April 2005

ACOW MEETS TONIGHT, THURSDAY, April 7, 2005, 6:00 p.m., FEDERAL WAY.
VALUEONE APPRAISAL -- WILLIAM KING & ASSOCIATES Forum One Office Park, Suite 5 33710 Ninth Avenue South, Federal Way 98003 Best Use I-5 Exit 142B at South 348th Street to avoid SeaTac Mall traffic, Go west on 348th to 9th Ave South, Go north on 9th to just south of South 336th Street, Office is on east side of 9th Ave. South.

AGENDA (including "Bullet Point" items)
1. Secretary's Report
2. Treasurer's Report
3. President's Report
4. * LEGISLATIVE UPDATE: Trainee Appraiser Bill (SB5274) passed by House as Amended by Committee, and returned to Senate for Concurrence (House companion died in Appropriations), LLC Disclosure Bill (HB 1315) passed by House (no Senate Companion) and now on Senate Calendar, Uniform Regulation of Business and Professions Act bills never made it out of their house of origin.
5. * REAC meeting postponed for budget reasons to July 8, 2005, in Parkland (South Tacoma), WA,
6. * DOL Appraisal Program - ListServ*.
7. * DOL Appraisal Program - Disciplinary Matrix - redraft nearing completion
8. * FNMA's new forms now released in final form
9. * ACOW AT THE SUMMIT VII - Scheduling and Planning
10. * Web Site enhancements underway. www.acow-wa.org <http://www.acow-wa.org>
11. * ACOW membership growth
12. ACOW Monthly Meeting Schedule
13. Other Old Business
14. New Business

APPRAISERS’ COALITION OF WASHINGTON - NEWSLETTER - APRIL 27, 2005 ÓACOW

LEGISLATIVE AFFAIRS

APPRAISER BILLS ARE AT THE GOVERNOR’S OFFICE

The two 2005 Bills of significant interest to Real Estate Appraisers have been delivered to the Governor after passing both houses of the Legislature by impressive margins, both without a dissenting vote in the Senate. The next step is for her to “take action” after review by her policy office. Every expectation is that she will sign both the bill concerning Trainee Appraisers (SB 5274), and the bill authorizing disclosure of information contained in real estate excise tax affidavits. To learn about any bill, go to < http://www.leg.wa.gov/wsladm/billinfo1/bills.cfm >, then enter the bill number in the search block in the upper right corner of the page. This will bring up the “Summary Page” for the specified bill. Scroll down through “Available Documents” and “Text of Bill Versions” to the link for < Bill as Passed Legislature > (for those which did). Click on < PDF Version > to Print a bill in its complete and more readable format. Leg above works. Can not make AF work http://www.appraisalfoundation.org

REAL ESTATE APPRAISER COMMISSION MEETING

A special Real Estate Appraiser Commission Meeting is scheduled for July 8, 2005, from 9:00 AM until 12:00 Noon at the Parkland Licensing Services Office, 2502 112th Street E., Parkland, Washington.

Map

Agenda to be announced.

Note: All attendees will receive a certificate of attendance granting 3 hours of continuing education credit.

and their proper supervision, and Regulatory Enforcement. Individual appraisers attending ACOW meetings in recent years have expressed continued support for enabling legislation to improve this situation through the DOL Appraisal Program. The two statutes having the most direct bearing on the welfare of the public we serve, and on our livelihoods are 18.140 RCW and 18.235 RCW. Four bills, two amending each of the two statutes, have had their hearings before the policy committees in their houses of origin. These committees are the Senate Committee on Labor, Commerce, Research & Development (LCRD), and the House Committee on Commerce and Labor (CL). After passage in their house of origin, the bills are expected to be referred to the corresponding committee in the opposite house. House Bill (HB) 1375 and Senate Bill (SB) 5274 address the issue of Trainees under the Real Estate Appraiser Act (18.140 RCW). HB 1395 and SB 5364 dealing with the operation of Regulatory Procedures under the Uniform Regulation of Business and Professions Act (18.235 RCW). The four bills got a good start on Tuesday, February 1 (Day 23), as the result of hard work by T. K. Bentler, ACOW’s Lobbyist, with a Senate Committee hearing on Senate versions of the appraiser bills. This was followed by the House Committee hearings on the companion bills on Monday, February 7 (Day 29). Each of these bills has been reported out with a “ Due Pass” recommendation by its house of origin policy committee. For those of you who feel that you would like more information about how the legislative system works, please see “HOW THE SYSTEM OPERATES OVERALL” later in this Newsletter, or go to the Legislature’s web site at < www.leg.wa.gov > for the details. The Chair of LCRD is Senator Jeanne Kohl-Welles (D-36, Seattle’s Belltown, Queen Anne, Magnolia, Ballard and Crown Hill Neighborhoods). Senator Rosa Franklin (D-29, South Tacoma) is the Committee’s Vice Chair and Senator Linda Evans Parlette R-12, Chelan and Douglas Counties, and parts of Okanogan and Grant Counties) is its Ranking Republican Member. Other members of LCRD are Senators Lisa Brown (D-3, Spokane), Karen Keiser (D-33, Des Moines), Margarita Prentice (D-11, South Seattle, Renton and Tukwila), Alex Deccio (R-14, Yakima), Mike Hewitt (R-16, Southeast Washington counties), and Jim Honeyford (R-15, Klickitat County).

The Chair of CL is Representative Steve Conway (D-29, Parkland and Tacoma) with Representative Alex Wood (D-3, Spokane) as the Vice Chair. Representative Cary Condotta (R-12, Wenatchee) is the Ranking Minority Member. Other members of CL are Representatives Larry Crouse (R-4, Spokane Valley), Zack Hudgins (D-11, Tukwila), John McCoy (D-38, Snohomish County), and Bob Sump (R-7, Northeast Washington counties).

