Archive for August, 2011

U.S. DEPARTMENT OF HOUSING AND URBAN

U.S. DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT
WASHINGTON, DC 20410-8000
ASSISTANT SECRETARY FOR HOUSINGFEDERAL
HOUSING COMMISSIONER
www.hud.gov espanol.hud.gov
AUGUST 22, 2011
MORTGAGEE LETTER 2011-30
To ALL APPROVED MORTGAGEES
ALL FHA ROSTER APPRAISERS
Subject The Uniform Appraisal Dataset (UAD) and appraisal reporting forms
Purpose of this
Mortgagee
Letter
The Federal Housing Administration (FHA) will adopt the Uniform Appraisal
Dataset (UAD) and two of the UAD compliant appraisal reporting forms,
which further define specific data fields in these industry standard appraisal
reporting forms.
Effective Date To allow Mortgagees sufficient time to make any necessary data system
changes, the requirements of this Mortgagee Letter are mandatory for all case
numbers assigned on or after January 1, 2012 and for all appraisals
performed on HUD real estate owned (REO) and Pre-Foreclosure Sale (PFS)
properties with an effective date on or after January 1, 2012.
Prior to the effective date, Mortgagees, at their discretion, may accept and
submit for loan endorsement an appraisal in either a UAD compliant format
or a non-UAD compliant reporting format.
Continued on next page
2
Background
The UAD is the result of collaboration between the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, at the direction of the Federal Housing Finance Agency (FHFA) to standardize data reporting quality and improve the collection of electronic appraisal data.
The UAD is part of the Uniform Mortgage Data Program (UMDP), which includes the:
Uniform Collateral Data Portal (UCDP) and, Uniform Loan Delivery Dataset (ULDD)
The UCDP is a web application that will enable lenders to submit appraisal report forms electronically. The ULDD is a standardization of loan delivery data that will leverage the use of MISMO (Mortgage Industry Standards Maintenance Organization) in delivering loan data electronically. FHA is not adopting or requiring the use of the UCDP or the ULDD at this time.
In an effort to enhance appraisal data quality and consistency and to promote the collection of electronic appraisal data, the GSEs have developed the
UAD to standardize the input values for certain data elements. For example:
Specific date Dollar amounts Property condition Quality of construction
Fannie Mae and Freddie Mac have modified the Uniform Residential Appraisal Report and the Individual Condominium Unit Appraisal Report forms, which are forms currently required by FHA, to include UAD requirements. Appraisal software vendors have also incorporated the UAD requirements into their form software that is currently available on an industry wide basis. Information that was never explicitly required in the GSE’s appraisal reporting forms before includes:
Days on market for the subject property and each comparable sale Updating or repairs to kitchen and bathrooms in the subject property Sale type for the subject property and each comparable sale
Continued on next page
3
New FHA appraisal reporting requirements
The following table identifies which appraisal reporting forms have been modified by the UAD and which modified forms will be required and/or accepted by FHA.
UAD Modified Appraisal Form Fannie Mae/ Freddie Mac Form # FHA Required
1
Uniform Residential Appraisal Report
Fannie Mae 1004
Freddie Mac 70
Yes
2
Individual Condominium Unit Appraisal Report
Fannie Mae 1073
Freddie Mac 465
Yes
3
Exterior-Only Inspection Residential Appraisal Report
Fannie Mae 2055
Freddie Mac 2055
Not accepted
4
Exterior-Only Inspection Individual Condominium Unit Appraisal Report
Fannie Mae 1075
Freddie Mac 466
Not accepted
UAD Field Specific Requirements
and FHA Compliance
FHA Roster appraisers must become familiar with the modified appraisal forms, including the UAD field specific requirements detailed in Appendix D of the Uniform Mortgage Data Program and which is posted on the web sites of Fannie Mae and Freddie Mac. Except for the cases listed below, FHA Roster appraisers must comply with the instructions and requirements as provided by the GSEs in Appendix D.
The following table identifies FHA specific compliance requirements:
UAD Field Specific Requirement Appraisal Form Section FHA Requirement
Select relevant subject condition rating
Improvements
“Subject to” select the as-repaired condition
Input room count and finished/unfinished basement areas
Sales Comparison Grid Basement & Finished Rooms Below Grade
Enter only verifiable data and cite source in the addendum
Appraisal made “as-is,” “subject to”…
Reconciliation Section
“As-is” only for HUD REO or PFS properties
Enter Appraiser Trainee and Supervisory Appraiser Information
Appraiser Certification Section (Pg. 6)
Supervisory appraisers and trainees are not permitted
Continued on next page
4
FHA Appraisal Reporting Requirements Remain in Effect
FHA Roster appraisers are reminded that all FHA appraisal reporting requirements remain in effect and are cautioned to continue to perform the research necessary and exercise the due diligence to produce a credible and accurate appraisal. The UAD field specific requirements are not a substitute for, and do not exempt FHA Roster appraisers from the requirement to provide adequate explanations in the addendum of the reporting form regarding methodology, anomalies, property deficiencies and other conditions that may have an impact upon the value of a property and its marketability.
In all cases, a property’s compliance with Minimum Property Standards (new construction) and Minimum Property Requirements (existing construction) must be thoroughly addressed by the appraiser. FHA Roster appraisers are reminded that the Statement of Insurability is also required for all appraisals performed on HUD REO properties.
Information Collection Requirements
Paperwork reduction information collection requirements contained in this document are pending determination by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB Control Number 2502-0538. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB Control Number.
Questions
If you have questions concerning this Mortgagee Letter, please call the FHA Resource Center at 1-800-CALLFHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TTY by calling the Federal Information Relay Service at (800) 877-8339.
Signature
___________________________________________________
Carol J. Galante
Acting Assistant Secretary for Housing-Federal Housing Commissioner

