Barrie Gaman, Appraisal Institute
Shown (from left) are 2013 officers: John Mello SRA secretary for the Mass. chapter; Dick Dennis, MAI, SRA; 2013 president Karen Hanlon MAI; board director George Demopulos, SRA; and chair of the branch chapter advisory board, Tom Andolfo, MAI.
Outgoing 2012 chapter president Barrie Gaman hands the gavel over to 2013 president Karen Hanlon.
Paul Reynolds presented his son, Stephen with his MAI designation.
Shown are MAI recipients (from left): Brian Reynolds, Melanie Kosich, presenter chapter president Barrie Gaman and Stephen Reynolds.
of real estate appraisers, published guidance in November to help
appraisers learn what evaluations are, when they are used and who can
prepare them. The Appraisal Institute's "Guide Note 13: Performing Evaluations of Real Property Collateral for Lenders" addresses how appraisers should prepare an evaluation for a lender and comply with the Uniform Standards of Professional Appraisal Practice.
The Guide Note said, "Federally insured lending institutions in the United States are subject to regulations regarding real estate appraisals. For lending transactions involving real estate, a lender
must obtain an appraisal from a state licensed or certified appraiser. There are 12 exemptions from this requirement. For three of these exemptions, in lieu of an appraisal by a licensed or certified
appraiser the lender may obtain an evaluation."
Evaluations, per the Interagency Appraisal and Evaluation Guidelines,
are market value opinions that may be provided by individuals who are
not state licensed or certified appraisers. However, state licensed
and certified appraisers may provide them, according to the Appraisal
Institute's Guide Note. The interagency guidelines also state that an
evaluation must be based on a valuation method that is appropriate for
a transaction rather than the method that renders the highest value,
lowest cost or fastest turnaround time.
The Appraisal Institute's Guide Note states that USPAP allows an
appraiser to adjust the scope of work for a valuation assignment as
long as the resultant value opinion is credible, given the intended
use. When preparing an evaluation, the appraiser may consider
narrowing the scope of work as appropriate.
According to the interagency guidelines, a lender may obtain an
evaluation in lieu of an appraisal when the loan transaction:
* has a transaction value equal to or less than $250,000;
* is a business loan with a transaction value equal to or less
than the business loan threshold of $1 million, and is not dependent
on the sale of, or rental income derived from, real estate and the
primary source of repayment, or
* involves an existing extension of credit at the lending
institution, provided that:
* there has been no obvious and material change in market conditions or physical aspects of the property that threaten the adequacy of the institution's real estate collateral protection after the transaction, even with the advancement
of new monies; or
* there is no advancement of new monies other than funds necessary to cover reasonable closing costs.
With Guide Note 13 the Appraisal Institute provides guidance
for the appraisers considering offering evaluations as a service. Done
per the notes an evaluation can be another business option for
appraisers.
Barrie Gaman is the 2012 president of the Mass. Chapter of Appraisal Institute and vice president at Bank America, Waltham, Mass.