Tag Archives: GSEs

Reviewer Thoughts & Tips

THIRD PARTY INSPECTORS & USPAP

MARCH 24 –  I wanted to share with everyone an excellent post about the above topic.  The Appraiser Coach has given me permission to re-post his article on my blog.  I am thankful for that.

Their website is https://theappraisercoach.com

Instead of cutting and pasting the entire article, the link is https://theappraisercoach.com/do-third-party-inspectors-violate-uspap/

I hope you enjoy the article and their website.

===================================================

My quick opinion on the matter excluding the USPAP issue (no doubt USPAP allows 3rd party inspectors, in my opinion).

Since 1993, I have NOT inspected any property I have performed an Appraisal Review (where I opine to value by either agreeing with the appraiser or coming up with my own value) or Evaluation on.

For Appraisals, the appraiser has already done that inspection and provided all the description I need to see.

For Evaluations, the past 10 years we have used a national firm to provide inspections.  They do a far better job than any appraiser I know of.  Clients love the inspection report we include in Evaluations.

The point is this has been going on for 25+ years.  More and more appraisers realize it is not good use of their time to be doing the inspection.  They serve their clients better by concentrating on the valuation analysis.

Lastly, the common concern I see regarding hybrid appraisals (again, maybe new to residential appraisers, but 25+ years in existence for commercial appraisers) is the quality of the inspection.  As I note above, the inspection report we have obtained is done by people more qualified to do such than most appraisers.  I agree, the level of competence of the 3rd Party Inspector must be addressed in order to avoid problems.  It can be addressed.  The GSEs just need to do it in advance.  Not after problems occur.

Stay safe.  Enjoy time with your family.

The Mann

Reviewer Thoughts & Tips

RESIDENTIAL APPRAISAL THRESHOLD INCREASE – MUCH ADO ABOUT NOTHING

February 1, 2019 – The Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency proposed raising the residential appraisal threshold from $250,000 to $400,000.

The Appraisal Institute and numerous other groups are opposing this increase.  That is understandable.  But, the hyperbole that these organizations and appraisers put out there is no different than the Fake News problem.

Based on my experience of over 25+ years in banking, I estimate that less than one-hundredth of 1% of residential appraisals will be affected.  Probably less than that.

GSEs are responsible for 90%-95% of residential loans and, thus, residential appraisals.  All such loans are exempt from FIRREA.  So, the Federal Agencies can increase the residential threshold from $250,000 to $1 Trillion and it wouldn’t be noticed by 99%+ of   residential appraisers!  Also, it will have no effect on the national economy.

For the most part, the only residential properties that stay under FIRREA are second/vacation homes, model homes in subdivisions, and rental homes (e.g. an investor rents 20 houses around a city).   Some ‘regular’ house loans remain under FIRREA – this is when the bank does not sell the loans to the secondary market.  Banks typically don’t keep many of these loans on their books.  But, yes, they do keep some.

Appraisers just need to keep an eye on the GSEs.  They are the ones who make decisions that affect the entire residential appraisal industry in a significant way.  Don’t worry about the FIRREA issue at hand.  As they say, it is a nothing burger:)

The Mann