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Appraisal Topics/Reports on GREAB Meetings 
The Georgia Real Estate Appraisers Board (GREAB) consists of the following five members:

Position Name Home Town Term Ends
Chair Charles B. Bramlett Monticello 07/2007
Vice Chair Sandra McAlister Winter Alpharetta 07/2008
Member D. Scott Murphy Suwanee 07/2011
Member William "Bill" R. Coleman Martinez 07/2010
Member Patricia K. Love Columbus 07/2009

The Real Estate Commissioner acts as the Board's Chief Executive Officer. This blog will provide comments on current appraisal topics and summaries of the Board's Monthly meetings for interested appraisers and members of the public.
Sunday, April 05 2009
In its March Newsletter, the GREC takes the position that BPOs are a permissible exception to the Georgia Appraiser Classification and Regulation Act (Appraiser’s Act) when performed by a real estate licensee who does not hold an appraiser classification - even if the BPO is estimating value for use in a mortgage transaction.  

In arriving at the conclusion that a BPO is an exception to the Appraiser’s Act, the Commission quotes O.C.G.A. 43-39A-24 (b) (2) which actually limits the exception afforded BPOs to use only when recommending “listing, lease, rental, or purchase price” (emphasis added). The exception to the Appraiser’s Act for real estate licensees reads as follows: The Appraiser's Act shall not apply to:
 
A real estate licensee licensed in accordance with Chapter 40 of this title who, in the ordinary course of real estate brokerage business, gives a broker’s price opinion, competitive market analysis, or any other written or oral opinion to a potential seller, purchaser, landlord, tenant, or third party as to the recommended listing, lease, rental, or purchase price of real estate or real property; provided however, that this opinion as to the listing, lease, rental, or purchase price shall not be referred to as an appraisal; (emphasis added)
 
This exception only applies to an opinion “as to the recommended listing, lease, rental, or purchase price” of real estate. It clearly does not include the use of BPOs for expressing an opinion of value which would require licensing under the Appraiser’s Act. The article appears to treat price and value as though they were synonyms. They, of course, are not [price is generally considered the amount asked, offered, or paid for property – while value expresses a monetary relationship between properties and those who buy, sell, or lease those properties; the worth of something (see USPAP 2008-2010); also see common dictionary usage]. Distinctions between price and value are rooted in Adam Smith’s Wealth of Nations and taught in all real estate pre-license courses and all appraisal pre-license courses in Georgia and all other states.
 
More importantly, nothing in the exception would permit the BPOs to be used for mortgage loan purposes. BPOs ask for both price AND value (see Fannie Mae BPO form) and BPOs are used for underwriting loan collateral based on the value – a use not authorized by the exception quoted.
 
The Georgia Attorney General issued an opinion supporting the GREC on October 1, 1999 (see Official Opinion No. 99-15 written by Emily Hitchcock, Assistant Attorney General). However, that opinion also failed to address the “price” limitation on the exception provided in the Appraiser Act. The Attorney General should be asked for an opinion based on the words “price” and “value” having distinctly different meanings.
 
The actual wording contained in the exception couldn’t be clearer – the exception only applies to recommendations of “price” and NOT “value”. However, the Commission, in the article, blurred the distinction between the two words by inserting the word “value” in its quote of the code section, yet the word “value” does not actually appear in the code section.
 
The article states:
 
The law provides that a real estate licensee, “in the ordinary course of real estate brokerage business,” may offer an opinion of value “to a potential seller, purchaser, landlord, tenant, or third party as to the recommended listing, lease, rental, or purchase price of real estate or real property.” (Emphasis added).
 
Note, however, that the phrase “may offer an opinion of value” is inserted by the Commission – it does NOT appear in the actual law. The law clearly only applies to “price” and without disregarding the distinction between price and value, the law cannot be used to support either the Commission’s conclusion or the opinion of the Attorney General. Appraisers should ask the GREAB to review the article and seek compliance with the clearly worded exception to the Appraiser Act. 
If you have an opinion and wish to share it with the GREC or the GREAB, you may comment on the GREC's Twitter link at http://twitter.com/grecnews (you will have to be a member to comment) or you can email both the GREC and the GREAB at grecmail@grec.state.ga.us.

