Time Limit For Revision Requests?

[Michigan CG]

Tonight I saw a story about an appraisal of a complex residential assignment that was completed 7 months ago. In my market I would charge ~$1,200 for the assignment. Seven months later the AMC and lender wants questions answered and possible revisions made to the original report. I am guessing the loan has closed and a review was ordered after the closing of the loan.

It is my opinion that it is beyond reasonable for the AMC/lender to ask for anything after this point unless there is significant compensation (remembering the report was pretty complex).

The AMC sells the lender on the quality of their services. Every AMC states that they have some super-duper review system which we all know is most likely a person with no real estate experience who is trained to use a PDF search for "key words". Some AMCs have actual licensed/certified appraisers on staff who look at reports.

No matter the staff of the AMC, they tell the lenders they sell their services to that they are good at what they do and are competent. If an AMC comes back 7 months later with a list of questions and possible revision requests it might mean that the AMC did not do their due diligence.

Does a complex property warrant a review by an actual appraiser from the very beginning? What kind of quality control is there if there are multiple questions and revision requests seven months later? Should the AMC have gotten a second appraisal or maybe a review in the very beginning?

It is my opinion that after seven months the original appraiser should charge for an entire day of work for this as they now need to look closely at the file again (after 7 months) and get back into the mindset they were in seven months ago.

 

[Meandering]

I believe you are correct.

And if the TILA says the borrower gets a copy of the valuations the lender relied on, 3 days before the loan closes, how does the lender justify changing the report after the loan closes?

Sounds like a solid complaint to the cfpb would be warranted.

.

 

[hastalavista]

Tonight I saw a story about an appraisal of a complex residential assignment that was completed 7 months ago. In my market I would charge ~$1,200 for the assignment. Seven months later the AMC and lender wants questions answered and possible revisions made to the original report. I am guessing the loan has closed and a review was ordered after the closing of the loan.

It is my opinion that it is beyond reasonable for the AMC/lender to ask for anything after this point unless there is significant compensation (remembering the report was pretty complex).

The AMC sells the lender on the quality of their services. Every AMC states that they have some super-duper review system which we all know is most likely a person with no real estate experience who is trained to use a PDF search for "key words". Some AMCs have actual licensed/certified appraisers on staff who look at reports.

No matter the staff of the AMC, they tell the lenders they sell their services to that they are good at what they do and are competent. If an AMC comes back 7 months later with a list of questions and possible revision requests it might mean that the AMC did not do their due diligence.

Does a complex property warrant a review by an actual appraiser from the very beginning? What kind of quality control is there if there are multiple questions and revision requests seven months later? Should the AMC have gotten a second appraisal or maybe a review in the very beginning?

It is my opinion that after seven months the original appraiser should charge for an entire day of work for this as they now need to look closely at the file again (after 7 months) and get back into the mindset they were in seven months ago.

I agree that there should be some kind of reasonable time-limit put on revision requests; actual changes to the appraisal. 7 months sounds unreasonable to me (although I cannot say what time-line should be, and I think it would need to be evaluated on a case-by-case basis.

I'd also like to know what the reason for the requests were and why they had to be applied to the appraisal report 7 months after submission? Let me give you an example:

A. Assume that the loan had closed and the report, 7-months old now, is being reviewed as part of an additional QC process. Sometimes, the QC (review) process on the pre-origination side has a different concern than post-closing. In this case, a lender may have some reasonable questions that it is asking to be addressed. However, after the close and after 7-months, I don't see a lot of good reasons to change the original report. Those questions (and the answers) can be handled outside of the report in a simple communication exchange between the appraiser and client. It can be retained in the loan package and can address the issues raised. This is done a lot.
If I were the appraiser and I thought the questions were reasonable, I'd address them. If I didn't think they were reasonable or didn't warrant addressing (and I didn't care of the consequences with my relationship with the lender) then I wouldn't address them. Obviously, if the concerns were such that failure to address them could result in a complaint, I'd weigh that into the mix. I might fix a factual error on a 7-month report. I might address a question of why I used X sale instead of Y sale outside of the report in a separate communication.

B. Assume that they wanted to use the report again for another credit decision and wanted something changed because of that.
I'd politely decline to make the change and suggest that the client obtain a new appraisal.

What I wouldn't assume, however, is if there was a legitimate question asked now that it should have been caught prior-to closing by the AMC; that may or may not be the case. It wouldn't surprise me if it were and it wouldn't surprise me if it were not.
The pre-closing review/QC control may or may not have been the AMC's responsibility. If it were responsible, and what is being asked for now is consistent with what should have been asked for 7-months ago, they should have caught it 7-months ago. If they were not responsible, they may simply be acting as the agent or have been asked to do a post-closing review (different from the pre-closing process).