Among other bills, the major topics concern the Disclosure of Real Estate Excise Tax Information (HB 1315), and the Authority to Condemn Property (HB 1649 and SB 5608). Bob Taylor of TK Bentler/Public Affairs Associates regularly sends weekly status reports and alerts to ACOW concerning these bills and others of potential interest to appraisers.

TRAINEE APPRAISERS - House Bill (HB) 1375 and Senate Bill (SB) 5274 will authorize the establishment of a “State-registered Appraiser Trainee” classification within the Washington Department of Licensing’s Real Estate Appraiser Program. Each of these identical bills officially “ Declares an intent to provide for the proper supervision and training of new entrants to the appraiser profession through the implementation of the state-registered appraiser trainee classification ” in their Section 1(2) and in the Legislative Digest http://www.leg.wa.gov/pub/billinfo/2005-06/Htm/Digests/ . Sections 2 thru 18, and 21 set forth the structure of the program for DOL to register trainee real estate appraisers and to adopt criteria for the trainees together with oversight requirements for the proper supervision of trainees.

Section 1 also will delete the definitions of a Certified Appraisal and of a Licensed Appraisal as these are considered archaic. Section 19 will allow, but no longer require, that one member of the Real Estate Appraiser Commission (REAC) be a Licensed Real Estate Appraiser because no such appraiser has yet to volunteer to serve on the Commission leaving a Governor unable to comply with the statute. Sections 20, 22 and 23 will allow earnings on the dedicated REAC Account to accrue to the benefit of the Account rather than to the General Fund. Sections 24, 25 and 26 set the sequence of dates necessary for the proper implementation of the act’s various sections as of either July 1, 2005, or July 1, 2006, as appropriate.

Representative Phyllis Kenney (D-46) of Northeast Seattle again is the Prime Sponsor in the House of the Real Estate Appraiser Trainee Bill, originally HB 1375 . Appraisers are grateful to Representative Kenney for her ve ry active sponsorship of the bill, including persuasive testimony at the Committee hearings both this year and last. The Co-sponsors of HB 1375 are Representatives Steve Conway (D-29), Cary Condetta (R-12), Larry Crouse (R-4), Alex Wood (D-3), Bill Fromhold (D-49, Vancouver), Skip Priest (R-30, Federal Way), “Ike” Eickmeyer (D-35, Mason County), Jay Rodne (R-5, Issaquah) and John McCoy (D-38).

The Prime Sponsor of SB 5274 is Senator Karen Keiser (D-33) of SeaTac. The Co-sponsors are Senators Parlette, Franklin, Hewitt and Margarita Prentice (D-11, South Seattle and Tukwila). Senator Prentice also is Chair of the Ways and Means Committee, and has thorough understanding of appraisal issues from her previous tenure as Chair (or, alternately, as Ranking Minority Member) of the Senate Committee responsible for Financial Institutions. The strong sponsorship of these bills are a testimonial the efforts of our ACOW Lobbyist, T. K. Bentler.

HB 1375 is now Substitute House Bill (SHB) 1375 and officially is a sponsored by the House Committee on Commerce and Labor (with recognition of its original sponsors). The revised House Bill report explains that the CL Committee found it appropriate to fine tune the original bill to change “the effective date for registration delays in the Act to make it consistent with other sections regarding registration delays, and (to make) the effective date of the dedicated fund consistent with the interest earning provision. These necessary technical corrections in no way change the operational aspects of the bill. It is SHB 1375 which actually received the “Do Pass” recommendation.

The House and Senate Trainee Appraiser Bills each have had a “Fiscal Note” attached because of a small funding requirement for the initial “administrative phase” of their implementation. SHB 1375 accordingly has been referred to the House Appropriations Committee. This is one of the largest Committees in the House with a total of twenty-nine members. It is Chaired by Representative Helen Sommmers (D-36, Seattle’s Belltown, Queen Anne, Magnolia, Ballard and Crown Hill Neighborhoods). The Vice Chair is Representative Bill Fromhold (D-49, Vancouver). The Ranking Minority Member is Representative Gary Alexander (R-20, Lewis and southwest Thurston Counties).

Representatives Anderson (R-5), Armstrong (R-12), Bailey (R-10), Buri (R-9), Clements (R-14), Cody (D-34), Conway (D-29), Darneille (D-27), Dunshee (D-44), Grant (D-16), Haigh (D-35), Hinkle (R-13), Hunter (D-48), Kagi (D-32), Kenney (D-46, the prime sponsor of the original bill), Kessler (D-24), Linville (D-32), McDermott (D-34), McDonald (R-25), McIntire (D-46), Miloscia (D-30), Pearson (R-39), Priest (R-30), Schual-Berke (D-33), Talcott (R-28), and Walsh (R-16) are the remaining members of the Appropriations Committee. Its report must be read into the House Record on or before March 7 (Day 57). Please contact IMMEDIATELY any Appropriations Committee member(s) that represent your district, and urge their support of SHB 1375. Use the Legislative Hot Line at 1-800-562-6000, or Web Site < http://www.leg.wa.gov > for E-mail links and telephone numbers .

Upon receiving a favorable report by the Appropriations Committee, SHB 1375 will go to the seventeen-member Rules Committee for placement on the Calendar for Floor action by the whole House. The Rules Committee is chaired by House Speaker Frank Chopp (D-43, central and northeast Seattle). Representative Chandler (R-15, Klickitat, Skamania and Yakima Counties) is the Ranking Minority Member. Representatives Anderson (R-5), Armstrong (R-12), Blake (D-19), Clibborn (D-41), Ericksen (R-42), Flannigan (D-27), Grant (D-16), Hudgins (D-11), Hunt (D-22), Kessler (D-24), Lovick (D-44), McDonald (R-25), Morrell (D-25), Shabro (R-31), and Tom (R-48) round out the Rules Committee. Floor Action in the house of origin must be completed by 5:00 p.m. on Wednesday, March 16 (Day 66).

