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Hot Topics in Appraisal
John Bredemeyer, SRA
President
Realcorp Inc
Two Major Changes
Dodd-Frank Financial
Reform Bill (HR 4173)
Interagency Appraisal and
Evaluation Guidelines
 Truth in Lending;
 Interagency Appraisal
Interim Final Rule
 October 28, 2010
and Evaluation
Guidelines
 December 2, 2010
Truth in Lending; Interim Final Rule
 Lenders and Agents (AMCs) required to pay Appraisers
“customary and reasonable” fees
 The “customary and reasonable” fee provision, which is now
part of TILA, will be in effect as of October 19, 2010
 Dodd-Frank states that evidence for customary and
reasonable fees may be established by objective thirdparty information, such as government agency fee
schedules, academic studies, and independent private
sector surveys issue interpretive guidance
Truth in Lending; Interim Final Rule
 Upon release of the interim final rule, the Home Valuation
Code of Conduct shall have no “force or effect
 Dodd-Frank grants authority to various agencies, including the
Federal Housing Finance Agency, to issue interpretive
guidance
 States enact AMC registration and supervision laws. States
will have until at least 2014 to enact state AMC laws
 Nebraska has drafted an AMC law – currently being considered
by the legislature.
Truth in Lending; Interim Final Rule
 At a minimum, state AMC laws must
 AMCs register with and be subject to supervision by the state
appraiser licensing and certification entity
 AMCs verify that they only utilize licensed or certified
appraisers for federally related transactions
 Require that appraisal coordinated by the AMC comply with
USPAP
 Require that appraisals are performed independently and free
from inappropriate influence and coercion
Truth in Lending; Interim Final Rule
 Broker Price Opinions (BPOs)
 H.R. 4173 prohibits BPOs being used as the primary basis to
determine the value of a piece of property for the purpose of
loan origination in conjunction with the purchase of a
consumer’s principle dwelling.
 The provision is intended to codify GSE policies that prohibit
the use of BPO’s in mortgage loan origination.
Interagency Appraisal and Evaluation
Guidelines - Independence of the
Appraisal and Evaluation Program
 Permitted Communication
 Consider additional information about the subject
property or about comparable properties.
 Provide additional supporting information about the
basis for a valuation.
 Correct factual errors in an appraisal
Interagency Appraisal and Evaluation
Guidelines - Independence of the
Appraisal and Evaluation Program
 Unacceptable Practices
 Communicating a predetermined, expected, or qualifying
estimate of value, or a loan amount or target loan-to-value
ratio to an appraiser or person performing an evaluation.
 Specifying a minimum value requirement for the property
that is needed to approve the loan or as a condition of
ordering the valuation.
 Conditioning a person’s compensation on loan
consummation.
Interagency Appraisal and Evaluation
Guidelines - Independence of the
Appraisal and Evaluation Program
 Unacceptable Practices
 Failing to compensate a person because a property is
not valued at a certain amount
 Implying that current or future retention of a person’s
services depends on the amount at which the appraiser
or person performing an evaluation values a property.
 Excluding a person from consideration for future
engagement because a property’s reported market
value does not meet a specified threshold
Interagency Appraisal and Evaluation
Guidelines - Independence of the
Appraisal and Evaluation Program
 Approved Appraiser List
 For residential transactions, loan production
staff can use a revolving, pre-approved appraiser
list, provided the development and maintenance
of the list is not under their control.
Fannie Mae
Announcement
SEL-2010-14
October 15, 2010
 Fannie Mae has been working with the
Federal Housing Finance Agency, Freddie
Mac, and key industry participants to
develop Appraiser Independence
Requirements to replace the Home
Valuation Code of Conduct (HVCC).
 The revised requirements pose no
significant changes to core principles of
the HVCC and incorporate language to
clarify questions that arose in the
implementation of the HVCC.
Fannie Mae
Announcement
SEL-2010-16
December 1, 2010
Selling Guide
Updates
In Announcement SEL-2010-14, Appraiser Independence Requirements,
Fannie Mae introduced the Appraiser Independence Requirements that replace
the Home Valuation Code of Conduct (HVCC) which has been retired. All
Selling Guide references to the HVCC have been replaced with
references to the Appraiser Independence Requirements:
 A3-2-01, Compliance with Laws


B4-1.1-01, General Information on Appraisal Requirements (Appraiser
Independence Requirements)

B4-1.1-03, Appraiser Selection (Use of Third-Party Vendors)

D1-3-05, Lender Post-Closing QC Review of Appraisers and Appraisals
(Appraiser Independence Requirements)

E-1-02, Acronyms and Abbreviations
Fannie Mae and Freddie Mac
Lender Letter LL2010-15
December 16,
2010
Uniform Appraisal
Dataset and
Uniform Collateral
Data Portal
 In an effort to enhance appraisal data
quality and consistency and promote the
collection of electronic appraisal data,
Fannie Mae and Freddie Mac, at the
direction of their regulator, the Federal
Housing Finance Agency (FHFA), have
worked together to develop the Uniform
Appraisal Dataset (UAD) and the
Uniform Collateral Data Portal
(UCDP).
Fannie Mae and Freddie Mac
UAD
Appraisal
Forms
 The following appraisal report forms collectively
referred to as the “four UAD appraisal report
forms”
 Uniform Residential Appraisal Report (Fannie Mae Form 1004)
 Individual Condominium Unit Appraisal Report (Fannie Mae
Form 1073)
 Exterior-Only Inspection Individual Condominium Unit
Appraisal Report (Fannie Mae Form 1075)
 Exterior-Only Inspection Residential Appraisal Report (Fannie
Mae Form 2055)
Fannie Mae and Freddie Mac
 The UAD standardizes the input values for
Uniform
Appraisal Dataset
Requirements
certain elements (e.g. specific date and dollar
amount formats) and standardizes the
definitions for select key appraisal data
elements (e.g. property condition and quality of
construction) on the four UAD appraisal report
forms.
 The UAD is required for appraisals with
effective dates on or after September 1, 2011
that are completed on the four UAD
appraisal report forms.
Challenges 2011
 Underwriting requirements
 Appraisal Management Companies
 Appraisal Fees
 Competition
 Volume