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January 24, 2012

letter distributed by the Appraisal Foundation (TAF)

Lori,

Appraisal Subcomitte

Recently, I was made aware of a letter distributed by the Appraisal Foundation (TAF) in response to a publication by the National Association of Home Builders.  The significance of the TAF letter was that appraiser have the freedom to choose whatever comps they feel are relevant to their valuation-including no arm's length sales to opine Market Value.  This practice is an apparent violation of acceptable appraisal practices.  I requested and then demanded that they send me a citation supporting this argument along with one indicating that their response was sanctioned by their bylaws.  They, again, refused.  I then demanded the information, along with comprehensive resume's indicating that they were competent to derive such conclusions, under the Freedom of Information Act (FIA.)  They again refused, stating that they were not subject to the FIA because they are a Private Non-profit organization.

 

This leads me to believe that they are incompetent for their positions, and that their actions have contributed to an unnecessary geometric decline in real property values.    My complaints are:

 

1. It is not within their purview to make requested or unrequested public comments re Appraisal Practices.

 

2. They are incompetent to make such statements.

 

3. They have no standing when it comes to an exemption of the FIA.

 

Thanks!

Curtis D. Harris, BS, CGREA, REB

Bachelor of Science in Real Estate, CSULA

State Certified General Appraiser

Real Estate Broker

ASTM E-2018 Commercial Real Estate Inspector

HUD 203k Consultant

HUD/FHA Real Estate Appraiser/Reviewer

FannieMae REO Consultant

CTAC LEED Certification

 

The Harris Company, Forensic Appraisers and Real Estate Consultants

*PIRS/Harris Company and the Science of Real Estate-Partners*

1910 East Mariposa Avenue, Suite 115

El Segundo, CA. 90245

310-337-1973 Office

310-251-3959 Cell

WebSite: http://www.harriscompanyrec.com

Resume: http://www.harriscompanyrec.com/CURRICULUMVITAENAME2011a.pdf

Commercial Appraiser Blog: http://harriscompanyrec.com/blog/

 

We Make a Simple Pledge to

 

Communicate, in a timely fashion, each appraisal, analysis, and opinion without bias or partiality

 

Abstain from behavior that is deleterious to our clients, the appraisal profession, and the public

 

Hold paramount the confidential nature of the appraiser/consultant - client relationship

 

and

 

Comply with the requirements of the Uniform Standards of Professional Appraisal Practice and the

Code of Professional Ethics of the National Society of Real Estate Appraisers

 

IT'S THE LAW- Statement 7: Prohibition Against Discrimination

State agencies should be aware that Title XI and the Agencies' regulations prohibit federally regulated financial institutions from excluding appraisers from consideration for an assignment by virtue of their membership, or lack of membership, in any appraisal organization. Federally regulated financial institutions should review the qualifications of appraisers to ensure that they are qualified for the assignment for which they are being considered. It is unacceptable to assume that an appraiser is qualified solely due to membership in, or designation from, an appraisal organization, or the lack thereof. The Agencies have determined that financial institutions' appraisal policies should not favor appraisers from one or more organizations or exclude individuals based on their lack of such membership. If a State agency learns that a certified or licensed appraiser allegedly has been a victim of such discrimination, the State agency should inform the Agency which has regulatory authority over the involved financial institution. INCLUDING THE APPRAISAL INSTITUTE-MAI

CONFIDENTIALITY/PRIVILEGE NOTICE: This transmission and any attachments are intended solely for the addressee. The information contained in this transmission is confidential in nature and protected from further use or disclosure under U.S. Pub. L. 106-102, 113 U.S. Stat. 1338 (1999), and may be subject to consultant/appraiser-client or other legal privilege. Your use or disclosure of this information for any purpose other than that intended by its transmittal is strictly prohibited and may subject you to fines and/or penalties under federal and state law. If you are not the intended recipient of this transmission, please destroy all copies received and confirm destruction to the sender via return transmittal

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UPCOMING CHANGES TO REAL PROPERTY APPRAISER QUALIFICATIONS

UPCOMING CHANGES TO REAL PROPERTY APPRAISER QUALIFICATIONS

On December 9, 2011, the Appraiser Qualifications Board of The Appraisal Foundation adopted changes to the

Real

Property Appraiser Qualification Criteria

 

that will become effective January 1, 2015. These changes represent

minimum national requirements that each state must implement no later than January 1, 2015.

OVERVIEW OF CHANGES

National Uniform Licensing

and Certification Examinations

Education and experience must be completed prior to

taking the AQB-approved

National Uniform Licensing and

Certification Examination

 

.

Background Checks

All candidates for a real property appraiser credential must

undergo background screening. State appraiser regulatory

agencies are

strongly encouraged to perform background

checks on

existing credential holders as well.

College Degree Acceptance and

Core Curriculum Requirements

Credit towards qualifying education requirements may be

obtained via the completion of a degree program in Real

Estate from an accredited degree-granting college or

university provided the college or university has had its

curriculum reviewed and approved by the AQB.

Deletion of the Segmented Approach

to Criteria Implementation

States had the option to implement the 2008

Real Property

Appraiser Qualification Criteria

 

via the “segmented

approach.” This implementation option will no longer be

valid effective January 1, 2015.

Restriction on Continuing Education

Course Offerings

Aside from complying with the requirements to complete

the

7-Hour National USPAP Update Course (or its AQBapproved

equivalent), appraisers may not receive credit for

completion of the same continuing education course

offering within an appraiser’s continuing education cycle.

Distance Education Requirements

A

written, proctored examination is required for all

qualifying education distance course offerings. The term

written

 

refers to an examination that might be written on

paper or administered electronically on a computer

workstation or other device.

Revisions to Subtopics in Guide Note 1 (GN-1)

and Continuing Education Topics

Added topics on green building (qualifying and continuing

education), seller concessions (qualifying and continuing

education) and developing opinions of real property value

in appraisals that also include personal property and/or

business value (continuing education only).

COLLEGE LEVEL EDUCATION REQUIREMENT CHANGES*

CLASSIFICATION CURRENT REQUIREMENTS 1/1/15 REQUIREMENTS

Trainee Appraiser

 

None None

Licensed Residential Appraiser

 

None

30 semester credit hours of collegelevel

education from an accredited

college, junior college, community

college, or university OR an Associate’s

degree or higher (in any field).

Certified Residential Appraiser

21 semester credit hours in

specified collegiate subject matter

courses from an accredited college

or university OR an Associate’s

degree or higher.

Bachelor’s degree or higher (in any

field) from an accredited college or

university.

Certified General Appraiser

30 semester credit hours in specific

collegiate subject matter courses

from an accredited college or

university OR a Bachelor’s degree

or higher.

Bachelor’s degree or higher (in any

field) from an accredited college or

university.

*These requirements are effective for individuals seeking a real property appraiser credential

after January 1,

2015. However, in some cases, the requirements may also apply to

existing real property appraisers (for example,

a state may require a credentialed appraiser to meet the new Criteria if he or she moves from a state that does not

have reciprocity with that state. Or some states may require appraisers seeking to change their credential level to

meet all of the 2015 Criteria prior to obtaining the new credential).

Credentialed appraisers are urged to

contact the applicable state appraiser regulatory agencies if they are contemplating relocation or changing

credential levels.

SUPERVISORY APPRAISER AND TRAINEE APPRAISER REQUIREMENT CHANGES

SUPERVISORY APPRAISER TRAINEE APPRAISER

State-certified Supervisory Appraiser shall be in good

standing with the training jurisdiction and not subject

to any disciplinary action within the last three (3)

years that affects the Supervisory Appraiser’s legal

ability to engage in appraisal practice. Shall have

been state certified for a minimum of three (3) years

prior to being eligible to become a Supervisory

Appraiser.

All qualifying education must be completed within the five

(5) year period prior to the date of submission of an

application for a Trainee Appraiser credential.

A Supervisory Appraiser may not supervise more

than three Trainee Appraisers at one time, unless a

state program in the licensing jurisdiction provides to

progress monitoring, supervising certified appraiser

qualifications, and supervision oversight

requirements for Supervisory Appraisers.

A Trainee Appraiser is permitted to have more than one

Supervisory Appraiser.

Shared responsibility to ensure the appraisal experience log for the Trainee Appraiser is accurate, current, and

complies with the requirements of the Trainee Appraiser’s credentialing jurisdiction.

Both the Trainee Appraiser and Supervisory Appraiser shall be required to complete a course that, at a minimum,

complies with the specifications for course content established by the AQB. The course will be oriented toward the

requirements and responsibilities of Supervisory Appraisers and expectations for Trainee Appraisers. The course

must be completed by the Trainee Appraiser prior to obtaining a Trainee Appraiser credential, and completed by

the Supervisory Appraiser prior to supervising a Trainee Appraiser.

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National Appraisal Board Adopts Changes to the

National Appraisal Board Adopts Changes to the 
Real Property Appraiser Qualification Criteria

Effective January 1, 2015

FOR IMMEDIATE RELEASE

January 24, 2012

Contact:

Paula Douglas Seidel

Executive Administrator

The Appraisal Foundation

paula@appraisalfoundation.org

direct phone 202.624.3048

 

Washington, DC — The Appraisal Foundation is pleased to announce that Proposed Revisions to the Real Property Appraiser Qualification Criteria (Criteria) have been adopted by the Appraiser Qualifications Board (AQB). The AQB is an independent Board of The Appraisal Foundation. The AQB is responsible for developing minimum qualifications for education, experience, examination and continuing education for real property appraisers in the United States.

 

The Criteria, which were adopted at the December 2011 meeting of the AQB, will be effective on January 1, 2015. The changes to the Criteria are the result of five public exposure drafts, covering a period of 15 months. Feedback was received from interested parties in the form of comment letters as well as comments made to the Board at public meetings. The changes to the Criteria will affect individuals seeking a real property appraiser credential as of January 1, 2015.  It is important to note that individual State Appraiser Regulatory Agencies may opt to implement the Criteria earlier than the 2015 deadline.

 

A summary of the changes to the Criteria include:

 

  • Education and experience will have to be completed prior to taking the National Uniform Licensing and Certification Examinations;
  • Applicants for the Certified Residential and Certified General classifications will have to possess a Bachelor’s degree or higher from an accredited college or university;
  • Applicants for the Licensed Residential classification will have to have successfully completed 30 semester hours of college-level education from an accredited college, junior college, community college, or university, or  have an Associate’s degree or higher from an accredited college, junior college, community college, or university;
  • All candidates will be required to undergo a background check;
  • Recognition of approved university degree programs as counting toward the education requirements in the Real Property Appraiser Qualification Criteria;
  • Removal of the “Segmented” Approach to the Real Property Appraiser Qualification Criteria implementation;
  • Prohibition of repetitive continuing education in the same continuing education cycle;
  • Clarification of the term “written examination”;
  • Revisions to the Trainee Appraiser classification that will include a requirement to take a course oriented to the requirements and responsibilities of Trainee Appraisers and Supervisory Appraisers;
  • New Supervisory Appraiser requirements;
  • Revisions to Guide Note 1; and
  • Additions to the illustrative list of educational topics acceptable for continuing education.

