In general information are you listing "Appraised Prop. Value" only with a full blown appraisal or are you including Evaluations also? When do you consider a value just an "Est. Prop Value"?

I was asked what determines an estimate value of property with a completed application?

I would like to "bump" this one.

If we rely on an Evaluation, rather than an Appraisal to establish the value of the property, do we select "Appraised Value" or "Estimated Prop. Value" on the Closing Disclosure?

From what I interpret in the .37 commentary (below), in a non-purchase transaction we always disclose "Estimated" on the Loan Estimate, but I'm a bit confused as to what we call a valuation on a Closing Disclosure. It seems as though we can call it an "Estimate" but I'm not certain.

What are others doing?

Official Interpretation -

Loan Estimate
37(a)(7) Sale price.
1. Estimated property value. In transactions where there is no seller, such as in a refinancing, § 1026.37(a)(7)(ii) requires the creditor to disclose the estimated value of the property identified in § 1026.37(a)(6) at the time the disclosure is issued to the consumer. The creditor may use the estimate provided by the consumer at application, or if it has performed its own estimate of the property value by the time the disclosure is provided to the consumer, use that estimate. If the creditor has obtained any appraisals or valuations of the property for the application at the time the disclosure is issued to the consumer, the value determined by the appraisal or valuation to be used during underwriting for the application is disclosed as the estimated property value. If the creditor has obtained multiple appraisals or valuations and has not yet determined which one will be used during underwriting, it may disclose the value from any appraisal or valuation it reasonably believes it may use in underwriting the transaction. In a transaction that involves a seller, if the sale price is not yet known, the creditor complies with § 1026.37(a)(7) if it discloses the estimated value of the property that it used as the basis for the disclosures in the Loan Estimate.

Closing Disclosure
38(a)(3)(vii) Sale price.
1. No seller. In transactions where there is no seller, such as in a refinancing, § 1026.38(a)(3)(vii)(B) requires the creditor to disclose the appraised value of the property. To comply with this requirement, the creditor discloses the value determined by the appraisal or valuation used to determine approval of the credit transaction. If the creditor has not obtained an appraisal, the creditor may disclose the estimated value of the property. Where an estimate is disclosed, rather than an appraisal, the label for the disclosure is changed to “Estimated Prop. Value.” The creditor may use the estimate provided by the consumer at application, or if it has performed its own estimate of the property value by the time the disclosure is provided to the consumer, disclose that estimate provided that it was the estimate the creditor used to determine approval of the credit transaction.

I think that is pretty clear:

"If the creditor has not obtained an appraisal, the creditor may disclose the estimated value of the property. Where an estimate is disclosed, rather than an appraisal, the label for the disclosure is changed to “Estimated Prop. Value.” The creditor may use the estimate provided by the consumer at application, or if it has performed its own estimate of the property value by the time the disclosure is provided to the consumer, disclose that estimate provided that it was the estimate the creditor used to determine approval of the credit transaction."

Tagging on here - for a same-lender refinance, what if the bank does not obtain a new appraisal or perform an evaluation, but depends on the value established by an appraisal obtained in the prior transaction? It is still an appraisal, but does the fact that it was not obtained specifically for the current application make any difference?

I think not. In this case, you are relying on the appraisal for the valuation, so you label the disclosure accordingly.

I agree. I don't see anything that would lead me to say label it differently just because it is a prior appraisal or internal evaluation.

Thank you both!

Can i ask for a point of clarification? Is the only time we're labelling it "estimated property value" when we don't have an appraisal OR internal evaluation to get the value from? IOW, only if we're taking what the customer listed on their application as the value of the property? (I'm confused about internal evaluations, whether those should be listed as "estimated property value" or "appraised property value".)

"If the creditor has not obtained an appraisal, the creditor may disclose the estimated value of the property. Where an estimate is disclosed, rather than an appraisal, the label for the disclosure is changed to “Estimated Prop. Value.” The creditor may use the estimate provided by the consumer at application, or if it has performed its own estimate of the property value by the time the disclosure is provided to the consumer, disclose that estimate provided that it was the estimate the creditor used to determine approval of the credit transaction."

I could be mistaken, but I'm reading the above description to include in-house evaluations.

Ok, thanks......that's what i thought.

Thanks KB! It's funny how the voice reading in your head makes the tone different so you blur the words that are clearly written!

