Monday, April 12, 2010

Appraisal Report Quality Improvements

From Dave Towne:

"An AMC who has me on their list sent a message to their appraiser vendor panel today. This is their forewarning of report expectations that some appraisers may not currently be doing. It also means this probably will become the ‘new normal’ from now on across the industry...

“If there is an overriding theme in these items, it is the idea that we all must document our work in a way which was neither asked for, nor sometimes appreciated, in years past.

The GSEs (FannieMae and FreddieMac) and FHA have made it clear to lenders that the old benchmark for documentation and commentary – including that for appraisals – is no longer good enough.

In short, the days of being able to assume you had a knowledgeable local reader and therefore didn't need to fully describe the appraisal thought process no longer exists. As outlined in USPAP and the various guidelines, complete commentary on the subject, comp select process, grid adjustments, and a thorough reconciliation is a must.

You will likely note that some of these items are not currently identified in the lenders’ stated guidelines, but nonetheless are emerging issues where underwriters are requiring corrections or clarification.

We will work with the lenders to update their written guidelines, and codify as many of these items as possible. However, in the meantime we need your immediate and complete cooperation.”

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