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New Form Comments for Fannie Mae (Read 4428 times)
Brian Duckering
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New Form Comments for Fannie Mae
Jun 11th, 2004, 4:00pm
 
We want Fannie Mae to hear from you. Please put all comments on Fannie Mae's new forms under this topic so that we can easily get this feedback back to them. Thanks - Bradford Technologies, Inc.
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Brian Duckering
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Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #1 - Jun 11th, 2004, 4:35pm
 
Brian Duckering wrote on Jun 11th, 2004, 4:00pm:
We want Fannie Mae to hear from you. Please put all comments on Fannie Mae's new forms under this topic so that we can easily get this feedback back to them. Thanks - Bradford Technologies, Inc.


Better late than never Brian...Is there any way you can move the old comments into here?  I suppose we could cut and past the whole page...LOL

Speaking of "NEW" forms, when will they become available for ClickFORMS?

Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #2 - Jun 13th, 2004, 6:37am
 
Bill Baughn wrote on Jun 3rd, 2004, 4:16pm:
So, just what do you put for floor coverings JD?

Bill Baughn


Bill, I answer the questions the forms ask. It states "Materials/Condition" so I describe the materials using meaningful abreviations followed by the description. Such as "CerTile,WWCpt/Gd-Avg." If it doesn't fit, it goes into an addendum. The question needs to be answered in a meaningful way.

There may be vinyl tile flooring in good condition, and it will likely still have less value in a market than average condition Satillo tile in nearly all the markets I deal with. It is important to provide a meaningful report. It is often seen as an error of commission NOT to clearly describe characteristics that are pertinent to a market. There are many appraisers having problems throughout the US right now for failing to be more specific.

Also, with regards to giving license not to include a cost approach, I'm sorry, but the cost approach is a most significant concept (substitution). It is also the FIRST place I look (specifically at land value) when seeing if an appraiser actually did an appraisal or backed into a value. It shows the appraiser's level of competence. Adjustments in the market grid are subjective, but the cost is NOT. I would say that of the 300+ reviews I did this year that were clearly and significantly inflated, my first clue was the Cost Approach. If I see a problem here, I know that some other items in the market analysis are going to be in error , as well. For example, an appraiser overstates land value by 100% to "back into" a value. Well, right away, I know the appraiser has already committed a violation, then when I get into the Market Analysis, I see site adjustments based purely on size that are unsubstantiated, guess what we have...fraud!

I know, people think that the cost approach has no relevance on older homes: BS - even in histrical market areas, a properly performed Cost Analysis will be exceptionally accurate...it's just that most appraisers only know the "Age/Life" method for depreciation and only know extraction for land value rather than abstraction and allocation. Most don't even know the difference.

I'm not speaking of anyone here, but you all know what I mean. We see it every day. We on this forum are only a small percentage of the appraisers out there, and you must admit that most have no clue what they are doing. I think these new forms will simply make their lives easier, and require a lot of extra addendum from the rest of us, increasing our COSTS, while the clients will now argue lower fees because of the lower requirements.

The forms are a joke meant only to cut more of us out of the loop. It is easier to mine data, easier to to develope a database, and, soon, some of the FNMA products will be allowed to use the FNMA AVM only instead of an appraisal.

Of course, I don't care. I'm doing more and more reviews, probably do more field reviews alone than most appraisers do appraisals. These forms will keep me in business for a LONG time.

Heck, I was already informed by one large AMC that of the 800+ appraisers they have in Arizona, I'm the only one left with a "Good" rating.

Yes, these forms will certainly keep me in business! Adrianna, my daughter, is definitely going to a good school, now. Fannie Mae, keep 'em coming. I want to buy a new plane, as well.

JD
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John-David Biggers
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Greg Myers
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Re: New Form Comments for Fannie Mae
Reply #3 - Jun 13th, 2004, 9:01am
 
My strongest complaints about the new forms are the predefined purpose and intended user sections. While I understand FannieMae is only concerned with mortgage loans, it would be able to use the forms for more general purposes. The intended user section is far to broad and includes people and companies that I do not intend to have use my appraisals. I would much prefer a blank space to put appropriate information.