SB 5274 is moving at a fast pace. It received a fast “Do Pass” report from the Senate LCRD. Senator Margarita Prentice (D-11, South Seattle and Tukwila) decided as the Chair of the Ways and Means Committee that the fiscal impact of the bill was too miniscule a part of the total budget picture for the committee to devote time to and allowed it to proceed directly to the Senate Rules Committee, a fter conversations with T. K. Bentler, and later with Jim Irish. The Rules Committee already has placed SB 5274 on the “Green Sheet” thereby making it eligible to be placed on the Floor Calendar. It is hoped that Final Passage by the Senate will occur imminently and House action will soon follow.

Your communication with the committee members, and your individual Senator and two Representatives is extremely important at every point along the bills’ paths. Every appraiser needs to be a frequent user of the Legislative Web Site < http://www1.leg.wa.gov/WorkingwithLeg/ >, or the Legislative Hot Line 1-800-562-6000. Appraisers were represented at the hearings by ACOW members Marc Campos, Bill King, Sheridan Shaffer and Jim Irish, and by the ACOW Lobbyist, T. K. Bentler. Linda Owings-Rosenburgh, a Certified Residential Appraiser who serve both a the Clallam County Assessor and as a member of the REAC testified in favor of HB 1375 before CL on her own individual behalf. T he Department of Licensing has been a strong supporter of HB 1375 and SB 5274 from the outset, as they were for the predecessor in the last biennium. The DOL was prompt in submitting its review report along with an agency fiscal impact note to both the House and the Senate.

Please study SHB 1375 and SB 5274, and contact your Legislators in both chambers for their support of this legislation along with the Governor and the Lt. Governor. PDF files of the bills are found by entering either of the bills’ number at < http://www.leg.wa.gov/pub/billinfo/2005-06/ >, as are the committee and staff reports and the fiscal notes. The 2005 bills are virtually the same as 2003-2004’s 2SHB1897 passed 94-2-0-2 by the House and reported out 5-0 with a “Due Pass“ recommendation by the Senate Commerce and Trade Committee before the sudden Senate adjournment last March. Information on all bills from recent legislatures can be found at < http://www.leg.wa.gov/pub/billinfo >.

APPRAISER REGULATORY ENFORCEMENT APPRAISERS - House Bill (HB) 1395 and Senate Bill (SB) 5364 will amend many provisions of the Uniform Regulation of Business and Professions Act (18.235 RCW) (URBPA) , enacted as Chapter 86 of the Laws of 2002 to replace the disciplinary sections of 18.140 RCW as well as those of the RCW’s governing some twenty-seven other programs, that it regulates. The bills were introduced at the request of the Department of Licensing and are accompanied by Fiscal Notes. Though the amendments are generally in the way of “technical corrections,” that is somewhat in the way of “beauty is in the eye of the beholder.” Section One of each bill reinserts language into RCW 18.140.160 that was “inadvertently” deleted in the 2002 act. The language previously had been in the Real Estate Appraiser Act since around 1992. RCW 18.140.160 allows the Director to “take disciplinary action for the following conduct, acts, or conditions:” The language to be reinstalled is: (7) Failure or refusal without good cause to exercise reasonable diligence in developing an appraisal, preparing an appraisal report, or communicating an appraisal; and (8) Negligence or incompetence in developing an appraisal, preparing an appraisal report, or communicating an appraisal. ACOW had been advised in the fall that technical corrections were planned, but assumed that they were more of the dot the “i” and cross the “t” nature. Copy of the proposed text was not provided before the bills were filed. The situation was unfortunate because some appraiser concern then arose that the fact that this language had previously been in the statute did not necessarily mean that it was either the best or the most appropriate, and that it was overly broad and subject to easy abuse by DOL staff. All of this left both ACOW and DOL caught by surprise at each other’s action and reaction, and by ACOW’s testimony in support of the bills but with concerns expressed. Eventually ACOW was able to discuss it at its next regular meeting on February 10, and decided to attempt to seek some compromise without withdrawing support for the bills’ overall goals. At this point, the bills are moving forward with the language unchanged, and discussions are underway with DOL as to how to best resolve the appraiser concerns that were raised. SB 5364 received a “Do Pass” report by LCRD and is at the Rules Committee, and is waiting to be made eligible for Second Reading. The House CL Committee gave a “Do Pass” report for a First Substitute Bill, SHB 1395, that contains changes unrelated the RCW 18.140.160 and the Real Estate Appraiser Act. The bill may go to House Appropriations or directly to House Rules.

DISCLOSURE BY LLC’S ON EXCISE TAX AFFIDAVITS - HB 1315 - Authorizing the disclosure of information related to real estate excise taxes is being reviewed by the House Rules Committee after having receiving a “Do Pass” report from the House Finance (FIN) Committee. The bill does have a Fiscal Note attached, but the bill does not require an appropriation. It is supported by the Washington Association of Realtors (WAR). ACOW decided at its February 10 meeting to support the bill also, after having endorsed its principles in concept at the January meeting. Sales Price information customarily disclosed through the amount of Real Estate Excise Tax paid with the filing of the Real Estate Excise Tax Affidavit is not available to local governments or to the general public when a property is transferred through a Limited Liability Company (LLC) because the tax is paid directly to the State Department of Revenue in such a transaction, and is subject to confidentiality requirements.

