• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Recon Of Value & USPAP

Status
Not open for further replies.

McPheeters

Junior Member
Joined
Feb 10, 2002
Professional Status
Certified Residential Appraiser
State
Oregon
The question: Is a Recon of Value subject to USPAP?
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Depends if you messed up your first consideration of value, if you did, then you probably violated USPAP and now have a me culpa, to fix.

Otherwise, there is no such thing as a Recon of Value, that is not mortgage broker/sales person speak. It is not within our vocabulary as we are responsible for a good value, on the first attempt.

You can be asked to consider new information, or further explain something already in your report, but you can't be asked to consider to change your value.

.
 

McPheeters

Junior Member
Joined
Feb 10, 2002
Professional Status
Certified Residential Appraiser
State
Oregon
Depends if you messed up your first consideration of value, if you did, then you probably violated USPAP and now have a me culpa, to fix.

Otherwise, there is no such thing as a Recon of Value, that is not mortgage broker/sales person speak. It is not within our vocabulary as we are responsible for a good value, on the first attempt.

You can be asked to consider new information, or further explain something already in your report, but you can't be asked to consider to change your value.

.
Well the whole point of the Recon is to get the appraiser to consider additional sales data not used in the appraisal. The Recon is triggered by the fact that the value estimate in the appraisal did not support the contract, so now the Lender supplies me with "additional Data" and wants me to explain why this sales data was not used in my report....and they expect me to reply to each sale in detail. So after explaining that I indeed reviewed that same data during the initial comps search and rejected it, as all of those sales were better quality/condition/newer/larger SF. The Lender insisted that I explain in detail why each of the sales was not included in the appraisal and then suggested that if I did not comply I would be in violation of SR 2-1a and 2-1b. While I do not necessarily have a problem with providing details as to why each of the sales were not used in the appraisal, I do have a problem with being threatened in such a manner...makes me want to tell 'em to go pound sand.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Everything is "subject" to USPAP. Its why we live in fear every day of our career.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Well the whole point of the Recon is to get the appraiser to consider additional sales data not used in the appraisal. The Recon is triggered by the fact that the value estimate in the appraisal did not support the contract, so now the Lender supplies me with "additional Data" and wants me to explain why this sales data was not used in my report....and they expect me to reply to each sale in detail. So after explaining that I indeed reviewed that same data during the initial comps search and rejected it, as all of those sales were better quality/condition/newer/larger SF. The Lender insisted that I explain in detail why each of the sales was not included in the appraisal and then suggested that if I did not comply I would be in violation of SR 2-1a and 2-1b. While I do not necessarily have a problem with providing details as to why each of the sales were not used in the appraisal, I do have a problem with being threatened in such a manner...makes me want to tell 'em to go pound sand.

:nono:

Follow this very carefully.

The Truth in Lending Act, was modified by the Interim Final Rule, which was called for in the Dodd Frank.

So the final Federal Law to quote is the Truth in Lending Act, 12 CFR 226.42 (c) which says;

(c) Valuation of consumer's principal dwelling—(1) Coercion. In connection with a covered
transaction, no covered person shall or shall attempt to directly or indirectly cause the value assigned
to the consumer's principal dwelling to be based on any factor other than the independent judgment of
a person that prepares valuations, through coercion, extortion, inducement, bribery, or intimidation of,
compensation or instruction to, or collusion with a person that prepares valuations or performs
valuation management functions.


AND 12 CFR 226.42 (c)(3)

(3) Permitted actions. Examples of actions that do not violate paragraph (c)(1) or (c)(2) include:
(i) Asking a person that prepares a valuation to consider additional, appropriate property
information, including information about comparable properties, to make or support a valuation;
(ii) Requesting that a person that prepares a valuation provide further detail, substantiation, or
explanation for the person's conclusion about the value of the consumer's principal dwelling;
(iii) Asking a person that prepares a valuation to correct errors in the valuation;
(iv) Obtaining multiple valuations for the consumer's principal dwelling to select the most reliable
valuation;
(v) Withholding compensation due to breach of contract or substandard performance of services;
and
(vi) Taking action permitted or required by applicable federal or state statute, regulation, or agency
guidance.


