Modernizing Appraisals & Being Stuck in 1989

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Modernizing Appraisals: It seems we're stuck in 1989.

Modernizing Appraisals: It seems we’re stuck in 1989…

On November 16, 2016, the Housing and Insurance Subcommitte held a hearing on “Modernizing Appraisals: A Regulatory Review and the Future of the Industry.” Subcommittee discussed modernizing appraisals to benefit American consumers. The hearing focused on necessary changes to the appraisal industry.

Subcommittee Chairman Blaine Luetkemeyer (R-MO) explained:

“Appraisals are one of the cornerstones of the home-buying process. Issues that impact appraisers also impact nearly every American buying or selling a home, in rural and urban areas; in high- and low-income neighborhoods. Yet when it comes to the regulatory regime surrounding appraisals, it seems we’re stuck in 1989. Today’s hearing focused on a topic that isn’t often on television or in the newspapers yet is an important issue that impacts Americans across the country who are buying or selling homes. The last meaningful update of the appraisal structure was in 1989, and while the marketplace has evolved, the regulatory regime remains stuck in the past. Ultimately, our nation’s appraisal system is unnecessarily complicated and outdated. That complexity impacts homeowners and is, in part, responsible for delayed closings and increased consumer costs. Today’s hearing gave this Subcommittee an opportunity to examine the past and, more importantly, look to the future of appraisal standards in America. We can and will find a better way that increases consumer choice and maintains market confidence.”

David S. Bunton, President, The Appraisal Foundation, testified:

“Dodd-Frank benefited consumers by requiring lenders to provide a copy of the appraisal that was utilized in underwriting a loan. The CFPB went a step further and required lenders to provide borrowers with copies of all valuation products that were considered in conjunction with the loan application. Unfortunately, many borrowers were simply confused when receiving this information prior to closing. Some wondered why certain products reflected one opinion of value, while a different product showed another. And how was the appraisal fee the borrower paid actually applied to these various products?

Bill Garber, Director of Government and External Relations, Appraisal Institute, told the Subcommittee in written testimony:

“Today, the number of real property appraisers in the United States is in decline, and concerns are being expressed by banks and real estate professionals alike about a potential shortage of appraisers. What is clear is that all appraisers are being choked by rules and regulations in nearly every facet of their business. Appraisers’ professional lives have become extremely complicated, more expensive and less productive due to a dated and archaic regulatory structure. As a result, consumers suffer from increased turnaround time, delays in loans and potential higher costs.

Real estate appraisers face a ‘layering effect’ of rules and regulations that creates a disincentive for potential entry into the profession, while also diminishing the profession’s profitability.

Presently, real estate appraisers pay for the operation and maintenance of the regulatory structure in a variety of ways, including imposing license renewal fees, course requirements, and mandates to purchase rules and regulations. After almost 27 years, it is time to make the appraisal regulatory structure and process more efficient and responsive to the needs of practitioners and consumers.”

NAHB believes in standardizing appraisal requirements throughout the housing finance system so all parties are operating under the same set of rules. NAHB Chairman Ed Brady testified that:

“The current appraisal system is impaired due to inconsistent and conflicting standards and guidance, inadequate and uneven oversight and enforcement, a shortage of qualified and experienced appraisers and the absence of a robust and standardized data system. Major reforms in appraisal practices and oversight are needed to ensure that appraisals accurately reflect true market values and do not contribute to price volatility. To improve the quality of valuations, it is necessary to strengthen education, training and experience requirements for appraisers of new home construction, particularly as it relates to energy-efficient, green building and other evolving new construction techniques.

Joan N. Trice, Chief Executive Officer and Founder, Clearbox, in her statement stated that the white paper entitled “Reengineering the Appraisal Process, Revisited” explores in greater detail solutions to bolster the appraisal profession. Some of the solutions offered in the white paper:

  • The need to rebuild new appraisal forms:

    The current forms do not address many of the data elements necessary for lenders, investors, insurers and rating agencies to perform adequate analysis of the underlying valuation and risk. There are also superfluous data points that need to be jettisoned. For example, it is doubtful that the identification of window type, such as double hung, is a meaningful data element for anyone. There are property characteristics however that are not collected that impact property risk. For example, the age of the roof, the age of the furnace, replacement windows, and other energy efficient items are not adequately addressed. In today’s lending environment we place the highest risk borrowers in the highest risk properties. If we addressed this systemic problem we can create meaningful solutions. One might be to calculate a “reserves for replacement” adjustment to offset a potentially catastrophic repair.

