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The National Flood Insurance program has changed their requirements and this change affects all appraisers’ photo addenda. Effective immediately, ALL IMPROVEMENTS on a subject property are required to be documented with a photograph. This includes, and is definitely NOT limited to personal property non-fixtures such as yard sheds and above ground pools, playhouses, grain bins, chicken coops, or any barn or structure that has collapsed and is not provided value.

Providing photographs of collapsed buildings or fully depreciated structures is very important as the bank would have photographic proof that would protect them after loan closing for any claims.

There has been increasing pressure from Samco’s clients on the subject of photographs, specifically comparable sale photographs. There is one client who allows MLS photographs if the neighborhood is Rural and the comparable sales are over five miles in distance, but that is a rare exception. All other clients require the appraiser to physically inspect (drive by) the comparable sale and document that with an original photograph. Here’s why.

As many appraisers are aware, effective September 1, 2010, Fannie Mae required photographs of the following:

There are many words that appraisers would use to describe their profession; reasonable, logical, orderly, sequential. After all, these words are the basis of the appraisal process. This week SAMCO appraisers will be tackling the portion of the orderly and sequential part of appraising.

Whether an appraisal is printed out or sent via email, the document itself must be orderly and logical for the reader of the report. Everything in life is that way, from making a bed to starting a car. Appraisals are no different. From this point on, all SAMCO appraisals will have a specific order. If not, they will be returned to the appraiser, and the quality score adjusted.

Here it is:

An appraisal report should be progressively logical and easy to understand when read by an individual not familiar with the appraisal process. When writing a report, you must keep at the front of your mind that another appraiser probably will not be reading it. It will be a processor, underwriter, loan officer, and now, a borrower. New federal requirements require the consumer/customer to actually receive the report before the closing. One of the reasons the UAD definitions addenda is now required is the fact that the borrower needs this to be able to read the report. An individual that has never laid eyes on an appraisal needs this addenda; that’s understandable.

A letter of reprimand was handed to an appraiser by a state Real Estate Appraiser Board.The Review Appraiser for the Board stated as part of her findings:

"b. Respondent described the Subject Property neighborhood boundaries as "Township, County", rather than providing detailed boundary streets, etc. While not specifying what the neighborhood boundaries should be, [the review appraiser] stated that "Township, County" is too vague, is minimal, and does not describe the area."

The Board's findings for the above are listed below:

Every few months a new community bank partners with SAMCO for their residential and commercial appraisal order management/review process and our consumer lending evaluation order management/review process. Our community bank clients have many good reasons for employing SAMCO Appraisal Management Company. One is meeting the Interagency Appraisal and Evaluation Guidelines; another is to provide a compliant appraisal product for Fannie Mae, Freddie Mac, or Federal Home Loan Bank, reducing their ‘cram down’ liability. The mortgage industry has had its issues, creating significantly tighter underwriting requirements. Appraisals are one area experiencing increased scrutiny.

There are times that we, here at SAMCO, see that the appraiser is just misunderstanding what the question is! Two of those easy-to-correct misunderstandings are & at the very top of page two of the 1004 Form:

Don't you hate it when you get a Request for Revision that says find another comparable? It  would be "nice" or possibly "convenient" for everyone looking over the appraisal report to just trust that you located the "best" comparable sales, but that isn’t your job, your job is to PROVE that the comparable sales chosen were the best available. So how do you do that?

15% - 25%, 12Months

There has been some recent discussion on recommendation versus requirements for theadjustment guidelines that are considered excessive. In light of the recent changes Fannie Mae, and Freddie Mac have made in regards to guidelines. SAMCO would like to offer our recommendations and assistance whenever you have an assignment that is unusual. SAMCO would also like to clarify our position and our recommendations.