What verbiage do you use when invoking Tidewater?

[Don Clark]

Also, think it s/be *PMI* not MIP.

PMI for Fannie, MIP for FHA, and, yes, there is a difference.

 

[Don Clark]

The Answer:

It's illegal for "they" (the GSEs, FHA, or any other similar party) to do so - except for the VA.

A. [PRIOR TO DELIVERY OF A COMPLETED APPRAISAL REPORT]:

"DODD-FRANK FINANCIAL REFORM & RECOVERY ACT 2010
TITL 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; and
H. R. 4173—813
‘‘(4) withholding or threatening to withhold timely payment for an appraisal report or for appraisal services rendered when the appraisal report or services are provided for in accordance with the contract between the parties ".
________________________________________________________________________

B. [ AFTER DELIVERY OF A COMPLETED APPRAISAL REPORT]
A.K.A. Reconsideration of Value

‘‘(c) EXCEPTIONS.—The requirements of subsection (b) shall not be construed as prohibiting a mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, consumer, or any other person with an interest in a real estate transaction from asking an appraiser to undertake 1 or more of the following:
‘‘(1) Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal.
‘‘(2) Provide further detail, substantiation, or explanation for the appraiser’s value conclusion.
‘‘(3) Correct errors in the appraisal report."

P.S. Coercion and Collusion in the appraisal process have been illegal since (and prior to) FIRREA of 1989.

Sorry Mike. i respect you but not your reasoning. Requesting that an appraiser consider information prior to completing a report is not coercion or collusion. And, in 2016-2017 based on changes to USPAP, draft reports will take it even a step further than the TI has done.

But, if you truely believe what you have written, why not send to the ASB and the APB for their input? And, send to your congressman or senator. That will gain far more results than continuing to post the above on the forum.

 

[Mike Kennedy]

My compliments to you as well Mr. Clark.

The essential wrench - the Tidewater Notification is required when, and ONLY when, the OMV is in, VA-speak, "likely to be below the CP$". Further, as you and others have posted, the requirement then requires an Appraiser to report on why the data supplied (if any - which can include NON-comparable properties) by parties with vested interest did not result in a change in the OMV to or above the CP$.

(paraphrased requirements used above - are replaced by actual verbiage below this post was edited to include) MEK

P.S. these "walls" do have "other" eyes besides Appraisers including major media outlets and regulatory officials.

_______________________________________________________________

VA APPRAISER GUIDE 08/20/2009 - ROANOKE VA
Page 31

B5: VALUATIONS BELOW THE CONTRACT PRICE
If you determine that the final value estimate will be less than the contract price, then do the following BEFORE you complete and send the appraisal report:

• Check the Appraisal Request form (VA Form 26-1805) in block 30 for a Point of Contact (POC). If none indicated then contact the requestor (at the bottom of the form). Advise that individual ONLY that you are requesting any additional data that they (or the buyer/seller/agents) can provide, to ensure that you have considered all pertinent information. You should AVOID any discussion of the value estimate.
• The POC or requestor will have two workdays to respond.
• Additional information (if any) sent to you should be in a format similar to the comparable sales grid (i.e. page 2 of the URAR) including verification of the sale. When pending sales contracts are submitted (especially to support time adjustments) they must be complete with all addendums attached. A narrative should be included describing the similarities and differences between the pending sale(s) and the subject property.
32
• Review and analyze all data submitted and then complete your final report based upon your findings.
• If you are able to increase the value estimate to meet or exceed the sale price, then comment on the extent of this process used and the (extra) time needed.
• If the final value estimate is still less than the contract price even after review of additional information, then comment on the source of the additional information, what was provided, the results of your review and analysis, and the (extra) time needed.
See also Reconsiderations of Value (Section B13)."

http://www.vba.VA.gov/ro/Roanoke/rlc/

 

[Mike Garrett RAA]

Regardless of what we believe the intend of Tidewater is...it is still what the VA directs the appraiser to do. If the appraiser doesn't like it then they have the option of dropping off the panel. I guess you can say it is an assignment condition we need to agree to prior to accepting VA assignments.

 

[sandpiperapp]

It seems to me that the Tidewater Initiative, as a well defined preemptive process, puts us as appraisers in position to control the reconsideration of value process.
At times it is a pain, but from the stories I hear about some of the never ending nightmares that many appraisers on this forum complain about with conventional loans, the TI keeps the process to a minimum.

 

[McPheeters]

Since the appraiser is providing the POC with a value direction (less than the contract price), TI is nothing more than a reconsideration of that value direction.

 

[Don Clark]

Since the appraiser is providing the POC with a value direction (less than the contract price), TI is nothing more than a reconsideration of that value direction.

Wrong again. "Value" is never discussed in notification to the POC. It is prohibited by VA to discuss value.

 

[McPheeters]

Wrong again. "Value" is never discussed in notification to the POC. It is prohibited by VA to discuss value.

Fine Don. You can re-direct and parse all you want, but the fact remains:
The "value" does not have to be discussed since the POC knows what TI means. Whats the difference? The whole dang thing is designed to give the heads up to the lender that the contract price will likely not be met so they have an opportunity to pressure the appraiser to change his/her mind so the Vet can obtain the home of his/her dreams even if it means paying more than the market indicates.

 

[Don Clark]

Fine Don. You can re-direct and parse all you want, but the fact remains:
The "value" does not have to be discussed since the POC knows what TI means. Whats the difference? The whole dang thing is designed to give the heads up to the lender that the contract price will likely not be met so they have an opportunity to pressure the appraiser to change his/her mind so the Vet can obtain the home of his/her dreams even if it means paying more than the market indicates.

I have been on the VA Fee Panel for 22 years. I have never, ever been pressured by a lender to meet a contract price. Prior to the TI, which stands for the Tidewater iniative( I am in the Tidewater area and was part of beta testing of TI) we constantly were being asked to do reconsideration of value. Real estate agents were largely involved in listing properties with the notation "No VA Contracts" and were discriminating agents veterans by doing so. VA Appraisers were also accused of "low balling" appraisals, and some idiot even said(a real estate agent) that VA wanted appraisers to keep values low. All of this was blatantly false.

In an attempt to do something to limit the number of request for reconsideration of value, the Roanoke RLC devised the plan for the TI. I personally contacted TAF at the time and inquired as to the TI's compliance with USPAP and was assured that it did comply with USPAP.

Although not perfect, the TI has made it much simpler to deal with circumstances where the appraised value may be lower than the sales price. There is no pressure, no coercion, no "direction in value", just an opportunity for all parties to submit to an appraiser any information they wish the appraiser to consider prior to completeion of an assignment. This is also part of the Dodd-Frank protocol, taken even a step further in that Dodd-frank, a federal law, allows "any party" to the transaction to submit information they wish for the appraiser to consider.

And, as I have stated before, this will be also part of the 2016-2017 USPAP whereby a client can request an appraiser to submit a "draft" copy of their report to them, prior to completion of an assignment. Read the 2016-2017 exposure draft if you doubt that.

 

[Mike Garrett RAA]

I concur with Don. In my 20+ years on the panel I can count on one hand the number of times a lender has "pressured me" about value. On the other hand I can count the number of times a real estate agent has provided data that would not support a change in value. Has it happened? Yes, as I have previously stated and it is usually because an agent failed to enter data correctly on MLS>