  • A repository system, and a credentials registry of appraisers and AMCs such as Clearbox:

    The mission of creating a database of all appraisals would be to monitor risk and contribute to a broader housing finance ecosystem that ensures safety and soundness. By stablishing data standards, improving the data collection and reporting by appraisers, and making available transactional level information, all stakeholders, including consumers, would benefit.

    In addition to creating a repository for all appraisals, a credentials registry of appraisers should also be included. All actors in the transaction should be registered to monitor behaviors between appraisers, lenders, AMCs and so on. Access to these patterns of behavior helps to identify fraud and vulnerabilities to appraisal independence. Implicit in this credentials registry would be integration of an AMC Registry. All credentials would be validated at time of registry of a transaction. Such a system does exist at Clearbox. Clearbox is a credentials database of all licensed appraisers and all known AMCs. Each has been assigned a unique identifier.

Jennifer S Wagner, Managing Attorney, Mountain State Justice Inc., thanked Congress for “imposing stricter standards for appraisals under the Dodd Frank Act.” She added that “these new standards have dramatically reduced fraudulent appraisals, in turn saving tens of thousands of homeowners from foreclosure”, and urged to leave the requirements under the Dodd-Frank Act in place because they not just help consumers, but support honest appraisers and lending institutions. Mr. Stevan Pearce, (R-NM) read the statement by Ms. Wagner, which stated that “It is common knowledge that lax regulation of the mortgage and appraisal market led directly to the financial collapse of 2008. Prior to that collapse, unscrupulous mortgage brokers and lenders joined forces with a handful of appraisers to fraudulently inflate home values” and asked Joan Trice whether it is possible for a handful of appraisers to have caused hundred of billions of dollars in losses in home values. Watch the video clip below at 1:37:00 for this segment.

Modernizing Appraisals Witnesses Statements in PDF:

  • Modernizing Appraisals: Witness Statement of Mr. James R. Park, Executive Director, Appraisal Subcommittee
  • Modernizing Appraisals: Witness Statement of Mr. David S Bunton, President, The Appraisal Foundation
  • Modernizing Appraisals: Witness Statement of Ms. Joan N. Trice, Chief Executive Officer and Founder, Clearbox
  • Modernizing Appraisals: Witness Statement of Mr Bill Garber, Director of Government and External Relations, Appraisal Institute
  • Modernizing Appraisals: Witness Statement of Mr. Ed Brady, Chairman of the Board, National Association of Home Builders
  • Modernizing Appraisals: Witness Statement of Ms. Jennifer S. Wagner, Managing Attorney, Mountain State Justice, Inc.

“Modernizing Appraisals: A Regulatory Review and the Future of the Industry” Hearing

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46 Responses

  1. Soon to be gone says:

    I am so glad that I’m on my way out in the next couple of years, there are so so many things wrong with this industry that fees are only a part of the problem.

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  2. Jeff says:

    This is the same old blame game that blames the appraiser and wants to put more control in the AMC’s hands. These are all topics that depict lobbyist for data collection agencies who want to get their hands in the appraisal profession. It is unfortunate that the chatter in this report also contradicts itself and spirals downhill fast as we get to the comments by Clearbox and Jennifer Wagner. I can tell you that I butt heads with some AMC who request certain items to be placed in my report that are in direct violation of USPAP so when I say no this will affect my ability to receive orders in the Clearbox  system.

    The reason it takes so long to complete an appraisal in todays markets is directly the impact of the roll out of the AMC. Get rid of the AMC and you will fix a lot that is wrong with the frustrations going on in the lending markets.

    To elaborate on Jennifer Wagners mention of a handful of appraisers causing the crash that happened is offensive. Markets crash and when they do big banks look for an escape goat and that is the appraiser. We are blamed for appraisals taking so long to complete as well. None of which was our doing. When a market crashes values will decline and when banks decide to dispose or dump homes in a market that too will force a market in decline again none of which is the appraisers doing.

    Thermal windows versus single pane does make a difference in certain markets. Maybe not your market but in other markets so lets not get more of the one size fits all problem we have today already. If a roof has been updated it is in the report under condition of improvements on the UAD URAR already.

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  3. Chris says:

    More nonsense ! They have been trying to rid of us for 20 years !

