We Became Complacent

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We Became Complacent... Appraisers Are to Blame - Appraisers Blogs

We raised a fuss when it first came out, but we became complacent and accepted what was being dictated to us.

Appraisers are supposed to be messengers of the market, right? If that statement is accurate, the question everyone needs to be asking is why appraisers are not allowed to do their jobs?

Without getting into a lot a finger pointing and blame, I am just going to come right out and say it. Appraisers are to blame. Not because appraisers wanted to influence the market, but we allowed others to take control and we sat by and did nothing. Yes, I said it, appraisers sat by and did nothing; appraisers are to blame.

When UAD was first introduced, it changed the way we report quality and condition of not only the subject, but the comparable sales. The UAD system is seriously flawed and bias. It does not allow an accurate reporting of the market, nor does it reflect how buyers and sellers interact within the market. The only explanation is to make every property fit squarely into the box to quantify an emotional purchase. Emotion cannot be quantified, it just can’t. We raised a fuss when it first came out, but we became complacent and accepted what was being dictated to us.

The purchase of a home is not like purchasing a gallon of milk or gas for your car. It is an emotional experience that cannot be quantified in any logical sense. Yes, common sense and logic play a part, but the primary trigger to make a purchase offer is based on that gut feeling when you walk into the house. Or maybe the house reminds you of your granny and sometimes it is a quirky or cool little thing like a 1950’s built in turntable that resonates. The point is emotion is the controlling factor.

If you ever watch HGTV, and we all know you do, the buyers always compare the properties to make their decision. They weigh the pros and cons, but ultimately their decision is based on emotion… I really loved that back yard; the master closet was exactly what I wanted; that kitchen was to die for, etc. I have yet to see on HGTV or in real life, any buyer choose randomly and say any of those houses will do. The UAD system does not reflect true market comparison between properties relative to the subject. Anyone who thinks otherwise does not understand how the market works. Appraisers are not being allowed to report the market accurately with UAD. Appraisers became complacent and accepted UAD.

Sorry Fannie and Freddie, you were wrong then, still wrong and are going down the wrong path now.

Fast forward to appraisal waivers and bifurcated appraisals; a bad situation just became worse. That same inaccurate data from UAD is now the sole factor in what is being called modernization. Is anyone at Fannie and Freddie intelligent enough to understand basing decisions on a flawed system with flawed data will never have a positive outcome? Remember the old saying two wrongs do not make a right? It is so relevant here.

Once again, appraisers are making a fuss, but some appraisers have begun to accept this modernization and are performing bifurcated appraisals. If we do not stop being complacent, they will become the norm. Then what?

The handwriting is on the wall, the market will crash once again. Yes, somehow, appraisers will be blamed, maybe not because of flawed appraisals, but because appraisers were complacent and allowed it to happen.

If you are reading this, most probably you are an appraiser. If you are betting on a second career as a greeter at Walmart, I hate to break it to you, Walmart has eliminated those positions.

I understand many markets are extremely active and appraisers are busy, but you seriously need to think towards the future because that work will dry up and then it will be too late. Remember what happened in 2008? How many appraisers took on part time or odd jobs to feed their families? How many lost their homes? How many left the profession they love? How many of your friends and neighbors suffered? How many have never recovered?

Some appraisers may think we are all doomed and we cannot change what is happening. I say hogwash! Each and every one of us has the ability to control who we do business with and what assignments we accept. We have control over our fees, what goes in to our reports and most importantly, we have control of our livelihood.

Don’t become complacent Do the right things.

By Advocate. The author is a Certified Residential Appraiser and has chosen to use the pen name Advocate to protect their identity. Many famous people including Benjamin Franklin, Agatha Christie, and Steven King have written under a pen name for various reasons. Just Google pen names used by famous authors, there are only 45,700,000 results to choose from.

Image credit flickr - Gordon Chirgwin

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33 Responses

  1. Avatar Penny Namelessappraiser says:

    Troll Alert: This comment/commenter was flagged as suspicious!

