Unacceptable Appraisal Practices from Freddie Mac

12 Unacceptable Appraisal Practices from Freddie Mac

10-5-22

 

 

Here are 5:

  • Reliance in any appraisal analysis on inappropriate comparable sales, or the failure to use comparable sales that are more similar to or nearer to the subject property without adequate explanation
  • Use of unsupported or subjective terms to assess or rate, such as, but not limited to, “high,” “low,” “good,” “bad,” “fair,” “poor,” “strong,” “weak,” “rapid,” “slow,” “fast” or “average” without providing a foundation for analysis and contextual information
  • Use of comparable sales data provided by interested parties to the transaction without verification by a disinterested party
  • The use of inordinate adjustments for differences between the subject property and the comparable sales that do not reflect the market’s reaction to such differences, or the failure to make proper adjustments when they are clearly necessary
  • Development of value and/or marketability conclusions that are not supported by available market data

To read more, click here

My comments: From Freddie Mac’s Selling Guide with links to more information. Nothing new, but good reminders.

Review appraiser liability

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on barndominiums, liability, declining prices, non-lender marketing, Freddie bad appraisal practices, unusual homes, mortgage origination stats, etc.

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Appraisers: What should you have in your car?

Appraisers: What should you have in your car?

Excerpt: Here are a few items:

  • Screwdriver: A screwdriver has many uses. You can use it to take the cover off a crawl space entry panel, check wooden structural members for rot or insect damage, remove an electrical outlet cover to check for insulation in the walls, etc.
  • Voltage detector: To determine whether wires are live.
  • Ice pick: To check for termites or wood rot.
  • Magnet: To determine whether old pipes are made of iron or lead.
  • Mace or pepper spray: To defend yourself, especially if you’re appraising REO and foreclosure properties.
  • Bug spray: To protect yourself from mosquito bites, ticks, etc.
  • Spare clothes and footwear: Including an extra coat or jacket, hat, and boots—especially if you work in rural areas.

To read more, click here

My comments: Good tips! I definitely need to add some of the items to my car, especially dog repellent, which is not on the list. I have been bitten by dogs. I left the homes and contacted the lender. Don’t know if they got their loan and did not care. Once two large Dobermann dogs broke down a trailer door. I barely got into my car in time.

This was originally posted on McKissock’s Appraisal Blog, but that link was not working.

Appraisers – The Past and The Future

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NOTE: Please scroll down to read the other topics in this long blog post on AMCs, appraisal business, real estate market, unusual homes, mortgage origination stats, etc.

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Reconsideration of Value and Appraisers

How to Respond to ROV Requests: Updated Guidance

By Greg Stephens, SRA, AI-RRS

Excerpts: Suggested protocols for responding to Reconsideration of Value requests

When you receive an ROV request, some recommended steps to take include:

1. Maintain USPAP compliance – Confirm the ROV request came from your client, either directly or through the client’s AMC, acting as an agent for the client, or other party designated as an agent by the client. The importance of this cannot be overstated. Appraisers are still required to comply with USPAP when responding to an ROV request, including the confidential nature of assignment results.

2. Identify ROV content to determine next steps – take the time to analyze the content of the ROV to determine what specifically is being requested of you (the appraiser) and what level of information will be needed to respond to the requestor of the ROV. This is an opportune time to maintain a professional demeanor and not react to an ROV request as if it is an affront to your competency or experience. After receiving an ROV request, send an acknowledgement of receipt and advise the client that the ROV request will be analyzed and responded to in a timely manner.

To read more, click here

Click here to listen to Tim Andersen, MAI’s podcast, “Reconsiderations of Value: Satan’s Own Seed, Right?” (Podcast 9.5 minutes) on ROVs, included in a 12-21 issue of this newsletter, so it may look familiar to you.

My comments: ROVs are a PITA for many appraisers. Very well written and practical. Greg Stephens is a very experienced appraiser and reviewer. He worked in management positions for several large AMCs.

Reconsideration of Appraised Value

Appraisal Business Tips 

Humor for Appraisers

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To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on Value Reconciliation, non-lender appraisals, liabililty, USPAP, unusual homes, mortgage origination stats, etc.

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VA Approves Desktops and Exterior-Only Appraisals

VA Approves Desktops and Exterior-Only Appraisals

Excerpts from the Summary: On August 1, 2022, the Veterans Affairs released Circular 26-22-13 announcing new procedures for alternative valuation methods, effective immediately.

“The use of a Desktop Appraisal may allow an appraiser from outside the market area, but with appropriate credentials for the jurisdiction of the property, to complete the assignment when no local VA fee panel appraiser is available.”

“Appraisal Assignment Waterfall. With consideration for the high demand for appraisal services and limited availability of appraisers in certain local market areas, VA is providing lenders, servicers, and appraisers with a procedural waterfall that clarifies acceptable valuation methods when certain conditions exist. Lenders and appraisers can also refer to Exhibit A for more information. VA continues to explore opportunities for expanding the use of Exterior-only Appraisals and Desktop Appraisals and will update this procedural waterfall, as appropriate.”

To read the full blog post, click here

The summary and Circular are in the blog post.

To read more about the May 2022 proposal to eliminate the fee panel, click here 

I wrote about the VA in my July 8 email newsletter. To read it, click here

My comments: The big push to cut down on appraisal turn times because of the appraisal shortage is Very Old News since mortgage volume has plummeted. I always recommend VA as the best lender client for appraisers. I wrote about it in the past and interviewed VA employees, appraisers on the VA panel, and appraisers who did not want to do VA appraisals in my paid monthly newsletter.

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Where VA loans are soaring. Are you doing VA appraisals?

Appraisal Business Tips 

Humor for Appraisers

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VA Appraisals and Fee Appraisers

V.A. as a Model for Appraisals

by Isaac Peck

Excerpts:

Step Above the Rest

It’s not a secret that being on the V.A. appraiser roster is a coveted position for most residential appraisers. So, what exactly makes the V.A. so special?

Rocha (V.A. appraiser) says the V.A. is a step above the rest primarily because of the following criteria.

V.A. wants a good quality panel

V.A. pays higher appraisal fees

V.A. delivers fast turn times to veterans

V.A. doesn’t use Appraisal Management Companies (AMCs)

V.A. has a program that encourages the use of trainees

V.A.’s Tidewater Program is fair to all sides

Fees, Turn Time, and Quality

The first four criteria are certainly related and are worth examining together. For starters, the fact that the V.A. does not use AMCs allows them to pay more directly to the appraiser, according to Rocha. “Instead of AMCs, the V.A. has a Portal which is really streamlined and easy for stakeholders to use. We can communicate in that Portal and it sends it out to all parties and keeps everyone in close communication,” says Rocha.

To read more, click here

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Proposal to Eliminate the V.A. Fee Panel

Excerpt: On May 1,8, 2022 the Subcommittee on Economic Opportunity held a legislative hearing on the Discussion Draft of H.R. 7735, Improving Access to the V.A. Home Loan Act of 2022… It would require the V.A. to consider when an appraisal is unnecessary and when a desktop appraisal should be used and, a move from the V.A. Fee Panel to a lender select program. Mortgage Bankers Association advocated for the proposal. Appraisal Institute opposed it.

To read more, click here

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My comments: V.A. is the best lender client for appraisers. You are working for the veteran to be sure they do not overpay, find out about problems, etc. You are not working for a lender who just wants to make the loan.

Where VA loans are soaring. Are you doing VA appraisals?

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on No more floor plans?, non-lender appraisals, hurricane with and surge risks, unusual homes, mortgage origination stats, etc.

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