 

A more detailed summary of the changes to the Criteria is available at the following link:  

https://appraisalfoundation.sharefile.com/d/sd2f26fafefe402ab.

 

Any questions on the Real Property Appraiser Qualification Criteria and the work of the Appraiser Qualifications Board can be directed to Magdalene Vasquez, Qualifications Administrator at 202.624.3074.

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January 20, 2012

Appraisal Subcommittee Needs to Improve Monitoring Procedures

REAL ESTATE APPRAISALS

Appraisal Subcommittee Needs to Improve Monitoring Procedures

 

 

 

 

What GAO Found

The Appraisal Subcommittee (ASC) has been performing its monitoring role under Title XI, but several weaknesses have potentially limited its effectiveness. For example, Title XI did not originally provide ASC rulemaking and enforcement tools that could be useful in promoting state compliance. In addition, ASC has not reported or clearly defined the criteria it uses to assess states’ overall compliance levels. Title XI charges ASC with monitoring the appraisal requirements of the federal financial institutions regulators, but ASC has not defined the scope of this function—for example, by developing policies and procedures—and its monitoring activities have been limited. ASC also lacks specific policies for determining whether activities of the Appraisal Foundation (a private nonprofit organization that sets criteria for appraisals and appraisers) that are funded by ASC grants are Title XI-related. Not having appropriate policies and procedures is inconsistent with federal internal control standards designed to promote effectiveness and efficiency and limits the accountability and transparency of ASC’s activities.

ASC faces potential resource and planning challenges in implementing some Dodd-Frank Act provisions. ASC has only 10 staff and is funded by appraiser registration fees that totaled $2.8 million in fiscal year 2010. The Dodd-Frank Act expands ASC’s responsibilities and authorities. For example, the act requires ASC to establish a national appraiser complaint hotline and provide grants to state appraiser regulatory agencies, and it gives ASC limited rulemaking and enhanced enforcement authorities to help address prior weaknesses. As of October 2011, ASC had completed several implementation tasks that required no rulemaking or creation of new programs and was in various stages of progress on the others. The potentially resource-intensive nature of some remaining tasks will require careful planning. For example, operating a complaint hotline may require investments in information technology and the creation of screening and follow-up procedures. Also, implementing a grant program will require ASC to set aside funds, develop funding criteria, and oversee grantees. ASC is in the process of developing a strategic plan to help carry out these efforts with available resources.

GAO found that more than 70 percent of residential mortgages made from 2006 through 2009 were $250,000 or less—the regulatory threshold at or below which appraisals are not required for transactions involving federally regulated lenders. In recent years, however, the threshold has had a limited impact on the proportion of mortgages with appraisals because mortgage investors and insurers such as Fannie Mae, Freddie Mac, and the Federal Housing Administration have generally required appraisals for mortgages both above and below the threshold. While these entities currently dominate the mortgage market, federal plans to scale them back could lead to a more privatized market, and whether this market would impose similar requirements is not known. None of the appraisal industry stakeholders GAO spoke with argued for increasing the threshold. Some stakeholders said the threshold should be lowered or eliminated, citing potential benefits to risk management and consumer protection. Others noted potential downsides to lowering the threshold, such as requiring more borrowers to pay appraisal fees and requiring appraisals on more transactions for which cheaper and quicker valuation methods may be sufficient.

http://www.gao.gov/assets/590/587735.pdf

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Appraisal Subcommittee Needs to Improve Monitoring Procedures

REAL ESTATE APPRAISALS

Appraisal Subcommittee Needs to Improve Monitoring Procedures

 

 

 

 

What GAO Found

The Appraisal Subcommittee (ASC) has been performing its monitoring role under Title XI, but several weaknesses have potentially limited its effectiveness. For example, Title XI did not originally provide ASC rulemaking and enforcement tools that could be useful in promoting state compliance. In addition, ASC has not reported or clearly defined the criteria it uses to assess states’ overall compliance levels. Title XI charges ASC with monitoring the appraisal requirements of the federal financial institutions regulators, but ASC has not defined the scope of this function—for example, by developing policies and procedures—and its monitoring activities have been limited. ASC also lacks specific policies for determining whether activities of the Appraisal Foundation (a private nonprofit organization that sets criteria for appraisals and appraisers) that are funded by ASC grants are Title XI-related. Not having appropriate policies and procedures is inconsistent with federal internal control standards designed to promote effectiveness and efficiency and limits the accountability and transparency of ASC’s activities.

ASC faces potential resource and planning challenges in implementing some Dodd-Frank Act provisions. ASC has only 10 staff and is funded by appraiser registration fees that totaled $2.8 million in fiscal year 2010. The Dodd-Frank Act expands ASC’s responsibilities and authorities. For example, the act requires ASC to establish a national appraiser complaint hotline and provide grants to state appraiser regulatory agencies, and it gives ASC limited rulemaking and enhanced enforcement authorities to help address prior weaknesses. As of October 2011, ASC had completed several implementation tasks that required no rulemaking or creation of new programs and was in various stages of progress on the others. The potentially resource-intensive nature of some remaining tasks will require careful planning. For example, operating a complaint hotline may require investments in information technology and the creation of screening and follow-up procedures. Also, implementing a grant program will require ASC to set aside funds, develop funding criteria, and oversee grantees. ASC is in the process of developing a strategic plan to help carry out these efforts with available resources.

GAO found that more than 70 percent of residential mortgages made from 2006 through 2009 were $250,000 or less—the regulatory threshold at or below which appraisals are not required for transactions involving federally regulated lenders. In recent years, however, the threshold has had a limited impact on the proportion of mortgages with appraisals because mortgage investors and insurers such as Fannie Mae, Freddie Mac, and the Federal Housing Administration have generally required appraisals for mortgages both above and below the threshold. While these entities currently dominate the mortgage market, federal plans to scale them back could lead to a more privatized market, and whether this market would impose similar requirements is not known. None of the appraisal industry stakeholders GAO spoke with argued for increasing the threshold. Some stakeholders said the threshold should be lowered or eliminated, citing potential benefits to risk management and consumer protection. Others noted potential downsides to lowering the threshold, such as requiring more borrowers to pay appraisal fees and requiring appraisals on more transactions for which cheaper and quicker valuation methods may be sufficient.

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January 19, 2012

Statement 7: Prohibition Against Discrimination

Statement 7: Prohibition Against Discrimination

State agencies should be aware that Title XI and the Agencies' regulations prohibit federally regulated financial institutions from excluding appraisers from consideration for an assignment solely by virtue of their membership, or lack of membership, in any appraisal organization. Federally regulated financial institutions should review the qualifications of appraisers to ensure that they are qualified for the assignment for which they are being considered. It is unacceptable to assume that an appraiser is qualified solely due to membership in, or designation from, an appraisal organization, or the lack thereof. The Agencies have determined that financial institutions' appraisal policies should not favor appraisers from one or more organizations or exclude individuals based on their lack of such membership. If a State agency learns that a certified or licensed appraiser allegedly has been a victim of such discrimination, the State agency should inform the Agency which has regulatory authority over the involved financial institution.

The ASC has determined that such discrimination also is inappropriate in the establishment and administration of a State's certification and licensing system. The ASC urges States to adopt legislation, regulations or other procedures to prohibit such discriminatory practices.

In addition, State agencies should avoid discriminatory practices regarding appraiser educational course providers. Some State agencies inappropriately: (1) have charged a course review fee to private course providers while not charging such a fee to certain professional appraiser organizations; (2) have delayed approval of private school appraisal courses while rapidly approving those of professional appraiser organizations; and (3) have forced non-affiliated proprietary schools to maintain and use fixed school room locations, while certain professional appraisal organizations have been allowed to teach courses at non-fixed commercial sites, such as hotels, motels and office locations. State agencies should review their internal procedures and take steps to ensure that all educational providers are afforded equal treatment in all respects, including course review fees, timeliness of review and course location requirements.

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January 09, 2012

Brown Separates Transportation and Housing in State Reorganization

Brown Separates Transportation and Housing in State Reorganization

In releasing his proposed 2012-13 budget last Thursday, Gov. Jerry Brown also proposed a major reorganization of state government that would separate transportation and housing at the same time Brown’s policy thrust is intended to link the two closer together.

In particular, Brown has proposed a major restructuring of the Business, Transportation, and Housing (BTH) Agency that would have here parts:

* All housing functions, as well as business regulation functions, would be merged with the current State and Consumer Services Agency to create a new Business and Consumer Services Agency. Within this new agency, the Californai Housing Finance Agency would be merged into the Department of Housing & Community Development.

* Economic development functions within BTH, such as the California Infrastructure Bank, would be moved to the Governor’s Office of Economic Development.

* These changes would leave only transportation functions within BTH, which would be renamed the Transportation Agency. These functions include Caltrans, the California Transportation Commission, and the California High-Speed Rail Authority.

The separation of transportation and housing comes at a time when the Brown administration – as well as regional and local officials around the state – are trying to bring housing and transportation into closer alignment. In particular, SB 375 brought Regional Transportation Plans into close alignment with the Regional Housing Needs Assessment process, which is overseen by HCD.

“With the reorganization, it separates the disciplines of transportation, housing, and economic development,” said Mike McKeever, executive director of the Sacramento Area Council of Governments. “Those are disciplines that are important to be more and more integrated.”

For McKeever and the other metropolitan planning organizations -- which are charged with implementing SB 375 -- the reshuffle means they have more places than ever to go to in the state government. They have to interact with Transportation on transportation funding issues; with the California Air Resoures Bboard (part of the California Environmental Protetion Agency) on greenhouse gas emissions targets; and now with the revamped HCD, under Consumer and Business Services, on RHNA even though SB 375 calls for MPOs to address all three of these in concert.

But Anna Caballero, the former Salinas mayor and assemblymember who is Brown’s State and Consumer Services secretary, said she is optimistic about the restructuring’s impact on SB 375 planning and the role of the state’s Strategic Growth Council.

“I don’t see it being a problem,” said Caballero. “I really think the SGC is the place where you link the two.” Presumably Caballero will be the secretary of the combined agency containing the housing functions. She was actually mentioned as a possible HCD director before be selected as consumer secretary.

McKeever did not disagree. “What I think this means is that it’s going to be even more important than before that the SGC be an important, meaningful, component of the state government,” said McKeever. “And I hope that the governor would make it clear to the council that it’s a high priority of his that they use their statutory authority to integrate the various silos of state government.”

However, the reshuffle creates a problem at the SGC. The SGC has six members – including four Cabinet secretaries and the head of the Governor’s Office of Planning & Research – and is charged with coordinating all state actions to support the goal of sustainable development. However, while the BTH secretary is on the council, Caballero is not. A statutory change would be required to add her.

Although he has been in office for a year, Brown has never appointed a BTH secretary – the only Cabinet position he has not filled. Caltrans had not had a director since last spring, and veteran civil servant Cathy Creswell has been acting as the interim HCD director. The directorship of the Governor’s Office of Economic Development is also vacant.

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USPAP-UNIFORM STANDARDS OF PROFESSIONAL

USPAP-UNIFORM STANDARDS OF PROFESSIONAL
APPRAISAL PRACTICE!

