Appraisal Order Clarification

Payment Requirements


For all non-bill clients, a credit card authorization form signed by the borrower must be uploaded to the system when an appraisal product is ordered. Orders will NOT be placed without this signed authorization.


Please keep in mind that it is not SouthEastern's responsibility to facilitate completion of the credit card authorization form or explain product charges to your borrower. The process is quicker and more efficient when all documentation is uploaded when the order is placed. We would sincerely appreciate your assistance in this regard.


Turn Time Standards
Typical turn time expectation is 5 business days for full URAR/condo/2-4 family property appraisal reports. Please note that orders requiring a quicker turn time will need to be considered a RUSH order, with appropriate fee increase. Should you need a RUSH on an order, please make sure that this is documented in the notes section of the order itself and we will make every effort to find an appraiser who can accommodate your needs. We will alert you to the RUSH fee before final order placement for your approval. Please note that all orders not noting a RUSH requirement will be placed with a 5 business day turn time


Turn time is calculated from the point of receipt of completed and signed credit card authorization.

REASSIGNMENT OF APPRAISAL

Per USPAP, when an appraisal order is placed, a relationship is created between the parties involved. The client is identified by the appraiser in the appraisal report and is the party with whom the appraiser has an appraiser-client relationship in the related assignment. Once a report has been prepared for a named client, the appraiser cannot be “readdressed” to another party since the appraiser does not have a contractual relationship with this other party. However, an appraiser may complete a NEW assignment for this second party. This will then establish a relationship between appraiser and second lender providing all of the rights, obligations and liabilities such a relationship places on the parties involved. A new scope of work is required and an associated fee is determined.

Appraisal Portability

Appraisal portability provides that a lender may accept an appraisal prepared by an appraiser for a different lender provided the lender (1) obtains written assurances that such other lender follows appraiser independence guidelines in connection with the loan being originated and (2) determines that such appraisal conforms to its requirements for appraisals and is otherwise acceptable.  The originating lender is responsible for documenting the written assurance to the other lender.  The lender accepting the appraisal report completed for the originating lender must accept the report “as is.”  The appraiser has no contractual relationship with the second lender and is not responsible for changes requested by the second lender.

Round 2 Appraisal vs BPO's

On January, 16, 2009, we brought to you the valuation fight that is appraisals vs. broker price opinions (BPO).  Today we bring you Round 2 – and this time it’s personal.  Well, it’s not really personal but there is a clear difference of opinion.
Last week, the Appraisal Institute (AI) sent a letter to Treasury Secretary Geithner expressing concerns about the use of BPOs in the HAFA loan modification program.  In the letter to Treasury, AI states that BPOs are likely to exacerbate mortgage fraud.  Further, real estate agents who perform BPOs are not independent, not properly trained, have a bias towards quick results  for a fee, and have little or no regard for the other parties of a short sale transaction (lenders, servicers, investors, property owners, etc).
Within days, the National Association of REALTORS (NAR) responded to AI comments in letters to Secretary Geithner and Housing and Urban Development (HUD) Secretary Donovan.  In the letter, NAR recognizes the need for flexibility in any mortgage modification program and notes the importance of the appraisal for purchase money mortgage transactions. However, NAR believes an appraisal may not be the best tool for all real estate transactions.  BPOs are widely accepted in the real estate industry and there is no evidence that their use results in mortgage fraud.  NAR also argues that there is no evidence to support the idea that appraisers are more or less likely to engage in mortgage fraud than real estate agents

Greenspan Denies Causing the Housing Bubble

Former Federal Reserve Chair Alan Greenspan, whose policies have been blamed for the economic meltdown of 2008, will present a paper at the Brookings Institution today saying that the low interest rates during his tenure didn’t cause the housing bubble.

"To my knowledge, that lowering of the federal funds rate nearly a decade ago was not considered a key factor in the housing bubble," he wrote in a preliminary copy of the presentation.

"The global house price bubble was a consequence of lower interest rates, but it was long term interest rates that galvanized home asset prices, not the overnight rates of central banks," Greenspan continued.

What did cause the bubble, Greenspan argued, is the explosive growth of developing economies in Asia and other parts of the world.

