My New Blog

Hi all and Happy Summer,

Training has begun for appraisers and underwriters that deal with Fannie Mae and Freddie Mac federally related transactions. In other words, Mortgage Appraisals must be UAD compliant as of 9/1/11. I will be attending training sessions this week and throughout the summer to gain all the knowledge possible before the deadline. My appraisal software provider, alamode, is ramping up their training already. One flag that has been raised, to me anyway, is the breakdown on the basement & finished rooms below grade grid. As of 9/1, the appraiser must provide in square feet, the area of finished basement. Easy to do for the subject property, but what about the sales comparables? This information is not readily available in many instances. My alamode webinar instructor suggests that we contact the listing agent and/ or current homeowner to obtain this information if no other sources provide. Let's see how well this goes over! Until next time....

What happens when an appraiser's actual Gross Living Area measurements of a dwelling are questioned by the borrower/ purchaser/ client? Safe to say this would only occur when the GLA is LESS than what is stated on the property (tax assessor) card, as they feel shortchanged. Their defense comes in the form of "I've had two appraisals in the past year and the GLA in those reports match the GLA on the assessor's card. It's assumed correct. WHAT DOES THIS TELL US? Maybe the respective appraisers did not measure at all and used the incorrect GLA on the assessor card. Do yourselves a favor and investigate and verify whenever possible.

In the mind of the appraiser, at the very minimum some measurements should be verified, if not totally measured during each subject property inspection, especially if there is uncertainty in the appraiser's mind versus the tax record. This gets magnified at a greater level when an Appraisal Management Company gets involved these days, as the appraiser may need to communicate with three or more concerned parties, as opposed to just one at an earlier time. It leads to miscommunication and confusion, but that's the way it is now. If you truly believe your GLA measurements are correct, stick by them, but be ultra prepared to describe and defend in detail what is wrong with the GLA on the tax card!

A little story for you:

I was scheduled to meet with a local media mogul this morning regarding taking out an ad in a local real estate agency publication for referrals. While waiting for him to show up, I struck up a great conversation with the assistant office manager. We discussed the recent changes to the appraiser/realtor relationship and what it meant to both parties. The consensus is FRUSTRATION! There will be no magazine ad for me because referrals are out the window since the HVCC implementation in 2009. It is not a cost effective move. No longer can an agent suggest me to perform an opinion of value on a potential sale. No longer can an agent suggest sales comparables (shhhhh lol). My services can only be used on nonfederal related transactions (No FNMA involvement), such as setting an asking price for a home. And using a general purpose form to boot! Meantime, the realtors and agents are stuck with appraisers generally from out of town (or county, or state for that matter) which through no fault of their own, do not have local market expertise and cannot produce a 100% credible and accurate appraisal report. This is better? Appraisal management companies are now the unofficial middlemen, which has driven report delivery times and appraiser fees down simultaneously. As of 4/1/2011, appraisers were supposed to see an increase in "reasonable and customary fees". tick tick tick......

What's a UAD you ask? Well, Fannie Mae and Freddie Mac are implementing new Uniform Appraisal Dataset specification requirements, effective for appraisals with an effective date on or after 9/1/2011. The affected forms will be the Uniform Residential Appraisal Report (1004/ 70), the Individual Condominium Unit Appraisal Report (1073/ 465), the Exterior Only Inspection Residential Appraisal Report (2055), and the Exterior Only Inspection Condominium Unit Appraisal Report (1075/ 466). They are looking for a marked improvement on the quality and consistency of appraisal data on loans delivered to the GSE's (Government Sponsored Enterprises). This UAD addresses inconsistencies in these reports, including variations in formatting numbers, dates, and measures; inconsistent terminology for identical information; and inconsistent use of descriptions.

To address these inconsistencies, the UAD standardization includes standardized formats for fields; allowable values from a list of choices provided for certain fields; standardized abbreviations; and standardized ratings and definitions for the "condition" and "quality" of the subject property and "Updated/Remodeled" status for kitchens/ baths, etc.

FNMA has rolled out some introductory material and training on their website, efanniemae.com. More is on the way. Also the appraisal software companies are scrambling to update the forms in question to be compliant by the end of 2Q-2011. This will allow some time for all concerned to obtain the proper training and get up to speed by the 9/1 deadline.

While this UAD information is relatively new and gray, I do know that these upcoming changes will make the implementation of the Market Conditions Report (1004MC) in 2009 look like a walk in the park! What do I mean by this? Next time! In the meantime, Happy St. Patrick's Day!