 

 http://www.harriscompanyrec.com/USPAP.html

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December 30, 2011

What’s Wrong with American Housing? the Appraisal Institute/Appraisal Foundation, MAI.

This is a "must read" for everyone in real estate, including brokers, appraisers, lenders, and yes even homeowners.  It is not a direct condemnation of the appraisal institute/appraisal foundation, mai, but is illustrative of how their inane practices-the use of non-arm's length transaction as sale comparables-have extirpated the downward move in real estate prices.  One thing important to note is that when the author speaks of "normal" sales or prices is what we in the industry call "Market" sales or prices.  All italicized items are comments from Curtis D. Harris, BS, CGREA, REB   

FROM:

"Anthony Downs

The Brookings Institution

What’s Wrong with American Housing? the Appraisal Institute/Appraisal Foundation, MAI.

Foreclosures Are Suppressing Any Major Recovery in Housing Construction

Sales of foreclosed dwellings have increased greatly since 2006, from about 400,000 to almost two million in

2010. Foreclosure sales comprised a large percentage of all home sales in 2010, and will do so again in 2011. It

is difficult to determine exactly how many foreclosed homes have been sold monthly during any of the years from

2006 through April 2011. Realty Trac estimates that total housing foreclosure filings in each year were as shown

in the accompanying table “Calculating Normal and Foreclosure Sales and Prices, 2006-2010.” It usually takes

considerable time for each filing to result in seizure of the home by lenders and subsequent sales to buyers.

Roughly 25 percent of filings in any year result in foreclosure sales within that year; another 35 percent occur as

sales in the following year; the remainder are settled in some other way.

The National Association of Realtors (NAR) publishes the number of homes sold each year and estimates their

median prices. By subtracting the number of foreclosure sales from total sales, one can estimate the number of

homes sold that were not foreclosed. Realty Trac estimates the number of foreclosure filings each year and the

discount at which actual foreclosures are sold below “normal” prices. These inputs were used to construct the

accompanying table “Estimating Foreclosure and Normal Home Sales Prices by Trial and Error, Matching

Estimates to NAR Housing Data, With 30% Foreclosure Discount.”

This table shows that the percentage of all home sales each year consisting of foreclosure sales rose from 8.53

percent in 2006 to 40.2 percent in 2010. This huge increase in the share of all home sales coming from

foreclosures has greatly reduced the average price of all home sales together. Yet none of the three major

home price indicators explicitly takes into account the influence of the rising share of discounted

foreclosure sales upon either the average overall price or the price of normal, non-foreclosed home sales.

As a result, all three price measures over-estimate the price declines of non-foreclosed homes. In fact, in

2010, as best I can estimate, the sales prices of non-foreclosed homes actually rose slightly at the same time that

the three most commonly used price measures showed a slight decline in average housing prices (including

foreclosure sales).

These factors hugely undermined the willingness of possible home buyers to purchase homes. That offset the

decline in home prices that might otherwise have increased home buying incentives.

Three additional factors reinforced the unwillingness of many households to buy a home (reduced demand.) One was the large inventory of unsold homes, constantly replenished by additional home foreclosures. Potential buyers are reluctant

to buy if they believe home prices might fall farther. Another factor was competition from speculative investors

who were willing to pay all cash to buy homes – especially foreclosed homes being sold at large discounts. Such

investors hoped to rent the homes they bought out and later sell them at a profit after the economy recovered.

The Major Measures of U.S. Housing Prices Provide Misleading Information About What

Is Actually Happening to Such Prices

There are three major sources of information about current housing prices in the United States: the Case-Shiller

Index, the National Association of Realtors (NAR) data, and the Federal Housing Finance Agency (FHFA) Index.

The Case-Shiller Index, owned by Standard and Poor’s, is the home price measure most often cited in the media.

It uses matched pairs of two sales of the same homes over time to measure price changes accurately, not

distorted by comparing prices of different quality homes. ( Now one must remember, what is the likelihood of a home selling twice within a short period 2006-2010 if there is sufficient equity, as opposed to one which is underwater over that same period of time.?  I propose that most of the paired sales used were foreclosure sales, reo sales, or short sales.)  However, it gathers data from only 20 major metropolitan areas in the United States, despite the fact that in 2009 the Census Bureau stated that there were 366 metropolitan areas (each with 50,000 or more residents). The 20 metro areas included in the Case-Shiller Index contained 104.9 million residents, or 40.78 percent of the entire U.S. metro population in 2009. Since the total U.S. population was 307.745 million in 2009, Case-Shiller covered only 34.4 percent of the total U.S. population,

omitting two-thirds. Moreover, the 20 metro areas in the Case-Shiller Index included most of those that had the

largest home price increases from 2000 to 2006. Hence they showed much greater home price increases from

2000 to 2006, and much larger declines from 2006 to 2010, than were true of home sales in the entire nation. This

can be seen in the accompanying chart entitled “Comparing Three Home Price Indices, 1989-2008.” It clearly

shows that the Case-Shiller Index rose much faster than the other two from 2000 through June 2006, then fell

faster than the other two through about May 2009.

transactions in over fifty metropolitan areas across the nation. From these data, the NAR computes the median

sales price for all these areas combined. However, the NAR price estimate suffers from two problems. First, it

uses median prices for each area and for the nation as a whole, rather than average prices. Second, it does not

correct for shifts in the sample of home types involved in sales during each period—so the median price actually

computed for sales in one period can be influenced by a change in the mix of types of homes sold from one

period to the next. On the other hand, since NAR uses data from a much larger number of metro areas than

Case-Shiller, errors caused by shifts in the types of homes being sold in each period are in part offset by the

larger sample of actual sales in far more locations.

The third index is the Federal Housing Finance Agency’s estimate of home sales prices. Its sample is confined to

purchase transactions eligible for financing by Fannie Mae or Freddie Mac. But it also uses data from many more

metro areas, grouped by regions of the country. And it uses the same matched pair analysis as the Case-Shiller

Index to protect from errors caused by changes in the types of homes that are sold in each period.

None of these indexes distinguishes between sales of foreclosed homes and sales of “normal” homes not

involved in foreclosures. But foreclosed homes typically sell at much lower prices than the same homes would if

they were not foreclosed. Realty Trac estimates that the average foreclosure discount is 20 to 30 percent.

Therefore, as the share of foreclosed sales rises in the total number of sales – as has been happening for several

years – the overall prices based on both types of transactions combined tends to decline, even if the sales prices

of “normal” (that is, non-foreclosed homes) are not falling at all. Based on data from Realty Trac, I estimate that

the share of foreclosed sales in total home sales has risen from about eight percent in 2006 to over 40 percent in

2010. For every 10 percent rise in the share of foreclosed homes in total sales above zero, the price of all sales

combined declines by one-tenth of the discounted price of foreclosure sales compared to normal sales. This can

be seen from the accompanying chart entitled “Relation Between Foreclosures and Overall Price Declines.”

The chart shows foreclosures are sold at prices 30 percent less than normal sales. Hence for every 10 percent rise in

the share of foreclosure sales, the overall price of all sales will be 3 percent lower than it would be without

foreclosure sales. Thus, if foreclosure sales reached 40 percent of all sales, the overall price of all sales would be

reduced by 12 percent below normal sales (3 percent times 4). The Case-Shiller Index shows that home prices of

all homes sold from the fourth quarter of 2007 to the first quarter of 2008 declined by 12.06 percent. That drop in

the overall price could have been caused by a rise in the share of foreclosed sales in all homes, rather than a

genuine decline in actual home prices, including prices of normal (non-foreclosed) homes sold. This assumes that

foreclosed sales are discounted 30 percent below normal sales.

One thing to note here is that I believe a Lack of Demand and High Levels of Forclosures are two sides of the same coin and therefore both CRITICAL to current market conditions.  Also i feel his Minor rating for inacurate indicies is underestimated consitering these values are improperly used by the appraisal institute/foundation on a regular basis, it to should have a CRITICAL rating.  In the final analysis what have we learned is that during any period of time there may be numerious markets, but always two, a Normal/Fair Market, and a Distressed Market,  and for sanity and economic reasons they SHOULD NEVER BE PRECEIVED AS ONE OR "BIFORCATED!"

http://www.brookings.edu/~/media/Files/rc/papers/2011/1228_housing_downs/1228_housing_downs.pdf

Thanks!
Curtis D. Harris, BS, CGREA, REB
Bachelor of Science in Real Estate, CSULA
State Certified General Appraiser
Real Estate Broker
ASTM E-2018 Commercial Real Estate Inspector
HUD 203k Consultant
HUD/FHA Real Estate Appraiser/Reviewer
FannieMae REO Consultant

CTAC LEED Certification

The Harris Company, Forensic Appraisers and Real Estate Consultants
*PIRS/Harris Company and the Science of Real Estate-Partners*

1910 East Mariposa Avenue, Suite 115
El Segundo, CA. 90245
310-337-1973 Office
310-251-3959 Cell

WebSite: http://www.harriscompanyrec.com

Resume: http://www.harriscompanyrec.com/CURRICULUMVITAENAME2011a.pdf

Commercial Appraiser Blog: http://harriscompanyrec.com/blog/

We Make a Simple Pledge to

Communicate, in a timely fashion, each appraisal, analysis, and opinion without bias or partiality

Abstain from behavior that is deleterious to our clients, the appraisal profession, and the public

Hold paramount the confidential nature of the appraiser/consultant - client relationship

and

Comply with the requirements of the Uniform Standards of Professional Appraisal Practice and the
Code of Professional Ethics of the National Society of Real Estate Appraisers

IT'S THE LAW-Designation Discrimination is Illegal [FIRREA, Sec. 564.6]: Professional Association Membership http://www.orea.ca.gov/html/fed_regs.shtml#Statement7 Membership in an appraisal organization: A State Certified General Appraiser may not be excluded from consideration for an assignment for a federally related transaction by virtue of membership or lack of membership in any particular appraisal organization, including the appraisal institute.

CONFIDENTIALITY/PRIVILEGE NOTICE: This transmission and any attachments are intended solely for the addressee. The information contained in this transmission is confidential in nature and protected from further use or disclosure under U.S. Pub. L. 106-102, 113 U.S. Stat. 1338 (1999), and may be subject to consultant/appraiser-client or other legal privilege. Your use or disclosure of this information for any purpose other than that intended by its transmittal is strictly prohibited and may subject you to fines and/or penalties under federal and state law. If you are not the intended recipient of this transmission, please destroy all copies received and confirm destruction to the sender via return transmittal

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December 27, 2011

John S. Brenan, David S. Bunton

John S. Brenan, David S. Bunton



From: David Bunton [mailto:david@appraisalfoundation.org]
Sent: Tuesday, December 27, 2011 5:50 AM
To: Curits Harris
Cc: John Brenan; Staci Steward
Subject: RE: John S. Brenan, David S. Bunton

Mr. Harris: Thank you for your e-mail regarding recent correspondence by John Brenan regarding a position put forth by the National Association of Home Builders (NAHB). The opinions expressed by Mr. Brenan in his correspondence on Foundation Letter Head (sic) are those of The Appraisal Foundation and, with the exception of your correspondence, have been very well received. Regarding your Freedom of Information Act request, The Appraisal Foundation is a private non-profit organization and is therefore not subject to this act. Regards, Dave Bunton
[Curtis Harris]
 
Yes! I got an answer, not quite what I expected from the head of the Appraisal Foundation, but apropos for someone with his Political Training. " The opinions expressed by Mr. Brenan in his correspondence on Foundation Letter Head (sic) are those of The Appraisal Foundation and. . ." " A sic may also be used as a form of ridicule or as a humorous comment, by drawing attention to the original writer's mistakes.” Here he is attempting to ridicule me for the improper use of the word Letterhead, but in his ignorance he has misused the word (sic) which is more correctly used in brackets and is always italicized, i.e. [sic]. What was it that I once heard about the crackpot who thought he was throwing a lug only to find out it was a boomerang?
In any event this was a ridiculous attempt by me to draw attention to a very important issue facing the real estate industry, real estate appraisers using non-arm's length transactions to estimate Market Value.
  
