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#2012137 - 05/05/15 05:15 PM Evaluations vs. Appraisals
mcronbach Offline
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California
In the case where a formal appraisal is not required and the Bank instead prepares an Evaluation in it's place, is the Bank required to provide a copy of the Evaulation to the borrower?
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Melody Cronbach

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#2012147 - 05/05/15 05:33 PM Re: Evaluations vs. Appraisals mcronbach
#Just Jay Offline
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Cheeseheadland
Yep.

From 1002.14(a)(1): In general, a creditor shall provide an applicant a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling.
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#2012170 - 05/05/15 06:19 PM Re: Evaluations vs. Appraisals mcronbach
Dan Persfull Offline
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Bloomington, IN
It depends how the evaluation was developed.

Review the definition of an evaluation in 1002.14 and its Commentary. Not all evaluations meet the definition therefore not all evaluations have to be provided to the consumer.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2012247 - 05/05/15 08:42 PM Re: Evaluations vs. Appraisals Dan Persfull
slicehead Offline
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Anyone have a sample Evaluation? Seems the Examiner's did not like our's.

Thanks!

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#2012250 - 05/05/15 08:45 PM Re: Evaluations vs. Appraisals mcronbach
RR Joker Offline
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What components do you have in yours? If it's based off a tax card, it's insufficient. You should be using valid comps and other appropriate valuation tools, for instance.
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#2012310 - 05/06/15 01:00 PM Re: Evaluations vs. Appraisals mcronbach
slicehead Offline
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Posts: 36
If the tax value supported the loan amount, we would just use the tax value. In most cases, we are referring to an old appraisal that we have in file. We only use them when the equity is obvious. We have added verbiage to include current and projected use of the property & zoning designation. We have added narrative to describe the method used to confirm the physical condition, narrative to describe the analysis that was performed and the supporting information that was used in valuation, narrative to describe market conditions and if using an existing Appraisal, verifying the original market value has not changed due to various conditions. Not sure if this will pass the test or not. Was hoping someone had a sample that have pleased the Examiner's.

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#2012312 - 05/06/15 01:07 PM Re: Evaluations vs. Appraisals mcronbach
RR Joker Offline
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If you are charging for this service and only using the tax value, be prepared to be criticized by your compliance examiners.

I would just compare what you are doing now to what is required in section XII and XIII of the link below.

https://www.fdic.gov/regulations/laws/rules/5000-4800.html#Validity of Appraisals and Evaluations
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#2012324 - 05/06/15 01:29 PM Re: Evaluations vs. Appraisals slicehead
#Just Jay Offline
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Cheeseheadland
Originally Posted By slicehead
If the tax value supported the loan amount, we would just use the tax value. In most cases, we are referring to an old appraisal that we have in file. We only use them when the equity is obvious. We have added verbiage to include current and projected use of the property & zoning designation. We have added narrative to describe the method used to confirm the physical condition, narrative to describe the analysis that was performed and the supporting information that was used in valuation, narrative to describe market conditions and if using an existing Appraisal, verifying the original market value has not changed due to various conditions. Not sure if this will pass the test or not. Was hoping someone had a sample that have pleased the Examiner's.


What is your narrative though? Just boiler plate you are adding to each eval? Is someone actually going out to look at the property and take a picture in its current state? Do your communities reassess annually, or are you using tax values based on a 5-6 year old community assessment? How are you verifying current market conditions... are you obtaining and reviewing comps to prove your point?

Regardless of how obvious the equity position is, it is 2015 now... if you are not taking the guidance reissued in December of 2010 seriously, you can expect to be criticized as you are. Those guidelines, detailed in the link Joker provided, clearly state that using the straight up tax value without showing your methodology to back into it, is not acceptable.

In our shop and in operating in a dense multi-community metro area, we just get an appraisal for nearly every deal now. Generally the only exception we make is if the appraisal on file is less than a year old, and then we do a full investigation and write up detailing why the appraisal is still a good reasonable value.
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#2012472 - 05/06/15 05:51 PM Re: Evaluations vs. Appraisals mcronbach
slicehead Offline
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Posts: 36
I think we are moving to the world of requiring a new appraisal on all deals. This is unfortunate for the consumer. Will cost them more $. Ultimately, in the event of a foreclosure or repossession, the value stated on that Appraisal is never what the collateral liquidates for. We portfolio all of our loans, have not had a foreclosure or loss in 10+ years and have next to 0% delinquency. You would have thought we would have got cut some slack on the preparation of our Evaluations, but we did not. We tweaked them the last exam and will again. Just wished someone had a template that could be used that contained the blessings of the Examiner's. Everything else will continue to be scrutinized.

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#2012493 - 05/06/15 06:22 PM Re: Evaluations vs. Appraisals mcronbach
RR Joker Offline
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RR Joker
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The Swamp
slicehead...our form is very basic.

It has the customer and their address at the top. The property description is under that.

Then there is a section for comps.

Then any adjustments, etc., to arrive at a total improvement, total site and total.

Signed by the in-house evaluation person, dated and a signature of a reviewer not connected to the loan.

Any supporting documentation is attached.
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My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

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#2012496 - 05/06/15 06:27 PM Re: Evaluations vs. Appraisals mcronbach
slicehead Offline
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Joined: Jul 2012
Posts: 36
RR Joker,

Has this form been reviewed by the Examiner's? It seems like basic is not in their vocabulary.

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#2012508 - 05/06/15 06:41 PM Re: Evaluations vs. Appraisals mcronbach
RR Joker Offline
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RR Joker
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The Swamp
Most definitely. S&S and Compliance.
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My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

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#2012510 - 05/06/15 06:46 PM Re: Evaluations vs. Appraisals mcronbach
slicehead Offline
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Joined: Jul 2012
Posts: 36
Excellent.
Any chance of you sharing this info with me?

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