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USPAP (Uniform Standards of Professional Appraisal Practice) are the regulations that appraisers must abide by when working in the capacity of an appraiser. These standards are updated every two years to remain current with the markets and government regulations. USPAP contains Frequently Asked Questions (FAQs) to help clarify the regulations.

My blog is intended to point out particular FAQs to help explain why appraisers do what they do and help educate the public. The following is directly from 2012-2013 USPAP. The full book can be found at uspap.org.

FAQ17

Question: I occasionally receive requests to appraise a property that I have appraised in the past. Since the ETHICS RULE requires me to disclose any assignments that I performed within the three years prior to the date of acceptance of the assignment, isn’t such a disclosure a violation of an appraiser’s responsibility under the Confidentiality section of the ETHICS RULE?

Response: Generally, no. The Confidentiality section of the ETHICS RULE prohibits, with some exceptions, the disclosure of “confidential information or assignment results prepared for a client.” The mere fact that an appraiser appraised a property is not confidential information as defined in USPAP. However, the appraiser must be careful not to disclose confidential information from a previous assignment in the new assignment.

My comment: I think this is an important rule for client’s to know. Especially when the client is an individual. Although the confidential information cannot be released, some client’s do not want others to know that an appraisal was done on a particular property. For instance; an investor can hire an appraiser to appraise a property they are interested in without the homeowner knowing. (An appraisal does not always involve an onsite inspection.)

A homeowner can have an appraisal on their property for a divorce without the spouse knowing but the same appraiser may be hired by the spouse for the same reason. In this case the appraiser would have to disclose the fact that a previous appraisal was done on this property by the same appraiser.

USPAP (Uniform Standards of Professional Appraisal Practice) are the regulations that appraisers must abide by when working in the capacity of an appraiser. These standards are updated every two years to remain current with the markets and government regulations. USPAP contains Frequently Asked Questions (FAQs) to help clarify the regulations.

My blog is intended to point out particular FAQs to help explain why appraisers do what they do and help educate the public. The following is directly from 2012-2013 USPAP. The full book can be found at uspap.org.

FAQ149

Question: An appraiser completed an appraisal for Client A. Client B received a copy of the appraisal from Client A (or the borrower) and finds it acceptable for their purposes, but wants to be identified as the client in the appraisal report. Client B is aware that appraisers are prohibited from readdressing (or transferring) a completed report to a different client's name. As a result, Client B would like to engage the appraiser in a new assignment, limiting the appraiser’s scope of work to only identifying them as the new client. Can the appraiser complete the assignment from Client B under these terms?

Response: No. USPAP requires the scope of work performed to produce credible assignment results. USPAP clearly establishes that the scope of work is determined by the appraiser. If a client’s instructions (i.e., assignment conditions) limit the appraiser’s scope of work in a new assignment to simply identify a new client, the client, not the appraiser, has made the scope of work decision.

In addition, even if the appraiser accepted the client’s proposed scope of work as his or her own, that scope of work may not be adequate to produce credible assignment results as required by USPAP.

As is the case with all assignments, when a client’s assignment conditions are too restrictive to produce credible assignment results, an appraiser must decline or withdraw from an assignment, unless the appraiser can modify those assignment conditions to allow for credible assignment results.

Have you ever wondered how you can make a difference?  With all the problems going on in the world right now, where do you start?  I was just reading about a way that you can earn rewards for something that you are probably already doing.  TFC Recycling is our major recycling company here in Hampton Roads.  They have created a subsidiary called Recycling Perks.  It is currently offered in Chesapeake and Suffolk.  They are focusing on Norfolk and Virginia Beach next.  Even if the program isn’t offered where you reside you can sign up for an account so you are ready when the program comes to your area.  Go to WWW.RecyclingPerks.com and open an account.  When your recyclables are picked up they are weighed.  Points are earned by participation and weight for acceptable items.  Local businesses participate by offering discounts as part of the rewards program.  Participants can cash in their points for the rewards and enjoy the services of local businesses.  It couldn’t be easier to earn discounts to local businesses for something that you are already doing.  The big picture is that by participating in the program you are helping to save the planet by reducing waste in landfills.  You are saving your city money and in turn you are saving taxes, by the cities reducing the amount of waste going to the landfills. Lastly, you are helping local businesses by using their services and in turn you are helping the local economy.  So I encourage you to participate today by signing up for an account, even if they are not servicing your area, you will receive notices from Recycle Perks about the program and when they plan to be in your area.  If you are a local businesses owner I encourage you to join the rewards program and offer discounts for your services.  This is great exposure to your company and shows that you care about our environment.