The prime sponsor of HB 1315 is Representative Rodney S. Tom (R-48, Medina), a Kirkland Realtor Ò Appraiser Jim Price is well acquainted with Rep. Tom and urged that ACOW should lend its support to the 2005 bill so that this sale price data is available to appraisers. The 2005 bill picks up where 2004’s SHB 2574 originally introduced by Representative Tom ended up last year. Please go to the Legislature’s “Bill Info” web site < http://www.leg.wa.gov/wsladm/billinfo1/bills.cfm > or call the Legislative Hotline at 1-800-562-6000 to obtain a copy of HB 1315 and its Bill Report to review because your support is needed on this beneficial legislation.

LENDER PRESSURE - It looks as if this important issue to appraisers may not be addressed in the Legislature this year, nor will the larger issue of Predatory Lending. The Washington Association of Mortgage Brokers (WAMB) is believed to still be studying the issue of loan originator licensing or other methods of consumer protection and industry image enhancement, but is not believed to have reached a consensus as to possible legislative action as of yet.

Two publications sent quarterly to all certified and licensed real estate appraisers, the “Communicator” (Fall 2004) and “Working Real Estate” (August 2004), each contained articles dealing with this issue. The “Communicator” treats the subject in its “Editorial – A Few Bad Apples. . .” on page 35. “Working RE” gets to coping in “Survival 101 – Getting Along without Going Along”. The two are excellent companion reading pieces. Our national organizations are working on the issue with the federal government, and with FHLMC and FNMA. They also are seeking input from their members, such as through the AI’s Appraiser Independence Action Center . It provides r esources to help appraisers combat client pressure < Appraiser Independence Action Center >.

PLEASE HELP MAKE THIS A GOOD LEGISLATIVE YEAR FOR APPRAISERS Hard Work also is needed by appraisers to achieve our goals. Every appraiser needs to contribute their Time, Talent and Treasure to the effort. Contact your District’s Senator and two Representatives, especially when they are member of the Committees hearing bills relative to appraisers and our profession, or members of their party’s leadership. Get acquainted with your legislators and contact them through the Legislative website <http://www.leg.wa.gov/districtfinder/Default.aspx>. Use E-mail, their office telephone, or the Legislative Hotline at 1-800-562-6000. Be sure to use the Bill Number, identify yourself and being a constituent and a real estate appraiser, and the way(s) for them to reply to you. Do not be concerned, however, if you do not get a quick personal response as most are inundated during session. They will know your opinion, and most will reply eventually because they know where votes and contributions for reelection come from. Set aside time in you schedule to attend the district meetings that both your State and Federal representatives will send you notices of. Introduce yourself and be personal. Watch the ACOW web site < www.acow-wa.org > and the Bill Information (Bill Info) web site < http://www.leg.wa.gov/wsladm/billinfo1/ > for the latest status. Plan to attend the Committee Hearings in Olympia when an appraisal bill is scheduled, sometimes there is even a week’s notice.

HOW THE SYSTEM OPERATES OVERALL Responding to inquires on how the system works for appraiser bills, this is the straight skinny: As this is written on Monday, February 28, 2005, Washington’s Fifty-Ninth Legislature now is beginning the eighth week in its 105-day (fifteen week) regular session, as allowed under the state constitution for the first year of the new biennium. This year’s session convened on Monday, January 10, 2005. The first much of the second week were devoted to the usual details of getting organized, events related to the inauguration the new Governor, and the briefing of the House and Senate policy committees by the various executive departments and agencies. The Legislature’s several policy committees in each chamber then began their business of hearing testimony from the sponsoring members and stakeholders in the some 2,282 individual bills (1,051 in the Senate and 1,231 in the House) introduced through last Thursday, February 24, 2005. The last day for the policy committees for the bills’ house of origin to complete this task and have their reports read into the chamber’s record is the session’s 52 nd day, Wednesday, March 2, 2005, unless it is a House fiscal committee, Senate Ways and Means Committee or either chamber’s Transportation Committee. The last moment (cut off) for either house of origin to consider (pass or reject) a pending bill in floor action is 5:00 p.m. Wednesday, March 16 (Day 66). Then, those bills that were passed by their house of origin, begin their second perilous journey through the opposite house, where the 5:00 p.m. cut off is on Day 96, Friday, April 15. The remaining days through Sunday, April 24 th are wrap-up purposes, including resolving differences between House and Senate versions of initially concurrent bills. To stay abreast of where we are, REGULARLY VISIT < www.leg.wa.gov > and < www.acow-wa.org >. GOING TO OLYMPIA Ramps at Exit 105 from both the north and the south on I-5 lead directly to the State Capitol Campus. See the last page of this Newsletter for current information about driving directions to the six available visitor parking locations, a Detailed Map of the Capitol Campus, and the Public Transportation options. Olympia’s Intercity Transit operates a circular Shuttle Service between Lots 5, 4, 3, and the Capitol itself.