Comments

Fannie Mae and Freddie Mac (GSEs) have NOT changed the Uniform

Fannie Mae and Freddie Mac (GSEs) have NOT changed the Uniform
Appraisal Dataset implementation date. September 1, 2011 remains the
effective date for appraisal reports to be completed in compliance
with the UAD for conventional mortgages sold to the GSEs.

FHA’s effective date for of the adoption of the UAD and two of the UAD
compliant appraisal reporting forms is January 1, 2012. More
information is available in Mortgagee Letter 2011-30 (see attached PDF
or go to FHA Mortgagee Letters at : http://portal.hud.gov/hudportal/documents/huddoc?id=11-30ml.pdf

Please note the following for further information on the UAD:

Uniform Appraisal Dataset

For appraisals with an effective date on or after September 1, 2011,
Fannie Mae and Freddie Mac will require use of the Uniform Appraisal
Dataset (UAD) reporting format for those appraisals completed on the
following Fannie Mae/Freddie Mac forms:

• • Uniform Residential Appraisal Report (Form 1004/70);

• • Exterior-Only Inspection Residential Appraisal Report (Form
2055/2055);

• • Individual Condominium Unit Appraisal Report (Form 1073/465) and;

• • Exterior-Only Inspection Individual Condominium Unit Appraisal
Report (Form 1075/466)

Use of the new UAD will not affect the requirements of USPAP Standards
Rules 1 and 2 (development and reporting of a real property
appraisal). Standard 2 specifies the minimum standards for the
content of an appraisal report, but does not dictate any specific
format for reporting the required content. UAD is only a format for
reporting data within the above identified appraisal forms for Fannie
Mae and Freddie Mac, the intended users of these reports. UAD does
not replace the minimum standards for reporting content identified
within Standard 2.

