AMC Asking Appraisers to Violate State Law

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VaCAP Board

Coalition of Appraisers in Virginia at Virginia Coalition of Appraiser Professionals
Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.
VaCAP Board

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AMC Asking Appraisers to Violate State Law

…inducing another to violate…

Appraisers Beware! VaCAP has been informed an email has been sent to Virginia Appraisers from Xome Vender Manager, Adam Burg. The email, addressed to “undisclosed recipients,” starts with “Dear Virginia Appraisers.” The body of the email announces that SunTrust Bank has begun ordering a bifurcated valuation product with an interior inspection. The appraiser is to use information from a third party property inspection for subject property data.

VaCAP cautions appraisers on this product. Virginia Statutes and Regulations are very clear the appraiser who signs the appraisal report must have complete direction and control over the appraisal. The Virginia Real Estate Appraisal Board held a committee meeting November 28, 2018 on this very topic. See the minutes of the hybrid committee meeting here. The committee will report to the full Board at the February 12th meeting a recommendation of any action to be taken.

…if you violate state law are you covered under your policy…If you choose to complete this product, or any product similar to it, we encourage you to be familiar with the below statutes and regulations. We also encourage you to  have a discussion with your E&O company, specifically, if you violate state law are you covered under your policy. We also encourage you to think about the value of your license and the consequences of a disciplinary action against you.

Take a look at the various statutes and regulations that may be impacted by these products.

As the Appraiser…

54.1-2009 Definition of appraisal

“Appraisal” means an analysis, opinion, or conclusion relating to the nature, quality, value, or utility of specified interests in, or aspects of, identified real estate or identified real property. An appraisal may be classified by subject matter into either a valuation or analysis. A “valuation” is an estimate of the value of real estate or real property. An “analysis” is a study of real estate or real property other than estimating value. The term “appraiser” or “appraisal” may be used only by a person licensed or certified by the Board.

54.1-2011 Necessity for license

C. Notwithstanding subsections A and B of this section, an individual who is not a licensed residential real estate appraiser, a certified residential real estate appraiser, or a certified general real estate appraiser may assist in the preparation of and sign an appraisal if:

1. The assistant is under the direct supervision of a licensed residential real estate appraiser, a certified residential real estate appraiser, or a certified general real estate appraiser; and…

18 VAC 130-20-180 Standards of professional practice.

C. Use of signature and electronic transmission of report.

1. The signing of an appraisal report or the transmittal of a report electronically shall indicate that the licensee has exercised complete direction and control over the appraisal. Therefore, no licensee shall sign or electronically transmit an appraisal which has been prepared by an unlicensed person unless such work was performed under the direction and supervision of the licensee in accordance with § 54.1-2011 of the Code of Virginia.

And if you are an appraisal management company soliciting these products…

18 VAC 130-30-160 Prohibited Acts

The following acts are prohibited and any violation may result in disciplinary action by the board:

1. Violating, inducing another to violate, or cooperating with others in violating any of the provisions of any of the regulations of the board or Chapter 20.2 (§ 54.1-2020 et seq.) of Title 54.1 of the Code of Virginia, or engaging in any acts enumerated in § 54.1-111 of the Code of Virginia.

10. Failing to act as an appraisal management company in a manner that safeguards the interests of the public.

What about the lenders that are using this product?

Do they have an obligation to obey state laws? Will the auditors have issue with a product in their files that violates state laws? What action could the Attorney General take?

But the bigger question in all of this, what does the consumer think of this product?

Image credit flickr - R/DV/RS
VaCAP Board

VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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40 Responses

  1. Ross Grannan on Facebook Ross Grannan on Facebook says:

    Is this a 3rd party interior inspection? If that’s the case it’s an assumption that the data is valid and whom ever does these reports needs to label that all over a report. Also it is a good idea to check in with your State Board and E&O because if the data is flawed lawsuits will fly and we all know how everyone gets roped into a civil case.

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    • Avatar Advocate says:

      Ross, you are incorrect. Regardless of any assumptions you make, any assistance must be under the direct supervision  and control of the signing appraiser. Unknown third parties can not do the inspection. No way around it. Many who are promoting these products are confusing USPAP with State Laws. States laws can and often do go further in protecting the public trust than USPAP.

      It should be noted, there are many states that have similar language and are having similar conversations. I believe Illinois is the latest state to say there is a problem. There around 20 states so far that are having similar discussions that I am aware of.

