The Appraisal Foundation’s Appraisal Standards Board (ASB) released a pair of advisory opinion exposure drafts last week for appraiser comments. The first advisory opinion relates to “Performing Evaluations of Real Property Collateral to Conform with USPAP.” The issue was prompted by the federal financial regulatory agency, which issued updated Interagency Appraisal and Evaluation Guidelines in December 2010. 

At that same time, the ASB was already in the process of exposing revisions for the 2012-13 edition of USPAP. The ASB was unable to consult with the Interagency Work Group to develop updated guidance (i.e., AO-13) based on the new guidelines in time to include it in the 2012-13 publication. The ASB has since consulted with the Interagency Work Group and released the draft of an updated AO-13. 

It deals with the question: How can an appraiser operating under the USPAP develop and communicate a valuation of real property collateral that complies with the Interagency Appraisal and Evaluation Guidelines?

Relevant sections include the definitions of “appraisal” and “appraiser” in USPAP. Additionally, the Scope of Work Rule stated in part, “Appraisers have broad flexibility and significant responsibility in determining the appropriate scope of work for an appraisal, appraisal review and appraisal consulting assignment.”

Read the Exposure Draft of Proposed Changes to Advisory Opinion 13 (AO-13), Performing Evaluations of Real Property Collateral to Conform with USPAP, for a full breakdown. All comments are due by March 22.

In the second advisory opinion, the ASB sets its sights on USPAP compliance, specifically the recently adopted USPAP changes by the ASB. Additionally, the board is currently considering changes to Advisory Opinion 21, USPAP Compliance, that, if adopted, would be included in the same publication.

The ASB’s work plan for the 2014-15 edition of USPAP included reviewing and revising as needed the following areas of USPAP:

- Reporting and Communication Requirements
- Reporting Options
- Retirement of STANDARDS 4 and 5
- Other revisions and additions as needed to ensure clarity and relevance.

The Board adopted revisions for the 2014-15 edition of USPAP at its public meeting in San Francisco on Feb. 1. However, the board decided to revise and re-expose the changes to Advisory Opinion 21. Any revisions would become effective simultaneous with the recently adopted changes to USPAP on Jan. 1, 2014.

At its Feb. 1, public meeting, the ASB voted to retire Standards 4 and 5, which address Real Property Appraisal Consulting Development and Reporting. The purpose of an assignment under Standards 4 and 5 is to develop, without advocacy, an analysis, recommendation or opinion where at least one opinion of value is a component of the analysis leading to the assignment results.

The impact of retiring Standards 4 and 5 is that any additional opinions or recommendations included within appraisal or appraisal review assignments will still be subject to the Ethics Rule, the Competency Rule and the Jurisdictional Exception Rule. Effectively, most assignments that are currently appraisal consulting will become either appraisal or appraisal review assignments with additional components. Those additional components remain a part of appraisal practice.

The ASB recommended referencing the line number in all comments to fully explain the reasons for concern or support, provide examples or illustrations, and suggest any alternatives or additional issues that the ASB should consider.

Read the Exposure Draft of Proposed Changes to Advisory Opinion 21 (AO-21), USPAP Compliance for all the changes. Any comments are due by March 25.