    There are a couple of reasons for this. First, we, as appraisers, are powerless in the face of Fannie, Freddie and the banks. All of Caesar’s appraiser armies aren’t going to make a bit of difference. The aforementioned parties can do pretty much whatever they want. Good luck stopping them. We’ll be spinning our wheels while they leave us in a cloud of dust. Second, and more important, technology has far surpassed the intellectual capabilities of most appraisers and computers can do a better job than we can. Technology has turned appraisal into a fact-based science project, while the product that we produce is a rather inaccurate opinion-based art project. The only need for us as appraisers are for the riskiest of transactions. Technology can handle valuation for most run-of-the mill transactions and for those that it cannot the banks are willing to accept the risk…or they’ll get an appraisal.

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    • Avatar Cotton Cornell says:

      Penny Clearly works for an AMC, GSE or is just not fully aware of the appraisal process. Good luck with that mindset!

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    • Avatar WStedman says:

      IF APPRAISERS WILL ALL GO ON STRIKE AT THE SAME TIME, FOR A GIVEN PERIOD OF TIME, guess what, we will all get what we want. There are always appraisers out there that don’t even keep up with what’s going on in our industry and will take assignments, any assignments for peanuts. If we got the word out and got even enough Appraisers to go on strike together, it will work.

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      • Baggins Baggins says:

        I’ve been on strict amc strike for around 3 full years now, and had only worked part time with them before that, working various reo direct, private, and always seeking direct assignment clients. The go on strike thing is silly. 3 out of 4 appraisers nationally do not complete amc work. 1 out of 4 appraisers still continues to cross the line. If the 25% of appraisers whom take in over 80% of mortgage lending work want industry changes, they’ll simply have to learn how to say no on their own. Nobody is in the business from saving appraisers from their own poor business decisions.

        If appraisers let clients or agents of clients take advantage of them, they should not be surprised the behavior continues.

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        • Avatar Seneca says:

          1 out 4 appraisers work for AMCs? Pulled that stat out of your $%&^#

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          • Baggins Baggins says:

            No that’s from the FNMA white paper on appraisal quality which specifically parsed the number of appraisals in their database which came from amc’s. The figure was something like 20,000 appraisers completing so many orders. They specifically parsed away all appraisers whom did not complete amc work, which is what made the analysis such a sham and why we focused on it. It’s absurd to make an argument that amc’s do not influence appraisal quality, while only analyzing work from appraisers whom work with amc’s. So many appraisers whom do not work with amc’s, do not work with them for very specific reasons.

            Dive in you big shot you. Prove me wrong.

            http://appraisersblogs.com/FHFA-working-paper-credibility-questioned

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            • Baggins Baggins says:

              Do you think FOIA would apply to the CU database? What about these sought after stats regarding amc vs non amc appraisers completing FNMA work? All we have is limited data for inference.

              Oh this might be a genius moment. Would FOIA apply to CU data? They’re going to need a big old mailing envelope. Ole! Who will accept the CU FOIA challenge? Any takers?

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  2. Matt McCormick on Facebook Matt McCormick on Facebook says:

    Zero leadership.

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  3. Donna Corrado on Facebook Donna Corrado on Facebook says:

    Just say No and unite

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  4. Jaie Blauvelt Woltjen on Facebook Jaie Blauvelt Woltjen on Facebook says:

    From the sound of it most of us aren’t complacent . It falls on deaf ears though. How do we battle the big banks?!

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    • Avatar nick barberini says:

      Unionize, organize. I’ve always thought the biggest disservice to appraisal is not having it taught in the classroom of universities. You don’t have accounting as some disorganized mish-mash. No. You take it in college, you get out, study for CPA and then you’re good to go. This is what should be done with appraisal. No one wants to learn to be an appraiser after having finished college and accept that they are going to make 30k for a few years before they get good at what they’ve chosen to do. The classes that are taught are sullied with brokers and people with lots of letters but aren’t the letters of appraisal…those who equate what they do to appraisal. It is not, nor has it been the same.

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    • Jaie we start out by joining a Guild, coalition of other active peer association. No one person can do it all.