Posted by: Dick Viti AT 07:53 pm   |  Permalink   |  0 Comments  |  Email
Thursday, February 19 2009
As you may know, shortly after the Fannie Mae announcement back in November of 2008, AREA asked GA MLS and FMLS to assist appraisers in gathering and analyzing the data necessary to complete the new Market Conditions form (1004MC). In a relatively short period of time, GA MLS has delivered an outstanding product and made it available to its subscribers. FMLS is still working on some research tools.

If you haven't seen the updated GA MLS reports yet, check out GA MLS Pro at  http://www.georgiamlspro.com/  - enter your user name and password for your GA MLS account. You will have access to a brand new analytical tool that will provide all of the data needed for the 1004MC form and a great deal more. A new search map is available, two year look back, month to month analysis, foreclosure statistics, and colorful graphs that you can add to your reports to spice them up a bit.

You do not need any special software. GA MLS is making it very easy for appraisers to complete this new required form. If you are outside of the metro area you might want to contact your local provider to see if they can follow GA MLS's lead.  

AREA is including review of this new data feature in its Declining Market Appraisals which is taught each month in the Acworth/Woodstock locations. For schedules, please see http://www.education-area-ga.com/appraisal_continuing_ed.

We will keep you updated on future resources. Let us know if you have any questions or we may assist you with any future educational needs.
Posted by: Dick Viti AT 01:39 pm   |  Permalink   |  0 Comments  |  Email
Wednesday, February 18 2009
Last year, Fannie Mae rules were changed to limit investors to having a maximum of four mortgages outstanding. That rule, in effect, limited investors to owning four properties. As discussed in our classes, the rule exacerbated the over-supply situation and slowed the market's ability to absorb the standing supply of housing. It was a bad rule with bad timing and AREA encouraged real estate agents and appraisers to voice opposition to the rule.
Congratulations! Your voices were heard. Fannie Mae changed its rule. The change is more in line with the traditional banking industry rules which allow investors to own and finance up to 10 one to four family properties. The new rule requires the investor to make a 25% down payment and have a credit score of at least 720.
Additional requirements to be met for the fifth to the tenth house include the following:
  • No bankruptcy or foreclosure within past 7 years,
  • No delinquencies longer than 30 days in the past 12 months,
  • Must be able to document income from the new property as well as existing rentals,
  • Must provide release of income tax returns for prior two years, and
  • Must maintain reserves for the new property and existing rentals
The entire rule can be found in Announcement 09-02 at eFannieMae.com. This is good news for the real estate industry. It will help the recovery, encourage more real estate sales, and create more work for agents, appraisers, and home inspectors. Stay involved and stay alert for market changes.
Posted by: Dick Viti AT 04:16 am   |  Permalink   |  0 Comments  |  Email
Saturday, November 22 2008

Federal financial regulatory agencies have proposed new interagency appraisal and evaluation guidelines that will affect both residential and commercial real estate appraisers.  The proposed guidelines are intended to clarify the agencies' real estate appraisal regulations and promote a safe and sound real estate collateral valuation program. 

The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (FRS), Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS), and National Credit Union Administration (NCUA) jointly published the guidelines on November 19, 2008. Interested parties may comment on the guidelines until January 20, 2009.

The guidelines will supersede the 1994 Interagency Appraisal Evaluation Guidelines, and incorporate subsequent revisions. The new rules will also reflect revisions to the Uniform Standards of Professional Appraisal Practice (USPAP) and the evolution of collateral valuation practices such as the use of automated valuation models (AVMs).

Highlights of the proposed changes include:

  • Emphasis on the importance of the independence of an institution's appraisal and evaluation program from influence by the loan production process or borrower,
  • Further clarification of minimum appraisal standards with discussion of the agencies' expectations for the content of appraisals that will satisfy those minimum standards,
  • Revisions to the requirements for appraisal development and reporting, and
  • Clarification on real estate-related financial transactions which are exempted from appraisal regulations.  

Read the proposed guidelines and send your comments on the new regulations to  regs.comments@occ.treas.gov - fax and mail alternatives are contained in the document.

