Wednesday, June 30, 2010

Warning - Chase Bank's 1004D requirements

From Dave Towne, some information about Chase's new (as of 6/16/2010) requirements:


This is a drive-by appraisal report for a (probable) 1004D fee, typically much lower in price than the drive-by fee would normally be.

Nowhere on the 1004D form Update does it indicate this level of reporting. The form says the appraiser must ‘summarize’ the info reported. There is no Fannie requirement (that I know of) that ‘new’ comps be driven and photo’d. But…you’d better damn well have a complete work file and data to justify how you answer the 1004D Update ‘Yes/No’ question. Fannie’s instructions to lenders say that if the question is answered ‘Yes’ then the lender must order a new appraisal.

This Chase requirement circumvents that process, and forces the appraiser to do a basically full blown appraisal prior to completing the 1004D.

What you do with this type of assignment is of course your own business decision. What you charge is your decision also. You do not have to accept the fee OFFERED by Quantrix (the senders of the Chase requirements). And you do not have to do the 1004D, even if you were the original appraiser.

This is just another recent example of escalating order and inspection requirements (probably) without properly compensating appraisers for what is being requested.

I hope you will make the correct decision for yourself and for appraisers nationwide when/if you get one of these new Chase 1004D requests.

(My BOLD below)

Dave Towne

Chase’s NEW Appraisal Requirements for the following 2 products: 1004D-Appraisal Update and 1004D-Final Inspection and Appraisal Update. The requirements apply to the “Summary Appraisal Update Report” section of the 1004D. These requirements are in effective as of (6/16/2010).

Chase Appraisal Requirements for a 1004D-Appraisal Update

Note: These requirements apply to the “Summary Appraisal Update Report” section of the 1004D form when either of the following products is ordered:

• 1004D-Appraisal Update
• 1004D-Final Inspection and Appraisal Update

The appraiser performing the Appraisal Update must, at a minimum:

• Perform an exterior inspection of the subject and new comparables from at least the street.

• Research, verify, and analyze current market data in order to determine if the property value has changed since the effective date of the original appraisal.

• Include an extraordinary assumption that the interior finish and condition are the same as the original inspection.

• Indicate on the 1004D form if the market value of the subject property has declined since the effective date of the original appraisal report.

• Provide a new sales grid with three new comparable sales that have closed since the effective date of the original appraisal to support your conclusion. Note: Listings may be included as a 4th, 5th comp, etc. if needed to support your conclusion. (We do recognize that the additional comparables being supplied with the Update may not be better, or more indicative of value, than the comparables used in the original report. Regardless, Chase underwriting needs to account for market activity occurring in the period since the original report date, so new comparables which closed after the effective date of the original appraisal must be provided.)

• Provide a new original front photo and a new original street scene photo of subject.

• Provide an original front photo of all new comparables provided on the grid.

• Provide a location map showing the subject property and all new comparables. Note: the neighborhood boundaries must be clearly visible on the location map.

The financial reform bill and appraisers

From Appraisal Today, Ann O'Rourke, Editor/Publisher:

The official name, as of today, is "Dodd-Frank Wall Street Reform and Consumer Protection Act." It passed a joint house/senate 20-hour conference Friday and is sent to Congress for voting. Of course, if it was just about appraisals, it would not have moved so fast.

If you have any other versions of the bill, don't use them as there have been some changes.

Hopefully, the bill will be approved by Congress this week. Lots of HVCC content such as no value pressure, etc. It requires AMC regulation and registration. The bill makes changes to FIRREA, RESPA, and other regulations.

Here's an excerpt:

From the Dodd bill "(i) CUSTOMARY AND REASONABLE FEE.-

"(1) IN GENERAL.-Lenders and their agents shall compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised. Evidence for such 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."

It is the biggest federal changes for appraisers since FIRREA in 1989. FIRREA had many major requirements, such as appraiser licensing. I don't know what that means for appraisers and federal regulations.

The full Dodd Bill (appraisals start on page 2205)

Also of interest, Alamode publishes an Appraisal Fee Reference, which gives shows the median and average fees of reporting appraisers. So if you are not sure what the 'customary and reasonable' fees are in our area, you can look here. At least it gives an idea of what is happening, and is a little more reliable than individual anecdotal evidence...

