Being on HUD’s FHA Appraiser Panel and performing FHA appraisals is an essential source of work for many appraisers. However, according to a recent legal brief filed by the National Association of Appraisers (NAA), HUD has been quietly blacklisting appraisers for years without due process.
At the center of the case against HUD (U.S. Department of Housing and Urban Development) is Ken Taggart, an appraiser in Penn., who was removed from HUD’s roster in January 2010. Taggart says that his mortgage servicer, GMAC Mortgage, LLC, mistakenly forclosed on his FHA-insured mortgage. Since then, Taggart says HUD blacklisted him without due process to appeal the decision, effectively cutting off FHA work and threatening his livelihood.
Taggart is currently suing HUD and vowing to fight until he is restored to the FHA roster. In addition to clearing his name, he hopes HUD will change its policies to ensure that other appraisers receive due process.
Foreclosure and CAIVRS
Taggart had an FHA-insured mortgage serviced through GMAC Mortgage, LLC. He alleges that GMAC erroneously (more…)
What really caused the real estate market to collapse?
While much has been written about the multitude of complex reasons behind the collapse of the real estate market in 2007, it is the opinion of this writer that there is one primary reason for the collapse. Simply stated, banks loaned money to borrowers who lacked the ability to pay back the loan. That’s it, pure and simple. If you loan money to someone who has no resources to pay back your loan, you will lose money almost every time and it matters very little if you have any collateral for the loan. This should be known as the prime directive: “Thou shall not loan money to someone who cannot pay you back.” There certainly are many other reasons behind the collapse, but if the “system” had not violated the prime directive the collapse would not have been so sudden, so precipitous, and so prolonged
If it makes you feel any better, the list of characters that also deserve some of the blame is as long as my arm (34” sleeves). This list includes, in no particular order:
- Elected officials who thought the banking system should loan money to anyone who wanted to buy a house plus many who did not. Some of the housing bills passed by our elected “leaders” were tantamount to acts of treason.
Some appraisers are now being targeted in lawsuits by an entity named “Mutual First, LLC.” It has filed at least 35 lawsuits since May. Mutual First is not a bank, credit union or any kind of regular financial institution. It’s an entity aiming to make money for investors by suing appraisers. Based in Texas, it acquires foreclosed loans for small fractions of the original principal amounts. It then files lawsuits against the appraisers who performed appraisals years ago for the original lenders who made the loans. In its lawsuits, Mutual First claims that the appraisers are liable to Mutual First for damages as the result of negligent overvaluation in the appraisals. The damages demanded include the full unpaid balance of the long-ago foreclosed loan (some were foreclosed 4-5 years ago or more), even though Mutual First itself only paid a very small amount to buy the loan after it was already foreclosed and after the appraised property no longer served as security.
Savant Claims Management appears to manage the litigation against the appraisers (more…)
Alliance Allows San Diego-Based Property Data Service to Offer E&O Coverage at No Additional Cost to Qualified Residential Appraisers0
SAN DIEGO, CALIF. (July 28, 2014) – National Data Collective (NDC), a San Diego-based property data company serving real estate professionals, announced today that it has formed a strategic alliance with CRES Insurance, LLC, a leader in protecting the real estate industry with risk management services and insurance solutions.
NDC offers a subscription-based data service to appraisers, providing access to a database of full property profiles, assessor records, deed history and comp reports for more than 130 million properties nationwide. NDC has joined forces with CRES to provide its customers with Appraiser One, a product that allows appraisers to get their data and E&O together for one low price. Through the partnership, appraisers who purchase a subscription to NDC data will receive E&O coverage from CRES at no additional cost. (more…)
At least one appraisal management company (AMC) put a new accent on appraising by having the point of contact be in another country—specifically, a call-center in India. According appraiser Bill Streep, this is how the conversation went:
Bill Streep: “Hi, this is Bill.”
AMC Staff: “HELLO! Bill. Could I please speak to Villiam?”
Bill Streep: “This is Bill.”
AMC Staff: “Yes, Bill. I need to speak to Villiam.”
Bill Streep: “My name is Bill, it’s short for William.”
AMC Staff: “Yes… (insert long pause) Could I please speak to Villiam?”
Bill Streep: “This IS William.”
AMC Staff: “No, this is Bill. I need to speak to Villiam.”
Bill Streep: “Hang on…” I set the phone down and shuffle some papers around.
Bill Streep: “Hello, this is William.”
AMC Staff: “VILLIAM! HELLO!”
Bill Streep: CLICK.
