Appraiser Shortage Myth Used to Raise De Minimis Value

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

Appraiser Shortage Myth Used to Raise De Minimis ValueAppraisers,

I know everyone is busy right now, but this cannot wait. This may be the most important blog post affecting appraisers this year. I don’t think it is an exaggeration to say that if something is not done, it really COULD lead to the end of ALL residential appraisers for federally regulated transactions under $500,001.

FFIEC under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA), is considering raising the de minimis lending level from $250,000 to $500,000, because the local community banks are complaining that they cannot find enough appraisers in rural America to handle the volume! If you do not write one letter this year, THIS is one you should write.

We all know this has been a topic for discussion for over a year, but it’s coming to head NOW.

If the de minimis value is raised from the current $250,000, it may cause serious disruption to appraisers and the appraisal profession.

We ALL have only 6 days to read, investigate and respond, from a CONSUMER benefit perspective to the following. This was sent to me by someone in one of our federal oversight agencies:

“…However, I thought it was important and did pass your email along to the banking agencies. Evaluations are a hot topic right now as the banking agencies consider raising the $250,000 appraisal threshold. I too have significant concerns about evaluations such as this Pace Pro product and evaluations in general. The agencies are accepting comments on this topic as part of the Economic Growth Reduction Paperwork Reduction Act (EGRPRA) process that takes place every 10 years. Comments can be submitted through the FFIEC website at http://egrpra.ffiec.gov. In fact, the agencies are considering comments on any aspect of federal banking regulations as they apply to appraisals. A list of those regs can also be found on the FFIEC website. I encourage you and others to submit comments prior to the March 22 deadline. Customary and reasonable fees is another important topic on which you can comment. If you have any questions please do not hesitate to ask.”

I added the bold face type for emphasis. What they are NOT kidding about is RAISING THE DE MINIMIS level, through the actions of a committee, to reduce the paperwork burden!

Again, we only ave DAYS to comment, not weeks. We need to write to them and point out the benefit/risk to CONSUMERS & taxpayers. They couldn’t care less about individual appraisers. THAT interest is appraiser competency versus the inability of Big Data or alternative products, such as evaluations or BPOS, to be a reliable alternative or substitute.

There is no shortage of appraisers as we have all noted. There is a shortage of appraisers willing to work for $25 a pop, for a BPO product review!

Please submit your comment here and share this post with your colleagues.

Image credit flickr - jacinta lluch valero
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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42 Responses

  1. Mark says:

    I am opposed to raising the minimum property value which would require an appraisal to $500,000. Since that would exclude most residential properties it would remove the protection afforded from most residential transactions. It is curious that the lower end buyers/homeowners who are the least informed would be the ones potentially excluded from the protection of an appraisal. It seems to me that the only folks who benefit from this rule change are the banks which would be free to make loans without an independent appraisal of the physical or economic characteristics of these properties. The supposed “shortage” of appraisers is to a large extent a myth perpetuated by appraisal management companies who can’t find appraisers who will work for minimum wage. My final point is one that is rarely discussed. The housing recent crash, as bad as it was, would have been much worse if the majority of housing transactions had not involved an independent appraisal. How many bad loans would there have been if lenders were allowed to operate without the scrutiny of an appraisal?

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  2. KenQ says:

    Thanks for the heads up Mike. Submitted a comment.

    In my market, first mortgage loans with low amounts default at a significantly higher rate than those with higher loan amounts. I agree with Mark and would add that since public trust is the primary purpose of an appraisal, when the de minimis value is raised, it discriminates against the lower income class since they will never obtain a credible and reliable appraisal when they purchase their homes. A lot of changes are needed but unfortunately none are going to happen.

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    • Mike Ford Mike Ford says:

      Good job Ken! Thank you.

      If we each get only FIVE appraiser friends to copy and post to the link above, we will be effective. There are 207 posts or comments so far. I suspect most are mortgage brokers and lenders lobbies. We CAN bat them, right here, and right now.

      Get your families to write AS CONSUMERS AND TAXPAYERS! Its not limited to us as appraisers!

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  3. KenQ says:

    Here is the link to median and average sales prices of new homes sold in the US from 1963 to 2015.

    And they want to raise the de minimis value to $500,000. Houston we have a problem!

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  4. Bill says:

    Home Price Index for 2009-2015 period, indicate that the average price for homes in surveyed markets ranged between $140,000 & $175,000. The data show that, at a minimum, most residential real estate transactions are below the de minimis, thereby nullifying the federal requirement for an appraisal. Consequently many consumers are effectively being denied the right to professional appraisals in a significant amount of mortgage transactions.

    They should be LOWERING the DM not raise it!

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    • Mike Ford Mike Ford says:

      ABSOLUTELY CONCUR!

