The VA appraisal process is different from other appraisal types. A term that strikes fear is when the VA appraiser invokes the Tidewater Initiative. Realtors, buyers, sellers, and lenders worry about the purchase falling apart. But if everyone moves quickly enough, the Tidewater process could be a good thing.
What is the Purpose of Tidewater Initiative Process
The Tidewater process has been in existence since 2003, but was just re-affirmed by VA on 7/19/2017. This was updated in the VA circular 26-17-18 which describes procedures for improving communication with appraisers. So the main purpose of this procedure is to allow and improve the communication during the VA appraisal process. Additionally, since the Tidewater Initiative happens prior to finalizing the appraisal report, it limits the amount of requests for appraisal rebuttals. Conversely, appraisal rebuttals occur after the appraisal is turned in. So, at least Tidewater gives interested parties an opportunity to provide information prior to appraisal completion.
What Does It Mean When a VA Appraiser Invokes the Tidewater Initiative?
When the buyer of a property uses a VA home loan, the appraisal process is a little different than other mortgage types. The biggest difference is that lenders do not order the appraisal directly with appraisers. The Lender will request the appraisal through the Veteran Administration’s online portal. Then, VA assigns the appraisal request using a rotation system of VA approved appraisers. VA looks to have approved appraisers in each county or area.
One of the other differences involves the process when the appraisal is going to be potentially short of the purchase price. Typically if the appraised value is going to be short of the purchase price on anything other than VA, the appraiser just sends the completed appraisal back to the lender. Then if there is a disagreement in value, it is possible for someone to provide additional sales or information to rebut the appraisal. Appraisers are humans and occasionally there is information they may not find. So it is possible that additional information provided through the rebuttal process could increase the value. Each lender’s appraisal rebuttal process could vary slightly, but some lenders will not allow rebuttals.
Notification Appraisal is Short
The VA appraisal process provides an extra step which is helpful in cases where the value is coming up short of the price. That is where the Tidewater Initiative comes into play. If the VA appraiser feels the value may be short of the purchase price, the lender contact is notified. The appraiser states that he/she is “invoking the Tidewater Initiative”. This Tidewater process is a very formal and specific one.
Typical Tidewater Process
If the VA appraiser feels the value may be short of the purchase price, then the Tidewater Initiative is invoked. This process typically looks like the following:
- Appraiser provides Tidewater Notice to lender’s designated point of contact (POC)
- Details of the request are provided to POC
- Point of Contact notifies Realtors of the Tidewater Initiative notification
- POC has 2 working days to return any additional information to the appraiser
- Appraiser is not at liberty to discuss contents of the appraisal
- Additional information is reviewed by appraiser
- Completed appraisal is uploaded to the VA portal
- Lender POC is notified of the completed order
- Lender’s VA underwriter performs a review of the appraisal and completes the Notice of Valuation (NOV)
- Appraisal is provided to the Veteran
If additional comparables are provided, then there are specific requirements of the process. Typically the real estate agent is the one providing the comparables.
Requirements of Additional Comparable Sales Provided
- Provide within 2 working days
- Must be in format similar to comparable sales grid on the appraisal report
- Verification the sale actually closed
- Pending sales contracts used to support a time adjustment must include all contract addendums
- Brief narrative describing similarities or differences in pending sale and subject property
Hopefully this has provided helpful information to better understand the Tidewater process. Just a reminder, in some areas a VA appraisal can take a bit of time. Lately, most VA appraisals are taking quite a while to get back because of the high number of orders. Although the delays are also caused by a lack of approved appraisers in many areas. So, good advice is to allow extra time and to order the appraisal early on VA purchases.
Author: Russell Smith
Team Move OVM Financial loan officer success is Russell’s primary focus. He provides the tools and techniques he used as a top producing loan officer. Additionally he offers the Team Move OVM Financial Agent Training Program. Sharing is so important to Russell so he works diligently to be a resource to loan originators and Realtors.