Spoiler alert: Apps don’t have any judgment, nor does their maker.
There are moments in my life when I am glad to have given 12 years of my life to service to the Illinois appraisal community, and being part of the team that was in place when the Illinois AMC laws and rules were written years ago.
Each state is different with how they discipline their AMCs and how they discipline their appraisers. In Illinois the AMCs have nothing to do with the appraisal board. They are a business, and as such, they have no say in the disciplining of appraisers. They have to follow the laws that govern them as a business, which includes hiring licensed appraisers for all of their work.This brings up 4 points:
- The AMC is responsible for hiring licensed inspectors, which includes appraisers to do these hybrid reports.
- The appraiser must be knowledgeable of their state laws, including the laws that govern AMCs
- If the appraiser receives an assignment that is ordered by an AMC in which the inspection is not done by a licensed appraiser or a licensed building inspector, then the appraiser should not accept the assignment and contact the state, informing them that the AMC is breaking the law.
- If the appraiser accepts the assignment that is ordered by an AMC in which the inspection is not done by a licensed appraiser or a licensed building inspector, then they are engaging in illegal activity.
Can mom and pop appraisal shops in Illinois do these hybrid reports when ordered by anyone other than an AMC? They sure can. And like every assignment, the appraiser is 100% responsible for their product. They sign it, they buy it.
When I served on the Illinois appraisal board from 2005 – 2017, the attitude then, and currently is: our job is not to tell you how to run your business. If there are appraisers out there who wish to do 1025s for $175 and take full responsibility for such a business decision, that’s their business decision. If somebody wants to sign off and take full responsibility for doing hybrids, that’s great too. It’s their business decision. They sign it, they buy it. Yet, this comes with a whole lot of Valuation Process problems. Let’s look at the following paragraph from the Morningstar press release:
Clear Capital’s Modern Appraisal Program uses ClearInspect™ — Clear Capital’s new, intuitive mobile app — to guide appraisers, agents, brokers, and other data collectors step-by-step through a property data collection process to ensure quality and efficiency. The results can easily be delivered to customers, government sponsored enterprises (GSEs), and appraisers who may perform a desktop valuation based upon the collected property data.
Who’s driving the Scope of Work? Who’s driving the data collection? It sounds like the intuitive mobile app is. Now I ask the question: who is driving the decision making process with this app? Is it the appraiser? It doesn’t sound like it. It sounds more like it’s Clear Capital’s new, intuitive mobile app!
And with that, my head just exploded.
When the hybrid and bifurcated reports were first introduced, I spoke with an attorney who does a whole lot of work defending appraisers. Right now, there aren’t that many cases against appraisers in Illinois and nationwide, yet the E&O companies and law firms that are hired by the E&O companies to defend appraisers, as well as the law firms who defend lenders who suffered a loss due to the hybrid appraisers are waiting. As one who specializes in forensic appraising of real property, along with a bunch of other “stuff”, I too will wait. There are a whole lot of licensed appraisers who are racing to the bottom to get some quick and easy money, and all of us know that this business practice typically results in stupid mistakes that have real consequences. For those of us who do expert testimony, we are going to be hammered with work due to the business decisions of others.
And I wish I didn’t have this gut feeling that a year from now, I will be receiving calls to litigation support regarding hybrid and bifurcated appraisal reports, but I do.
[see updated meeting info below]
For those who will be in the Arlington, VA area next Friday, June 7th, hopefully you can make the joint TAFAC and IAC meeting. Peter Christensen will be there: http://appraisersblogs.com/hybrid-appraisals-liability-risks
All of us have been in this business way too long, and all of us have lived through the public making uninformed decisions. All of us have screamed for consumers to inform themselves. And all of us have witnessed time after time consumers ignoring the cries of those who witnessed the decisions made by others before them. We can’t save the consumer from themselves, and we can’t save the appraiser from themselves. And yet, like Sisyphus, we will continue to try.
[From The Appraisal Foundation: Next Friday, June 7, we will be in Park City for the Spring Board of Trustees meeting.
Our 2019 Joint TAFAC/IAC Meeting is Thursday, June 27:
It’s the 30th anniversary of FIRREA and this year’s speakers include Peter Barash and Bill Black giving a historical perspective of the S&L Crisis and Congressional responses and the agencies’ activities since that have diluted it, and also a look forward with Josh Panknin from Columbia Univ & NYU, author of The Property Valuation Reckoning is Imminent, How Technology is Highlighting Underwriting’s Shortcomings. And more.]