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Chapter 11

By Kathryn Patterson,2014-05-06 08:37
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Chapter 11

    VA Pamphlet 26-7, Revised

    Chapter 11: Appraisal Requirements

Chapter 11. Appraisal Requirements

    Overview

    Introduction This chapter contains information about appraisal requirements.

    In this Chapter This chapter contains the following topics.

    Topic Topic description See Page 1 Using This Information 11-2 2 VA Reasonable Value 11-3 3 VA Appraisal Requirements 11-4 4 Appraisal Report Contents 11-6 5 Submission of Appraisal Reports 11-9 6 Approaches to Value 11-11 7 Selection and Analysis of Comparable Sales 11-12 8 Other Market Analysis Considerations 11-14 9 Minimum Property Requirements and Repairs 11-17 10 Remaining Economic Life of Improvements 11-18 11 Proposed Construction 11-20 12 Other Property Types and Situations 11-22 13 Liquidation Appraisals 11-27

    11-1

VA Pamphlet 26-7, Revised

    Chapter 11: Appraisal Requirements

     1. Using This Information

Change Date October 1, 2008, Change 8

    This section has been changed to add subsection c on servicers.

a. Appraisers This chapter describes the requirements that must be followed in appraising

    property for VA loan guaranty purposes.

b. Lenders The Lender’s Staff Appraisal Reviewer (SAR) of a lender with Lender

    Appraisal Processing Program (LAPP) authority must use the information in

    this chapter when reviewing the work of VA fee appraisers. This information

    will also help lenders without LAPP authority to understand appraisal reports

    and VA-issued Notices of Value (NOV).

c. Servicers The Servicer’s SAR with Servicer Appraisal Processing Program (SAPP)

    authority must use the information in this chapter when reviewing the work of

    VA fee appraisers.

11-2

    VA Pamphlet 26-7, Revised

    Chapter 11: Appraisal Requirements

    2. VA Reasonable Value

Change Date July 20, 2007, Change 5

    This section has been changed to create subsection lettering.

a. Definition For VA loan guaranty purposes, the “reasonable value” of a property is that

    figure which represents the amount a reputable and qualified appraiser,

    unaffected by personal interest, bias, or prejudice, would recommend to a

    prospective purchaser as a proper price or cost in the light of prevailing

    conditions.

b. VA considers reasonable value and market value to be synonymous. VA’s

    “Reasonable” definition of market value is consistent with that used by Fannie Mae, Freddie

    vs. “Market” Mac and major appraisal organizations.

    Value

    11-3

VA Pamphlet 26-7, Revised

    Chapter 11: Appraisal Requirements

     3. VA Appraisal Requirements

Change Date October 1, 2008 Change 8

    This section has been changed to update subsection a to provide instructions for

    completing the borrower field in the appraisal report form and to make minor

    grammatical edits.

a. General Every VA appraisal must:

    Requirements

    ? name VA as the client on the appraisal report form,

    ? insert “Any Qualified Veteran,” rather than the veterans name in the borrower

    field of the appraisal report form,

    ? be performed within VA timeliness requirements,

    ? conform to Uniform Standards of Professional Appraisal Practice (USPAP),

    ? meet the additional requirements (as outlined in this chapter) that VA

    considers to be supplemental to USPAP, and

    ? be uploaded into E-Appraisal by the appraiser as a Portable Document Format

    (PDF) document.

b. Timeliness Fee appraisers must complete VA assignments as quickly as appraisals for

    conventional loans are generally completed in the area where the property is

    located. An exception may be allowed in a particular case if:

    ? Valid extenuating circumstances are documented, and the

    ? VA Regional Loan Center (RLC) with jurisdiction is notified on IND cases,

    or the

    ? Lender Appraisal Processing Program (LAPP) lender, indicated on VA Form

    26-1805, Request For Determination of Reasonable Value (Real Estate), item

    5a, is notified on LAPP cases.

    Note: Liquidation appraisals must be completed within five business days. The

    time required to gain interior access (see section 13 of this chapter) will not be

    counted against this standard. VA will consider reasonable explanations for

    delays beyond the control of the appraiser.

    RLCs will consider adding appraisers to the fee panel in areas where it

    consistently takes lenders longer to obtain a VA appraisal than a comparable

    conventional appraisal.