Use of the new UAD reporting format is a client condition, therefore,
specific questions regarding UAD reporting criteria should be directed
to Fannie Mae and Freddie Mac (links to Fannie Mae and Freddie Mac can
be found at the end of this document).
This document is being provided to assist licensed appraisers in
understanding how to remain in compliance with USPAP when utilizing
the new UAD reporting format. It is important to remember that each
appraisal report completed utilizing the new UAD format must always
meet the minimum standards set forth in USPAP.

UAD and USPAP – Some Commonly Asked Questions

UAD and the Ethics Rule:
Question: The Conduct Section of the Ethics Rule states: “An
appraiser must not use or communicate a report that is known by the
appraiser to be misleading or fraudulent.” If the UAD report is not
understood by the reader of the report, have I delivered a misleading
report?
Answer: No. Comments to Standard Rule 2-1(b) state, in part: “The
appraiser must provide sufficient information to enable the client and
intended users to understand the rationale for the opinions and
conclusions…” The UAD reporting format is a client assignment
condition, therefore, by implication, the client and intended user(s)
will understand the report. The UAD does not limit the information
and or data that appraisers can include in the addenda to an appraisal
report. Therefore, to assist any other potential readers in
understanding the rationale for the opinions and conclusions in the
report (such as those parties specified in Certification Item 23), UAD
definitions and abbreviations from the Field-Specific Standardization
Requirements can be included as an addendum to the report.
(Reference: Fannie Mae Uniform Appraisal Data (UAD) Frequently Asked
Questions – FAQs, Q10, Q20, and Q23).

UAD and the Competency Rule:
Question: The Competency Rule states: “The appraiser must determine,
prior to accepting an assignment, that he or she can perform the
assignment competently.” How can I determine if I am competent to
complete a UAD assignment?
Answer: The expectation will be that the appraiser has acquired the
necessary training and knowledge required for proper compliance with
UAD. The appraiser must not engage an assignment with UAD specified
as an assignment condition if they lack the required knowledge. The
appraiser must understand the assignment conditions as issued by the
client prior to accepting an assignment (reference the Scope of Work
Rule in USPAP). If the assignment conditions are not fully understood
prior to accepting the assignment, the appraiser will not be able to
properly identify the problem to be addressed, will not be considered
competent to complete the assignment, and will not be in compliance
with USPAP.

UAD and the Scope of Work Rule:
Question: If an appraisal is not ordered as a UAD compliant
report, is completed and transmitted to the client, and the client
subsequently requests a UAD compliant report, does that constitute a
new assignment?
Answer: Yes. The assignment conditions have changed, and therefore
the problem identification criteria for the appraisal have changed.
It is important to remember that an appraiser must determine the
assignment conditions prior to accepting the appraisal assignment.
Industry wide, it is understood that effective September 1, 2011,
reports completed for Fannie Mae and Freddie Mac must be UAD
compliant. Therefore, as with all appraisal assignments, the
appraiser is responsible for clarifying with the ordering party and/or
client, the assignment conditions applicable to the appraisal, prior
to accepting the assignment.

Question: Aside from the change in the way the appraisal
information is being reported, is there any new information required,
and will providing that additional information become a requirement of
USPAP?
Answer: Yes. There are four additional data points requested for
UAD compliant reports and several new definitions that will become a
USPAP requirement under the Problem Identification section of the
Scope of Work Rule as they become assignment conditions. The new
information being requested under UAD consists of the following:

• • Days on Market for the subject property and each comparable
property;

• • Specifically defined Condition and Quality Ratings;

• • Updating or remodeling to the kitchen and bathroom(s) for the
subject property, and;

• • Sale type for the subject property and each comparable property.

The new definitions for UAD can be found within the Fannie Mae and
Freddie Mac Uniform Appraisal Dataset Specification Appendix D:
“Field-Specific Standardization Requirements” (links to Fannie Mae and
Freddie Mac can be found at the end of this document).