      Now PLEASE copy your own post and put it on the link above! Only 207 comments have been received by the agencies considering the change. I suspect MOST are from mortgage lenders and small community banks.

      http://www.regulations.gov/#!submitComment;D=FFIEC-2014-0001-0126

      BTW ANY reader can copy any of these remarks if they represent your feelings, and post them to the feds website portal as well. We NEED TO GET INDIVIDUAL comments relating to consumer rights  posted thee!

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  5. JC says:

    It’s time to diversify away from mortgage lending work!

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  6. Baggins low income Baggins low income says:

    This is the comment I just submitted: (Please copy paste yourself it you agree, and need to save some time, but still wish to comment.)

    A national deminimums raise is an offensive affront to the lower income states and persons whos typical real property value points for typical market participators, which fall into middle class or lower earnings scales. The deminimums should be applied state by state, or even county by county, with fixed formulas for determining the applicable deminimum, in that specific location. A blanket deminimums raise is in logical terms, a pat on the back to high income persons, and a statement of no confidence or no concern, for everyone who falls below that point. The key argumentative points being; The application of deminimums is there to facilitate the checks and balances system, for regular market participators. There is no compelling or logical reason why lower earnings scale persons, should not have equivalent protection from checks and balances systems. In many locations, the deminimums should be lowered, not raised, based on the common points of respective earnings and qualification scales of regular Americans seeking fair access to mortgage market lending products. All US Citizens whom bear significant personal risk when engaging the largest loan products of their life, should be afforded equivalent checks and balances system protections, regardless of their income scales. (comment end.)

    Do not copy this portion or later; My blog comments; If the government stops requiring appraisals for lower income earnings, I will send out scare tactic flyers to regain that lost supply of appraisal requests. Just off the cuff; The federal government has determined that you do not earn enough money, to be afforded the same checks and balances system protections as are extended to everyone else whom can afford to pre qualify over $500,000. If you are participating in mortgage lending markets with a prequalification or refinance value point of anything less than $500k, you should seek independent councel and independent real property valuation service on your own. The federal government in their infinite wisdom has determined that your risk to them is negligible at your current borrowing levels, and subsequently, your personal risk position is no longer a concern to them. Protect yourself by demanding a live real property appraiser be requested to provide a value opinion prior to loan closing, or obtain this service yourself prior to closing, to assure you do not become over invested and over extended in your future lending choices. How does that sound?

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  7. Retired Appraiser Retired Appraiser says:

    Let’s go with a billion dollar De Minimis just so we’re not forced to listen to this horse crap year after year.

    Let’s require a PhD or law degree to enter the “profession” along with a 5  year apprenticeship.

    Let’s require $100,000,000 of E & O coverage.

    Let’s add at least 1 major form to your report each year (free of course).

    Let’s require appraisers to memorize USPAP verbatim, and take a 2 day test on it just prior to rewriting the entire book.

    Let’s require appraisers to loan their fees to AMCs who are in trouble for at least a year.

    Let’s strive to transform the residential appraisal into a 250 page document as quickly as possible.

    How much more manure do you need dumped upon you before you say: ENOUGH? Someone should do a documentary on the last days of the appraisal “profession”. What you are ENDURING is actually a survival game. Nobody has bothered to tell you that you are a contestant. The grand prize: The winner gets to boasting rights about being the last appraiser to leave the business (not exactly something I would brag about). Call the documentary: “Last Appraiser Standing”.

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    • Powerball Baggins Powerball Baggins says:

      You’re too jaded.  Consider my position, why I chose to argue the merits of checks and balances for someone elses benefit, rather than my own.  As they say on RedGreen, we’re all in this together. / Nobody is going to run circles around unsuspecting consumers when I’m involved, at least not as regularly.  Ha!  You can’t save the atm for a home sort of borrowers, but you can plant the seed for so many others. My rewards are not quantifiable in cash.  I boost, I stop boosting, I’m chilling, then I’m working OTx3, but I like that rhythm opposed to the daily grind to infinity. Instead of getting fired, I do the firing.  Instead of paying taxes to the man, I write off and get more tangible benefits for myself.  Rather than load up debt, I have used these challenging experiences as a real property appraiser to better my personal and professional positions.  What does not destroy you, makes you a stronger individual.  I would conclude that any talk of raising deminimums and applying the checks and balances system in an even more imbalanced way than it is now, is just a reflection of the arrogance of the persons making those decisions.  A consequence of their silver spoon world view, in their glass towers way up in the clouds.  Where they judge the worth of a person by their financial state, instead of their citizenry. If any person can qualify for a loan product, they deserve equal protection under checks and balances systems, and nothing less. Meanwhile, the liberty movement continues to gain a footing, and it’s only a matter of time before a great quantity of existing mortgage market participants, will never participate ever again with those systems.  I know I won’t, unless it’s for a 2nd home.  And with the continued vampirism of available offerings being funneled to foreign investors, the US citizens whom want real property purchase opportunities here state side, will continue to feel the pressure, and will continue to buck the system more and more as time goes on.  Debt is what killed them, and lack of debt is certainly what will save them.  Curiosity killed the cat, but only We The People, can demand an audit of the FED. Being an appraiser is so much more than just being an appraiser. It is more about a continuation of the cornerstone principals which built this country, which are rooted in checks and balances systems. Despite all odds, this profession will not, and can not die, regardless of how much pressure they put upon it. Subscribing to the positive merits of checks and balances systems is a very popular and longstanding consumer consideration for regular every day citizens. And it will continue to be that way, despite the best and most nefarious efforts of the anti-American trans national power house interests. As long as checks and balances persist, so will our liberties. I’m in it for the liberty, not the cash. Appraising is not for the weak of heart. It has become a profession for the bold, and the brave, and nobody else.

