We all got gut punched by Andrew Cuomo’s HVCC, the most of which were the appraisers. Well now the shady truth about it’s conception is here.
HVCC. We all remember it. Basically is was a total drag. Unless you owned a huge AMC that is. Which by the way virtual all the banks did. It was totally counter productive to the industry and real nuclear bomb to our collective equity as a nation. Well as it turns out, one of Cuomo’s buddies actually got the ball rolling on it as long has he and his company got total immunity, which they did, then he helped Cuomo structure it all so the bank clients he represented made out like champs by forming their massive AMC’s. Yeah, that’s basically it. So the whole thing was a big good-ol-boy love fest that continues to create problems with appraisals today. So tune in (more…)
Even today there is undue pressure being put on appraisers to make loans work. All the new regulations in the appraisal industry did nothing for the bullies who work for AMC’s now. It’s sad to hear veteran appraisers talk about the way they were disrespected and treated unprofessionally, and how they are making plans to leave the industry. It happens every day in appraisal forms and blogs all across the country. The bullying and intimidation is as bad now as it ever was before.
This would never happen in any other industry and there is obviously a huge discrepancy between how appraisers are trained and what the mortgage industry expects from them. Appraisers are taught from day one; protect the buyer, lender, and mortgage investor. Make sure the value is fair to the best of your ability. 100% imbedded in every appraiser’s brain; be ethical and fair, you are there to protect the public and are influencing large financial investments. Then they discover this is NOT what lenders want. They might say they do in public, but their day to day business operations tell another story. The lenders and AMC’s (who pay the appraisers) often could care less if the loan is secure, not their problem. Make the loan, get paid, and let the next guy worry about it. Sound familiar? (more…)
If you were an appraiser looking for more work, this year’s Valuation Expo at the Flamingo Hotel in Las Vegas, June 23-25, was a good place to find it. Attenders included many product vendors, AMCs seeking appraisers, and representatives from agencies such as HUD and the VA.
Four sessions were offered for CE credit: “Keynote – panel of government and GSE representatives,” “Alternative Valuations,” “Valuation Visionaries,” and “Regulatory Compliance.”
In this month’s newsletter, I’d like to share some of the information covered by the Keynote panel: David Bunton of the Appraisal Foundation; Robert Murphy of Fannie Mae; Robert Frazier of the FHA; and Gerald Kifer of the VA.
Up first, Bunton shared information from the Appraisal Foundation, under which are all of the following: (more…)
How many times have you had this comment from someone who knows relatively little about the appraisal process, “I am not so sure about you appraisers. Seems like every time there is a purchase transaction needing an appraisal, you come in just above the purchase price. If the house is selling for $200,000, you come in at $202,000. If it is selling for $450,000, you come in at $460,000. Seems a little rigged to me.” Ever had a client get really upset when you asked to see the purchase contract before you begin working on the appraisal? “Well, I don’t want you knowing what the purchase price is. How can you be unbiased and give me an honest appraisal if you know what they are buying it for?”
To the ignorant (and I mean that in the most gentle of ways), these are legitimate questions. To a trained real estate appraiser however, looking at and even analyzing the contract in detail as part of the appraisal process is necessary in order to complete a credible report. In fact, the Uniform Standards of Professional Appraisal Practice (USPAP) REQUIRES that we do (Standards Rule 1-5a). Why? To answer that question, let’s step back from the trees for a view of the forest for just a minute. What is an appraisal? In layman’s terms, an appraisal is an opinion of value by a qualified professional supported by market data. That is all fine and dandy…if you have support in the market. Now, some appraisers work in metro areas where support for the market is easier. I (and many others like me) work in a more rural market where finding true ‘comps’ are sometimes like finding Big Foot in aisle 13 at the local grocery store. It is times like this that we appraisers (more…)
The Federal Housing Administration on July 31 issued drafts of four new appraiser policy documents that it plans to add to its Single-Family Housing Policy Handbook. The FHA is seeking feedback before the documents are finalized.
The draft documents relate to FHA appraiser eligibility requirements and the application process, as well appraiser responsibilities and compliance actions, eligibility guidelines for appraisers performing appraisals and reporting results, data delivery requirements related to the FHA Uniform Appraisal Dataset and instructions to help appraisers accurately complete FHA appraiser forms.
FHA developed the documents in an effort to provide appraisers a more consistent approach to its policies. Stakeholders can submit comments on the draft policies (more…)
CHICAGO (July 31, 2014) –The number of active real estate appraisers in the United States fell less than 1 percent in the first half of 2014, the Appraisal Institute announced today, lower than the average annual decrease of 2.6 percent over the past six years.
Research conducted by the nation’s largest professional association of real estate appraisers found that as of June 30, the total number of active real estate appraisers in the U.S. stood at 80,500, down from 81,050 on Dec. 31, 2013. A broader analysis suggests the rate of decrease could rise sharply over the next five to 10 years due to retirements, reduced numbers of new people entering the appraisal profession, economic factors and greater use of data analysis technologies, Appraisal Institute research found.
“As appraisers leave the profession (more…)
Alliance Allows San Diego-Based Property Data Service to Offer E&O Coverage at No Additional Cost to Qualified Residential Appraisers0
SAN DIEGO, CALIF. (July 28, 2014) – National Data Collective (NDC), a San Diego-based property data company serving real estate professionals, announced today that it has formed a strategic alliance with CRES Insurance, LLC, a leader in protecting the real estate industry with risk management services and insurance solutions.