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      • Ross Grannan on Facebook Ross Grannan on Facebook says:

        I didn’t say these valuation products were legitimate, that’s why I said check with the state board and your E&O. You can only assume the data is correct. This is why the TAF wants to incorporate evaluations as a legitimate appraisal product. Whether we like it or not this is getting shoved down our throats. Is this set up for another housing financial disaster, if sure is.

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        • Avatar Advocate says:

          Ross, sorry if I misread your comment. I read it to say if you do them, just make an assumption the data is valid. The point of the article is you can not do them in Virginia.

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  2. Avatar Ralph says:

    This just further illustrates that no one outside of appraisers gives a flying fig tree about USPAP, if lenders are going to be using more of these products, and the main point of USPAP is to protect the public’s trust, this who concept needs rethinking.

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  3. Avatar MD appraiser says:

    I got this email too and yes it is based on a 3rd party field inspection. Appraisers are asked to use “field inspector’s” measurements for GLA and data for condition rating.

    The engagement letter states:

    “- When a signing appraiser has relied on work done by appraisers and others, the signing appraiser is required to have a reasonable basis for believing that those individuals are competent. Standard 2-3 (comments)

    – The names of individuals providing significant real property appraisal assistance must be disclosed as required in accordance with Standards Rule 2-2(a)(vii), in the certification.

    – The engaged appraiser must inspect the subject and the report must indicate inspection by the engaged appraiser.

    – The additional certification page must be signed by the signing appraiser and contain the correct certification language. The additional signed certification page must be uploaded in the appraisal report that is submitted to the client.”

    and “The name of the 3rd party inspection agent is auto-populated…”

    So I’m not sure if they engage one appraiser to do the field inspection and another the HVI report. However, if you decide to do these, you better be certain that the “field inspector” is competent. “3rd party report: verify all pre-populated data on your appraisal report…the appraiser may use a 3rd party inspection report if the appraiser verifies and agrees with its conclusion”

    Needless to say I won’t be doing these

    Sample report and engagement letter below

    http://appraisersblogs.com/wp-content/uploads/2019/01/Sample-HVI-Lending-and-Engagement-Letter.pdf

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  4. Avatar chris says:

    Only a fool would do this kind of an appraisal !!!  So let the fools do them !!! See how long they are around for !!! Not very long !!!

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  5. Avatar chris says:

    Just looked at the report…did you see the part that said revision requests in 3 hours….

    And it’s not a 2 story, it’s a 1.5 story, that would be misleading the reader of the report, report has no design adjustments, a $500 fireplace adjustment…..seriously clueless on that one !!! Love the condition adjustments, I guess both comps #2 and #3 were in the exact same condition….I would love to see the MLS for the comps, at the very least they should be provided for in the report….. I will bet you the comps don’t have galley kitchens !!!  What a moron, but hey, that’s what the AMC’s staff appraisers will be !!!  And I guess there is no difference in the market for a 3 bedroom compared to comps #2 and #3 of 4 bedrooms, WOW, I wonder what he would do with a 2 bedroom property, wait….I do know, Seen it a 100 times before….So sad ….Did you see the neighborhood value range $90 – 1,700 K…wow, doesn’t even know how to do neighborhood !!! Wait….of course not, LOL !!! and the predominate neighborhood value is his appraised value….

    OH the lawyers are going to have fun !!

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    • Baggins Baggins says:

      They’ve only been going strong because we’ve enjoyed a low cost of money with artificially depressed lending rates, which has held defaults down. Now that ninja loans, arms, and an all around lackluster qualification program is taking hold again, their time will come. Shorting the market was so wildly successful last time, now that most inventory is sold off or in a positive cash flow position as an investment property, it’s time to give the market the final pump and then dump it all back with risky practices. Nobody ever even answered the question if these are covered products under standard EO insurance. You’d have to be an absolute fool to trust a craigslist inspector for anything.

      When part time dog walkers earn more than ‘home inspectors’ you know there is a problem. Where did that actual true photo of an inspector working que go? Quite literally, a $5 inspection. What a sham.

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  6. Vincent R Simon on Facebook Vincent R Simon on Facebook says:

    Just now talking, these companies have been around for a few years now. Ask in a forum if anyone who has done these reports, lost a certification /license and see how many people have a story to tell. That would be interesting.

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  7. As much as I’d like to agree with the article’s claim, I just don’t see it. Under 54.1-2011 non-licensed individuals ARE permitted to assist.

    The argument becomes what constitutes ‘direct supervision’. Experience with various states brokers supervision and varied perceptions of how Giant National AMCs that merely have “Corporate Policies” directing the actions of their staffs can (will) argue that they are in compliance.