 

[Michigander]

Are you sure they want revisions and not just further explanation? Maybe the loan is in default and the appraisal is getting a second look? Maybe random post close reviews? Maybe performing loan repurchase?

 

[Michigan CG]

.................I'd also like to know what the reason for the requests were and why they had to be applied to the appraisal report 7 months after submission? .............

I have no idea, it was on Facebook.

I have personal feelings about this. I do complex residential for four clients and this year have only done residential work for one AMC and I know I can contact the AMC chief appraiser if the report is complex. The remainder of the clients I work for have reviewers ranging from good to excellent. It is my opinion, wrong or right, that the AMC should have pushed this report to at least a real appraiser and possibly the chief appraiser.

Again clarifying, I don't know all details of this, only what was on Facebook. The report could be a demo-quality report or it could be garbage, I don't know. After all, we all write better reports than anyone!

...........If I were the appraiser and I thought the questions were reasonable, I'd address them. If I didn't think they were reasonable or didn't warrant addressing (and I didn't care of the consequences with my relationship with the lender) then I wouldn't address them. ....

I agree with the above although I have clients that have quality review appraisers for the most part and it would be normal for the questions to be asked in the initial review or at least in the second review which is always within a few days. I am spoiled with good reviewers.

Wouldn't an AMC have an automatic system in place where the report was reviewed any time the property had an accessory unit or was complex? The AMC model sells itself on quality control to the lender. Call me skeptical of most AMCs as the review process seems to be former Taco Bell employees doing PDF searches. I have people who review my reports who read every single word.

...............The pre-closing review/QC control may or may not have been the AMC's responsibility. If it were responsible, and what is being asked for now is consistent with what should have been asked for 7-months ago, they should have caught it 7-months ago. If they were not responsible, they may simply be acting as the agent or have been asked to do a post-closing review (different from the pre-closing process).

If the AMC is not responsible and now, seven months later the appraiser is being asked for additional work, the appraiser should be compensated IMNSHO.

 

[Michigan CG]

Are you sure they want revisions and not just further explanation? Maybe the loan is in default and the appraisal is getting a second look? Maybe random post close reviews? Maybe performing loan repurchase?

I don't know, it was a Facebook thing.

If an AMC says they provide reviews of appraisals then they should do so. The description of the property deemed it complex and would warrant more than a PDF check normally associated with a cookie-cutter neighborhood.

Post closing reviews are part of the business, I get that. If I have to open a report again for a highly complex property then I expect to be compensated for that work at an hourly fee. If the PDF check guy missed something it is not my problem seven months later.

 

[hastalavista]

I recently assisted an appraiser who had a situation that has some similarities.

He completed two appraisals in early 2016. He was contacted in late December by the lender. This lender uses an AMC, so the original order and upload was handled via the AMC. I would have presumed that it would have been reviewed on some lever at the time of the upload by the AMC but that is a presumption.

He didn't respond to the December request. The request was for additional information in some of the analyses he used. He received a re-request in late January. The second request wasn't as cordial as the first (due to his non-responsiveness); I had issues with the 2nd request wording because in it, the lender said if they did not get any response back they would be required to consider filing a complaint with the state (per Dodd-Frank). While that is the regulation, that immediately upped the priority for this appraiser to look at the request (so, in that regard, it worked. Is that statement in the 2nd request a "threat"? Hard to say. It certainly is within the lender's obligations).

I looked at the request and I thought the lender had some very legitimate questions and I advised the appraiser to address those questions PDQ. To the lender's credit, they did not require any changes to the original report (they specifically told him not to change anything in the report). What they wanted was an explanation for some of the things done in the report; what the lender asked for (a) should have been in those two reports and (b) if reviewed on more than an automated basis, would have likely been raised by a competent reviewer assuming the review SOW included verification of the sales data and market data). The lender said that if the responses adequately addressed the questions, that would end the issue as far as they were concerned. The appraiser was able to adequately address the issues in a separate correspondence and the lender's in-house reviewer thanked him for the assistance; he asked what would happen and she said the questions go into the loan file and the the issues are resolved. In his case, he definitely turned a likely complaint-situation into a no-complaint-situation. He may have salvaged his relationship with that client, but he has yet to receive any orders (I don't consider that unusual at this point in time).

So, that's why I gave my answer as I did. 7 months by itself seems unreasonable. But, there may be more to the story not presented in Facebook.
There can be a very legitimate reason for a request for additional information. I think if it is a post-closing review, they can be handled outside of the report. However, if the requests are legitimate and the information requested is the difference between a compliant and non-compliant report, I suppose a specific lender could ask for those changes to be made in the report.
That it should have been caught pre-closing is another unknown. That depends entirely on the lender's review policy. You are correct that most AMCs market their ability of quality-control/review services. But not all lenders engage their AMCs to do that work and some lenders have different AMC-review requirements than others.