Just wanted to add another comment on this: We get our evaluations from licensed appraisers... we don't do "in-house" evaluations. That being said, I think we are going to call it "estimated" unless it's a standard scope appraisal report.

The below thread contradicts this one...and I apparently 'missed the memo' on the above thread. Which is correct? Why would an in-house evaluation fall into the same category as an estimate. I'm not so sure it should from a broader regulatory standpoint.

https://www.bankersonline.com/forum/ubbthreads.php/ubb/showflat/Number/1983306/Searchpage/2/Main/230225/Words/%22appraised+value%22/Search/true/re-appraised-value#Post1983306

bump

To add. It appears, at least to me, that when they use the term 'estimate', it's referring to a 'guesstimate' from either the customer or the loan officer. No problem.

However, they then refer to 'appraisal or valuation' and that if an appraisal is not obtained, the lender MAY use the estimate.

So...you estimate the LE based on the info you have. Once you perform an in-house evaluation or order a 3rd party appraisal/valuation (none being an estimate by appraisal standards), you would then disclose it as the appraised value...not an estimate.

Am I wrong?

Bump

An lender evaluation is not an appraisal:

If the creditor has not obtained an appraisal, the creditor may disclose the estimated value of the property. Where an estimate is disclosed, rather than an appraisal, the label for the disclosure is changed to “Estimated Prop. Value.” The creditor may use the estimate provided by the consumer at application, or if it has performed its own estimate of the property value by the time the disclosure is provided to the consumer, disclose that estimate provided that it was the estimate the creditor used to determine approval of the credit transaction.

So, an independent evaluation done by an in-house appraiser is an estimate? Although it must meet USPAP guidelines?

So, please tell me...when would the term 'valuation' in the below excerpt even come in to play?

"To comply with this requirement, the creditor discloses the value determined by the appraisal or valuation used to determine approval of the credit transaction"

That is talking about disclosing the dollar amount.

Where does it say an evaluation has to met USPAP guidelines?

Randy/Joker I know you both responded on another thread I posted this on -- but I am still wrapping my head around it and I think the reg is not conclusive.

In the event the appraisal is received before a LE is redisclosed - do we enter the appraised value on the loan estimate?

Sorry - you both responded - Joker you said the reg doesn't specify beyond the initial disclosure.. maybe im just being paranoid. Sorry to hijack!

Darth, I think you are reading to much into it. Revised LEs are covered under 1026.19(e)(3)(iv) and only addresses the correct of charges. You would put it on the initial CD.

Thanks Randy!

I think I read way to much into a lot of areas! Appreciate your insight!

Sorry, wrong acronym. Regardless, why is an internal evaluation/appraisal an estimate? I understand using a method, such as 'what does Zillow say' , or the below examples, is an estimate. Why would an internal evaluation meeting the Interagency guidelines and using comparable sales, be an estimate any more so than a 3rd party appraisal's 'estimate' of market value?

A valuation method that does not provide a property’s market value or sufficient information and analysis to support the value conclusion is not acceptable as an evaluation. For example, a valuation method that provides a sales or list price, such as a broker price opinion, cannot be used as an evaluation because, among other things, it does not provide a property’s market value. Further, the Dodd-Frank Act provides “[i]n conjunction with the purchase of a consumer’s principal dwelling, broker price opinions may not be used as the primary basis to determine the value of a piece of property for the purpose of loan origination of a residential mortgage loan secured by such piece of property.”30 Likewise, information on local housing conditions and trends, such as a competitive market analysis, does not contain sufficient information on a specific property that is needed, and therefore, would not be acceptable as an evaluation. The information obtained from such sources, while insufficient as an evaluation, may be useful to develop an evaluation or appraisal.
An institution should establish policies and procedures for determining an appropriate collateral valuation method for a given transaction considering associated risks. These policies and procedures should address the process for selecting the appropriate valuation method for a transaction rather than using the method that renders the highest value, lowest cost, or fastest turnaround time.

I could be wrong, but an appraisal is performed by a licensed or certified appraiser and meets all USPAP guidelines. Everything else is just an evaluation for collateral value purposes regardless of who performs it.

If the creditor has not obtained an appraisal,................

If all you have is an evaluation, you do not have an appraisal.

Okay. I think you have me convinced...although it just seems 'wrong'. !