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  4. Jeff says:

    This is a great discussion and I recommend anyone who is an appraiser to watch this video. The comments for the most part are dead on and the actual issues with the appraisal process are being discussed

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    • Koma says:

      Sorry Jeff but a great discussion without a single appraiser there doesn’t matter to me. Retirement can come soon enough…aaah

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      • Jeff says:

        was interesting how several of the legislatures did in fact have friends who are appraisers with dead on concerns that we as appraisers are dealing with. But to the point of no appraisers it was good however to see a unanimous concession of the importance of the appraiser and their independence. AS well to reduce the bureaucracy holding back the performance of appraisers especially in rural America

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  5. Jeff says:

    wish I could delete the comment I have above after watching the actual video

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  6. Peter says:

    Why didn’t the committee have an appraiser of note, such as Jonathan Miller, as a witness? Then the specific issues could have been addressed by someone who does not have a vested interest in perpetuation of the status quo.

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    • Bill Johnson says:

      I had two inspections that day, sorry I couldn’t attend.

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    • Peter the American Guild of Appraisers asked that specific question of the ‘behind the scenes’ folks that organized the hearing guest list. According to them two of the speakers were invited for no other reason than they are an ongoing nuisance to the Committee. You decide which ones.

      We are now on the ‘list’ for inclusion in future discussions. We’ll see.

      Testimony was largely from the perspective of self serving interests. Garber, who is the paid flack for the Appraisal Institute was there to promote the AI’s desire to have special exceptions carved out from existing standards for the limited benefit of a very few of their MAI members to the detriment of the SRAs and other residential associates, as well as those MAIs that don’t play the AMC alternative “national appraisal firm” game.

      NAHB was there to flail meaninglessly at windmills. The solution to their concerns were the easiest to resolve but they insisted on playing Man of La Mancha instead. They don’t need a universal “Tidewater” rule like the VA…all they have to do is train THEIR sales reps to ASSUME more support is needed for values and to provide it up front…instead f pretending to be too cool to be bothered with appraisers.

      Joan Trice (and Garber as well?) want an NMLS type licensing system where appraisers can hop around and appraise anywhere they want…state to state. No inherent competency issues there, right?

      Maybe it is time to revisit FIRREA in its entirety again. At least the portion dealing with appraisal. Certainly standards that seem to have to be changed every two years can’t be very good standards to begin with, can they?

      Let the mortgage and international banking industry decide what IT wants; and then let US decide what the standards and principles of appraisal are to be. S&Ps that do not change with every breeze just to warrant selling new USPAP courses.

      But STOP telling us that the integrity of the process is important, and then undermining us with the very next set of regulations. Either WE are the professional appraisers or some FNMA or CoreLogic, First American database is.

      THEN lets hope someone actually requires state regulators to learn and follow them.

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  7. Bubba Jay / Retired Appraiser II Bubba Jay / Retired Appraiser II says:

    look at all the pretty ties and long titles behind every ones names!  impressive!  appraisers are in great hands now!  🙁

    credit given to the few in this video are do seem to have a decent handle on what is going on.

    sad to see all these clean suits speculating about what is going on, and not actually seeing a range of appraiser business owners and staff appraisers who dirty their boots every day, and not get their input too.

    this video proves that the elimination of the big government circle-jerk would be a great place to start fixing some of the problems.

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    • Retired Appraiser Retired Appraiser says:

      The Greatest Dog & Pony Show On Earth

      Both Hollywood and Barnum & Bailey should be green with envy.  The Dog & Pony Show these guys put on was pretty amazing considering it’s low budget production cost.

      Rated R: Restricted to an audience that believes in fairies & pixie dust.

      R

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  8. Dan says:

    I watched the whole hearing and recommend others to watch the video. Issues like C&R fees, lender pressure, AVM manipulation, shortage of appraisers, etc. were discussed.

    At 54:07, David Bunton (AF) discusses the issue of “lots of AMCs” focusing primarily on cost and turnaround, and he concludes that there is shortage of appraisers willing to work for low fees. “BUT THEY DON’T WANT TO WORK FOR THAT FEE”

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    • Jeff says:

      YEs I was very impressed with the discussion and how accurate it was with what is really going on and the real issues causing the problems with appraising. Hopefully positive changes will result.

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  9. Lauren says:

    Sounds like Joan Trice was there to promote her own business. Got to give her credit its’ free advertisement to the entire industry. Just hope  those who are making decisions see through all the crap like the American people did in our election. If the correct decisions are not made, the housing market will crash again and the appraisers will be blamed again. Do you think next time someone in charge may say to themselves “hmmmm every time this happens the independent appraiser is blamed but the independent appraiser never has any input on any rule or reg. put in place. Maybe we should go to the source next time and find out what’s really going on?”  What a novel idea!!  How frustrating.  Doesn’t matter I’m going right to the top, I already wrote to Donald Trump about this. He has seen through the crap of all the rest of government hopefully he will see through all of this crap too before it’s too late. (FYI, I Haven’t watched it yet. I’m afraid).