      The American Guild of Appraisers, OPEIU, 44, AFL-CIO engages appraisal issues on many fronts, but what we are most known for is our work in helping appraisers defend themselves against false state regulatory agency complaints.

      The Guild, Coalitions, ASA and AI have occasionally come together for specific issues with positive results (stopping PIWs in TN for example; preventing PACE PRO’s first version from being released-broadening the discussion on bifurcated hybrid garbage and getting TAF to modify its former increased appraisal barriers to license -upgrades). AI is currently leading the charge to establish a Repose period (Statute of Limitations) on appraisal recourse and complaints.

      There is so much more to do. All organizations need more volunteers to help us identify and respond to emerging issues. For more information contact Janbellas@appraisersguild.org

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      • Baggins Baggins says:

        How to fight big banks? I think they talked about that before, at the boston tea party, the signing of the declaration of independence, and other historical moments.

        Abe lincoln himself regarded corporations as being more dangerous to liberty than a standing army. Drawing from the lessons of the blessed whom came before him.

        Know your history or be condemned to repeat it. What’s your debt position? If it’s anything other than zero, the lenders are winning. We need loans, occasionally. It’s when citizens prioritize fiat spending over real property ownership, that’s when it gets messy. Money is power. Debt is servitude. There is no two ways about it.

        As long as the government is involved in lending, expect more of the same.

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  5. Avatar Bill Johnson says:

    Were we complacent in 2009 (?) when we voiced our opinions 10,000+ strong via an appraiser petition? Appraisers have been speaking up and out for a long time, but if others in power avoid the truth and make up their own reality for profit, don’t shoot the appraiser when others value dollars over public interest.

    Seek the truth.

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    • Bill, ‘we’ (collectively-since i was working for Treasury then & couldn’t figure out why AICPA didn’t follow USPAP) were still learning how to play the game then. Petitions are never more than a first step. They have to be backed up by a carrot or stick. They have to be directed to the right people at the right time. The signers also have to show or demonstrate ongoing unity.

      I disagree with complacency being our biggest problem. Oh, don’t get me wrong-many if not most ARE complacent with a “let someone else do it” mentality, but they aren’t the sole problem. MUCH, MUCH worse are the self serving appraisers that have cushy jobs owning or managing AMCs and other service companies.

      That’s right, our own ‘peers’ will inject counter-arguments into any discussions of problems and possible solutions. It still goes on today. Just look at the Evaluation discourse and efforts.

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      • Avatar Bill Johnson says:

        100% agree Mike. I don’t necessary blame them (former / current appraisers / appraisal software owners / coach’s, etc.) for seeing the writing on the wall and going to the dark side to make money off the appraisers backs, but don’t take us for fools as we see it where others may miss it.

        Seek the truth.

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        • Baggins Baggins says:

          There is no requirement to be kind or forgiving to people whom sell out liberty for a dollar. In fact, quite the opposite is true. It’s time to send so many of these people to prison.

          Without consequences to a person individually, the de facto expectation is they will operate as if they are above the law. Because they are. Taxation is theft. So is bailing out corporations with taxpayer dollars.

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  6. Avatar Seneca says:

    Who is accepting these $75 desk tops when you can make $450 for an hour & half or 2 more work. It’s not like there is a lack of volume of assignments. I turn down 6 full appraisal a day because I’m swamped. Call out and list the name of any appraiser you know doing these bifurwhatever appraisals.

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    • Avatar Blue Chip says:

      I couldn’t agree more. Put these supposed professionals ON BLAST. It’s time to unionize and organize. Join the AGA today. The more professionals that join the more our voices will be heard. CAR INSURANCE sucks UNTIL you get into a wreck. Then it’s awesome depending who is at fault. The AGA is STRONG and defends it’s own with independent peer review. I’m proud to be a member. The only way to get through this mess and regain control of OUR industry is to unite.

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      • Baggins Baggins says:

        The paper light 2.5 hour appraisal for 450 that leaves you knowing less about real estate than before you read it? And conflating the issue of industry wide collusion and racketeering with car insurance? Neither one of you have a good handle on these issues.

