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Anna

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Reply with quote  #1 
There are occasions where I receive a request for a drive by appraisal.

I asked an appraisal coordinator (not sure if he is an appraiser) for an additional day as most of the work I complete is located in rural markets. 

Although EA are part of the report development, I usually want to talk with the owner/borrower about the interior.  Apparently, the AC is not so concerned about the quality and condition. 

When I shared what my development included his response was as follows:

"You shouldn’t need interior information.  We only need to be concerned with it if it’s a full inspection or there’s some additional factor that might require information".

Really.

Anna


 


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Meatloaf

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Reply with quote  #2 
Yes really.  Give them what they are paying for... and nothing more.
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BillDing

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Reply with quote  #3 

First off,  EA is NOT part of the report development and the form states that assumptions and limiting conditions are not permitted.  Even if EA was permitted, it has to be "credible". 

You are certifying this
The appraiser must be able to obtain adequate information about the physical characteristics (including, but not limited to, condition, room count, gross living area, etc.) of the subject property from the exterior-only inspection and reliable public and/or private sources to perform this appraisal.

Also says "The appraiser may expand the scope of work to include any additional research or analysis necessary"

So the real answer is: Yes, (if you're smart) you do need to talk to the HO if you're putting it on the 2055 form.

Due to the form certs, I won't touch a 2055 unless I can talk to the HO and it's been recently listed on MLS. The 2055 is actually MORE work than a 1004.  Inspections are the easiest things to do on an appraisal.  My 2055 fee is the same as the 1004, so they end up ordering a full typically.

If he client doesn't like that, then tell him/her that you'd be happy to do it on a generic 2055 type form where you don't have such a tight loose around your neck and you can use extraordinary assumptions.


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Anna

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Reply with quote  #4 
Bill, I agree totally that it is more work. 

When I made the statement regarding the EA, what I meant was although I do make the obvious extraordinary assumptions and disclose this, I still research the engagement to its fullest,  I speak with the owners/borrowers and also resource the information my peers consider in their development.

When the response from the client was as I quoted, it just goes to show you how misunderstood the Drive By requirements can be.

As you disclosed, my 2055 is also as indepth as the 1004.  It has to be for me to complete it.

When completing field work for the 2055 there are times when I find out from the HO that there was a 2055 completed weeks before I arrive. They are unhappy because no one called them to receive additional information, such as completing a recent rehab or new appliances being installed or finishing the basement area. 

Thank you.

Anna


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treskirkland

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Reply with quote  #5 
They order a 2055, because they think it will be completed quicker... the AMC could care a less about the accuracy or quality of the report, just that they meet their turn times.  Turn times is what they use to market themselves to the lenders.     Most 2055's I do there is no contact info.  Even if you speak to the homeowner, how do you know if they are telling you the truth or not?  I don't really like 2055's because there is just really no way to know about the condition.  I've done several 2055's where after I completed it a few weeks later they turn around a order a full appraisal.  The homeowner almost always says they requested a full appraisal upfront.  
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Anna

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Reply with quote  #6 
This is a major bank with no AMC. 

It always occurs to me that the owner may not be telling me the truth about the condition of the subject.  You're right on about that.

The bank and the owner always want me to complete a 1004 on a 2055,  and I have a due diligence to my client and to the
general public.  I have to collect as much information as possible as a seasoned, responsible appraiser. 

Almost always the 2055's requested are on a subject that has had one completed recently.  When I come out to the property,
I get out of the car because I need to know as much information as possible.  When I do this, if the owner is home, he/she will come
out and tell me some sort of horror story about the previous appraiser not doing this or that.  Meanwhile I am saddled with this
information only to realize that 2055's are almost always an accident looking for a place to happen.......to me and to the owner most times.  In the end I end up completing a 1004 on the cheap.  My income is only important to me...certainly not my client.  They don't give a tinker's damn. The salt on that wound is my client charges me 2% of my fee to render my compensation within 10 days of acceptance.  Add the $15.00 transfer fee that AP charges.  You get the picture.

They (AMCs and big banks) are just lucky to have appraisers on their rosters who have integrity and character and there are many more
than claimed to be out there.

