Recertify Vs. Update

[Susie Seibert]

Hey there everyone,

Received a fax last week asking me to recertify an appraisal I did in December. It had been an "as-is" appraisal. So I told them I could not recertify it and if they wanted I would do a new appraisal. So then his underwriter sent me an email with a definition of recertify and update. They included the following definitions.

Definitions:

Update of Value: An update of value is an extension of the original
appraisal that changes the effective date of the value. An update
report can be in appraisal or letter format. The update should
preferably, be completed by the original appraiser. If it is not
possible for the original appraiser to perform the update, the file must
indicate why a different appraiser was used.
Recertification of Value: A recertification of value certifies the
completion of any repairs and/or improvements. The certification does
not change the effective date of the appraisal.
Conventional (Generic Conforming/ Jumbo) Products: Existing Property
No more than 120 days (4 months) old at time of closing
If appraisal date is more than 120 days (4 months) but less than 360
days (12 months), an update of value is required.
Updates are acceptable for 120 days (4 months) provided the ORIGINAL
appraisal date is less than or equal to 360 days (12 months) at time of
closing.
New Construction
No more than 180 days (6 months) old at time of closing
If appraisal date is more than 180 days (6 months) but less than 360
days (12 months), an update of value is required.
Updates are acceptable for 120 days (4 months) provided the ORIGINAL
appraisal date is less than or equal to 360 days (12 months) at time of
closing.

Based on the part of the definition below I told her that I would have to revisit the property and do a new appraisal (the appraisal was 130 days old).

"If appraisal date is more than 120 days (4 months) but less than 360
days (12 months), an update of value is required."

She said she understood but said that they have updates and recertifications all the time. I still told her I would need to do a new appraisal. I said it was possible it would look just like the old appraisal but I would still have to go through the entire routine. And of course it might look totally different.

I guess I would like some clarification from you guys...I read in AO-3 about this...I had written in the margin "As-is recert not okay"...

Is there a situation where it is alright to "update" an appraisal?

Am so glad you all are here...

Signed: Grateful in Michigan

 

[Thomas Fiehler]

Susie-Get your USPAP book out and send the UW comments about recertifications and updates. They are expressed in the AO section. They are sending you their requirements so just send them our requirements and they will see that they are not the same. We can, no MUST, abide by USPAP and not some FNMA verbage.

 

[Jo Ann Meyer Stratton]

What exactly does the client want to know? Since you did the report "as is" there was no subject to provision. For example the house did not have any flooring in December and your opinion of value reflected that lack of flooring.

Do they want to know what the value is today because it does have flooring? That is a new assignment with a new effective date and a new opinion of value--which may be more or less or the same as it was in December.

Do they want to know what the value is today because there is a possibility the market has changed but nothing physical has changed at the subject property? This is also a new assignment with a new effective date and a new opinion of value--which may be more or less or the same as it was in December depending on the market for that particular property in that particular location. That would be an update to an appraisal.

Do they want to know if your opinion of value in December was really and truly $10,000? New assignment completed on a new date with an effective date of December. Any physical or market change since December would not be considered or analyzed. That would be a recertification of value.

If the loan is to be sold to Fannie Mae and there has been no physical changes to the property, Fannie Mae wants an update to an appraisal. They want to know if today's opinion of value based on current market is not less than it was in December, not what you said the market was doing in December. New assignment, new effective date new report, new data analyzed, etc. That would be an update to an appraisal.

Whatever information they are looking for--it is a new assignment, new report--and you just need to get clear instructions from them on the effective date of your opinion of value in this new report.

 

[Susie Seibert]

So Jo Ann...

An update of value or a recertification is a new appraisal no matter what...the recert would be as the original effective date...the update would be as of the new date?

 

[Robert Anderson]

Susie,

I generally agree with what has been said above. I would like to add one comment and one suggestion.

You ask in your posting "Is there a situation where it is alright to 'update' an appraisal?" The answer is yes. We have to treat the update as a new assignment, and it has to comply with USPAP as explained in Advisory Opinion 3, but yes we can do an appraisal update.