On July 21, 2010, President Obama signed H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act, into law. The reform bill is recognized for the Wall Street and government regulatory oversight as well as appraiser independence. Under appraiser independence the bill requires that “reasonable and customary” fees be paid to appraisers to reflect what an appraiser would typically earn for an assignment absent the involvement of an appraisal management company (AMC). AMCs that violate “customary and reasonable” requirements will be subject to serve penalties under the Truth in Lending Act. Although the “customary and reasonable” fee provision went into effect on October 19, 2010 it will be enforced as of April 1, 2011. The penalties for violation the new Truth in Lending Act provision created by the Dodd-Frank Act are as such:

• 1^st offense – fine up to $10,000/day per violation
• Subsequent violations – fine up to $20,000 for each day that a violation occurs

Example:

A lender and their agent (AMC) has failed to pay an appraiser a customary and reasonable fee for 10 assignments. The AMC may be charged with a single, first offense and could be subject to a civil penalty of up to $100,000. However, if the same AMC subsequently does not pay another appraiser a customary and reasonable fee for 20 assignments, then the AMC could be charged, as a subsequent offender and could be fined up to $400,000.

The bill states that evidence for customary and reasonable fees may be established by objective third-party information, such as government agency fee schedules, academic studies, and independent private sector surveys. Fee studies shall exclude assignments ordered by known appraisal management companies. Assignments from AMCs would not appear to be considered evidence of customary and reasonable fees. For the Hampton Roads area of Virginia, the following customary and reasonable fees have been reported:

· The Veterans Affairs Regional Loan Centers published fee schedule

o SFR/Condo - $400

o 2-4 Family - $550

o Re-Inspection - $75

· Mercury Network by a la mode Appraisal Fee Reference

o SFR – median fee - $400

· Working RE survey

o SFR/Condo Fannie/Freddie - $351-450

o SFR FHA - $401-$450

**The Mercury Network is a Vendor Management Platform that allows lenders and AMCs to manage their appraisal orders. The appraiser fees on the network are set up by the individual appraisers and should be a reflection of their customary and reasonable fees.

**Working RE is a publication created by the Organization of Real Estate Professionals, an E&O insurance company. Their data is from a survey taken by individual appraisers.

The Truth in Lending Interim Final Rule states that a document signed by a fee appraiser indicating that the appraiser agrees that the fee paid to the appraiser is ‘‘customary and reasonable’’ does not by itself create a presumption of compliance or otherwise satisfy the requirement to compensate a fee appraiser at a customary and reasonable rate. In the Board’s view, a fee appraiser’s agreement that a fee is ‘‘customary and reasonable’’ is insufficient to establish that the fee meets the statutory ‘‘customary and reasonable’’ standard.

I am constantly being asked my opinion when the mortgage market is going to turn around.  My opinion is no less than 2-3 years.  We have not seen the end of the ARM resets and with never ending layoffs more people are going into default.  As I drive around Hampton Roads I see more empty store fronts.  What is happening with these people who have been paid off?  Are they able to find jobs right away?  All these factors affect the real estate industry.

The 2011 Midwinter Housing Finance Conference was recently held in Utah.  The Federal Reserve Governor Sarah Bloom Raskin stated that the residential mortgage market will not rebound until loan servicing practices at large financial institutions improve.  According to Raskin, deficiencies in how loans are serviced are impairing the mortgage markets and diminishing "overall accountability to homeowners.”