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    • bill johnson says:

      In communicating back and forth with Joan Trice some months back via AppraisalBuzz, it was clear she did not want to hear my opinion, but rather wanted to live in her own reality. Some days later, our entire at length back and forth (over some one hour) was deleted by her or her team along with most all past comments I had provided. Shortly after this back and forth, AppraisalBuzz has eliminated the easy comment option for readers. Seek the truth.

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    • Jeff says:

      how do you reach out to Trump? I wanted to do the same. You should watch the clip it is good overall. Trice does seem to have her own agenda no question.

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      • Lauren says:

        Jeff,

        You, or anyone, could go onto to the site below and write your ideas.  If enough of us speak up hopefully someday we will be heard, I guess. I’ve been doing this for 15 years and it’s only gotten more frustrating. But there is hope. This one man took on Washington and won, of course with a lot of $$ but it wasn’t easy. Sometimes I just want to throw my hands up, type the report and be done with it, other times I want to form a Million Appraiser march in DC.
        http://www.greatagain.gov/

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    • Bubba Jay / Retired Appraiser II Bubba Jay / Retired Appraiser II says:

      its already too late. appraisers have barked and warned about the impending iceberg that was about to hit the appraisal ship, and all of it has fallen on deaf ears for over a decade.

      the appraiser ship has already hit the iceberg, and the ship is sinking fast. all these over-educated idiots who have probably never done an appraisal and have never owned a business, are now sitting on the deck discussing their sinking ship, and are now trying to figure out how to stop the hundreds of gallons of water that is now gushing into their ship at an alarming rate.

      by the time this group over-analyzes all the issues, and does manage to put any changes in place that will more than likely not fix anything anyway, the appraiser ship will already be sitting at the bottom of the ocean.

      remember, it was this group of people that made this mess, and now they are the ones who think they can fix their mess.

      good luck with that.

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      • Retired Appraiser Retired Appraiser says:

        They have no concern over fixing the mess they were paid to create.

        This meeting is known as “pandering”.  Nothing more.

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  10. Wayne says:

    If you are a licensed or certified appraiser you have been in this occupation long enough to know what the problems are. I could list the problems for several paragraphs but it would do no good. We all know the problems! We all know that these problems are most likely not going to be resolved because the parasites feeding off of the appraisal industry have such a grip that they will not let go. That leaves those of us that are old the choice to retire and those younger facing a career change. Are there any other options?

    As for me….I am retirement age. I can draw social security and still do a few appraisals here and there. As a general certified appraiser I can pick and choose what I want and I have no fear of court testimony. I have done the explosive manufacturing facility, the steel plating plant, the slope easements, water, sewer, drainage easements, etc. high rise office buildings, wetlands, etc. What about those with a license who only do FNMA work…. These folks are going to have a tough time in the near future! I do not think this career path looks good…do you?

    I discovered that there is very little that I can do to make any difference. Therefore I will do as I please! LOL..some of you are old and have similar opinions. I am still trying to get a group of us to go deep sea fishing in Belize. Like I said before…I am no tourist guide and no money in my pocket….lets get a bunch of us appraisers to go and have a wonderful time. Really…everyone is welcome but I am going to do this even if I am all alone! For what you send to the Appraisal Institute or others you could join me and have a world class memory. Oh well, it is your money! Come on…lets have an adventure and become friends!

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    • Wayne I’ve travelled in the Marine Corps; and when I got out. I sailed on a small boat to Acapulco from California. I’ve sailed and dived from Cape may NJ to Icacos Puerto Rico; and on the Chesapeake, Severn and Patomic.  I lived on boats in California from 1980 until 2005; and my old diving buddy retired to Belize.

      I have my memories. I want to leave a worthwhile legacy for the next generations of appraisers. I already consider all appraisers that do honest work to be my friends.

      Our profession wont fix itself. So to all, create those memories Wayne speaks of…but save just a little bit for the profession that helped you make them.

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  11. Henry E. Deecke says:

    I enjoyed the entire video of “Modernizing Appraisals: it seems we’re stuck in 1989”

    I expected to hear Mr. Garber to tough on the subject of how to eliminate appraisal reviewers, underwriters and VA approved SAR’s (Staff Appraisal Reviewer) who actually are prolonging the lending process due to their lack of appraisal knowledge. Most of the questions these people ask either have nothing to do with value or or using mostly outdated information such as what FNMA has finally decided in 2014 never had requirements that individual line adjustments can not exceed 10%, or Gross adjustments can not exceed 25%, or net adjustments can not exceed 15%.