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BillDing

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Reply with quote  #7 
Quote:
Originally Posted by Anna
what I meant was although I do make the obvious extraordinary assumptions and disclose this

That is the problem with the current 2055...you are not allowed to make any extraordinary assumptions...and you certify that you didn't!

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Anna

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Reply with quote  #8 
The extraordinary assumptions would be my assumptions about the interior to complete this assignment. If my assumption is that it's a functional 3-BR/2.5-Bath and the interior is in average condition then that's my extraordinary assumption.

I would identify the issue - no interior description - what I did to resolve it (asked the client, public records, MLS, ColDNA, etc.), what my extraordinary assumptions are (physical description), and then conclude (in this case) that actual conditions could have a significant but indiscernible impact on my observations and conclusions.



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Meatloaf

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Reply with quote  #9 
Assume its in average condition and not updated.  How hard is that?

Sure this could drastically affect value, but thats when you get to do the "upgrade" to a full 1004.  Money Money Money!!!!

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Anna

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Reply with quote  #10 
Yep.  Thanks ML, Bill and Tres


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RubberStamp

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Reply with quote  #11 
A little late for my two cents but this is what stating extraordinary assumptions is for:  Including the interior condition.
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We argue this: Meanwhile the agent's assistant just did 5 unofficial appraisal inspections they paired with a Zestimate and granted 90% LTV - all guaranteed no buy back.
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BillDing

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Quote:
Originally Posted by Anna
The extraordinary assumptions would be my assumptions about the interior to complete this assignment. If my assumption is that it's a functional 3-BR/2.5-Bath and the interior is in average condition then that's my extraordinary assumption.

You can't make that extraordinary assumption on the new 2055! Hence why doing them on that form is not a good idea.  Read language printed on the new suckass 2055 form that you're signing to be true and correct.  

Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted.

 


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RubberStamp

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Reply with quote  #13 
Quote:
Originally Posted by BillDing


You can't make that extraordinary assumption on the new 2055! Hence why doing them on that form is not a good idea.  Read language printed on the new suckass 2055 form that you're signing to be true and correct.  

Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted.

 



I don't know, I'm not reading that the same way.  I don't have time to read through the assumptions and limiting conditions of the 2055 at the moment but I know that they disapprove of anyone modifying theirs.  However, extraordinary assumptions have been a necessary part of the appraisal process since its conception.. and, in fact, no drive by could be completed without it.  They know this.  I still state everything big and bold, full disclosure, in the addendum and instruct them to stop immediately if there are any questions or concerns otherwise they are considered fully disclosed and accepted by the users of the report. 

Even if you get a written condition statement from the borrower there is the extraordinary assumption that they are telling the truth as you did not see it with your own eyes. 

Regardless I'll read it through again when I have time...

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Meatloaf

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Reply with quote  #14 
You don't need an extraordinary assumption because the SOW doesn't require you to inspect the interior.

Just like your SOW doesn't require you to inspect your subject for structural integrity on a 1004, yet you do not need an EA to ward off any bad structural juju.

You CAN use information provided by the property owner.... but there is no part of the SOW that says you MUST use information provided by the property owner.



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BillDing

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Reply with quote  #15 
Explain it to the Judge. Assumptions are not permitted.  The form sucks and its verbiage puts appraisers in a very precarious position.  How Fannie Mae of them.
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BillDing

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Reply with quote  #16 
Quote:
The appraiser must be able to obtain adequate information about the physical characteristics (including, but not limited to, condition, room count, gross living area, etc.) of the subject property from the exterior-only inspection and reliable public and/or private sources to perform this appraisal

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treskirkland

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Reply with quote  #17 
Your assumption would be that the data you have relied upon is accurate, just as any other third party data you have relied upon in your report.   This is not rocket science..... 
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Meatloaf

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Reply with quote  #18 
So... Let me get this straight.  We say that a drive-by inspection in itself is useless.  I agree.... Yet we insist that a drive-by of the comp is what separates the men from the boys in the appraisal profession?
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nogava

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Reply with quote  #19 
Bingo. An antiquated concept based upon availability of data.
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BillDing

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Reply with quote  #20 
Quote:
Originally Posted by treskirkland
Your assumption would be that the data you have relied upon is accurate, just as any other third party data you have relied upon in your report.   This is not rocket science..... 