APPRAISER ISSUES :

FINE TUNING (a/k/a TECHNICAL CORRECTIONS) TO THE REAL ESTATE APPRAISER PROGRAM

Real Estate Appraiser Act ( 18.140 RCW) –

Terms of Real Estate Appraiser Commission (REAC) members are for six years, and were intended to expire at the rate of two or three every two years (2-3-2 basis). Through some forgotten situation in past years, a 5-0-2 basis evolved. The plan now is to correct this administratively in the course of future gubernatorial appointments rather than through legislation to amend RCW 18.140.230(1);

The composition of the REAC is required by RCW 18.140.230(2) to comply with the requirement that “. . . at least one member of the commission shall be a licensed real estate appraiser, . . . ”. The problem is that licensed appraisers have not come forward to fill this slot. It has been suggested that both the original intent together with the Governor being able to properly fulfill her or his duties by changing the word “shall” to “may” is accomplished in Section 19 of SHB 1375 and SB 5274;

The definitions in RCW 18.140.010(5) and (17) together with those in WAC 308-125-010(5) and (6) of a “Certified appraisal” and of a ”Licensed appraisal” are obsolete under the statute and rule, and inappropriate under the Uniform Standards of Professional Appraisal Practice (USPSP), and are deleted in Section 2 of SHB 1375 and SB 5274; and

A definition of “Significant Appraisal Assistance” is under review for future inclusion in either RCW 18.140.010 and/or in WAC 308-125-010 to be more consistent with the spirit and intent of the USPAP, and to facilitate the operation of the DOL Appraisal Program. Real Estate Appraisers (308-125 WAC) - DOL is working on amendments to update these rules, such as to change references to the REAC from those referring to the predecessor Advisory Committee.

REAL ESTATE APPRAISER COMMISSION

The REAC has scheduled its next meeting for 9:00 a.m. to Noon on Friday, May 20, 2005, at the Department of Licensing offices in Parkland ( South Tacoma) were numerous previous REAC meetings have been held. The Parkland Licensing Services Office is at 2502 – 112 th Street East (Thomas Brothers Map, page 834-B5). All attendees will receive three (3) hours of Continuing Education Credit. The proposed agenda still is in formation. Send your thoughts to David Santhuff < dsanthuff@dol.wa.gov >, and Dean Potter <deanpotter@aol.com> on suggested topics and your concerns. The agenda and other pertinent information is expected to appear soon on the Appraisal Program web site < http://www.dol.wa.gov/app/appfront.htm > as, hopefully, will the draft of the minutes of the recent meeting in Vancouver. The February 18, 2005, REAC meeting at the Gen. George C. Marshall House on the grounds of historic Fort Vancouver overlooking the Columbia River in Vancouver, Washington, was well attended. Appreciation was expressed for holding a meeting in Southwest Washington. This continued the policy implemented last year of taking the meetings to various locations around the state. The major new item was the reemergence of the Structural Pest Inspector issue being raised again by the Washington Department of Agriculture. DOL is going to initiate discussions with Agriculture to seek a resolution, which may lie in that program’s enabling legislation.

ACOW NEW YEAR SEMINAR II

ACOW hosted well attended Lunch and Seminar following the REAC meeting during the afternoon of Friday, February 18, 2005 in Vancouver, WA. “Emerging Appraisal Issues in 2005 – A Year of Change” focused on DOL Appraisal Program changes, industry trends and the new Fannie Mae forms. Program Manager David Santhuff covered items such as the new Appraisal Program Disciplinary Matrix, the responsibilities of supervisors and their trainees, and the interrelationships of the RCW’s, the WAC’s and the USPAP. Bill King, a Certified Instructor for USPAP discussed several issues including the scope of work changes in the USPAP and the new series of appraisal test forms that may be in final test form S2005 for final release in mid-year by Fannie Mae, and other possible changes in appraisal forms.

DOL REAL ESTATE APPRAISAL PROGRAM

LISTSERV Ò

SIGN UP NOW TO STAY INFOMED. The number of appraisers who have done is gaining fast. All of you know that E-mail is with us to stay. More and more of the appraisal organizations are making it their communications norm. So far, the new Real Estate Appraiser Program < http://www.dol.wa.gov/app/appfront.htm > LISTSERV® has distributed several “Talking Point” Bulletins on matters of proper appraiser policy and procedure, job notices for positions with government agencies, municipal “Request For Proposal”, USPAP Q&A’s, First Exposure Draft for USPAP 2006, and much other information. Every certified and licensed appraiser and all known trainees need to SIGN UP to receive these important broadcast E-MAIL messages. The Real Estate Appraiser Program's goal is to enhance communication with licensees with available new technology. The messages will be sent as needed to distribute law and rule changes, real estate appraiser licensing updates, and other TIMELY information. If you want to be in the know, register at LISTSERV® today. There is no cost to subscribe, and you may delete your address at any time. Congratulations to the some 20% of appraisers now signed up. Everyone else, PLEASE DO SO TO KNOW THE NEWS. Do not let yourself be uninformed.

DISCIPLINARY MATRIX

At the Vancouver meetings, Program Manager David Santhuff thanked those who had helped in the Disciplinary Matrix validation process by completing the Validation Course., and providing valuable comments with their responses. The Disciplinary Matrix has been developed in response to requests from the appraisal community and ACOW, the REAC and the Appraisal Program Staff have developed a system to categorize and prioritize complaints filed against appraisers and to standardize fines, penalties and other sanctions leveled as appropriate. It now is under going refinements by DOL and the REAC based upon your comments. After more exposure and various necessary agency approvals, it will soon be incorporated into the Washington Administrative Code (WAC) as appropriate. Go to < http://www.dol.wa.gov/app/appfront.htm > for the latest information.

USPAP 2006

Ready or not, it is coming with significant changes! The Appraisal Standards Board (ASB) released the first 2005 Exposure Draft for the 2006 Edition of the Uniform Standards of Professional Appraisal Practice (USPAP) on February 15, 2005, with a deadline for comments of April 1, 2005. The document develops three principal themes: First, it contains the third draft of proposed revisions throughout USPAP relating to the ASB’s Scope of Work Project; Second, it contains the second draft of proposed revisions to Standards 9 and 10 of USPAP (concerning the Development and Reporting of a Business or Intangible Asset Appraisal) resulting from the ASB’s Standards 9 and 10 Review Project; and Third, it contains the first exposure of the proposed retirement of USPAP reference material Advisory Opinion 8, “Market Value vs. Fair Value in Real Property Appraisals.”