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      • Retired Appraiser Retired Appraiser says:

        Jaded?  Perhaps

        A Realist? Absolutely

        Name one positive thing that’s taken in the industry since 2009.

        Some will claim they don’t have to listen to banks begging for values.  I was quite capable say no to them prior to 2009…no big bonus there for me.  On the other hand I can point out at least 10 super negative items that were dumped on the “profession”.  Most everyone on here points out the same negatives day after day.  That’s pretty realistic.

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      • Thursday Baggins Thursday Baggins says:

        Name one positive thing? That’s an easy one. I’ve helped hundreds of people become better informed regarding various topics pertaining to responsible home ownership. I’ve consistently planted the seeds of hope for escaping mortgage servicing. Typing the language of real estate for each individual report is knowing the market, and proving your worth and rightful place in the process of lending. The value is in the human analysis, because the lenders have greater tech access than us these days. I say rethink development process, rethink marketing and take advantage of the principals of substitution, and the doors will open for the appraisers of the future. One might also argue that the call for appraiser irrelevance in the under $500k deminimums range, is the direct consequence of the increasing automation within appraisal development itself. Outsource this duty, import that data, click that preset language. I am relevant, in the $50k+ range, not the $250k, not the $500k, the $50k.

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    • Wayne Courtney says:

      Why a billion? …why not a Trillion or whatever is much more than that? Let’s stop the FDIC insurance. If the bank wants to loan a billion to Joe shirt the rag man….go for it….no stops….Let them bust their financial arse!   Really….let those highly trained gurus take their supporters under….However….just no taxpayer bailout! OK? maybe some jail time for the crooks?

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      • Baggins, it could happen. Baggins, it could happen. says:

        Look into the TPP more, and please resist at all costs.  Under TPP, the private bankers losses will be ‘bailed in’, rather than baled out.  The municipal governments will run risk of lawsuits for not bailing these companies out in the future.  Now that international investors are playing the real estate mortgage markets backed and sourced through GSE channels.  Under TPP, a correction of these unethical relationships will result in a business loss to the private investors whom are the GSE participators and portfolio subscribers.  Under those same rules, the corporations can sue the government for any legislation or regulatory change from day 1 of the TPP and for ever after that, for any corrective action which detracts from the corporate profits.  Ever heard this one; Profits before people.?  TPP.  Know it, learn it, fight it.  It’s upcoming possible and likely implementation is why international investors are rushing into American markets right now.  The only hope after TPP will be to escape GSE lending all together, and fight for in house loans.  We called for a long time, for 80% LTV max, and it seems the TPP will provide that correction, but only for the consumers wise enough to demand their loan is not sourced through GSE channels.  Everyone else, including the citizens whom did avoid GSE, will pay taxes for the future losses being built up right now.  Welcome to TPP, if a corporation loses money, it becomes the citizens responsibility to comp them, and they are judged and regulated by international tribunals, not the local law of the land.  Economic issues are coming, and the people rolling up debt into their homes, will have a sweet surprise in store for them, very soon.

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      • Mike Ford Mike Ford says:

        Works for me! Oddly enough if it was their own investors money at risk and not insured money, there’d be a LOT more demand for GOOD appraisers, even a the top of the fee ranges.

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  8. Thursday Baggins Thursday Baggins says:

    If anyone has sent in the letter to the official web site there, please post and say so.  It only takes a minute to jot down a letter, so don’t be afraid to do so.  Lack of commentary could result in a permanent dearth of appraisal work, for anything less than $500k.  And my crystal ball is glowing right now!  I’m seeing a renewed push for bpo and eval products to fill the under $500k void.  With an associated feigned ignorance by some appraisal suppliers, whom would presume that the regular appraisal fee should drop, due to reduced demand for appraisal services, despite the permanent increase in complexity and risk, with the inevitable insurance increase to boot.  A few would hopefully retain their programs in an attempt to provide higher security ratings, but who knows for sure, when uncle sam is backing the whole thing in the first place.  Mr Ford has asked for your help. Call out if you’ve posted.

