Appraisal news, discussions, opinions, technology solutions by Real Estate Appraiser bloggers
What is the FDIC Suing Appraisers About? Some Examples of the FDIC’s Specific Allegations?
0May 18, 2012
The FDIC continues to sue residential appraisers in connection with origination appraisals and review appraisals performed for failed lenders between 2003-2009 on loans now in default. It may be helpful, or scary, for appraisers and AMCs to see for themselves exactly what kinds of alleged USPAP violations or other errors the FDIC is claiming in lawsuits against appraisers. Therefore, I have copied below the FDIC’s actual allegations against several appraisers. These are word-for-word the entirety of the FDIC’s claimed errors against these appraiser defendants. Please don’t shoot the messenger. I’m a lawyer, not a USPAP expert, but even I know some of these things aren’t really “USPAP violations” despite the FDIC’s allegations.
The FDIC’s favorite alleged “USPAP violations” or other alleged errors in its most recent cases have been: (more…)
Wake Up Call
1May 17, 2012
Here’s a disturbing trend that the board is seeing more frequently: Appraisers who do not know how real estate works.
What do I mean by that?
There are complaints pouring in where the appraiser doesn’t know how to read contracts, riders, leases, zoning restrictions, blue prints, or listings.
I’m not talking about complex documents or Associate Trainees struggling with their first few assignments.
I’m referring to seasoned professionals who’ve been in the business for five, ten, or even thirty years.
We have complaints where appraisers can’t tell when they’ve been presented with a bogus lease or contract. (more…)
APB Valuation Advisory #3: Residential Appraising in a Declining Market
0May 16, 2012
The Appraisal Foundation is pleased to announce that the Appraisal Practices Board (APB) has adopted “APB Valuation Advisory #3: Residential Appraising in a Declining Market.” The APB is an independent Board of The Appraisal Foundation, which is responsible for developing voluntary guidance on recognized valuation methods and techniques.
APB Valuation Advisory #3: Residential Appraising in a Declining Market, includes guidance on:
- How Should an Appraiser Define a Declining Market?
- What Databases are Available to Support a Market Trend Conclusion?
- What are Some Alternative Value Definitions? (more…)
How Much Do You Charge for a 1004?
1May 7, 2012
Had an interesting email come in yesterday. It came from a friend of mine in the appraisal industry and began with this question, “Care to reveal the minimum fee for a ‘typical’ 1004 + MC in your area?” The message went on to express some concern over some of the shenanigans that was going on in his own area concerning AMCs, low fees, and appraiser’s willingness to sell themselves short. Unfortunately, the same is likely going on in every community (yours included).
Though the question was likely rooted in a simple curiosity, the premise assumes I had a simple answer. I don’t. What is my “floor” with regard to appraisal fees? How low is too low? If I had to answer that question, I guess the response would have to be “free!” Let me explain.
The fact is, I do not have a “I will do an appraisal for this much, but no lower” number. Oh, I have some guidelines for accepting or rejecting orders, but they are based in what is being required of me rather than an arbitrary, ‘lowest-bid’ pinpoint. Every appraisal request I accept has been vetted.
Specifically, I am looking at the following criteria:
- Scope of Work
- Type of client
- How big of a pain in the a** are they to work with? (more…)
Sense is like courtesy it is no longer common!
0May 5, 2012
I dealt with an old question recently that I felt was pertinent and worthy of repeating.
The question arose in Brooklyn, NY when an underwriter demanded that the appraiser include the basement area as part of the gross building area when comparing the subject to the comparable sales.
After all they reasoned, Fannie Mae guidelines, i.e. Property and Appraisal Guidelines, XI 405.07 state, “Gross building area, which is the total finished area (including any interior common areas, such as stairways and hallways) of the improvements based on exterior measurements, is the most common comparison for two-to four-family properties. The gross building area must be consistently developed for the subject property and all comparables that the appraiser uses. It should include all finished above- and below-grade living areas, counting all interior common areas (such as stairways, hallways, storage rooms, etc.), but not counting exterior common areas (such as open stairways).
We will accept the use of other comparisons for two- to four-family properties (such as the total above-grade and below-grade areas as discussed above in Section 405.06), as long as the appraiser explains the reasons he or she did not use a gross building area comparison and clearly describes the comparisons that were made.”; however, within this definition of gross building area was the appraiser’s response. Although the “appraisal gods’ have clearly mandated that gross building area must include the area below grade, this only applies when this space is also generally included by the market area.”
