Appraiser Independence Violated
A Journal Piece of Appraiser Independence (Part 2): Appraisal Independence Violated
History is an important reminder to us all of what went wrong and what went right. When history is known we tend to skip the mistakes we made. We can either choose the right path for the wrong reason, the right path for the ‘right’ reasons and, we can take the wrong path in a similar manner. The MARKET needs to take the right path for the ‘right’ reasons.
In years of late 1998 and 1999 several ideas were brought forth to a Forum filled with Individual Appraisers carrying a dislike toward the status quo. One idea was the Appraisers Petition we are all familiar with and another one is the outline for creating the HVCC. The HVCC was not created immediately; it couldn’t be created until it was “appraised.” Many older Appraisers should check their reports for this “appraisal process.” The HVCC Ideal looked to have been more ‘able,’ but the problem surrounding it was the “Timing” as years went by. 8.5 years of heavy lifting (additional ideals and problem solving) took place from the start of discussing the Appraisers Petition to 6 months (+/-) before the collapse. Trust me none of this had anything to do with a “Fee.” It had to do with acting as an Appraiser Independently and a “safe market.”
The HVCC is probably one of the most – within context – Independent ‘works’ by any group of Real Estate Appraisers in the history of Real Estate Appraisal and even the field of Economics. It is one of the most, if not the most, in depth study of Property Economics. It took 8.5 years of reading the market in order to “Time,” and the outline is reflective of the appraisal process and the persistent reaching for Independence by Real Estate Appraisers. It isn’t the demon everyone claims it to be. The original HVCC is a unique piece of work!
There are thousands of Real Estate Appraisers believing the HVCC was created to hurt them and Andrew Cuomo created this HVCC demon. Both of these notions are completely and utterly false. All of it! It is more than what Cuomo and the Lending Industry made it to be, or even what these Appraisers believed it to be. Cuomo was a used Politician — he was in fact for sale — but Independent Appraisers didn’t use money, they used their 8.5 years of collateral. The Lending Industry, which specifically includes Fannie Mae’s erratic and manipulative participation in the same Forum the Independent Appraisers birthed Appraiser Independence, twisted and punched the HVCC until it favored their cause during the two year “Public Comment Period.” The HVCC was to provide a safe market and a path of progress. The original HVCC is in my files and I understand it at great length. AMCs should not have existed, because AMCs help create a market that is on the same level of a fairy tale (AVMs, with skippy helping) in order to fulfill “greed.” The Fee was not why AMCs should be exposed or given the attention they received.
Intimate details are not important here. However, I did not like the fact that AMCs were not specifically mentioned in the Appraisers Petition. AMCs were treated differently. There was no “pressure” in which Real Estate Appraisers could attest to in great numbers. AMCs were in fact studied, but the evidence against Realtors and MB/LOs were in bulk! If Independent Appraisers were able to sell it, it could have been sold in bulk. AMCs were difficult to accuse until the latter portion of the 8.5 year study and analysis—their behavior was easy to predict and analyze (they were estimated and destined to fail). There was a chance to ‘clip’ AMCs from the ‘Appraisal Process’ according to the original HVCC and the HOPE that Appraisers would seize that particular moment. To be honest, there was Hope that Appraisers would embrace Appraiser Independence. In the end the enslaved Real Estate Appraiser rallied against the HVCC and thus by doing so, Appraiser Independence. Intimate details were of course, a showing of dislike and concern about AMCs behavior and economic slavery.
After the HVCC went public large amounts of Real Estate Appraisers either didn’t fully understand it while having large amounts of anxiety about the present and future. There were Skippies who absolutely looked as if they were chickens with their head cut off and, that was exciting for a true Independent Appraiser to watch. What I said may be disliked, but Appraisers are not supposed to coddle; a little bit of honesty can go a long way. These same Real Estate Appraisers rallied FOR a socialized Fee structure buried in the heart of Federal Law’s interpretation of the HVCC with the help of many that had the anxiety and entities like AMCs, Fannie Mae and even AI members. This was a shallow and ignorant, as well as, timely mistake. Real Estate Appraisers have spent their time, since the HVCC arguing about the Fee. I suppose this is what they truly desired, or was it out of spite, worry or anger. Real Estate Appraisers must find it in themselves to truly believe that the Fee is the least most important item in Appraiser Independence and leave it be as a business decision. The correct path needs to be understood.
There was a complete understanding that AMCs had a chance to grab the Bulk of the “retaining” of Real Estate Appraisers and the handling of mortgages. Competition was the best way to eliminate dominance of the market. Competition is part of the “Rules of the Game.” I have the original Rules of the Game in my files. I guarantee you The Rules of the Game are not being interpreted and acted on. Some Rules of the Game are ignored, taken out, or simply twisted. It is important to know that the secondary market is interested in AVMs and the need for data to be handled in bulk is significant. They are competing against other entities who favor AMCs for data and information. Fannie Mae obviously read the Rules of the Game, because they have used it for their own benefit. One rule was a “Vault.” However, there is one rule that isn’t written in any document: the known intended consequence of a “Spot Light,” which has been shining on AMCs for quite some while Appraisers argue about a Fee and, for which AMCs happily accepts.
With regard to AMCs the “Spot Light” is what has been important, because the HVCC was not going to make it “as-is.” The spot light is the easiest study to conduct, because AMCs are blatantly breaking the law (one may observe the ownership), as predicted. AMCs cannot help but to operate one or two ways. AMCs are not supposed to be in existence forever and, the sooner the better – we can all agree that AMCs MUST go.
The “Firewall” was never complied with and violates the Independence of Real Estate Appraisers. Firewalls were supposed to be competitive within the rules, but the Firewall was never truly acted on. It was training wheels until Appraisers’ Independence evolved. We knew AMCs are used and many will simply fold either way. I guess many Real Estate Appraisers have learned the hard way. The General Public acting as the clientele is where true Independence will be felt while the “Vault” would keep pirates from having AVMs. Data and information and pirates are harming the safe market and the Independence of Real Estate Appraisers.
The HVCC was built to gain market confidence and compete for “Independence.” The MARKET cannot experience Independence unless Real Estate Appraisers act on, evolve and compete for their Independence while influencing the Rules of the Game that are in place. The original HVCC is an excellent tool that may guide Real Estate Appraisers in that regard. The Independence of Real Estate Appraisers is supposed to have an impact on an “Independent Appraisal Process.” It should have the same impact as the source of externals that are positive and/or conforming. The Spot Light shines on a path in which AMCs are in the way of. They need to be removed so Real Estate Appraisers can keep walking on the path called progress.
This is the second of a two part series. Click here for part 1: A Journal Piece of Appraiser Independence (Part 1): Where Do We Go From Here?