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PMI Removal

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Question:&nbsp Is there anything different when doing appraisals for the sole purpose of the lender removing PMI?&nbsp The borrower is my client, that’s who ordered the appraisal, although the lender is Homecomings.&nbsp Should I state the purpose of the appraisal and intended user/s.

Answer:&nbsp The intended use of this report is for the homeowner to provide the lender with evidence of sufficient equity for PMI removal.&nbsp The intended users of this report are the homeowner and the homeowner’s noteholder.

Although this is not for procurement of a mortgage, it is a mortgage related transaction and the the new FNMA 1004 is acceptable. Check “other” as the “Assignment Type” and enter “PMI Removal”. There is no harm in using the old FNMA form but there is no need.

We used to get a letter from the noteholder that outlined the Scope of Work, intended use, intended users, and listed the approved appraisers by name or classification.&nbsp If the SOW is different than the SOW printed on the URAR, you will have to include the additional work to be performed.&nbsp I don’t know a letter of instructions is still provided.

Reference: &nbspGeorgia Appraiser Forum

GLA — Bracketing

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Question:  I have performed an appraisal on a renovated like
new home, my comps are all renovated, in the same subdivision, within
the last six months, and vary from 100 sq ft to 125 sq ft larger than
the subject.  The reviewer says I should have used a comp with square
footage that is less than the subject even though it “needs some TLC”
according to FMLS.  I did not use this sale because it requires a
highly subjective condition adjustment.  Is bracketing by square
footage an absolute rule?

Answer:  FHA requires that you bracket by size and sales price or explain why you didn’t.  (Appendix D,
page 6).  Since FNMA does not mention bracketing, the FHA rule is a
good one to follow.

If you have explained why you didn’t bracket by GLA, the underwriter
should be satisfied.  I wouldn’t make a big stink out of this,
however.  If the underwriter insists, use the inferior house as a
fourth comparable sale and explain that you included it at the request
of the lender and didn’t consider it in your final opinion of value.

Original Thread on the Georgia Appraiser Forum

GLA — Sunroom

I did an inspection this afternoon and homeowner had built a sun room addition.   The homeowner showed me building
permit.   The sun room was finished beautifully inside and exterior matches original.  This area is cooled and heated with a 14,000 BTU window unit.   The kitchen opens to this area through sliding doors which are kept open.  Is the fact that area does not have central heat and air a problem?  Or can the room be included in GLA?   The homeowner has contractor’s license and oversaw all
construction.  (Spent big bucks for this area and as I said, it is beautifully finished.)

Answer: So I can discuss this in specifics, let’s say the addition is 500 square feet and that a typical buyer would pay $20,000 extra for this feature.

The market sets value, you only provide an opinion of what that value is.  Your label (sun porch or GLA) doesn’t make one twit of difference to the market.  It will be worth $20,000 whether you call it GLA, a super nice sun porch, or a reading room.

With the understanding that you can call it what you want, then call what will be most clearly understood by the client.  FHA, FNMA, and ANSI say that enclosed heated area above grade is living area so I would lean toward living area.  I would have to see the house and the improvement.

How much should you adjust?  Mark Ratterman once said “Cost minus Depreciation = Value”, No Exceptions”.   Ask the contractor the cost and then ask him what he would charge to build one exactly like it on your
house.   The larger number is the cost if the profit and overhead are reasonable.   Subtract a percentage for the superadequacy (depreciation) and you will have your value adjustment.

Again, the contributory value of the addition does not change a nickel regardless of what you call it.  The method of heating and cooling is not an issue.

Original Thread on the Georgia Appraiser Forum

MLS Photos in an Appraisal

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Question:  Is it OK to use pictures from MLS in your report?  I had a comparable property on 6 acres of land and the house was was not visible in the picture that I took.  Can I copy and paste the picture of the comp from the picture in MLS?

Answer:  It is OK to use photos from MLS in your report, however, I advise keeping a photo of something recognizable such as a mailbox, sign, or fence so you can prove you have actually exercised "due diligence" in your appraisal.

I would also include a statement similar to the following:

Recommended Comment:

"The photo of comparable sale number 3 is from MLS.  The house was not
visible (or barely visible) from the street.  A copy of the appraiser’s
photo of the property is on file if needed."

Fannie Mae does not require that you include a statement regarding the photo or the photo that you actually took.  The Fannie Mae selling guide, part 11 paragraph 204.01 says:

Quote:

"Generally, photographs should be originals that are produced by
photography or electronic imaging; however, copies of photographs from
a multiple listing service or from the appraiser’s files are acceptable
if they are clear and descriptive."

FHA wants a copy of the photo you actually took in addition to the MLS photo.  Appendix D, page 13 says:

Quote:

"The photos taken by the appraiser are considered evidence of
compliance with the Scope of Work of having inspected each comparable
sale from the street.  Use of MLS photos to exhibit comparable condition
at the time of sale is acceptable; however, the appraiser must include
their photos as well to document compliance"

FHA — Updating Roster Status

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Question:  I took your class in
March (03/21 to 03/22) and I had my license
updated shortly after (03/26/07 +/-).  I tried to renew my FHA status,
but ASC
has not been updated by the Georgia Appraisers Board at the time.  Do you know why
this would
happen?  What do you think I should do?  My FHA status expires 04/30/08.