Notice that with comps, that is a recent listing.  Drive-bys are typically refis and the subject has no current MLS listings....which in that case, I tell the client to upgrade it to a 1004 or go fish.

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RubberStamp

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Reply with quote  #21 
Quote:
Originally Posted by Meatloaf
You don't need an extraordinary assumption because the SOW doesn't require you to inspect the interior.

Just like your SOW doesn't require you to inspect your subject for structural integrity on a 1004, yet you do not need an EA to ward off any bad structural juju.

You CAN use information provided by the property owner.... but there is no part of the SOW that says you MUST use information provided by the property owner.




Yes but due to the different users of the report (or more likely, those that are still allowed to take you to court) I still think it is better to spell it out for them.  Hard for them to dispute that they didn't understand what they were provided when you have a bold paragraph explaining it to them. 

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We argue this: Meanwhile the agent's assistant just did 5 unofficial appraisal inspections they paired with a Zestimate and granted 90% LTV - all guaranteed no buy back.
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RubberStamp

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Reply with quote  #22 
Quote:
Originally Posted by treskirkland
Your assumption would be that the data you have relied upon is accurate, just as any other third party data you have relied upon in your report.   This is not rocket science..... 


Except the other third party data can be verified independently.  What we have been provided in private can be disputed and denied/lied/changed to meet the desires of those wishing to do us harm possibly becoming your word against theirs.

Not unlike getting specifics about a sale from an agent over the phone.  I believe I recall JB saying in class "If you have too many variables - time to get a different comp".   Likewise what we are seeing here is if there are too many variables for a drive-by - time to request a full appraisal.  Which means every time a 2055 is ordered unfortunately so we are back at square one.

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We argue this: Meanwhile the agent's assistant just did 5 unofficial appraisal inspections they paired with a Zestimate and granted 90% LTV - all guaranteed no buy back.
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BillDing

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Reply with quote  #23 
Here's the bottom line for me regarding the 2055.  I charge as much (sometimes more) for a 2055 as I do a 1004....they ain't saving any money.   If they don't have a recent listing and/or I can't talk to the HO, I won't do the 2055 on the latest FNMA form; they'll have to upgrade to a 1004 or accept an old 2055 or generic drive-by where I can insert extraordinary assumptions, which I will have to believe are true.  That way there is no conflict with the printed language of the form.
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Anna

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Reply with quote  #24 
The same group that peddled the "no doc" loans years ago are putting this on our backs. That leaves us wide open for law suits.   I'm about to renew my E&O and need to talk with my insurer.

I think that is why so many engagements from clients are beginning to be 2055s.  Again, they have the appraiser to blame if they don't agree with the value. 

Bill, your idea about charging as much for the 2005 and mandating a prior listing and/or consultation with the HO is a great idea. 



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MEP

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Reply with quote  #25 
This points to a more important issue...due diligence is often neglected in order to mass produce reports and meet AMC deadline requirements. There is More than enough work to keep the Loan Processors busy but they let the file sit on their desk until the appraisal is delivered. The client pays an application fee, that includes the appraisal fees, why wait? This process is dishonest and does not serve the interest of the public or lenders. So we can complain amongst ourselves; but that produces no results, other than our venting and wasting time. 
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Meatloaf

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Reply with quote  #26 
MEP has a point.  The clients waste way too much time in the process.

I had one a couple weeks ago.  Everyone knows I only do inspections on Friday.  They sent it on a rush asking me to inspect it on friday and they would release it from hold on monday after the buyer agreed to proceed after the inspection was done.  Realtor said the inspection was clean and that the buyer was proceeding.  Two weeks later... Still on hold.

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Anna

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Reply with quote  #27 

I would like to be a fly on the wall of some of my clients.


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Meatloaf

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Reply with quote  #28 
Quote:
Originally Posted by Anna

I would like to be a fly on the wall of some of my clients.



Then do that.

Make friends with them and get their input.  Its easy.

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Anna

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Reply with quote  #29 
Actually, I talk with my clients and for some it is typically a pleasure.  For some, not so much.
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