    Continued on next page 11-4

    VA Pamphlet 26-7, Revised

    Chapter 11: Appraisal Requirements

3. VA Appraisal Requirements, Continued

c. Properties Fee appraisers must not complete an assignment for a property that does not

    Not Eligible for appear to be eligible to become the security for a VA-guaranteed loan without Appraisal first contacting the lender involved or the RLC with jurisdiction.

    See chapter 10, section 6.

d. USPAP Every VA appraisal must meet the USPAP requirements. Lenders and their

    Staff Appraisal Reviewers are expected to be familiar with applicable USPAP

    provisions.

e. Sales Price Any appraisal that is not based on recognized appraisal practices in order to

    Accommo- “accommodate” the sale price is unacceptable and will result in VA disciplinary

    dation action.

    Prohibited

    f. Appraisal The VA assigned fee appraiser must personally: Tasks Not to be

    Delegated ? view the interior and exterior of the subject property (except on proposed

    construction cases) and the exterior of each comparable,

    ? select and analyze the comparables,

    ? make the final value estimate, and

    ? sign the appraisal report as the appraiser.

    g. Appraisal If the VA assigned appraiser relied on significant professional assistance in Assistance performing the appraisal or in preparing the appraisal report (except as

    prohibited in subsection f of this chapter) the name of that individual and the

    specific tasks performed must be shown in the “Reconciliation” section of the

    appraisal report.

    11-5

    VA Pamphlet 26-7, Revised

    4. Appraisal Report Contents Chapter 11: Appraisal Requirements

    Change Date October 1, 2008, Change 8

    This section has been changed to update subsection a to authorize the use of

    appraisal forms for exterior-only inspections for liquidation appraisals when the

    property is occupied and the appraiser is unable to gain interior access to the

    property and to make minor grammatical edits.

    a. Required Every VA appraisal report must include the following items.

    Items

    ? A properly completed (according to the requirements in this chapter) appraisal report using one of the following forms:

    - Uniform Residential Appraisal Report (URAR), Freddie Mac Form

    70/Fannie Mae Form 1004, if the property is a single-family residence,

    not a manufactured home or a unit in a condominium.

    - Manufactured Home Appraisal Report, Freddie Mac Form70B/Fannie

    Mae Form 1004C, if the property is a single-family manufactured home.

    - Individual Condominium Unit Appraisal Report, Freddie Mac Form

    465/Fannie Mae Form 1073, if the property is a condominium unit.

    - Small Residential Income Property Appraisal Report, Freddie Mac Form

    72/Fannie Mae Form 1025, if the property has two to four living units.

    - Exterior-Only Inspection Residential Appraisal Report, Freddie Mac

    Form 2055/Fannie Mae Form 2055, for liquidation appraisals (only),

    when interior access cannot be obtained (see section 13 of this chapter).

    - Exterior-Only Inspection Individual Condominium Appraisal Report

    Freddie Mac 466/Fannie Mae 1075, for liquidation appraisals (only),

    when interior access cannot be obtained (see section 13 of this chapter).

    - Exterior-Only Individual Cooperative Interest Appraisal Report, Fannie

    Mae 2095 for liquidation appraisals (only), when interior access cannot be

    obtained (see section 13 of this chapter).

    ? A location map, showing the location of the subject and each comparable. ? Building perimeter sketches showing the “footprint” of all improvements,

    including floor plan layout of residential spaces. The calculation for the

    square foot size of the improvements must also be shown either here or in the “Comments on Cost Approach” section of the URAR.

    ? Photographs (see subsection b of this section).

    ? An itemized list of any observed repairs required to be completed, customer

    preference items to be installed, inspections to be performed, or conditions to be corrected, for the property to meet VA minimum property requirements. ? A copy of the appraisal invoice should be included preceding the report.

    Continued on next page

    11-6

    VA Pamphlet 26-7, Revised

    Chapter 11: Appraisal Requirements

4. Appraisal Report Contents, Continued

a. Required ? Any additional appraisal or repair-related information that may be needed to

    Items support the fee appraiser’s conclusions. The appropriate areas of the

    (continued) computer-generated URAR can be expanded to include such information,

    provided the standard sequence of the URAR instructions, information

    entries, etc., does not change and the “Sales Comparison Analysis” does not

    appear on two separate pages.

b. Photograph Each appraisal report requires:

    Requirements

    ? photographs of the subject property showing a front and rear view (preferably

    including a different side view in each photograph) and the street scene, and

    ? a photograph of each comparable (only a front view of the comparable sales

    is required).

