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Scope of Work

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Rob Lentz

Junior Member
Joined
Nov 8, 2005
Professional Status
Certified General Appraiser
State
Michigan
I recently completed an appraisal for a MB client. I live and work in a rural area where there are not that many appraisers to choose from. I'd never worked with this lender before.

The borrower was a former colleague (3 years ago we used to work in the same school district...we were 2 of over 700 employees). There were no guarantees/promises/winks/handshakes - you know what I mean.

The subject is an "on-frame" modular from pre-1976. I called it as such in the appraisal, included a mix of low end mods and manufactureds as comps (because them's the appropriate alternatives that my market dictates). Since it is not HUD, I reported the appraisal on a 1004. And then, slapped my value on it and shipped it. Did I mention that it was tenant occupied? (yes, it gets worse...someone shoot me for not being out of town that week!). Had this borrower talked to me prior, I would have advised them to talk to a local bank who might be able to work something in-house...but my client is the MB (at least for this assignment, and at the time of inspection) - not that after my best efforts to give said MB the best service I can I couldn't complete for a new client under a new assignment.

Today I get a call and the LO says UW wants clarification of mod. vs. man. issue. No problem, I can explain what it is and what it isn't (even though I think I already did). The problem isn't value, its a mix (or possibly more accurately, a mismatch) of the subject improvements, the client, and the occupancy.

I know what is likely to happen here. If UW can't place this property in a loan program, it'll get canned. Then the LO will likely blame the appraiser/appraisal. And, yes, I've already been paid COD for my services (which we all know borrowers completely "get" the whole "the lender is the client, but the borrower pays for the appraisal" line). At which time I'll get a phone call from said borrower, wondering "what gives?" Then, I'll get dagger eyes at the next little league picnic.

There is nothing in the Scope of Work that says that the appraiser's job is to know which properties will fit what secondary market guidelines, or even that we're to assume that we're judging a property's suitability for the secondary market (and then which GSE, and then which program, etc) at all. [Further, we don't appraise on contingency based fees, i.e. a loan closing=paid, no loan=no pay.] In my mind, property eligibility is the LO, and MB's area of expertise - and his/her responsibility. It's like the Home Inspection and the Appraisal...we both look at the same property, but for different reasons, objectives, etc. While I know enough to be dangerous, I never portray that the appraisal inspection is equivalent to a home inspection. Nor would I ask the home inspector to tell me what the home is worth...Catch what I'm throwing? Good.

I've only run into 1 other on-frame modular in my life, and the loan process was a piece of cake. I explained what it was, and proceeded just as above. But thinking back, its probably because the first one was a purchase transaction for primary residence. No questions, no problems.

So, if (when) I get the phone call from the borrower...is there anything unethical about recommending that they talk to a local lender of their choice (I am approved to provide services to all of them), with the caveat that I can complete the 2nd appraisal faster and cheaper than anyone else? (I'm not into gouging anyone). In my opinion, they started at the wrong lender...but I would've been out of line to say so from the git-go.

How would you proceed?

Thanks in advance for your thoughts, and taking the time to respond.
Rob Lentz
 
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Since you know these people I feel for you and your position.

When or if they call you just tell them that you can discuss nothing about the assignment or the client. However, you think it's odd their current lender is having problems and that you've done these types of appraisals before for such and such at yo-yo bank and there didn't seem to be a problem then.

I don't see anything wrong with that.
 
Since you know these people I feel for you and your position.

When or if they call you just tell them that you can discuss nothing about the assignment or the client. However, you think it's odd their current lender is having problems and that you've done these types of appraisals before for such and such at yo-yo bank and there didn't seem to be a problem then.

I don't see anything wrong with that.


Quite a good way to handle it. If you dont mind Id like to borrow the method you describe. Nothing is disclosed and yet the message is delivered quite adequately. Thanks for the tip.
 
I hate to say it but I am confused by the terminology too, and I appraise manufacture houses and modular houses regularly.

To me there are mobile homes (in that they once had wheels and axles) built after 1976 to HUD code and they are manufactured dwellings.

There are also mobile homes (in that they once had wheels and axles) not built to HUD code and they are mobile homes, or non-code manufactured houses.

Then there are modular houses that were never vehicles, never mobile, just shipped to the site and attached there, but never did they have their own wheels, hitches and axles.

When you say modular, are you talking about a mobile home that was not built to HUD standards? Or do you mean what I mean by modular?
 
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Rob,

I don't think you're going to like my answer so before you read it you might want to sit down.

One of the elements of the SOW decision is to identify the intended user and their expectations. Had you been able to identify your client's target lender and their appraisal policies you would have been able to inform your client in advance of what they were looking at when submitting this loan package. They could have saved themselves some time and effort and placed it with a more appropriate loan program.

Both you and your client should be able to take away a lesson from this one. In the current lending environment it pays to find out where the loan package is going so that it can be built for that loan program. That includes, but is not limited to, the appraisal.
 
Yep-USPAP requirements are built for a perfect world-when you find it let me know because I want to go there!
 
I know what is likely to happen here. If UW can't place this property in a loan program, it'll get canned.
So what?

I think George is overracting. The purpose of an appraisal is not to make a loan close. The purpose is to develop results, including the value conclusion that enable our intended users to make informed decisions. One of the uses of a mortgage appraisal is for the client to determine whether the property is collateral worthy, whether the property attributes create extraodinary risks, etc. Sounds to me like this appraisal did its job.
 
Rob,

I don't think you're going to like my answer so before you read it you might want to sit down.

One of the elements of the SOW decision is to identify the intended user and their expectations. Had you been able to identify your client's target lender and their appraisal policies you would have been able to inform your client in advance of what they were looking at when submitting this loan package. They could have saved themselves some time and effort and placed it with a more appropriate loan program.

Both you and your client should be able to take away a lesson from this one. In the current lending environment it pays to find out where the loan package is going so that it can be built for that loan program. That includes, but is not limited to, the appraisal.
George, I think that's way beyond the typical SOW for an appraisal. The appraiser's job is to value the property - it's not to determine where the MB should submit it. Most MB's have access to a wide array of funding sources with many different programs and requirements. Often, they have a good idea of where they're going to try and place it, but the appraisal may change their minds. I don't think it's our role as appraisers to try and stay one step ahead of MB's in the process.
 
Rob,

I don't think you're going to like my answer so before you read it you might want to sit down.

One of the elements of the SOW decision is to identify the intended user and their expectations. Had you been able to identify your client's target lender and their appraisal policies you would have been able to inform your client in advance of what they were looking at when submitting this loan package. They could have saved themselves some time and effort and placed it with a more appropriate loan program.

Both you and your client should be able to take away a lesson from this one. In the current lending environment it pays to find out where the loan package is going so that it can be built for that loan program. That includes, but is not limited to, the appraisal.

That sounds theoretically correct. Then there is the reality of the current lending market where I have to check my email and guides every day and still will not be confident about program availability and changes. Investor owned properties, MH/Modular-the options are shrinking quickly.

Experience depreciated at an astounding rate, what you knew yesterday has a good chance of being obsolete tomorrow! Imagine a new monthly addition of USPAP with significant rewrites sprinkled throughout the text.

I don't see how an appraiser can be expected to track it all when I have to go through 3 sets of passwords, attach a FOB number just to read some of the stuff required. Things can and will get missed:sad:
 
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