Friday, October 28, 2011

Appraisal Independence Requirements

From Dave Towne:

It must be said very simply: the appraiser is the one who controls report content. But it’s also incumbent on appraisers to include relevant details and plenty of commentary to justify their opinions, and of course, the final opinion of value. I think this is where some appraisers hang themselves. But others do it well, and still get asked to make changes. That is not necessarily appropriate.

Despite negative comments about the Dodd-Frank law and some movement to repeal it, it has a section devoted to Appraisal Independence Requirements. ...I recommend that you read it, print it and keep it next to your computer, and also save it to your computer so that you can send it to entities who use inappropriate tactics against you.

Note that the wording of the AIR has this:

No one connected to the property in any way “shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner…”

Per the law, clients, etc., are allowed to request that the appraiser provide ‘additional comments’ about the information within a report, and to provide more explanation. They can also send you additional properties to consider, ...but many overlook the specific wording that states those ‘comps’ must be “APPROPRIATELY COMPARABLE.”

The mere fact that those properties magically have sale prices close to the desired appraisal value is no coincidence, but that fact alone does not make them ‘appropriately comparable.’

Your defense & preservation is knowledge of the law, writing good reports with enough CYA and other relevant comments, and crafting responses that define and demand your independence in the mortgage lending process when inappropriate requests are made.

Dave Towne

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