As to my suggestion, Fannie Mae has just released a new form entitled "Appraisal Update and/or Completion," which can be found at:

http://www.efanniemae.com/singlefamily/for...4d.html?role=ou

This form contains a section entitled "Summary Appraisal Update Report." I think, but am not sure, that this is what your clients are requesting. I would send them a blank copy of this form and see if it will do the job.

Bob Anderson

 

[Robert Anderson]

Originally posted by Jo Ann Meyer Stratton@Apr 12 2005, 08:05 AM
...Do they want to know if your opinion of value in December was really and truly $10,000?  New assignment completed on a new date with an effective date of December.  Any physical or market change since December would not be considered or analyzed.  That would be a recertification of value....

Jo Ann,

I generally refrain from commenting on postings from other forum members. However, you are clearly a knowledgeable appraiser and a forum leader, so I thought I would raise an issue that confuses me.

In your posting as quoted above you state that the appraiser would be doing a recertification of value. Advisory Opinion 3 discussed and defines recertification of value as follows:

The term "Recertification of Value" is often mistakenly used by some clients in lieu of the term "Update". A Recertification of Value is performed to confirm whether or not the conditions of a prior appraisal have been met. A Recertification of Value does not change the effective date of the value opinion. If a client uses this term in an assignment request that includes an updated value opinion, then it constitutes a new appraisal assignment that must be completed as discussed in this Advisory Opinion.

Is the term recertification of value appropriate in the situation you describe? What "conditions of a prior appraisal" have been met?

As an aside, I have been trying to envision a situation in which an appraiser would be asked to do what you describe and none come to mind. I guess this isn't important, but it stuck with me.

Bob Anderson

 

[Susie Seibert]

So Robert...

Thank you for the link to that Appraisal Update and/or Completion Report. May I use this (if this is indeed what the client wants) and not be violating USPAP?

Is this form considered a "new assignment"?

 

[Richard Carlsen]

Is the term recertification of value appropriate in the situation you describe? What "conditions of a prior appraisal" have been met?

"Subject to" or "As is" with uncompleted work.

Susie

Your and mine and everybody else's problem is that we keep telling the client that we cannot do a "recert" because there ain't no such animal for what they want. We tell them they need a new assignment. At this point the client sees dollars going out the window to the greedy appraiser. Then you try to explain it to someone who does not know USPAP from UNICEF and the whole thing is a mess.

Here's what we have done and do when a client calls for a "recert". We tell them something like this: "We certainly we can do it. BTW Mr Client, as an FYI, they are now called Updates. We call them that to comply with our guidelines. Just send me an order for an Update and we will get it completed for you. Fee? Let's see, it's been 4 months so I'll have to view the property from the exterior and check for new comps....$150 should do it."

No explaining, USPAP instruction that the lender does not want to hear from us, and just a nice Update order that we will consider and treat as a new assignment.

Keep it simple. Remember who you are dealing with at all times.

 

[SmilingDog]

Originally posted by Susie Seibert@Apr 12 2005, 08:33 AM
So Jo Ann...

An update of value or a recertification is a new appraisal no matter what...the recert would be as the original effective date...the update would be as of the new date?

This is certainly interesting and I was going to post a similar question.

IN my case, the lender wants me to recertify the value of an appraisal done in November 2004, showing that the values have not changed since then.

The issue for me is that the values have changed about $40k since then, so I sent them a whole new appraisal with an updated value and effective date. They do not want this or an "update", they want to have a recertification that shows value is unchanged.

How can I possible do this knowing that values have gone up?

So was I correct in giving them a new appraisal with a current effective date and value (an update)????

 

[Robert Anderson]

Originally posted by Susie Seibert@Apr 12 2005, 09:47 AM
So Robert... Thank you for the link to that Appraisal Update and/or Completion Report. May I use this (if this is indeed what the client wants) and not be violating USPAP? Is this form considered a "new assignment"?

Susie,

An assigment is defined by USPAP as "a valuation service provided as a consequence of an agreement between an appraiser and a client." The research and anlyses involved in completing the "Summary Appraisal Update Report" would qualify as an appraisal assignment.

The form has been approved by Fannie Mae for use by appraisers and lenders. If used for its intended purpose, I do not see any USPAP violations.

Bob Anderson