One of the biggest challenges that appraisers face today is meeting client requirements. Each and every lender is developing their additional requirements that are placed atop the Fannie/Freddie/HUD guidelines which are fairly exacting to start with. Then you add to the mix UAD and most of us go home at the end of the day looking for a good stiff drink.
My suggestion is that each of us take the time to become experts for our clients, to know their guidelines better than they know them. In this way, our value to our client increases as we help them navigate the murky waters of “underwitting” and review. Oh, I know I should not pick on under-witters, some of my best friends are under-witters. In fact some of my friends would tell you I too was once an under-witter, or perhaps I still am – but I digress.
Knowing the client expectations is part and parcel of defining the appraisal problem. It will save you hours of frustration during the review process. It may also save you $1,000’s in court costs. Bear in mind that we are now in an age of kill or be killed and many financial institutes have already died. Capital Investors are now getting very cranky as they determine that the representations and warranties that they purchased to back the derivatives were invalid. The problem is that any portion of a representation can be invalid if a component of the loan package is found to be in error or simply out of compliance. Attorneys have gotten smarter and have started to investigate appraisal reports not only for compliance with Fannie/Freddie/HUD/USPAP/FIRREA but now for compliance with lender guidelines as well. Not only the guidelines of our original clients, but also for the lenders who may have inherited the loan, or purchased the loan before re-packaging and reselling. If the appraisal is found to be out of compliance in any one step, the loan package can be challenged and with enough challenges, the derivative can be sent back to the issuing GSE.
Watch out ladies and gentleman, it is going to get a little crazier around here.
See you around the water cooler!