    I’ve been waiting for definitive language to come out of Virginia, OR VaCAP on this specific issue, but so far it has not. Anyone remember when Virginia used to have laws against AMCs practicing without state licenses, and then consciously choosing NOT to enforce them against Coester? This is no different.

    This is exactly the problem with “Something is better than nothing” legislation that FAILS to PROTECT or achieve the desired results. It makes enforcement subjective. Heck, just look at USPAP enforcement variance between what USPAP itself states and what various regulators claim.

    Virginia, you have a BAD Law! Its language is flawed and leaves loopholes big enough to drive a fleet of trucks through. THAT needs to be fixed to remove the ambiguity. My understanding is that the Board’s committee meeting in February is your best hope of this.

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  8. Baggins Baggins says:

    Just got the new workingre in the mail today. This publication has turned into a pro amc pro elimination of traditional appraisal practice rag. What a supreme disappointment. The constant premise is the partner amc, now where have I heard that before? Apparently WorkingRE thinks of they just sweep away and ignore a decade of collusive practices, restraint of trade, price fixing, and absolutely inadequate hiring practices by amc’s for their staff persons, appraisers will just forget about it and learn to “extend the concept of team beyond their office to include amc’s and to work more cooperatively to produce and deliver a product for their mutual client, the lender…”

    With team mates like that who would need enemies? Continued unanswered betrayal of trust is not a valid reason to collaborate with unethical people or businesses. Directly over an amc guide solicitation for 100 dollars, which in case jr appraisers don’t understand, a more detailed locale specific list is available on your state regulatory website anyways for free. It’s obvious whom is being appealed to here, the most ignorant appraisers whom do not have fair perspective on the larger mortgage lending assignment market. Long old articles but fail to answer why we need an amc in the first place and like usual, ignoring the unearned variable fee raking where amc’s pocket the difference and in turn promote unethical behavior of appraisers by forcing them to compete by providing a thing of value. 

    Anyways, this publication just caught up with the Appraisal Buzz, and buzzed directly into the recycling bin within less than an hour flat.

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  9. Michelle Murphy on Facebook Michelle Murphy on Facebook says:

    I would refuse this kind of assignment it seems too risky! I have worked too hard to ruin my reputation.

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  10. Scott Taylor on Facebook Scott Taylor on Facebook says:

    Let me ask this, forget the inspection, who is taking pictures of the comps and listings? Are we the appraiser just dropping photos from MLS for comp pictures then? AMC’s sure don’t take that now. I guess we as appraisers that sign the report must make the assumption that the pictures in MLS are accurate to the condition of the house contrary to all of us experiencing a much different house when we drive by than what was advertised in MLS. I could actually see this working the exact opposite way. The certified appraiser does the inspection and finds the proper comps and then sends it to a form filler to come up with a value with all the analytics retrieved from numerous years of UAD.

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    • Avatar chris says:

      Yup !!! And lets not forget the amazing powers of PHOTOSHOP….lol Can you imagine writing an appraisal without driving the comps….SERIOUSLY !!! So many times I drove a comp and the MLS photo looked so more beautiful then what I was looking at…..and how about that crappy house next door and the guy across the street who uses his front yard as an car cemetery !!!  Crazy !!!  And they want to relay on inspections from tyhe general public or worse, a realtor who has listing in the area….lol

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      • Baggins Baggins says:

        You’re going to absolutely love the new digital photoshop listing services deal. They call in a professional photographer whom of course will forget to give a street shot, a rear shot, and will completely ignore the utility room. Then best of all they will ‘digitally stage’ the property complete with dishes, plants, beds, furniture, photos on the wall. True story, look it up and if the person is good enough, it is near perfect, except for some odd glare mismatching. Advanced photoshopping is not just a possibility, it is already here. For either drone or digi staging, w/ full photo spread, agents pay roughly 200-250 per list. Half the appraisal fee and all they do is take photos. Something is not adding up…

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        • Avatar chris says:

          Our country has been clearly “taken over” !!! We appraisers are being killed, so are the doctors and most of the workers in this country. 5 times the drug costs while the world pays 80% less than we do !!! Health insurance could have easily been fixed by making it national completion, where is Trump with that, he said it would be easy!! And it would have been !!! 1.5 trillion dollar tax break to the super rich who have been and WILL continue to control our government for the next 3 generations !!! (Both parties) A 2% tax increase for the rest of us for 2019. They will then you our debt of 22+ trillion dollars to justify another tax increase for us all!! We are a debtor nation and it is imploding after 100 years. 

