Upcoming NYSSREA meetings and events
We have passed the midway point of 2010 and it has proven to be an eventful several months with news on the Home Valuation Code of Conduct (HVCC) and several events coming up in the near future.
The NYSAR Fall Business Meetings are fast approaching, scheduled for September at the Hilton Rye Town. NYSSREA will hold its annual committee and board of governors meetings in conjunction with the meetings. I encourage you all to participate in NYSSREA’s committee work and attend some of the NYSAR Business Meetings to get a sense of what the state association is working on for you. If you would like to participate at the state level, committee sign-up for 2011 is taking place during the month of July. Just go to NYSAR.com for more information and to sign-up. If you are looking for continuing education, NYSSREA will offer Mineral Rights Valuation taught by Mike Coles at the business meetings. It has been submitted for 3 hours of appraiser and real estate continuing education credit.
The Home Valuation Code of Conduct (HVCC) has been an ongoing dilemma for appraisers in New York State. The code is due to sunset in November 2010, but the financial reform legislation in Congress could now wipe out the HVCC completely and create new standards for property valuation. At this time, it is difficult to determine whether or not the financial reform legislation will benefit appraisers and REALTORS alike, but it does call for rules to be established that would make certain that appraisals are done independently without manipulation from real estate agents or lenders. You will see an article in this newsletter from Jon Prior of REO INSIDER, which depicts the current situation with the HVCC.
The 58th Annual Fall Appraisal Conference is fast approaching, so mark your calendars for October 7-8, 2010 at the Turning Stone Resort and Casino. Here you will be able to fulfill your USPAP requirement and learn about Evaluating Residential Construction taught by James C. Canestaro, AIA, AICP, registered architect and certified urban planner.
I hope you will all consider getting involved with NYSSREA and at the state level to improve our industry for appraisers in New York State. Mark your calendars, and see you soon.
George S. Wonica
2011 NYSSREA President
Sign up for NYSAR committee service
NYSAR encourages you to get involved and help guide the future of your state association. Give your time, talent and expertise in assisting the association as it strives to meet the needs of its more than 54,000 members. Committee sign up will be available online through July 31 at NYSAR.com.
Members who wish to serve may select up to six of the more than 25 NYSAR committees available in 2011. Volunteers are asked to be sure they will be able to attend the association’s 2011 business meetings January 31-February 3 in Albany and September 11-14 at the Turning Stone in Verona before committing to serve.
Click here to sign up.
Apply for the NYSSREA John J. Noto Scholarship Award
In an effort to stimulate interest in the challenging, complex and ever-changing profession of real estate valuation, NYSSREA is offering scholarships of up to $300 to be used for Appraisal courses sponsored by NYSSREA, NYSAR and NAR or a local board/association; or for the Appraisal Institute courses. The money can be used toward room and board, books and tuition.
Applicants with main offices in New York must have one year experience in real estate appraisal, brokerage, development or other related disciplines, and/or hold an appraiser assistant license. The applicant must show positive motivation toward real estate appraisal education and must have completed at least one real-estate-related course acceptable to the society within the last five years.
Applicants must send in a completed application, transcript or evidence of satisfactory completion of real estate and/or appraisal course and a brief biography by September 1, 2010 to:
New York State Society of Real Estate Appraisers
130 Washington Avenue
Albany, NY 12210-2220
Click here for an application and additional information.
Mineral Rights Valuation seminar offered at NYSAR Fall Business Meetings
Mike Coles, of Coles & Associates Inc., will present Mineral Rights Valuation during the NYSAR Fall Business Meetings on Sunday, September 12, 2010 at 2 p.m. at the Hilton Rye Town, Rye Brook, NY.