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        • Baggins Baggins says:

          Also, the union is a great idea. Even without the ability to quote unquote strike, the AGA has brought many important issues to the front lines with policy makers. The way many unions work is they attain negotiation agreements and are legally set in place as the entry point for all workers whom work with a particular corporation. The union claims legal negotiating rights for all workers. That can’t happen in a national appraisal industry where we source work from a variety of disassociated corporations. Only at a state or federal level could unions be mandated in this industry. But then people may argue about political spending and influence. There are no easy answers. Each appraiser is a union unto themselves in terms of negotiating power and engagements. Every instance of individual action or non action matters. The AGA appears to be effective at policy considerations and individual defense. If you can afford a membership, go for it.

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          • You cannot mandate union membership. Period. Either people join because they see a need for collaboration on common concerns with others that are like-minded, or they do not. Unions are also traditionally supporters of one specific party. While there is a pragmatic reason for much of that support; we also need to be mindful that it alienates fully 1/3 of the population that favors the other side or another 1/3 that crosses over to both sides of the political spectrum.

            AGA has tried to bridge that gap. We are supportive of issues that benefit our members-regardless of the side of the political aisle they originate from.

            To try to force membership is often self-defeating. There are areas where traditional ‘union shops’ still function well, but just as we see efforts to circumvent regulatory compliance among our clients, so too do unions see similar circumvention.

            IF appraisers had the same level of unity on all issues, then there would not be a need for a union to begin with. We would already be demanding the same levels of professional respect nationally

            There are nearly as many appraisers that support AMC / FNMA / TAF / Banking / MISMO abuses as there are that do not (figuratively-not literally).

            Every time an appraiser signs on as an AMC Chief appraiser; or functionary of CRN or similar parasitic services and advocates to maintain the status quo or worse, to expand third party interference, they are putting another nail in our professional coffin.

            As a guild, we are not prohibited from striking. On the contrary. We can strike all we want. We simply don’t believe the necessary numbers can be achieved due to divisiveness amongst appraisers. Strikes don’t work if 50% to 75% of the appraisal population would only see it as a windfall of work opportunity

            Case in point. Hybrids and evaluations. There is NO LEGITIMATE reason for an appraiser to do either. BOTH undermine our profession and directly lead to our demise. Yet clearly appraisers are doing both. Otherwise, the discussion about them would have ended over six months ago. Either we are going to follow minimum standards, or we are not. As a professional, I think there must be standards.

            The unenforceable crap contained in IAEG ‘final rules’ for evals are not meaningful standards. They are lip service platitudes.

            Tortured USPAP reinterpretations and flat out deceptive custom forms for hybrids continue to be offered despite FNMA 1004P experimentation. As poor as 1004P are, users, don’t want to pay reasonable fees there either.

            We are working on a lot of issues at AGA. Especially now that our new revised affiliation agreement with OPEIU was signed (09/06/19). C&R is still among them. The FTC put that one on hold effectively in all states, but once it is over, then there should be a lot of lawsuits in places like Virginia, where the VA fee was set as a minimum but no one enforced it.

            We urge union membership. Voluntary membership. Especially new members that want to help other appraisers.

            FYI-The American Guild of Appraisers, OPEIU #44, AFL-CIO is the ONLY guild or coalition or professional peer association that directly helps our members defend themselves; get removed from do not use lists, and helps recover unpaid fees.

            http://www.appraisersguild.org or contact janbellas@appraisersguild.org

            4
        • Avatar Seneca says:

          There goes Baggins again who says he spends 8 hours on one appraisal. Shhhhhhhh

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          • Baggins Baggins says:

            It’s a fact. That’s why I’m first in line when it comes to panel approval. It’s give or take, to each his own. Save up for lawyers and have another career ready, or do the job right and detailed the first time around. It’s strange, I see these amc and speedy appraisers buzz past me through the years, but I rarely see them later on. They’re like shooting stars, getting a cut and then getting pushed out.

            One might argue that if someone else typed the report, someone else did the research, someone else did the inspection, and someone else’s program suggested adjustments, the signing appraiser actually did not have any opinions of their own to contribute.