The basic problem, as I see it, is that (more…)
Cert 22 With a Twist
1May 2, 2012
I’ve written about this before but it’s well worth repeating. Please keep in mind, this is and has been the position of the Illinois board.
If you appraise a property for Client A, and two years later, Client B wants you defend your report, you’re not required to answer their queries about the report created for Client A.
What if Client B threatens to blacklist you for not cooperating in the review?
When does the client relationship end with Client A?
USPAP states: An appraiser must protect the confidential nature of the appraiser-client relationship.
That seems clear enough. So, who is the client?
Again, USPAP defines client as: the party or parties who engage, by employment or contract, an appraiser in a specific assignment.
What if Client A is merged into or is purchased by Client B? (more…)
Petition Opposing Coercive and Abusive Behavior of Chase Bank and Other Lenders Against Appraisers
5April 23, 2012
Please consider signing the online petition launched by John Dingeman opposing the coercive and abusive behavior of Chase Bank and other lenders against appraisers.
Stop Intimidating, Threatening, and Bullying Appraisers
Chase Mortgage Banking, like other financial institutions have come into possession of appraisals where a loan has been assigned or sold to them. If Chase had any issues with these appraisals during the underwriting process when the loans were written, they would have asked the appraiser’s “Client” for clarification, explanations, and/or corrections.
With every foreclosure, Chase is scrubbing each and every one of the appraisals in an attempt to place blame on a loan gone bad on someone else, instead of acknowledging their culpability in greed. Chase is sending out non-registered mail and alleging that USPAP (Uniform Standards of Professional Appraisal Practice) violations occurred and are asking the appraiser to reconcile the violations, explain their appraisal methodology, and discuss with them the value conclusion. If the appraiser does not comply, Chase is threatening the appraiser with placement on their Ineligible Appraiser List and a formal complaint to the respective appraisal board. (more…)
Memorandum to Kentucky Registered AMCs Regarding Appraiser Independence, Objectivity, and Impartiality
2April 18, 2012
From: Larry Disney, To: Kentucky Registered Appraisal Management Companies and Credentialed Appraisers, Date: March 29, 2012
Subject: Appraiser Independence, Objectivity, and Impartiality
The Kentucky Real Estate Appraisers Board staff has received calls from Kentucky credentialed appraisers in the past two weeks concerning the following issue that is being propagated by Appraisal Management Companies:
When appraising one unit residential properties and reporting the results of the appraisal development using a 1004 Fannie Mae form, the appraisers are told that if the cost approach is developed and reported, regardless of reasoning, the appraiser shall not consider the opinion of value developed via the cost approach when reconciling the final opinion of market value.
The appraisers tell the staff they have been instructed to insert “only” the value opinion developed in the sales comparison approach within each of the following 1004 form fields, 1) page 2 of 6, value indicated by the sales comparison approach, 2) page 2 of 6, the reconciled opinion of market value at the bottom of the page 2, and 3) the bottom of page 6 of 6. (more…)
Real Estate Appraisers Blacklisted by Banks Fight Back
1April 16, 2012
PHOENIX (CBS5) – Mortgage lenders and big banks share much of the blame for this country’s housing crash. So you would thing that they have learned their lesson after cheating the system with bad loans and shady business practices. But Jason Barry has uncovered a whole new way banks aren’t playing by the rules.
Clay Gregory is a Valley home appraiser who is spending a lot of time at home these day, but it’s not by choice.
”I was put in a position where they pretty much demanded information from me or they were threatening me not to use me anymore,” Gregory said.
Gregory claims he’s been blacklisted by Chase Bank, making it extremely difficult to find work. The appraiser told CBS 5 News that Chase sent him a letter a couple months ago demanding data on an old appraisal and citing possible violations. Chase apparently needed information on the home which they were buying back from a foreclosure. The only problem was Gregory would be breaking state and federal law by sharing info with Chase because the bank was not the one that hired him.
Fannie Mae Updates Uniform Appraisal Dataset (UAD) Appendix D
0April 16, 2012
Fannie Mae released an updated version of Appendix D of the Uniform Appraisal Dataset (UAD).
