Volume 2, Issue 10 ILLINOIS DEPARTMENT OF FINANCIAL & PROFESSIONAL REGULATION October 2010 IllinoisAppraiser And You Thought We Were Kidding Q: Now, I’m looking at your real es‐ The preceding passage was lifted word‐ INSIDE THIS ISSUE: tate appraisal, Respondent’s Exhibit for‐word from the transcript of a di‐ Certifying Exclusion 2 2. Under the comment addendum— vorce case. that’s page 8 of 12 of your appraisal Can I Appraise This? 3 report— However, this exchange sounds re‐ Under Qualified? 5 markably close to one we’d hear in a A: Okay. Settlement Conference in front of a The Magnificent Seven 6 board member and a department attor‐ Q: The intended use that you list as ney. this appraisal is one for a mortgage refinance transaction; is that true? A: I believe it says that. Correct. Q: And, in fact, it indicates that there is a limiting condition that the pur‐ pose of this appraisal is for the pur‐ poses of an individual obtaining mortgage financing only by the lender slash client and secondary market participants, and that market value is defined in the limiting condi‐ As you can see, opposing counsel went tions page; correct? right for the jugular by pointing out for the court that the URAR form was in‐ A: Correct. appropriate for this assignment. Q: Where is the limiting conditions Because the appraiser had no snappy page in this appraisal? answer, the court is left with the im‐ pression that this appraiser can’t even A: It’s more likely than not going to be in figure out the form...so why should there as far as that goes. their value conclusion be any more credible? Q: So the definition of market value, which you say your appraisal is based Once again, the URAR is not a hammer upon, is on a limiting condition page for all nails. that’s not even been provided as a part of this report; is that true? For certain, it should never be used for anything other than for its intended A: That would be correct if that’s the case. purpose...mortgage lending. The State rests. http://www.idfpr.com/dpr/re/Appraisal.asp 1 ILLINOIS DEPARTMENT OF FINANCIAL & PROFESSIONAL REGULATION IllinoisAppraiser Certifying Exclusion AMCs have a lot of by‐the‐ways crowd‐ from Freddie Mac sending it to you di‐ ing their appraisal orders. Orders are rectly) is through Freddie Mac’s selling typically chock‐full of things that the system known as MIDANET or per‐ vendor/appraiser is responsible for haps Loan Prospector. doing or knowing. Wait a minute. Aren’t those platforms A few AMCs that provide work on only available to loan sellers or ser‐ behalf of Freddie Mac include a com‐ vicers? ment much like the one in the box be‐ low. Of course they are. Please note that the Lender/Client for this assign- ment is Freddie Mac. By accepting this assignment, A Freddie Mac Indus‐ you, the appraiser are certifying that you are not try Letter dated August currently on Freddie Mac's exclusionary list, and 21, 2009 reiterates what may complete assignments on their behalf. If this is was already made clear not the case please do not accept the assignment in Sections 6.11 and 51.3 into your account. of the Single‐Family Seller/Servicer Guide. The question is, what exactly is the Freddie Mac exclusionary list? Sellers and Servicers (not appraisers) are to represent and warrant that they have According to Freddie’s not employed and will not employ own definition; any person listed on the Freddie Mac exclusionary list. “The list compiled, main‐ tained and distributed by For all practical purposes, it isn’t your Freddie Mac containing problem as an appraiser to know names and other informa‐ whether you’re on this specific list or tion concerning persons or not. entities that have been ex‐ cluded, voluntarily or invol‐ How could it be? untarily, or suspended from participating in transac‐ It would appear that agreeing to this tions or doing business with stipulation in the box would be ill‐ Freddie Mac as a principal.” advised at best. In other words, it’s a black More like, ridiculous. list. Perhaps the AMCs that pepper their Where would an ap‐ vendor agreements and orders with praiser typically find such stipulations might be wise to ac‐ such a list? tually familiarize themselves with Freddie’s Guide. The only legitimate way to access this list (aside That’s their responsibility. http://www.idfpr.com/dpr/re/Appraisal.asp 2 ILLINOIS DEPARTMENT OF FINANCIAL & PROFESSIONAL REGULATION IllinoisAppraiser Can I Appraise This? We receive a lot of calls and e‐mails According to the Dictionary of Real asking for clarification as to what an Estate, the concept of Consistent Use Illinois Certified Residential appraiser is; is allowed to appraise. “...that land cannot be valued on the basis Let’s examine what the Act says: of one use while the improvements are val‐ ued on the basis of another. The concept of “A State certified