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.
Anthony Blackburn, of Apple Appraisal, Inc., in Martinez, CA responded recently to a WinTOTAL Users Group forum question about common errors with FHA appraisals. The following was his response. At the bottom of this blog post is a "bookmarked" pdf highlighting the references to his list.
"I'm reviewing a batch of about 25 reverse mortgage appraisals, post funding. Not a single one complies will all of HUD's guidelines!"
Most commonly, the reports that I review fail to:
Download 41502appdHSGH.pdf - This appendix to HUD's 4150.2 has been bookmarked to correspond to the list above. Thanks to Anthony Blackburn, of Apple Appraisal, Inc., of Martinez, CA for compiling and sharing this list!
Download 41502appdHSGH.pdf - This appendix to HUD's 4150.2 has been bookmarked to correspond to the list above.
Thanks to Anthony Blackburn, of Apple Appraisal, Inc., of Martinez, CA for compiling and sharing this list!
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.
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 CommercialAppraisals and Reviews
Serving Northern and Southern CA, Las Vegas and Denverwww.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:
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......:)
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 toidentify 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 andintentionally reports it otherwise, he or she is in violation of theETHICS RULE. If an appraisal report indicates that property values are“stable” when they are actually declining and the appraiser’s datasupports 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 theCOMPETENCY 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.
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
Thanks
Serving Northern and Southern CAwww.goapple.com
(925) 313 -5900Mailing Address: 811A Ferry Street, Martinez, CA 94553
Here is some interesting info from PMI. They are attampting to predict what chances homes prices have of going down in markets across the US.
While we in the mortgage biz live in....ahem....interesting times....remember that there are pockets of positive valuations and price increases in some areas.
If you want more info on these areas, shoot me an email.....Now on to PMI's info.
Home prices in some of the nation's largest markets are poised for a fall, according to a study that says homes are overvalued in many cities. The PMI U.S. Market Risk Index report, released yesterday, named Boston, San Diego, Long Island, N.Y., Santa Ana, Calif., and Oakland, Calif., as the markets facing the biggest risk of a price correction. The index showed these markets have a more than 50% chance of experiencing price declines during the next two years. New York City ranked 14th, with a 33% chance . . . The markets facing the biggest potential correction are Los Angeles, Sacramento and Riverside, Calif., where prices are estimated to be overvalued by 33.7%, 31.3% and 30.7% respectively, the report said. New York City's prices are 16.3% overvalued, according to PMI.
Home prices in some of the nation's largest markets are poised for a fall, according to a study that says homes are overvalued in many cities.
The PMI U.S. Market Risk Index report, released yesterday, named Boston, San Diego, Long Island, N.Y., Santa Ana, Calif., and Oakland, Calif., as the markets facing the biggest risk of a price correction. The index showed these markets have a more than 50% chance of experiencing price declines during the next two years. New York City ranked 14th, with a 33% chance . . .
The markets facing the biggest potential correction are Los Angeles, Sacramento and Riverside, Calif., where prices are estimated to be overvalued by 33.7%, 31.3% and 30.7% respectively, the report said. New York City's prices are 16.3% overvalued, according to PMI.
Here's the methodology behind their calculations:
PMI calculated its Risk Index by tracking and comparing home-price appreciation, labor markets, employment levels, affordability and the percentage of monthly income that a mortgage takes up in each market. The Risk Index estimates the chances of a price correction of any size in the next two years. The Valuation Index, which the firm just introduced, is based on home-price appreciation, the cost of a 30-year fixed-rate mortgage and the public demand for housing in each market. This index offers a snapshot of how much a home is overpriced or undervalued in each market at this moment.
PMI calculated its Risk Index by tracking and comparing home-price appreciation, labor markets, employment levels, affordability and the percentage of monthly income that a mortgage takes up in each market. The Risk Index estimates the chances of a price correction of any size in the next two years.
The Valuation Index, which the firm just introduced, is based on home-price appreciation, the cost of a 30-year fixed-rate mortgage and the public demand for housing in each market. This index offers a snapshot of how much a home is overpriced or undervalued in each market at this moment.
Apple Appraisal, Inc. is a full service real estate valuation company serving most California Markets. We also serve AZ, CO and NV.
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