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New USPAP rules and 'new client'

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Farm Gal

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Elite Member
Joined
Jan 14, 2002
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Licensed Appraiser
State
Nebraska
Folks I am confused: this was NOT covered in class:
According to the new USPAP "rooles", one can accept a 'new appraisal assignment' from a new client on a porperty appriased for another client... (BTW: this is NOT open to debate - I heard it from as close to horse's mouth as you can get - please hold off on any arguement over this proposition - I am interested ONLY in replies using the assumption that the above is correct :x

So:
An appraiser gets a call from a mortgage company, indicating that they know that you did an appraisal for another company.

The original company is not going to be able to close the loan per company #2.

Without admitting that you did in fact do an appraisal for company A (which would be a violation of confidentiality) even though potential cleint B named the company and the effective date of the appraisal... and your suggestion that potential cleint B has their borrower seek a release from client A is met with "The borrower doesn't want to talk to them" and you already got a call from the selling agent to this effect... so:

AS I UNDERSTAND IT it is not only permissible but good business practice to accept a NEW order with the caveat that one cannot disclose confidential information acquired in the course of performing appraisal #1.

So being possessed of a new copy of sales contract, the appraiser races through the house, observes no major changes... uses good business practices and clones a 'similar appraisal' which just happens to be the one you did a few days before... Checking for any newer better sales, and 'completing the work' in very short order...

HOW does one build one's workfile... :?

1.IS copying all the pertinent data permissible, and a a good idea,
2. Can one 'incorporate by reference' the 'original file' and skip the copy process?
3. other comments suggestions ?

:? what to do :oops: ?
 

Dee Dee

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Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
I could be wrong here, but I think that as long as you reinspect and assign the clone to the new lender, you should be fine.
The bigger problem may be your relationship with Client A. If they are a good client then you may be burning bridges. If that's not the case, then I hope that they already paid you for the appraisal, or you may find it difficult to collect.
It will be interesting to see what the majority has to say here.

Dee Dee
 

Jo Ann Meyer Stratton

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Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Confidentiality (which is very important) and the ending of the previous business arrangement (payment of your fee by Client A) are the two main factors. You would have a new effective date---any new listings or FSBO or a listing that became a pending since the prior effective date (or maybe even a sold)?? Be sure and throw one or more of those in as additional comparables to add to the dissimularities between the two reports. But your relationship with Client A would be the biggest determining factor. Your best client, you might not want them to get upset by doing a report for Client B. Your worst client--good riddance! Or vice versus! Which client do you want to keep? But then is the borrower going to go marching around from client to client with both appraisals in their hot little hands? After all if they paid you or Client A for an appraiser, Client A has to provide them with a copy. Since the borrower doesn't want to talk to Client A, why doesn't Client B talk to Client A and leave you completely out of it? You could quote USPA and RESPA to Client B so that they do all the calling--not you.
 

Terrel L. Shields

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Certified General Appraiser
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Arkansas
Without admitting that you did in fact do an appraisal for company A (which would be a violation of confidentiality)

Not so fast, weedhopper. What we do we do not do in a vacuum. Unless your client requests you do not disclose to anyone that the property is being appraised, then you do not violate confidentiality by admitting you have appraised a property. You visited it publicly didn't you? And the neighbors probably know it was appraised. It is public knowledge at that point. There are lots of things that are "public" knowledge. For instance, in a small subdivision, the builders know what was in those houses. And can and will tell you. There is very little "facts" that you cannot treat as public. What you must keep confidential are your value conclusion.

Even if it is obvious to everyone that the new appraisal value will be identical to the old one, if you do not disclose that value then no one can say for sure unless they were given access to the report.

Secondly, if Client A's borrower has withdrawn their application, they have no issue with the report further. And they (should have obtained from the borrower up front) pay for the appraisal. Ask. If the file is still active at A, they may be hearing for the first time that their borrower is about to bolt to another company. I hate this kind of shopping around. Invariably you get a call from some underwriter (whom you did disclose to that you appraised it, right?) wanting a 4th comp.