I agree with FannieMae that the cost and income approaches are often not applicable, but I do not like the word optional placed next to them and a blank for the value. At a minimum it should be a check box for applicable or not applicable. The cost and income approach are not optional for the appraiser. They can be optional for the client, who may order a limited appraisal, but not the appraiser.
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« Last Edit: Jun 13th, 2004, 1:33pm by Greg Myers »  
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Re: New Form Comments for Fannie Mae
Reply #4 - Jun 13th, 2004, 9:47am
 
Greg Myers wrote on Jun 13th, 2004, 9:01am:
My strongest complaints about the new forms are the predefined purpose and intended user sections. While I understand FannieMae is only concerned with mortgage loans, it would be able to use the forms for more general purposes. The intended user section is far to broad and includes people and companies that I do not intend to have use my appraisals. I would much prefer a blank space to put appropriate information.


Greg,

I strongly agree with your comments on the predefined purpose and intended user sections. Fannie Mae regularly hires appraisers to use this form for foreclosure appraisals, and others use the form for a multitude of purposes. Restricting the form to one purpose without providing some alternative is a bad idea.

USPAP requires that the appraiser "state the identity of the client and any intended users, by name or type." The new FNMA form simply states that the intended users "may include...." That is meaningless.

I agree that the form should have blank spaces for the purpose of the appraisal and intended users.

Thanks for catching that.

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Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #5 - Jun 13th, 2004, 1:52pm
 
JD,

There are just some markets where doing the cost approach just doesn't make any sense.  When properties start selling at rates of 20% to 300+% APR all logic goes out the window.  The problem isn't that we are running out of land to build on causing the prices to rise.  There are NO vacant land sales to justify the land value.  Personally I am happy to see the cost approach go bye byee.  It is long overdue...

Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #6 - Jun 13th, 2004, 3:09pm
 
Guess there must be a REAL SHORTAGE of land for values to increase 300%.

And we aren't supposed to "justify the value" of land: we are to develope an opinion of it. Direct land sales, abstraction, these are things which, if used properly, would help keep an inflated market and unscrupulous builders and Realtors in check.

No, we just play along, I suppose.

My background was always math and finance since I can remember. My doctorate is in macro-economics. It is amazing how real estate (and only in the past 6 years) is the only commodity ever known to man (and, again, only in the past few years) that has increased in value beyond supply and demand and economic growth rates.

Yes, I know all about the economic activities of Nevada. Given a project I was in charge of for a political campaign in the area, I'm probably more failiar with it than most Nevada residents. I also know of some of the very major concerns NOT BEING ADDRESSED with development.

Just because it is hard doesn't make in unnecessary. In fact, because it might be more difficult, maybe it's cause to raise your fees. But the principle of substitution is a compelling valuation model for residenatial and most commercial use.

In rare cases, such as the need to place antenae in a particular location, cost is meaningless. But we're dealing with use of land, there. In residenail settings, the use is the same anywhere: it is the surrounding area that dictates cost value of land and feasibility of residential use. "Location, Location, Location" use to mean something more than the name of a subdivision: now, we have all come unwitting accomplice to thinking otherwise and allowing others (and ourselves) to pay more for nothing more but a name. If WE APPRAISERS do our jobs with dilligence, we could have kept these things in check. Instead, we found ways to justify it an play along.

Anything to make it easier, I suppose.
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John-David Biggers
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Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #7 - Jun 13th, 2004, 10:09pm
 
AppraisalPro wrote on Jun 13th, 2004, 3:09pm:
Guess there must be a REAL SHORTAGE of land for values to increase 300%.