UAD and Standard Rule 2-2(b):
Question: Will USPAP appraisal reporting requirements be
affected by UAD?
Answer: No. All four appraisal forms scheduled for inclusion in the
UAD reporting format changeover fall under Standard Rule 2-2(b). The
minimum USPAP reporting requirements can still be met under the UAD
reporting format as addenda are not only allowed, but in certain
cases, required, by Fannie Mae, Freddie Mac and USPAP.

Resources for USPAP and UAD:
USPAP Q&A: https://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=taf&WebCode=USPAPQA
Fannie Mae UAD: https://www.efanniemae.com/sf/lqi/umdp/uad/index.jsp
Freddie Mac UAD: http://www.freddiemac.com/sell/secmktg/uniform_appraisal.html

Comments

John S. Brenan, Appraisal Foundation

From: Curits Harris [mailto:harris_curtis@sbcglobal.net]
Sent: Tuesday, August 30, 2011 1:27 PM
To: ‘wsj.ltrs@wsj.com’
Subject: Editor: Appraisal Foundation Letter of August 17, 2011

Editor,

RE: John S. Brenan https://appraisalfoundation.sharefile.com/d/sd41485a674242298
Director of Appraisal Issues

Your article was on the mark! These folks at the Appraisal Foundation/Appraisal Institute are totally lost. Please see the following statement by Sara http://financialservices.house.gov/UploadedFiles/071311stephens.pdf President of the Appraisal Institute. She is arguing against a PROPOSED federal law that would outlaw the use of Non-armslength sales transactions, when appraising market value. Also, it was reported that Four States have already banned this process. I have been in the Real Estate Business since 1984 and never used a non-armslength sale as comparable to a Market Transaction, all one has to do is read the Definition of Market Value.

1 Interagency Appraisal and Evaluation Guidelines, December 10, 2010
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
(1) buyer and seller are typically motivated;
(2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest;
(3) a reasonable time is allowed for exposure in the open market;
(4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
(5) the 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.

REO’s, Probate Sales, Gifts, and other Distressed Property Sales do not come close to meeting this definition. Maybe one could, although I would not, argue that no (4) payment in cash, is acceptable. Besides where are his citations? I have never read in any publication that this was an acceptable practice. In other words, they are making this stuff as they go along.

He, Brenan, speaks of a bifurcated market, duh!, what he calls bifurcated is actually two markets, one fair and the other distressed. Just as you would never use a Fair Sale to value a distressed property (i.e. for salvage value) you should never use a distressed sale for a fair market sale.

One last comment, Of course distressed sales affect the fair sale market but to use distressed sales as comparable further extirpates the problem, forcing a downward arithmetic move to a geometric one. PLEASE KEEP UP THE GOOD WORK, THE REAL ESTATE MARKET HAS BEEN SEVERELY NEGATIVELY IMPACTED BY THE APPRAISAL FOUNDATION/APPRAISAL INSTITUTE.

P.S
If you wish to discuss this issue any further my contact information is below.

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/
A WORD OF CAUTION: When selecting an Appraiser, Consultant, or Expert please pay close attention to his Resume/CV
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

Comments

How the Appraisal Institute Destroyed the Real Estate Industry

How the Appraisal Institute Destroyed the Real Estate Industry

Curtis D. Harris, BS, CGREA, REB • “How the Appraisal Institute-MAI Destroyed the Real Estate Industry.”

All,
We are currently working on a book titled “How the Appraisal Institute-MAI Destroyed the Real Estate Industry.” The book will discuss both Debacles I, which occurred in the 90′s and affected mainly Commercial Properties that were only appraised by MAI-Appraisal Institute Members. And, Debacle II which occurred shortly after the MAI-SRA-Appraisal Institute entry into the Residential Appraiser Market. We are investigating their involvement with Tax Frauds in the Land Trust Tax Credit Program. Fraud and the overvaluation of real estate to close Real Estate Transactions and Mortgages. The fact that they were suspended and kicked out of the Appraisal Foundation, for their involvement in activities contrary to the Foundations Doctrine. Their, MAI-Appraisal Institute, present promulgation that appraisers should use non-arm’s length sales transactions as comparables, contrary to logic, public policy, and law. The Fraud around their advertising that they are the best in the field, a real estate field, when very few of them have degrees in Real Estate. Their affiliation with Financial Institutions. Not to mention their latest report to congress which is full of lies and misrepresentations http://financialservices.house.gov/UploadedFiles/071311stephens.pdf