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  12. Wayne says:

    Yes…Yes…we cannot have line item adjustments that exceed 10%. Lets just say that our subject is a 30 year old log home on a five acre tract that is outside the city of XX population 345. The next closest city is 14 miles with a population of 9,367. There have been two sales within the last three years in this communityl. Those are sales…not comparable sales….I do not give a damn what Dodd and Frank has to say….this is not an easy assignment. Lets add the fact that four of these five acres are in a government designated “wetlands” zone. The subject is inside a floodzone…and the log home needs substantial repair. Come on dudes…lets do this assignment within 48 hours for an AMC and for a fee of $200….come on…do it. Would you like to mow my yard? I will pay you more and it will be easier!

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  13. Wayne says:

    July 4th is coming up in about 8 months. This could be the day that appraisers make a career statement. We have time to organize this and with some real effort we could make some changes. Starting with July 4th. we need to take some time off. Lets do some continuing education. Lets take the family to Disney land. Come join me on the fishing trip to Belize. Really, lets let those parasitic  sons of bitches understand who earns the money in this occupation. We will cause many to go out of business and the others will know who butters their bread. All it takes is one time and a set of balls….Lets do this….bust their ass and we can laugh during the fishing trip to Belize….We could do this…but we will not. I know that we will not because I have watched this for a decade. you silly geese will continue to pay your dues to the appraisal organizations, you will continue to buy news letters, pay for background checks, coaches, Expos and other silly crap. Then you will wonder what is wrong with this occupation!

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  14. Baggins - Round and round we go again Baggins - Round and round we go again says:

    I’ll post again after watching the video later. But,…..  Um…… Price volatility in markets is directly tied to the federal lending rate which is controlled by…… The FED! Blame the appraiser for the volatility involved with rate jumps a half point and point at a time? Newsflash; Purchasing power and the price that follows are directly tied to the lending rate! The appraiser just analyzes conditions at the time and does not have to adjust for cash equivalent differences tied to the rate! A perfect cover for those whom seek to redirect blame for insolvent markets to where it belongs, the fed and private lenders both chartered and not. And no need for additional private company verification of legitimate standing. It’s called the ASC and you can go there to look up credentials of appraisers nationally right now. We don’t need additional regulatory authority granted to a private for profit company to automate what is already available and only takes 2 minutes of human effort or less per individual appraiser validation of credential.

    Hey, the new screen format here rocks! Finally the article content appears on 2/3rds of the screen and posters commentary is wide not narrow. Thanks!

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  15. Seneca says:

    A couple of staff cuties in the background

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  16. Seneca says:

    At the end (1:58) when Park and Garber got into their spat who was Bunton talking about? Park or Garber?

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  17. I had a different “take away”.

    My impression was that there were two simultaneous hearings by the same people in the same place.

    There was the actual televised hearing with disparate prepared speeches; and then there was the real underlying reason for the hearing. The partisan battle to eliminate Dodd-Frank.

    I try very hard to take a non partisan approach to the issues facing appraisers when writing about or for AGA. Obviously AGA is a union organization, though as I’ve said many, many times, we are not your grandpa’s old union. We seek win-win solutions.

    Its important that I also disclose (as I have in public appearances before TAF and APB), I personally happen to be one of the extremely few Republican Union Organizers in America. Those that know me or my history writing here know why I joined an appraisers union. I only remind readers of this so that any will understand my views are purely objective and not partisan based. If I could overcome my aversion to traditional unions to organize one, then I submit I AM capable of unbiased analyses. Readers must judge this for themselves.

    There is very little in Dodd-Frank that (my) GOP objects to that is important to real estate appraisal. We had appraiser independence requirements long before Dodd Frank. They wont go away whether DF does or not. Frankly about the only thing DF DID do for appraisers is create the illusion that reasonable and customary fees would somehow become enforceable.

    We all know what a bad joke that is! Only 38 states of 55 jurisdictions have passed ANY type of AMC regulations to date and very few of those have passed clear or enforceable C&R fee laws (Virginia; NC and LA tried). DF merely gives states the right to ignore C&R IF they choose to. There was never a credible enforcement mechanism.

    So, it will not truly affect appraisers if Dodd Frank were to be rescinded in its entirety. We’d still have the battle to get federal support for ENFORECEABLE reasonable fees (can we just drop the pretense of “customary”?). Working for less than a fast food worker EVER, is not ‘customary OR reasonable’!