The document runs 130 pages. Pages 1 to 7 contain the introductory sections consisting of the transmittal memo, “Request for Written Comments” and Section 1, “General Discussion of Proposed Revisions Related to the Scope of Work Project.” Pages 8 to 16 contain Section 2, “Proposed Edits to DEFINITIONS, PREAMBLE, and Rules including the SCOPE OF WORK RULE.” Pages 17 to 38 contain Section 3, “Proposed Edits to STANDARDS 1 and 2.” Pages 39 to 45 contain Section 4, “Proposed Edits to STANDARD 3.” Pages 46 to 129 contain Sections 5 to Section 9 that relate to Standards and/or Statements 3 through 10. Page 130 contains Section 10, “Proposed Retirement of Advisory Opinion 8.” The Exposure Draft may be downloaded in its entirety or as individual Sections at https://209.213.217.34/html/PDF-Images/ASBexd2.15.05.pdf >.

FANNIE MAE (FNMA) APPRAISAL FORM CHANGES

Stay alert, but no new announcement has been issued as of 02-28-2005. Stay alert and informed by monitoring the FNM web site < http://www.fanniemae.com >. There is a white search block in the upper right corner. Enter < 05-02 > and press < Enter >. It will eventually show up. So far the site will respond with a “not found” message. If it has nothing to do with appraisals, enter 05-02 and so on until the appraisal forms word is put forth. Announcement 05-01, dated February 25, 2005, is unrelated to real estate appraisal issues. When you find any FNMA announcement, scan it carefully. FNMA often does not put completely descriptive titles on its announcements . The third iteration of the test forms is expected soon. The most recent items of interest to appraisers were included in “ Announcement 04-07 ” issued on November 8, 2004, <http://www.efanniemae.com/singlefamily/pdf/04-07.pdf>.

When the next iteration of the Test Forms is released, there hopefully will be at least a short comment period. Final release now is expected in late 2005, so new software will be a year-end Holiday present for just about all appraisers. Usage may become mandatory in early 2006, depending upon the ability of lenders to implement their necessary procedural and software changes.

Significant changes modifying the test versions of Fannie Mae’s single-family appraisal reports series concern “Scope of Work” statements and content, the “Sales History of the Subject Property” and its analysis by lenders, and a revision of Fannie Mae’s policy in response to unacceptable property flipping schemes. The last phrase should not be taken by anyone as an indication that there is somehow an “acceptable” property flipping scheme.

These changes work together to bring appraisers more deeply into the processing of helping to provide lenders with the tools to stem the currently-prevalent mechanisms employed by predatory lenders, including their being abetted by appraisers. The Cost and Income Approaches remain a relevant part of the appraisal process, but the appraiser (not the lender) will be responsible for determining when they will be applicable to solving a particular appraisal problem.

Appraisers will need to examine their business models, especially their pricing of services. It will be impossible to quote a fee or a time frame for delivery until the scope of work has been determined. This is as it should be, just like every other business or profession. A “cafeteria” fee structure will be necessary for the “a la carte” menu of services we have always offered, but ignored.

The latest information on new happenings at Fannie Mae is best found at its web sites. Corporate news on a wide variety of topics is at its main site < http://www.fanniemae.com >. The Test Forms, the Guide Announcements (04-02, 04-03, 04-04 & 04-07, so far), appraisal report forms and instructions and virtually all other forms as PDF files at < http://www.efanniemae.com/singlefamily/sf_forms.jhtml >. Additional and other related items are available at < http://www.efanniemae.com >. The complete Fannie Mae Seller’s Guide, Part XI: Property and Appraisal Guidelines is available, section by section, at < http://www.allregs.com/efnma/index.asp >. Click on the “Refresh” icon if this link results in a “Can not Display” message screen appearing.

PROPOSED CHANGES TO APPRAISAL FORMS

The number of forms in the single-family (1 to 4 units) appraisal report series now has increased to a net of eleven in Announcement 04-07 on pages 8-10. This is a result of two specialized forms each for individual condominium units and for individual cooperative apartment interests. The unique “Individual Condominium Unit Appraisal Report (Form 1073)” for complete exterior and interior property inspection returns to the series in a revised version. A new “Exterior-Only Individual Condominium Unit Appraisal Report” will continue as the Form 1075, replacing the current version.

The “Exterior-Only Inspection Residential Appraisal Report” (Form 2055) now is intended solely for one-unit appraisals (including individual units in PUD projects) and/or a property with an accessory unit based on an exterior-only property inspection, but for not an exterior and interior inspection. According to its Guidelines < http://www.efanniemae.com/singlefamily/forms_guidelines/selling_servicing/2055test.html >, the Test Form 2055 “appraisal report form is not designed or intended to be used to report an appraisal of a manufactured home, or an individual unit in a condominium or cooperative project.”

New to the Fannie Mae single-family appraisal report series are the specialized forms for the appraisal of an individual cooperative apartment. These properties are encountered most often in some longer-established major metropolitan areas, including in the Capitol Hill and Queen Anne neighborhoods of Seattle. Such a corporately-owned building typically dates to between the two World Wars. The “Individual Cooperative Interest Appraisal Report” is to be Form 2090 for an appraisal based on an exterior and an interior property inspection. The “Exterior-Only Inspection Individual Cooperative Interest Appraisal Report” (Form 2095) is introduced for an appraisal based on an exterior-only property inspection.