Updates include:
- Date 2/18/2011, Version 1.1, Minor formatting changes
- Date 8/11/2011, Version 1.2 Updates:
- Added additional clarity in Introduction and Purpose and Overview Sections
- Added notation in multiple sections that additional Information can be provided elsewhere in the appraisal report
- Added clarification to Overall Condition rating (more…)
TAF Response to Columbia Institute eVIP Appraisal News
0April 12, 2012
in AI, American Society of Appraisers, APB, Appraisal, Appraisal Institute, Appraisal News, Appraisal Organizations, Appraisal Subcommittee, Appraisers News, AQB, ASA, ASC, NAIFA, NAR, National Association of Independent Fee Appraisers, National Association of Realtors, The Appraisal Foundation, The Appraisal Practices Board, The Appraiser Qualifications Board
April 6, 2012, Mr. George Harrison, The Columbia Institute
Dear Mr. Harrison:
This is regarding an item that appeared in the “Ask George” column in the April 2 edition of eVIP Appraisal News.
The question and answer relates to Appraisal Sponsors of The Appraisal Foundation apparently being under some type of constraint regarding freedom of expression. You have made a similar claim in a previous column and we thought that it was time to correct the record.
You state that “The Appraisal Foundation has a restriction clause–gag rule–in its sponsorship/membership agreement that any sponsor may not publicly criticize the Foundation.” This is absolutely untrue. We simply ask that if any Sponsor has a concern about the Foundation and its activities, that the Sponsor (more…)
If You Want to Stop Crime, Make it Against the Law!
1April 11, 2012
If you want to stop crime, make it against the law! It is this type of thinking that has made it increasing difficult for honest appraisers, while providing a buffer for the true criminal that seeks to manipulate the system. Is it really as simple as the best appraiser is the one who is always on time, always fills out the form according to UAD, and never strays from a Fannie Mae guideline? The report reads clean, passes review and never makes the slightest ripple when place in the loan pool, so how could it be wrong? (more…)
We Need More Regulations?
0April 10, 2012
“There oughtta be a law!” This is the typical rant from well-meaning Americans who feel they have been wronged in some way. In some cases, they may be right. There is a place for government and there are a reasons for regulations. The problems is, we have too dang many of them!
Appraisers of any walk are usually the first ones to complain against excess government overreach. Yet surprisingly, they can also be the first ones to call for more when it appears to be in their favor. Take a recent thread I was reading on a popular appraiser web forum. “Should it be a requirement that all reviewers be licensed appraisers and have access to local MLS data?” The question was followed by a whole slew of support for such a mandate. Now, I am not going to take the time to analyze the pros and cons of such a measure (maybe another column, another day), but I do believe the issue of increased regulation warrants discussion.
There is not a soul among us who is unable to see the benefit to our industry and society in general for laws and enforcement procedures to limit fraud and deception. The fact that another individual has no right to do appraisal reports and sign them in your name is, of course, a good thing. There should be recourse available for those who have been on the short end of the stick regarding contract agreements. There may even be room for discussion regarding certain, reasonable barriers to entry. However, asking for Congress to pass another law (more…)
Top to Bottom: Complaint Primer
0April 4, 2012
Howard Richter, MAI of IACREA made a great suggestion for an article.
“Why don’t you write about the complaint process from start to finish?”
Okay, Howard. Let’s do it!
Whether complaints come from homeowners, lenders, AMCs, other government entities, they all find their way to my desk via Complaint Intake.
The two-page complaint form is on-line and was designed to make it easy for the complainant and for the Department to get to the heart of the problem. (more…)
Where To Direct Questions and Comments Regarding Customary and Reasonable Fees
0April 2, 2012
The appropriate agency to receive your concern about a creditor’s compliance with the Truth in Lending Act (TILA), including the requirement for the creditor or the creditor’s agent (including an AMC) to pay an appraiser a customary and reasonable fee, is the agency that enforces TILA with respect to the creditor. With respect to insured depository institutions of more than $10 billion and their affiliates, the Consumer Financial Protection Bureau (CFPB) is the appropriate agency. For other non-depository institutions, the appropriate agency to receive the complaint is the CFPB or the Federal Trade Commission. There are two websites that you can use to find the federal regulator for a creditor that is an insured depository institution of $10 billion or less: (more…)
