The following is important information regarding the methods by which METRO provides our clients with reliable, ethical, and useful services. Please read the following discussion and feel free to contact George Riethof by email with any questions or comments. Note that this does not constitute the sum total of all aspects of these issues, and if there is any question at all regarding the compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) in any services provided by METRO, the intent is to comply with all aspects of USPAP, Office of the Comptroller of the Currency (OCC) regulations, Appraisal Standards Board (ASB) rulings, or applicable laws, guidelines and regulations.

1. COMP CHECKS:

The METRO Partners may provide 'comp checks' to lenders to assist them in understanding online data resources that may be available to them.

Many lenders avail themselves of online data regarding property sales, 'Automated Valuation Models' or 'AVM's', or other resources that may be available via their title companies or other sources. Additionally, many homeowners regularly access similar data resources to gain understanding of their property values. These resources have been prevalent for many years, and are not inventions of the 'Internet age', but these resources are more prevalent and accessible due to the rise of the Web.

As a result, it at once becomes more and less likely that a homeowner or lender will have an understanding of property values prior to the placement of an appraisal order. More likely, because there is more data. Less likely, because there is more data to misunderstand. Raw sale data does not analyze itself, and the published data may contain misleading or erroneous information which may impact the value of a property.

While these online resources are valuable, they do not replace the appraisal in the process of making a reliable lending decision. Indeed, many lenders and agencies such as FNMA and FHLMC regularly make lending decisions based on online data and AVM's, but make these decisions with the risk thereof evaluated and taken into consideration. Where risk profiles require it, these agencies and lenders utilize a professional appraisal in their lending package.

When the METRO Partners provides a client with a 'comp check', this involves examining available data, and in many cases, applying some knowledge of a general area to disqualify or otherwise filter data that appears to be either inaccurate or inapplicable to the appraisal problem being considered. It should be noted that this filtering does not constitute filtering of sale data to yield 'comps' or 'comparable sales' that may be applicable to a particular appraisal. The term 'comp check', while generally prevalent, is perhaps misleading because we are not selecting 'comps' nor are we filtering data to be utilized in an appraisal assignment. The scope of the 'comp check' is to survey general sale data in a geographic area over a specified time frame and to disseminate this sale data to assist a client in making an appraisal order decision. In no way does this 'comp check' presume to predict the value of the subject property, nor does the 'comp check' become incorporated in the work product of the appraisal. Ultimately, the appraiser who performs the appraisal has no information regarding the 'comp check' that was performed, so that the appraiser can comply with all aspects of USPAP regarding appraiser independence, management, and competency.

Note also that we provide comp checks only for regular clients, and reserve the right to refuse to provide this service to any client who appears to be 'value shopping', or otherwise takes unwarranted advantage of this service that we make available to our clients. Furthermore, we only provide comp checks to lenders, and do not regularly provide comp checks to homeowners as the homeowners typically have other resources at their disposal to ascertain their property value, and may not be availed of the specific conditions under which a comp check may be ethically performed.

2. ACCEPTABLE AND UNACCEPTABLE ORDER CONDITIONS:

Many lenders have been known to make certain requests on the appraisal orders which may or may not be acceptable order conditions. In fact, the Appraisal Standards Board promulgated an analysis of these common order conditions and codified the response to such requests in the form of Uniform Standards of Professional Appraisal Practice, Advisory Opinion 19 (AO-19). This Advisory Opinion outlines the tools by which an appraiser can respond to unacceptable order conditions. We at METRO recognized that lenders' expertise in this area is generally lacking, and few lenders are fully trained in the issue of 'Unacceptable Order Conditions'. We also recognize that many lenders may violate AO-19 unwittingly, with no intention of placing unacceptable conditions on the appraisal order.

It is important to recognize that METRO does not consider any unacceptable order condition that may exist on any appraisal order to be in effect in the course of any order. For instance, METRO is of the opinion that no assignment can be accepted by any appraiser with the condition that if a target value is not reachable, that the appraiser will 'stop work' and bill for an inspection fee after ascertaining the failure of the property to meet the 'target value'. Every time such an arrangement is accepted, the appraiser would be taking on an assignment with the fee subject to a contingent value. It is our finding that there is no ethical way such an arrangement can be made. As such, we recognize also that lenders will want to know right away if a 'target value' cannot be reached. In all such cases, METRO will let the client know if their 'target value', which they may have communicated in the form of an anticipated value on the order sheet, is not going to be met. This communication may take place at the time the appraisal report is delivered to the client, because the final value may not be known until the entire report is completed.