The Marcellus Shale formation is under 28 of New York’s 57 counties. The shale formation is predominantly in the lower half of upstate New York. Mineral rights are emerging as a major influence on property values in the Marcellus Shale. Oil and gas leases, rights conveyed and terms of conveyance impact the property’s sale/purchase price. This seminar presents a timeline of Marcellus Shale market events. Real estate appraisers will review source documents followed by a case study. The course objective is to provide a base level of knowledge about this emerging valuation issue for upstate New York. (Submitted to DOS for 3 hours of Appraiser and Real Estate Continuing Education) Visitwww.NYRealEstateAppraisers.com for more information.
Appraisal provisions included in Dodd-Frank Wall Street Reform and Consumer Protection Act
On June 28, the Appraisal Institute praised the inclusion of appraisal provisions in the final version of the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173). The House-Senate Conference Committee on Financial Reform completed work June 25 on the measure, which includes the most significant modernization of the appraisal regulatory structure since 1989. Click here for more information.
Amendment to eliminate HVCC still alive in financial reform bill
By Jon Prior
An amendment to the Wall Street Reform Bill that would eliminate the Home Valuation Code of Conduct (HVCC) survived congressional debates last week, according to one representative’s office.
A congressional conference last week took place to reconcile both versions of the House and Senate financial reform bills. As it stands now, the HVCC would be eliminated 90 days after the bill is signed. A new set of “appraisal independence standards” would replace it, according to the bill.
The Federal Housing Finance Agency (FHFA) implemented HVCC in May 2009 in an attempt to improve the independence of appraisers by prohibiting lenders and third parties from influencing appraisals. It’s a controversial regulation, leading to an increase in demand for appraisal management companies (AMCs) and complaints from independent appraisers who claim they’re being cut out of the market.
But the “appraisal independence standards” will be written and announced 60 days after the bill is passed. The bill, unlike HVCC, allows Fannie Mae or Freddie Mac to accept any appraisal report completed by an appraiser selected or paid by a mortgage loan originator.
The bill also stipulates that the new standards will include a requirement that lenders and their agents pay appraisers at market rates.
The new standards will still subject loan originators to any state or federal laws that prohibit it from making payments, threats or promises to an appraiser to influence the work. But nothing in the standards will prohibit a person with an interest in the transaction from asking the appraiser to consider other information, provide further detail or correct errors in the appraisal.
Despite the efforts to end HVCC, some independent appraisers are still concerned with the bill's language. Frank Leogrande, of Grande Appraisals in Oviedo, Fla., said fees for appraisals have dropped 40%, while fees for homeowners continue to climb.
“I don't think the language is strong enough to save the independent appraiser,” Leogrande said. “What's more, AMCs are still left in control of the lenders, who now own the entire process. It will take a class-action suit for fee equity to save the appraiser, but that will be years in the future.”
Vladimir Bien-Aime, the CEO of Global DMS, which built a Web-based valuation management platform said earlier in the year that HVCC should stay.
“Before HVCC, let’s face it, the door was wide open to loans containing inflated appraised values. In order to avoid the problems of the past decade, we need to do everything we can to protect the integrity of collateral valuations,” Bien-Aime said. “Is HVCC perfect? No. Is it necessary? Absolutely.”
The FHFA did not immediately have a comment.
Editor’s note: Reprinted with permission from www.reoinsider.com.
FHFA announces appraisal complaint process, GSEs will not fund IVPI
In a letter to New York Attorney General Andrew Cuomo, the Federal Housing Finance Agency's (FHFA) interim director, Ed DeMarco, announced that the Independent Valuation Protection Institute (IVPI) will not be implemented by Fannie Mae and Freddie Mac. The two government sponsored enterprises (GSE) will instead implement a targeted appraisal complaint process for the Home Valuation Code of Conduct (HVCC). The GSEs will act on suspected acts of fraud and violations of HVCC. A standardized form should be available within a few weeks.
In the letter, DeMarco cites the use of substantial taxpayer funds by the GSEs as the primary reason the IVPI will not be implemented. "In light of the billions of dollars in taxpayer funds the enterprises have drawn since entering conservatorships, I cannot, as conservator, justify the enterprises funding the institute. Therefore, as conservator, I have determined that they will not proceed with that portion of the cooperation agreements."
