happened after the appraisal was received by Mr. Smith."

Mr. Jones: "Well I paid $400. to the appraiser because Mr. Smith told me "good news-my appraiser said no problem the sales are there and he can be at your house tomorrow morning. Then the next day Mr. Smith called me and told me the house didnt appraise out and he wanted me to change the loan amount on my application or he couldn't help me."

Attorney: "So to recap, you applied for a loan, the loan broker contacted an appraiser who told him there were several sales in your neighborhood and that the appraiser said no problem. Mr. Smith then told you to pay that appraiser for an appraisal which did not enable you to get the loan you applied for. Is that fair to say?"

Mr. Jones: "yes, I want my money back because they both lied to me".

 

[Mike Kennedy]

Congratulations. You are an ethical appraiser. Although you do realize that the fee is strictly a business decision. So the only part about "...no guarantee a second appraisal will meet or exceed..." is necessary.

I suppose the point of the post was the "Click."

Guess what? If Joe finds an appraiser who will guarantee the "second appraisal", that appraiser violates USPAP. I have to assume that the appraiser took a USPAP at some point in their career. So they have the knowledge that USPAP prohibits such a "guarantee."

What more do you want from the ASB? They can't exactly visit the potential client and kneecap them.

Title XI of the Financial Institutions Recovery, Reform, and Enforcement Act of 1989
SEC. 1101. PURPOSE [12 U.S.C. 3331] The purpose of this title is to provide that Federal financial and public policy interests in real estate related transactions will be protected by requiring that real estate appraisals utilized in connection with federally related transactions are performed in writing, in accordance with uniform standards, by individuals whose competency has been demonstrated and whose professional conduct will be subject to effective supervision...


The Appraisal Subcommittee of the Federal Financial Institutions Examination Council has the authority to ensure that the states and the Foundation meet the requirements that the states use certifying appraisers and the standards of professional practice to which appraisers are held by the states (the Uniform Standards of Professional Appraisal Practice).



The Appraisal Subcomittee's (ASC) mission is to ensure that real estate appraisers, who perform appraisals in real estate transactions that could expose the United States government to financial loss, are sufficiently trained and tested to assure competency and independent judgment according to uniform high professional standards and ethics. The ASC is responsible for monitoring the individual states in the licensing and certification of real property appraisers. In addition, the ASC acts as an oversight mechanism fo activities of The Appraisal Foundation relating to real property appraisal.



The ASB develops, interprets and amends the Uniform Standards of Professional Appraisal Practice (USPAP). The ASB is composed of six appraisers who are appointed for three year terms by the Board of Trustees of The Appraisal Foundation. Members of the ASB may serve two consecutive three year terms. Activities of the Board are directed by the Chair, who is appointed by the Board of Trustees for a one year term.