Values are increasing at an alarming rate because of stupid hardup buyers and greedy builders.  This is what started the frenzy but because of the builders, real estate agents (I won't say realtors cause that puts a limit to what agents might be involved) are getting to be just as bad inticing homeowners to sell their homes at highly inflated values.  The only thing I see stopping it is for the government to step in (I can't believe I said that) and raise interest rates up into double digits again.  At least that will put a crinkle in the number of buyers that can qualify for loans.  With less buyers, homes will stop increasing in value and level off.  Then when the number of buyers dry up, people will drop their asking prices down to a reasonable level to where more people can afford them again.  This market has nothing to do with bad appraisers.  All we do is try to interpute what the market is doing.  I believe the ones who are playing the game are those who make across the board time adjustments because they believe it is the right thing to do.  Rarely in todays market here in the Las Vegas Valley area do I appraise a home at the sales price or more with my opinion of value.  I would say more but I won't at this point.

Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #8 - Jun 14th, 2004, 8:00am
 
Greetings,

I was curious to see what was included in the old 1004 form but was omitted from the new test form. So, I did a quick comparison of two sections of these forms and came up with the following.

Items left out of the Description of Improvements section of the new form include:

* Exterior description: gutters and downspouts, window type, storm/screens

* Foundation: settlement, infestation

* Basement: walls, ceilings, floor, outside entry

* Insulation: all items

* Rooms: all items except room count and gross living area

* Interior (materials/condition): all items

* Kitchen Equipment: all items

* Amenities: all items

* Car storage: attached, detached, built-in, driveway

Items left out of the Sales Comparison Analysis adjustment grid of the new form are:

* Quality of construction

* Functional utility

* Energy efficient items

* Porch, patio, deck, fireplace, etc.

* Fence, pool, etc.

I want to do some actual appraisals before passing judgment, but I think that the new form leaves out too much.

Best wishes,
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Re: New Form Comments for Fannie Mae
Reply #9 - Jun 16th, 2004, 12:49pm
 
AppraisalPro wrote on Jun 13th, 2004, 6:37am:
Of course, I don't care. I'm doing more and more reviews, probably do more field reviews alone than most appraisers do appraisals. These forms will keep me in business for a LONG time.

Heck, I was already informed by one large AMC that of the 800+ appraisers they have in Arizona, I'm the only one left with a "Good" rating.

Yes, these forms will certainly keep me in business! Adrianna, my daughter, is definitely going to a good school, now. Fannie Mae, keep 'em coming. I want to buy a new plane, as well.

JD


I don't know what it takes to get a "good" rating from an AMC. From my experience the AMC's only want one thing and that's for the numbers to work. I probably have a poor rating with most of them.
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Re: New Form Comments for Fannie Mae
Reply #10 - Jun 19th, 2004, 1:18am
 
PaulS wrote on Jun 16th, 2004, 12:49pm:
I don't know what it takes to get a "good" rating from an AMC. From my experience the AMC's only want one thing and that's for the numbers to work. I probably have a poor rating with most of them.


To an extent, you're right. But this AMC only does asset dispositions. I usually do a retrospective appraisal first, sometimes as much as 6 years later. Then, I am given the original appraisal report and perform a review.

In this case, numbers that work mean numbers that make sense and aren't inflated. That is very important in this type of work due to the purpose and intended use. You wouldn't believe some of the garabage I come across.

With these new forms, unless appraisers put in a ton of addenda, more so than they have to with the current non-compliant version, appraisers will often find themself in violation of USPAP.

On the other hand, I suppose we can think of it this way and send FNMA a message:

They think this "streamlined" form will reduce costs, but we can already see it will require us appraisers to write addenda that is largely already contained in the current version. As such, maybe if we INCREASE our fees because of the extra work-load, they will come up with something better than the curent draft.

But, no doubt, a lot of the form-fillers will find themselves before their board quite often if the current proposed forms are ratified. Most of these type of appraisers fail to suplly the additional information necessary now, and will take the new form as license to report even less.

