Question: To finish or not???

[Pamela Crowley (Florida)]

FHA appraisal order with Case #. FSBO now with contract for $91,000 was previously purchased in 11/2001 for $60,000. The did some fixing up, don't like this little town so are selling out. With no MLS listing to go by and no way to know what I was going to find, I pulled comps for a large range of possibilities. What I did know is that a MAJOR renovation was necessary to even come close to the pending sale price.

House is small, built in 1960 with some updating, some old stuff, crawl space 18" +/-, old 100 amp breaker box with some exposed electric and needs complete electrician inspection, needs water pressure inspection, painted over older vinyl siding over even older wood siding, newer roof shingles but still has some water stains in closet ceilings, odd floorplan, 2 legal bedrooms, 2 rooms that could be used as bedrooms if closets were added (1 room has no closet, just the four walls and the door to the back porch, a toilet and a whirlpool tub, lots of windows). BIG church buildings very close to the narrow street directly across the street. Somewhat similar but with superior appeal and amenities brick house down the street sold last July for $67,000.

Now that I've been there, I doubt I can hit $70,000 but, I just don't know yet without working this up. There are new houses in the area, slightly larger with superior amenities that are selling in the $90s. With the questions that I asked the owners (they've already moved almost everything to Tennessee and were back for finalizing this deal) they called the loan officer and he now has left me a message that if I can't make the value or if there would be too many repairs/inspections, to just cancel the order.

I figure that I'm so far into this now that I need to complete it. What about the FHA case # already assigned? Do I need to write up something about why I didn't complete this appraisal for FHA?

What do our FHA experts here believe I should do?

 

[Doug Walters]

Don't Stop :!: Finish the report and provide the same level of detail in it that you have in your post. Who cares that the sellers have packed up everything and that it is going to fall short of the contract price. Stopping in mid-stream perpetuates the reality of the loan officer shopping the assignment until they get the highest price and/or the fewest repairs.

 

[Mountain Man]

Even if the LO asked you to stop, I would bill the full amount. You already have done your job, just need to put it on paper (remember my argument with World Appraisal?). You drove to the middle of nowhere, got the data, got the photos, etc. and know the truth. I keep all files and data just the same as a full work file once I have visited the site. You know that they have to use you if going FHA, case # has been assigned. Get ready for a call from another lender when they go shopping.

 

[AC King]

A question you may wish to answer is, what is the reason for not finishing the appraisal assignment? If it is because you can not find reasonable support for the client's estimate of value? Be sure you comply with HUD and USPAP regulations and guidelines. If you do, they will probably lead you to completing the assignment irrespective of your opinioin of value.

 

[Brad Pack]

Pam,

4150.2
C. COMMUNICATION WITH APPRAISERS
(1-2) HUD/FHA mortgage insurance is initiated when a lender
selects an appraiser from the FHA Register. Once the
appraiser agrees to perform the appraisal, the
appraiser is in a contractual relationship with the
lender. The appraiser will send the completed
appraisal directly to the lender. HUD advises the
appraiser to discuss the appraisal only with the
underwriter. No other individual should contact the
appraiser before the appraisal has been completed.
Real estate brokers and agents should consider the
lender their sole source of information on the
appraisal and all matters related to the appraisal.

Problem solved?

Brad Pack

 

[Farm Gal]

Brad: part of Pam's delimna is the LO called her... how do we as Appriasers identify the DEU from the LO?

I am somewhat in agreement on the 'finish the appraisal assignment' point of view.

It really is too bad soooo sad for the prospective homeowner attempting to make the purchase when/if it won't fly. It does help that hopefuly you haven't met them (bias?)

HOWEVER:

For purposes of USPOOP compliance alone you are on shaky ground in stopping the process at this point.

Given that it is an FHA... that number is for
1. protection for me (as a member of the group who ultimately pays the penalty for defaulted loans) and
2. Homeowner protection and also
3. Me again as a member of the appraiser group authorized to perform FHA appraisals.

As Brad stated: the lender MUST pay you for your efforts due to contractual obligation. HUD will eventually investigate lack of such payment.

If you missed my post a while back I have had conversation with HUD officials who strongly discourage completion or release of any FHA appraisals without assigned numbers because some lenders are 'shopping FHA'... the gov't is aware, but for the program to work we MUST do our part to inhibit activities.

If you bail, it is quite likely that a less ethical FHA appraiser is going to pocket the fee, magiccly make th enumber and ignore needed repairs: the homeowner is going to be in a negative equity situation from the start, and if the HO gets swept under by costly repairs or has to move on for any other reason... who winds up with it on the books? FHA REO!?!

Go forth flag waving high. and don't forget to pass go and collect$$.

 

[Pamela Crowley (Florida)]

Thanks Everyone!

You've responded with what I feel about this. I've talked with the LO this morning, he's very unhappy with me. I will not state what the value is going to be, I did tell him that additional necessary inspections will likely add to my VC list of necessary repairs. He REALLY wants me to stop and I've told him that I really cannot do that. I will complete the report and send it in. He stated that he will shop around for another loan program for these people other than FHA. Doubt he will want me to a new report for conventional.

The Case # is already assigned, to me, so I am relatively sure that I will get paid without too much trouble. No way some other FHA appraiser can come in behind me and turn this into a farce.

 

[Farm Gal]

GOOD GIRL!
This is such a difficult business.

To fully adhere to professional ethics 100% of the time we would steal from little old ladies and the mouths of children, when some loan shark promises the moon and we refuse to participate. Sometimes it is right to walk away.

If you are 'nice' and 'do the right thing' and walk away from assignments, you are in violation of professional ethics.

If you do complete one like this everyone hates you and you are ethical.

If you stay ethical 100% of the time you are unemployed!

Despite what some others on this forum might say-I find shades of grey everywhere... you are really between a rock and a hard place, but I applaud your choice. and I wouldn't toss too many rocks had you taken the other path.