July 2008 ASC Q&a- Wink Wink Comp Comp

[George Hatch]

To be honest, I think that if lenders had to engage their own appraisers it might have the net effect of increasing the volume of residential appraisal assignments. The MBs serve a purpose and service a legitimate need in the market; they aren't going to go away just because a portion of the transaction costs are shifted from the originator to the lender.

What I think would happen is that the originators would soon tire of sending packages in without having an idea of which loan programs and LTVs their deals would qualify for. At least some of them would come to the conclusion that they really do need to get an idea of the value prior to burning up all those resources in building a wholesale package. That's where the AVMs and BPOs and Appraisals would come in. As an added bonus, if the lender's mortgage appraisal was at odds with a broker's appraisal the broker might have some leverage to compare the two to see if the lender's appraisal stands up. Or vice versa.

You never know. It could happen someday. I think it might depend on how badly our society feels they are getting burned on this bailout.

 

[Mike Kennedy]

Huh? The word "retainer" does not appear anywhere in the book. The phrase "Compensation variants" does not appear anywhere in the book.

ASC / ASB ....... when the day occurs that you, me, or anyone else on here do not have a single typo - please advise me, thanks.

"or even partial payment up front and the remainder upon the rendering is a dependent arrangement but not prohibited."


p.s. the issue is preliminary and directly contingent ORDERS........ not payment. Whether fee or free is NOT the issue -unequivocal contingent solicitation, collusion, and/or coercion are the issues.

 

[Mike Kennedy]

Kenneth Brown; not a fairytale, just not a 1004 level appraisal.

Recently I appraised an undeveloped townhome subdivision. It, like many others, was approved prior to late 2005, but never got out of the ground. It had been previously zoned for commercial uses. After the lender received the results of my appraisal for the property in "as is" condition, I got a request to appraise the property under the hypothetical condition that the property had retained the commercial zoning.

By some recommendations posted here, I could not have developed and reported the second appraisal. By some assertions here, getting a request for another appraisal of the property by the same client should indicate something underhanded was occurring."



This post has exactly what relevance to a comp check and subsequent contingent order on the same Single Family Residential Loan, for the same borrower, exact same intended use?? Kindly stay on topic. Thanks.

 

[George Hatch]

Same client, different SOW in both situations. Other than the improper contingencies in the one, what's not similar?

Any dull-spoon surgeries on USPAP to outlaw SFR comp checks could easily also take this type of assignment with it. Those types of assignments are more common than you might think. It's an illustration of the law of unintended consequences.


BTW, the intended use and intended users for the comp check request is almost completely different than for the mortgage underwriting appraisal; that's why they have very different SOWs. It's a huge mistake on your part to equate them as being the same thing, although that does appear to contribute to why you consider the no-look SOW to be uniformly substandard and inadequate.

 

[Ken B]

Kindly stay on topic. Thanks.

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

 

[PropertyEconomics]

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

The topic changes to suit the needs of those whose arguements have been defeated. Its a moving target thats nearly impossible to draw a bead on with any accuracy.

 

[Fred]

p.s. the issue is preliminary and directly contingent ORDERS........ not payment. Whether fee or free is NOT the issue -unequivocal contingent solicitation, collusion, and/or coercion are the issues.

And what of the "compensation variants" I was foolish enough to ask about?

If it were only just typos, that would be a minimal problem. I can even look past the occaisional erroneous hyperbole. I am not trying to be the grammar police, but at some point, you might consider investing in a few - dare I say - "normal" sentences.

MANY THANKS TO MR. BRENAN FOR REPLYING TO MY RECENT INQUIRY, AND PAM CROWLEYS YEAR OLD PRIOR INQUIRY, RE "A THING OF VALUE" i.e. free comp check prior to receiving an ACTUAL "full" appraisal order.

IS AN APPRAISERS' EXPERTISE AND EXPERIENCE WORTH ........ZILCH? EVIDENTLY.

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..........

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

TO PRE-COMP OR NOT TO PRE-COMP - ..........THAT IS STILL THE QUESTION....THE STATUS-QUO IS PROTECTED ......ONCE AGAIN..

NON-SPECIFIC ANSWER MEANS ..............THE GAME CONTINUES.....

Just my opinion, but if a moderator wants to make the case I strayed from the topic, just translate the above excerpt to regular English, something I can interpret with the aid of a dictionary.

Do you have another QA document somewhere with those questions and those answers? I ask because the one the ASB published has different questions.

 

[Hamlet]

...but at some point, you might consider investing in a few - dare I say - "normal" sentences.

Mr. Santora, isn't that of what you were accused?

I guess no one appreciates dramatic effect or poesy.

Except Sandy who likes Rice Crispieisms.

 

[Fred]

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?

 

[Bill_FL]

Kenneth Brown; not a fairytale, just not a 1004 level appraisal.

Recently I appraised an undeveloped townhome subdivision. It, like many others, was approved prior to late 2005, but never got out of the ground. It had been previously zoned for commercial uses. After the lender received the results of my appraisal for the property in "as is" condition, I got a request to appraise the property under the hypothetical condition that the property had retained the commercial zoning.

By some recommendations posted here, I could not have developed and reported the second appraisal. By some assertions here, getting a request for another appraisal of the property by the same client should indicate something underhanded was occurring."



This post has exactly what relevance to a comp check and subsequent contingent order on the same Single Family Residential Loan, for the same borrower, exact same intended use?? Kindly stay on topic. Thanks.

my bold -

Mike - first, lets remove the phrase, contingent order and look at the intended use and user.

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?).

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

You send in your "comp check", USPAP legal, either written or verbal. 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). Who are the intended users and use or this one?

Intended user: Lender to which the MB sells the loan
Intended use: Mortgage Loan

There is nothing wrong, illegal or in violation of USPAP with this. These are different users and uses. 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.

Donna said it a while back and I have been saying it for a few years now. This scenario is NOT the problem. The problem is value shopping. If you want a flag to wave; a mantra to chant, let it be over value shopping. That is the issue. That is what causes the problems. The reason that there are so many inflated value problems in the general market right now is not because people were allowed to to a desktop appraisal before doing a "full" appraisal, it is because the MB or LO value shopped the property. Please, lets all address the problem.

Back when the herds were screaming that "comp checks" were illegal, there was a vocal minority of us here that were trying to tell the group that in fact there is nothing illegal about appraisers providing opinions of value. They can be done perfectly in compliance with USPAP. We were called names, yelled at, I even had a few people PM me questioning my ethics. I simply stated that appraisers waving that "comp-checks-are-illegal-flag" were making appraisers look stupid. Opinions of value are appraisals and they are not illegal for appraisers to do. It took a few years, but at least now most will at minimum begrudgingly agree that appraisers are allowed to perform appraisals.

Now here we are where once again the ASB has said - um, hey guys and gals, a "comp check" is an appraisal and guess what, ya'll are allowed to do them. Just don't do them with contingencies - And we are now on a 60 page thread arguing over whether or not we are allowed to do appraisals?

So - how about a truce. We all agree that opinions of value are appraisals and we are allowed to do them. There are several scopes of work under which we can provide appraisals to our clients in full compliance with USPAP. Even on the same properties. What we all also need to agree on is that appraisals are not the problem. Inflated values that came from value shopping are the problem. Go after the value shoppers and the appraisers that make it possible. Can we at least agree that that is the issue?