The first thing my wife did after downloading the forms (which she did as soon as getting notice of them) was to not only look at the items missing for USPAP, but she also went through some of the "checkbox" items and cross checked many of those with the Arizona Board's findings of omission or commission to see if appraisers have been nailed for being too summary in certain cases, and there were many just in the last year, alone.

You'd be surprised the level of detail expected in a summary report from our board and a few others I have reviewed the public meetings of. By chance, I had responded to someone earlier about how I describe floor coverings in the current URAR: this is one area someone was nailed on. The appraiser stated "Good" for the floor coverings, stating condition only. It turns out that the floor coverings in most bedrooms were vinyl tile...new and in good condition...but in a market of $750k homes where either scored concrete, marble, or $90/yd carpet was typical. While the adjustment for "features" was found to be warranted in the appraiser's report, not clearly stating the materials were beneath market standards directly was found to be an act of commission as being misleading. I can think of literally thousands of similar examples of being too "summary" and I believe this current draft will take this further.

On the other hand, like I said, maybe it will give cause for us honest appraisers to increase our fees and do what we like best: write reports and not fill out forms.

So, I guess maybe I shouldn't complain because it will put more money in my pocket either way.

JD
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John-David Biggers
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Re: New Form Comments for Fannie Mae
Reply #11 - Jun 19th, 2004, 6:20am
 
I have read over the new test forms and need to address some issues of concern.

Form 1004 -
As others have indicated, there are several items contained in the current 1004 that are no longer addressed in the new form.  What that tells me is that Fannie Mae doesn't care about those items.  But, Fannie Mae rules/guidelines are a Supplemental Standard.  USPAP is the minimum standard and there many items required to be addressed that are not on this form.  In order to conform to USPAP, an appraiser's Comment Addendum has just significantly increased.  At Valuation 2004 in Las Vegas, Mark Simpson of Fannie Mae stated that they were going to implement a form that complies more with USPAP.  It is my opinion that they went the opposite direction.

Form 1004B -

There are several issues with this form, but my biggest concerns are:
1)  INTENDED USER:  
The form states that "Other intended users may include the mortgagee or its successors and assigns...."

I understand that the term "may" is the pivotal word, yet even with that, the word "assigns" may not be appropriate.  An appraisal report that was developed in accordance with USPAP and Fannie Mae guidelines may not be appropriate for another "assigned" entity.  There may be other guidelines that could apply making that appraisal report inappropriate for the "assigned" entity.  Fannie Mae should not be linked to a situation where Fannie Mae guidelines apply to a particular assignment but do not apply to an "assigned" entity, yet authorized by Fannie Mae.

Suggestion:  USPAP states that the Intended User is "the client and any other party as identified, by name or by type, as users of the appraisal report by the appraiser on the basis of communication with the client at the time of the assignment.  Fannie Mae should not be pre-determining the Intended User(s).  Thus, at a minimum, delete the words "and assigns" so that Fannie Mae cannot be held responsible for the transfer of an appraisal report that does not meet the "assigned" entity's guidelines.  The correct thing to do would be to provide a blank space for the appraiser to identify the Intended User(s) as stated in USPAP.

2) STATEMENT OF LIMITING CONDITIONS Item 6 :
This item currently states: " The lender/client specified in the appraisal report may distribute the appraisal report to:.........data collection or reporting services...."

There are several states that deal with Non-disclosure laws, whereas the sales price of a property (and other data) is deemed private and protected by state law.  If the lender/client that is specified in the appraisal report distributes information that is protected by state law, it could put them in a very difficult (and possibly unlawful) position.  In that Fannie Mae is stating that this is ok to do, could also be held liable.  I don't think that Fannie Mae wants or is willing to accept this responsibility.

Suggestion:  delete the words "data collection or reporting services" to alleviate any possible litigation or violation of state laws regarding personal/private information that could befall on Fannie Mae.

Form 2004D -
The Update Appraisal/Certificate of Completion Form

Same as above with regards to Intended User(s).
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Bobby Crisp
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Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #12 - Jun 19th, 2004, 8:00am
 
Bobby Crisp wrote on Jun 19th, 2004, 6:20am:
I have read over the new test forms and need to address some issues of concern.


