Supplemental Standards Rule Elimination

[Don Clark]

Beginning with the 2008-2009 version of USPAP, the Supplemental Standards Rule is eliminated from the standards. All information relative to that rule will be eliminated, and not effective.

The new Advisory Opinion 30 deals only with Federally Related Transactions. As a matter of fact, on page A-106 under Commonly Asked Questions, this is question 4.

"Do the agencies' appraisal regulations apply to FHA, VA, Fannie Mae, Freddie Mac, Farmer Mac. or Sallie Mae?"

Answer: "FHA,VA, Fannie Mae, Freddie Mac, Farmer Mac and Sallie Mae are not under the supervision of the federal financial institutions regulatory agencies and therefore are not subject to their appraisal regulations."

My question is, how will you express your obligation to comply with the requirements of FHA, VA, Fannie Mae, Freddie Mac, Farmer Mac and Sallie Mae, absent any rule that tells you what your obligations are? I know how I will do so, but am looking for your input.

Time is running out, now is the time to decide how you will handle this change.

 

[George W Dodd]

My question is, how will you express your obligation to comply with the requirements of FHA, VA, Fannie Mae, Freddie Mac, Farmer Mac and Sallie Mae, absent any rule that tells you what your obligations are? I know how I will do so, but am looking for your input.

Time is running out, now is the time to decide how you will handle this change.

Don,

I believe this can be handled in the engagement letter and scope of work, however I'm not sure how most lenders are going to deal with this because they don't understand what goes on in the appraisal process anyway. And many appraisers are not going to know and/or understand and/or care about it anyway.

 

[Mike Kennedy]

Scope of Work.

 

[Fred]

My question is, how will you express your obligation to comply with the requirements of FHA, VA, Fannie Mae, Freddie Mac, Farmer Mac and Sallie Mae, absent any rule that tells you what your obligations are? I know how I will do so, but am looking for your input.

The same way one complies with the ERC, who is not listed in the SSR as an entity that can make supplemental standards.

BTW, the SSR never told us what our obligations were, just who was allowed to create them.

 

[Carnivore]

BTW, the SSR never told us what our obligations were, just who was allowed to create them.

Now everyone can create them or no one can! I just haven't figure out which one it is.

 

[Fred]

Now everyone can create them or no one can! I just haven't figure out which one it is.

It used to be everyone. With bolding by me, up until around 2000, it said:

"The purpose of the Supplemental Standards section is to provide a reasonable means to augment USPAP with additional requirements set by clients, employers, governmental entities and/or professional appraisal organizations."

Does that leave anyone out?

 

[Marcia Langley]

My question is, how will you express your obligation to comply with the requirements of FHA, VA, Fannie Mae, Freddie Mac, Farmer Mac and Sallie Mae, absent any rule that tells you what your obligations are? I know how I will do so, but am looking for your input.

The same way I'm doing it right now. In my scope of work I list all the client requirements including any published guidelines such as GSEs or FHA. These have always been client requirements even though the contact person may not realize it.

It's true that the clients don't always know what they want and need help from me to figure it out. I tell them my default is Freddie Mac unless they tell me otherwise. They usually say, "Huh?"

Nothing at all will change for me in regards to this on January 1.

 

[CANative]

Under the SSR, requirements imposed by GSE's and other agencies could be harnessed by the criteria that the requirement was acceptable and augmented USPAP.

Does the SOWR cover this or is anything Fannie wants or says now a required SOW item?

 

[Elliott]

Seems to me ASB/USPAP recognized the obvious.

 

[Fred]

Nothing at all will change for me in regards to this on January 1.

On the development side, nothing changes. That's why I like to say the rule is going away, but you still have to comply with it. Don's question was about reporting - how to "express it." The SSR always created complications that I could not maneuver through to my satisfaction on clarity. For examples, parts of the interagency guidelines are in SMT 10. There is just no coherent way to state that you are applying standards of practice that are both supplemental to, yet contained within, USPAP.

The clarity problem remains because, with the exception of analyzing the contract and prior sale, USPAP is essentially a set of passthrough performance standards. It says what is required, is what others say is required, ie, what clients expect to see and client-group guideines.

With or without the SSR, to me, it gets complicated when you have a client who is not governed by their own written set of appraisal guidelines, because now there is nothing to anchor USPAP's moving-target benchmarks, like "credible" and "due diligience." What if the client is just a potential buyer: from noviate citizen up to senior corporate aquisition officer. buyer. The citizen hasn't seen anything while the aquisitions guy has seen a thousand appraisals who has seen everything from dart-throwing to demand-side market analysis with sensitivity testing. That's the real quandary. Since USPAP doesn't really require any particular practice or level of diligence by itself, or tangible reference for how does one define what is appropriate when there are no "supplemental" guidelines or citable expectations laying out inspection, method and secondary analysis benchmarks?