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Re-Certify, What is it, when is it due, How is it done, why

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Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
Would someone be kind enough to review for me what is a re-certify appraisal for a lender. If it has been five months, market conditions would have change, new comps would be available, subject might have changed?

What I have been doing, is pulling new comps if any, doing a quick drive by of the subject and making a new report. Also charging for the work.

Telling the lender there is no, such thing as just to sit down at the desk and re-certify the former report.

I am getting different advise from different appraisers in the area. What do you all think on this board.

It seem as things are slowing down for some of the lenders they are taking a look at older appraisals that the loan did not fly or some are even doing a refinance from five months back as rates have dropped again. They also receive their full fees when they re-due a loan, correct? So why should we not charge? :D
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Section 201 -- Age of Appraisal (Fannie Mae guidelines that went into effect 06/30/2002)

http://www.adfinet.com
or
http://www.allregs.com/efnma/index.asp

Advisory Opinion 3 of 2003 USPAP

http://www.appraisalfoundation.org/html/US...PAP2003/toc.htm

A "Recertification of Value" DOES NOT change the effective date of value, therefore no current market data is considered. It only confirms that the home was completed or remodeled to the original plans and specifications and that the value that was in the original report was valid for that original effective date. (not usable for a loan to be sold to Fannie Mae)

An "Update of a Prior Assignment" is for a current opinion of value and would require research and analysis of current market data as of the new date. Fannie Mae requires at least an exterior view of the subject property. (Fannie Mae requires an update)

The chief appraiser for LSI had an excellent article regarding updates in the Appraisal Buzz several weeks ago, originally published in a newsletter for appraisers that provide appraisals to LSI.

Several of the software vendors have a form in their packages (Day One, Ala Mode, ACI that I know of) that is titled Appraisal Update. Advisory Opinion 3, option 3 requires the original lender and original appraiser or appraisal firm to be involved when a report that incorporates by reference is used. That Appraisal Update form, with some additional items required by 2003 USPAP, could be utilized in that situation . AO-3, option 3 requires seven items to be covered. That form lacks an intended use and intended user. Compare the form to Option 3 of AO-3. Also select the one that includes a signed certification required by Standards Rule 2-3.

So, if you have a client that plans to sell the mortgage to Fannie Mae: If the original effective date will be more than four months old on the date of the note, an update is required by Fannie Mae (although the lender might use other terms, but they really want an update regardless of what term they use). Fannie Mae also requires that the appraiser at least do an exterior observation of the subject property on the new effective date. If the value has not declined, then a letter or an Appraisal Update form like the software vendors have developed could be used--if all original parties are involved. Or the appraiser could write their own letter, making sure that all seven items required by AO-3 are included. Market data could be either retained in the appraiser's files or a comparison sales grid could be attached to the letter/form, comparable photos, location map could also be attached (appraiser's choice or specific lender requirements).

If the value has declined or something has happened to the property--damage, destroyed, remodeled, etc, etc,--than a completely new 2055 or 1004 could be done (Option 1 of AO-3). If minor items, than option 2 of AO-3 might be applicable. Option 1 and 2 could be completed by a different appraiser for a different client.

So for Fannie Mae types of clients---erase, remove, delete the words recert, recertify, recertifications, etc, etc, etc from your vocabulary. So similar to listening to a person speak in another language, your brain should translate whatever words the Fannie Mae lender client uses into the word update. And then prepare an update to a prior assignment in compliance with USPAP and everybody is happy.
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
Thank you.

Great answer.

Each lender seems to have a different way of using words.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
So educate them! Most don't know what they want or need...all they know is the underwriter says they have to have something so they can close the loan.
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
Trying, but I thought you old pros would have done that by now.
 

Charlotte Dixon

Senior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Delaware
I have a question, too. I was ready to post it and saw this.

I have been using a Recertification of Value form 1190 3/92, which is in my forms library.

Wells Fargo asked for a Recert and we completed one like above, like we always do. Now they say they want the Value IT form, which is an Appraisal Update. I didn't have it so asked a fellow appraiser. He sent it to me, but it's a 4 pager. I'm not approved by Value IT, don't wanna be and am not comfortable with that form. Do any of you use that one? .... if you do Wells Fargo work?
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
I don't DO no stinking updates for the price of a final inspection :angry:

I also refuse to do VIT work, cause they won't pay me enufff... :twisted:

Hubby Does do VIT work, but has never had to do any 4 page updates...

I would educate the client that they are asking for an appraisal which you would be happy to do for a comensurate fee, but otherwise the 442 form is good enough for thier cut rate final inspection fee proferred :twisted:

OF course they can always have someone else do the final :mrgreen:

Seriously I do not think this is SOP for VIT or Wells... I think you have a nontypical LO who doesn't know what he/she is doing... :confused: ... can you call some higher up and discuss the matter?...
 

Charlotte Dixon

Senior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Delaware
Pain in the Neck (nice), they are! :twisted: I'm filling out the darn form, have read it well.....mostly fluff. But they're getting it hand written, signed, faxed, and with a new invoice of $150 vs. the first one at $100. The final inspection will be next week and will be another $150.
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Charlotte: What software are you using? ACI, Ala Mode and Day One all have a very similar Appraisal Update from. the Day One version has a choice between two pages or four pages. The two page version (although not in compliance with 2003 USPAP) is sufficient, with addenda to make it compliant. It is basically a letter that you could retype to fit your understanding of Advisory Opinion 3, making sure to attach a certification of limiting conditions. That is what I have done for about ten years!

If you go back through Fannie Mae guidelines to their 1990 version, they never do use the term "Recertification of value" in their guidelines. That was a term they used on a form in the 1980s, before USPAP. Between 1990 and 1995, when the original appraiser was involved they wanted to know if the value had declined or not. If it had declined, then they wanted a completely new appraisal with a completely new effective date. If it hadn't declind, the original appraiser could do current market analysis and state that it hadn't declined. Beginning in 1995 Fannie Mae had very similar wording to what they have in 2002. Since 1990, if the original appraiser wasn't available then a different appraiser was to do a review of the original report and decide whether the value as of the original effective date was reasonable. And USPAP since 1990 (as part of the Departure Provision) has always referred to updates to an appraisal. In the 1995 USPAP there appeared Statement 7 with the definitions for updates to an appraisal and recertifications of value. Which basically described what Fannie Mae's 1990 guideline said. An update changed the effective date and new market data was to be analyzed. A recertification of value was as of the original effective date.

The big change came with 2003 USPAP, where updates are no longer an extension of a prior assignment but new assignments.

Just have been doing some research to all of the above recently and it was interesting to see how lenders and appraisers got very confused when opinion of value letters became outlawed in 1990 and all of a sudden a term became common usage for a "stew" that mixed and matched the Fannie Mae requirements depending on whether it was the original appraiser or a new appraiser that completed the assignment.

Anyway, completely erase that form in your software that has the heading of Recertification of Value for an assignment that will be sold to Fannie Mae. If you are considering new market data--it definitely is NOT a recertification of value per 1990-2002 Fannie Mae guidelines and 1990-2003 USPAP!
 

Charlotte Dixon

Senior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Delaware
Jo Ann ... I've used MCS since 1988 and have had regular updates. I don't doubt you, but all my lenders want the Recert of Value 442, which says the value has not declined since the date of the appraisal. Never do they want an update (what it's value is on another date). That is, except for Value IT.
 
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