2) STATEMENT OF LIMITING CONDITIONS Item 6 :
This item currently states: " The lender/client specified in the appraisal report may distribute the appraisal report to:.........data collection or reporting services...."

There are several states that deal with Non-disclosure laws, whereas the sales price of a property (and other data) is deemed private and protected by state law.  If the lender/client that is specified in the appraisal report distributes information that is protected by state law, it could put them in a very difficult (and possibly unlawful) position.  In that Fannie Mae is stating that this is ok to do, could also be held liable.  I don't think that Fannie Mae wants or is willing to accept this responsibility.


If it is unlawful to disclose the sales price, could the appraiser be held for breaking the law by disclosing the sales price in the report?

I don't know if there is any USPAP guideline (where's Bob and Barry when I need them) that says we must disclose the sales price in our report.  Besides, isn't the sale price nothing more than a "predetermined value", something we aren't suppose to appraise too (although we all know many appraisers who do just that)?

Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #13 - Jun 19th, 2004, 8:34am
 
Bill Baughn wrote on Jun 19th, 2004, 8:00am:
I don't know if there is any USPAP guideline (where's Bob and Barry when I need them) that says we must disclose the sales price in our report.


Bill,

Advisory Opinion 1 deals with the topic of sales history. This advisory opinion states:

USPAP Standards Rules 1-5(a) and (b) require an appraiser, when the value opinion to be developed is market value, and if such information is available to the appraiser in the normal course of business, to analyze (1) all agreements of sale, options, or listings of the subject property current as of the effective date of the appraisal and (2) all sales of the subject property that occurred within three (3) years prior to the effective date of the appraisal. USPAP Standards Rules 2-2(a)(ix), (b)(ix), and (c)(ix) call for the written appraisal report to contain sufficient information to indicate compliance with the sales history requirement. Standards Rules 2-2(a)(ix), (b)(ix), and (c)(ix) further require that, if sales history information is unobtainable, the written appraisal report must include a commentary on the efforts taken by the appraiser to obtain the information.

So, there does not seem to be a requirement that you actually state the sale price of the subject property in the appraisal report--only that you analyze it and indicate in the appraisal report compliance with the sales history requirement. I suppose the analysis could be done in a memo retained in the work file, and you could make reference to this memo in the appraisal report. This may be valid in the case of a high-value commercial or industrial property. But, omitting the sale price of a subject property that is a condo or SFR would seem to be asking for trouble.

Best wishes,
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Re: New Form Comments for Fannie Mae
Reply #14 - Jun 19th, 2004, 8:57am
 
Bill Baughn wrote on Jun 19th, 2004, 8:00am:
If it is unlawful to disclose the sales price, could the appraiser be held for breaking the law by disclosing the sales price in the report?

I don't know if there is any USPAP guideline (where's Bob and Barry when I need them) that says we must disclose the sales price in our report.  Besides, isn't the sale price nothing more than a "predetermined value", something we aren't suppose to appraise too (although we all know many appraisers who do just that)?

Bill Baughn

USPAP requires a discussion of any current listing or sales agreement. I don't see how an appropriate discussion could occur without mentioning the prices involved.

The idea that a client can give the report to anyone and that person use the data contained in the report any way they desire (including profiting from my work without compensating me or even selling me access to data I gathered under their copywrite) is disgusting. Data collection and reporting sevices are not inteded users of any of my reports. If that stays in the form, I will of course have a standard comment that the statement of intended users listed in the deffinitions  is replaced by... and statement 6 of the limiting conditons is replaced by... .

I think FannieMae has good intentions with the new form, but I think they would have done better to make it a three page form and not force some of the choices that where apparently made due to space constraints of two pages. The reports rarely are in paper form, so the cost of another page is minimal.
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Re: New Form Comments for Fannie Mae
Reply #15 - Jun 19th, 2004, 9:40am
 
Bill Baughn wrote on Jun 19th, 2004, 8:00am:
If it is unlawful to disclose the sales price, could the appraiser be held for breaking the law by disclosing the sales price in the report?