To help move the housing market forward, Raskin advised that servicers should consider proprietary modifications, short sales and deeds-in-lieu-of-foreclosure for loans that do not qualify for modifications under the Treasury Department’s Home Affordable Mortgage Program.  "These actions will have a far-reaching positive impact: A lower inventory of distressed properties for sale results in higher house prices, which leads to a healthier pace of recovery in the housing market and the broader economy," Raskin said.

Raskin noted that a shift toward servicing-focused business models will be difficult for large financial institutions that have run their servicing divisions on lean budgets.  "Until these operational problems are addressed once and for all, the foreclosure crisis will continue and the housing sector will languish," Raskin said.

Fannie Mae has come out with a great website for those homeowners who need help with their mortgages.  This is an easy to use site full of great information!  It shows the options a homeowner has and how to pursue them.  Check it out and pass it on!

www.knowyouroptions.com

I read this blog on ActiveRain and am passing it on. The HVCC affects more than just appraisers....  read on

http://activerain.com/blogsview/1701807/could-new-home-appraisal-rules-get-scrapped-- 

Mortgagee Letter 09-28 discusses appraiser independence and appraiser fees.  This letter requires FHA approved lenders to ensure that all parties to the appraisal process; appraisers, AMC’s or other third parties, are compensated at rates that are customary and reasonable and are commensurate with the level of the respective service provided.  What does customary and reasonable mean?  This can be interpreted differently by anyone reading the letter.  HUD responds with this:

    "Customary and reasonable appraisal fees are reflective of those fees established and negotiated by an FHA approved self employed independent fee appraiser or an appraisal firm that may directly employ FHA approved roster appraisers or retain FHA approved roster appraisers as independent contractors, for appraisal services rendered, regardless of whether a lender, AMC or a 3^rd party company or vendor is ordering/requesting appraisal services. The fee charged must be commensurate with the level of services provided and should reflect the amount of research, level of difficulty, and due diligence required on the appraiser’s part to produce a credible, reliable and accurate appraisal report that is in compliance with all FHA guidelines and USPAP."

The customary appraisal fees in the Hampton Roads market is between $350 and $400 for a single family appraisal.  This is far from the $150 to $250 that AMC's want to pay for FHA appraisals.  So when is FHA going to enforce this guideline that they set?  They are quick to enforce the guidelines having to do with writing the reports and our analysis.  I sure hope the FHA backs us appraisers on this and does it quickly.  We can't keep working at these low fees.  I hate to keep harping on this subject but it is tough times right now.  Our educational requirements and licensing requirements have increased as well as what we are required to include in the report, which means we are investing more time in each assignment and our pay is decreasing.  We need help and we need it soon!  I have bills I need to pay and we are losing good appraisers.

The following is a position available with First American, an AMC (Appraisal Managament Company).  I have copied it directly from their website.  It can be viewed at http://jobs.firstam.com/jobs/205840-Appraisal-Coordinator.aspx.

Note the priorities listed in the ad....  The areas bolded are my emphasis.  The comments in red are mine as well.

First America  - Bloomington, MN
Tuesday, February 02, 2010

The Information Solutions Group, a division of The First American Corporation (NYSE:FAF), is the largest collector and provider of real estate information used by businesses to value, locate, and analyze properties across the United States. With the world's most comprehensive database of real estate information and property characteristics, our companies transform complex data gathered from thousands of public records and private sources into meaningful business information used by mortgage lenders, title companies, government agencies, legal firms, and others. For more information, please visit our website www.firstam.com. If you are looking for a growth-oriented, financially stable company that's been in business since 1889, please consider our opportunity.

POSITION SUMMARY:

Processing Analysts are responsible for the timely and accurate placement of all Conventional and FHA orders within 24 hours of their receipt. Proper placement is ensured by the PA’s analysis of the appraisers available and selection of one that meets the company standard turnaround time, profitability requirements, and quality standards. (quality standards is last in this list, after turn time and profitability) Complete and concise documentation, as well as clear communication to all parties, is required on all files.