Posted by: Dick Viti AT 02:23 pm   |  Permalink   |  0 Comments  |  Email
Wednesday, November 19 2008
Fannie Mae has issued several new underwriting guidelines and revised some existing policies that will dramatically affect real estate appraisers. Fannie Mae, which is now under the control and direction of the newly created Federal Housing Finance Agency (FHFA), promulgated the new policies in its November 14, 2008 Announcement.
 
In reaction to the nation’s worsening economic crisis and uncertain real estate market, Fannie Mae will require real estate appraisers to provide data and analysis of market conditions on a new Market Conditions Addendum form which is to be included in every appraisal completed after April 1, 2009. The new form will require trend analysis to be completed in each appraisal with inventory analysis, absorption rates, and average sales prices shown for the prior seven to 12 months, prior four to six months, and current three-month periods.  
 
The additional documentation will ensure that the appraiser is able to provide market-based data to support his or her conclusions regarding market trends that may affect the value of the subject property. Currently, neither FMLS or GAMLS provides access to all of the specific information required by the new guidelines. AREA has contacted both organizations and is waiting to hear if the groups intend to provide the required data to its appraiser customers.
 
The announcement appears to change the role of the “supervisory appraiser.” In an ambiguous statement, Fannie Mae's updated policy now requires "that if a supervisory appraiser signs the appraisal report as the appraiser, the supervisory appraiser must have performed the inspection of the property." Some appraisers are interpreting that to mean if the supervising appraiser signs on the left as the appraiser, he or she must have inspected the property (many appraisers would not see that as a "change" in policy). Other appraisers view the statement as a poorly worded requirement that the supervising appraising must now inspect all properties being appraised - that would be a change for many appraisers. Expect Fannie Mae to issue a clearer statement on the new requirement before April 1, 2009.
 
Updated guidelines alter a number of other appraisal practice for mortgage loan appraisals including a repair escrow for existing construction, new research and reporting requirements for current and prior listings of the subject property, a requirement to appraise the entire parcel for houses with excess land, and changes in time adjustments, verification of sales, neighborhood descriptions, and reporting the effective age. The recent announcement can be found at https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0830.pdf. Also, you will want to review the FAQs associated with the new rules.
This document and related issues shall be addressed in AREA's Declining Markets CE course.    
Posted by: Dick Viti AT 07:06 pm   |  Permalink   |  0 Comments  |  Email
Wednesday, November 19 2008
Proposed Rule Change – The GREAB today considered a proposed rule to clarify requirements for appraiser instructor renewals. The changes make clear that instructors must have a minimum of 14 hours of instructional contact with students each calendar year or complete a seven hour instructor development workshop. In addition, each instructor must complete an additional 14 hours of courses approved by the Board for appraiser instructor continuing education (CE).
Credit toward the latter requirement will be given for attendance at the annual school meeting, an instructor development workshop, and any other course approved in advance for this purpose by the Board. Dick Viti, AREA’s Curriculum Director, has urged the Board to provide credit to the instructors of any appraiser instructor CE courses. He has also requested that attendance at the National USPAP Instructor Update course be automatically included as a Board approved CE course.
Number of Appraisers – The Board reported 97 fewer appraisers this month. The statewide total is now just 6,508. (The shrinkage in appraisers is consistent with AREA’s prediction of a shortage of appraisers in the near future).
FHA Roster – Appraisers on the FHA Roster are advised to renew early in their renewal month and this point was discussed by Commissioner Ledford. The commissioner explained to the Board that Georiga appraiser renewals are reported to the Appraisal Subcommittee (ASC) on the 15th of each month. Renewals after the 15th are not reported until the following month. Because FHA receives its renewal information from the ASC, an FHA Roster appraiser who renews a Georgia license after the 15th will actually drop off of the FHA Roster at the end of the month – and will have to reinstate. That may mean a licensed appraiser will be off of the Roster permanently due to the change made October 1st limiting new applicants to certified appraisers only.
Posted by: Nora Monahan AT 01:23 pm   |  Permalink   |  0 Comments  |  Email

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