NDC offers a subscription-based data service to appraisers, providing access to a database of full property profiles, assessor records, deed history and comp reports for more than 130 million properties nationwide. NDC has joined forces with CRES to provide its customers with Appraiser One, a product that allows appraisers to get their data and E&O together for one low price. Through the partnership, appraisers who purchase a subscription to NDC data will receive E&O coverage from CRES at no additional cost. (more…)
- Most AMCs are small companies. 86% have annual gross revenue less than $10 million. Conversely, 13% have annual gross revenues of over $50 million.
- AMCs are more frequently adopting a “cost plus” pricing model for their services. This means they charge a separate fee for their service and are transparent about their fees paid to an appraiser. (Note: Arizona Appraisal Statute requires appraisers to disclose the fees they have been paid by an AMC in the Scope of Work section of the appraisal).
- 35% of the AMCs surveyed (more…)
This is a list of USPAP violations most commonly encountered by the Texas Appraiser Licensing & Certification Board’s staff appraiser-investigators when investigating complaints filed with the Board. This list is given for informational purposes only and does not constitute legal advice or instructions on how to properly comply with USPAP or properly complete an appraisal assignment.
Most Commonly Encountered USPAP Violations:
- Sales Comparison Selection of Comparable Properties. Failing to select and/or support the selection of comparable sales using recognized methods and techniques. Examples include:
- Leaving the subject’s neighborhood when sales data is readily available in the immediate neighborhood;
- Searching by price;
- Utilizing sales of superior quality, superior site characteristics, and/or superior amenities when more similar sales to the subject were readily available; and
- Lack of documentation (more…)
July 25, 2014, the immunity clause and HB2339 will go into effect. Already there have been serious results that will impact appraisers in the future.
To bring you up to date:
House Bill 2339 was proposed by the Arizona Board of Appraisal and contained changes to the State Statutes. These changes included:
1. Immunity for Board members who are appraisers and staff members who are appraisers from any complaints filed against them for any of the USPAP rules except the Ethics Rule. In other words, they could be incompetent or negligent and get away with it. They could make statements in meetings about value but could not be held accountable under the Scope of Work Rule or the Record Keeping Rule. The immunity clause is a Jurisdictional Exception under USPAP. Have you ever met an appraiser who was incompetent but ethical? (more…)
Legislation that would clarify several aspects of an Illinois law governing broker price opinions and comparative market analysis has passed the state legislature and currently is under consideration by Gov. Pat Quinn, the Appraisal Institute reported July 23.
SB 3044 adds definitions of both BPOs and CMAs to the state’s Real Estate Appraiser Licensing Act and its Real Estate Licensing Act, and clarifies when and how BPOs and CMAs may be performed by brokers and managing brokers.
The bill was sent to Quinn June 27, and he has 60 days to take action.
According to the Illinois Coalition of Appraisal Professionals, “Defining and regulating these products will protect the public’s trust and reduce consumer confusion.” The bill was supported by ICAP after (more…)
Citigroup will pay $7 billion to resolve claims it misled investors who purchased shoddy mortgage-backed securities that helped lead to the financial crisis six years ago, Reuters reported July 14. The deal includes the largest civil fraud penalty ever levied by the U.S. Department of Justice. The multibillion-dollar settlement is more than twice what many analysts expected but less than the $12 billion the government sought in negotiations with Citigroup.
All those who argue about the causes of the real estate crisis cannot discount yet another billion dollar settlement. Over and over again we see large settlements for mortgage securities fraud, where the problem was not with the appraisals, but (more…)
Very recently, I was presented with an appraisal report that was actually a fourth revision. The appraiser had accurately completed a report and submitted the report for consideration to the lender, then over the next six weeks apparently, was barraged with a continual flow of reconsideration requests and alternative comparables, until the report appraiser finally felt pressured enough not only to re-grid alternative comparables, but also to change the opinion of value by almost 20%. I was involved in a quality assurance review and, fortunately for the appraiser, was able to reject the revision that could have ultimately placed the lender in a very bad position and placed the appraiser in jail for a report that was very misleading.
What led to this place of dark descent? (more…)
At least one appraisal management company (AMC) put a new accent on appraising by having the point of contact be in another country—specifically, a call-center in India. According appraiser Bill Streep, this is how the conversation went:
Bill Streep: “Hi, this is Bill.”
AMC Staff: “HELLO! Bill. Could I please speak to Villiam?”
Bill Streep: “This is Bill.”
AMC Staff: “Yes, Bill. I need to speak to Villiam.”
Bill Streep: “My name is Bill, it’s short for William.”
AMC Staff: “Yes… (insert long pause) Could I please speak to Villiam?”
Bill Streep: “This IS William.”
AMC Staff: “No, this is Bill. I need to speak to Villiam.”
Bill Streep: “Hang on…” I set the phone down and shuffle some papers around.
Bill Streep: “Hello, this is William.”
AMC Staff: “VILLIAM! HELLO!”
Bill Streep: CLICK.
While the above story is funny, wasting time and money are not. Ever since AMCs gained prominence, appraisers have lamented having to deal with inexperienced AMC staff who have little or no (more…)
As I write this, I am watching my two youngest children as they participate in gymnastics. It is a Friday afternoon and most of my peers are sitting in a cubical somewhere. We have had a very busy week, but all has gone smoothly and my assistants are just wrapping up a few loose ends before the weekend. Sometimes I have to step back, shake my head, and say, “Wow, I am very blessed!”
As I lurk the various online appraisal forums, I see a whole lot of discouragement. Rightfully so. We as appraisers have experienced a lot of change over the past few years. Many of us built up a business empire only to have it washed away practically overnight with HVCC and Dodd-Frank. Some of us have restructured and have been able to see a resurgence, but not everyone. “Requirements are up and fees are down (more…)