    Where DF DOES become an issue is in the ongoing partisan war between the Democratic Party and the Republican Party. DF created the CFPB which does appear to have benefitted regular taxpaying American citizens and investors already. Case in point is Wells Fargo and it’s well publicized FRAUDULENT treatment of customer accounts. DF does benefit taxpayers. Whether the same protections could be done differently is open for discussion. Those cases are not appraiser issues.

    CFPB also is supposed to be the place where certain limited appraisal/appraiser independence/ consumer appraiser rights issues get handled but that system is so murky and disorganized so as to be useless. In my opinion, no benefit to appraisers exists so far.

    We’d likely survive the loss of DF and CFPB; though as Committee Member Green pointed out, DF was not and is not a cause of the appraisal problems in America today. It merely fails to resolve any of them.

    It’s erroneous for any to say there were no appraisers on the witness panel. Mr. Park of ASC is. I believe Mr. Bunton is as well. Mr. Park has been a Member of the AI for over 25 years. I believe he properly maintains his independence from purely AI-benefit issues. I’ve spoken with him several times now and I believe he is beyond reproach in his actions with ASC despite the grilling he was subjected to by the committee. We all have to remember his is a highly sensitive position politically.

    Mr. Bill Garber representing the Appraisal Institute does not appear to be a licensed appraiser anywhere unless it is under a different name. I checked the ASC Registry for Bill and William and he is not found. So we are left to wonder whether despite the title if he is anything other than a paid lobbyist for the AI?

    By the way, the AI claimed to be the largest appraisal organization as if that is some kind of inferred representation of ALL appraisers interests. I’d like to check the ASA rosters before conceding size superiority of the AI in America. Though they may (or may not) be the largest if worldwide membership is considered. My point is that there are over fifteen (15) other nationally recognized professional appraiser peer organizations PLUS over two dozen State Appraisal Coalitions representing appraisers. Why were none of these included?

    What about the National Association of Realtors? Clearly THEY are the largest real estate trade group in America. NAR also has its own appraisal disciplines and designations.

    Let me repeat that. WHY WERE NO APPRAISAL ORGANIZATIONS included beyond the one with a paid lobbyist and their own *self serving agenda? (Ref: *promotion of alternative appraisal standards for limited use by their members-see CA AB624 and similar bills passed/proposed in TN, IL and TX).

    The battle between the AI and TAF is no secret. So it’s no surprise that they oppose the Appraisal Practices Board created by TAF. Let’s not lose sight of the fact that they were removed as sponsors of the TAF or the reasons.

    AI serves a very specific & very small segment of appraisers in America. They have many respected educational offerings. They are not the only ones that do however. ASA & NACVA are as highly respected in their own right, as are many of the other nearly three dozen UNREPRESENTED appraiser peer and state professional associations absent from the hearing.

    Mr. Garber’s written proposals were not presented to listeners beyond his stated belief that the APB should be disbanded, and that cheaper, big data driven alternative appraisal products and standards are desired by the AI.

    Ms Trice is also not an appraiser (no current license on Federal Registry). Her voiced views sounded very reasonable. The devil is of course in the unknown details of the proposal she submitted that was NOT discussed or summarized in the hearing. Ms. Trice is known to have represented or advocated for the interests of AMCs, to the detriment of most appraisers needs, but let’s keep an open mind until we hear all the details of her specific proposals to the Committee.

    Ms Wagner of Mountain States law largely cited ancient history – events that predated the collapse of 2008/2009. She referred to (inferred) recent loan modifications related to high rate predatory lending but no one has offered the type of pick a payment, option ARMS she described since 2009. In any case, her concerns serve as an ongoing caution. She too opposed big data driven alternative products that are less reliable than real appraisals.

    Mr. Brady of NAHB had several legitimate appraiser concerns but none that rise to the level of requiring congressional oversight. He proposed something similar to the VA’s “tidewater” system where if a value issue is noted in the development of an appraisal, the appraiser would stop and contact buyers and or sellers to discuss it (no pressure there, right?).

    The point he missed is that builders sales reps ALREADY HAVE THE ABILITY for that type of input! These are no individual consumers with limited experience in real estate that require special protection as some veterans might. They are professionals “in the business”.

    They have their “tidewater” opportunities BEFORE the appraisers ever show up to do the appraisal! ALL they have to do is their jobs. That’s it. They could follow the NAR Code of Ethics regarding appraisals. They could LEARN to have information available to support their prices BEFORE the appraiser completes his or her work. They COULD get loan funding commitments from lenders in advance as builders did for over 40 years before HVCC. IF he is serious I invite him to reach out to me through the AGA. His concerns are the easiest to solve.