ESSENTIAL FUNCTIONS:

• Appraisal Management functions including answering incoming calls, placing of FHA and Conventional orders, telephone contact with the customer as needed, managing your assigned branch in box and other duties as assigned. These responsibilities may be changed from time to time as appropriate.

• Placing orders. Focusing on rushes, orders on Hold, Finals and orders over 48 hours old first. Order Placement standards are as follows: Conventional – Placed with in 2 hours of activation, FHA – Placed with in 4 business hours, Declines – Reassigned same day, and Holds – Followed up on daily until resolved. The goal is to have 92% of all orders placed with in 24 hours. Each PA will be responsible for calling on any non accepted orders within their area along with placement of new orders.

• Assuring vendor acceptance of the Quantrix Valuation standard turn around time of 5 business days.

• If an appraiser requests a higher fee or longer tat, the PA is expected to get a minimum of 2 other quotes (for a total of 3) in order to determine the best appraiser (lowest fee) option for each order

• After eliminating all reasonable options in VOM (by checking previous orders in the subject area and checking the vendor coverage detail report) a One Time Vendor can be used, check www.yahoo.com or the other web-sites given.

• Shorten turn around times by establishing a good flow of communication with our appraisers, keeping in contact with both the appraiser and lender to accomplish this goal.

• Holds – When the reason a hold was requested is out of the appraiser’s control, place the order on hold and contact the client to update them and-or request needed information.

• Fees – Products have a standard flat fee regardless of what state the property is located in on all properties up to 1 million dollar or 1.5 million dollars dependent on business line. For this reason it is important for PAs to attempt to place the order to an appraiser with the lowest fee to maintain our profitability. On orders over 1 million dollars the PA is to obtain 3 fee quotes from 3 different offices before assigning the order. In situations where we must use a one time vendor or fee appraiser the PA will need to check as many options as possible to obtain the lowest fee.

• The use of fee appraisers should be limited unless determined to be the best option

• Documentation Habits – ways to improve
o Use the correct abbreviations and acronyms.
o Be clear and concise.
o Do not over abbreviate.
o Do not abbreviate when downloading notes to the client.
o Record the name of the person with whom you spoke.
o Record the person’s position.
o Do not use one or two word follow-ups.
o Record the reason for a fee increase request.
Job Qualifications EDUCATION, EXPERIENCE AND SKILLS:

To perform this position successfully, an individual must be able to perform each function satisfactorily. The requirements listed below represent minimum levels of knowledge, skills and/or necessary abilities. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

REQUIRED:

• High School diploma or equivalent
• Strong analytical and problem resolution skills.
• Ability to be creative regarding current processes and future improvements.
• Demonstrated ability to work independently and meet multiple goals and deadlines.
• Effective time management and organizational skills.
• Proven ability in building, nurturing, and protecting customer relationships.
• Excellent oral, written, analytical and interpersonal communication skills.
• Professional demeanor.

PREFERRED:

• Proficient computer skills in Window-based software products such as Word, Access, Excel, Email and Power Point.
• 2-4 year college degree or equivalent relevant experience in the customer service field.

First American offers an empowered work environment that encourages creativity, initiative and professional growth. Our competitive salary and benefits package includes:

• Health, dental and vision care
• 401(k) retirement savings plan including a company match tied to profitability
• Long-term disability insurance
• Short-term disability insurance
• Discount stock purchase program
• Tuition assistance program
• Title and escrow fee reimbursement program
• Company credit union
First American Corporation is an Equal Employment Opportunity/Affirmative Action Employer and maintains a Drug-Free Workplace.
% of Travel Required None
NOTICE: Individual is responsible to adhere to First American Corporation’s and department’s compliance and information security policies, practices, and procedures, including the handling of systems and data, in the performance of the role.