USPAP problem?

[pgerarde]

I have got a lender that is insisting that I use the newer 1004 form for a REO. They also want me to state that the purpose of the appraisal is for Asset Valuation purposes only.

I explained that this form actually states that it can be used for only mortgage puposes and that we should use a general purpose form.

They insist that they want this form only.

they state that all the other appraisers are using this form and just putting in an addendum stating that this form is used at the request of the lender.

As an appraiser, I know this is the wrong form. But the client appears to have their own critera to follow.

Does any of this cause a problem(s) with USPAP requirements???

Thank you for your help.

God bless,
Patti in Chino Valley, AZ

 

[George Hatch]

Most appraisers are already working around some of the stock verbiage in that form by adding some clarifications. When I use the form I point out that there are some limitations and in the event of a conflict between form verbiage and my written clarifications the later supercede the former.

I'd definitely pin the decision to use this form on your client in the report. No need to be obnoxious about it, but it would explain why you're contradicting the stock verbiage.

 

[Carnivore]

No!

Your form also says "other" for purpose.

Just do it. Cash your check when you get it and move on.

 

[Caterina Platt]

Hey Patti!!

My understanding is that this wouldn't necessarily be a USPAP/wrong form issue, but more of a liability thing for the appraiser.

In a sense, the process of asset valuation for the lender is tied to the mortgage. Using the new 1004 isn't so much a problem there, but it is a problem when we need to make extraordinary assumptions. For example, we won't have the utilities on in most cases, and we won't be able to say the electric/plumbing/heating, etc. isn't a problem. If there are malfunctions in the systems, it's very likely that it would effect the value. The new form doesn't allow extraordinary assumptions without using the checkbox 4, which will indeed send your REO client into orbit. 'It has to be AS IS!!'

Actually, I've had REO's where the utilities were the least of my worries. Cracks throughout the dwelling that really look to be settlement, and who am I to say what exactly caused it, and what exactly will cure it. Extraordinary assumptions are invaluable in such cases. If they force the use of the new 1004 in this case, you almost have to use the 4th checkbox unless they've gone to the trouble of hiring a structural engineer for their opinion.

I'd be interested to hear more from our folks doing lots of REO work these days. Anyone else successful in getting the old URAR accepted?

 

[Mztk1]

I don't believe it is the wrong form. A lenders asset management due to possible foreclosure is mortgage ralated and I have no issue with it. Just like PMI removal, IMO.

 

[stefan olafson]

Patti,

Just make darn sure you disclose why you are using the 'required form' and provide an addendum with all you hypothetical conditions included. Make sure you include a table of contents and don't put the comment page last. Sometimes without the table of contents page the lender conveniently loses that comment page.

There are eleven items you must include in your report to be compliant with USPAP, the one where there is always a slippery slope is:

SR 2-2b(viii)
summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained;


Comment: A Summary Appraisal Report must include sufficient information to indicate that the appraiser complied with the requirements of STANDARD 1. The amount of detail required will vary with the significance of the information to the appraisal.

Make sure you include all eleven points and you should have no trouble.

 

[timd354]

I don't believe it is the wrong form. A lenders asset management due to possible foreclosure is mortgage ralated and I have no issue with it. Just like PMI removal, IMO.

I agree 100%, REO asset evaluation is definitely mortgage related.

 

[Lee Lansford]

Most appraisers are already working around some of the stock verbiage in that form by adding some clarifications. When I use the form I point out that there are some limitations and in the event of a conflict between form verbiage and my written clarifications the later supercede the former.

I'd definitely pin the decision to use this form on your client in the report. No need to be obnoxious about it, but it would explain why you're contradicting the stock verbiage.

"Ditto"....!!!!

 

[Offshore]

“Other” about covers it for assignment type. There are some holdouts on the mortgage purposes argument, but there are more important things to worry about IMO. The supplementary REO addendum is well worth reading since it addresses future revisions and repair estimates.

 

[pgerarde]

Thank you all. You have been very helpful. I can now accept this order and feel that I have covered all my bases.

Thanks to all,
Patti in chino Valley, AZ