I don't know if there is any USPAP guideline (where's Bob and Barry when I need them) that says we must disclose the sales price in our report.  Besides, isn't the sale price nothing more than a "predetermined value", something we aren't suppose to appraise too (although we all know many appraisers who do just that)?

Bill Baughn


Mr. Baughn,

A "Client" and intended users needed by that client are going to already know the sales price.   Plus we are required (USPAP complaince states) to review earnest money agreements.   I feel that unless a client specifically states they do not want a sale price disclosed in the appraisal that it is clear the standard is to disclose it.   The real issue here is when our clients turn around and hand out the information to outside third parties who proceed to profit from distributing it all over the planet.   However,  that is not the appraiser's responsibility, it would be the act of the client doing it so it's the client's legal problem.   The appraiser delivered a confidential report and kept it confidential regarding any act of the appraiser.  

Unfortunately we don't sell appraisal reports by the copy.  Someone pays us to prepare them.   We may not like the fact they get mined for data and that data gets sold by reporting services.  But when the clients are allowing this to happen we intend to do what?  Sue our own clients?   Good luck proving damages directly related only to you.  
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Re: New Form Comments for Fannie Mae
Reply #16 - Jun 19th, 2004, 9:58am
 
I was surprised to learn that in some places sales price is protected by law.  In Florida sales price is a matter of public record.  How can an appraiser do appraisals if sales' prices are protected by law.  Would you guys who stated that please enlighten  me?
Joe Donnelly
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Re: New Form Comments for Fannie Mae
Reply #17 - Jun 19th, 2004, 10:06am
 
It seems there are several comment areas to post in regard to Fannie Mae forms.  I have indicated at other locations on the forum that I sent Fannie Mae a two page letter commenting on the new form.  I recognize the letter is not all inclusive but I tried to cover what I saw a important points including where USPAP requirements were no met.  I tried to be diplomatic in my letter, which for me is a major adjustment, but I didn't want to turn them off to inputs.  Anyone wanting a copy of the letter just provide me with an e-mail address and I wiil send it to you.  It is too lengthy form me to retype on the forum.  All I ask is your comments and additions.  I'm hoping to provide a follow up letter if Fannie Mae is receptive to the first one.  
Joe Donnelly
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Re: New Form Comments for Fannie Mae
Reply #18 - Jun 19th, 2004, 12:39pm
 
Joe (and others that did not know about Non-disclosure states):

There are currently six states that have a Non-disclosure law protecting the buyer's right to privacy when it comes to real estate transactions.  Kansas, Mississippi, New Mexico, Texas, Utah and Wyoming have such a law whereas the sales price of a property cannot be obtained through public records.  There are additional states (Alaska, Indiana, New Hampshire, Maine, North Dakota, South Dakota, Montana and Vermont) where certain counties or municipalities have Non-disclosure.

You asked "How do we appraise properties then?"  Sometimes, it can be quite difficult!  Tax rolls and Appraisal Districts will, sometimes, have information about the sale of a property (address, loan amount, the lender, buyer's and seller's names unless they opted out, that sort of thing....the Sales price is not available).  Once a lender is identified, an appraiser can contact them and attempt to obtain the HUD-1 as long as the buyer and seller did not opt out....even then, the lender will usually reject our request because of the non-disclosure law.  The best avenue to obtain comparable sales, for those of us in these six states, is to join a Board of Realtors and subscribe to their MLS.  In that this is a membership and dues are paid, the appraiser has purchased the right to utilize data from the MLS.  Those owners & builders who list properties through the MLS sign an agreement that data regarding their property can be utilized by other participating members of the MLS.  This information is to be used for specific purposes (i.e. realtors performing a CMA, advertise a listing, or allow an appraisal for a specific property).  MLS data is not for the use of a lender to re-sell to whomever they choose.  This information is protected by the non-disclosure law.  Appraisers, like myself, are utilizing this data for a specific purpose....a specific Intended Use.....for a specific Intended User.  Lastly, previous appraisal files are utilized where data was obtained regarding sales.  Again, we still must be specific and careful with confidential information.