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    • Bill says:

      I did so yesterday. Looks like the last 100 comments are by appraisers.

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      • Mike Ford Mike Ford says:

        How could you tell? Counter was at 207 when I first looked, but could not see actual comments. Could you? IF we get 100 appraiser comments, even with 200 industry comments we have a GREAT chance this wont go through! Usually they get almost MO comments from us so this would be a big deal to them.

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      • Baggins how to Baggins how to says:

        HOW TO count the comments, and read them:

        Click the egrpra link provided in the lead article. Click the submit a comment link on top, then click it again in center. New window loads as regulation dot gov. Click the title link like you would to read the main article, directly above the noted ID: FFIEC-2014-0001-0126 identification number. On the right it states current comment counts. Right now it is at 141. Then scroll down on the right bar to the docket information section on right hand column, and under related comments, click the view all link. That leads to a counter which states 259 related comments. I suspect that may be the count difference between attachments and not, or officially identified businesses vs not, I’m not sure. In the 259 comments section, click the sort by posted newer-older. And that’s it. Click and read, etc, etc. It’s obvious whom the appraiser commenters are, because we’re the only ones with personal names in the lead for comment post identification.

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      • Bill says:

        Mike click here. 259 comments now with yours/AGA’s at the very top.

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    • Mike Ford Mike Ford says:

      Baggs,

      I sent a cover letter for 13 million AGA/OPEIU/AFL-CIO TAXPAYING CONSUMERS opposing:

      1. Deminimus increase-I actually made an argument as to why it should be LOWERED to $100,000.

      2. PACE PRO from First American; owner of ACI. Worst “product” ever and BY ITSELF among the best arguments for reducing the deminimus.

      Go ahead and sue me First American! You ought to be banned from originating ANY loans though your mortgage arm. If PACE Pro is a typical example of your professionalism, your clients are being HOSED! By the way appraisers, BOYCOTT the software company they own. You may have heard of it. It’s called ACI! Why should we support those trying to drive us out of business? You advertise far more than is delivered via that format. You will be lucky if state attorney generals and local jurisdictions ONLY talk to you about advertising far more than can be delivered in the vehicle you brag so much about online.

      3. Example of Big Data inaccuracy. $3.4 million property in Los Angeles reported as $17+ million dollar sale IN ERROR! COMMON error in data accumulators. Affected the average and median by DOUBLE what it should be. Suggested regulators ban ALL AVMs except those actually designed or operated by appraisers on a case by case basis…such as a comp check based value estimate, and even then only with full disclosures.  don’t expect this one to fly but at least they know the “Big data” in to lenders and AVM operators is GARBAGE!

      4. Requested that FNMA CU be banned and explained how flawed it is (article previously printed in here)

      5. As long as I was writing anyway; suggested C&R should be as per website http://www.appraisersguild.org May not have made that point as strong as Id have liked, but frankly I couldn’t read the computer screen anymore by that time.

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  9. Jeff says:

    Just left a comment opposing raising the de minimis. Thanks for the heads-up on this!

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  10. Lic.Res.Appraiser says:

    Dear Sir or Madam,

    I find it hard to believe that there is a shortage when I am a Licensed Residential Appraiser and I have only completed three (3) appraisal assignments for 2016.
    I have been constantly denied approval for Banks and AMC’s due to my License not if I am competent, licensed approved for less than 1 million dollars, compliance with USPAP or disciplined. FHA removed Licensed Residential Appraiser then Banks and AMC were eager to follow. I do not see a future for Licensed Residential Appraisers unless something changes quickly. Help Licensed Residential Appraisers keep their jobs and suggest to Banks and AMC’s to use Competent Licensed Appraisers no matter what License they hold.

    Please do not follow suit and force Licensed Residential Appraisers out of a job.

    Licensed Residential Appraisers are one of the last Entrepreneurs. They are Mom and Pop Shops in which the American Dream was founded on. Do not help Big Business shove the little man into being an employee instead of an Employer!

    As a Licensed Residential Appraiser,
    My License allows me to Appraise Residential Properties under 1 million dollars.
    I possess a skill set that 99% of the population can’t do.
    I‘m the last of a dying Breed.
    I am not a AVM,
    I am 100% old school Appraiser!

    Proud to be a Licensed Residential Appraiser!