SR 2-1a and 2-1b.
(a) clearly and accurately set forth the appraisal in a manner that will not be misleading;


(b) contain sufficient information to enable the intended users of the appraisal to understand the
report properly; and



Dear Client,

I am confused by your request.
You ask me to consider additional data that you want researched and reported within an already completed appraisal report, which I believe I can accomplish under 12 CFR 226.42 (c)(3), however you should understand that doing this additional research will not cause me to change my opinion of value, thereby protecting you from violations of 12 CFR 226.42 (c). However you should realize I am a fee appraiser, not a free appraiser, so the additional costs to research other material for you will be $125 per property if you require original photos, or $100 per property if you will accept MLS photos.

You're communications with me indicate you believe my report may have mislead you or did not contain sufficient information for you to understand the appraisal report, inline with USPAP SR 2-1a&b. Please confirm there is something in my report you do not understand so that I might address that. As my client, it is my understanding your are a sophisticated user of appraisal products and already have an understanding of the Uniformed Standards to which the appraisal has been written.

Please note that Standard 1-4a
(a) When a sales comparison approach is necessary for credible assignment results, an appraiser
must analyze such comparable sales data as are available to indicate a value conclusion.


As you may know, "comparable sales" is an undefined term within USPAP. Fannie Mae's Certification on the 1004 URAR form, #7 says;

7. I selected and used comparable sales that are locationally, physically, and functionally the most similar to the subject property.

Which I believe I have completed. USPAP Standard 2 a (vii) and (viii) says;

(vii) summarize the scope of work used to develop the appraisal;
Comment: Because intended users’ reliance on an appraisal may be affected by the
scope of work, the report must enable them to be properly informed and not misled.
Sufficient information includes disclosure of research and analyses performed and
might also include disclosure of research and analyses not performed.


(viii) summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained;


Comment: An Appraisal Report must include sufficient information to indicate that
the appraiser complied with the requirements of STANDARD 1. The amount of
detail required will vary with the significance of the information to the appraisal.
The appraiser must provide sufficient information to enable the client and intended
users to understand the rationale for the opinions and conclusions, including
reconciliation of the data and approaches, in accordance with Standards Rule 1-6.
When reporting an opinion of market value, a summary of the results of analyzing
the subject sales, agreements of sale, options, and listings in accordance with

Standards Rule 1-5 is required.


Since I believe I have complied with these above requirements of USPAP, I fail to see where you have been mislead or what it is you don't understand. Please detail your concern about this for me.

In the meantime, if you have additional data you want me to research and consider, the Truth in Lending Act requires that the data be appropriate to make or support my opinion. Please provide detailed commentary about the appropriateness of the data and why it is better suited to meet the Fannie Mae Certification #7 on the URAR. But as stated, there is an additional fee for me to consider extra research beyond the USPAP requirement for comparable sales, which are defined by my opinion of what is or is not comparable.

Again, the additional research fee is $125 per property if you require original photos, or $100 per property if you will accept MLS photos.

Thank you and have a great life.

Your former appraiser.

PS this letter has also been sent to the state appraiser board for their monitoring of AMC activity.

.
.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Well the whole point of the Recon is to get the appraiser to consider additional sales data not used in the appraisal. The Recon is triggered by the fact that the value estimate in the appraisal did not support the contract, so now the Lender supplies me with "additional Data" and wants me to explain why this sales data was not used in my report....and they expect me to reply to each sale in detail. So after explaining that I indeed reviewed that same data during the initial comps search and rejected it, as all of those sales were better quality/condition/newer/larger SF. The Lender insisted that I explain in detail why each of the sales was not included in the appraisal and then suggested that if I did not comply I would be in violation of SR 2-1a and 2-1b. While I do not necessarily have a problem with providing details as to why each of the sales were not used in the appraisal, I do have a problem with being threatened in such a manner...makes me want to tell 'em to go pound sand.

I would drop this client after this order, if you can't drop them immediately work like crazy to find new client then drop them...(imo) It is not always purchase for a recon, if owner thinks their place is worth more in a refinance .

