Appraisal Today 
 
NEWZ:///Background checks/Appraiser on TV/FHA-attic inspection
- September 3, 2015
A Question from LIA's Claudia Says: 
A unique situation; is it considered a claim against me?

E&O insurance

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Course Title:   NEW
FHA Appraiser Training (Atlanta Homeownership Center)
Date/Time:
Tuesday, September 15, 2015  8:30 AM to 4:00 PM (Eastern)
Event Location:
Atlanta Homeownership Center
40 Marietta Street
Five Points Plaza
Atlanta, GA 30303
Registration Link:
Description:
This FREE FHA on-site training is intended for appraisers, mortgage loan professionals, including underwriters and loan officers. The training is designed to assist in preparing the industry for the release of new FHA Single Family Housing Policy Handbook 4000.1. Discussions to include changes, policy clarifications and updates on topics such as: property acceptability criteria, underwriting the appraisal, minimum property requirements, defective property conditions, enhanced appraiser responsibilities and requirements, programs and products (i.e., 203(k), EEM) and much more.
Special Instructions:
There is no fee for this training. Registration is required; walk-ins will not be admitted.  Seating is limited; please register early.  Check in will begin 30 minutes before the beginning of each session.  A government issued photo I.D. is required for entrance into the building.  Parking is available in nearby garages and lots for a fee.  Lunch is on your own. For more information, contact Brandi Young ([email protected]) (678) 732-2276.

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BofA Unit To Pay $36M To Settle Appraiser Overtime
 
Excerpt:
Bank of America Corp.'s appraisal subsidiary, Landsafe Appraisal Services Inc., will pay $36 million to settle a class action accusing it of misclassifying residential real estate appraisers as exempt from overtime, according to a Monday filing in California federal court.
 
Seeking preliminary approval of the settlement, plaintiffs' attorneys heralded the "enormous payday" that would come with the deal, under which 365 class members would receive approximately $100,000 each.
 
... in October of last year. JPMorgan agreed to pay $2.4 million to resolve a putative class action alleging the company incorrectly classified commercial real estate appraisers as exempt from overtime.
 
Full press release from law firm:
 
 
My comment: Nothing new. The issue of paying overtime to employee appraisers has been around many years. It was an issue when I started my appraisal business in 1986. I always made sure my employee appraisers did not work over 40 hours in a week. Payment on a fee split does not exempt from over time. Another employee trainee issue is payment of minimum wage for hours worked for those who pay their trainees very little.
 
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Appraisers on TV
 
 
Excerpts:
...  At my house HGTV is on nearly all the time. It's not surprising that people tune in to watch renovation rescues or rehab shows. We have all been there at some point but it's so interesting to see a home renovation take place in a span of sixty minutes. Why is it then that you never see the valuation professional? Real estate appraisers play such a vital role in this process. This is not the case on the new HGTV show "Beach Flip". This show brings in 11 area appraisers to give their opinion of value. We were lucky enough to speak with Drew Watson one of the 11 appraisers and ask him about the process. We thought our readers would enjoy the inside look.
 
Buzz: How did you get involved with this project on HGTV?
Drew:  I received a call one day from the Beach Flip producers in New York who had received my name from local real estate agents in Gulf Shores, Alabama.  We did a couple of phone interviews then I submitted a video.
 
Buzz: What is the basic concept of the show Beach Flip?
Drew:  To evaluate which design team used its scarce resources most wisely in the remodeling efforts to produce the highest percentage increase in perceived market value from the perspective of market experts.
 
To read the full story click here:
 
My comment: The last time I saw an appraiser on TV were the infamous "Vic" the appraiser who almost got beat up (or got beat up.... I forget ;> by Tony Soprano's goons ;>
Check it out here. The first minute is about Vic. He was on several episodes.

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FHA Appraisers........
 From Dave Towne, of course!!

FHA has always had a requirement for appraisers to inspect 'attics.'  However, HUD/FHA does not have a real definition of 'attic' in their documentation.
 
Because there is no definition of 'attic', assumptions have been made by FHA and appraisers that the 'attic' includes any space above the ceiling and below the roof inside dwellings - despite that space in modern design homes typically not having any flooring.
 
