Devastating Impact of a Blanket Waiver
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The Virginia Coalition of Appraiser Professionals has submitted an official comment to the ASC opposing the State wide appraisal waiver request in North Dakota.
VaCAP has submitted a public comment expressing concerns over the much larger consequences in allowing such a request. A blanket waiver of appraisals up to $500,000 for a 5 year period will have a devastating impact on housing, not only in North Dakota, but across the country. We envision a snowball effect with other states following and submitting waiver requests as well.
We know each and every appraiser realizes the danger that could happen if this waiver is granted, not only in North Dakota, but across the country. Please take the time to comment. The deadline is July 1st.
See VaCAP’s comments below and to submit you own comments, click here.
The Virginia Coalition of Appraiser Professionals (VaCAP) is a non-profit coalition of boots on the ground appraisers who support sound, ethical practices in the appraisal profession.
Although we have no direct knowledge of specific issues in North Dakota, we are concerned that granting a broad appraisal waiver, such as the one requested by the State of North Dakota will have far more reaching consequences than just North Dakota; Consequences that would devastate communities and destroy the housing market. Are we ready for another financial crash due to the removal of the only unbiased party to a real estate transaction?
An appraisal shortage has been claimed by lenders and their agents, appraisal management companies, across the country. This could not be further from the truth. Do delays sometimes happen? Absolutely. Are rural properties more difficult to appraise? Yes. Do they take a little longer? Yes they do. This is true for all parts of rural America and is not unique to North Dakota. Why all the talk of an appraiser shortage?
Appraisal management companies are their own worst enemy. Many have 17 plus page engagement letters, require constant updates on the progress of the report, unrealistic turn times and fees lower than what appraisers were earning 20 years ago. Simply put, many appraisers will not work for appraisal management companies under these conditions. Further, appraisal management companies do not understand the nuances of the appraisal profession, nor do they understand the challenges many rural properties bring. The mindset that each property fits squarely into the box without exception is simply false.
Appraisal management companies will email all appraisers on their approved list requesting fee and turn times. Appraisers are given nothing more than an address and must take time to research the property before quoting a fee. From experience of never getting any assignments, many appraisers simply will not waste time responding to those email blasts. The amc chooses the least expensive appraiser, regardless of their qualifications or availability.
A normal and reasonable turn time to receive an appraisal is 5-7 business days; longer for more complex properties or during busy seasons. Most amcs require appraisals back in 2-4 days, including non-business days of Saturday and Sunday. This pressure constrains the appraiser in the amount of work that can be accepted and most appraisers businesses are not set up to allow for this scenario. Add the lower fees paid by most appraisal management companies and appraisers simply solicit more profitable, less stressful business.
So what are the alternatives?
S2155 recently passed and allows for waivers under certain circumstances. VaCAP is not a fan of this legislation, as our concern is no one is overseeing the lenders and amc in their efforts to locate and engage appraisers. However this legislation has passed into law and while certainly not ideal, at least offers a better alternative than a blanket waiver.
Removing the appraisal management company from the process and lenders directly engaging appraisers will shorten the turn time and increase the fee to the appraiser. More appraisers would be willing to work with lenders under these circumstances, appraisal management companies are the issue.
Lenders could and should reach out to the state coalitions for assistance in locating qualified appraisers that cover areas where difficulties arise. This was suggested several times in the past and not one coalition has been contacted to our knowledge. Why grant a waiver when help has been offered and simply ignored?
Granting the waiver request with such broad terms in scope and time will only trigger more requests of such magnitude, further eroding an already damaged housing market. We ask if a waiver request is granted and the lender does not obtain an appraisal from a credentialed appraiser, that lender be responsible for that loan until the day it is paid in full. Taxpayers and investors should not be responsible for reckless actions of the lender. Consumer protection should always be placed ahead of lender convenience and profit.
VaCAP thanks the ASC for allowing us to comment on behalf of the dedicated appraiser professionals in the Commonwealth of Virginia.