Lenders and appraisers may continue to use the original test appraisal report forms or the revised versions of the test forms until June 1, 2005, for purposes of satisfying Fannie Mae’s appraisal requirements (Guide Announcement 04-07 dated 11-08-2004 – pp. 8-10.). Encourage your client-lenders to use and comment on the test forms, and consider using them with private clients now to become proficient ASAP & ready for more comments. Implied date for Implementation of final versions of all forms continues to be on June 1, 2005.

Comments can be submitted either by E-mail to test_appraisal_forms@fanniemae.com or by USPS to Fannie Mae, Test Appraisal Forms, 3900 Wisconsin Avenue NW, Mail Stop 2H-4S-08, Washington, DC 20016. Although there is not an open comment period at this time, comments may always have an impact. It is possible that a very brief comment period on anticipated “fine tunings” of the early 2005 versions of the Test Forms may open upon their announcement. Copy your comments to ACOW, the appraisal organizations, other stakeholders, federal legislators, etc.

Most of the appraisal forms vendors also have released updates to their forms packages with the test forms, so check with yours if you have not yet received them. Some vendors have sent out newsletters with comments. Watch out for gossip, hearsay and rumors from others.

FANNIE MAE 2004 NEW FORMS – NOVEMBER REVISED TEST FORMS TABLE

Line No.	Guide Announcement	Form No.	Title of Test Form
1	04-07	1004	(Fannie Mae) Uniform (?) Residential Appraisal Report (November 2004) (Exterior AND* Interior, including in a PUD)*.
2	04-02	1004B	Definitions, Statement of Limiting Conditions, and Appraiser’s Certification (May 2004). *DISCONTINUED*
3	04-07	1004D	Appraisal Update and/or Completion Report (November 2004)
4	04-07	1073	Individual Condominium Appraisal Report (11-04). (Ext. AND* Interior)*
5	04-07	1075	Exterior-Only Inspection Individual Condominium Appraisal Report (November 2004).
6	04-07	2055	Exterior-Only Inspection Residential Appraisal Report (Nov. 2004). (Including one unit in PUD Projects, but NOT* Mfg, Condo or Co-op.)*
7	04-07	1004C	Manufactured Home Appraisal Report (Nov. 2004).
8	04-07	1025	Small Residential Income Property Appraisal Report (Nov. 2004) (Exterior AND* Interior)*.
9	04-07	2000	One-Unit Residential Appraisal Field Review Report (Nov. 2004).
10	04-07	2000A	Two- to Four-Unit Residential Appraisal Field Review Report (11-04).
11	04-07	2090	Individual Cooperative Interest Appraisal Report (November 2004).
12	04-07	2095	Exterior-Only Inspection Individual Cooperative Interest Appraisal Report (November 2004).

SALES HISTORY OF THE SUBJECT PROPERTY

On page 5 of Announcement 04-07, Fannie Mae clarifies its “expectation of lenders in their review of appraisal reports” as a part of their underwriting analysis. The process is to include review of the current contract for sale in purchase money transactions, current listings or other offerings for sale of all subject properties, current ownership information for all properties, and “sale (or transfer) history of the subject property, and comparable sales for both purchase and refinance transactions.” This information is to be supplied in keeping with both Fannie Mae’s instructions for its forms, and with the Uniform Standards of Professional Appraisal Practice (USPAP). Appraisers are urged to read and follow this part of Announcement 04-07 carefully.

PROPERTY FLIPPING

Fannie Mae describes this as “generally refer(ring) to the process of purchasing existing properties with the intention of immediately reselling the properties for a profit” in Announcement 04-07. Various schemes, scenarios and techniques are described in detail on pages 5–8. Lenders selling loans to Fannie Mae are “encouraged” to “implement (the necessary appraisal review and underwriting policy changes) as soon as possible (with its) revised underwriting policy (to be) mandatory for loan applications taken on or after May 1, 2005.”

Appraisers are expected to provide the necessary data to the lender in the appraisal report, and the lender is required to verify it through the appraisal review process. Any gaps in the data reported are to be filled it. “This policy modification will ensure that lenders and their appraisers understand the quality and timeliness of their data sources, identify time gaps in, and assess the accuracy of, their data sources.” Appraisers, and all of their reviewers and supervisors, are urged to obtain and study all of the announcements, forms and instructions at <http://www.efanniemae.com/singlefamily/sf_forms.jhtml>.

APPRAISAL REPORT DOCUMENTATION

Pages 14 through 19 are “Attachments” to the thirteen page main body of Announcement 04-07. They are the actual pages for insertions into the complete Fannie Mae Seller’s Guide. Several pages set forth the documentation that should be a part of the appraisal report or be reviewed by the appraiser in completing the appraisal assignment. Reviewing these with the information memos which have been sent out on the WA DOL ListServ offers appraisers excellent guidance in being USPAP compliant, including as to workfile content.

CHANGES TO FANNIE MAE CONVENTIONAL LOAN LIMITS

In its Announcement 04-08 dated November 30, 2004, Fannie Mae raised its original Maximum Mortgage Amounts for one to four family properties delivered to the corporation “on or after January 1, 2005” as summarized in the table below:

Fannie Mae Conventional Mortgage Loan Limits, effective January 1, 2005
Units	Contiguous 48 states, DC, & PR ($)			Alaska , Guam, Hawaii & Virgin Islands ($)
	First Mtg.	Second Mtg.	Combined	First Mtg.	Second Mtg.	Combined
1	359,650	179,825	359,650	539,475	269,725	539,475
2	460,400			690,600
3	556,500			834,750
4	691,600			1,037,400

STAY ALERT

The bundling of appraisal fees together with other costs associated with obtaining of a home loan is bad for many reasons, especially for both lender solvency and consumer protection. HUD remains under continuing intense pressure to revisit its withdrawn proposed new rule to change its implementation of the Real Estate Settlement Procedures Act (RESPA). THE ISSUE IS FAR FROM DEAD, and it is expected to come back to a front burner about a soon as the new Congress convenes. Read the national press and real estate industry publications. Lending and Title industry leaders are still lobbying for bundled services in spite of opposition from the Appraisal profession and other providers outside of the packagers’ loop who will get hammered! Consumers will loose what little protection they have left in the home-buying system because appraisers and others will fall captive to the packagers to stay in a declining business.