    He had a valid point about appraisers not always being qualified to do new tract housing appraisals. Until C&R fees are paid, that will remain an issue. There are already laws in place that say complex assignments must be done by certified appraisers. New construction by its very nature constitutes ‘complex’ appraisal until such time as open market resales are generated and most builder defect warranties have lapsed.

    I know many licensed appraisers that CAN do great work on these, but that’s not who the AMCs hire to do them. Even if certified appraisers were required, many will still lack adequate experience with new developments.

    IF NAHB wants expertise, then they should be willing to PAY for expertise…not appraisers that still brag that they can complete two or three appraisals a day start to finish all by themselves.

    The committee’s conclusion as to why there is a ‘shortage’ of appraisers is seriously misleading. I sincerely hope it was not a window dressing Congressional meeting to provide cover for a foregone conclusion that was predetermined behind closed doors.

    Not long ago, TAF (AQB) proposed and modified requirements for entry level appraisers and those seeking higher licenses. Many from the AI asked rhetorically why anyone would support  “lowering” standards by eliminating college degree requirements (that were add on requirements; just like APB is an add on). Now I ask THEM the same question. “Why do the AI, AMC Trade Groups and certain Committee Members want to lower appraisal standards?” If ‘Big Data’ were so reliable, then how come it couldn’t get the recent election polls or results right? How come it cannot reliably predict the stock market? “Big Data” has been getting it wrong for decades now. Modern computers merely help get the wrong answers faster.

    I understand that there is currently a survey with (so far) over 500 appraiser responses (Mark S. out of Georgia) and the number one concern remains adequate fees and the manner in which they are paid.

    Before forwarding any recommendations to the full FSC or Congress I hope the sub committee will make an effort to assure greater outreach to ALL stakeholders.

    That includes appraisers.

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    • Baggins - see my pre written addenda Baggins - see my pre written addenda says:

      Awesome Mike. Yes, self regulation and what amounts to racketeering is the norm not the exception these days. Big data is controlled by fewer people. Therefore mistakes have a larger scope of systemic influence. We can’t have checks and balances if one man or one company plays god to the whole system. 

      Corelogic should be broken up under monopoly statutes. C&R, the mythical unicorn that never delivered. I told everyone from day one, I’d fall over backwards and spew coffee if a single lender ever got that 10k fine. AI rules, the toothless tiger. See addenda continues to be accepted code word for outright cheating and nobody is going to stop us. This ship of fools has sailed and there are more vendor managers than vendors themselves. Government has failed in their duty to regulate safety into the GSE guarantee programs. That’s what this is all about, let’s not forget. Time to wind down fnma and let the lenders hash this out in a free market setting in their own board rooms. If lenders shouldered their own risk and had a 1/1 ratio on capital reserves vs capital lended, this RICO level manipulation of markets would not happen. That’s how it works for the rest of us, a dollar is not 20 dollars of lending potential, it’s simply a single dollar. You can bury it, spend it, or invest it. 

      Back to the basics and off with their heads!

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  18. Supplement to Previous post:

    A proposal WAs made for a national appraiser license similar to NMLS so that appraisers could appraise across state lines with little or no restriction (or enforceable area competency). Mr. Garber conceded it may not be applicable for residential appraisers where local knowledge is critical but commercial appraisers weren’t bound (as much?) by those.

    Ms Trice supported the NMLS style licensing.

    Neither addressed the impact of such licenses on that old belief about real estate. The three most important things are location…location…and location.

    Just because a property produces income does not mean investors for that specific property (or type) accept the same rates of return in New Jersey as they would for Kansas or Alaska. State laws that could impact value in California are not necessarily the same as in coastal Florida locations.

    Then again, big data doesn’t like to get bogged down in too many details.

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  19. Wayne says:

    I have never met Mike Ford but I have chatted with him a couple of times. In my opinion he is the “real” character. He seems to be the person that wants to fight endlessly to support the appraisal profession. What can I say…I like this guy! However, I am old and too pissed off to join him. I just want to retire and let someone else fight this…what I consider to be a losing battle. I think…why should I butt my head against the stump? What do I care if there are stupid appraisers wanting to work with AMCs for chump change? Why do I care if they want to pass up a vacation with the wife and kids so that they can send dues to an organization that does not even acknowledge that they exist. I honestly do not care! Seems that my last count put me into this silly profession for over 40 years. If I could go back….I would have joined the fire department, railroad, etc….Really…these careers pay retirement….count your money after 40 years of the appraisal profession. Really, this business sucks and this is coming from someone that has done a lifetime of it.