From: Curits Harris [mailto:harris_curtis@sbcglobal.net]
Sent: Friday, December 23, 2011 10:23 PM
To: David Bunton
Cc: 8fad3708f17c60e0@typepad.com
Subject: John S. Brenan, David S. Bunton
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December 23, 2011

(David S. Bunton) and John S. Brenan's, Appraisal Foundation

David, (Appraisal Foundation)

 

I have made several demands for information on one of your employees, specifically John S. Brenan.   Under the Freedom of Information Act, I further demand that you provide me a complete copy of your (David S. Bunton) and John S. Brenan's Resume.  You are also formally notified that Mr. John S. Brenan is responsible for the dissemination of information, on the Appraisal Foundation Letter Head, that is contrary to public policy and  professional appraisal practice.  This has lead me to believe that he is incompetent or unqualified for his position. 

 

Additionally I have requested a copy of his job description and a statement of how these letters are relevant to his position, or who authorized there publication and distribution.

 

 

$ Mr. Bunton has served as the senior staff member of The Appraisal Foundation since May of 1990. As President, he is the chief executive officer of the Foundation.  (Think we need TERM LIMITS?)

Prior to joining The Appraisal Foundation, he served as the Vice President of Government Affairs and Communications for the Federal Asset Disposition Association. He also previously served as a legislative assistant in the U.S. Senate for eight years and was a Congressional Chief of Staff in the House of Representatives for four years.

Mr. Bunton holds a BA degree in Government and Politics from the University of Maryland.  (Just what the Appraisal Industry Needs!)

He is presently a member of: The Collateral Risk Network, http://www.collateralrisknetwork.com/speaker_david_bunton.php which  was formed in late 2003 at the first annual Valuation Expo in Orlando, Florida. Attendance was approximately a half dozen or so lenders. Today membership stands at 281 members comprised of Lenders, Government Agencies, Wall Street, Vendor Management Companies, and Appraisers.  (Their main objective is to transfer the bulk of appraisal work away from independent appraisers to Appraiser Management Companies and AVM developers.  Mr. David S. Bunton you are a disgrace to our industry!  Talking about the cat garding the chicken koop. Can we please get some sanity in this profession?)

http://banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=41c1c2ff-5353-44e1-b964-39945b6614ce

Your immediate response is appreciated. (appraisal foundation)

Thanks!
Curtis D. Harris, BS, CGREA, REB
Bachelor of Science in Real Estate, CSULA
State Certified General Appraiser
Real Estate Broker
ASTM E-2018 Commercial Real Estate Inspector
HUD 203k Consultant
HUD/FHA Real Estate Appraiser/Reviewer
FannieMae REO Consultant

CTAC LEED Certification


The Harris Company, Forensic Appraisers and Real Estate Consultants
*PIRS/Harris Company and the Science of Real Estate-Partners*

1910 East Mariposa Avenue, Suite 115
El Segundo, CA. 90245
310-337-1973 Office
310-251-3959 Cell

WebSite: http://www.harriscompanyrec.com

Resume: http://www.harriscompanyrec.com/CURRICULUMVITAENAME2011a.pdf

Commercial Appraiser Blog: http://harriscompanyrec.com/blog/

 

We Make a Simple Pledge to

Communicate, in a timely fashion, each appraisal, analysis, and opinion without bias or partiality

Abstain from behavior that is deleterious to our clients, the appraisal profession, and the public

Hold paramount the confidential nature of the appraiser/consultant - client relationship

and

Comply with the requirements of the Uniform Standards of Professional Appraisal Practice and the
Code of Professional Ethics of the National Society of Real Estate Appraisers

IT'S THE LAW-Designation Discrimination is Illegal [FIRREA, Sec. 564.6]: Professional Association Membership http://www.orea.ca.gov/html/fed_regs.shtml#Statement7 Membership in an appraisal organization: A State Certified General Appraiser may not be excluded from consideration for an assignment for a federally related transaction by virtue of membership or lack of membership in any particular appraisal organization, including the appraisal institute.

CONFIDENTIALITY/PRIVILEGE NOTICE: This transmission and any attachments are intended solely for the addressee. The information contained in this transmission is confidential in nature and protected from further use or disclosure under U.S. Pub. L. 106-102, 113 U.S. Stat. 1338 (1999), and may be subject to consultant/appraiser-client or other legal privilege. Your use or disclosure of this information for any purpose other than that intended by its transmittal is strictly prohibited and may subject you to fines and/or penalties under federal and state law. If you are not the intended recipient of this transmission, please destroy all copies received and confirm destruction to the sender via return transmittal

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December 22, 2011

Appraiser Qualifications Board Public Meeting Summary

Appraiser Qualifications Board

Public Meeting Summary

December 9, 2011

On December 9, the Appraiser Qualifications Board (AQB) held its fourth public meeting of 2011. The meeting

was held in Houston, Texas. The primary focus of both the public meeting and work sessions included

ongoing projects associated with the:

 

Fifth Exposure Draft of Proposed Revisions to the Real Property Appraiser Qualification Criteria

 

USPAP Courses and USPAP Instructor Program

 

National Uniform Licensing and Certification Examinations

 

Undergraduate/Graduate Degree in Real Estate Review Program

 

Course Approval Program

Fifth Exposure Draft of Proposed Revisions to the

 

Real Property Appraiser Qualification Criteria

On October 27, 2011, the Appraiser Qualifications Board (AQB) released the Fifth Exposure Draft of Proposed

Revisions to the

 

Real Property Appraiser Qualification Criteria (Criteria). The AQB accepted written and oral

comments on the exposure draft and based on feedback received, adopted the proposed revisions contained in

the exposure draft. The following changes to the Criteria will take effect for individuals seeking a real

property appraiser credential as of January 1, 2015 (unless adopted earlier by a particular state or jurisdiction):

 

Education and experience must be completed prior to taking the National Uniform Licensing and

Certification Examinations

 

 

;

 

Applicants for the Certified Residential and Certified General classifications must have a Bachelor’s

degree or higher from an accredited college or university;

 

Applicants for the Licensed Residential classification shall successfully complete 30 semester hours of

college-level education from an accredited college, junior college, community college, or university

 

or

have an Associate’s degree or higher from an accredited college, junior college, community college, or

university;

 

All candidates must undergo a background check;

 

Recognition of university degree programs as counting toward the education requirements in the Real

Property Appraiser Qualification Criteria

 

 

;

 

Removal of the “Segmented” Approach to the Real Property Appraiser Qualification Criteria

implementation;

 

Prohibition of repetitive continuing education in the same continuing education cycle;

 

Clarification of the term “written examination;”

 

Revisions to the Trainee Appraiser classification that include a requirement to take a course oriented to

the requirements and responsibilities of Trainee Appraisers and Supervisory Appraisers;

 

New Supervisory Appraiser requirements;

Appraiser Qualifications Board

Public Meeting Summary

December 9, 2011

Page 2 of 3

1155 15

 

th Street, NW, Suite 1111 2

Washington, DC 20005

T 202.347.7722

F 202.347.7727

 

Revisions to Guide Note 1; and

 

Additions to the illustrative list of educational topics acceptable for continuing education.

A copy of the new

 

Real Property Appraiser Qualification Criteria effective January 1, 2015 will be forthcoming in

the weeks ahead. In the meantime, to review the exposure draft and related comments, please visit The

Appraisal Foundation website at:

http://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=TAF&WebCode=AQBDrafts

USPAP Courses and USPAP Instructor Program

The 7-Hour and 15-Hour versions of the

 

National USPAP Course are currently available. Additionally, the AQB

is accepting applications for equivalency review and approval from providers who wish to develop their own

USPAP courses. For further information, please visit our website at:

https://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=TAF&WebCode=EquivalentCourse2012

The Instructor Recertification Course (IRC) is currently available online. All Certified USPAP Instructors must

recertify prior to teaching the 2012-13 USPAP courses. Additionally, all instructors must recertify prior to

March 31, 2012, or will be required to re-take the Instructor Certification Course (ICC) and successfully

complete the accompanying examination. For more information on taking the IRC, please contact Mavis Kleso

at

 

mavis@appraisalfoundation.org.

The ICC will be offered once next year during the first six months of 2012. For more information, please

contact Mavis Kleso at

 

mavis@appraisalfoundation.org.

National Uniform Licensing and Certification Examinations

The AQB continues to monitor the

 

National Uniform Licensing and Certification Examinations and the applicable

pass/fail rates. Based on data obtained through January – October 2011, the average pass rate for first-time

test takers has gone up significantly since 2008.

Additional information regarding the new examinations, including statistics on pass rates from 2008-10, as

well as Q&As and sample questions, is available on the Foundation’s website, by visiting the following link:

http://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=TAF&WebCode=NULCE

Appraiser Qualifications Board

Public Meeting Summary

December 9, 2011

Page 3 of 3

1155 15

 

th Street, NW, Suite 1111 3

Washington, DC 20005

T 202.347.7722

F 202.347.7727

Undergraduate/Graduate Degree Review Program in Real Estate

In 2009, the Appraisal Subcommittee provided The Appraisal Foundation with funding to review graduate

degree programs in real estate for equivalency with the education required in the

 

Real Property Appraiser

Qualification Criteria

 

 

. The AQB conducted on-site reviews at two institutions and has approved educational

hours for the programs at the University of Denver and Texas A&M. Details on these approved graduate

degree programs can be found on The Appraisal Foundation’s website.

In 2011, the AQB began accepting applications to review undergraduate degree programs in real estate

 

 

 

. This

service is provided at no cost to accredited colleges and universities. Further information is available on The

Appraisal Foundation’s website at:

http://netforum.avectra.com/eweb/DynamicPage.aspx?Site=TAF&WebCode=DegreeProgram

At their last meeting, the Board approved the first undergraduate degree program at the University of Denver.

Details about the approved program can be found on The Appraisal Foundation’s website.

Course Approval Program (CAP)

The Course Approval Program (CAP) continues to expand with 335 courses currently CAP-approved.

