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BREAKING: VA Issues Guidance on Interior Inspections
By Isaac Peck, Editor
This morning (March 27), the Department of Veteran Affairs (VA) issued guidance allowing for exterior-only and desktop appraisals in lieu of interior inspections, joining the recent announcements from FHFA, Fannie Mae, and Freddie Mac, which also allow flexibility in waiving interior appraisal inspections in a variety of scenarios.
The VA’s guidance reads: “Considering the health and safety of Veterans and VA Appraiser Fee Panel members during this national emergency, valuations may come in a form of an exterior-only appraisal with enhanced assignment conditions or in limited instances, a desktop appraisal.”
The VA acknowledges that due to health and emergency conditions, appraisers may need to make an Extraordinary Assumption (EA) about the interior of a property, but advises appraisers that they must have a reasonable basis to do so and they must still produce credible assignment results.
Interior Waived
The VA outlines a number of conditions where an interior inspection may still be required, such as if the property is vacant and the appraiser’s assigned geographic jurisdiction “does not have restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine or shelter-in-place.”
However, a clear concession here is that even if the conditions provided are met, if either party (including the appraiser) does not wish to move forward with the interior inspection the appraiser “may move forward with an exterior-only appraisal with enhanced assignment conditions.” The VA is careful to stipulate that “Lenders may not direct the appraiser to conduct an interior inspection.”
James Heaslet, Chief Appraiser at the VA, says the VA is allowing appraisers to make the decision on whether to do an interior inspection. “We believe our appraisers will for the most part do the right thing,” says Heaslet.
Exterior Requirements
The VA’s guidance differs from Fannie guidelines earlier this week in that the VA prefers an exterior-only appraisal to a desktop valuation, while Fannie’s preferred alternative to a traditional appraisal is a desktop.
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The VA’s “exterior-only appraisal with enhanced assignment conditions” is just what it sounds like. The VA writes that the appraiser “must make every effort to complete the enhanced assignment conditions,” which include:
-Reviewing the full exterior of the property and providing photos of all sides of the property with detailed notes of the exterior and any visible Minimum Property Requirements (MPRs).
-Providing a measurement of the footprint of the home (if accessible).
-Conducting a detailed interview over the phone with the occupant, veteran, or real estate professional regarding the property.
-Utilizing any and all photos available from MLS, provided by the occupant, veteran, or real estate professional.
Desktop Appraisals
The VA writes that desktop appraisals will be conducted when the appraiser’s assigned geographic jurisdiction has “restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine or shelter-in-place.” However, lenders are not required to accept desktop appraisals, and if the lender declines to accept a desktop, the appraiser will “place the assignment on hold for 30 days and then subsequently cancel, if the status has not changed.”
Just like lenders, VA panel appraisers are not required to accept a desktop assignment and they may decline an assignment if they believe “information is not available to provide a credible report.”
The VA has also issued a separate set of instructions, Scope of Work, Certifications, and Statement of Assumptions and Limited Conditions for desktop appraisals (link below).
Fees
In a move that many appraisers will appreciate, the VA writes that fees for exterior only appraisals with enhanced assignment conditions or a desktop appraisal will remain the same as an interior appraisal. However, the VA may require appraisers to complete a 1004D appraisal update “within one year of completing an exterior-only or desktop appraisal under the same fee payment.”
Click here to read the full release: Valuation Practices during COVID-19
Click here to read: Modified Set of Instructions, Scope of Work, Statement of Assumptions and Limiting Conditions and Certifications for Desktop Appraisals
>> Join the Discussion at OREP/Working RE’s Coronavirus (COVID-19) Discussion and Resource Page where you can share your thoughts, experiences, advice and challenges with fellow appraisers. See what Appraisers are saying here!
>> “Coronavirus State of the Appraisal Industry” Survey. How’s it going?
About the Author
Isaac Peck is the Editor of Working RE magazine and the Vice President of Marketing and Operations at OREP.org, a leading provider of E&O insurance for appraisers, inspectors and other real estate professionals in 50 states. He received his master’s degree in accounting at San Diego State University. He can be contacted at isaac@orep.org or (888) 347-5273.
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