TAF / ASB Challenge USPAP

Michael Ford

Michael Ford

General Certified Real Estate Appraiser at Michael F. Ford Appraisal
Over 28 years appraising all property types and interests, in Southern California real estate. VP/Chairman National Appraiser Peer Review Committee, American Guild of Appraisers, #44OPEIU/AFL-CIO. - Michael Ford on e-AppraisersDirectory
Michael Ford

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TAF Admits Current USPAP Is Inadequate & Requires Substantial Change30 days after implementation of the last changes, ASB/TAF is already admitting they think the current USPAP is inadequate and requires substantial change.

They’re ALREADY Doing It Again!

On January 30, 2018 the Appraisal Standards Board announced the release of their Discussion Draft for the 2020-2021 USPAP based in part on a survey from 2017 & prior draft comments.

I’m confused. Didn’t we just have the 2018-2019 become effective 30 days ago? Should all those that have not yet purchased 2018-2019 just save their money and wait for the significantly revised 2020-2021 revisions? Rely on word of mouth and online excerpts in the meantime?

Doesn’t logic dictate that concerns so pressing as to require revisions to USPAP in order “to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers” would have incorporated the 2017 identified ‘needed’ changes in the 2018 draft versions of USPAP?

Thirty days after implementation of the last changes, ASB/TAF is already admitting they think the current USPAP is inadequate and requires substantial change.

Houston, we have a problem. Any ‘high level of public trust in appraisal practice’ left the building a long time ago. TAFs efforts in promoting a high level of trust are and have been an abysmal failure.

You cannot maintain high levels of anything when that high level (of trust) disappeared almost a decade ago. Nothing meaningful was done to regain it. Remember the 2008-2009 economic collapse anyone?

Remember HVCC? Remember that Countrywide and WAMU (combined) had over half a million identified appraisals where 90% failed to conform to USPAP; and 95% to 97% were identified as being grossly deficient?

What specifically did The Appraisal Foundation (TAF) or Appraisal Standards Board (ASB) do from 1991 until 2007 to prevent that collapse?

Seriously, what has TAF achieved in the past fifteen years that remains in effect today that either preserved or promoted public trust in appraisal practice?

We know that they chased after including a lot of other (often unlicensed) and unregulated appraisal disciplines under USPAP. Despite there being no mandate under FIRREA to do so.

We know that they have pursued adoption of international valuation standards, although again, there is no requirement or mandate under FIRREA to do so.

They have taken the original excellent qualifications and tweaked them to the point that appraisers have left the profession because they saw no practical path to advancement anymore; or even ability to move to other states without finding new professions or other fields of employment.

TAF has reached out to the lenders burdened under FIRREA to advocate for reduced interpretation of standards, or at least clarification that was/is so convoluted and unrealistic that those same lenders felt comfortable routinely creating conditions that violated them.

TAF has been glaringly absent from necessary battles before state or federal agencies to help appraisers fight to preserve appraisal integrity. Yet they were always in the forefront to oppose any challenge to others modifying the ‘standards’ they proposed.

While FIRREA Chapter XI addressed only American Real Estate Appraisers and Appraisal, TAF has wasted its energy trying to make R.E. Appraisal guidelines and rules fit those of other disciplines simply because we shared the term “appraiser or appraisal”.  Actually, that’s not completely accurate. Business Entity Valuation practitioners called themselves Valuators to distinguish between an accountant’s value perspectives and those of lesser species real estate appraisers.

To seduce them into voluntary compliance with USPAP, we all had to change the name of what it is we are and do to “valuator / valuation” so as not to offend CPAs in general or members of AICPA.

Then they allowed these different disciplines to have input on real estate appraiser qualification requirements and standards. Those with no idea what we do get to vote on what our necessary qualifications should be. Nice touch.

Is it any wonder that 29+/- years after FIRREA was passed, members of the public don’t have a clue about the differences between a real estate appraisal and a ZILLOW or CoreLogic AVM?

TAF has reached out to institutional consumer bankers, mortgage bankers, investment bankers, National Association of Realtors®, National Association of Home Builders and management companies for their input.

They have reached out to pretty much everyone EXCEPT the public, whose trust they are charged with promoting and preserving. Does that make any sense at all? I can see an excuse in the early formative years, but nearly thirty years down the road they have still not reached out effectively to the public?

Have they effectively pointed out to ‘the public’ why AVMs are unreliable; or hybrids are inherently defective? Have they pointed out why evaluations only have uses applicable to the most sophisticated or appraisal users?

Have they pointed out (or even investigated) the fatal flaws in big data property analyses?

They didn’t even identify, or challenge FNMAs flawed Collateral Underwriter process or its current uses. Uses that FNMA itself once said it would never be used for.

Has TAF ever reached out publicly to ALL their sponsor groups and explained why appraisal results are not often conducive to those sponsors short term objectives?

Has TAF ever explained to real estate appraisers what the differences between a CMA and an appraisal are?

So, I ask again, what exactly has TAF or their Boards done to justify their continued existence as Public Trust Protectors? What is their real legacy?

Is it possible for an organization that treats appraisers as if they are “the disease” to maintain and promote public trust in their profession?

Is there one reader of this article that would seriously claim they have lived up to their FIRREA obligations? Is there on reader that thinks the public’s perception of real estate appraisals has improved since 1989-1991?

If TAF cannot prove they have achieved their primary goal in fifteen years, then it is time to try something else. Something other than rewriting core standards like clockwork every two years whether they need it or not.

