Big Battles Ahead for Appraisers
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…complete elimination of appraisal as part of their fully automated loan processing objectives…
Our work as appraisers & appraisal issue advocates is certainly cut out for us all in 2019.
I think appraisal unity is going to be needed if we are all to take on the adverse issues affecting us. That includes AI. They still have a large number of honest, & competent members. I think the rest of us will have to let AI take care of AI issues. I’m not averse to butting heads with them on specific issues when necessary but alienating them rather than seeking to expand cooperative areas may not be the best approach for 2019. We had many MAIs and SRAs at Appraiserfest. Hands of friendship were extended on both sides.
Lenders and regulators ignoring the risks of so-called alternative SUBSTANDARD methods and approaches are certainly influenced by the false claims of accuracy and presumed expertise of CoreLogic in the analysis of data, but CoreLogic is not the worst of the culprits. Merely one of the most prolific. Like a hydra of mythology. Powerful, but not particularly bright.
MISMO is our biggest threat. Following that, TAF‘s willingness to adopt rules, language and interpretations for eMISMO Members benefit is. Next comes AARO – an organization that has no legitimate business to exist but which undermines USPAP by backroom unofficial regulatory policy setting, circumventing states legislations. Appraisers need to focus their attention there. MISMO has published their goal of fully automated loan processing (including appraisals) in their collaborative talking points memo which I have previously published in several forums including here.
They have published a desire to first END hybrids (presumably after they have served their purpose of numbing appraisers; the public and regulators to the degradation of appraisal integrity and requirements for credibility). Next, they have stated they first need commercial appraisals graphs and charts eliminated (because data mining them is not practical yet) so that they too can be replaced by automation. Lastly, they have cited the ultimate goals of complete elimination of appraisal as part of their fully automated loan processing objectives.
What started as a worthy objective to assure better communication throughout the loan process has morphed into a monster that seeks to eliminate all the necessary and long accepted checks and balances to assure mortgage market stability.
I am also willing to bet a lot of taxpayers and consumers are unaware that their tax protection laws and regulations have been eroded. Where in rare instances previously, a borrower might be asked for a copy of their tax return, most loan applications today include signing an authorization for release of electronic tax return data direct from IRS to the lender for income verification. Previously, third-party disclosures by IRS for any purpose required written notification to the taxpayer that had happened. It is still a pretty big deal among IRS agents and their superiors today. It makes me wonder how MISMO managed to circumvent this. Probably tied to the politically driven financial legislative changes being sought to strip away consumer protection and financial regulatory safeguards.
Serious privacy issues aside, such direct electronic reporting of return summaries only report adjusted taxable net income rather than actual net income. They are not the same. Asset depreciation and other deductions reduce tax obligations without necessarily reducing actual net income. Consumers have surrendered rights to privacy though regulatory agencies have finally latched on to a method of preventing one form of falsified borrower financial reporting by mortgage “loan officers” and brokers.
In fact, one has to wonder what the purpose of a correspondent loan officer or loan broker will be going into the future. If not to ‘package’ or sanitize borrower profiles, what purpose will they serve in the future? Mortgage opportunity outreach and advertising? That actually can be done more efficiently online by computerized lending.
There is a certain irony between MISMO’s intended goal to eliminate appraisers and their actually accomplished achievement of eliminating the benefits of brokered loans, and loan brokers.
In any case, our work as appraisers & appraisal issue advocates is certainly cut out for us all in 2019.