An appraiser in WA State (not me) was concerned about this inspection requirement and sent an inquiry question to HUD/FHA.  Their response is below .....  be sure to read this very carefully because it probably will alleviate fears some appraisers have (I have added enhancements to the typeface for emphasis):
 
FHA attic observation requirements will not change on September 14, 2015 when the 4000.1 handbook becomes effective.  FHA requires that the appraiser observe the attic for evidence of needed repairs and non-compliance with FHA property eligibility requirements.  If the appraiser cannot observe the entire attic, a head and shoulders observation along with an explanation from the appraiser regarding why the entire attic could not be observed is sufficient.
 
If the attic does not have a floor for the appraiser to stand and walk on and the appraiser believes that it would be both dangerous to the appraiser and possible damaging to the home, the appraiser may perform a head and shoulders observation and explain to the lender the circumstances and scope of the appraiser's work.
 
DISCLAIMER: All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.
 
This kind of language should be added to your FHA reports.  The Scope of Work you performed needs to be explained.
 
You should always include your own multiple photos of the 'attic' and crawl spaces in the report.
 
NOTE:  if the 'attic' or crawl space accesses are not readily accessible, you should take photos showing what you observed relative to where those are located, and also include an explanation of why a required inspection of an inaccessible space was not done.  That is acceptable to FHA.  You are not required to move anything (other than the simple covers), open walls, use dynamite, etc.,  to access these areas.
 
My comment: I have heard this before many times from experienced FHA appraisers. But, since I haven't done FHA since 1988 (too many requirements and reviews), I didn't think I would be the best person to write about it ;> Thanks to Dave for writing this  up!!

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Background Checks/Third Party Relationships
Another Great Email from Dave Towne, WA appraiser!!
 
Appraisers.....
 
One of the recent thorns in appraisers' sides has been the issue of Background Checks (BC's).
 
A key reason for this is the Office of the Controller of the Currency (OCC) bulletin, which outlines the management responsibility banks must take when dealing with 'third parties' .... link here: http://www.occ.gov/news-issuances/bulletins/2013/bulletin-2013-29.html
 
Third parties include the AMC's banks use to 'manage' their appraisal orders, and vendor appraisers.
 
The bulletin puts the fear of God into bank Board of Directors.  Since @#$% runs downhill, the banks are telling AMC's that they must improve how they 'vet' appraisers on their panels.  Many AMC's are taking the position that their panel appraisers must have a BC to be sure the appraiser is white as the driven snow (not a reference to race here), and ultra clean.
 
The difficulty for appraisers is mostly related to the acceptance of BC's.  Most AMC's have taken the position that 'you' (the appraiser) must provide a BC through the AMC's selected contractor who does the BC.  If an appraiser works for multiple AMC's, the hassle and expense increases.  Typically, individual separate AMC's do not accept a BC from a company they are not joined at the hip with.
 
To be fair, some of the 'better' AMC's provide a BC to their individual vendor panel appraisers at no cost to the appraisers.
 
The other exacerbating factor is most states currently do not do BC's for renewing appraisers, and in some cases, currently don't do them for new appraiser license applicants.  That will change in 2017 when the AQB has mandated that all NEW APPLICANTS must have BC's done by the state as part of the application process.  The AQB policy does not address license renewals by existing appraisers - individual states will decide what to do for those.
 
There is no current way (that I know of) for an appraiser to get a 'formal' background check by any certified entity, including the state police agency, and then make that BC available to any requesting party - such as an AMC.  I'm not even certain that an individual can be given a copy of a BC done on them.  Some claim 'privacy rights' will be violated.  Really?  If I go into my local sheriff office and request a concealed carry permit, a BC will be done.  Since I have not done this, I'm not sure if the BC result will be given to me.  But if it is, why couldn't a copy of that document be given to an AMC to satisfy the BC requirement?  Or is this considered to be something akin to a borrower paying for the appraisal report, but not really 'owning' the report?  I frankly don't know.
 
There are two individual companies I know of who claim to do this - using another BC providing entity  - but it only works for AMC's who are subscribers to that company's data base of appraisers, and appraisers who must 'sign up' to be on that list.  Since there are approximately 450 AMC's in the US, and 17,000 +/- appraisers, this won't work for the vast majority of AMC's or appraisers who are not joined with either company.  Both of these companies require annual BC renewals, which cost about $60.
 