    From: Sheri Olsen [mailto:solsen@coesterappraisals.com]
    Sent: Wednesday
    To: Appraiser
    Subject: A New Order Has been Assigned to You

    Nationwide Appraisal Management – Appraisal Compliance – BPOs – AVMs
    http://www.coestervms.com Call: (888) 485-1999

    File Number:123456
    Loan Number:XYZ
    FHA:No
    FHA Case Number:N/A
    Client Info:Union Mortgage Group, Inc.
    Borrower:John Doe
    Property Info:120 Any Street, City of your Choice, USA 09876
    Product:1004 URAR with 1004MC,
    Date Due:5 Days
    Status:Assigned
    Fee:$325.00
    Accept | Decline

    You must accept this order within 2 hours or it will be re-assigned to another appraiser on our panel.
    This order was sent only to you and is not a broadcast.
    The fee on this order is the fee set in your profile at CoesterVMS, no one at
    CoesterVMS has the authority to change and or update the fee that you charge for work in your area except for you.
    If you would like to charge less or charge more you must update your profile so the next order will have the correct fee.

    From: Sheri Olsen [mailto:solsen@coesterappraisals.com]
    To: Appraiser
    Cc: solsen@coesterappraisals.com
    Subject: John Doe (12345) has been cancelled

    Nationwide Appraisal Management – Appraisal Compliance – BPOs – AVMs
    http://www.coestervms.com Call:(888) 485-1999

    Hello Appraiser,
    We are e-mailing you to let you know the John Doe, file 12345 has been cancelled, the property address is 120 Any Street,
    City of your Choice, USA 09876. Please stop all work on this file.

    Thank you
    Sheri Olsen

    From: Frederick Schaper [mailto:fschaper@coestervms.com]
    To: Appraiser
    Subject: Update to Vendor Approval Status (Licensed Appraiser)

    Appraiser,

    Please be advised of the following:

    CoesterVMS does require all appraisers registered in our network who complete reports to be Certified. Upon
    review of your license status we have determined that you are currently Licensed and therefore ineligible to receive orders.

    Please feel free to contact us once you receive your certification and we will be happy to
    re-review your status for inclusion in the rotation to receive orders.
    Thank You,

    Fritz Schaper
    Vendor Relations Manager
    Coester Valuation Management Services
    CoesterVMS
    7529 Standish Place, Suite 200
    Rockville, MD 20855
    Direct/International: 240-345-9068
    Office: 888-485-1999
    E-mail: fschaper@coestervms.com
    Web: http://www.coestervms.com

    The Way Valuations Should Be!

    If you have enjoyed your experience with CoesterVMS, become a Raving Fan!
    Send an e-mail to ravingfans@coestervms.com describing your experience.

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    • Baggins 1-5 Baggins 1-5 says:

      I wrote fritz a correction letter before.  If you take it to the top, Coester himself will brush you off.  If you’re on the Coester approved list, and you have not demanded they send you direct assignment at 400 or better, you’re part of the problem, not the solution.  This is not deminimums for lending, you’re taking C&R minimum compensation.  Coester attracts the new appraisers, like a vulture.  Free lunch, every time a new appraiser buys the lies.  “Dump Coester”.

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      • Mike Ford Mike Ford says:

        Presumptive minimum fee in Virginia is now $450. IF appraisers WANT that, then they need to ALL update their profiles. In a week or two Coester will either be paying it, or you will know there are others in Virginia that do not believe THEY are worth more than peanuts.

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    • Mike Ford Mike Ford says:

      Lic. Res. Appraiser, I ASSUME this was before Virginia passed the $450 presumptive minimum C&R fee.

      I appreciate there are two issues here. One of which is being worked on by national ‘appraisal factories’ that hope to capitalize on the plight of licensed appraisers and trainees (not to infer the former is similar to the latter) by getting AMCs and lenders that use them to accept trainees (presumably at MUCH lower than C&R rates).

      The other issue which is more hopeful is the possibility that AQB MAY provide an opportunity for experienced non certified appraisers like yourself, to upgrade your license WITHOUT the four year degree currently required. It is NOT a lowering of entry standards, but rather recognition of the value of your experience. Those of us at the American Guild of Appraisers, OPEIU/AFL-CIO have worked on this with many other individuals, and organizations and have presented testimony to TAF and it’s Boards concerning how this one fact alone is driving many appraisers away.

      An appraisal license IS something to be proud of; or at least it used to be. Those of us that like you, have been around awhile know they weren’t handing those out for the asking. One of the BEST residential appraisers I know is licensed rather than certified. Its the result of skill, knowledge, integrity and a great work ethic.

      IF it is any consolation, your post will be read by numerous Virginia Coalition of Appraisal Professionals; and possibly by state regulators, that are already aware how COESTER pays LESS than C&R fees, and then tries to rationalize that. You’ve just shown how it is done. Thank you.

      Also the turn time! Not overlooked is that they didn’t bother to check your qualifications to see if you were qualified for the assignment they gave to you BEFORE they gave it to you. Reasonable folks would conclude then that the assignment was based on the LOW FEE rather than specific qualifications and property complexity.

