Supplemental Standards Rule Elimination

[Marcia Langley]

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?

Greg,

Without looking up any apecific verbiage in USPAP, I see this as 'no change' also.

The fact that USPAP must be adhered to at a minimum is enough to understand it as a limit on what a client can require. Client requirements can not diminish USPAP or violate law. Beyond those two things and the general public trust and ethics admonitions, all other client requirements are a business decision between the appraiser and the client. Then it is only a USPAP matter that the appraiser did what they agreed to do and what they said they did.

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Steve,

I'm not sure I grasp the nuances of your question but the way I do my SOW is to list the requirements in order (USPAP, GSE published Guidelines, additional client requirements) and then write that statement about client requirements not deminishing USPAP.

If the GSE (or other) published guidelines do not apply (are not required by the client), I don't list them and my scope is tailored to the definition of value, intended blah-blah, etc.

In my opinion, the published GSE guidelines do not restrict or enhance my development and analysis that I would do anyway for non-GSE work, depending on the assignment parameters.

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One thing I started doing differently when the new forms came out was declaring which published guidelines I was following. Ben V. made me think about it and the failure of fannie to publish updates made me feel the urgency of it.

Prior to that, I and many others allowed our reports to be assumed to comply with GSE guidelines without ever saying so in our SOW. Looking back, I think we always should have but especially after the new forms came out.

And now, after January 1, I believe it becomes even more crucial.

 

[Stephen J. Vertin MAI]

Wondering how you are going to handle it Don?

 

[PropertyEconomics]

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.

Marcia you just told a fib ... there is NO WAY you can include every published guideline of FHA ... it would take a truck to carry your appraisal report ....

 

[Don Clark]

Marcia you just told a fib ... there is NO WAY you can include every published guideline of FHA ... it would take a truck to carry your appraisal report ....

That may be true PE, but she can do it the same way the states require that you follow USPAP, and make it part of their state requirements. By referrence.

 

[Marcia Langley]

Well, that would be one way I could beat Otis' poundage!

 

[Don Clark]

2008-2009 USPAP

Wondering how you are going to handle it Don?

Stephen, since you asked, I am going to follow what is written on page U-v, 2008-2009 USPAP:

The duty for the appraiser to comply with applicable assignment conditions is embedded in the obligations to provide ethetical and competent services. The SCOPE OF WORK RULE requires appraisers to identify the problem to be solved, which includes identification of assignment conditions. In communicating assignment results, the requirement that reports be meaningful and not misleading creates an obligation to comply with applicable laws, regulations, and guidelines.

So, I intend to simply state, as part of the SOW:

"This appraisal report is intended to comply with and meet the requirements of_________________________________________, contained in such laws, regulations and guidelines as may be applicable at the time of the assignment".

In some cases, it may be prudent to state more than one entity in what I show as a blank space.

There is no reason to attach any such laws, regulations and guidelines, extractions from such, or summaries of such in the report itself. It is my opinion that you can do so by referrence. And, I believe the statement above does just that.

 

[Marcia Langley]

As long as client requirements are published in a manner that is available to the general market participants (like the laws' and GSE's are) then simply naming them as an assignment parameter is plenty.

Other client requirements that are generally distributed in writing to all of a specific client's vendors could also be referenced or actually enumerated depending on how well documented the appraiser felt they were.

Client requirements that are specific to one assignment should always be specifically enumerated in the scope of work.

Once I started paying more attention to this I found that not only did my scope verbiage get much better but it also really shined a light on specific client requirements that were inappropriate.

If the client made a request that I was not willing to clearly state in my SOW then I also was not willing to agree to comply with it.

Snarky requests like requiring GSE compliance as well as "as is" box checking even if the subject has a big hole in the roof simply create an impossible conflict between the client's own two requirements. They can have one or the other but not both.

Smarmy requests for contengiency values are also not something I am willing to state in my SOW.

I think relegating the SS to just another client requirement and the new emphasis on SOW is a blessing to appraising.

 

[Carnivore]

I think relegating the SS to just another client requirement and the new emphasis on SOW is a blessing to appraising.

I respectfully disagree.

I predict that pandamonium will rule for quite awhile.

One problem has already surfaced. The use of certain words.

Guidelines and requirements! What is the difference?

Example: Under standard two there is really no difference. Under standard one there is a huge diffference. Each SO-CALLED lender standard one additional requirement will have to be vetted againts USPAP to make sure it does not interfere with proper USPAP appraisal development.

This is just my opinion. We will have to wait and see.

It may not have any effect as most of the appraisers dont pay attention to USPAP anyway. USPAP is essentially irrelevent when it comes to lender work.

Another problem that will surface is the so-called client requirements that conflict with other client requirements. Rember they take these appraisals and shop them around.

I sincerely hope I am wrong about all of this.

 

[George Hatch]

The whole reason the SSR is being removed is because it is obsolete, redundant and it adds nothing to USPAP; that is, nothing except some confusion. If you were wrong for not including those elements in your appraisal in 2007 you're going to continue to be wrong for excluding them after 01/2008.

Whether one of these assignment conditions (which is what they are and what they have been for a long time) is a guideline or a requirement is moot for two reasons:

- If an element is being requested because the client thinks its meaningful to their decision process, and assuming the inclusion of the element won't detract from the reasonableness of the workproduct, it doesn't matter whether it's a rule, a regulation, a guideline or an informal request. We are here to provide meaningful solutions to our clients and intended users, and each assignment we perform is supposed to be built for their use.

- Even if it is an extra requirement there will be situations in which it won't be possible to comply and therefore you'll have to work around them anyway.

No changes in appraisal reports. Whatsoever.

 

[Don Clark]

I respectfully disagree.

I predict that pandamonium will rule for quite awhile.

One problem has already surfaced. The use of certain words.

Guidelines and requirements! What is the difference?

Example: Under standard two there is really no difference. Under standard one there is a huge diffference. Each SO-CALLED lender standard one additional requirement will have to be vetted againts USPAP to make sure it does not interfere with proper USPAP appraisal development.

This is just my opinion. We will have to wait and see.


It may not have any effect as most of the appraisers dont pay attention to USPAP anyway. USPAP is essentially irrelevent when it comes to lender work.

Another problem that will surface is the so-called client requirements that conflict with other client requirements. Rember they take these appraisals and shop them around.

I sincerely hope I am wrong about all of this.

A guideline is just that....to guide you but subject to flexibility. A requirement is not subject to flexibility, as in VA & FHA Minimum Protery Requirements. Also, one must comply with FRT requirements. Fannie Mae allows us to deviate from their guidelines as long as we explain. For example, not exceeding a 25% Gross adjustment. Just explain why you exceeded the adjustment. Using MH comps for a MH. Just explain why you used stick built.

[/quote]It may not have any effect as most of the appraisers dont pay attention to USPAP anyway. USPAP is essentially irrelevent when it comes to lender work.

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Try explaining that to the NCAB.