Apple Appraisal Blog

Yesterday, on April 1, 2009, the 1004 MC became a required addition to all appraisals. This includes single family, condo and 2-4 unit appraisals.

The Market Conditions Addendum (Form 1004MC) is designed to enhance the transparency of the market trends and conditions conclusions made by the appraiser. This requirement applies to loans delivered to Fannie Mae, however, even on loans not intended for delivery to FNMA, many lenders and investors are requiring it. This form is now a requirement on all FHA appraisals as well.

Check with your lenders and investors for thier requirements regarding this form.

Apple Appraisal will include this form on all appraisals only if the person that orders it, requests it.

Be careful, because if you have to order it as a condition, the fee for the form is $75, as opposed to $50 if you order it up front, with the appraisal.

As always, we are here to help make the appraisal process smooth in these turbulent times.

Apple Appraisal does appraisals in CA, AZ and WA. Shoot us an email for fees and turnaround times.

Dennis and Went to the East Bay CAMB Marketplace event at Crow Canyon Country Club yesterday. It was pretty well attended. We saw lots of old faces now in new places. Several that had gone from wholesale to retail. Our question of the day revolved around the HVCC. "What has your company done to prepare?" Surprisingly little has been done by lenders to prepare for this. I think part of the problem is the huge amount of speculation and flat out dis-information. Lets face it, the HVCC is one of the most poorly written documents I've seen in a long time. And it impacts so many people, all the way from the consumer to the investor on the secondary market. But, we have to live with it. I don't think the NAMB lawsuit is going to stop it. Maybe it will slow it, but it won't stop it. The best we can do as industry participants is educate ourselves about it. To that end, I'm reposting a portion of a document created by the Appraisal Instute about Myths and Realities of the HVCC.

MYTHS AND REALITIES OF THE HVCC

Reality: Use of appraisal management companies is not required under the Home Valuation Code of Conduct (HVCC). Lenders may engage appraisers directly without the use of third parties.

Myth: Mortgage sellers cannot achieve compliance without outsourcing the appraisal function.

Reality: Sellers may achieve compliance by establishing meaningful risk management practices, including separation between risk management (appraisal) and loan production. The Code requires that loan production staff not be involved in ordering the appraisal. This separation is currently required under existing federal bank regulation.

Myth: "Loan Correspondents" or "correspondent lenders" are the same as mortgage brokers and they too cannot order appraisals.

Reality: Unlike mortgage brokers, loan correspondents fund loans in their own name and, therefore, have "skin in the game." They are allowed to order appraisals on loans sold to Fannie Mae and Freddie Mac like other sellers that fund loans in their own name or with their own funds. Mortgage brokers no longer will be able to engage real estate appraisers directly.

Myth: Sellers cannot maintain the appraisal function internally (as an in-house operation), without loan production involvement.

Reality: There are several ways in which sellers may staff appraisal functions internally without outsourcing the function to a third party, so long as they maintain separation between risk management functions and loan production staff. To achieve compliance the appraisal function should report to an individual or department outside of loan production. Some examples of eligible individuals or entities within institutions include, but are not limited to, the following:

As someone that does a lot of reviews, I see some interesting appraisals come across my desk. Some give me pause to wonder. And some just give me pause.

One issue that has come up more and more of late, is appraisers not being licensed to appraise the property in question.

Specifically, I’m speaking to the license limitations of a “Licensed” or “Residential” appraiser.

Here in California, we have 4 licensing levels. Other states have similar licensing, however, the designations may differ.

· AT-Trainee Appraiser-Can appraise any property the supervising appraiser is licensed to appraise.

· AL-Residential Appraiser-Can appraise any “NON-COMPLEX” 1-4 family property with a transaction value up to $1,000,000

· AR-Certified Residential-Can appraise any 1-4 family property without regard to transaction value

· AG-Certified General-Can appraise all real estate without regard to transaction value or complexity.

The sticking point that I see is the “NON-COMPLEX” issue. Many AL or "Residential Appraisers" here in CA, appraise complex properties as a part of their regular business.

Can you say “Vague”?

I called my state office of real estate appraisers and spoke to an investigator about this issue.

While I didn’t ask them to go on record or put it in writing, I was told the CA OREA considers examples of “complex” to be anything that has

· Functional Obsolescence

· External Obsolescence

· Acreage

· Views

That takes a whole lot of properties out of the pool of homes a residential appraiser, or AL level appraiser, here in CA, can appraise.

I recently did a field review of an appraisal on a home that was a lakefront property, on a few acres of steeply sloping property, in an area where there are very few similar sales and the few that there are, were up to 26 miles away, by road.

OK, now that is definitely complex by anyone’s standard. Even the appraiser admitted it was very complex when I called her. The problem I had with the appraisal is that she is an AL or residential appraisal, as is her supervisor, that signed on the URAR.

When I asked her why she completed an admittedly complex appraisal that is outside the scope of her license, she had a few reasons.

· She has appraised these types of properties in the past

· She thought she was competent to do the appraisal

· She didn’t realize it was so complex until she inspected the property

· She didn’t know the definition of complex

· No one ever said anything to her before about doing homes like this.

These are all well and good, but unfortunately, none flies with USPAP.

Unfortunately, it seems that the CA OREA doesn’t prosecute this offense, specifically, because, as the investigator told me, the definition of complex is too vague and in an investigation, there are usually many other issues. The policy does have a negative impact on the Certified Residential appraisers who all worked so hard for their AR licenses, because they lose business when an AL does a complex appraisal. It should be noted that other states may prosecute this offense.