      Hopefully the folks at VREAB will read this, but there is not much they can do since you provided no order number or other identifiers that they cold track.

      If you still have the specific records on this one and are a member of VaCap contact Pat Turner; or if a member (or want to be a member) of AGA then contact me. (714) 366 9404, Mike Ford or mike@mfford.com; or janbellas@appraisersguild.org (301) 220-4100. This IS the kind of thing we’d love to investigate further if you are so inclined.

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  11. JEANNIE STROUP says:

    I am a 23 year Certified Residential Real Estate Appraiser and I am opposed to raising the de minimis value.  In the Los Angeles market, first mortgage loans with low amounts default at a significantly higher rate than those with higher loan amounts.

    De minimis is used to facilitate the checks and balances system, for regular market participators. Allowing the Banks to make loans without the protection of an independent appraisal from a disinterested 3rd party (appraiser) is of no benefit to anyone except the bank.  And if public trust is the primary purpose of an appraisal, raising the de minimis value would discriminate against the lower income class since they will never obtain a credible and reliable appraisal when buying a home. Removing the protection that the higher income population is afforded is in it self discriminatory as the lower end home buyers who are the least informed are the ones excluded from the protection of an appraisal. I can see no logical reason why those lower end buyers should not have equivalent protection from the checks and balances systems.  
     
    Over the years I’ve received many calls from would-be buyers who thanked me for my honest appraisal. It protected them from taking on a bad loan because the home wasn’t worth what the real estate agent said it was, or there was some big problem with the property that hadn’t been disclosed by the seller, agent or home inspector. I myself was saved by an appraisal from over paying on a property that I was buying in another state where I was not familiar with values and I had no access to sales data. I called that appraiser and thanked him for his honest appraisal and for saving me almost $100,000. Keep in mind that just because one person over payed for a home doesn’t mean that they would be able to turn around and sell it at that same price. So where does that leave the seller when they need to sell? It would lead to default.

    The shortage of appraisers is a myth created by the Appraisal Management Companies who can’t find enough appraisers who will sacrifice the quality of their reports in order to meet the extremely low fees and quick turn times the AMCs demand.  AMCs are not paid by the banks but by the appraisers by taking a large part of our appraisal fees. Sometimes as much as 60%!  I wonder how many of you reading this could work for 60% less than what you make? Would you accept that pay and still do all the same amount of work and quality of work?  Most of you wouldn’t.
     
    During the Real Estate boom it was a feeding frenzy.  Everyone was buying and with every home that sold the sales price increased.  Appraisers were under a lot of pressure from both real estate agents and lenders to keep increasing our values regardless of if those higher prices were reasonable or supportable. I can only imagine what it would have been like if no appraisals were needed back then?  Those appraisers like myself that didn’t just bring in the appraisal and hit the value lost work. We knew that the market was not sustainable and many of us put our careers at risk to tell whoever would listen that there was a big problem, but no one cared, no one listened. In the end the real estate market collapsed and along with it our economy collapsed. Of course there were other factors involved, but I wonder where we would be today if appraisers had more of a voice and weren’t treated like data entry clerks just doing what we were told.
     
    So here we are now. Appraisers shouting to those that will listen that the raising of the de minimis is not only a bad idea because it’s discriminatory but that it’s dangerous and would have dire consequences. Is anyone listening?

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    • Mike Ford Mike Ford says:

      Agree with 99.9% of what you said! Usually the deminimus is employed where HELOCs are involved, though it could be used for first mortgages too. Whether anyone is listening or not depends on whether you sent this to the link provided in the article at top of page. TOMORROW is the DEADLINE

      I spent eight hours today and several hours last week drafting letters and back up documents to upload on behalf of 13,000,000 taxpayers and consumer members of AGA, OPEIU & AFL/CIO.

      I KNOW the cover letters will be read. It is possible the back up data will be as well.

      We (AGA, OPEIU/AFL-CIO) specifically asked that deminimus not be raised, but further that it be LOWERED to not more than $100,000. We also addressed C&R fees, Collateral Underwriter and the lack of credibility of almost ALL AVMs and AVM based products where no appraiser developed and applied the AVM search & screening criteria; and specifically how bad a product the First American PACE Pro is.

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    • Baggins Baggins says:

      Reply to JS. Great letter.  Good, compelling read.  Hope you sent that in to the official location.  Thanks.

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  12. Ofelia Hopson says:

    PLEASE DON’T CHANGE THE DE MINIMIS LENDING LEVEL FROM 250,000 TO 500,000!!!

    There is not an appraiser shortage but rather a shortage of appraisers willing to work for the ridiculously offered low appraisal fees.