          WE HAVE BEEN TAKEN OVER !!! My doctor says to me “anything would be better than what we have now !!! Vote for a single payer system, call everyone you know, Old people pay $100 a month for a 80/20 plan, So why can’t we !!!  Oh, I know, all the profits would be gone to the big health insurance companies and big Pharm !! People with money are retiring to other countries !!! 10,000 a day of the baby boomers are counted at the poverty level !!!! 40 k people a day !!! Almost no wage increases in 20-30 years !!! and everything cost 7 times more than 30 years ago !!! That is what is not adding up !!!! We need term limits !!! 17 lobbyists for every congress member and the senators…………hmmmm…..I wonder what really happened to this county. If there is no profit in it, they turn their backs to it !!! Fill up our privatized prisons, we the tax payers pay for that !!! While rich get richer from stick drug laws to keep our prisons full !!! Destroy people lives so they can’t get jobs, keep them poor !!! That is how you control a country !!!

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          • Baggins Baggins says:

            Without such excessive government intervention, the free market would take care of these issues on their own. Companies whom rely on government would fail, a well deserved end. Take a deep breath, support thorough auditing. The federal reserve, 100 years of not being federal, and not having any reserves. Turn off the idiot box and try this instead… If you’re waiting on a single person to fix anything, you’ll be waiting forever.

            http://patriotarchives.blogspot.com/

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            • Baggins Baggins says:

              Oh yeah, I like the guys from AZ, primarily. They came first but recently branched out with a second broadcast in CO. Fridays are the best usually. Been listening to them well over 10 years now, lots to learn over time, and fun to listen to. Joe is a trip and knows money and real estate up and down, despite having a shot of whiskey in his hand on fridays. Ha!

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          • Avatar Ex appraiser says:

            here’s what’s happened to our profession and it is the trend that has also ruined our government with trump. Don’t listen to Baggins, he’s a trumpster from a state that thinks like this:

            https://www.psychologytoday.com/us/blog/head-in-the-cloud/201701/the-dunning-kruger-president

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            • Avatar chris says:

              Very interesting read! I Highly recommend it to everyone! Thank you,

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            • Baggins Baggins says:

              Sure, whatever you say. Content control by the most powerful corporations ever on this planet must be fake news. Psychology Today, tossing around quackery and armchair diagnoses since 1967. For the record, I watch the Liberty Report with Ron Paul like nightly, religiously. Please acquire a clue.

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              • Avatar Ex appraiser says:

                Libertarians like you have nothing real to say. Rand Paul is not a republican, if you didn’t know, he is a tea party libertarian, serving the Koch Brothers! You are the reason I won’t join this union, because you consistently opine on bs like our president who creates fake news. I think you are abhorrent spewing that crap here, so it hurts the whole organization that Mike works so hard to get accepted! Go back to your hillbilly corner and stop trying to influence a profession which used to be devoid of politics, and try to act like an adult and a neutral party. I wouldn’t wipe my you know what with anything you wrote, including an appraisal because you have no credibility! there, I said it. Mike, you can delete it because I wrote it for you and to advise the others of who this baggins guy is!

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                • Please be respectful of the opinions of others and do not attack someone for having an opinion that differs from your own; if you disagree with someone, please express yourself respectfully. Snide or rude comments are not constructive and certainly not helpful. We count on your cooperation and appreciate your support!

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                • Ex appraiser, we come from all backgrounds and political views in our profession. I try very hard not to lose sight of the fact that it will take all appraisers to make things better. I know Baggs is Libertarian from his many collective posts. That doesn’t mean I agree with all or even most of his views having anything to do with appraisal. What I do know is that he does his homework before posting. He forces me to think.

                  For what it’s worth AGA is comprised of as much a mix of political perspectives as our nation is. Though I voted for the party in power currently (executive and Senate), I’m extremely grateful that Secretary Mnuchin’s ultra deregulation proposals will now have some resistance. Similarly, Jeb Hensarling’s proposed Dodd-Frank replacement had ZERO benefits for appraisers, and stripped away what few benefits DF had. I’m happy it’s no longer fast-tracked. I’m hopeful appraisers can influence what replaces it. By working together.

                  On the other side, I am concerned that some of those in power who talk to issues of the working man/woman quietly support big banking, insurance and lawyers in the background. Either actively to our (appraisers) detriment, or simply by ignoring us.

