top 10 tips to helping your borrowers understand appraisals
TRANSCRIPT
Top 10 tips to helping your borrowers
understand appraisals
www.Nationwide–Appraisal.com888-760-8899
Joni PilgrimDirector of Sales & Business Development
888-760-8899 x207
Kevin JohnsonNational Sales Manager
Cristy ConollyDirector of Quality Assurance & Compliance
Quick Poll Who’s with us today?
What’s on the agenda?
• Introduce regulatory requirement
• Challenge for lenders:
• Technology
• Training
• Top 10 borrower questions about appraisals
Regulatory RequirementEffective January 18, 2014
CFPB & Equal Credit Opportunity Act regulation requires disclosure and
delivery of copies of appraisals and other written valuations
Regulation
Challenges for Lenders1. Technology
• To ensure complete audit trail delivery of documents with date/time stamps
• To make the process easy & cost effective
2. Training - is your team trained to answer questions about an appraisal?
Challenges
NAN’s Technology
Consent form
emailed to borrower
Client is notified
Consent form
has been sent
Borrower enters info &
either accepts/
declines
If they accept, a pdf is
created & saved to the
file
Pdf created confirming
borrower received email
Once accepted,
email sent to borrower to
retrieve appraisal
Client is notified that borrower was sent retrieval
request
Once report is retained,
notification sent to client & pdf is saved
to file
Delivery
Delivery
NAN’s Technology
Consent form
emailed to borrower
Client is notified
Consent form
has been sent
Borrower enters info &
either accepts/
declines
If they accept, a pdf is
created & saved to the
file
Pdf created confirming
borrower received email
Once accepted,
email sent to borrower to
retrieve appraisal
Client is notified that borrower was sent retrieval
request
Once report is retained,
notification sent to client & pdf is saved
to file
Delivery
NAN’s Technology
Consent form
emailed to borrower
Client is notified
Consent form
has been sent
Borrower enters info &
either accepts/
declines
If they accept, a pdf is
created & saved to the
file
Pdf created confirming
borrower received email
Once accepted,
email sent to borrower to
retrieve appraisal
Client is notified that borrower was sent retrieval
request
Once report is retained,
notification sent to client & pdf is saved
to file
Delivery
NAN’s Technology
Consent form
emailed to borrower
Client is notified
Consent form
has been sent
Borrower enters info &
either accepts/
declines
If they accept, a pdf is
created & saved to the
file
Pdf created confirming
borrower received email
Once accepted,
email sent to borrower to
retrieve appraisal
Client is notified that borrower was sent retrieval
request
Once report is retained,
notification sent to client & pdf is saved
to file
Delivery
Delivery
NAN’s Technology
Consent form
emailed to borrower
Client is notified
Consent form
has been sent
Borrower enters info &
either accepts/
declines
If they accept, a pdf is
created & saved to the
file
Pdf created confirming
borrower received email
Once accepted,
email sent to borrower to
retrieve appraisal
Client is notified that borrower was sent retrieval
request
Once report is retained,
notification sent to client & pdf is saved
to file
Delivery
Delivery
NAN’s Technology Reporting
Function:oAll details logged in real time report
oApproved consents and received appraisals are tracked by
IP address
oDate & time stamped for auditing purposes
Reporting
Is your team confident in explaining appraisals to borrowers?
Quick Poll
What is an appraisal?
oNot an exact science
oOpinion of value
Opinions
Stuck in a box
Understanding Appraisals
o Industry requirements
oUAD (Uniform Appraisal Dataset)o Condition
o Updates
o Quality
UAD
How is the value of my property determined?Factors to consider:1. Market Data
• Trends• Inventory
2. Public Records• zoning
3. Actual Inspection• Physically measure property• Materials in each room• Condition• Amenities• External factors
4. Comparable properties• Design• GLA• Room count• Condition• Amenities
5. Develop opinion of value
#10
Cost approach. What is it?
The cost approach is the appraiser’s opinion of the current replacement cost
of constructing a reproduction of the existing structure.
#9
Cost Approach
#9
What’s the difference
between
an
FHA appraisal
and a
Conventional appraisal?
#8
How are rural and/or unique properties appraised?
Comparable Sale Selection• Limited market data
• Dated sales
• Sales are dissimilar
• Sales are too far
Large Adjustments
• Location
• Site Size
• Age
• Condition
• Other
#7
Why are adjustments made when appraiser selects
comparables?
oNo two properties are the same
oAppraiser must account for differences between comparable & subject
oThese differences are called “adjustments”o GLA
o Garage
o Bathroom Count
o Quality
o Condition
#6
Grid
Example
#6
Why is my assessed value and appraised value different?
oAssessment = value placed on a property by the town or city’s
assessor’s office to determine property tax due
o Typically no interior inspection
o Often times outdated, not done regularly
oAppraisal = report completed by licensed appraiser to determine current market valueo Property details
o Current market conditions
o Recent sales
o Assessed value not considered
#5
Perception
is a funny thing!
How are my upgrades and improvements
valued in my appraisal?
Significant Improvements:
1.Bathroom additions
2.Bedroom additions
3.Replacement of worn roof
4.Fixing foundation issues
#4
How are my upgrades and improvements
valued in my appraisal?
Other Improvements:
#4
What is the difference between valuing
“above grade” vs “below grade” square footage?
o“above grade” = finished part of dwelling above ground line
o“below grade” = area of dwelling that is all or partly below ground line
o“above grade”/”below grade” are valued and reported seperately
Gross Living area does not include “below grade” area
#3
I’m going with a new lender, can you change the name of the
lender on my appraisal?
oUSPAP requires a new assignment
oAppraisals are confidential
oNeed lender permission
#2
What do I do if I find errors or have concerns?
oContact your lender
oProvide valid information to support concerns
oLender will provide info for appraiser to consider
oAsk for a review or second appraisal
o Appraiser Independence Requirements
o Flawed appraisal
o Lender QC process
o Required for loan product
o Required by law
#1
Dispute
form
#1
Quick Poll
Would you like more information on
NAN’s Appraisal Delivery Program?
X-225
Kevin JohnsonNational Sales Manager
X-202
Cristy ConollyDirector of Quality Assurance & Compliance
888-760-8899
Joni PilgrimDirector of Sales & Business Development
X-207