While the above story is funny, wasting time and money are not. Ever since AMCs gained prominence, appraisers have lamented having to deal with inexperienced AMC staff who have little or no (more…)
One of the requirements of your job as an appraiser is getting to the property to appraise it. Unless you are appraising a property within a few blocks of your own house or office, chances are that you will be driving there. Today, the costs of driving — higher gas prices, higher insurance premiums and higher maintenance costs — have gone through the roof.
This got me thinking: the cost of almost everything that we, as appraisers, need to do to successfully perform our job has increased substantially. Higher insurance premiums, higher costs for the tools required by USPAP guidelines, higher vehicle costs, and higher costs associated with working for an AMC means we forfeit a large portion of our fee. What we’re left with does not give us much purchasing power.
Let’s rewind 20 years
Two decades ago, gas cost about a dollar per gallon. Let’s face it – almost everything (milk, eggs, etc.) was cheaper, including obtaining and maintaining your appraisal license (more…)
On May 23, 2014, the Court of Appeal for the Fourth Appellate District, Division One, State of California, issued a very interesting decision on whether a plaintiff can successfully plead and argue fraud based on comments made about the concluded value of real estate that was appraised. The case is Graham V. Bank of America, N.A., et al. Although this ruling is unquestionably useful for an appraiser being accused of appraisal fraud, it probably is not the magic elixir many will proclaim it to be. This is because the appraiser involved in the lending transaction, which was the subject of the lawsuit, was not named as a party to the lawsuit. Nonetheless, much of what the Court of Appeal said about appraisals and fraud is worth examining and understanding because it may provide a road map for the defense of an appraiser who is sued and must respond to allegations of fraudulent conduct.
The essential facts in Graham are as follows: In 2004, Graham borrowed a total of $489,000 to purchase a home in Vista, CA. The amount borrowed equaled the purchase price of the home (100% LTC) and Graham borrowed $391,200 under a first trust deed and the balance of $97,800 under a second trust deed. At the time, the lender involved had an appraisal report done and the appraiser concluded the value of the home was $525,000. Graham alleged there was some discussion about the appraisal (more…)
For the past two months, VaCAP has participated in a networked council consisting of 13 professional state appraisal organizations in responding to the Agencies request for comments of the Proposed Rules on Minimum Requirements for Appraisal Management Companies:
This letter is in response to the Agencies’ request for comments on the Proposed Rules on Minimum Requirements for Appraisal Management Companies. The undersigned represent a networked council of professional state appraisal organizations. We appreciate this opportunity to comment and thank the Agencies for their work and interest in creating and implementing appraisal management company (AMC) regulation.
The proliferation of AMCs is a relatively recent phenomenon, resulting from the May 2009 Fannie Mae implementation of the Home Valuation Code of Conduct (HVCC)/Appraiser Independence guidelines.
By their design, AMCs’ operations cover an extremely large amount of geographic and lending territory. As a result, they handle a tremendous amount of monies and interests associated with the various services they attempt to offer to lenders and consumers. Many AMCs not only supply appraisal services, but also title and other real estate related services. The potential for a single AMC to affect an enormous number of transactions should not be underestimated. Our members have already witnessed several large AMCs closing their doors without notice and filing for bankruptcy.
The professional appraiser’s business, as well as the appraisal profession, have been decimated by the increasing market dominance of AMCs. Trust and credibility (more…)
Current economic trends suggest your appraisal practice will not survive beyond 2015.
Appraisers are running for the exits, with many moving into Ad Valorem, and some into cost estimating. Client accounts you thought were safe have been converted to ether and dispersed among a dark refinancing void.
You’ve gone from completing six appraisals per week to camping by your email, in hopes of an AMC broadcast assignment appearing. Where you once had time to think about accepting the assignment, you now have less than 2 seconds to accept, because like you, ninety five other appraisers are competing for the same assignment in this down period.
Before you can click on the email, the assignment has been snatched by an appraiser using a faster connection, and quick-draw keyboard. By the time you acknowledge that an email has arrived, the assignment has already been accepted, and the accepting appraiser is on his way back from looking at the property. OK, well maybe not on his way back, but you get the point. (more…)
In my years of appraising, I have had had to argue with many Lenders, Attorneys, and general pains in the butt. What many of us have found is that when Banks screw up, they come knocking at your door.
What we need to do as appraisers is to state the separation of Lending liability to appraisal liability. Please consider utilizing the following statements in your reports after your statements of intended users that is required in your reports.
