Commercial Grade is a weekly post by John Cicero, MAI who provides commentary on issues affecting real estate appraisers, with specific focus on commercial valuation. Today John talks the newly created art of sifting through client memos regarding the new USPAP.
Disclosure: John is a partner of mine in our commercial real estate valuation concern [Miller Cicero, LLC](http://www.millercicero.com) and he is, on
Thursdays Fridays, one of the smartest guys I know. …Jonathan Miller
The new and supposedly improved USPAP went into effect on July 1, and there has been a flurry of memos sent out by major lending institutions to “clarify” their positions. Two such institutions, amongst the largest in the country, have adopted the following guidelines:
Since [USPAP](http://www.appraisalfoundation.org/s_appraisal/sec.asp?CID=3&DID=3) now says that the terms “limited” and “complete” are obsolete, their internal guidelines calll for “comprehensive”, “condensed” and “concise,” each with its own requirements.
The three C’s. Simple! Another major institution reports that they will continue to use “complete” and “limited” in order to provide minimum standards and guidance for scope of work determination. In this case the “complete” and “limited” labels, although eliminated from USPAP, have been adopted by internal Bank policy. Its clear that other institutions will follow suit and adopt their own creative policies to communicate what they expect.
So in this new order, the fee appraiser need only to sift through a 12 page memo issued by a Bank in order to understand their defintion of different levels of Scope of Work.
[Can we make it anymore difficult for appraisers? -ed]
Tags: Soapbox Blog, USPAP, Commercial Grade
My name is Steven Krystofiak, President of the Mortgage Brokers Association for Responsible Lending. http://www.mbarl.org I have a letter in a word document form that highlights the risks of the current loan industry unrealized by regulators and economists alike, mainly due to stated income loans. Email me at firstname.lastname@example.org if you want me to send you a copy.
~ Steve Krystofiak 13 main points in the letter are; 1. Stated income loans are associated with fraud, and started to become popular in 2002. 2. Banks originate these loans because they are profitable and then sell them to reduce their risk. 3. Fraud is encouraged by the banks 4. Stated income loans help no one. 5. Exotic loans originated with stated income are now causing foreclosures or forcing homeowners to refinance into negatively amortized loans. 6. Stated income loans are why home prices have skyrocketed. They have caused a large demand in the US housing supply. 7. Banks have sold their loans and have already made their profit. Investors will soon realize stated income loans are too risky and stop purchasing them. 8. Almost anyone can get a stated income loan for $950,000. 9. Stated income loans cost consumers hundreds of dollars a year because of higher interest rates. 10. Stated income loans allow tax cheats to purchase homes easier. 11. Stated income loans are not always faster than fully documented loans. 12. Appraised values are often inflated. Underwriters are basing their decision on inflated home values, inflated incomes and inflated assets. The only “real” number is the FICO (credit) score. This is why underwriters have become focused on FICO scores. 13. Rules are not enough, they must be enforced.
JohnBoy-has Jonathan promoted you to 2 days of being the wisest man (i.e. on Friday as weel as Thursday) or has he rescinded thursday & substituted Friday??