            4
            • Avatar Bill Johnson says:

              I get it Baggins. I just spent 30 minutes looking at plat maps and working with the condo HOA manager just to figure out what phase my 3 COMPS were in. You and I both know that 90% of the appraisers out there would blindly indicate phase 1 on the sales grid without spending a minute getting to the truth. Hell, I have an entire paragraph defending my actions (HOA contact, name, documentation, etc.) because in part I can see that other appraisers (A la mode / peer comps) have labeled the phase numbers in error. I’m sure others coach their employees to spend no more than 30 seconds on such issues and as a default just follow the crowd (phase 1), but not me.

              Update. I just spent an additional 30 minutes with the HOA manger regarding the ratio of owner occupied versus rental percentage on the condo cert, versus what is indicated per public record files. Turns out, the HOA sends out voluntary questioners to all owners and unless the owner responds indicating its being rented, they assume its owner occupied (40% variance from public records). Do you think the form fillers in India are placing calls to the HOA to get down to the bottom of the variance, or are they coached to ignore the difference and just blindly indicate whats on the condo cert? Some would say, “Screw it”, how can I complete 4 to 8 appraisals a day and sell my merch. to the masses when the truth takes so long to discover.Time for another paragraph.

              Seek the truth.

              1
              • Baggins Baggins says:

                Colorado just eliminated HOA manager licensing, only a few years after it had began. I read once CO has the highest per capita volume of hoa pud communities.

                Thank you for adding another 10 minutes to my reporting time. Is that important, I suppose in some scenarios. Anyone have the link to that old article on how an appraiser has so many thousands of individual decisions to perform in order to analyze and fill properly for every single report? Someone wrote an article on that once.

                0
                • Avatar Bill Johnson says:

                  After tracking/stalking an agent for 3 days regarding comments within her MLS listing (“Seller to pre-pay 2 years of HOA fees”), but yet no dollar amount was listed in the concession box of her MLS listing, she confirmed some $7,200 was in fact credited to seal the deal. In using A la mode software, and with the ability to see what other appraisers indicated when they used this comp, 9 out of 9 incorrectly indicated $0 in concessions, versus what the truth was ($7,200). Through local area analysis, the market reaction to such credits were near 75 cents to the dollar, or in other words, the comp warranted a negative dollar concession adjustment of $5,400 (no adjustment applied by 9 other appraisers).

                  Knowing big brother collects the data from the other 9 appraisers, and my numbers differ from a panel of my peers, a paragraph is needed to explain what the truth is versus what other sheeple have indicated. No way people are going down the rabbit hole to seek the truth on there way to completing 4 to 8 appraisals a day.

                  This is why Seneca appraisal reports can take 8+++ hours to complete.

                  Seek the truth.

                  2
          • Avatar Bill Johnson says:

            Perhaps its your market Seneca. Being a San Diego appraiser where there’s high density (Search results often = 80 to 100 sales / year), there is a tremendous amount of time spent e-mailing, calling agents, driving sales/comps, actual trips to the building dept. (on line records date back only to 1990), not just stating R1 for zoning, and blindly saying yes to highest and best use. Give me a market where there are 10 sales to analyze anytime over a 100 and my reports would be done faster. I Without boilerplate comments, its not unusual for my reports to contain 7,000 to 8,000 words that actually explain what I did and why I did it. Hell, I just took an assignment today (1 bedroom / 33rd floor) where there are multiple class action lawsuits (builder indicated GLA versus actual GLA, HOA versus builder, windows, balconies, etc.), where 8 hours might be spent just figuring out the impact.

            Seek the truth.