The survival of the real estate industry depends on your assistance, the MAI-Appraisal Institute must go. If you can provide appraisals, information, or other documentation in support of, or rejecting, our premise please, please, contact me at the following email address. harris_curtis@sbcglobal.net

WE LOOK FORWARD TO YOUR COMMENTS AND A WRITTEN RESPONSE FROM sARA.

John O’Dwyer, MAI, MRICS • This comment is most likely not going yo last long as a post, but his dude Harris is a loose canon. His mind is a jumble and his opinions are most definitely extreme. As far as I know, but I can not be 100% certain, he has been ousted from other discussion groups. My advice is just don’t play along!

Curtis D. Harris, BS, CGREA, REB • Hi John, didn’t realize you were still in business. For all of you who do not know john, he is one of those frauds, mai, from the appraisal institute, posing as a real estate appraiser, He spends his free time following me all over the web.

This comes from his website, “JSO Valuation Group, Ltd. was founded in 1989 by John O’Dwyer, President. John has nearly 25-years of professional real estate experience (where is your resume john, still afraid to produce it. you work for a valuation group for 25 years? now where is your Real Estate Experience) He is a graduate from the University of Dublin, ( Yes folks that is Dublin Ireland, that tiny little brokeass-bankrupt island over there across the pond.) Trinity College 1984, majoring in real estate finance, town planning and economics ( We searched their website and could not find an offering for a real estate degree.) His experience began working as a senior appraiser in New York (1984-1987) and then as a senior loan appraiser in Chicago (1987-1989) (Now come on you disgusting fraud you graduated one day and the next you were a senior appraiser in New York, it must have been for a MAI Firm.) In 1989, John started his own appraisal company, JSO Valuation Group, Ltd. (Pretty good with at most 5 years of appraisal practice.)”

To cut to the chase john o’dwyer is a perfect example of what the appraisal institute – mai represents. A cluster of incopentent frauds. Rest assured he will be in the first chapter if not on the first page.

LIT john

John O’Dwyer, MAI, MRICS • Rest my case….. there is nothing more to say!

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/

A WORD OF CAUTION: When selecting an Appraiser, Consultant, or Expert please pay close attention to his Resume/CV

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

Comments

FHA Condominium Training: Using the Condominium Project Approval and Processing Guide:

All-

FHA Condominium Training: Using the Condominium Project Approval and Processing Guide:

FHA is pleased to announce training on the new condominium guidance issued in Mortgagee Letter 2011-22. This two-day training event, “Using the Condominium Project Approval and Processing Guide,” will be conducted in all four Homeownership Center (HOC) jurisdictions. The training event is open to all industry professionals and other interested parties. The training dates for each of the four Homeownership Centers are listed below, as well as, the registration links for the 4 respective HOCs. Due to the time constraint, the venue locations for Atlanta and Philadelphia are not available yet. Future email update with the venue locations for these 2 HOCs will be sent out to the registrants of these locations. Although the actual training venue locations have not been identified, it is important that you register as soon as possible. Registration is based on a first-come, first-served basis. Please register for only those sessions that you plan to attend by clicking on the corresponding link. Reminder: Recording or videotaping of these events is NOT authorized.