Answer:  Georgia updates ASC on the 15th day of each month (or the first business day
after the 15th).  Sometime they are late.  I remember one month when
they didn’t update until the 22nd because the guy responsible for the
update was on vacation.

Keep checking the ASC Web Site
to make sure your license has been updated and then send your renewal
request to HUD.  They give you a 30-day grace period for renewal so you
won’t lose your status until May 31.

You should always check ASC BEFORE you send your license renewal request to HUD.

Anybody
who does FHA appraisals on a regular basis should not procrastinate on
renewing his/her license.  Try to renew two or three months in
advance.  At the very latest, renew by the 14th of your birth month.
If the 14th falls on a holiday, renew on the previous business day.  If
you don’t, FHA will put "In 30-day Grace Period" by your name on the
FHA roster.

FHA — Attic Inspection

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Question:  Are we still required to bring a ladder in order
to inspect the attic of a home which has a scuttle?  A client is
telling me that we’re still required to do a "head & shoulders"
inspection of every attic.   I thought that went away with the VC
sheets.

Answer:   Attic â?? Enter the attic and observe the interior
roofing for insulation, deficient materials, leaks or readily
observable evidence of significant water damage, structural problems,
previous fire damage, FRT sheathing, exposed and frayed wiring and
adequate ventilation by vent, fan or window. If any of these
deficiencies exist, condition the appraisal on their repair and prepare
the appraisal "subject to repairs" and/or "subject to inspection".  The attic must be entered,
at a minimum, by head and shoulders, whether access is by pull-down
stairway or scuttle.  Size of the scuttle and accessibility of the
attic dictate the level of entry.

Source â?? 4150.2 Appendix D, Page D-22

Question:  The homeowner has a small scuttle in a small
closet full of clothes and crap, not to mention that the closet rod and
shelf must be removed to enter the attic.  Homeowner isn’t home.  What
do you do?  Homeowner is home.  What do you do?

Answer:  If unable to visually evaluate the improvements in
their entirety, contact the lender and reschedule a time when a
complete visual inspection can be performed.  This includes access to the crawl space and attic.
The appraiser is not required to disturb insulation, move personal
items, furniture, equipment, plant life, soil, snow, ice or debris that
obstructs access or visibility.

Source –?? 4150.2 Appendix D, Page D-3

FHA — Reverse Mortgage

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Question:  I know that a reverse mortgage has to follow FHA guidelines, I just
wanted to make sure that I wouldn’t be missing anything else.  Are
there any additional forms that I should include or any additional
comments that state that the appraisal is done for a reverse mortgage?
Thanks.

Answer:  There is no difference in a reverse mortgage appraisal and a normal FHA appraisal.

HOC Reference Guide, Page 1-12

Experience — Appraisals without a client

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Question:  I have heard that I can gain experience credit by doing "appraisals without a client" under the supervision of a school or even doing a vacant house on my own.  Is this information accurate?

Answer: Your information is accurate.

See PDF page 28 of The Real Property Appraisal Criteria, AQB, 2006

”Appraisals in conformance with USPAP may be made without a client.   They can qualify for experience credit toward a credential, but there are special considerations a credentialing authority must consider.   Without a client, the appraiser determines the type of appraisal and type of report. In instances where appraisals were never presented to anyone with a stake in a potential transaction, there is no oversight entity to verify data and ensure that it was correctly analyzed and interpreted.   There is no potential for feedback to the appraiser on his or her performance.”

The same document (PDF page 34) says:

”There need not be a client in order for an appraisal to qualify for experience, but experience gained for work without a client cannot exceed 50% of the total experience requirement.   Case studies or practicum courses that are approved by the AQB Course Approval Program can satisfy the non-client experience requirement.”

Conclusions:

• An appraiser can do 50% of total experience without a client.  Supervision by a school appears to be optional.
• These are AQB rules. Comments by Jeff Ledford at the Appraisers Coalition Meeting in February 2008 indicate that appraisals without a client are acceptable to the GREAB.

Experience — Drive Time

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Question:  I have been told that drive time counts as experience credit for licensing or certification credit.  Is this correct?

Answer:  The AQB allows drive time to count as experience credit if it is part of the "Appraisal Process".  See item 10 on page 28 of "The Real Property Appraisal Qualification Criteria" published by the AQB which says:

The time spent driving to and from an appraisal assignment (“drive time”) may qualify as appraisal experience if it is considered to be a part of the appraisal process. (adopted, February 1997)

Conclusion:  I am not sure how to interpret the phrase "if it is part of the appraisal process".  There is no mention of drive time in the definition of the appraisal process in the USPAP but there is also no mention of measuring the house.  I am going to go out on a limb and say that to gather relevant data, you must drive and that a reasonable amount of drive time time can be counted toward experience.