                  As citizens, we each support the strategic policies that we feel is best for the country. As appraisers, we have to look more toward the tactical side of issues. Even when the ‘side’ proposing or opposing a specific law represent the ‘other guys’.

                  BTW – thank you. I DO work very hard to work toward common appraiser goals. That’s why I hate to see us become as factionalized as the nation is.

                  It’s going to take Democrats, Republicans, Independents and Libertarians (& Greens, etc.) working together to deal with appraisal issues.

                  PS contrary to the belief of some, I have nothing to do with running this site. Nothing. The administrator is a friend and has been a long time AGA supporter. We are grateful, but respect that she is fully independent and runs HER own site. Quite well, in my opinion.

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                  • Baggins Baggins says:

                    Thank you. I vote the issues primarily and find it fascinating that people actually believe this mess can be attributable to only one party, or even only one person. These days the journalists and politicians alike flip flop to whomever dialed the most dollars in, rarely speaking to power as was intended. Nobody needs to moderate this kind of speech, there is no such thing as a right to never be offended. That’s what the 1st is all about, the right to offend, the right to speech, the right to speak to power. The founding fathers did not place speech first so we could talk about the weather. The first does however grant us the choice to have speech or not, nobody can be forced to have speech they disagree with, nor should they be forced to be silent if they disagree. 

                    If one truly believes in liberty, they also believe in free speech and work diligently to protect that. This website remains the only appraisal industry site that I know of that is not self promoting, does not censor content, and is not subject to sponsors ideas of content control. Article 1 Section 10. Cheers.

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                • Baggins Baggins says:

                  I said Ron, not Rand and I’m not even a member of the AGA. Armchair diagnoses are flying today, watch your step and remember to duck if you’re lucky enough to see them coming.

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        • Sadly, the photo advice that many agents are receiving today seems to be bad generally. Fish Eye Lenses may be ok for supplemental shots where a feature simply can’t be captured otherwise, but as a supplement – not a substitute. As a potential buyer they turn me off completely rather than intrigue me enough to want to learn more.

          When trying to show something in its best light leads to showing something that exists only in the ad or agents imagination, then they have missed the point of mls photos. Like the drone photo 150 feet above the house that shows a distant ocean that no one in the neighborhood can actually see.

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  11. Avatar Janet K Riggs says:

    Most lenders won’t let my 2 trainees inspect and sign a report, but they are going to let some 3rd party, probably a realtor that thinks everything looks GREAT! Everyone needs to refuse to do these.

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    • Agree.

      There are several Made As Instructed designated owned or managed regional and national “appraisal puppy mills” that do these. From giant corporate aggregators to those claiming to be the wave of the future appraising in America.

      Just because they care so little for their personal reputations or that of individual appraisers across the country, is no reason everyone else should join them.

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      • Avatar Ex appraiser says:

        These made as instructed amcs are working for the lenders; no real appraiser who is worth their salt would sell out, except those who can’t really do this work, so they are just sell-outs who profited on fellow appraisers, selling us some inadequate computer program that would eventually replace us. When computers start buying houses, then maybe you can have a robot appraise them for loan purposes; meanwhile, they are engineering the next bailout, raising the di minimus threshold when it was formerly $25K, then raised to $250K with the last bailout! It is easy to criticize designated appraisers when one didn’t spend years qualifying, not counting the cost of doing so! The kind of reputation one needs to get work in this profession is irrelevant when all they want is to get rid of appraisers for computerized programs, programmed by quants who crashed the economy in 2008 when they successfully got away with murder because they were Wall Street, the finance gods!

        Face it, we are on the last threads of life support! I barely have a heartbeat, but I sure don’t like what happened to my respectable, hard earned designation!

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        • PS – I know there are still many; (possibly even most) MAI’s that are truly honorable and professional appraisers, like you. Some are personal friends.

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        • Baggins Baggins says:

          There may indeed be hope yet Ex Appraiser, check out Skapinetz article today, inspiring.

          Ten years of regulatory changes, tech advancements, business accolades for record setting growth, and somehow mysteriously the distribution companies still can’t get billing right. Ha! Dare to dream the lenders will force them to bill separately, a lot of doors could open up overnight.

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  12. Xome?

    Look up Quantarium. Another garbage product involving the use of local MLS services (and other data) compliments of Xome.

    Folks, please STOP using or working for people that are trying to put you out of business!

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AMC Asking Appraisers to Violate State Law

by VaCAP Board time to read: 3 min