Tidewater Initiative Question?

[Jim Onderisin]

1. Then why is it we cannot discuss values that appear they will not make the SP with an AMC, mortgage broker, etc. ?
What am I missing?

2. I've wondered if Tidewater violates USPAP.... does it, and if not, why not. Does VA supercede USPAP?

Mike, you seem to always have a good handle on questions & answers... could you explain that? Thanks.

Nicholz: What you are missing is the VA's exact Tidewater procedure. The procedure is indicated for appraisals supporting purchase-money lending decisions (not refinances). The person who authorizes the appraisal (lender) establishes a point of contact (POC). If the subject's appraised market value is less that its contract price, the appraiser informs the POC of ONLY that fact. Nothing about the appraisal or the specific value is divulged to the POC. The appraiser is not authorized to discuss the appraisal or value with anyone other than the lenders staff appraisal reviewer (SAR).

The above procedure is not similar to having discussions with any commission-compensated party. It is ONLY a request for market support the POC believes is available.

 

[Jim Onderisin]

Here is what I do not understand, and posted before:

As a VA appraiser, I know the sale price. If my value is below, I initiate the Tidewater process, PRIOR to delivering the appraisal. That is the process.

Part of the debate I am failing to understand is regarding if Tidewater applies to VA Refi's? How would I, as the VA appraiser, have any indication of what the owner's opinion of value is, to know if I did or not meet that value, in order to Invoke Tidewater. I'm not asking, and no one is providing that info to me. This is why I question the fact that Tidewater ever had any applicability to Refi's? Is something different in my region, or am I missing something?

Tidewater doesn't apply to appraisals which support mortgage refinance lending decisions. The VA's instructions are to notify the POC in the even the appraised market value is less than contract price.

 

[Mike Kennedy]

"If the subject's appraised market value is less that its contract price, the appraiser informs the POC of ONLY that fact."

communicating a verbal or written opinion that "< less than the Contract Price" IS an appraisal.

USPAP 2012-13 DEFINITION
APPRAISAL: (noun) the act or process of developing an opinion of value; an opinion of value.
9 (adjective) of or pertaining to appraising and related functions such as appraisal practice or
10 appraisal services.
11 Comment: An appraisal must be numerically expressed as a specific amount, as a range of
12 numbers, or as a relationship (e.g., not more than, not less than) to a previous value opinion or
13 numerical benchmark (e.g., assessed value, collateral value).
* NUMERICAL BENCHMARK IN THIS INSTANCE = CONTRACT PRICE

Dodd-Frank 2010
SEC. 1472. APPRAISAL INDEPENDENCE REQUIREMENTS.
(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section 129D
(as added by section 1461(a)) the following new section:

‘‘§ 129E. Appraisal independence requirements

‘‘(a) IN GENERAL.—It shall be unlawful, in extending credit
or in providing any services for a consumer credit transaction
secured by the principal dwelling of the consumer, to engage in
any act or practice that violates appraisal independence as described
in or pursuant to regulations prescribed under this section.

‘‘(b) APPRAISAL INDEPENDENCE.—For purposes of subsection (a),
acts or practices that violate appraisal independence shall include—
‘‘(1) any appraisal of a property offered as security for
repayment of the consumer credit transaction that is conducted
in connection with such transaction in which a person with
an interest in the underlying transaction compensates, coerces,
extorts, colludes, instructs, induces, bribes, or intimidates a
person, appraisal management company, firm, or other entity
conducting or involved in an appraisal, or attempts, to compensate,
coerce, extort, collude, instruct, induce, bribe, or intimidate
such a person, for the purpose of causing the appraised
value assigned, under the appraisal, to the property to be
based on any factor other than the independent judgment of
the appraiser;
‘‘(2) mischaracterizing, or suborning any
mischaracterization of, the appraised value of the property
securing the extension of the credit;
‘‘(3) seeking to influence an appraiser or otherwise to
encourage a targeted value in order to facilitate the making
or pricing of the transaction;

 

[Mike Garrett RAA]

It's called the Golden Rule....them what's got da gold makes da rules!

The entire intent was to circumvent the "reconsideration" process for the VA staff at the regional offices. Prior to Tidewater, the appraiser would complete the appraisal and submit the report to the VA. The VA would then send the appraisal report to the lender. The lender would then notify buyer that the property did not appraise for the contract price. The buyer's agent would then notify the listing agent who would notify the property owner. The agents involved would discuss the appraisal and if they believed the appraiser erred someone would submit a request for reconsideration to the VA who would then notify the appraiser. Very cumbersome.

With Tidewater the appraiser notifies the SAR (staff appraiser reviewer) directly and holds off on sending the appraisal report for up to two days. The SAR contacts the loan officer who contacts either the buyer or the buyer's agent who calls the listing agent who then submits a whole laundry list of sales to the appraiser...most of which are not comparable. The appraiser looks over the data, finds no support for a value change, adds comments to the appraisal report about what and why and sends the report to the VA. The only difference? The VA isn't in the middle of the process making their (VA) job easier and putting more on the backs of the appraisers.