If an appraisal is performed in one of these six states and the lender turns around and sells this data (subject and comparables) to a Data Collection service, the lender could be held liable.  My suggestion to Fannie Mae was that they might not want to be caught up in the middle of it by pre-authorizing the sale of private confidential information.  By stating so on their new form, they could also be held liable.  This is an example of why USPAP addresses the Intended Use, Intended User(s), and Confidentiality to such a degree that it does.

Above all of this, it can go beyond the six Non-disclosure states as the Gramm-Leach-Bliley Act of 1999 allows anyone in the United States to opt out and prevent data from becoming public.  With all of this in mind, I just don't think Fannie Mae really wants to go there!

Happy Father's Day to all you Dads out there!

Bobby Crisp
San Antonio, TX
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Greg Myers
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Re: New Form Comments for Fannie Mae
Reply #19 - Jun 19th, 2004, 5:40pm
 
Quote:
Unfortunately we don't sell appraisal reports by the copy.  Someone pays us to prepare them.   We may not like the fact they get mined for data and that data gets sold by reporting services.  But when the clients are allowing this to happen we intend to do what?  Sue our own clients?   Good luck proving damages directly related only to you.  

Such a suit would probably be done on a class action basis with lawyers making a lot of money in the process.

It is not so much a case of damages as it is a fair share of the profits.
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Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #20 - Jun 19th, 2004, 7:09pm
 
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  Plus we are required (USPAP complaince states) to review earnest money agreements.  


This I understand this (although it seems to me that I am one of the very few who ask for the contracts).  But are we actually REQUIRED to disclose the sales price?  Of course the lender knows what it is so why would we have to disclose it to them?

Just a thought that came to mind...

Bill Baughn
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Drift Wood
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Re: New Form Comments for Fannie Mae
Reply #21 - Jun 20th, 2004, 6:16am
 
Mr Crisp,

Interesting post you made.   But I ended up confused on a fine point.   If a MLS in a non-disclosure state allows all the members to access sales prices from a legal document signed by the seller ..... but it is the buyer that is protected under the non-disclosure laws .... then either the agents involved are getting the buyers to sign something allowing it (and not the sellers) or the MLS (or someone) ends up in violation of the law.   It would seem to me a seller can't sign away some unknown buyer's rights to non-disclosure.

In Oregon a buyer can have the agents / MLS not disclose the sales price and also title not record it if they want.   But it's very rare anyone does this.  

Mr. Baughn,

I think the answer is we disclose the sales price in our reports at the request of our client.   We also do not if our client requests it or by action of law.   I am not aware of any USPAP requirement we disclose it.   Only analyze it if it is provided to us.
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Bobby Crisp
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Re: New Form Comments for Fannie Mae
Reply #22 - Jun 20th, 2004, 8:36am
 
Mr. Dayton-

First, let me say "Thanks" for your professionalism..... but, please call me Bobby.

You are exactly correct in the point that you made.  It is the buyer's purchase price that is protected by our state law from public distribution.  In that MLS is a private entity, information posted on MLS is deemed private and available to only those who are members of the Board of Realtors (i.e. realtors, brokers, appraisers, builders...the general public is not allowed membership) and subscribe to the MLS.  This private information is utilized for specific purposes (advertise listings to other realtors, identify pending sales, record sales for CMAs and appraisals, etc.) by members only.   Realtors/Brokers are responsible for informing buyers & sellers about private information.  Buyers & sellers are made aware that information regarding the sale of a property are posted on the MLS when utilizing a realtor.  This is in the Listing Agreement as well as the Buyer's Agent agreement.  In a Non-disclosure state where a property was purchased through a "For Sale By Owner" without any realtors involved, an appraiser could not..... cannot..... use information regarding that sale unless it can be verified (such as a HUD-1) and the new home owner provides written permission (I say "written" because verbal permission is difficult to prove in court).