            2
  7. Avatar Michael Curtis, SRA, AI-RRS says:

    One of the reasons the UAD came into existence was that appraisers were being “creative” with their definitions for items like quality and condition; in many cases making wild and unsupported adjustments. Nationwide, FNMA found 78 different descriptions for condition and 62 descriptions for quality. The UAD is far from perfect, but at least brings some sort of uniformity in reporting by at least providing standard definitions that are included in every report. Even though adjustments between 2 comps that are both C3 can be different with the appropriate supporting commentary, at least the client/readers/end users can understand where we are coming from. Many of the reports I review now show that about half of the appraisers either do not read the definitions or do not understand them; I see many cases where form input is being manipulated to get past the software making it UAD compliant. Things even more extreme were proposed at the time (such as drop down boxes allowing only fixed comments) but were nixed by the committee of appraisers that FNMA selected for input when the UAD was as being tested. All of the major appraisal organizations were involved, so appraisers did in fact have input in the final version.

    1
    • Avatar Milton P says:

      That maybe true, but UAD is not a reflection of the market. Never had been and never will.

      6
    • Mike, respectfully those are the excuses for UAD coming into being-not the reasons. Not at all. The sole purpose of UAD was to implement the ultimate goal of MISMO for full automation of the entire loan process including appraisal. FNMA pioneered the UAD for the purpose of stealing (data mining) appraiser information without having to pay labor costs to have it transcribed from delivered pdf reports.

      The ‘creativity’ you cite as being negative was actually a good thing and all the proof one needs that a C1-C5 /Qa-Q5 system is inadequate. There is not a real underwriter alive today that had any difficulty understanding what the 68+ variants of of ratings meant. Avg-gd; or avg.(-), VG-Ex were all perfectly clear to anyone with more than a years experience.

      Yet (some) reviewers today can’t seem to grasp the concept that a C3 may or may not have an adjustment when compared to another C3.

      Any system that requires a two-page addendum for readers to understand it is fatally-flawed out of the gate. There is no ‘added clarity’. It should surprise no one that UAD restricted fields have to be bypassed in order to upload completed reports. UAD planners & designers screwed up! THEY failed to anticipate real-world conditions.

      Your valid arguments about unsupported adjustments are not addressed by UAD at all. UAD should have encouraged greater explanatory comments, but it had the opposite effect. Like so many historic FNMA ‘policies’ it had the effect of reducing, rather than enhancing appraisal quality. The added burden of conforming to computer entries and recognition software (which is more cumbersome today than when it started) is refocussing time away from appraisal quality enhancement, and toward UAD ‘meshing’.

      As an aside, how, many of those reviews that you do today are both SR3 and SR4 compliant? I don’t know ANY appraisers regualrly receiving field review requests anymore. Probably because no one will pay for a quality review.

      Are you doing 1 a day or 30? I ask because it makes a difference in one’s perspective. Back when I used to do very high volume ‘reviewing’ for our in house appraisers (’91-’93) I rejected 35% to 50% as being deficient initially EXCEPT that no employer; nor client will permit any reviewer to reject that many. Instead, you are forced to consider ‘marginally’ acceptable instead, as the metric.

      FNMAs idiotic proposals have only been surpassed by TAFs acquiescence to special interests in rewriting standards to facilitate reduced quality. Specifically SOW Rule versus Departure Provision. Except in academically structured scenarios SOW now facilitates blurring of former mandatory requirements under USPAP simply by claiming they are not in the agreed SOW.

      In 1989 USPAP was a pretty good set of guidelines for MINIMUM standards…except the mortgage industry thought even those were too onerous. What we have today is little more than a crapfest of cobbled together accommodations. A crapfest that most state regulators cant even follow.

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    • Wendy Stedman on Facebook Wendy Stedman on Facebook says:

      Appraisers were able to adjust for extremely important features before the UAD Quality and Condition put us into boxes. I don’t doubt that quality and conditions descriptions and definitions were broad before, however they have been made entirely too narrow now. In addition, UAD being forced upon us has tied appraisers hands, along with other forced coercion of our process, and made our reports devoid of the very expert opinion we are paid to give. I’m also a Realtor and see a lot more “wild” and unsupported adjustments now than I ever did before the UAD and other forced changes.

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  8. Baggins Baggins says:

    Some still regret the people did not think carefully about their future in 1913.

    https://www.youtube.com/channel/UCkJ1N-7g9Q6n7KnriGit-Ig/videos

    3

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We Became Complacent

by Guest Author time to read: 3 min