TAF COULD reinvent itself and segregate all activities from real estate appraisal; and stick to their original mandate but expecting that to happen is like saying appraisers COULD perform USPAP compliant evaluations or hybrids. Neither is likely.

It’s time to end this public-private experiment. End private agencies reinterpreting Congressional laws and misdirecting state agencies. Take control away from TAF and states and send it back to the feds where it belongs.

I believe it could be done without increasing the size of ASC. In fact, I think there could be net budgetary savings and a huge reduction in federal implementing regulations dealing with state or general oversight.

It could also end the improper state regulators end run, behind the scenes lobbying for exceptions to USPAP for themselves.

WHEN it is necessary to revise USPAP, that too can be directed through ASC with input from APPRAISERS groups and users alike. All on an equal footing. Openly, with final decisions made by informed federal level appraiser trained managers such as James Park and representatives of the FFIEC.

Appraisers, SPEAK UP. End the Heinz 57 Flavor style USPAP. Forward copies of this article to your states federal legislators.

Image credit flickr - Mike Mozart
Michael Ford

Michael Ford

Over 28 years appraising all property types and interests, in Southern California real estate. VP/Chairman National Appraiser Peer Review Committee, American Guild of Appraisers, #44OPEIU/AFL-CIO. - Michael Ford on e-AppraisersDirectory

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11 Responses

  1. Tom Markoski on Facebook Tom Markoski on Facebook says:

    Simply No Confidence.

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  2. Don Donk on Facebook Don Donk on Facebook says:

    USPAP is a POS.

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  3. Ross Grannan on Facebook Ross Grannan on Facebook says:

    Too many screwy changes and even the USPAP instructors are confused

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  4. Fritz Vogel says:

    USPAP is useless anyway. We try to understand it, the public has NO clue what it is, let alone trying to read it and we are forced to take classes for this? The authors just like to fight, put in their 2 cents (Maybe so they don’t have to face the real appraisal world dealing with what we deal with);  No wonder we, as a group, can’t get anything done.  

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  5. Jeff says:

    We need to get back to the basics. We need to somehow get back our relationships with lenders and get all the special interest groups out of our profession. This is the cause of AMC’s like Clear Capital trying to introduce their own interests as well as other groups. If we can isolate these groups so that we and lenders work directly with one another again, I think a lot of the issues will go away   

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    • Baggins Baggins says:

      It’s the co mingled fees. A simple but absolute requirement that the appraisal fee charged to borrower must be paid 100% to the appraiser, no sharing, would return literally billions of dollars back into appraisers pockets very quickly. Also this would remove the incentive to select by fee for many companies, and there would be far better balance in terms of fair distribution. No more enticement by low fee approaches, but if appraisers wanted to work for less to save borrowers money, they’re free to do so. As it stands now with co mingled fees, there is too much room for abuse and the pattern of abuses is continually expanding.

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  6. Wayne Courtney says:

    USPAP 2020-21 will be the same manure with a different shovel. The only thing that is changing is that the residential real estate appraisal profession is dying a little more each day! Is it any wonder that 29+/- years after FIRREA was passed, members of the public don’t have a clue about the differences between a real estate appraisal and a ZILLOW or CoreLogic AVM? In my opinion the PUBLIC does not know an MAI from R2D2 and could not care less! Why don’t we start a couple dozen more worthless appraisal organizations, coalitions, etc.? That way we could spend more money, waste more time and dream up more alphabet soup designations in an attempt to pit one appraiser against another. We have no leader for this band! If we were to combine ALL of our efforts under one appraisal group we may be able to be noticed by those who regulate us. Yes, I know I am dreaming!

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  7. Baggins Baggins says:

    Management rule; You must not provide a thing of value to be the preferred selectee. FDIC rules; Appraisers must not be selected on fee and turn time, but rather for quality consideration reasons. Real world; Discount to get more work, no consequences just ignore the management rule. Cost savings from reduced costs of appraisal services are not returned to consumers, and are pocketed by distributors as an incentive to use that appraiser again, ahead of others. Outright ignoring fair billing practices has turned criminals in to this industries super stars.

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  8. Eric says:

    USPOOP… We need much less Barney Frank and a reasonable and customary Barney Fife. Them folks in DC are Intellectual.. yet Idiots.

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    • Baggins Baggins says:

      If amc’s and direct distributors alike, having direct unrestricted access to the ‘appraisal fee’, can price gouge consumers and rake in secret from appraisers, I think it’s only fair they allow mortgage lenders to get in on the action and charge some superfluous fees.  Why should the appraisal order distributors get such a break when others are held to all these long standing standards?  I do believe it should be o.k. for appraisers to just raise the fee midway without needing any justification.  There is no standard for how much is o.k. to take out of the appraisal fee for management.  Am I the only logical participator in this industry whom thinks junk fee and unearned fee rules are unfairly implemented when they apply to everyone except handlers of appraisal orders?  Can I start double billing to recapture the loss, and like send title a bill for use of the report?  How can I get in on this unrestricted unfettered earning and raking variable ever increasing fees game?  It’s going on all around me, around this entire industry.  It must therefore be legal and acceptable practice.

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  9. Wow says:

    A few folks around TAF that have been there a VERY long time. Same scourge in the industry where folks never seem to retire and just keep on keepin on. New blood please.

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TAF / ASB Challenge USPAP

by Michael Ford time to read: 5 min