Federal agents crack Upstate Mortgage fraud scheme

Columbia, South Carolina ---- Acting United States Attorney Kevin F. McDonald stated that five people and an upstate corporate builder of residential homes entered guilty pleas in federal court for their respective roles in a mortgage fraud scheme that involved false loan applications, kickbacks, and duping investors, many of whom were members of a Greenville church. Twin brothers Anthony B. Grant and Antonio B. Grant, age 43, both of Simpsonville, and their business partner Michael D. Holmes, age 37, of Lawrenceville, Georgia, pled guilty to conspiracy to commit bank fraud.  Also pleading guilty were Tower Homes, Inc., a South Carolina corporation, and its President Nathan Seppala, age 50, and Vice President Sandra Kinnunnen, age 59, both of Greer, South Carolina.  United States District Judge Henry F. Floyd accepted the pleas and will impose sentence after he has reviewed pre-sentence reports from the U.S. Probation Office. Beginning in 2007, Anthony and Antonio Grant, along with Holmes, operated South East Real Estate Solutions (SERES), which sought people interested in real estate investment and would locate property in upstate South Carolina for these investors to purchase. Many of these novice investors were recruited from the congregation of Redemption World Outreach Church of Greenville, South Carolina, after the Grant brothers and Holmes made presentations to members of the congregation on investment opportunities.  The men promised each investor that once an investment property was purchased, SERES would make all mortgage payments, would find individuals to rent the property, would manage the property, and that SERES would try to “flip” the property to earn a profit for themselves and the investor. Investors were asked to provide personal financial information to SERES so that financing could be sought by the Grant brothers and Holmes on their behalf for the real estate purchases.  However, the Grant brothers and Holmes falsified the investors’ financial information, preparing loan applications stating that the investors had substantial assets and income to qualify for higher mortgage loans, when in fact many did not.  The men also provided investors with money required by lenders to be paid at closing by the investors.  To deceive the lenders on the source of these funds, the men typically gave each investor a check prior to closing, instructing the investor to present it at closing as if it were from the investor’s personal account. Based on the false applications and the deceptive closing funds, mortgage lenders approved 33 loans in amounts far in excess of what would have been loaned had accurate information been presented.  Many of these loans are now delinquent and many of the homes are in foreclosure. Many of the properties that SERES arranged for its investors to purchase were small site-built homes constructed and sold by Tower Homes in the upstate.  The Grant brothers and Holmes entered into side contracts with Tower Homes to locate buyers, then arranged for a recruited investor to purchase one of the Tower Homes’ properties at a price far in excess of that typically charged by Tower Homes.  For arranging for the investor to purchase the Tower Homes property, Seppala and Kinnunnen authorized kickback payments to the Grant brothers and Holmes which were not disclosed to the lenders.  Representatives of Tower Homes provided sworn affidavits to the lenders that there were no oral or written contracts relating to or affecting the property purchased by the investor, when in fact, the representatives knew about the side contracts and the kickbacks authorized by Seppala and Kinnunnen. Secret Service agents began investigating the case after numerous victim investors contacted the U.S. Attorney’s Office to report the fraud in February 2009. Mr. McDonald stated the maximum penalty the individual defendants can receive is a fine of $1,000,000 and imprisonment for 30 years.  The corporate defendant Tower Homes faces a maximum possible fine of $1,000,000.

NAR Supports Use of BPOs in HAFA Program

The allowance of broker price opinions (BPOs) in the administration’s Home Affordable Foreclosure Alternatives (HAFA) program has created a major controversy.

As DSNews.com previously reported, four appraisal organizations recently wrote a letter to Treasury Secretary Timothy Geithner, voicing concerns over the use of BPOs for short sales under HAFA. In response to this opposition, Vicki Cox Golder, president of the National Association of Realtors (NAR), wrote her own letter, supporting HAFA and its allowance of BPOs.
The letter, which was addressed to both Treasury Secretary Geithner and HUD Secretary Shaun Donovan, was written on behalf of the 1.2 million members of NAR.
Golder said NAR recognizes the need for flexibility in any mortgage modification or short sale program to ensure all parties are treated fairly and appropriately. While an appraisal is a very important part of a purchase money mortgage transaction, it may not be the best tool for other real estate transactions, she said. NAR believes that in many cases, a more appropriate and cost-efficient measure is the BPO.
“BPOs are completed by licensed real estate agents with a detailed knowledge and understanding of real estate pricing and local market trends developed through active participation in the listing, negotiation, and sale of properties,” Golder wrote. “This perspective offers a unique viewpoint that supports sound real estate decisions with accurate estimates of the value of real estate.”
According to NAR, BPOs are widely accepted in the real estate industry, due to their established reliability and accuracy. Fannie Mae and Freddie Mac permit BPOs in certain circumstances, the FDIC and the Federal Reserve Board permit the use of BPOs in various programs, and BPOs are also accepted by banks, lenders, and all major loan servicers for a number of purposes.
Golder said the use of BPOs to analyze mortgage loan portfolios for risk management, due diligence, and fraud detection purposes is an important part of the mortgage

lending industry. BPOs are viewed as a valuable tool to assist lenders, loan servicers, and investors in making decisions related to refinances, home equity loans, and secondary market transactions related to loan portfolios, and the use of BPOs in these situations benefits borrowers through increased efficiencies and reduced servicing costs, she explained.
The appraisal organization’s letter noted that law enforcement officials have highlighted loan modification fraud-including fraud involving short sales-as a new form of mortgage fraud. To mitigate such conflicts, the coalition of appraisal organizations urged the department to reestablish independence in the valuation process.
“Generally speaking, real estate agents and brokers are not independent or properly trained valuation specialists,” the letter said. “They have an inherent bias towards quick results and actions which produce a fee for themselves, irrespective of whether the lender, servicer, investor, property owner, and/or borrower gets a fair return on the short sale.”
In her letter, Golder said there is no evidence to support the assertion that appraisers are more or less likely to engage in mortgage fraud than real estate agents. She said many of NAR’s members conduct BPOs, and to do so, they must adhere to a rigorous code of ethics.
This code requires a Realtor to complete a BPO within a specified framework. In addition, Realtors have a fiduciary responsibility to their clients and are required to perform their duties consistent with “the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage.”
Additionally, Golder said there is no evidence that a BPO exacerbates mortgage fraud or abuse. The appraisal organizations cited a recent study from Interthinx, which specifically mentioned property valuation fraud. According to the study, bank-owned fraud attributed directly to schemes involving shorts sales and REO inventories increased by nearly 50 percent over the past year and 100 percent over the past two years. However, Golder said the study did not consider the method of valuation used for transactions that may be fraudulent.
The coalition of appraisal organizations also claimed that in at least 23 states, the ability of a real estate agent or broker to perform a BPO is specifically limited to assisting a buyer or seller, or a potential buyer or seller, in establishing a listing or offering price for a property. Golder said this assertion is simply incorrect.
“We urge you to examine the relevant state statutes and not accept this argument at face value, as we believe the use of BPOs for short sales and other purposes is clearly permissiable in most, if not all, states,” Golder wrote.