AQB Public Meetings Scheduled for 2012:

April 20, 2012 Chicago, Illinois

September 14, 2012 Dallas, Texas

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The Appraiser Qualifications Board (AQB) has issued the following Summary of its Meeting on December 9, 2011 in Houston, Texas:

The Appraiser Qualifications Board (AQB) has issued the following Summary of its Meeting on December 9, 2011 in Houston, Texas:

Appraiser Qualifications Board Public Meeting Summary - Houston - December 9, 2011 

 

Direct Link: https://appraisalfoundation.sharefile.com/d/s5d82d7356934541a

Questions?  Please contact Magdalene Vasquez, Qualifications Administrator at 202.624.3074. 

 

The Appraisal Practices Board (APB) has issued the following Summary of its Meeting on December 12, 2011 in Atlanta, Georgia:

Appraisal Practices Board Public Meeting Summary - Atlanta - December 12, 2011

Direct Link: https://appraisalfoundation.sharefile.com/d/s73a5ed98ee144bcb

Questions?
  Please contact Staci Steward, Practices Administrator at 202.624.3052.


Exposure Drafts 

Events/Meeting Registration

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December 20, 2011

Vol. 3, No. 2 December 2011 Appraiser Qualifications Board

Vol. 3, No. 2 December 2011

Appraiser Qualifications Board

Q&A

Vol. 3, No. 2 December 2011

The Appraiser Qualifications Board (AQB) of The Appraisal Foundation establishes the minimum education, experience and examination requirements for real property appraisers to obtain a state license or certification. The AQB Q&A is a form of guidance issued by the AQB to respond to questions raised by appraisers, enforcement officials, users of appraisal services and the public to illustrate the applicability of the Real Property Appraiser Qualification Criteria and Interpretations of the Criteria in specific situations and to offer advice from the AQB for the resolution of appraisal issues and problems. The AQB Q&A may not represent the only possible solution to the issues discussed nor may the advice provided be applied equally to seemingly similar situations. AQB Q&A does not establish new Criteria. AQB Q&A is not part of the Real Property Appraiser Qualification Criteria. AQB Q&A is approved by the AQB without public exposure and comment.

General Requirements

Question:

I would like to get a Certified General appraiser credential. I am from another country and have a student visa, but don't have a Social Security card or Taxpayer ID Number. If I fulfill the education and experience requirements, can I get a Certified General appraiser credential without possessing a Social Security card or similar document?

Response:

The

 

Real Property Appraiser Qualification Criteria does not specifically address residency, citizenship or identification issues. However, be sure to check with the state appraiser regulatory agency in the state where you plan to seek the credential to confirm the state’s requirements for licensure, as states may have their own residency or citizenship requirements.Appraiser Qualifications Board Q&A Page 2 of 5 Vol. 3, No. 2 December 2011

Experience

Question:

I am an Appraiser Trainee working towards my license. If I do not sign an appraisal report due to my company’s policies or a client’s assignment conditions, what verbiage is required in the report in order for the time I spent on the appraisal to count toward the experience requirements in the

 

Real Property Appraiser Qualification Criteria?

Response:

If you provide significant real property appraisal assistance for a supervisory appraiser but do not sign the report certification, your supervisory appraiser must disclose that you provided significant real property appraisal assistance within the certification of the report. In addition, the supervisory appraiser must describe the extent of your assistance in the report (refer to the Uniform Standards of Professional Appraisal Practice [USPAP], Standards Rules 2-2 and 2-3, as well as Advisory Opinion 31,

 

Assignments Involving More Than One Appraiser, for additional details).

Furthermore, the experience log you submit to your state appraiser regulatory agency must describe the work you performed in support of the hours of experience you claim for each assignment. Documentation in the form of reports, certifications, or file memoranda, or other evidence that the time you spent on the appraisal process is compliant with USPAP must be provided as part of the state experience verification process to support the experience claimed.

Qualifying Education

Question 1:

I am a state regulator responsible for evaluating courses submitted for qualifying education for state appraiser licensure and certification. I recently received a submission of a course entitled "Advanced Residential Applications and Case Studies." I reviewed Guide Note 1 of the

 

Real Property Appraiser Qualification Criteria and understand one of the subtopics for this course is "Advanced Case Studies." What qualifies a case study as "advanced?"

Response:

An

 

Advanced Residential Applications and Case Studies course should serve to provide the student with practical instruction demonstrating how to handle complex and high-value residential properties.Appraiser Qualifications Board Q&A Page 3 of 5 Vol. 3, No. 2 December 2011

Guide Note 1 of the Criteria provides curriculum guidance including the following subtopics for this course:

A. Complex Property, Ownership and Market Conditions

B. Deriving and Supporting Adjustments

C. Residential Market Analysis

D. Advanced Case Studies

Thus, the case studies in this type of course should include issues dealing with complex and/or high-value residential properties such as:

• Atypical properties in a given market;

• Residences with unique architecture or historic properties;

• Properties which may be stigmatized due to internal or external circumstances; and/or

• Properties of such value and/or unusual characteristics that their competitive market may be regional as opposed to an immediate neighborhood.

Other advanced case study topics could include complex ownership situations, such as the appraisal of fractional interests in a property; material dealing with more complex market conditions such as declining neighborhoods within a generally improving market; properties affected by a government acquisition program; or properties within markets which may be impacted by foreclosure sales or tax sales.

Advanced case studies may involve advanced statistical analysis; appropriate handling of unusual sales concessions; atypical markets; and markets with scarce data.

Please be advised that the above is not meant to be an exhaustive list of possible topics for

 

Advanced Residential Applications and Case Studies. Course developers are encouraged to explore a variety of topics relevant to complex residential issues in order to differentiate an Advanced Residential Applications and Case Study course from more basic level course topics.

Question 2:

I am an Appraiser Trainee preparing to get my Certified Residential credential. For my initial qualifying education to become a Trainee, I completed 80 hours of

 

Basic Appraisal Principles and Procedures in 2003 from a proprietary school that no longer exists. My state appraiser regulatory agency said any courses taken before January 1, 2008 were no longer considered valid according to the AQB. Why can’t these original hours count toward the qualifying education requirement for my Certified Residential credential?Appraiser Qualifications Board Q&A Page 4 of 5 Vol. 3, No. 2 December 2011

Response:

The current edition of the

 

Real Property Appraiser Qualification Criteria went into effect January 1, 2008. However, the Criteria do not contain any provision that invalidates qualifying education successfully completed prior to that date. As with all AQB Criteria, states may create requirements that are more restrictive; if so, you’ll need to clarify this with your state. From the AQB’s perspective, courses that were eligible in 2003 would remain valid towards the 2008 Criteria.

Question 3:

I have been a commercial real estate professional for over 21 years, have my broker’s license and am a Certified Commercial Investment Member (CCIM). I am interested in pursuing a Certified General real property appraiser credential. I would prefer to do my education on my own time with an online educator. I have my Bachelor’s degree in business from a state university. With my licensing, education, and experience, is there a way to "fast track" the required coursework?

Response:

Many qualifying education (QE) courses required under the

 

Real Property Appraiser Qualification Criteria are available online. Your state appraiser regulatory agency maintains a list of approved QE courses and providers. Also, it is possible your university may have sought and received QE approval from your state appraiser regulatory agency for some of the courses you took when earning your degree.

Alternatively, some of the education you completed for your other real estate credentials/designations might be approved by your state appraiser regulatory agency as real property appraiser QE. If so, you may already have some of the 300 hours of required QE for the Certified General credential completed.

Continuing Education

Question:

I am a certified appraiser in a state with a 2-year licensure cycle. As such, I am required to complete 28 hours of approved continuing education (CE) in order to be eligible to renew my certification. If I complete more than the required 28 hours, can I carryover the extra hours to my next certification renewal?

Response:

The

 

Real Property Appraiser Qualification Criteria (2008) does not provide for any carryover of CE hours from one renewal period to the next. Specifically, under Section F. Criteria Specific to Continuing Education, Item 11 requires the instruction for which CE is sought to take place "…during the period preceding the renewal."Appraiser Qualifications Board Q&A Page 5 of 5 Vol. 3, No. 2 December 2011

The AQB Q&A is posted on The Appraisal Foundation website (

 

www.appraisalfoundation.org)

For further information regarding

AQB Q&A, please contact:

John S. Brenan, Director of Appraisal Issues

The Appraisal Foundation

1155 15

 

th Street, NW, Suite 1111

Washington, DC 20005

(202) 624-3044

(202) 347-7727 fax

john@appraisalfoundation.org

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December 06, 2011

2012-13 Edition of USPAP Released in eReader Format

2012-13 Edition of USPAP Released in eReader Format

FOR IMMEDIATE RELEASE

December 6, 2011

Contact:

Paula Douglas Seidel

Executive Administrator

The Appraisal Foundation

paula@appraisalfoundation.org

direct phone 202.624.3048

 

WASHINGTON, DC—The Appraisal Foundation, a congressionally-authorized nonprofit organization dedicated to the advancement of professional valuation, is pleased to announce that the 2012-13 edition of the Uniform Standards of Professional Appraisal Practice (USPAP) is now available for eReaders (specifically: the Amazon Kindle, Apple iPad, Barnes & Noble Nook and Sony Reader). USPAP are the generally accepted standards of practice for the appraisal profession in the United States.

 

The 2012-13 edition of USPAP will be valid for two years, effective January 1, 2012 through December 31, 2013. As with the prior edition, the new edition includes the standards of professional practice for all appraisal disciplines as well as guidance from the Appraisal Standards Board (ASB) in the form of USPAP Advisory Opinions and USPAP Frequently Asked Questions (FAQs).

 

Changes to the document include:

  

  • Revisions to DEFINITIONS of “Client,” “Extraordinary Assumptions,” and “Hypothetical Condition,” as well as a new definition of “Exposure Time”;
  • Creation of a new RECORD KEEPING RULE and related edits to the Conduct Section of the ETHICS RULE;
  • Revisions to Advisory Opinion 21, USPAP Compliance; and,
  • Revisions to STANDARDS 7 & 8: PERSONAL PROPERTY APPRAISAL, DEVELOPMENT & REPORTING.

 

To purchase the 2012-13 edition of USPAP for the Apple iPad, Barnes & Noble Nook or Sony Reader, CLICK HERE.

 

To purchase the 2012-13 edition of USPAP for the Amazon Kindle, CLICK HERE.

 

More information is available at the Foundation Store at http://www.appraisalfoundation.org/.   The cost to download USPAP in any of the eReader formats is $60.

 


 


While the effective date for the new edition of USPAP is January 1, 2012, The Appraisal Foundation is encouraging appraisers to familiarize themselves with the changes now. To assist appraisers in this regard, earlier this summer the Foundation released a video featuring the Chair and Vice-Chair of the ASB discussing the changes to USPAP. The video, A Preview of Changes to the 2012-13 Uniform Standards of Professional Appraisal Practice (USPAP), is a 23-minute interview with the 2011 Chair and Vice-Chair of the Appraisal Standards Board, J. Carl Schultz, Jr. and Barry Shea, respectively.  Please visit the following link to access the video on the Foundation’s eLibrary:

 

CLICK HERE TO VIEW THE VIDEO ON 2012-13 USPAP CHANGES *

 

* Alternate Link for Video: http://www.globalpres.com/mediasite/Viewer/?peid=ae8192ef41804f23a498bf7b30458189

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December 02, 2011

Bye, Bye Appraisal Profession. Hello Veros Real Estate Solutions!

