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VA Circular 26-07-04-Declining Markets

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Doug Smith SRA

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Jan 16, 2002
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Certified General Appraiser
State
Montana
VA has just released a Circular on Declining Markets.

In this circular, VA addresses the appraiser's role in defining "declining markets" VA certainly is ahead of the curve on this issue. I am impressed.

3. General Guidance
a. Certain areas around the country are experiencing what is frequently referred to as a "declining market." We recognize that some lenders may object to receiving appraisal reports that contain comments or analyses of negative market conditions and, consequently, may request that such items be removed. VA expects appraisal reports to contain negative comments when they accurately reflect market conditions. Be assured that VA has no objection to guaranteeing a VA loan in a declining market area as long as the appraiser has properly documented the facts of the case. Furthermore, secondary market sources have indicated that they will purchase VA loans in declining markets as long as the appraisal analysis is proper and complete.
b. It has been reported that some lenders may also be reluctant to provide prompt payment to VA fee appraisers who submit reports containing discussion of declining market trends. VA reminds lenders that, when an appraisal is requested, the lender is certifying the approved fee being held for this purpose will be forwarded to the appraiser upon delivery of the appraisal. Furthermore, since 97 percent of appraisals are processed under the Lender Appraisal Processing Program (LAPP), lenders know when an appraisal is delivered and, consequently, should be able to process the appraisal fee promptly.
 

Charles Witt

Senior Member
Joined
Dec 13, 2002
Professional Status
Certified Residential Appraiser
State
Delaware
Now if they only will pounce on some of those lenders who are very slow pay and take away their LAPP approval status! I have one who is over 90 days on 1 report....................I have only notified them five times!
 

CCAAMO

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Sep 17, 2007
Professional Status
Certified General Appraiser
State
California
Now if they only will pounce on some of those lenders who are very slow pay and take away their LAPP approval status! I have one who is over 90 days on 1 report....................I have only notified them five times!

VA allows you to charge a late fee. Send out a new statement charging them for three months worth of late fees.
 

Mike Garrett RAA

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Professional Status
Certified Residential Appraiser
State
Colorado
Only 90 days...I have some that are nearly a year old.
 

imhere

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Dec 6, 2007
Professional Status
Certified General Appraiser
State
New Jersey
Make sure that you send those late notices to the contact person at the VA. They have sent the lender stern notices for payment on my behalf (at least Cleveland does, when they get a chance).
 

The Matrix

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Joined
Apr 28, 2003
Professional Status
Certified General Appraiser
State
Colorado
Ok, the appraiser can mark the declining box, but must document to the hilt why the box was marked. In addition to that, if the POC can provide older sales (within one year... supporting a high contract price) the appraiser has to go through "Tidewater". The level of documentation is becoming ridiculous. It seems like the presumption is that the appraiser's analysis is always wrong until the appraiser can prove beyond a reasonable doubt that his/her analysis is correct. Hours and hours of research are being added into many VA reports with no compensation.

The extra documentation required by these circulars pushes the appraiser into marking the stable box... and pushing values..in the case of "Tidewater".. so the appraiser doesn't have to deal with unhappy lenders/realtors and threats of their reports being sent to the state.
 
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Don Clark

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Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Ok, the appraiser can mark the declining box, but must document to the hilt why the box was marked. In addition to that, if the POC can provide older sales (within one year... supporting a high contract price) the appraiser has to go through "Tidewater". The level of documentation is becoming ridiculous. It seems like the presumption is that the appraiser's analysis is always wrong until the appraiser can prove beyond a reasonable doubt that his/her analysis is correct. Hours and hours of research are being added into many VA reports with no compensation.

The extra documentation required by these circulars pushes the appraiser into marking the stable box... and pushing values..in the case of "Tidewater".. so the appraiser doesn't have to deal with unhappy lenders/realtors and threats of their reports being sent to the state.


I disagree entirely.

I have had 2 recent appraisals where I had to notify the lender of the fact that my appraisal and market value would be lower than the sales price. In both cases beither one responded withing 48 hours and I simply completed the assignments and uploaded them to the VA web portal. In all cases I report the facts as to the current market. VA wants the current market data, and opinions based on current market. This is the required verbage, at least by the Roanoke region that backs this uo, IMNSHO:

MARKETING TIME IN THIS NEIGHBORHOOD AND MARKET HAS BEEN LESS THAN 90 DAYS FOR PAST 2-3 YEARS.
" AND ANY TREND INDICATED BY THAT DATA IS SUPPORTED BY THE LISTING/OFFERING INFORMATION INCLUDED IN THIS REPORT".

I do an active listing to current sales analysis that shows the percentage relationship between active listings and closed sales. That gives a good indication of what the market actually is like. I also include the average price of pending and expired listings. That data supports what I put in any check box.

Doing VA appraisals does not add to my work load. As a matter of fact, as long as the cost and income approaches is/are not relevant, and./or necessary to an assignment, VA does not want, desire, or require those approaches to value. That is a SOW decision for me. But, it does not add to my work load. It may actually reduce it.
 

Mike Garrett RAA

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Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
It's certainly a sticky wicket...

Seems they are now asking for time adjustments since the market has slowed. It's not uncommon for the closed sales to be more than 6 months old. If we do time adjustments, either positive or negative, they want listings. My contention is list price really doesn't prove anything. In an expanding market, the listing is usually inflated as agents will bid for the listing and it goes to the one who offers to list at the highest. In a declining market, the listings are generally above the market anyway.

I am meeting with the VA in Denver next a week from Monday. Seems we have some things to "discuss". Maybe today's video training session will help clarify thing.
 

liznindy

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Indiana
according to an email I recently received from VA office, they are allowing late fees up to $15 per month, when payment is more than 60 days out....
 
Joined
Jan 31, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
You can slice this anyway you want to. If you are marking the "Increasing" box, the "Declining" box or the "Who the hell knows" box, you had better be doing the market research and analysis to back it up. The same goes with marketing the "Stable" box. We are observers and researchers. We report the facts and opine based on those facts.
 
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