Condo Training Locations and Dates:

September 08-09, 2011 – Denver Homeownership Center. Register at: http://www.hud.gov/emarc/index.cfm?fuseaction=emar.registerEvent&eventId=1022&update=N

September 12-13, 2011 – Santa Ana Homeownership Center. Register at: http://www.hud.gov/emarc/index.cfm?fuseaction=emar.registerEvent&eventId=1021&update=N

September 22-23, 2011 – Atlanta Homeownership Center. Register at: http://www.hud.gov/emarc/index.cfm?fuseaction=emar.registerEvent&eventId=1026&update=N

September 27-28, 2011 – Philadelphia Homeownership Center. Register at: http://www.hud.gov/emarc/index.cfm?fuseaction=emar.registerEvent&eventId=1024&update=N

To read Mortgagee Letter 2011-22 and any attachments in their entirety, please visit: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/ view the 2011 letters and click on the letter of your choice. Mortgagee Letters from previous years can be found on the same page.

Comments

Wanna know Why you cannot get a SALE TO CLOSE? From the Mouth of the Appraisal Institute-President

Wanna know Why you cannot get a SALE TO CLOSE? From the Mouth of the Appraisal Institute-President

C. Appraisers should be allowed to analyze all sales in a market, and their judgment and expertise
should be respected
In 2011, four bills were introduced in state legislatures (Illinois, Maryland, Missouri, and Nevada), and one bill was
introduced in Congress and referred to this Committee, to inappropriately legislate the appraisal process. Each
proposal would prohibit the use of distressed sales, such as foreclosure sales or short sales, as comparables in
an appraisal of a parcel of real property. While we sympathize with the plight of those in today’s real estate
market, we strongly oppose such bills, for they will only contribute to an asset bubble and place lenders at great
risk.
It seems reasonable to assume that distressed sales should not form the basis for market value opinions. But, in
some markets, they are such heavy weights on value that they must be considered along with appropriate
adjustments. Distressed sales such as foreclosure sales and short sales are common in a declining market.
Depending on the severity of the local market downturn, some, many, or even all sales that occur do so under
distressed conditions. Appraisers cannot categorically discount foreclosures and short sales as potential
comparable data in the sales comparison approach. However, due to differences between their conditions of sale
and the conditions outlined in the market value definition they might not be usable as market information.
Foreclosures and short sales usually do not meet the conditions outlined in the definition of market value. A short
sale or a sale of a property that occurred prior to a foreclosure might have involved atypical seller motivations
(e.g., a highly motivated seller). A sale of a bank-owned property might have involved typical motivations, so the
fact that it was a foreclosed property would not render it ineligible as meaningful comparable data that should be
considered in developing a credible appraisal. However, if the foreclosed property was sold without a typical
marketing program, or if it had become stigmatized as a foreclosure, it might need to be adjusted if used as
comparable evidence of value. Further, some foreclosed properties are in inferior condition, so adjustments for
physical condition may be needed.
As is always the case in selecting sales to use as comparable market information, appraisers must investigate the
circumstances of each transaction, including whether atypical motivations or sales concessions were involved,
the property was exposed on the market for a typical amount of time, the marketing program was typical, or
whether the property condition was compromised. Adjustments might need to be made for these circumstances.
When it is necessary to use a distressed sale as evidence of value, the appraiser must carefully analyze the
Testimony of Appraisal Institute President-Elect Sara Stephens, MAI, CRE
July 13, 2011
current local market to determine if an adjustment for conditions of sale is needed. If no adjustment is warranted,
the lack of adjustment should be explained.
Physical condition and conditions of sale are two distinctly different factors that must be considered separately.
They may be related to some degree in a distressed market, but not necessarily. An appraiser must not assume,
for example, that a property was in inferior condition simply because it was a foreclosure. The level of
investigation needed to meet the requirement for sufficient diligence is generally more than is needed in nondistressed
market situations. Further, supporting such adjustments can be particularly challenging when there are
few current transactions to analyze. Competency in performing such investigation and analysis is essential, which
is why we believe the best and most productive way to alleviate concerns about appraisals in complex markets is
to ensure that highly qualified appraisers– particularly those with advanced training, peer review, and competency
exams – are used by lenders and their agents.
Further, under federal and state law, appraisers are required to follow the Uniform Standards of Professional
Appraisal Practice (USPAP). USPAP Standards Rule 1-4(a) requires that appraisers “must analyze such
comparable sales data as are available.” This means all sales, including foreclosures and short sales. In some
markets, there are so many distressed sales that they are the market and must be considered. When there is a
glut of distress sales in the marketplace, and those properties are truly comparable to the subject, it would be
misleading not to use them as part (or in some cases all) of the basis for a value conclusion.
USPAP further states that, “When compliance with USPAP is required by Federal law or regulation, no part of
USPAP can be voided by a law or regulation of a state or local jurisdiction.”
As such, we urge that this Committee refrain from legislating the appraisal process and refrain from advancing the
appraisal provisions of H.R. 1755, as introduced.