Does the process violate USPAP? The VA and Appraisal Foundation says no. Supposedly the reason being no value is indicated and there is no report. Purists say Yes because the appraiser has communicated a "verbal" appraisal with a "less than" the contract price. The VA counters with...'we have jurisdictional exception which trumps USPAP".

Does this put a target value before the appraiser? Yes, in my opinion but then so does having a contract price in the first place. Does it compromise the appraiser's independence or bias the appraisal process? Probably. Does anyone really care? Only the appraiser apparently. Regardless of how we feel or what we believe is really right it is the policy of the VA and we live with it...or quit.

There is also another current issue concerning appraisals done for the VA which is probably contrary to USPAP. That concerns liquidation appraisals where the VA has instructed the appraiser put None for the name of the borrower and None for the name of the lender/client on the appraisal report. Many of us believe this is misleading and contrary to USPAP. Again...another Golden Rule!

Cheers, Mike

 

[nicholz12]

Tidewater doesn't apply to appraisals which support mortgage refinance lending decisions. The VA's instructions are to notify the POC in the even the appraised market value is less than contract price.

Prior to a certain date, which I can't remember, TI did apply to a refinance. I know this for a fact.

 

[Mike Garrett RAA]

Tidewater never applied to refi's according to the VA but did according to VA appraisers.

 

[nicholz12]

"If the subject's appraised market value is less that its contract price, the appraiser informs the POC of ONLY that fact."

communicating a verbal or written opinion that "< less than the Contract Price" IS an appraisal.

USPAP 2012-13 DEFINITION
APPRAISAL: (noun) the act or process of developing an opinion of value; an opinion of value.
9 (adjective) of or pertaining to appraising and related functions such as appraisal practice or
10 appraisal services.
11 Comment: An appraisal must be numerically expressed as a specific amount, as a range of
12 numbers, or as a relationship (e.g., not more than, not less than) to a previous value opinion or
13 numerical benchmark (e.g., assessed value, collateral value).
* NUMERICAL BENCHMARK IN THIS INSTANCE = CONTRACT PRICE

Dodd-Frank 2010
SEC. 1472. APPRAISAL INDEPENDENCE REQUIREMENTS.
(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section 129D
(as added by section 1461(a)) the following new section:

‘‘§ 129E. Appraisal independence requirements

‘‘(a) IN GENERAL.—It shall be unlawful, in extending credit
or in providing any services for a consumer credit transaction
secured by the principal dwelling of the consumer, to engage in
any act or practice that violates appraisal independence as described
in or pursuant to regulations prescribed under this section.

‘‘(b) APPRAISAL INDEPENDENCE.—For purposes of subsection (a),
acts or practices that violate appraisal independence shall include—
‘‘(1) any appraisal of a property offered as security for
repayment of the consumer credit transaction that is conducted
in connection with such transaction in which a person with
an interest in the underlying transaction compensates, coerces,
extorts, colludes, instructs, induces, bribes, or intimidates a
person, appraisal management company, firm, or other entity
conducting or involved in an appraisal, or attempts, to compensate,
coerce, extort, collude, instruct, induce, bribe, or intimidate
such a person, for the purpose of causing the appraised
value assigned, under the appraisal, to the property to be
based on any factor other than the independent judgment of
the appraiser;
‘‘(2) mischaracterizing, or suborning any
mischaracterization of, the appraised value of the property
securing the extension of the credit;
‘‘(3) seeking to influence an appraiser or otherwise to
encourage a targeted value in order to facilitate the making
or pricing of the transaction;

Thank you for pointing me to this section of USPAP, I believe this is the section of USPAP I have a problem with. It appears there is preferential treatment to some entities.
I think what I am really ticked off about is this... why not just say it... preferential treatment is given to some people for whatever reasons... that's all I am saying, instead of skirting the issue, own up to it.

And again, 'no' disrespect to the Veteran.

 

[nicholz12]

Does this put a target value before the appraiser? Yes, in my opinion but then so does having a contract price in the first place. Does it compromise the appraiser's independence or bias the appraisal process? Probably. Does anyone really care? Only the appraiser apparently. Regardless of how we feel or what we believe is really right it is the policy of the VA and we live with it...or quit.

1. Only until the appraiser is sued for 'making' value.
2. I can certainly voice 'my' questions, concerns and observations... I don't have to quit.
I prefer trying to understand a situation/policy, rather than quiting if I don't understand the situation/policy.

 

[nicholz12]

I suppose VA stating JE does say they have preferential treatment in some way, shape or form... you could look at it that way. I guess.

 

[Mike Garrett RAA]

I have almost 20 years on the VA fee panel...doubt I will quit. What I was saying is...If you don't agree with the VA appraisal policies that is an option.