Oft, A lets them off the hook with take the report and pay for it with the new lender. I got one of those recently. A bank I never heard of sent me a check. I had to call and find out they had accepted the report as is. In the meantime I had notified A that the amount was past due and they had paid it out of their deadbeat account. It was a mess to clear up.

ter
 

George W Dodd

Senior Member
Joined
Jul 9, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Lee Ann,

IMHO you can build the workfile in any of the ways you noted. A notation in the file referring to the orginial work file would certainly comply with USPAP requirements and is the one I usually use.

I include a copy of the orginial appraisal, the "field notes" of the second inspection, and any additional data I might have pulled in the process.
 

Farm Gal

Thread Starter
Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
:lol: :lol: Thanks Terril!
I bow to the master, who can jump weeds and trees even in single bound.

THIS part of confidentiality has always bothered me, particularly when client B TELLS me that they know I did something and I feel obliged to say I did do an appraisal but 'cannot confirm or disclose for whom' :roll: .

I really really did try to encourage the lender to get an assignment, but they basically refused to pursue the issue... Time and energy and irritation being cited as the reason(s) why... like the call was NOT causing me same? :evil:

Thanks George! I kinda figured that reference was sufficient, but wondered if anyone else had a take on it. Seems we never got around to discussing the workfile, one the half hour war over could you even DO the second report was put to rest :wink:
 

Bill_FL

Senior Member
Joined
Aug 23, 2002
Professional Status
Certified General Appraiser
State
Florida
Lee Ann

I had posed this question to the ASB and NCAB several years ago. I was told that your relationship only lasts as long as the life of the appraisal. If you receive a new order from a new client, it can be assumed that the life of the previous appraisal is over. (however I have made the borrower jot a note that said they had withdrawn previous application for my files)

As long as you reinspect, search for new sales (a printout in the folder) you are fine. It is a new assignment. I also took new photos when I was at the property.
 

Jo Ann Meyer Stratton

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Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Everyone read the latest Apprasial Buzz which has an interview with Danny Wiley, Chair of the Appraisal Standards Board regarding Advisory Opinion 3 (AO-3) that is in the 2003 USPAP. And everyone get a copy of at least those three pages (129-130) as soon as possible also.

The three requirements for an update that was necessary in the past have been removed and "updates" are no longer extensions of a prior assignment. Instead there are three types of reporting new assignments.

#1 is providing a report, without incorporation of the prior report. A new report could be done for a previous or new client, as long it complies with the Confidentiality section of the Ethics Rule.

#2 is providing a report that incorporates by attachment portions of a prior report. Examples would be a field review or a 2055 where the client provides a copy of a prior report completed by another appraiser. or your own report, again as long as it complies with the Confidentiality section of the Ethics Rule.

#3 is providing a report that incorporates by reference information from a prior report. The original appraiser's firm and the original intended users have to be involved with this becasue the client would have access to the original report. This would be the procedure for when your original client asks for a "recert" and what Fannie Mae is referring to in Section 201 - Age of Appraisal of their new guidelines that went into effect 6/30/2002. Depending on the circumstances, the client might be really asking for either #1 or #2, which is also outlined in Section 201.

So effective 01/01/2002, every appraiser that completes appraisals for lenders needs to have both the 2003 Advisory Opinion 3 and Fannie Mae's Section 201 side by side on their desk!
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Oops--typing mistake. Effective 01/01/2003---you need Advisory Opinion 3 and Section 201.

Also don't forget to provide a 3 year history!!!
 

Farm Gal

Thread Starter
Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Jo Ann

I have read the assignment, but my question about hte workfile remains - or am I more confused than ever???

I CAN infact do a new appraisal which is neither an update nor 'any of the above which gets me in trouble'.

In order to be compliant with AO3 & Sec 201... my workfile on the second assignment should contain:

1. A newly completed report, any new conclusions drawn and any new data discovered, with a reference to the 'original' workfile generated in the development of appraisal#1.

2. Full copies of all the original data and analyses used to generate a value opinion (removing any client specific /confidential information) plus any new data discovered?

3. Scrawled note on the front of a thin folder referencing the original report file and 'no new data found, no new conclusions reqd...'

Somehow the REASONABLENESS of generating duplication of data seems questionable... not to mention a waste of trees and resources... :? but sort fo looks like compliance requires (reccommends) this?
 
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