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/
A WORD OF CAUTION: When selecting an Appraiser, Consultant, or Expert please pay close attention to his Resume/CV
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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“How the Appraisal Institute-MAI Destroyed the Real Estate Industry.”

All,
We are currently working on a book titled “How the Appraisal Institute-MAI Destroyed the Real Estate Industry.” The book will discuss both Debacles I, which occurred in the 90′s and affected mainly Commercial Properties that were only appraised by MAI-Appraisal Institute Members. And, Debacle II which occurred shortly after the MAI-SRA-Appraisal Institute entry into the Residential Appraiser Market. We are investigating their involvement with Tax Frauds in the Land Trust Tax Credit Program. Fraud and the overvaluation of real estate to close Real Estate Transactions and Mortgages. The fact that they were suspended and kicked out of the Appraisal Foundation, for their involvement in activities contrary to the Foundations Doctrine. Their, MAI-Appraisal Institute, present promulgation that appraisers should use non-arm’s length sales transactions as comparables, contrary to logic, public policy, and law. The Fraud around their advertising that they are the best in the field, a real estate field, when very few of them have degrees in Real Estate. Their affiliation with Financial Institutions. Not to mention their latest report to congress which is full of lies and misrepresentations http://financialservices.house.gov/UploadedFiles/071311stephens.pdf

The survival of the real estate industry depends on your assistance, the MAI-Appraisal Institute must go. If you can provide appraisals, information, or other documentation in support of, or rejecting, our premise please, please, contact me at the following email address. harris_curtis@sbcglobal.net

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/
A WORD OF CAUTION: When selecting an Appraiser, Consultant, or Expert please pay close attention to his Resume/CV
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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NOTICE OF FHA LOAN LIMIT EFFECTIVE OCTOBER 1, 2011 THROUGH DECEMBER 31, 2011

NOTICE OF FHA LOAN LIMIT EFFECTIVE OCTOBER 1, 2011 THROUGH DECEMBER 31, 2011

This provides notice of the posting of the comprehensive update to the Federal Housing Administration’s (FHA) single-family loan limits which are effective on or after October 1, 2011 through December 31, 2011. These limits apply to forward mortgages insured under section 203(b)(2) of the National Housing Act and reverse mortgages insured under section 255 (Home Equity Conversion Mortgages (HECM)). A mortgagee letter providing further guidance has been issued August 19, 2011.

For Forward Mortgages, the FHA floors for the period October 1, 2011 through December 31, 2011 are $271,050, $347,000, $419,425 and $521,250 for 1-, 2-, 3- and 4-unit dwellings, respectively. The FHA ceilings are $625,500, $800,775, $967,950 and $1,202,925 for 1-, 2-, 3- and 4-unit dwellings, respectively. For all other areas, i.e., those where 115 percent of the median home price for the area is in between the floor and the ceiling, the limit shall be at 115 percent of the median home price. For areas under Section 214 of the National Housing Act (Alaska, Guam, Hawaii and the Virgin Islands), higher ceilings of $938,250, $1,201,150, $1,451,925 and $1,804,375 for 1-, 2-, 3-, and 4-unit dwellings, respectively, apply.