Another note on AO-19: reading this Opinion may suggest that it is impossible to order an appraisal and provide any information other than 'address and phone number'. This is not the case. This Advisory Opinion provides the tools by which lenders and appraisers can communicate ethically and efficiently. METRO is happy to assist any regular client in compliance with AO-19. We can arrange to visit your office and discuss these issues, or otherwise discuss them over the phone with responsible personnel. Let George Riethof know by email if you would like such assistance.

To summarize, METRO conforms to all aspects of AO-19, and recommends that each client familiarize themselves with the provisions of AO-19 as this summarizes the conditions upon which METRO accepts any appraisal assignment. We recognize that nearly all violations of AO-19 on the part of a client are inadvertent and we will be happy to assist any client in rendering full compliance with AO-19 in the ordering process.

3. “REASSIGN” or “READDRESS” ORDERS:

An appraiser may not “readdress” an appraisal to a new client, but an appraiser may perform a new assignment for a client. Many lenders are justifiably confused or uninformed about the rules regarding how these assignments are handled.

We regularly have clients contacting us stating that another lender has “released” an appraisal to them, and that we should 'readdress' this appraisal report. However, in 2001, the rules regarding the 'release' of an appraisal effectively changed. It was customary to require a lender to either 'release' an appraisal to a new client, if the borrower elected to apply for a loan with a new client. The lender would then either make the business decision to 'release' an appraisal, or to refuse to do so, and decline to 'release' an appraisal, thus preventing the appraiser from performing an appraisal on the same property for another client until 'market conditions change.'

However, the Appraisal Standards Board clarified several aspects of this. It was determined that it was unreasonable to grant a lender the ability to prohibit a homeowner from doing business with any other competing business for a period of time. Nothing in the business arrangement between the homeowner and the lender would grant such a right. Furthermore, it was determined also that to require a homeowner to contact a lender with whom the homeowner may no longer have a business relationship constituted a violation of the homeowner's privacy.

As a result, these rules and practices have evolved in the form of Advisory Opinion 26 and 27. AO-26, “Readdressing (Transferring) a Report to Another Party” and AO-27, “Appraising the Same Property for a New Client” outline the rules and practices by which METRO treats new assignments for the same property, if such is ordered. To summarize, METRO never 'readdresses' an appraisal to a new client. If we perform a new assignment for a new client, we consider this clients' applicable guidelines, and perform an appraisal on the property for this client under such guidelines if applicable. The value opinion may be the same as a prior assignment performed for another client, but at no point will we disclose any confidential information gathered in the course of the original assignment, if such information would not be otherwise gathered in the course of a new assignment. METRO complies fully with AO-26 and AO-27, and any action on the part of METRO may not be construed as in violation of these Advisory Opinion procedures.

4. Occasionally, METRO may email you with updated contact info, special deals on appraisal prices or services, new coverage areas, or other communications which may be routinely directed to any client in any client/vendor relationship. By ordering an appraisal from us, or by ordering a comp check or other service, you expressly acknowledge the establishment of a client relationship and therefore assent to such routine communications. If you wish to opt out of any such email communications, for which we use the service provided by Constant Contact, an email marketing tool provider, you may 'opt out' from within that email. By opting out, you will no longer receive such emails. You still may order appraisals or other services. However, we may decline to provide free 'comp checks' upon opt-out of this service. Note that we are in full compliance with ICANN anti-spam guidelines and any appearance of any communications that may not comply with these guidelines is not intended.

5. Payments for appraisal services made by credit card are considered to be payments for any and all of the steps that contribute to an appraisal. As a result, the fee is considered due and payable upon commencement of the appraisal service. The outcome of a loan application relative to the appraisal cannot and is not a condition of the appraisal or payment for same. The appraisal service is provided independent of any outcome that may favor the customer or homeowner. METRO does not accept any appraisal assignments contingent on any specified outcome or value opinion, nor does METRO accept any assignment which may have a different fee based on any particular outcome.