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When Is A 2055 Applicable?

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Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
I friend of mine asked me a question. It may be a dumb question, but I didn't know the answer. I do some 2055's but they have always made up a small portion of my biz, and normally do them for what they were originally intended by FNMA(Simple house and lot). So I haven't run into this.

He has been assigned, by an AMC, a 2055 interior on a house and 9 acres. Problem is, the house is $500,000+ and the 9 acres could be anywhere from $100,000 - $200,000. He's pretty sure this does not meet FNMA Destop guidelines but is double checking. This may be a borderline deal, but this same AMC orders stuff like 100 year old homes on 80+- acres on the 2055, which does not seem to meet FNMA criteria.

His question is, has the 2055 become a "free for all" form that you can use for just about anything? He thinks not, but it seems as if may AMC's lenders want to use it that way. What do you all think.
 

John Hassler

Senior Member
Joined
Jul 23, 2002
Professional Status
Certified Residential Appraiser
State
California
William

I don't have any first hand data to support this but I believe most of the 2055 ordered are the result of Desktop Underwriter or Loan Prospector guidelines . I have no idea what the criteria are but it seems to be a blend of credit score and LTV. I've been asked to do these on properties up to $1M (and probably higher I just can't remember) and do them regularly on homes around $750k so I don't think there is a max home value. I'm guessing property value, or the property type for that matter, is not the critical component just the loan amount (conforming).


John Hassler
 

Verne Hebert

Senior Member
Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
My contention is, like the ordering of field reviews in lieu of second appraisals, 2055's have been ordered because appraisers remained blind enough to believe they could do them for less money.

Lately, 2055's are being ordered more and more due to the FNMA requirement shown in the three ring binder to the loan agent in the process.

Now, since the onset of the 2055's I have struggled with just your question, and I operate off of the same reference as you. They were intended for a house and a garage.

If the property meets the USPAP requirement necessitating a cost approach, then you are doing it by hand and throwing it in the working file anyway.

You can report anything on a 2055---on a property "too cumbersome" for the 2055 your working file however may be monstrous------and the underwriting requirements will be horrendous (unless you are adding considerable narrative for clarification).

Bottom line, my policy. When I cannot comfortably "beat" the data (both subject, and often more importantly the comps) into the 2055 form and comfortably generate a viable report, with no additional narrative-------------------i.e. a house and a garage (maybe a little more).

Then it is a 1004ab. Anything with acreage or contributory improvements of any significance needs to go into this form.

That is my story and I am sticking to it.

Just for fun. When the 2055 is ordered, ask them why they are ordering the 2055. I have done this many times. "'Cause the manual says so, or they were told to."
 

Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
People, keep your responses coming, thanks. My friend just called back. Out of coincidence, he just received a 2055 request on a house w' a 1.7 million estimated value. It is 9500 SF. LOL That does seem rediculous to me.

He said he thought he would turn that one down.


Get this, they want to pay a little over $200 for it. No comp photos.

Folks, that really is about a $2,000 appraisal, IMHO.

Is this crazy or what?
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Verne has this right but I still have to give my point of view and thoughts.

First lets not forget that USPAP drives the appraisal. Purpose, intended user, scope of work. Then you decide what reporting format to use.

So whats that really mean. Simply, a 2055 for example can be used on any residential property(cant speak for commercial). The form does not in any way change your REQUIRED scope of work.

In conclusion, you charge for the scope of work not the Form. This is where ASB and lenders parted paths. Lenders wanted a cheaper appraisal, ergo easier less involved appraisal. ASB said OK, heres your Form, but forgot to tell them that it still required the same level of detail in the appraisal process, ergo Same price.

Its amazing to me how two sides can agree about something and be intirely different in the actual outcome.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I second Vern and Andrew.

Regarding the fees: I don't care what form they want it on, my base fee and adding on for anything and everything that is not cookie cutter is the same.

The fee is for what it takes to arrive at a justifiable value. If it works easily enough on the 2055 form and that's what they want, that's what they'll get. If I'm going to have to write a book in additiona to the 2055 form, I will call to talk to them about switching it to the URAR and I've never had anyone balk at that switch yet.

Then again.... I don't work with AMCs.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Form selection appears to be above our pay grade.
The FNMA computer spits out the appropriate form.

I've had requests where I will call the LO and say,
boy, are you sure, I mean this thing is a condo on
leased land. Its hard to argue with FNMA. Then I
usually do the report again as a full 1004. By the
time its all straightened out the person has lost his
first lock, maybe his second, maybe switched lenders,
and then I usually get to do an update.

I have a local mortgage broker who always orders
1004s because its not worth saving the borrower
$50 for all the frustration of jumping from form to form.

go figure

elliott
 

Randy Beigh

Senior Member
Joined
Jan 16, 2002
William

I agree with Verne. If you feel comfortable doing ABC Address on the 2055, then it is okay. Otherwise, upgrade it, do it on the 1004, or cancel it. But, I wouldn't do it on a form that I feel is inappropriate for the assignment.
 

Bill_FL

Senior Member
Joined
Aug 23, 2002
Professional Status
Certified General Appraiser
State
Florida
Ladies and Gentleman,

Is this not pretty basic? We do not allow an underwriter or computer to determine the level of analysis or the reporting format. That is a request they can make, and if the property fits into the type they want, fine. If not, it is our duty to tell them and complete the appropriate type/level appraisal.

In some cases, those of you in areas where cookie cutters are $750K, no big deal. For those in areas where $750k is a pink elephant, a 2055 probably wont work and you willhave to do what is needed.

I get those request all the time. When I find out that the property wont fit neatly in their desired format, I usually tell them that the type of appraisal they have requested will not do the property justice and will likely cause many underwriting questions and concerns down the line. Since I charge extra to answer dumb questions, why not just let me do a full appraisal now?

Worked every time so far.
 

Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
Points very well taken. But what is the lending biz coming to when they order a 1.7 Million (estimate) appraisal on a 2055. It isn't a typical even in the county ordered, which has the highest per capita income in the state of TN. It seems to me that lenders are getting out of control, possibly.

I do realize we should quote a fee appropriate to complete an accurate appraisal. But 1.7 mill on a crummy 1 page report seems to be out of hand to me. Not on our part, but on lending institutions part and even FNMA.

Your current input is excellent. More imput is appreciated.
 
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