Bye, Bye Appraisal Profession. Hello Veros Real Estate Solutions!


The 2012 Predictive Methods Conference Is Right Around the Corner!

Although 2011 is winding down, we know that businesses are already budgeting for conferences in 2012. As you plan next year’s budget, make sure to include the Predictive Methods Conference (PMC) slated for June 4-6 in Southern California.

PMC is a premiere industry event that actively engages mortgage professionals on the most critical trends and issues affecting mortgage technology, as well as the industry at large. Hosted by Veros Real Estate Solutions, the conference provides a more intimate setting that allows attendees to network and connect with some of the most influential individuals from the mortgage industry, including the government, investor, origination and servicing sectors.

Get organized now to qualify for the best possible rate with group and advanced registration rates until March 1.  Registered PMC attendees will also receive a significant discount at The Ritz-Carlton, Laguna Niguel, making a luxury setting realistic for today's budgets.
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November 18, 2011

Public Meetings of the Appraiser Qualifications Board and the Appraisal Practices Board

Public Meetings of the Appraiser Qualifications Board and the Appraisal Practices Board are coming up near the end of this year. Please take the time to register for these meetings if you plan to attend.

  

Appraiser Qualifications Board - December 9, 2011 - Houston, Texas 


Location:

 

Omni Houston Hotel

Four Riverway, Houston, TX 77056

 

Date/Time:

 

Friday, December 9, 2011

9:00am - 12:00pm 

 

Meeting Agenda: 

-5th Exposure Draft of Proposed Revisions to the Future Real Property Appraiser Qualification Criteria

-Proposed Revisions to the Personal Property Appraiser Qualification Criteria

-Activities of the Course Approval Program

-National Licensing and Certification Examinations          

-Undergraduate/Graduate Degree in Real Estate Review Program


Lodging Accommodations:

You may make a reservation with the Omni Houston Hotel by contacting them directly at
(713) 871-8181Please note that The Appraisal Foundation no longer reserves “room blocks” for meeting attendees. Therefore, meeting attendees are responsible for making their own lodging arrangements at the best available rates.  

 

Please click the "register online" link below to register. 
If you have any questions about the meeting or the registration process, please contact Magdalene Vasquez, Qualifications Administrator, by email at magdalene@appraisalfoundation.org.

 

 

 

Appraisal Practices Board - December 12, 2011 - Atlanta, Georgia

Location:

 

The Westin Peachtree Plaza

210 Peachtree Street, Atlanta, GA 30303

 

Date/Time:

 

Monday, December 12, 2011

1:00 pm - 5:00 pm 

 

Meeting Agenda:

 

The Appraisal Practices Board (APB) was officially constituted July 1, 2010. The purpose of the APB is to issue voluntary timely guidance to appraisers on emerging valuation issues that are occurring in the marketplace. This guidance will be of assistance to appraisers, appraiser regulators and educators.

 

The following items are on the Board’s Meeting Agenda:


-Adjusting Comparable Sales for Seller Concessions

-Residential Appraising in Declining Markets

-Status of Valuation for Financial Reporting Work Groups 2 and 3 - The Valuation of Customer-Related Assets and Control Premiums for Financial Reporting 


Lodging Accommodations:


You may make a reservation with The Westin Peachtree Plaza, 210 Peachtree Street NW, Atlanta, GA 30303 by contacting them directly at (404) 659-1400. Please note that The Appraisal Foundation no longer reserves “room block” for meeting attendees. Therefore, meeting attendees are responsible for making their own lodging arrangements at the best available rates.


Please click the "register online" link below to register. 

If you have any questions about the meeting or the registration process, please contact Staci Steward, Appraisal Practices Board Administrator, by email at staci@appraisalfoundation.org.

  



 

Your online registration will assure proper seating at the meetings.

Qualifications Administrator:  Magdalene Vasquez, 202-624-3074, magdalene@appraisalfoundation.org

Practices Administrator:  Staci Steward, 202-624-3052, staci@appraisalfoundation.org

 
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November 09, 2011

Undergraduate Degree Review Program Approved by

 

 Undergraduate Degree Review Program Approved by

National Appraisal Board 

FOR IMMEDIATE RELEASE
November 9, 2011

Contact: 
Paula Douglas Seidel

Executive Administrator

The Appraisal Foundation

paula@appraisalfoundation.org

202.624.3048

 

WASHINGTON, D.C.,– The Appraisal Foundation, a congressionally-authorized nonprofit organization that fosters professionalism among appraisers by setting qualifications and standards, announced that its Appraiser Qualifications Board (AQB) has approved the University of Denver’s Bachelor of Science in Real Estate and Construction Management degree program through its Undergraduate/Graduate Degree in Real Estate Review Program. 

In 2009, the AQB established a Graduate Degree in Real Estate Review Program. This year, the AQB added an Undergraduate Degree in Real Estate Review Program. The program is free to any accredited undergraduate or graduate college or university that makes application.

Upon receiving a complete application, the AQB conducts an on-site analysis of college/university degree programs in real estate to determine if the course work completed to obtain a degree is consistent with the course requirements established by the AQB in the Real Property Appraiser Qualification Criteria.  Once the analysis is complete, the AQB publishes the results for state appraiser regulatory agencies to use when reviewing the educational qualifications of applicants that hold such a degree. 

 

The AQB established this program to benefit college degree applicants looking to obtain a real property appraiser credential, as well as state appraiser regulatory agencies in their review of an applicant’s qualifications. “The AQB believes this program is yet another step forward in attempting to attract the best and brightest to the profession,” said Rick Baumgardner, Chairman of the Appraiser Qualifications Board. “The Board intends to proactively seek out those colleges and universities that offer both graduate and undergraduate degrees in real estate to increase awareness of this important program,” Baumgardner added.

 

In addition to the Bachelor of Science in Real Estate and Construction Management from the University of Denver, individuals completing the entire course of study under the following graduate programs are also eligible to receive credit toward a state credential under the AQB’s Real Property Appraiser Qualification Criteria:


Texas A&M University

Mays Business School

Master of Real Estate Program

 

University of Denver

Daniels College of Business

Master of Science Degree in Real Estate and Construction Management

 

Official notification letters with details on courses and topics each degree covers is posted at the following link: 

https://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=TAF&WebCode=DegreeProgram


Colleges and universities that wish to apply for this program should visit the Foundation’s web site at https://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=TAF&WebCode=DegreeProgram for a copy of the application. 

While the program is complimentary, applications will be considered on a first come, first serve basis.

For more information on the program, please contact Magdalene Vasquez, Qualifications Administrator at 202.624.3074 or magdalene@appraisalfoundation.org.
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November 03, 2011

III. What are Some Alternative Value Definitions?

THERE MAY BE SOME LIGHT AT THE END OF THE TUNNEL 

III. What are Some Alternative Value Definitions?

Some appraisers have expressed difficulties in obtaining clear guidance from their clients or 278 from secondary market participants on the correct meaning of terms and applicability of different 279 value definitions. Some clients ask for "market value" but don‟t define or understand the term. 280 Some clients want to adjust the appraisal conclusion by stipulating terms in the analysis, e.g. a 281 sale within 30 days. This usually results in a variance from the commonly-used definitions of 282 value and the appraiser must then define the term within the document to ensure the client and 283 intended users understand what type of value is conveyed in the report. 284

Most value definitions are provided to appraisers within the customary forms, e.g. URAR. Some 285 terms in common use today include market value, liquidation value, disposition value, distress 286 sale, forced sale, forced price, short sale, foreclosures, etc. Other literature may reveal additional 287 terms of importance. (Many are reprinted within a glossary at the end of this paper.) 288

Market Value: The Public Perception –

 

It is important to understand that most real estate 289 owners, lenders, investors and government officials believe that the term "market value" reflects 290 a gross sale price that an owner of the subject would receive if the subject were put on the market 291 as of the effective date of appraisal. 292

In most definitions, market value assumes a sale to the most probable buyer within the highest 293 and best use opinion. This means the definition of the term is based on a sale from the current 294 owner to a new owner. When an appraiser is asked for a "Market Value Opinion," the public 295 perception would be that the appraiser will tell the client how much they can sell it for. This 296 necessitates an opinion of "the most probable buyer." 297

Client Expectations –

 

It is important to discuss the type and definition of value with a client to 298 ensure the appraiser is not developing an opinion of value that is different than the client‟s 299 expectations and different than the one utilized in the appraisal. This is to avoid any 300 misunderstanding between the client and the appraiser as to the type and definition of value the 301 opinion is based on. Appraisers should match the intended use of the appraisal with the defined 302 value and carefully consider each part of the defined value. For example: 303

An appraiser is asked to use residential comparable sales to provide an opinion of value 304 on a property that has a highest and best use as commercial land. The client says, "Value 305 First Exposure Draft –

 

Residential Appraising in a Declining Market 13

it as a residence and ignore the commercial land value." If the appraiser agrees to do this, 306 this appraisal has shifted from market value (commercial) to value-in-use (residential). 307

Some terms that may be significant in this issue are listed below and defined in the Glossary of 308 Terms. 309

1.

 

Disposition Value – This is a defined value that can be used by appraisers and clients 310 who are attempting to find a value that represents a particular need. This can be used by 311 clients in some markets to represent the value that they might sell the asset for after a 312 foreclosure. For a complete definition of these terms, and others that follow please see 313 the glossary. 314

2.

 

Foreclosure sale – This is the sale of a property ordered by the court and/or process of 315 law, where the seller is ordered to sell the property at auction or by other means to satisfy 316 the mortgage against that property. In many states, this is called a "sheriff‟s sale." 317

3.

 

Liquidation Value – This definition is different than the standard market value definition 318 because it assumes: 319

1. Actual market conditions currently prevailing are those to which the appraised 320 property interest is subject; 321

2. The seller is under extreme compulsion to sell; and 322

3. A limited marketing effort and time will be allowed for the completion of a sale. 323

4.

 

Market Value – This is the standard definition used in most residential appraisals. There 324 are other value definitions used for relocation and condemnation appraisals. This 325 definition refers to a "fair sale" without "undue stimulus." This definition is based on a 326 transaction occurring under ideal market conditions. 327

5.