    In 2010 I left the industry because I couldn’t cover my business expenses with the ridiculous low fees being offered by the Management Companies.  I left the industry because I refused to work for nothing.  Since then, many appraisers have left the appraiser industry all together.  With high requirements for licensing and no money to be made, appraisers with college degrees could do much better in a different line of work….

    The solution is not to to raise the de minimis, but to allow the broker/lender to go directly to the appraiser for loans below 500,000.  The appraiser would get full fee and there would be no shortage of appraisers.

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    • Mike Ford Mike Ford says:

      Wow! Ofelia you just gave me a Homer Simpson moment with the beauty and simplicity of your suggestion! I just spent eight hours compiling documents to send to the folks over at: OCC; Board of Federal Reserve and FFIEC. I WISH I had included YOUR comment.

      Absolutely BRILLIANT! I bow humbly in your direction Ma’am IF you sent this to the comment links previously link provided.

      If it helps I asked for a REDUCTION in the deminimus to $100,000 along with support; opposition to PACE Pro; support for C&R at government Civil Service rates as opposition to ALL AVMs, BPOs and alternative products.

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  13. Baggins Baggins says:

    Who are these people, and why did they just vote to remove the appraiser from the lending equation?  It sure is easy to make claims that appraisers are not necessary, when no appraisers are there to stand up for themselves. I recall a podcast specifically where Brian the insurance lawyer guy talked about just that.  There was some interesting content there on how some are losing homes to servicers.  I just learned how so many of these foreclosures are running through the pipeline, even when the principal debt noted on the ptd eviction letter, was far far under the actual market value.  The relatives could not assume, or even get info, or even get in position to sell, and the servicer swipes the home out from beneath them.  I never knew that in estate death, the heirs are supposed to be able to assume the note, without having to undergo a credit check.  Suggest you read through some random letters from both appraisers and the big corporations whom posted as well.  Shockers.  Here are a few good ones;  Who is the ICBA, and why do I feel so upset by this comment:  “In many instances, we believe that an evaluation conducted under the requirements of the Interagency Advisory noted above would render accurate if not more accurate results than an appraisal completed by a state-licensed appraiser.”  And they want to cut out CG’s w/ a 2m minimum raise, and want to let the speculators destroy what’s left of land, with a jump from 65 ltv, to 90 ltv on land plots.  And not a mention of how they’re stacking risk on the back of taxpayers.  No wonder people want to wind down the gse’s, if this is how lenders use those privileges.  Do you think they’d make those same decisions if they had to back the loans with their own assets and personal wealth? / Here is a good cut out of some of NCLC comments on fair estate transfers (rules I’d bet you also knew nothing about) : The OCC should clarify in the regulations implementing Garn-St Germain that servicers must recognize the assumption of the mortgage by a successor pursuant to an exempt transfer under 12 CFR § 191.5(b), regardless of default status of the loan and without additional credit screening. Implicitly, by prohibiting the servicer from exercising the due-on-sale clause, Garn-St Germain requires servicers to permit an assumption of the mortgage by these successors. Congress made no provision allowing lenders to perform a credit check on these protected homeowners or otherwise review their assumption. In contrast, during the three year “window period” after enactment of Garn-St Germain during which states’ restrictions on due-on-sale clauses continued to apply, lenders were permitted to impose “customary credit standards” as a condition of an assumption.7 Indeed, the only requirement the Garn implementing regulations currently place on a protected successor who assumes a mortgage is the continuance of pre-existing mortgage insurance.8 But the lack of regulations clearly stating that a successor has the right to assume the loan after a Garn-exempt transfer make invocation of the successor’s rights under Garn-St Germain exceedingly difficult. The OCC should clearly set out this right in the regulations and make it privately enforceable by successors, so as to promote compliance.  In the case of the regulations under Garn-St Germain, it would also allow countless homeowners recovering from the trauma of a family breakup or the death of a loved one to become obligors on the mortgage loans secured by their homes, furthering the purpose of the statute to protect such individuals who want to maintain the family home.   //

    Wow, so how many foreclosures run through monthly, that otherwise could have gone to the family.  Who said diversify away from mortgage lending work?  Why?  Apparently land is the next big appraisal rush, and reo continues on despite any market climate, due to aggressive servicers.  Wait, how do deminimums apply to land? Raise deminimums and minimum land ltv investment points at the same time.  You’ll see the carpetbaggers rushing blm lands for miles and miles.  It’s not there to be sold, but I can see so many of these complex intricate ploys coming to fruition in many diverse locations.  There should be a specific exemption that blm lands cannot be sold or considered to fall under this regulatory framework.  The implications of these changes when considered with the big picture of today are remarkable to say the least.

    Thank you Mike for being on top of this.  Unbelievable.  Someone please start a thread on the AF, to boost the comments quantity.  I did not see any of the names of the appraisers forum regulars in those letter sets.  I cannot post there anymore, because I refuse to turn adblock off.  Someone should though, that group should be good for at least 50 more comments in a single day just today.  Post a thread with; “Rush, need letters today”, and link them over here for the rest.  Remarkable.