This BC issue is a major conundrum for appraisers.  It's currently not possible to "cross pollinate" multiple AMC's using one BC provided by a certified company who provides BC's.  Most states don't have the resources to archive individual BC's from multiple appraisers, and make the correct one for a certain appraiser available to a requesting third party AMC.
 
The only real sensible way to solve this problem is for states to do BC's on BOTH renewing appraisers and new applicants, and certify that the individual meets acceptable criteria to hold the appraiser license per state criteria.  No license would be issued if criteria was not met.  That way, multiple BC's requested from individual companies, and paid separately by the appraiser, won't be necessary.  However, it does not solve the problem of current existing appraisers between renewal cycles who want to work for certain AMC clients.
 
This issue is one the various appraiser organizations and the one appraisers' union should address - working collaboratively without turf wars.  They need to work with everyone connected to the mortgage lending process, all regulators, Congress and the States to come to a workable process to make this work efficiently, at the least expense for appraisers.
 
Dave Towne, AGA, MNAA     Owner / Educator
Certified Residential RE Appraiser                 
Appraiser Education Service
360-708-1196                                                     
[email protected]                       
www.towneappraisals.com
Mount Vernon, WA  
                                                         
My comment: I get a lot of questions about this issue from appraisers. Thanks to Dave for discussing it. I am in CA and background checks (including fingerprinting) have always been required for new appraisal licensees. But, none after the initial licensing. I was licensed around 1993. That is a long time ago. I don't know what other independent contractors are required to provide BCs, such as underwriters. Have you ever had any client except AMCs request background checks? If you know, please hit the reply button and tell me!! BCs have been done for all employees for quite a while.

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The Mass Litigation Phenomenon Involving Llano Financing, Impac Funding and Others
 By Peter Christensen, www.liability.com 
Excerpt:
It is very important that appraisers and appraisal firms - small and large - and also appraiser regulators understand a new mass litigation phenomenon that is affecting hundreds of residential appraisers in at least 10 states (so far).
 
Appraisers are being targeted in lawsuits by investment entities named Llano Financing Group, Mutual First, First Mutual Group and Carrington Capital Management; and behind these entities is Savant LG, aka Savant Claims Management, and its principals.  As of this date, these entities have filed  about 340 lawsuits against appraisers in 2014-2015. They are not banks, credit unions or any kind of regular financial institutions. They are investor-backed vehicles aiming to make money by suing appraisers.  They acquire long-ago foreclosed loans for small fractions of the original principal amounts and then file lawsuits against the appraisers who performed appraisals years ago for the original lenders.
 
Read more, plus comments at:
www.appraisalbuzz.com/the-mass-litigation-phenomenon   

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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go 
 
Note: I publish a graph of this data every month in my printed newsletter, Appraisal Today. For more information or get a FREE sample issue go to http://www.appraisaltoday.com/products.htm or send an email to [email protected]  . Or call 800-839-0227, MTW 8AM to noon, Pacific time.

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WASHINGTON, D.C. (September 2, 2015)
 - Mortgage applications increased 11.3 percent from one week earlier,
according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending August 28, 2015.
The Market Composite Index, a measure of mortgage loan application volume, increased 11.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10 percent compared with the previous week. The Refinance Index increased 17 percent from the previous week to its highest level since April 2015. The seasonally adjusted Purchase Index increased 4 percent from one week earlier to its highest level since July 2015. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 25 percent higher than the same week one year ago.

"Although mortgage rates were unchanged for the week, Treasury rates were down sharply early in the week due to the global stock market rout and this led to a significant increase in application volume," said Mike Fratantoni, MBA's Chief Economist.

The refinance share of mortgage activity increased to 58.7 percent of total applications from 55.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.5 percent of total applications.

The FHA share of total applications decreased to 12.7 percent from 13.1 percent the week prior. The VA share of total applications decreased to 9.8 percent from 11.4 percent the week prior. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.08 percent, with points increasing to 0.37 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.05 percent from 4.00 percent, with points increasing to 0.28 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.87 percent from 3.90 percent, with points increasing to 0.32 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.30 percent from 3.33 percent, with points decreasing to 0.26 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.05 percent from 2.96 percent, with points unchanged at 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100
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