In this environment, I can understand anyone assuming that something is illegitimate about this situation; and that illegitimacy originates on the AMC/lender side. Based on the information available, I acknowledge that possibility but I do not make that assumption.

 

[Michigan CG]

...............That it should have been caught pre-closing is another unknown. That depends entirely on the lender's review policy. You are correct that most AMCs market their ability of quality-control/review services. But not all lenders engage their AMCs to do that work and some lenders have different AMC-review requirements than others.

In this environment, I can understand anyone assuming that something is illegitimate about this situation; and that illegitimacy originates on the AMC/lender side. Based on the information available, I acknowledge that possibility but I do not make that assumption.

If all lenders do not engage the AMC to do quality-control then the onus of the quality control is on the lender.

Based on the information I have I do not assume that the report was credible or not, I have no idea. But again, after a week, the report should have been deemed acceptable or not acceptable before it was funded.

Seven months after funding the request requires an additional fee if due diligence was not performed by either the lender or the AMC.

On another note, there are some who think that their list of adjustments are actually defensible as that is what they were taught and they know nothing different.

I don't know, just a topic that I thought could be discussed.

 

[hastalavista]

It is a good topic of discussion.

In general, if I need to revise something that isn't necessary 7 months after the fact, I'm probably not too thrilled to do it (I'd do it for my clients but I don't have a lot of residential mortgage clients and no AMC clients). If I had the typical relationship that I read about on this forum, I probably wouldn't do it at all.

But I'd certainly address the issue if it was legitimate (my fault) and for a fact I'd fix something if I thought there was a reasonable likelihood that the client would file a complaint if I didn't (and the complaint had legitimacy).

In the scenario that I assisted the other appraiser in:
A. He should have fixed it to begin with; the unresolved issues were sufficient enough to reject the report. Unresolved, they would have been sufficient enough to warrant a complaint under Dodd-Frank.
B. The issues should have been caught if the appraisal was reviewed prior to closing. Not all reports are reviewed manually and not all automated QC processes can catch issues which would trigger a higher-level review. I don't know if his two reports were reviewed or not (although it seems likely to me).
C. 10-months later, the issues were discovered in a post-closing review process.

In the above there is an issue with the report. While it would have been better had the appraiser complete it correctly the first time, or that it got caught prior to closing and the appraiser corrected it at that point, it wasn't discovered until 10-months later. It was sufficient enough to warrant a complaint to the state regulator if not addressed. I don't know of any time-limit on that requirement. For all I know (another guess) an auditor found the issue and put it front and center on the QC department's desk. But, 10-months later, the lender goes back to the appraiser and asks them to address the issue (again, in my scenario, not in the report but separately. The report was complete and they didn't want to alter it; kudos to them I say although I, as the appraiser, would want to submit a new report with a current date showing I addressed those issues just in case somehow, it landed on my regulator's desk).

In the above, is 10-months too late for the appraiser to fix the issue and avoid a complaint? I don't think so.
Should the appraiser charge for his time to address what should have not been an issue if he had done the report correctly and likely would never think of charging for if caught 9.5-months ago in the post-closing review? I don't think so.
So I'm providing a scenario which has some similarities to yours, which I know about first hand, and which was resolved less than 3-weeks ago to the appraiser's benefit; no complaint. In this case, I think he'd be an idiot if he tried to charge the lender to provide the information that should have been there in the first place and if not provided, would have resulted in a complaint.

So that is what I'm saying. There is a potential explanation of what's going on with the Facebook situation that, if we knew the answer, we might all agree that 7-months isn't too long to address a request and the appraiser would be nuts to try to charge for it. Or, the request is totally unreasonable and the appraiser would be a fool not to charge to do anything. We just don't know, so I wouldn't presume it is one or the other without more information (doesn't mean anyone else cannot presume something different).

 

[jay trotta]

Just a thought; appraisal to closing - 90 days / 24hr TAT (5 bus. days or agreed TAT) by most AMC, that allows ample time by AMC review & Lender review (they all have reviewers). Most any issue is required to be completed prior to Closing. Even at 180 days, question prior to shipping package is ample time; 5-7 Months becomes a retrospective review and would appear to be beyond a reasonable time line for anything.

MCG; To review a mid set that old becomes a question (agreed, a matter of second guessing oneself is never good), as to many other projects have taken place; the Question is, what is the purpose for the inquiry ? Unless provided with a great reason for the retro-review (supported as required by FNMA, by the Lender) the report should be/should remain as provided.