New USPAP Q & A October 2009

[George Hatch]

FYI, the definition of JE and the JE Rule itself are modified for the 2010 version of USPAP.

Jurisdictional Exception: an assignment condition established by applicable law or regulation, which precludes an appraiser from complying with a part of USPAP. Lines 98-99, Definition Section of USPAP 2010

 

[timd354]

This clear and unambigious conflict once again shows that USPAP is a Catch 22 classic. So long as the appraiser is trapped between those two worlds, how can you win? You cannot.

I hope it is clear how stupid this situation is - on the one hand, USPAP says we CANNOT DO THIS. On the other hand, it says we must comply with LENDER REQUIREMENTS...and those are totally in conflict.

You cannot comply with both, yet not to puts you in violation of USPAP . Will a STATE board ruling in favor of USPAP trump a FEDERAL regulation? I bet not. You might not be sanctioned by the state, but you certainly will be booted off FHAs board.

There is no conflict here. An appraiser cannot violate USPAP based upon some lender requirement, period. This is no different than a lender having a requirement to hit a target value....nobody would argue that such a lender requirement was in conflict in USPAP. There is also no inherent conflict between this Q & A and the recent HUD mortgagee letter. That mortgagee letter permits a SOW limited to just a lender name change, but that mortgagee letter does not require to accept an assignment with a SOW so limited. Thus, even though HUD is okay with such a limited SOW, doing an appraisal with such a limited SOW is a violation of USPAP. I think that any appraiser who is foolish enough to accept an assignment with a SOW limited to just a change of the lender could well find himself in deep trouble in front of state board, and rightfully so in my opinion.

I happened to be at a TAFAC meeting about a week after the HUD mortgagee letter at issue was released and was the topic of quite of bit of discussion by many of the people at that meeting. Virtually everyone at that meeting who I heard say anything on the subject expressed the opinion that a SOW limited to just a change of the lender was not sufficient under USPAP. I think that it is very instructive that a Q & A addressing this issue was issued in such a short time frame. To me, that indicates that the members of the ASB likely felt very strongly about this issue.

 

[Couch Potato]

FYI, the definition of JE and the JE Rule itself are modified for the 2010 version of USPAP.

The AF prefers to say it is "clarified" because it is their opinion it is not changing the way things are, just making it easier to understand.

A new assignment on a property using a new client's name does not prevent an appraiser form doing anything in USPAP. The client only requiring the name be changed is not the same as the client only allowing the name to be changed. Only if the HUD regulation specifically prohibits doing more than the name change would an appraiser be faced with a choice between obeying the regulation or obeying USPAP.

 

[Terrel L. Shields]

Only if the HUD regulation specifically prohibits doing more than the name change would an appraiser be faced with a choice between obeying the regulation or obeying USPAP.

Then that mortagee letter is mindless piffle and clearly FHA created with the intent of letting appraisers change the name on the report....CLEARLY. It is the Department of Redundancy Department.

Virtually everyone at that meeting who I heard say anything on the subject expressed the opinion that a SOW limited to just a change of the lender was not sufficient under USPAP.

were any of them from FHA / HUD?

 

[Couch Potato]

Then that mortagee letter is mindless piffle and clearly FHA created with the intent of letting appraisers change the name on the report....CLEARLY. It is the Department of Redundancy Department.

I agree FHA is saying they are fine with an appraiser taking an old report, just changing the client name, and giving the client a report with a phony scope of work in it that was actually the scope of work for a prior assignment, but not minding fraudulent reports is not the same as requiring fraudulent reports. To create the Jurisdictional Exception necessary, FHA must require the fraud.

 

[timd354]

Quote:
Virtually everyone at that meeting who I heard say anything on the subject expressed the opinion that a SOW limited to just a change of the lender was not sufficient under USPAP.
were any of them from FHA / HUD?

FHA is a member of TAFAC...I cannot recall if the FHA representative showed up at that TAFAC meeting or not. In any case, I did not hear anyone from FHA say anything regarding the issue and no one objected when someone made a request to a representative of the ASB at the meeting to have the ASB take a look at this issue.

 

[CANative]

Funniest thread ever.

So HUD says we can't change the name but we can do a new assignment where the SOW is to change the name. TAF says no, we can't do that because appraisers determine the SOW not the client. George says no big deal because even if the client pulls the trigger on a "name change only SOW" it's okay because the appraiser has to do the job right and determine what the actual scope of work should be. But this is no different than before when a Client B demanded an appraisal in their name and we told them "no can do" but we can do it if it's a new assignment. In which case we change the name and call it a new assignment after figuring out that there is nothing that needs to be done except change the name.

:new_all_coholic:

Actually it's just HUDs way of getting around the no new appraisal until after 6 month rule in order to be more Fannie-like.

 

[Couch Potato]

Funniest thread ever.

So HUD says we can't change the name but we can do a new assignment where the SOW is to change the name. TAF says no, we can't do that because appraisers determine the SOW not the client. George says no big deal because even if the client pulls the trigger on a "name change only SOW" it's okay because the appraiser has to do the job right and determine what the actual scope of work should be. But this is no different than before when a Client B demanded an appraisal in their name and we told them "no can do" but we can do it if it's a new assignment. In which case we change the name and call it a new assignment after figuring out that there is nothing that needs to be done except change the name.

:new_all_coholic:

Actually it's just HUDs way of getting around the no new appraisal until after 6 month rule in order to be more Fannie-like.

They have indeed thrown out that rule by telling lenders to order a new appraisal. Even if the results of the second appraisal look just like the first except for the name, it is a new appraisal.

 

[Carnivore]

Well this certainly is confusing when it should not be.

1. Wether HUD say we can or can not is irrelevent. This like HUD saying that they dont care what we do. They fail to say that in these statements that we stilll have a USPAP Driven State Law to comply with.

Does that make any sense?

Let us another example; What if they sent out mortgage letter that said;

Appraisers, we dont care if you conduct and report a search of the prior sales history of the subject.

That does not mean in a HUD assignment that we are now allowed to not do a three year search, but rather it means HUD wont ding us if we forget to do the search and report.

 

[NC Appraising]

Who cares what HUD, the State Boards, or USPAP says. I will do what the AMC says to do, their in charge, and we must obey or we will be cut off; no more work for you.:Emoticon_hug:

I will wait for LSI on how to proceed, and then take their test.