residential real estate Consistent Use must be addressed when appraiser must have a State certified gen‐ properties are devoted to temporary in‐ eral real estate appraiser who holds a valid terim uses.” license under this Act co‐sign all appraisal reports on properties other than one to four Returning to our photo example: units of residential real property without regard to transaction value or complex‐ We know that the house is still being ity.” used as a residence. We know that it sits on three acres most likely zoned The photo illustrates what tends to commercial (given its location). The confuse licensees. property will most likely sell with the intent of demolishing the resi‐ dence to make way for a com‐ mercial use of some sort. Can an Illinois Certified Resi‐ dential appraiser complete an appraisal report on this prop‐ erty? Let’s say that it was for an AMC/lender client. Generally, they want their appraisers to stop and contact them before completing an assignment like We see a single‐family residence with a this. These interim uses are a red flag for sale sign announcing 3 acres of for residential underwriters. commercial property is available. First, the property is being offered for This is typical of transitional property. sale. Next, the commercial zoning will This is where an existing use has a usually be enough to make this noth‐ highest and best use as something else. ing more than a “trip fee”. In many cases this is made evident by a change in zoning. Let’s say that you receive this as a “private party” assignment. The concept of Consistent Use is at play in this example. (Continued on page 4) http://www.idfpr.com/dpr/re/Appraisal.asp 3 ILLINOIS DEPARTMENT OF FINANCIAL & PROFESSIONAL REGULATION IllinoisAppraiser Can I Appraise This? (Continued from page 3) would write in your report what the If the highest & best use is commercial underlying zoning was along with Pat Quinn, Governor or industrial; you’ll need a Certified whether it represented a legal, pre‐ General to co‐sign the report. existing, non‐conforming use. Brent E. Adams, Secretary If the residential improvement is lo‐ As a Certified Residential appraiser, Donald W. Seasock cated on commercial or industrial you would be permitted to appraise this Acting Division Director zoned land that has no market, the un‐ property, under these specific condi‐ derlying zoning may have little to no tions, without a Certified General co‐ Division of Professional Regulation influence on the overall value. At this signing. Illinois Department of Financial point, the highest & best use may still and be the residential use. Remember, a license does nothing Professional Regulation more than give permission to do a Division of How could it have no market as com‐ thing. It does not confer competence Professional Regulation mercial or industrial? upon the licensee. 100 West Randolph Street 9th Floor Appraisal Unit The site may be too small to accommo‐ Certified General appraisers have no Chicago, Illinois 60601 date commercial or industrial develop‐ restrictions as to the scope of their Phone: 312/793-6608 ment (physically possible). practice. However, it doesn’t mean that Fax: 312/793-8720 they are equal to the task of appraising The site may be located along a dead hotels, dry fertilizer terminals, or cell Appraisal Board David L. DuBois, Chairman corridor of commercial/industrial de‐ towers. Jim Blaydes, Vice-Chair velopment (financially feasible). Robert Gorman USPAP requires competence in all as‐ T.J. McCarthy If an alternative use to the residence signments. Licensing is just a step to‐ Lee Lansford isn’t possible; it doesn’t really matter ward that goal. Gary Harvey what the underlying zoning is. You Thomas Gooding Maureen Sweeney Hon. Marsha D. Hayes Brian Weaver, Coordinator Editor of IllinoisAppraiser Luisa Rivera, Admin Assistant Mary Bates, Board Liaison The Next Appraisal Board Meeting is scheduled for Wednesday, October 13, 2010 at 10AM The Public is invited The ASC will be Present James R. Thompson Center 100 West Randolph Street 9th Floor Chicago, 60601 http://www.idfpr.com/dpr/re/Appraisal.asp 4 ILLINOIS DEPARTMENT OF FINANCIAL & PROFESSIONAL REGULATION IllinoisAppraiser Under Qualified? Without a doubt, most of the articles market support, your assumptions, written in this publication involve and your conclusions. some aspect of residential appraising. Generally, commercial complaints are For one thing, residential appraisers fairly detailed and well considered. make up the lion’s share of licensees. This makes for big files where narra‐ They also generate far more reports tives are involved. which, in turn, opens them up to more scrutiny and more complaints.
Details
-
File Typepdf
-
Upload Time-
-
Content LanguagesEnglish
-
Upload UserAnonymous/Not logged-in
-
File Pages6 Page
-
File Size-