    Exception:

    If… …then…

    it is a proposed construction only a photograph of the subject site and

    case and no improvements street scene are required in addition to a front

    are under construction, view photograph of each comparable.

    the property is in a no photographs of the comparable sales are

    condominium more than required, provided they are located in the

    three units high, same project as the subject property and are

     substantially identical to the subject property.

    the appraiser documents an copies of listing service or advertising

    inability to take photos of pictures are acceptable for the comparable

    the comparable sales due to sales if they clearly depict the properties.

    lack of access, poor Copies of listing service or advertising

    visibility, etc., pictures in lieu of photographs are never

    acceptable for the subject property.

    Continued on next page

    11-7

VA Pamphlet 26-7, Revised

    Chapter 11: Appraisal Requirements

    4. Appraisal Report Contents, Continued

    c. Additional Additional certifications required by State law or related to continuing Conditions and education or membership in appraisal organizations, etc., can be made on a

    Certifications separate form or page, provided they do not conflict with the language on the

    Statement of Assumptions and Limiting Conditions or with any VA policy.

    Note: Appraisal reviewers must determine that additions or changes to the

    Statement of Assumptions and Limiting Conditions do not conflict with VA

    requirements.

11-8

    VA Pamphlet 26-7, Revised

    Chapter 11: Appraisal Requirements

5. Submission of Appraisal Reports

Change Date October 1, 2008, Change 8

    This section has been updated for minor grammatical edits.

    a. Electronic Fee appraisers are required to upload their appraisals into E-Appraisal at the Transmission VA Veterans Information Portal (VIP) web site (https://vip.vba.va.gov).

    System failures of VIP or E-Appraisal should be reported to: VIP@vba.va.gov.

    In the event of system unavailability(ies), VA appraisers may e-mail their

    report to the Lender Appraisal Processing Program (LAPP) Lender or to VA

    (IND Cases), but must upload into E-Appraisal at a later time when the

    system(s) is available.

    As with all other aspects of the VA appraisal process, fee appraisers must meet

    all Uniform Standards of Professional Appraisal Practice (USPAP)

    requirements applicable to electronically transmitted appraisal reports.

    The appraiser must upload a fully completed appraisal report with all related

    exhibits, including photographs, into E-Appraisal using the Portable Document

    Format (PDF) from Adobe Acrobat?.

b. Access to VA staff, lenders, agents, servicers, and other requesters with VA issued ID

    Appraisal numbers that are associated with the loan number will be able to retrieve the

    Reports appraisal from E-Appraisal for review, issuance of the Notice of Value (NOV),

    or other functions. Only the latest copy of the appraisal uploaded into E-

    Appraisal will be available for retrieval.

    Continued on next page

    11-9

VA Pamphlet 26-7, Revised

    Chapter 11: Appraisal Requirements

5. Submission of Appraisal Reports, Continued

c. Appraiser An exemption to the E-Appraisal upload requirements may be granted when

    E-Appraisal warranted. Appraisers must request and obtain written authorization from the

    Exemption Regional Loan Center (RLC) of jurisdiction to be exempt from the E-appraisal

    requirement.

    If an exemption to E-Appraisal is granted, the appraiser must send the appraisal

    report by overnight mail delivery to the:

    ? VA RLC of jurisdiction, and

    ? LAPP lender, indicated on VA Form 26-1805, Request for Determination of

     Reasonable Value (Real Estate), item 5a, for LAPP cases or

    ? Servicer, indicated on VA Form 26-1805, Request for Determination of

     Reasonable Value (Real Estate), item 5, for SAPP cases.

d. Appraiser Appraisal reports must have the appraiser’s signature, either electronically or

    Signature and handwritten.

    Electronic

    Signature The electronic signature may be a digitized image controlled through a personal

    identification number, or other verified signature electronic media where the

    appraiser has the sole control of affixing the signature.

    Note: USPAP provides specifics on what can be considered an electronically

    verified signature. Please refer to these standards for more information.

11-10

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