Form 2055

Ask Henry

Exterior-Only Appraisal of a Duplex

Good Afternoon Henry,

I am at a loss. I've been asked to do an exterior appraisal of two duplexes. My client has a second mortgage on the two properties and needs to know the value of each property. No rental information is required. Public data is rather sketchy. My problem is that my software provider has no form for such an assignment. Would it be possible to use the FNMA 2055? Or, how would you suggest I proceed? Thank you in advance for your help.

Best regards,
Bob (Bear) Klingensmith
Georgia Certified Residential Appraiser
bobklingensmith21@gmail.com

Dear Bob,

Since this appraisal is not going to Fannie Mae or Freddie Mac you can use any form you and your client agree upon. You can use the 2055 but you must be careful to correctly modify it. In this type of situation, the form is really just a cover sheet and you should plan to use an addenda to present any information you need to explain what assumptions you will be making. These will have to be extensive as you will not inspect the interior of either property nor do you have any rental or expense information. Keep in mind that it is up to you to feel comfortable that you are making a "credible appraisal' as required by the USPAP.  Many appraisers would not be confident that they could make a credible appraisal under these conditions.

HSH
askhenryharrison@revmag.com

Ask Henry

2055 VS Full Appraisal

Dear Henry,

I work at a community bank and am new to appraisal review. We are getting very unclear information from our examiners as to what we need for a residential appraisal. Up until recently, they accepted a BPO (Broker Price Opinion) for a routine (yearly) value update on loans under $500,000. Now a different examiner states that BPOs are not acceptable, and requires that we get a full appraisal for everything with a mortgage balance over $250,000.
 
One examiner told us that all residential appraisals must be made according to USPAP. In trying to reduce our ridiculous costs in having to order a brand new appraisal for every residential annual value update, a few appraisers have submitted their reports on Form 2055 (basic drive-by). This form cannot meet USPAP in its brevity. Do you know if the OCC will accept a Form 2055 for a residential valuation update? And do you have any recommended websites where I can search for additional information on the uses of the various residential appraisal forms? 

Thank you in advance for your help,
Mary F Miron
mmiron@fbfna.com

Dear Mary,

There is nothing in the USPAP that specifies what type of appraisal report the appraiser must use. Therefore, this is something your institution must determine based on their needs and requirements. They must comply with all their regulators' requirements.  I sympathize with their dilemma. As far as your statement that an appraisal report on the Form 2055 "cannot meet USPAP requirements in its brevity", that's just not the case. An appraisal reported on the 2055 still must meet all USPAP requirements. The choice of the form does not dictate the comprehensiveness of the appraisal itself.

HSH
askhenryharrison@revmag.com