Again, thanks for bringing this point up and helping me clear it up.  I should have addressed this a little better previously.

Bobby
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Bobby Crisp
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Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #23 - Jun 20th, 2004, 12:56pm
 
Bobby Crisp wrote on Jun 20th, 2004, 8:36am:
Mr. Dayton-

First, let me say "Thanks" for your professionalism..... but, please call me Bobby.



Good luck on that Bobby, we've tried for so long to get Barry not to be so formal with us, but like an old dog he's stuck in his ways...

Bill Baughn
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Re: New Form Comments for Fannie Mae
Reply #24 - Jun 21st, 2004, 5:48am
 
Bobby,
Thanks for the info.  Glad I don't work there.  if we had to depend on MLS sales only in this area we would be constantly turning out bad appraisals.  Over 50% of the sales in this area are sold directly by owners or by non-MLS real estate companies.  So, public record info is vital in this area.
Joe Donnelly
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Re: New Form Comments for Fannie Mae
Reply #25 - Jun 21st, 2004, 11:48am
 
Hi all,
I am fairly new to the appraisal side of the mortgage industry (7 months), but am confused and shocked at the limited reporting that these new forms are allowing us.  I have not gone back through my USPAP book to double check requirements etc. (others have done that for me, thanks!), but it still seems to me that omitting pertinent information concerning the interior of the home, flood map info, basement info, etc. is going overboard.  In fact the new 1004 looks very much like the 2055.  Would this new form replace the 2055 and the condo form?  Sure, save paper/bytes, but each form was developed for a distinct purpose and those distinct purposes would be gone with the new forms.
I also read the letter from Fannie Mae and thought it interesting that they based many (if not most) of their changes on their own Desktop Underwriting software requirements.  I have been (in a past life) an underwriter who used DU and LP, among other automated underwriting systems, as a part of my job.  I always looked very closely at an appraisal that was submitted (if required) as a part of the file.  This new form, eliminates information that would need to be addressed in an addendum that an underwriter would need to read.  How does eliminating information in an easy and concise format, save time and money, when the underwriter would have to read complete/fragmented sentences on a comment addendum that may be 2 or more pages long?  I am thoroughly confused.
I like the additional room for sales history (grid), but some of the additional questions mean even more research for me.  Assuming that public/county records even has the information such as past sales buyers and sellers, how am I to know whether it was an arm legths transaction or not?  Some instances may be easy to spot, but others...  Okay, don't even let me go on about reporting each listing price and listing broker for every listing in the last 12 months.  
I don't understand the detailed PUD information either.  The third line states that the folowing information be answered "only if the builder/developer is in control of the HOA and the property is an attached dwelling:".  If that's that case, then why does the next line ask to check the appropriate box - Detached, Row or Townhouse, Other?  I'm confused again.  
Maybe I'm too new to have any real input on any of this, but I certainly don't feel right about some of these changes.  In my area of the country (Denver Metro), there have been some instances where the Cost Approach yields a higher value than the Sales Comparison Approach.  Prices of homes are not going up around here, in fact they were (and still continue to do so, in some parts) going down.  Some areas have leveled off and others are heading back into a slow climb, but I have to disappoint a few lenders/loan officers on their appraisals from time to time.  It seems to me that if you offer a spot to put a Cost Approach value, but nowhere to supply how you derived that figure, then that leaves a lot of room for inconsistencies in reporting.
Anyway, I think I have babbled enough.  Thank you for allowing me to share with all of you and Fannie Mae, my opinions and experience.
Grete
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Re: New Form Comments for Fannie Mae
Reply #26 - Jun 21st, 2004, 1:46pm
 
Very well put, Grete.

JD
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John-David Biggers
J-D Biggers Appraisal & Consultation
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