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    • Baggs, great information (PLEASE break posts up with a couple line breaks or paragraphs though…hard to follow for these old eyes).

      I never read Garns-St. Germain but now I will in my spare time though. When I worked as an appraiser in IRS/LB&I; my primary function was review of Estate and Gift Tax appraisals. It’s interesting to note that IRS taxes an estate based upon the ownership interest that is passed from the estate; and NOT on the basis of what is received by the heirs. Those interests CAN be different.

      Because the ‘transfer’ is an instantaneous event in time, I have to wonder about the federal tax implications IF a lender was able to enforce a due on sale clause against an estate? Even the big boys don’t get to claim rights over those of the U.S. that precede their P-notes!

      You can argue that its in the promissory note, but you also have to consider the sovereign powers of the State (as in USA) which supersede everything else. ALL property rights in America derive from one of  the following sources: English Royal Patents & Common Law; Spanish Land Grants and (U.S.) Government patent.

      So, the/any ‘rights’ I may have in my property are subject first to the rights reserved by the government via Spanish Land Grant(s) modified by the Treaty of Guadalupe Hidalgo (I think): and made subject to U.S. Governmental Police Powers. Back east you folks were mostly Royal Patent based.

      Now please stop leading me astray with such interesting and educational posts! *G*

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  14. Bill says:

    Excellent comment posted by Hamp Thomas:

    Dear Sir or Madam:

    I greatly appreciate the chance to comment on the review of existing regulations regarding “Appraisals.: Standards for Federally Regulated Transactions” under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) (Docket FFIEC-2014-001).

    After working as a real estate agent for ten years and then earning an appraiser’s license, I Immediately noticed a difference in the ways agents and appraisers measured and viewed square footage. I started tracking sqft errors in the MLS, public records, and in automated valuation products. After over ten years of research, I have recently had approved two appraisal CE classes. The first titled ANSI, Home Measurement & the Power of Price-Per-Square-Foot; and the second titled Public Records, Square Footage, and the Real Estate Information Crisis. Both classes address the extensive problems with automated valuations.

    Most automated valuations are based on the sqft details contained within public records. Those records are inaccurate in the majority of homes, enough so to change home values. In large urban areas they are more accurate than others, but across the country these errors are alarming. Especially in homes with upper or lower levels, these errors are significant. Inaccurate sqft details, when utilized in a price-per-square-foot formula, create over and under home valuations. The public records system was never designed or intended to provide precise sqft data, and the automated valuation industry relies on this highly inaccurate data. AVMs are hurting the real estate industry. Unsuspecting homeowners (and real estate agents) often based home prices on the totals listed by an AVM, which can be above or below true market value.

    To extend the appraisal limit from $250,000 to $500,00, based on these highly inaccurate programs, would hurt consumers. It’s a system whose basic premise is flawed and in our current price-per-square-foot world, these numbers change home values and do harm to consumers. The appraisal industry is the best chance to protect consumers and no computerized system can ever replace the skill, experience, and local knowledge of a professional appraiser.

    I strongly encourage you NOT to adopt any action that would increase the current appraisal threshold levels of $250,000. Based on my research, raising appraisal thresholds would decrease the safety and soundness of real estate lending practices.

    I would be happy to elaborate about the problems with public records and square footage, and how that data impacts automated valuation services, and/or answer any questions. Thank you for your time and consideration.

    Respectfully Submitted,
    D Hamp ThomasInstitute of Housing Technologies
    Carolina Appraisers
    26 Pinecrest Plaza #165
    Southern Pines, NC 28327

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  15. Mike Ford Mike Ford says:

    Since we are talking about AVMS anyway…I just read this in WorkingRE. Not counting the AVM, it may well be the best service I’ve ever seen listed there, if the data reliability is decent. http://orep.org/wp-content/uploads/2016/03/bradford-3-22-16.html

    I’d pay $39 a month with no contract before Id pay NDC, CoreLogic, LoopNet and others a dime!

    Now the fun part (separate from above)

    I urge every reader here to take the 15 day free trial and start running AVMs on your own house, 2-4s in your area, friends houses and even current listings or recent sales in your area and report back with your conclusions. Lets keep notes folks. IF this unassisted service is any good, then lets acknowledge it so that we can go find new careers before all the good shifts at McDonald’s are all taken!

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  16. Kevin says:

    The De Minimus should be changed from 250K to Complex instead of $500 which is not the right way of going about this as that number does not represent a realistic gap. Analytics are now prevalent that illustrate this and they are now being one on the front end due to having to perform a TRID analysis before you can order the appraisal. If the confidence level requires an appraisal, it could be deemed complex at any value point.

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