Environmental Issues Notice to Appraisers
Response to LRES email concerning appraiser’s responsibility regarding environmental issues
Have you asked yourself WHY a few more of the larger regional AMCs are joining organizations like REVAA?
In my opinion, it is because they and their clients (usually GSE lenders) KNOW that they are not truly compliant with Dodd-Frank’s C&R requirement.
Despite disclaimers or advisories like this, they also know that the bulk of their work products are ‘probably not compliant’ with USPAP. Notices like this don’t normally get set out until ‘after the fact’ issues arise.
REVAA recently helped coerce the State of Virginia (through threat of litigation) into issuing an AMC license to a large firm that had been practicing without a license, and which had a ‘tainted’ reputation at best in the SE United States.
They also helped limit the damage to a minor wrist slap when the State of Louisiana recently brought suit to enforce C&R fees against a large AMC down there.
It is NOT REVAA’s fault! They are providing a service for which there is a demand. THAT “demand” is the one sought by AMCs to help them continue unfettered abuse of appraisers, while pretending to conform to C&R requirements and other AMC regulatory burdens.
I sent the following to LRES on receipt of a generic email notice (see below) from them concerning appraiser’s responsibility for reporting environmental issues impact. I’ve never actually done a job for them that I can recall because the fees offered are usually from ½ to 1/10th of what I consider to be “reasonable” given assignment complexities. I DO stay on their list in order to be aware of what is going on.
For example, they now post proudly on their website that they are new members of REVAA. I personally read & interpret that to mean “This is a firm that is telling me up front, that they would prefer to hire industry advocates than to negotiate with appraisers directly, OR to seek honest C&R fee input.”
I have offered to discuss C&R with them, but I’m not naïve enough to think they will do so openly or honestly. What I DO expect, is that they will follow the model of other AMCs in suppressing fees paid.
The only real question though is what, if anything, will appraisers do about this ongoing bulk notice “compliance” trend?
Their site is http://lres.com.
Reply to LRES Email Notice sent on 02/05/2016
Gentlemen, this is among the BEST cautions I have ever known you folks to put out. It is encouraging. However compliance will depend more on your own internal efforts than on any appraiser. You ARE aware that the Federal Government and ASC / FFIEC & CFPB see “virtually no separation space” between the regulated lender, and their AMC. Similarly, positive step that it is, this “notice” will not assure compliance unless appraisers are 1. paid a ‘reasonable’ fee (your fees are generally NOT reasonable), and 2. that they are given adequate time to do the research. For example, take the Porter Ranch issue going on right now. How many even know about it? How many are ALREADY BEING TOLD to just “assume” their way around it? I’m on top of this specific issue, but on a specific appraisal assignment I’d still have to spend several hours investigating AND DOCUMENTING the impact on any given property appraisal.
We have many issues facing us. I’d like to speak to your senior executives some time about (trying to) implement a true ‘cost plus’ pricing system…and not just the fantasy systems being promoted or supported by REVAA and MBA.
Mike Ford, VP/Chairman NAPRC AGA OPEIU/ AFL-CIO (714) 366 9404
The original LRES email copy I received is below.
Dear LRES Corporation Approved Vendor,
LRES relies on our business partners to monitor local environmental issues that could impact the analysis and valuation of real property in products ordered by LRES. We depend on your expertise in your respective areas to ensure that any issues are properly disclosed, reported, analyzed and evaluated in the products that are delivered back to LRES.
As an approved business partner, LRES requires that you:
- Maintain an active list of environmental issues in your markets and areas.
- Notify LRES prior to conducting work on a file with any environmental issues that may impact the subject property. Only proceed with work on the file when approval is given by LRES.
- Be aware and have the required knowledge and competence to complete the assignment that you have accepted.
- Provide an adequate disclosure of the issue(s), include comparable sales and listings that are impacted by the same situation or;
- Ensure that sufficient commentary is included to indicating reason if non-impact. (E.g., “Typical marketing time averages 120 days and XYZ environmental issue occurred on 01/01/01 therefore adequate time has not elapsed for a market reaction to this issue.”
- Ensure that the report provides clear requirements for testing and third party verification of the environmental issues (if applicable).
A useful resource in identifying environmentally impacted areas is the EPA website. You can search your state by clicking on this link.
If you have any questions regarding this message please contact us.
765 The City Drive South, Suite 300
Orange, CA 92868