"Taking Stock of the 2055 :Exterior Only" appraisal form"

[residentialguy]

Just understand you are not complying with the SOW on the 2055 form when you do.

I have to agree with NTex. Just because we've "never heard of an appraiser getting sued", doesn't mean they can't. I may win the case, but it's going to cost a lot of cash/time/headache either way.

If I don't get good recent verification, I use CB4 ...typically it is then upgraded to a 1004. $$$$ :icon_mrgreen:

 

[gregb]

Example of a 2055 exterior request last week from a long-time bank client.

1200 sf home built in 2005 on 35 acres, not visible from the street.
prior 1004 appraisal provided, along with review, dated 2007. (appraisal was at $2.7m, review cut it to $2.3m)

client requires no contact with borrower, no interior inspection, exterior inspection only from the public street.

home may or not be existing in who knows what condition.

client would allow any 2005 form, and any Extraordinary Assumptions. Loan is in default and client needs appraisal to make decisions.

 

[J Grant]

Sounds like most of the value is in the land, 35 acres with a 1200 sf house, so if the land is visible (but the house is not), one could derive a credible opinon on the land, with a range for the house depnding on conditon or an EA of avg condition with a disclaimer that since house was not visible, value might be affected). If this is done on a narrative or other form with no pre printed certs, the appraiser is not violating any certs by assuming avg condition.

 

[Bob Ipock]

I have to agree with NTex. Just because we've "never heard of an appraiser getting sued", doesn't mean they can't. I may win the case, but it's going to cost a lot of cash/time/headache either way.

If I don't get good recent verification, I use CB4 ...typically it is then upgraded to a 1004. $$$$ :icon_mrgreen:

So who will do the suing and on what grounds?


Is Fannie Mae going to sue?

The client that wanted a 2055 and knew exactly what they were getting?

The client that was unable to arrange an interior inspection?

The FDIC who requires appraisals or valuations on non-performing loans even when interior access is not possible.


Some important parts of the 2055 Scope were intentionally left out in a few posts back.


Scope of Work (edited version)

..The appraiser must be able to obtain adequate information about the physical characteristics (including, but not limited to, condition, room count, gross living area, etc.) of the subject property from the exterior-only inspection and reliable public and/or private sources to perform this appraisal. The appraiser should use the same type of data sources that he or she uses for comparable sales such as, but not limited to, multiple listing services, tax and assessment records, prior inspections, appraisal files, information provided by the property owner, etc.


Here is the unedited version:


Scope of Work

The scope of work for this appraisal is defined by the complexity of this appraisal assignment and the reporting requirements of this appraisal report form, including the following definition of market value, statement of assumptions and limiting conditions, and certifications. The appraiser must, at a minimum: (1) perform a visual inspection of the exterior areas of the subject property from at least the street, (2) inspect the neighborhood, (3) inspect each of the comparable sales from at least the street, (4) research, verify, and analyze data from reliable public and/or private sources, and (5) report his or her analysis, opinions, and conclusions in this appraisal report.





The appraiser must be able to obtain adequate information about the physical characteristics (including, but not limited to, condition, room count, gross living area, etc.) of the subject property from the exterior-only inspection and reliable public and/or private sources to perform this appraisal. The appraiser should use the same type of data sources that he or she uses for comparable sales such as, but not limited to, multiple listing services, tax and assessment records, prior inspections, appraisal files, information provided by the property owner, etc.




Let me know when TAF, the ASC or some other official agency (with the power) bans the 2055. Why did Fannie Mae publish the form if it is not to ever be used?

 

[NorthTexValuation]

Why did Fannie Mae publish the form if it is not to ever be used?

You need to change your name to 2055NonCompliant.

Let me make this really simple for you.

The 2055 can be used "correctly" when the appraiser can confirm/verify the interior condition and room counts from a "source" including but not limited to the owner, a prior recent interior inspection, broker familiar with the current condition, current MLS information or any other reasonable source. (That was paraphrased so don't get all literal with the actual wording).

The 2055 should not be used if the appraiser has no source for interior condition and/or room count. NO EAs are allowed and "assume average" or "assume" anything else is not permitted, PERIOD. Read the SOW.

Like I said, you feel free and go ahead and use the form any way you want, I don't care.

Just understand you are not in "compliance" with the 2055 SOW and Certs.

That is all, 2055NonCompliant.

 

[J Grant]

The SOW does not say no EA is allowed. What it does say, is that no changes are allowed to be made to the list of assumptions within the certifcation.

There is a short list of assumptions on the 2055 form cert page. Adding an EA does not mean that one of the assumptions on the 2055 form has been changed.

1044 forms have the same language, that no changes are allowed to be made to the lsit of assumptions on the cert. Yet appraisers make EA on the 1004 form often. The use of an EA does not have to change or delete any of the assumptions pre printed on the cert form.

On a 2055 form, yes, per the SOW , the appraiser needs credible sources (MLS, tax records, owner, realtors etc) for information about interior, room count, condition, etc. Nowhere does it say additional EA's must not be used, once the appraiser has the sources needed about the interior. An appraiser can do an interior inspection on a 1004, and still make an EA, such as that there are no hidden defects.

 

[residentialguy]

The SOW does not say no EA is allowed....
1044 forms have the same language, that no changes are allowed to be made to the list of assumptions on the cert. Yet appraisers make EA on the 1004 form often. The use of an EA does not have to change or delete any of the assumptions pre printed on the cert form.

They shouldn't be using EA with the 1004 either, if they are marking CB1. That language (EA) is CB4. If an appraiser uses an "extraordinary assumption" and/or "hypothetical condition", the appraisal is to be made "subject to".



On a 2055 form, yes, per the SOW , the appraiser needs credible sources (MLS, tax records, owner, realtors etc) for information about interior, room count, condition, etc. Nowhere does it say additional EA's must not be used, once the appraiser has the sources needed about the interior. An appraiser can do an interior inspection on a 1004, and still make an EA, such as that there are no hidden defects.

The only reliable source would ba a recent MLS listing or agent that has recently seen the place...maybe a contractor, if they just worked on the house. You can't use the homeowner. Read 10 in the SOW

"10. I verified, from a disinterested source, all information in this report that was provided by parties who have a financial interest in the sale or financing of the subject property."​

 

[Sulago]

The SOW does not say no EA is allowed.

Just to clarify, quoted from the article linked in post #1 :

... the language within the 2055 form does not provide for making an extraordinary assumption while the "as is" box (CB1) is checked within the reconciliation section.

The article goes on to suggest that CB4 should be used. I'd like to know if anyone else has used CB4 for a 2055 and if the client has cried about it or not said anything (because doing a 2055 and then requiring an interior inspection seems silly).

 

[residentialguy]

Just to clarify, quoted from the article linked in post #1 :

... the language within the 2055 form does not provide for making an extraordinary assumption while the "as is" box (CB1) is checked within the reconciliation section.

The article goes on to suggest that CB4 should be used. I'd like to know if anyone else has used CB4 for a 2055 and if the client has cried about it or not said anything (because doing a 2055 and then requiring an interior inspection seems silly).

You need to clarify it with your lender FIRST!
Remember with USPAP:
Communication with the client is required to establish most of the information necessary for problem identification.
Assignment conditions include assumptions, extraordinary assumptions, hypothetical conditions,


These are assignment CONDITIONS and the preprinted SOW states that they cant be modified.

 

[Sulago]

You need to clarify it with your lender FIRST!

Oh, that makes and a bucket of sense, and easy to do to !! Thanks !