The National Association of REALTORS (NAR) has long called for the implementation of the IVPI. In April, NAR President Vicki Cox Golder called on FHFA to implement the institute. FHFA's General Counsel Alfred Pollard responded in a letter dated April 20, 2010, saying "FHFA continues to work with Fannie Mae, Freddie Mac and the attorney general's office on the institute" and that "FHFA recognizes the value of a formal complaint process as envisioned with the Institute and continues to work towards that end."
For more information from NAR, click here.
To read the letter to Cuomo on the complain department, click here.
If I have appraised a property multiple times within the previous three years, do I have to disclose the number of appraisal services? (e.g., “I have appraised the subject property three times during the previous three years.”)
Yes. Each prior service must be disclosed to the client and included in the report certification. This disclosure is similar to when an appraiser has any current or prospective interest in the subject property or the parties involved, which requires that each interest be specified. Therefore, each service must be disclosed to the client and appear in the certification.(See lines 231-241 in the 2010-11 edition of USPAP)
If I have performed a service other than appraisal practice, such as acting as a general contractor within the prior three years, do I have to describe the specific service or merely state a service was performed?
You must disclose to the client the type of prior service you performed regarding the property and this must be included in the report certification. This disclosure is not limited to services provided as part of appraisal practice. Therefore, each service must be disclosed to the client and appear in the certification.
The Comment to the Conduct section of the ethics rule states, in part: “If an appraiser has agreed with a client not to disclose that he or she has appraised a property, the appraiser must decline all subsequent assignments that fall within the three-year period.” Does this really mean that the appraiser could not be engaged by this same client, on this property, within the three-year period?
Yes. The agreement not to disclose that he or she has appraised the property is between an appraiser and the client. It is possible that a qualified legal opinion might conclude that a confidentiality agreement between an appraiser and a client does not preclude disclosure between the same parties. However, the ASB is not qualified to make such a determination. Without such a legal opinion, the requirement precludes an appraiser from disclosing the prior service and from appraising the property again during this three-year disclosure period.
However, there is nothing that prohibits a client and an appraiser from modifying the prior agreement to allow disclosure. If the confidentiality agreement is amended, the disclosure could be made and an appraisal could be completed for the same client. It must be made clear that if a client releases an appraiser from such a confidentiality agreement, services performed within the previous three-year period must be disclosed in the certification of the subsequent report, even if the client is the same for both assignments.
I am a staff appraiser for a company and only complete appraisals for my employer’s (the company’s) internal use. Am I required to inform the company that I have previously completed an appraisal within the three-year period when the company is already aware of it?
If you consistently correspond with the same person in the company when completing subsequent assignments regarding the same property, the risk of misleading that person is probably minimal. However, your prior services must still be disclosed. When you are working with the same person and they understand your professional responsibilities, it is unlikely this will be a problem.
It is also possible that the specific person you deal with from one instance to the next may change. In this case, the new contact must certainly be informed if you have performed services regarding the subject property within the last three years.
While it is not included in your question, there is also the possibility that you may have performed services regarding that property for a different client within the three-year period, or performed another type of service.
I am aware of the new disclosure requirements in the Conduct section of the ethics rule for the 2010-11 edition of USPAP that requires me to disclose any services I performed regarding the subject property within the prior three years. If I have not performed any such services, am I required to make that disclosure as well?
No. USPAP does not specifically require disclosure when no prior services were performed by the appraiser within the last three years.
Education offerings The following appraisal CE class is sponsored by the Rockland County Board of REALTORS.
For more information, click here
Appraisal Report Writing Formats (3 Hrs. Appraiser CE)
September 20, 2010, 9 a.m. – 12:15 p.m.
The Deal Killers: Appraisers & Underwriters (3 Hrs. Appraiser CE)
September 20, 2010, 1:15 – 4:30 p.m.
Save the date!
2010 Triple Play REALTOR Convention and Trade Expo
December 7-9, 2010
Atlantic City, NY