When an AL level appraiser, or residential appraiser completes a complex appraisal, even if the value is fine and there are no issues in the appraisal itself, it can put you, the originator or the lender at risk of a buyback, or at the least, some heartache in dealing with a lender/investor looking for ANY reason to get satisfaction from SOMEONE on a defaulted loan. Residential appraisers are not likely to turn away work in this market just because a home has a view or a pool causing functional obsolescence. It is incumbent on us, as appraisers, to police ourselves and follow state and federal law.

But let's face it, that doesn't always happen the way it should.

If you are a loan originator, here are some tips to remember whn ordering an appraisal.

· If the property is unusual in any way for the area, make sure you order your appraisal from an "AR" or "Certified" level appraiser.

If the property is on a busy street, is "over-built" for the area, has really nice views, etc, make sure you order your appraisal from an "AR" or "Certified" level appraiser. 

You can limit any potential liability from an investor requiring a buy back by ordering complex appraisals with an AR level appraiser.

Yes, I know it's a long shot that would happen, but why risk it?

Ordering your appraisals with Apple Appraisal, Inc. eliminates that risk. We have several AR level appraisers and our AL appraisers do not do complex assignments without the proper supervision.

With Apple Appraisal, Inc, you can be sure the right person is doing your appraisal.

Because it matters to you and it matters to us.

·Anthony Blackburn is a Certified Residential Appraiser in Martinez, CA and one of the co-owners of Apple Appraisal, Inc..

Anthony Blackburn wrote this article for the AppraisalScoop.com blog, one of the most populatr appraisal blogs on the internet.

June 06, 2008

It's that time of the month again.....THE END!

That's when you need your review company to come through with fast service and the value you can count on!

One of our more popular requests is the Three Hour Desk Review...

Your review is guaranteed back to you within three hours. What could be easier?

A/E's...if you would like to have your inside staff get desk reviews for your broker's done faster, forward this to your Underwriter, Account Manager or Ops. Manager and have them contact us!

Our 24 HOUR FIELD REVIEW is popular too! Be sure to ask for it by name on your order!

Don't let those big AMC's drive you... ....Apple Appraisal can beat them on service and quality every time!

You can place your orders online at www.appleappraisalinc.com or fax them to (925) 313-5919.

Or simply call Staci Eisenbarth at (925) 313-5900.

Apple Appraisal, Inc.

Residential and Commercial
Appraisals and Reviews

Serving Northern and Southern CA, Las Vegas and Denver

www.appleappraisalinc.com

www.applestats.com

Here are some tips to make ordering more efficient..

When placing your orders online, attach the original appraisal as a PDF file. The "Direct-Fax" service is a little buggy, IMHO. Attaching PDF's of the original appraisal works much better.

When ordering a review, always indicate, as appropriate, at the bottom of the order, in the comment section, that you need a:

• Enhanced Desk
• 3 Hour Desk
• Enhanced 3 Hour Desk
• Enhanced Field

OK, now, I know this one is nit-picky, but I was trained, many years ago, in a galaxy far, far away, by an English Major, so this is near and dear to me....

Please use proper capitalizaion when placing an order.

I can hear the moaning and groaning from here...."Who does he think he is? An English Teacher?"

Really, the issue is that we have to re-type the data in the order if It's not propertly capatilized, so It will save us a little re-typing.

If you aren't using our new online ordering system....It's EASY!!!! And it makes us more eficient and we get our reviews done faster...;) Email Tony at ablackburn@goapple.com and he will walk you through your first order.

I'll be sending out customer service forms in a few days for you to give us feedback on.

Til then......:)

To see the latest statistics on housing prices in selected market areas of California, please go to

Apple Appraisal, Inc. as a service to those in the real estate community, that find such data useful.

Apple Appraisal, Inc. is a full service real estate valuation company serving most California Markets.

You can place an order at www.appleappraisalinc.com

If you find the AppleStats website interesting or useful, you can thank us by ordering an appraisal or review or recommending us to a colleague.

This just came down from our licensing gods…As you probably know, “USPAP” that they refer to in the paragraph below is the rules and regs that we as appraisers must abide by, by law, State and Federal. This pretty much means that an appraiser (or reviewer for that matter) that incorrectly reports market conditions can have their license sanctioned or yanked by the State.

Checking “Stable” vs. “Declining”

Question: When performing residential appraisal assignments I use
“standard” preprinted appraisal software forms. The forms ask me to
identify whether neighborhood property values are “increasing,” “stable,” or “declining.” I have been told that lenders won’t accept appraisal reports where “declining” is checked (even when this is an accurate analysis), so I usually check “stable” to accommodate the underwriting process. Is this a violation of USPAP?

Response: Yes. If the appraiser is aware that a market is declining and
intentionally reports it otherwise, he or she is in violation of the
ETHICS RULE. If an appraisal report indicates that property values are
“stable” when they are actually declining and the appraiser’s data
supports the conclusion of declining values, the report is misleading and in violation of Standards Rule 2-1(a). In addition, if the appraiser does not properly recognize that a market is declining, he or she may also be in violation of other requirements in STANDARD 1, as well as the
COMPETENCY RULE.

To see the latest statistics on housing prices in selected market areas of California, please go to www.applestats.com

WWW.applestats.com is a website maintained by Apple Appraisal, Inc. as a service to those in the real estate community, that find such data useful.

Apple Appraisal, Inc. is a full service real estate valuation company serving most California Markets.

You can place an order for an appraisal or a review at http://www.goapple.com/order_form.htm

You can find out more about our company at www.goapple.com

If you find the AppleStats website interesting or useful, you can thank us by ordering an appraisal or review or recommending us to a colleague.

Thanks

Apple Appraisal, Inc.

Residential and Commercial
Appraisals and Reviews

Serving Northern and Southern CA

www.goapple.com

www.applestats.com

(925) 313 -5900
Mailing Address: 811A Ferry Street, Martinez, CA 94553