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Rural Housing Allows for Delayed Appraisal

The US Department of Agriculture’s (USDA) Rural Development issued an Unnumbered Letter last month temporarily permitting obligations of Section 502 loans without an appraisal.  This is being done on a temporary basis and all loans must continue to meet the other program requirements of Section 502 loans.

The letter says “If the application meets all of the other requirements, the Agency may obligate funds subject to obtaining an appraisal that supports the loan request.”  It goes on to say that an appraisal must be completed prior to closing the loan.

Comments
  1. Laura F

    Hi,
    What is the latest on enforcement of customary and reasonable fees for appraisers? We are now into October and I am still being denied independence to charge a typical fee for numerous companies.

  2. Tim In Fla

    Laura,

    Pretty good question. The latest I have heard is that all “Staff Appraisers” will be doing the heavy lifting here for a while. Since they are technically commissioned employee’s and can be paid 45%. customary and reasonable does not apply. Almost every staff appraiser out there I know is out of their minds busy as the penalty for not meeting production goal is pretty stiff. So they are taking on the crappy orders that used to be passed off to minor AMC’s or the “broadcaster’s”. It appears some movement is being seen at some of the super regional banks. They have had it with Realtor and borrower complaints. If you work with these types of lenders check over the letters of engagement closely. You will find that some have now introduced Title XI, FIRREA language back in and it sort of looks like there is going to be room for independent appraisers back at quoted fee’s.

    The latest ploy I have heard out of the TAVMA folks is now geared to geographic competency. They are of the opinion that no matter where your office, or principal place of business is, geographic competency is best identified by how many assignments in the market area you ahve done in the last few years. So if an appraiser did a couple hundred assignments 100 – 200 miles away thats OK. Its a nice try. I think everyone realizes that since they had the strangle hold on the valuation industry for the last several years they routinely sent appraisers that distance if they accepted those ridiculous low fees so all their people would qualify under that theory. The problem is that was also what helped to create the mess.

    The profit margin is way to high for these groups to go away quitely without a fight. The banks and lenders are just starting to realize that they were either duped or had some complicity in regards to undislcosed fees and steering of services. I’m sure a lot of attorneys are working very long hours to try and find any loophole they can.

    We’ll see, October 19 is just one week away. I really don’t expect to see much change except those AMC’s that you might be currently with will have you sign a blanket agreement that the current fee structure IS your customary and reasonable fees. Of course, if not…….sorry. Or, nothing may change at all as the fine is, I believe, $10,000 per day. So an average month brings in three million in fees, you stroke a check for $300,000. Cost of doing business, no problem. The sad part is there is really no enforcement of this law until January or later. i expect the strategyt would be to stall.

  3. Tim In Fla

    I just was notified that the USDA Direct Program for their panel appraisers has raised the appraisal fee to $425. The release was in a un-numbered letter to area managers.
    The letter stated the fee increase was after a series of field surveys.

    So much for “lack of data on appraisal fees”. Add USDA to one of the groups that want quality reporting and are willing to pay for it.

    Good Stuff !!

  4. Heather

    My knee-jerk reaction to the “allowance of delayed appraisals” means there may be significant pressure to complete the appraisal FAST, like we need it yesterday.

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