For HECMS, the maximum claim amount will remain at $625,500.

As HUD is not updating median prices at this time, there is no appeal period associated with the change of loan limits on October 1, 2011.

For calendar year 2012, HUD does expect to announce proposed maximum mortgage amounts in November 2011. Once the principles set forth in the Mortgagee Letter announcing the loan limits that take effect on October 1, 2011, there will be no further declines in any loan limits for 2012, absent a change in authorizing legislation. As all locality specific maximum mortgage amounts are ultimately tied to the so-called national conforming loan limit of 12 USC 1454(a)(2)(C), and that limit may only go up and not go down over time, county-level loan limits under current statutory authority may only go up in the future and not go down.

Complete schedules of FHA mortgage limits for all areas for forward mortgages will be available through the downloadable file links found at https://entp.hud.gov/idapp/html/hicostlook.cfm The website also provides a current look-up tool that will have the capability of finding loan limits for periods in 2011 and 2012. Please read these FHA Maximum Mortgage Limit FAQs: http://portal.hud.gov/hudportal/documents/huddoc?id=faqfha.pdf

If you have questions regarding this notice, please call FHA’s Resource Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483). You can also get email technical support on FHA mortgage limits at: answers@hud.gov or by visiting: www.hud.gov/answers

AND

New FHA Mortgagee Letter:

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, DC 20410-8000
ASSISTANT SECRETARY FOR HOUSING- FEDERAL HOUSING COMMISSIONER
Date: August 19, 2011
To: All Approved Mortgagees
Mortgagee Letter 2011-29
Subject: Federal Housing Administration’s (FHA) Maximum Loan Limits Effective October 1, 2011 through December 31, 2011

Purpose: This Mortgagee Letter provides notice of FHA’s single family housing loan limits for Forward Mortgages and Home Equity Conversion Mortgages (HECMs) effective October 1, 2011 through December 31, 2011, provides loan limit instructions for FHA-insured to FHA-insured refinance transactions, and provides eligibility criteria and instructions for pipeline loans which have not closed on or before September 30, 2011…

To read this mortgagee letter and any attachments in their entirety, please visit: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/ view the 2011 letters and click on the letter of your choice. Mortgagee Letters from previous years can be found on the same page.

AND

FHA Training Comes to Alaska:

September 07, 2011 – Anchorage, AK. FHA Lender Training. FHA will be conducting a 1.5-day class-room, instructor-led live seminar on discuss recent changes, automated (AUS) vs. manual underwriting, review & discussion of “feedback certificate” and documentation, post endorsement technical reviews (PETRs), insuring deficiencies and much more. This training is for mortgage lending professionals; highly beneficial for Underwriters, Processors, and Loan Officers. Registration required, no fee. More info at: http://www.hud.gov/emarc/index.cfm?fuseaction=emar.registerEvent&eventId=1011&update=N

September 08 2011 – Anchorage, AK. FHA Appraiser Training. FHA will be conducting a 4-hr instructor-led live class on how to complete an FHA appraisal and highlight recent program changes that affect FHA appraisal protocol. This training is highly valuable for appraisers who would like to be added to the FHA Appraisers Roster, and an excellent review for those who are currently on the Roster. Registration required, no fee. More info at: http://www.hud.gov/emarc/index.cfm?fuseaction=emar.registerEvent&eventId=1012&update=N
_________________________________________________________________________________________

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Blog Administrators Needed

We are currently looking for Residential Appraisers to contribute to our Residential Appraiser-Appraisal Blog. We are currently ranked #1 for Residential Appraiser Blog by Google. This opportunity is being offered to expand our brand nationwide. Your participation will expand your brand locally and regionally. To apply please contact Curtis Harris at harris_curtis@sbcglobal.net

http://www.harriscompanyrec.com

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