Friday, June 25, 2010

Appraisers lose out in Wells Fargo lawsuit

Wells Fargo and its appraisal management subsidiary Rels Valuation won an important lawsuit this month when a [ U.S. ] district judge granted the company's motion to dismiss. The lawsuit was filed by two residential appraisals who claimed that Rels Valuation had pressurized them into reaching inflated values on appraisal reports and then subsequently blacklisted them when they did not comply with demands.

Granting Wells' motion to dismiss, District Judge Claudia Wilken opined that be held liable for violating the right to fair procedures, a private entity must have the power to “significantly impair” the individuals' ability to work in a particular field. “In essence,” she wrote, “the law concerns exclusion or expulsion from membership by a gatekeeper organization, like a union or an insurance company,” which she determined did not apply to Wells Fargo.

“Wells Fargo's extensive national involvement in originating and servicing mortgages does not necessarily mean that it wields significant power over the appraising profession in the geographic areas in which plaintiffs work,” wrote Wilken.

“It is especially important to note that, while loss of income after exclusion by a private entity is relevant, it is not 'conclusive proof' that the exclusion impaired the plaintiff's ability to continue in the profession,” she continued. In the judgment of the court, the percentage of business lost by Pearsall and Savage following their blacklisting was not enough to establish a duty to provide fair procedures. In addition, the blacklisting didn't affect Pearsall or Savage's ability to receive work from other mortgage companies.

“No authority requires the imposition of the fair procedure doctrine simply because removal from a single company's list of appraisers it chooses to retain substantially affects the economic interest of a removed appraiser. Defendants simply made a choice not to do business with plaintiffs; they did not exercise power as a gatekeeper of a profession nor did they prevent plaintiffs from pursuing employment by others,” said Wilken. On this reasoning, she dismissed the claim against Wells Fargo with prejudice, saying that any further amendment would be “futile.”


Saturday, June 12, 2010

No June ACOW Board meeting planned

I have not called for, and am not planning an ACOW Board meeting for this month (June), unless someone asks that we specifically consider some business element. There are various items “ in process” (such as the Summit, membership drive, inactive license research, etc), but nothing to report or act on at this time.


Stan Sidor
President ACOW

Tuesday, June 8, 2010

Register today for ACOW at the Summit XII

Register here.

Howard Johnson Summit Inn at Snoqualmie Pass
(formerly known as Snoqualmie Summit Lodge)
603 SR906
Snoqualmie Pass, WA 98068

Reservations at the Lodge: A block of rooms will be available at the Howard Johnson Summit Inn. Rooms are $80 for 1 king and $90 for 2 Queens.

ACOW at the Summit XII Schedule
Friday August 20, 2010
12:45 PM – 1:30 PM ACOW Summit registration
1:30 PM – 4:30 PM Session I - Washington’s New AMC Licensing Law: What It Does, What It Does NOT Do, and What You Need to Know To Ensure AMCs Are In Compliance and What To Do If They Are NOT!
Presenter: Stan Sidor, ACOW President
6:00 PM Poolside Barbecue
3 hours of continuing education credit from Washington State

Saturday August 21, 2010
8:00 AM – 8:30 AM ACOW Summit registration
8:30 AM – 11:30 AM Session II - AMC Problems: How to identify and resolve them
Presenter: Richard Hagar, SRA, Appraiser, American Home Appraisals
11:30 AM – 1:00 PM Lunch Buffet/ACOW Meeting - ACOW’s Lobbyist, TK Bentler, will be there to provide a brief overview of the last legislative session, and what might lie on the horizon.
1:00 PM – 4:00 PM Session III - Defining Market Value and How to Adjust for Concessions
Presenter: Richard Hagar, SRA, Appraiser, American Home Appraisals
6 hours of continuing education credit from Washington State

ACOW at the Summit XII Cost
Friday August 20, 2010
Seminar $75.00
Poolside Barbecue $30.00

Saturday August 21, 2010
Seminars and Lunch Buffet $165.00

Complete package for all events $249.00


Washington State Real Estate Appraiser Commission Meeting - CANCELLED

Due to state budget constraints, all commissions and agencies are being prohibited from holding public meetings in private facilities. For this reasons REAC will have to reschedule their August meeting to a public facility, and will not be able to hold it at the ACOW Summit at Snoqualmie. The ACOW Board is working to substitute the planned REAC meeting time with another seminar for Friday morning, August 20. Watch for details, coming soon.