 

Other Values – Clients may modify existing defined values to suit their current needs. If 328 an appraiser is asked to use an alternative definition, the appraiser must include that 329 defined value in the report and if another defined value is also included in the report, the 330 appraiser must be clear what definition they are using in conjunction with each value 331 opinion. 332

More than One Defined Value – Appraisers may be asked to provide more than one

 

333 type of value in an assignment. Appraisers should also remember that if they are conveying 334 a value opinion other than market value, the use of standard secondary market forms requires 335 caution. These forms have incorporated the definition of "Market Value" into the form. If 336 an appraiser were asked for "Liquidation Value," it may be necessary to utilize something 337 other than a preprinted form and include the type and definition of value being utilized. In 338 most cases, preprinted secondary mortgage market forms do not offer an option of a different 339 defined value. It is possible for appraisers to add a second defined value in the report and 340 then give the client two value opinions, e.g. market value and liquidation value. However, 341 both values must be defined within the report and the report cannot be misleading and in 342 violation of USPAP.

https://appraisalfoundation.sharefile.com/d/sbdb218d49bc48c6a

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October 27, 2011

Fifth Exposure Draft of Proposed Revisions to the Criteria 1

Fifth Exposure Draft of Proposed Revisions to the Criteria 1

https://appraisalfoundation.sharefile.com/d/s37bad6cf5694643b

TO: All Interested Parties

FROM: Rick Baumgardner, Chair

Appraiser Qualifications Board

RE:

Fifth Exposure Draft of Proposed Revisions to the Real Property Appraiser Qualification Criteria

DATE: October 27, 2011

The goal of the

Real Property Appraiser Qualification Criteria (Criteria) is to promote and maintain a high level of public trust in appraisal practice by establishing minimum education, experience, and examination requirements for real property appraisers. With this goal in mind, the Appraiser Qualifications Board (AQB) periodically examines the Criteria to determine if they are serving their intended purpose under Title XI of FIRREA. In addition, the AQB regularly receives comments and suggestions from appraisers, educators, regulators, and others on how to improve the Criteria. As indicated above, all proposed changes are intended to promote and maintain public trust in appraisal practice.

As mentioned in the first four exposure drafts, the AQB held a public hearing in Minneapolis, Minnesota, on June 25, 2010, where a wide range of constituents, including representatives from professional appraiser organizations, educators, regulators, and users of appraisal services provided comments to the Board suggesting the types of revisions to the

Criteria that should be considered for the future. The AQB spent a considerable amount of time reviewing those comments and on October 19, 2010, issued a First Exposure Draft of potential changes to the Criteria for public comment and feedback.

In response to the First Exposure Draft, the Board received a number of written comments, as well as oral comments at its public meeting in New Orleans, Louisiana on December 3, 2010. Based on the feedback received, the AQB published a Second Exposure Draft on January 14, 2011 and received numerous written comments, as well as oral comments at its public meeting in Tampa, Florida on February 25, 2011. Based on the feedback received from that exposure draft, on March 18, 2011, the AQB issued its Third Exposure Draft of Proposed Revisions to the

Real Property Appraiser Qualification Criteria.

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October 18, 2011

411114"Liquidation Value, Not market Value"

I. Orderly Disposition or Liquidation

https://appraisalfoundation.sharefile.com/d/s10c36f9afd54123b 

There is usually a significant difference in the price received at sale, depending upon how much

time is allowed to sell the property. Too often, a client requests a market valuation which

presumes a normal marketing period in the market for the particular property, then wants to sell

the property quickly.

Most definitions of Market Value presume the property is transferring on the date of valuation.

In a declining market, when values are expected to continue falling, an extended marketing

period may be required to sell at the valuer’s then-current opinion of value. Therefore,

depending on the expertise of the valuer, the scope of work may need to request of the valuer an

opinion of the likely Disposition Value with a client-specified marketing time after the

valuation date. In a declining market, this option will likely be lower than the valuer’s opinion

of Market Value based upon a typical marketing period. Conversely, the opposite would be

true in a rising market. An extremely short marketing period is commonly known as

Liquidation Value, not Market Value.

The Appraisal Institute, a professional organization in the United States, set up a Project Team

to develop a paper on alternative definitions of Market Value, Disposition Value and

Liquidation Value as a result of the recession and troubled mortgage market in the United States

in the late 1980s. The team developed the following definitions which were approved and

published by the Appraisal Institute in 1992.

a. Market Value

The most probable price which a specified interest in real property is likely to bring under all of the

following conditions:

1. Consummation of a sale as of a specified date.

2. Open and competitive market for the property interest appraised.

3. Buyer and seller each acting prudently and knowledgeably.

4. Price not affected by undue stimulus.

5. Buyer and seller typically motivated.

6. Both parties acting in what they consider their best interest.

7. There were adequate marketing efforts and a reasonable time was allowed for exposure in the open

market.

8. Payment made in cash or in terms of financial arrangements comparable thereto.

9. Price represents the normal consideration for the property sold unaffected by special or creative

financing or sales concessions granted by anyone associated with the sale.

Note: This definition could also be modified to provide for valuation with specific financing terms.

The Pricing & Disposition of Distressed

Real Estate Assets

By J. Carl Schultz, Jr., The Appraisal Foundation

P a g e

 

 

| 12

b. Disposition Value

The most probable price which a specified interest in real property is likely to bring under all of the

following conditions:

1. Consummation of a sale within a limited future marketing period specified by the client.

2. Current actual marketing conditions for the property interest appraised.

3. Buyer and seller each acting prudently and knowledgeably.

4. Seller under compulsion to sell.

5. Buyer typically motivated.

6. Both parties acting in what they consider their best interests.

7. Adequate marketing effort made for the limited time allowed for completion of a sale.

8. Payment made in cash or in terms of financial arrangements comparable thereto.

9. Price represents the normal consideration for the property sold unaffected by special or creative

financing or sales concessions granted by anyone associated with the sale.

Note: This definition could also be modified to provide for valuation with specific financing terms.

c. Liquidation Value

The most probable price which a specified interest in real property is likely to bring under all of the

following conditions:

1. Consummation of a sale within a severely limited future marketing period specified by the client.

2. Current actual market conditions for the property interest appraised.

3. Buyer acting prudently and knowledgeably.

4. Seller under extreme compulsion to sell.

5. Buyer typically motivated.

6. Buyer acting in what he/she considers his/her best interest.

7. Limited marketing effort and time to be allowed for completion of a sale.

8. Payment made in cash or in terms of financial arrangements comparable thereto.

9. Price represents the normal consideration for the property sold unaffected by special or creative

financing or sales concessions granted by anyone associated with the sale.

Note: This definition could also be modified to provide for valuation with specific financing terms.

On the following page is a comparison chart summarizing the differences between Market Value,

Disposition Value and Liquidation Value.

The Pricing & Disposition of Distressed

Real Estate Assets

By J. Carl Schultz, Jr., The Appraisal Foundation

P a g e

 

 

| 13

S

 

PECIAL TASK FORCE ON DEFINITION OF MARKET VALUE / FAIR VALUE

C

 

OMPARISON CHART

No. Market

Value

Disposition

Value

Liquidation

Value

1. Date Specific Future Future

2. Open & Competitive Market Yes Not Necessarily Not Necessarily

3a. Buyer Acting Prudently & Knowledgeably Yes Yes Yes

3b. Seller Acting Prudently & Knowledgeably Yes Yes Not Necessarily

4. Price Not Affected by Undue Stimulus Yes No No

5a. Buyer Typically Motivated Yes Yes Yes

5b. Seller Typically Motivated Yes No No

6a. Buyer Acting in Own Best Interest Yes Yes Yes

6b. Seller Acting in Own Best Interest Yes Yes No

7a. Adequate Marketing Efforts Yes Yes (Limited) No

7b. Adequate Time Exposure/Marketing Yes Not Necessarily No

8. Cash or Equivalent Yes Yes Yes

9. Unaffected by Special or Creative

Financing or Sales Concessions Yes Yes Yes

It is noted that a valuation subject to (including) the financing could also be estimated by the

valuer, if favorable seller financing was to be provided. In these cases, however, the Market

Value of the real estate does not change. The positive or negative influences of the financing

terms are attributable to the financing, not to the real estate.

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October 04, 2011

Adjusting Comparable Sales for Seller Concessions.

The Appraisal Practices Board (APB) is pleased announce the release of its first Exposure Draft entitled Adjusting Comparable Sales for Seller Concessions.  All interested parties are encouraged to comment in writing to the APB before the comment deadline of December 2, 2011.

LINK:  https://appraisalfoundation.sharefile.com/d/s5b9a0a2c45649ada

Written comments on this 
Exposure Draft can be submitted by mail, email and facsimile:

Mail:   Appraisal Practices Board
          The Appraisal Foundation
          1155 15th Street NW, Suite 1111
          Washington DC 20005

Fax:   (202) 347-7727

Email:  APBcomments@appraisalfoundation.org

Comments on the Exposure Draft will be considered at the December 12, 2011 public meeting of the APB (details below).

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August 07, 2011

A word of Caution From the Appraisal Foundation

 

The United States has some of the lowest education requirements for the credentialing of valuation professionals worldwide. Many nations require a minimum of a Bachelor’s degree, if not a Master’s degree, in a specified field of study such as business, real estate, architecture or engineering.

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January 06, 2011

Residential Appraising in Declining Real Estate Markets.

Fellow Real Estate Professionals, Property Owners and Investors 

Most of you know that I have been ranting for years about the number of unqualified "professonals" in our industry.  This conversation peaked with the most recent decline in real estate values.  Since then I have told anyone that would listen that the Appraisal Foundation/Appraisal Institute, FannieMae, Freddie Mac, and a number of other affilaited agencies that, appraisers were inapproperately using non-arms length sales (REO-Short Sales) as comparables.  This practice continues and has resulted in an inestimable geometric decline in both residential and commercial values.

Now we have the opportunity to do something constructive about this mess.   The Appraisal Foundation/Appraisal Institute is in the process of setting up a SME panel to investigate this problem.  I am not a member of either of these organizatons, you might call me a Real Estate Tea Party Planner!   To protect the interest of millions of families and investors, it is imperative that I be selected to this pannel.  If you and your associates are concerned with appaisal values and the decline of the Real Estate Market  please spread the word, write to

staci@appraisalfoundation.org 

and insist that I be consitered for the panel. 

Curtis D. Harris, BS, CGREA, REB http://www.harriscompanyrec.com

The Appraisal Practices Board (APB) has issued the following Solicitation for Subject Matter Experts (SMEs) to assist in the research and development of voluntary guidance on Residential Appraising in Declining Real Estate Markets. The SME panel chosen to address this topic will accomplish its goal by, at a minimum, gathering, citing and researching all existing literature and publications. For more information on the background and qualifications required to be considered for the Subject Matter Expert panel, please see the SME application at https://appraisalfoundation.sharefile.com/d/s7298621e0e7403abCompleted applications must be submitted by January 10, 2011.  Appraisal Practices Board

 

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October 15, 2010

Appraiser Independence Requirements

0 This document is incorporated by reference into the Fannie Mae Selling Guide.

Appraiser Independence Requirements I. Appraiser Independence Safeguards A. An "appraiser" must be, at a minimum, licensed or certified by the State in which the property to be appraised is located. B. No employee, director, officer, or agent of the Seller, or any other third party acting as joint venture partner, independent contractor, appraisal company, appraisal management company, or partner on behalf of the Seller, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner including but not limited to:

(1) Withholding or threatening to withhold timely payment or partial payment for an appraisal report;

(2) Withholding or threatening to withhold future business for an appraiser, or demoting or terminating or threatening to demote or terminate an appraiser;

(3) Expressly or impliedly promising future business, promotions, or increased compensation for an appraiser;

(4) Conditioning the ordering of an appraisal report or the payment of an appraisal fee or salary or bonus on the opinion, conclusion, or valuation to be reached, or on a preliminary value estimate requested from an appraiser;

(5) Requesting that an appraiser provide an estimated, predetermined, or desired valuation in an appraisal report prior to the completion of the appraisal report, or requesting that an appraiser provide estimated values or comparable sales at any time prior to the appraiser’s completion of an appraisal report;

(6) Providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the Borrower, except that a copy of the sales contract for purchase transactions may be provided;

(7) Providing to an appraiser, appraisal company, appraisal management company, or any entity or person related to the appraiser, appraisal company, or appraisal management company, stock or other financial or non-financial benefits;

(8) Removing an appraiser from a list of qualified appraisers, or adding an appraiser to an exclusionary list of disapproved appraisers, in connection with the influencing or attempting to influence an appraisal as described in Paragraph B above (this prohibition does not preclude the management of appraiser lists for bona fide administrative or quality-control reasons based on written policy); and

(9) Any other act or practice that impairs or attempts to impair an appraiser’s independence, objectivity, or impartiality or violates law or regulation, including, but not limited to, the Truth in Lending Act (TILA) and Regulation Z, or the Uniform Standards of Professional Appraisal Practice (USPAP).