I have been using this for years in my reports as it returns liability for poor lending decisions back on the Lender – It is not a cure all – but will clearly state that you had no part in poor underwriting and qualification of the Borrowers:
The appraiser is engaged by client to render a value conclusion utilizing similar comparable sales within the subject’s market area. From analyzing and adjusting similar/dissimilar features of the comparable sales, appraiser is able to (more…)
In the last week, CoStar Realty Information has filed several lawsuits against commercial appraisers and real estate brokers for intentional copyright violations and fraud relating to the alleged use of CoStar property data and photos without proper registration/payment.
If you use CoStar, be sure you are doing so properly and within the terms of your license agreement. Examples of the types of alleged situations that have led to CoStar’s recent and past copyright lawsuits are: (1) sharing IDs/passwords, (2) obtaining an ID/password for an appraiser or other person who is not employed with the company licensed by CoStar, and (3) using IDs/passwords outside of the facility for which the ID/password is licensed.
In its latest round of lawsuits, CoStar also has filed a lawsuit naming (more…)
Thinning wallets and dwindling fees for work performed are nothing new for the appraisal community. Yet in their latest income-reducing move, AMCs have sparked an outcry by requiring appraisers to foot the bill for additional services. These charges are further cutting into appraisers’ fees, which already suffer from AMC management fee deductions.
Recently, FREA uncovered three hidden costs being introduced by AMCs – which of these have you experienced?
An increasing tendency among AMCs is the passing of technology fees on to appraisers. When an AMC orders a home valuation, the appraiser must submit the report through the AMC’s authorized software. However, software providers, such as Mercury Network, charge a per-report transaction fee, which is billed to the vendor (i.e., appraiser) rather than the AMC. Essentially, in order to submit a completed work order as requested by an AMC, an appraiser must cough up anywhere from (more…)
If you are a real estate professional, please read this, especially if you fear your own business is being damaged by all of the new regulations designed to “help” the real estate industry recover.
Imagine you, a hardworking, law abiding taxpayer, are sitting at home one evening watching television when there is a knock at your door. Somewhat surprised by the late hour of the visit, you get up and open the door and three IRS agents barge into your home and declare, “We are from the IRS and we are here to help.” I think it’s safe to say you would be both shocked and concerned. If you are involved in residential real estate, what has happened to most of you since the market collapse began in 2007 is similar to this scenario. You see, most professionals working in residential real estate were doing the right thing all along so many of the knee-jerk decisions made after the market collapsed are about as useful and helpful as three IRS agents showing up on your doorstep in the middle of the night.
There’s TARP I, TARP II, HVCC, Dodd-Frank, CFPB, AMC, UAD, UCDP and AVM, and now there is something new called AQM. In typical government fashion, the medicine being administered may actually be killing the patient. In this case, the patient is the residential real estate market. Thanks to the power ($$$$) of lobbyists representing (more…)
In September of 2013, Joe Appraiser (not his real name) was notified by one of the big banks that he had been placed on ineligible status due to an incorrect review. Immediately, Joe contacted the bank regarding his placement on the “do not use” list believing this was all a simple mistake. In hopes of reversing his eligibility status, Joe submitted a detailed rebuttal where he provided a line-by-line response to each alleged deficiency in his appraisal report.
In part 1 of our series on blacklisting, we talked about the process Joe Appraiser went through to be reinstated using his FREA Professional membership benefits. After several months of back and forth emails, FREA was able to have Joe removed from the bank’s “do not use” list and reinstated. However, even winning comes at a cost. Joe’s fear of repercussions for even letting us tell his story made it necessary for him to remain anonymous. Plus, while he was on the blacklist, his business dropped by more than 30%.
The high cost of being blacklisted
Joe’s business suffered greatly just because he was blacklisted by a single big bank (more…)
When a lending institution loses confidence in an appraiser’s work, the bank or AMC will put them on a “do not use” list, also known as a blacklist.
In some cases, this means an appraiser has made a costly mistake. However, some banks are taking blacklisting to an extreme by treating appraisers as guilty until proven innocent without cause or reason why.
If unchallenged, this practice can be devastating because being blacklisted even once can have permanent detrimental effects on an appraiser’s career, income, and reputation.
By engaging in blacklisting lenders are trying to insulate themselves from future risks when doing business with Fannie Mae and Freddie Mac. However, there is no formal review process in place to ensure these “do not use” decisions are justified. In an attempt to prove accountability to these government-sponsored enterprises (GSEs) big banks in particular are demonstrating a repeated and ongoing lack of accountability to the appraisal profession. (more…)