There are some clients ( usually a big box AMC nightmare client) that have in their engagement letter that you will include a list of sales not used, and some go beyond that and want you to describe why you did not use them.

In any event, I have responded to this type of thing and I don't go into great detail. On the addendum I list the address of each sale , cut and paste then a brief statement such as " sale 1 is not a viable comp because it is 1000 sf bigger than subject and has a lake view . And so on.

I part ways with clients who are aggressive about reconsideration, the client is supposed to screen the comps sold and not use it as an intimidation to get you to raise a value.
 

McPheeters

Junior Member
Joined
Feb 10, 2002
Professional Status
Certified Residential Appraiser
State
Oregon
Thank you Marion and J for your perspectives. I requested the lender's reviewer direct me to the requirement to provide DETAILED info on each sale not used in the appraisal, since no such requirement was found in their engagement letter. The reply was "it's part of Dodd-Frank". I then requested he direct me to the section in DF where I could find said requirement...that's when it all went south and he threatened me with USPAP...he did finally admit that it was the Lender's requirement, not DF.

I began heading down that path Marion, but I ran out of patience and sent in the detailed sales info for the Recon along with a request for them to lose my contact info. I don't need the stress.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
I understand your stress.
Believe me,
For 7 years now I've listened to people on both sides of the report blaming Dodd Frank for stuff that does not exist and other's who accept that Dodd Frank is to be blamed. That's why I gave you the copy and pastes, instead of just the citations.

But on the flip side, I'm looking at a report, on a single story, 28' wide by 52' long stick built home that has 4 comps, 3 of which are two story, newer and larger, along with a one single story comp, newer, and wishing someone asked that appraiser to review the other sales in the PUD that were more similar than the 3 two story comps used in the report.

But we can only do what we can do in pursuit of our own opinions, of which, mine doesn't count, but I know who's opinions do count, so, sorry, number chasers aren't tolerated.

.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
"The Recon is triggered by the fact that the value estimate in the appraisal did not support the contract"

The Bull$eye Lives............on and on.......

Market Value is based on the actions of OTHER buyers of OTHER properties which would compete with a subject property based on the Principle of Substitution. Whether a subject property is active or contracted is irrelevant.

INDEPENDENT
http://thelawdictionary.org/independent/

OBJECTIVE
http://thelawdictionary.org/objective-standard/

BIAS
http://thelawdictionary.org/bias/

COERCION
http://thelawdictionary.org/coercion/

IMPLIED COERCION
http://thelawdictionary.org/implied-coercion/

MISREPRESENTATION V FRAUD
http://thelawdictionary.org/article/misrepresentation-vs-fraud-whats-difference/
 
Last edited:

Michigan CG

Moderator
Staff member
Moderator
Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
The Lender insisted that I explain in detail why each of the sales was not included in the appraisal and then suggested that if I did not comply I would be in violation of SR 2-1a and 2-1b.

First of all, get rid of that client. I had that pulled on me a couple years ago. My policy is that the client give me a reason why they think that (those) comp(s) are better than the ones already in the report. Second, I will I address additional sales including researching them for a fee of $50 each unless the comp is better than the ones already in the report.

As to being a USPAP violation, your client is an idiot.

I have only had to use the below once:


FNMA ML 2015-02 clearly states: "Before asking the appraiser to consider any alternative sales, it is imperative that the lender analyze the relevance of the sale and determine if the use of such sale would result in any material change to the appraisal report". Therefore, if the appraiser is requested to review any other sales after the effective date, the appraiser will only accept the order to review the sale(s) if the following two (2) conditions are met:


1) A summary submitted from the lender/client or AMC showing their analysis supporting the premise that their sales are superior to that of the sales used in this report, with the understanding that closer proximity or more recent date of the sale does not mean it is a better indicator of value, as clarified above.


2) The lender/client must agree to pay a fee of $50* per sale reviewed, plus a minimal $75* inspection trip fee, which may be greater depending on mileage and drive time incurred.


*These fees will be waived and the report will be revised to include additional sales IF they are found by the appraiser to be superior to the sales used in this report *and* their use results in a material change to the appraisal report.


https://www.fanniemae.com/content/announcement/ll1502.pdf
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks