Appraisers and Trust ~copyright AppraisersBlogs

Appraiser and Client Trust Factor

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Relationships are important.  The bonds we form with a spouse, children, friends, or business associates can be powerful and a strength.  When trust is broken, however, deep challenges emerge.  Divorce, separation, or permanent dissolution can be the end result when someone’s integrity is on the line.  The trust factor between an appraiser and the client is essential if professionalism and continued business is to be amicable.

Last month, I wrote an article about taking drive-by and comp pictures.  The comment boards lit up.  Most appraisers agreed with me (for a change), but many did not.  I read every comment and have spent some time thinking about the insights and opinions of so many appraisers.  The question that keeps haunting me is, “why?”  Why are pictures required in the first place?  I think there are two, equal answers.  One has to do with clarity, and the other has to do with trust. (more…)

Historic meeting State Appraiser Organizations

Historic Meeting of State Appraiser Organizations

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Representatives of several independent state professional appraiser organizations met in Chicago, Illinois on Saturday October 11th, to further discuss collaboration on issues affecting their membership. The network, which started as a conversation among three State appraiser organizations less than a year ago, now comprises 16 such State Organizations which is expected to continue growing.

The group, which functions as a network rather than a formal organization is unique in its focus and operation. The network has no single elected leader but is comprised of leaders from each participating state organization; it is self-governing by consensus. Participating organizations do not pay dues and market no products. The network has a single overarching purpose: to improve and elevate the appraisal profession. (more…)

Excited about working for an Appraisal Management Company

Can You Tell I’m Excited About Working for an Appraisal Management Company?

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Today I received a notice telling me my best customer was changing over to an AMC for all their appraisal ordering. I have worked for this company for many years and have always enjoyed a great relationship. Today that ended. I can longer talk to any person at the bank.

In my application to continue working for this company I have worked with for so long, I have to provide sample reports, a resume, three business references, license info, info about CE classes I have taken. I have to sign to agree to new terms which completely change the way I get paid, how much I get paid, how long it takes to get paid, the amount of comps within my reports, agree to provide them pretty much anything they ask for within 24 hours, give them permission to make deposits and withdrawals from my checking account (in case they make a mistake or I don’t do something they ask), and basically give them more power (more…)

Customary & Reasonable Appraisal Fee Study ~ copyright AppraisersBlogs.com

Virginia Study on Customary & Reasonable Fees for Residential Appraisals

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BLACKSBURG, Va., Oct. 7, 2014 – Virginia Tech researchers and students conducted a survey of Virginia residential real estate appraisers to analyze the patterns of fees earned in 2013. Prior to the release of this report, no data existed that defined “customary and reasonable” residential real estate appraisal fees in Virginia.

This report is the third report of its type to be conducted in the United States, and the first in Virginia.

The research was conducted in response to recent amendments to the Truth in Lending Act modified by the Wall Street Reform and Consumer Protection Act, also known as Dodd-Frank. This legislation requires lenders to pay appraisers a “customary and reasonable fee” for residential real estate appraisal services in their geographic market. (more…)

Can you prove your adjustments ~copyright AppraisersBlogs.com

Adjustments- Your Opinion Doesn’t Count

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Regulations state that appraisal adjustments cannot be based upon an appraiser’s opinion. According to federal and state law, adjustments must be based on support and evidence- proof if you will, and an appraiser’s opinion is not considered to be “support.” Many appraisers have failed to support their adjustments and as a result have had their licenses revoked, penalties assessed and lawsuits lost, all because the they failed to understand a single but important requirement.

Think about your appraisals. Are the adjustments based on your opinion or do you have proof of the adjustment in your workfile? If your workfiles are reviewed by the state or as part of an investigation or lawsuit, would you have “the right stuff” or fail the test?

When I first got into the appraisal business, the person training me handed me a sheet of paper that listed all of the adjustments I was going to need to complete an appraisal. I bet this sounds familiar to many appraisers. I was also a real estate agent specializing in selling new homes, so I knew what builders were charging for add-ons like a kitchen upgrade, extra bathroom or garage. So between what I was told to use and what I knew builders were charging: “Of course I know what the adjustment should be- $2,500 for a bedroom, $2,500 for a bathroom, $3,500 for a garage and $500 for a fireplace. We are all in agreement…..right!?!” (more…)

Declaration of Appraisal Independence

Declaration of Appraisal Independence

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Real Estate Appraisers of America: Declare appraiser independence by prohibiting lenders from having any ownership or stake in the real estate appraisal process.

This declaration of the real estate appraisal workers of the United States of America and those who stand together with the appraisal industry is made subject to the understanding that commercial and financial events guide growth and development of society, and that financial products and services are integral to the necessary and successful health of our citizens.  It is further understood and recognized that the fair and independent valuation of underlying assets backing financial products are critical to investors, borrowers and all others who rely upon the safety and soundness of these financial products.

United we hold truths and beliefs, that all men and woman in their pursuit of life, liberty and happiness, must preserve their unalienable rights to buy a home, borrow money, invest in financial instruments, and plan for retirement without fear that their life savings are being exposed to unnecessary and preventable risk.

To secure these rights, it is necessary (more…)

Closet or room ANSI

When Does a Closet Become a Room?

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In most cases, interior closets are included within the total finished square footage. But, when the closet measures 12 x 20, and does not have any heat/air ducts; is it a closet or is it really a separate unheated room? Should it be counted in the total finished square footage, or should it be included within the unfinished category? According to ANSI®, the space must be heated and cooled by a central HVAC system and a closet typically serves a specific bedroom/space. If you really look through ANSI® there is not an answer to this question and like much about measuring square footage, “it depends” applies. Depending on the agent or appraiser that measures the space, it may (or may NOT) be included within the total square footage. Since it’s not specifically addressed in our “standard,” who can say for sure? But, according to the intent of the rule, if a closet is that large and does not have an HVAC vent, it is really not a fair comparison with other spaces that should be included within the heated/cooled living area.

So, when is a closet a room? (more…)

Drive by comp pictures and Appraisers

Drive By Comp Pictures and Appraisers Safety

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I posted the following true (and scary) experience on Facebook a few days ago:

“I just had to file a police report. I was taking a picture of a house from the street for a drive-by pre-foreclosure. The owner ran out of the home and stood in front of my car. He demanded to know what I was doing. He walked around to the driver’s window, and I calmly explained to him that I was taking a picture for the bank. He got very verbally abusive and demanded to know why. I told him it was confidential. He demanded that I hand him my camera. Of course, I refused. Because I was afraid it would get physical, I drove away at that point. This is not the first time I have had such an altercation.”

I have heard many, many stories from my fellow appraisers similar to this one. A colleague of mine was taking comp pictures in a less-than-desirable neighborhood, was chased for blocks, cut off, and held at gunpoint till he (more…)

MLS no reported sales ~ copyright AppraisersBlogs.com

There are no reported sales! Now what?

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How many times have we, as reviewers, heard the following: “But there aren’t any sales within the subject’s development.” Or, “But the subject is the finest house in its development.” Of course there are rare instances when this is true; however, even in the instance where there are no sales that have taken place in the subject’s development within the last 12 months, the appraiser should be able to show sales at some previous point in time if the development is not newly developed. New construction appraisals will be a topic for a future post, but for the sake of this discussion I am going to focus on well established developments.

Oftentimes appraisers will find a property that has been improved beyond its development, or will be faced with valuing a home that is located in a development where there has been no market activity in the last 12 months. First, we will address the non-conforming property appraisal, then we will address an appraisal in a stable market. (more…)

HUD Blacklisting Guilty

HUD Blacklisting: Guilty Until Proven Innocent

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Being on HUD’s FHA Appraiser Panel and performing FHA appraisals is an essential source of work for many appraisers. However, according to a recent legal brief filed by the National Association of Appraisers (NAA), HUD has been quietly blacklisting appraisers for years without due process.

At the center of the case against HUD (U.S. Department of Housing and Urban Development) is Ken Taggart, an appraiser in Penn., who was removed from HUD’s roster in January 2010. Taggart says that his mortgage servicer, GMAC Mortgage, LLC, mistakenly forclosed on his FHA-insured mortgage. Since then, Taggart says HUD blacklisted him without due process to appeal the decision, effectively cutting off FHA work and threatening his livelihood.

Taggart is currently suing HUD and vowing to fight until he is restored to the FHA roster. In addition to clearing his name, he hopes HUD will change its policies to ensure that other appraisers receive due process.

Foreclosure and CAIVRS

Taggart had an FHA-insured mortgage serviced through GMAC Mortgage, LLC. He alleges that GMAC erroneously (more…)

Real Estate Market Collapse

Are the Inmates in Charge of this Asylum?

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What really caused the real estate market to collapse?

While much has been written about the multitude of complex reasons behind the collapse of the real estate market in 2007, it is the opinion of this writer that there is one primary reason for the collapse. Simply stated, banks loaned money to borrowers who lacked the ability to pay back the loan. That’s it, pure and simple. If you loan money to someone who has no resources to pay back your loan, you will lose money almost every time and it matters very little if you have any collateral for the loan. This should be known as the prime directive: “Thou shall not loan money to someone who cannot pay you back.” There certainly are many other reasons behind the collapse, but if the “system” had not violated the prime directive the collapse would not have been so sudden, so precipitous, and so prolonged

If it makes you feel any better, the list of characters that also deserve some of the blame is as long as my arm (34” sleeves). This list includes, in no particular order:

  • Elected officials who thought the banking system should loan money to anyone who wanted to buy a house plus many who did not. Some of the housing bills passed by our elected “leaders” were tantamount to acts of treason.

(more…)

Comments on USPAP Changes

Comments Requested for Additional Proposed 2016-17 USPAP Changes

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The Appraisal Foundation’s Appraisal Standards Board has issued a third exposure draft of proposed changes to its 2016-17 edition of the Uniform Standards of Professional Appraisal Practice, and is seeking feedback on the proposed changes by Oct. 10.

Among the proposed changes is an adjustment to the definition of report, which currently is defined as “any communication, written or oral, of an appraisal or appraisal review that is transmitted to the client upon completion of an assignment.” The proposed definition would read “Any communication, transmitted to the client or to a party authorized by the client, of an appraisal or appraisal review that includes a signed certification.”

A modified recordkeeping rule would require appraisers to track communications with clients prior to report submissions and keep those communications (more…)

Fees for complex appraisals

Utah Study on Customary & Reasonable Fees for Residential Appraisals

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An online survey of both Utah mortgage lenders and Utah licensed and certified residential real estate appraisers was conducted to discover customary and reasonable fees for residential appraisals throughout Utah for 2013. Federal regulation pertaining to customary and reasonable fee studies specifically “excludes compensation paid to fee appraisers for appraisals ordered by appraisal management companies.” Therefore, this study does not include appraisal fees paid by appraisal management companies to Utah appraisers.

Two surveys, one for lenders and one for appraisers, were prepared to capture the unique demographic and background information of each group; however, the questions pertaining to appraisal fees (more…)

HVCC impact study discussion - Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Impact of the Home Valuation Code of Conduct on Appraisal and Mortgage Outcomes

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During the housing crisis, it came to be recognized that inflated home mortgage appraisals were widespread during the subprime boom. The New York State Attorney General’s office investigated this issue with respect to one particular lender and Fannie Mae and Freddie Mac. The investigation resulted in an agreement between the Attorney General’s office, the government-sponsored enterprises (GSEs), and the Federal Housing Finance Agency (the GSEs’ federal regulator) in 2008, in which the GSEs agreed to adopt the Home Valuation Code of Conduct (HVCC). Using unique data sets that contain both approved and nonapproved mortgage applications, this study provides an empirical examination of the impact of the HVCC on appraisal and mortgage outcomes. The results suggest that the HVCC has reduced the probability of inflated valuations and induced a significant increase in low appraisals. The HVCC also made it more difficult to obtain mortgages in the aftermath of the financial crisis. (more…)

CFPB fines lender AMC

CFPB Fines Lender, AMC for Inflated Appraisal Fees

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The Consumer Financial Protection Bureau announced Aug. 12 that it fined mortgage lender Amerisave Mortgage Corp., its affiliate, Novo Appraisal Management Company, and the organizations’ collective owner, Patrick Markert, $19.3 million for allegedly luring prospective borrowers with misleading interest rates and trapping them with inflated appraisal fees.

The CFPB claimed that the lender and its affiliated AMC violated the Truth in Lending Act and Real Estate Settlement Procedures Act by enticing tens of thousands of borrowers with deceptive advertising and then illegally overcharging them for third-party services. (more…)

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