ACOW AT THE SUMMIT VII

Start your 2005 calendar by saving Thursday and Friday, August 18 & 19, 2005, for ACOW AT THE SUMMIT VII. Washington State’s annual gathering of real estate appraisers again is planned for the Best Western Snoqualmie Inn. ACOW expects to follow the same format of the past two years by following the REAC meeting to be held on Thursday morning. Potentially timely topics include a State of the Appraisal Program presentation by David Santhuff, the latest on best usage of the new Fannie Mae forms expected to have become mandatory on June 1, 2005, the best procedures for Supervising Trainees, and those timely topics that you feel are even more important to the well-being of appraisers and their publics. So, send in your thoughts via www.acow-wa.org .

ACOW MONTHLY MEETING SCHEDULE -- PLAN AHEAD

ACOW normally meets Every Month on the Thursday after First Monday (some years except July 4 week). Remaining 2005 MEETINGS DATES are March 10, April 7, May 5, June 9, July 7, August 4, September 8, October 6, November 10, and December 8, 2005. THE MARCH MEETING WILL BE IN SEATTLE AS BILL KING WILL BE AWAY, MAKING HIS OFFICE UNAVAILABLE, SO FOR NOW ODD months will be in Seattle and EVEN months will be in Federal Way. Meetings are open to all appraisers, so please plan ahead and come.

WEB SITE ENHANCEMENT WELL UNDERWAY

Be sure to see the new pages at <www.acow-wa.org> with new content, links, sidebars and graphics. Some of the new features are links for Individual Member Application and Donation Form < http://www.acow-wa.org/application.html > or < http://www.acow-wa.org/memberapp.pdf >, < Current ACOW Newsletter >, < ACOW Meeting Dates >, and < The Latest With Fannie Mae Forms >. The sidebar on the left takes the user to pages for Home (as above), About Us, Our Purpose, Chapters, Contact Us, Links, Ed Calendar, Individual Membership Application, and Archives. Please send your suggestions for fleshing these out to maximize their utility, and for other site enhancements. Development is ongoing during January, and your input will help make it the more useful to you and others.

HELPFUL HINT

For those of you who work in the City of Seattle and use the “Address Search” function of the now Department of Planning and Development (formerly DCLU) web site, the only/correct way to enter the “Street Name” of “Martin Luther King Jr.” (once “Empire”) Way South at < http://www.ci.seattle.wa.us/dclu/permitdesk/permitinfo/search.asp > is as “M L King” per an e-mail from < dpd.webteam@seattle.gov >. The following is from the web page:

Search Hints:
Enter the property address (above), and click on the Search button. The street name is the only required entry, and it must be an exact match. It does not matter whether you enter the street name in CAPS or not. Although the street number, prefix, type, etc are optional, it is recommended that you use them (to retrieve a more focused set of address results).

Notes:

· Street names must be entered precisely. (e.g. to search for Broad Street, you must enter "Broad", not "Bro" or "BR")

· Numeric street names are entered as "2nd" or "34th", not "Second"

· When the results of the search appear, you may click on the column headers to re-sort the list.

ACOW MATTERS

CHAPTERS , become an active Organization Member. Your participation will benefit your members by strengthening the Appraisal Profession in our state. PLEASE SEND YOUR ACOW DUES ($25.OO per appraiser member, who becomes an Individual Member) for 2002, 2003 and 2004. Thank you to the Columbia Basin, Inland Northwest and Seattle Chapters of AI, and the South Puget Sound Chapter on NAIFA for strong support during 2004. Funding and participation by all appraisers and chapters is the key to a successful ACOW. If your chapter is not listed, or if you are not affiliated with a chapter, you also may become an Individual Member if you are a Certified or Licensed Washington State Appraiser. Aspiring future appraisers are encouraged to register with ACOW by making a similar donation to keep up to date on appraisal matters. Go to < www.acow-wa.org > and click on the new Membership Application form, fill it out and mail it in.

ACOW needs the help of all chapters and individual appraisers with the essentials of Time, Talent and Treasure as we prepare for the future. Please do your part. Remember that our efforts through ACOW have won us an Expert Review Panel, a Commission rather than an Advisory Committee, a Dedicated Account for our fees, and much, much more. There is still a lot of work to do in order to build on these successes. Dues and donations are needed from all appraisers doing business in Washington State.

CHAPTER LEADERS : Please send this newsletter on to any and all of your appraiser distribution lists so everyone knows what is going on. Also, be sure to have a chapter representative attend ACOW meetings.

CHAPTER SECRETARYS : Please send your chapter leadership and membership lists with current e-mail addresses to ACOW at seaop@qwest.net

EVERYONE: ACOW’s mailing list is only as up-to-date as you make it! Postal and electronic mailings can only go to those who keep both ACOW and DOL advised of their whereabouts. Please contact the ACOW Administration Office by E-mail at seaop@qwest.net or by Fax at 206-623-4474 or by Voice at 206-622-8425 or by USPS mail at 6351 Seaview Avenue Northwest, Seattle, Washington 98107-2664 for the detailed information.

ACOW Thanks the sponsor of its Winter and Summer Events, First American Real Estate Solutions < www.firstamres.com > for its gracious support.

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