II. Acceptability of Subsequent Appraisals

A Seller must not order, obtain, use, or pay for a second or subsequent appraisal in connection with a Mortgage financing transaction unless: (i) there is a reasonable basis to believe that the initial appraisal was flawed or tainted and such basis is clearly and appropriately noted in the Mortgage file, or (ii) such appraisal is done pursuant to written, pre-established bona fide pre- or post-funding appraisal review or quality control processes or underwriting guidelines, and so long as the Seller adheres to a policy of selecting the most reliable appraisal, rather than the appraisal that states the highest value, or (iii) a second appraisal is required by law.

III. Borrower Receipt of Appraisal

The Seller shall ensure that the Borrower is provided a copy of any appraisal report concerning the Borrower’s subject property promptly upon completion at no additional cost to the Borrower, and in any event no less than three days prior to the closing of the Mortgage. The Borrower may waive this three-day requirement if such waiver is obtained at least three days prior to the closing of the Mortgage. The Seller may provide the Borrower at closing, a revised copy of an appraisal and information as to the nature of any revisions, so long as the revisions had no impact on value.

The Seller may require the Borrower to reimburse the Seller for the cost of the appraisal.

IV. Appraiser Engagement A. The Seller or any third party specifically authorized by the Seller (including, but not limited to, appraisal companies, appraisal management companies, and Correspondent lenders) shall be responsible for selecting, retaining, and providing for payment of all compensation to the appraiser. The Seller will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by any other third party (including Mortgage Brokers and real estate agents). B. There must be separation of a Seller’s sales or Mortgage production functions and appraisal functions. An employee of the Seller in the sales or Mortgage production function shall have no involvement in the operations of the appraisal function.

(1) Certain parties are prohibited from:

(a) Selecting, retaining, recommending, or influencing the selection of any appraiser for a particular appraisal assignment or for inclusion on a list or panel of appraisers approved or forbidden to perform appraisals for the Seller; and © 2010 Fannie Mae. Trademarks of Fannie Mae 3 of 4 October 15, 2010 This document is incorporated by reference into the Fannie Mae Selling Guide.

(b) Having any substantive communications with an appraiser or appraisal management company relating to or having an impact on valuation, including ordering or managing an appraisal assignment.

These parties are:

(i)

All members of the Seller’s Mortgage production staff;

(ii)

Any person who is compensated on a commission basis upon the successful completion of a Mortgage; and

(iii)

Any person whose immediate supervisor is not independent of the Mortgage production staff and process.

 

Seller personnel not described in Section IV.B (1)(i) through (iii) above are not subject to the restrictions described above, and may engage in communications with an appraiser. In addition, any party, including the parties described in Section IV.B (1)(i) through (iii) above, may request that an appraiser provide additional information or explanation about the basis for a valuation, or correct objective factual errors in an appraisal report. (2) If absolute lines of independence cannot be achieved as a result of the Seller’s small size and limited staff, the Seller must be able to clearly demonstrate that it has prudent safeguards to isolate its collateral evaluation process from influence or interference from its Mortgage production process. C. Any employee of the Seller (or if the Seller retains an appraisal company or appraisal management company, any employee of that company) tasked with selecting appraisers for an approved panel or substantive appraisal review must be: (1) Appropriately trained and qualified in the area of real estate appraisals; and (2) In the case of an employee of the Seller, wholly independent of the Mortgage production staff and process.

V. Use of Appraisal Reports by In-House Appraisers or Affiliated Appraisers A. In underwriting a Mortgage, the Seller may use an appraisal report:

(1) Prepared by an appraiser employed by:

(a) The Seller;

(b) An affiliate of the Seller;

(c) An entity that is owned, in whole or in part, by the Seller; or © 2010 Fannie Mae. Trademarks of Fannie Mae 4 of 4 October 15, 2010 This document is incorporated by reference into the Fannie Mae Selling Guide.

(d) An entity that owns, in whole or in part, the Seller.

(2) Prepared by an appraiser employed, engaged as an independent contractor, or otherwise retained by an appraisal company or any appraisal management company affiliated with, or that owns or is owned, in whole or in part, by the Seller or an affiliate of the Seller, provided that the Seller complies with the provisions of these Appraiser Independence Requirements. B. The Seller also may use in-house staff appraisers to: (1) Order appraisals; (2) Conduct appraisal reviews or other quality control, whether pre-funding or post-funding; (3) Develop, deploy, or use internal Automated Valuation Models; or (4) Prepare appraisals in connection with transactions other than Mortgage origination transactions (e.g., Mortgage workouts), if the Seller complies with the provisions of these Appraiser Independence Requirements.

VI. Transfer of Appraisals

A Seller may deliver to Fannie Mae a conventional Mortgage with an appraisal prepared by an appraiser selected by another lender, including where a Mortgage Broker has facilitated the Mortgage application (but not ordered the appraisal). The Seller delivering the loan to Fannie Mae makes all representations and warranties to Fannie Mae regarding the appraisal set forth in the Mortgage Selling and Servicing Contract, the Selling Guide and related documents, including the representation that the appraisal is obtained in a manner consistent with these Appraiser Independence Requirements.

VII. Referrals of Appraisal Misconduct Reports

Any Seller that has a reasonable basis to believe an appraiser or appraisal management company is violating applicable laws, or is otherwise engaging in unethical conduct, shall promptly refer the matter to the applicable State appraiser certifying and licensing agency or other relevant regulatory bodies.

VIII. Compliance

Sellers must adopt written policies and procedures implementing these Appraiser Independence Requirements, including, but not limited to, adequate training and disciplinary rules on appraiser independence, including the principles detailed in Section I. Additionally, Sellers must ensure that any third parties, such as appraisal management companies or Correspondent lenders, used in conjunction with the sale and delivery of a Mortgage to Fannie Mae are also in compliance with these Appraiser Independence Requirements

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August 03, 2010

2010 USPAP Update Unedited

Barry J. Shea, Member, Appraisal Standards Board
Roberta Ouellette, General Counsel North Carolina Appraisal Board
Barry J. Shea, Speaker
Barry J Shea is a state certified residential appraiser who has been appraising real property in central New Hampshire since 1987. He has a Master of Science degree in Business Education from Southern New Hampshire University. He holds a designation from a professional appraiser organization that is a sponsor of The Appraisal Foundation.

Shea sat on the New Hampshire Real Estate Appraiser Board from 2000 to 2005, serving as chair for two years. He has worked with The Appraisal Foundation as a representative to both the Education Council of Appraisal Foundation Sponsors (ECAFS) and The Appraisal Foundation Advisory Council (TAFAC). He is currently a member of Appraisal Standards Board of The Appraisal Foundation.

He has been teaching both qualifying education and continuing education programs for appraisers since 1994. In addition, he has developed several appraisal courses and seminars.

Roberta Ouellette, Moderator
Roberta Ouellette is an assistant attorney general for the State of North Carolina and has served as the full time general counsel to the North Carolina Appraisal Board since 1995. She prosecutes disciplinary actions in front of the Board, and represents the Board in appeals to Superior Court and the Court of Appeals. Roberta received her undergraduate degree from the University of New Hampshire and her Juris Doctor from the University of Maine School of Law. She and her husband have three children and 8 grandchildren who keep them on the go.
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March 25, 2010

The Appraisal Subcommittee Launches Redesigned Website

 

The Appraisal Subcommittee Launches Redesigned Website

The Appraisal Subcommittee (ASC) launched a new website today that greatly enhances the availability of ASC information to the public. The website at http://www.asc.gov has a new design, added content, improved organization, and enhanced features and architecture to enable ease of use and navigation. The website also includes new ways to highlight timely and important news. To take advantage of the website's technologies and capabilities, it is best viewed with Internet Explorer 8.0, or the latest version of your web browser.

The new website has improved search functionality for both authenticated State regulators and non-authenticated users. Authenticated users now have the ability to update an appraiser’s record on the ASC’s National Registry in real-time. Historical views of an appraiser’s credentials will provide financial institutions and other users of appraiser services with more complete information for determining an appraiser’s eligibility to perform an appraisal. Another new feature allows remote applications to perform queries against the National Registry database.

Comments and suggestions regarding the website can be sent to the ASC by using the form provided at the Contact Us link found at the bottom of the website’s home page.

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January 09, 2010

USPAP Exposure Draft 2012

USPAP Exposure Draft 2012

http://www.harriscompanyrec.com/uspapexposuredraft2012.pdf

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January 05, 2010

USPAP 2010-2011

USPAP 2010-2011

http://www.uspap.org/2010USPAP/eUSPAP2010.htm

 

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December 17, 2009

IMPORTANT USPAP CHANGES EFFECTIVE JANUARY 1, 2010

IMPORTANT USPAP CHANGES EFFECTIVE JANUARY 1, 2010
As a reminder, the 2010-11 edition of the Uniform Standards of Professional Appraisal Practice (USPAP) becomes effective on January 1, 2010.  Therefore, we want to take this opportunity to strongly encourage all appraisers to review the Appraisal Standards Board’s 2009 Summary of Actions document, which can be downloaded from our website by clicking on the following link: http://www.appraisalfoundation.org/s_appraisal/bin.asp?CID=3&DID=1359&DOC=FILE.PDF.
We also wish to highlight one particular revision to USPAP that will affect each assignment starting in 2010.  As stated on pages 3 and 4 of the above-referenced document, appraisers will be required to disclose to their client, prior to engagement (as well as within the certification of the report):
“Any services regarding the subject property performed by the appraiser within the prior three years, as an appraiser or in any other capacity.”
Because there have been questions from appraisers and users of appraisal services regarding this particular new requirement, the Appraisal Standards Board issued a series of questions and answers in its April 2009 USPAP Q&A document.  This document can also be downloaded from our website by clicking on the following link: http://www.appraisalfoundation.org/s_appraisal/bin.asp?CID=12&DID=1351&DOC=FILE.PDF.  The Board will also add additional Q&A’s for publication this month on this same topic. We are providing you this information with the intent of keeping you as up-to-date as possible regarding USPAP requirements.  If you have any questions or need additional information, please feel free to contact John Brenan, Director of Research & Technical Issues at (202) 624-3044 or  john@appraisalfoundation.org 

To purchase a complete copy of the 2010-2011 USPAP at a special discount, please see the information below.

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