    Just think when we ever have a group that wants to discuss appraisals/appraisers these idiots do not even include any of the appraisers who are working in this field each day. They want to hear from folks that operate AMCs or Expos, or newsletters or such bullshit! In other words the people who have created the problems are being asked to solve the problems. Well those of us who are old will simply retire…the young ones will (and should) move on to another career. Not sure how these AMCs can do appraisals without appraisers but it will be interesting to see!

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    • Baggins Baggins says:

      The unfunded liability of retirement programs is shocking though, one big illusion held up by a thread. It’s important to note that many of the state pension programs are tied to libor, and backed purely by fiat. Only the older people talk that way these days, because most of us younger persons know there will be no social security or retirement package except what we make for ourselves. Reasons to own your home and never refinance except to save time. I agree with you, the regulators are turning to the people whom stirred the pot in the first place. A new career for me you say? Well, this profession has certainly challenged the skill sets and now I could move competently to a wide variety of other businesses. Don’t discount the little guy in this industry just yet, we all fill pretty big shoes just to be here.

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  20. Ralph says:

    After watching 2 hours of this testimony, it is apparent that no one has any clue what to do about anything. This profession is so convoluted, Appraisal Subcommittee/Appraisal Standards Board, Appraisal Practice Board, Appraisal Foundation, USPAP, (which makes silly changes every 2 yrs in order to sell classes) what a CLUSTER BLEEP. Everything needs to be streamlined under one Federal organization with state boards maintaining a registry and imposing fines/discipline etc.

    Freddie/FNMA are already rolling out appraisal free products for re-finances and honestly who can blame them, with many areas of the country experiencing 1-2 month turn times due to the appraiser shortage, there is no way the people holding the $$ are going to keep losing deals and rate locks, due to appraiser’s being booked out 2 months. I know all of you think you need a full appraisal on every order, but in homogeneous areas of the country and in tract sub-division land, the data models available for those places are getting very accurate and if a borrower has good credit, income etc, and the AVMS are in a tight range, it’s just a lending decision, based on risk analysis. For those of you in complex market’s and on the coasts, I think there will always be a need for full appraisals. Just how I’m reading the Tea Leaves. Good luck out there.

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    • Wayne says:

      Personally I have zero problem if someone wants to back me on a pass line bet on the next roll of the dice. Lets see they want to back me to the tune of $1,000,000. one roll of the dice! Gee…what if they bust their ass?  (and eventually they will) Does not matter as it is their money! HOWEVER…what if it is a bank idiot using depositors money? A totally different story! These bastards should spend some time in prison if they gamble with depositors money. Maybe get their ass kicked while there!  There is a difference!

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      • Baggins Baggins says:

        “Reason to own gold number 287. Many people do not know that the bank rules have changed and when you deposit money at the bank, you are merely an unsecured creditor of the bank. That means if the bank goes under you get paid less.” Rather than play by the rules, major lenders changed the rules. ‘Your’ savings is merely a credit to the bank and your customer position is now officially that of an unsecured creditor. Basically if you make a deposit or leave money at most banking institutions, that money ceases to be yours. Even keeping money at banking institutions these days is possibly risky. And also there are many new rules regarding limitations to withdrawn funds. There will never be another bank run per say, because banks simply shut the windows down in a time of crisis and limit actions of ‘customers’, or should I say, the creditors. It’s all legal now, the mechanism to stop all faucets of possible bank runs. Also, lenders worldwide have floated austerity measures in various increments. Austerity is the stop gap and it’s been used recently in the European areas. Not only can they stop the withdrawals, they can allocate ‘your’ funds to stop liquidity crisis on a permanent basis. Poof, it’s gone.

        To the laymen whom is reading this and may not understand, it’s quite simple; Lenders have trillions of unfunded liabilities, especially through derivatives market. They’ve been caught manipulating silver markets and libor rate for decades now. Exposure finally came around and on par, nobody went to jail. In a time of crisis no money can be withdrawn and all money can be re allocated to the banks coffers permanently to stop liquidity crisis. So forget about the bail out, that was so much work, the bail in is now in place. As a rule of thumb never challenge a lender to gamble, because the federally insured banks are basically professional gambling houses. Major bucket lending institutions, if you will. That’s what they say on the radio, and I believe them. There is a lot of meat in the argument to wind down FNMA, audit the FED, and let free markets correct this constrained market manipulation. aka, the revolving door argument.

        The beat skips on.

        http://patriotarchives.blogspot.com/

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    • Retired Appraiser Retired Appraiser says:

      If the truth be known Ralph, it’s not that these groups and governmental agencies “have no clue” but rather that they don’t give a shit about rebuilding the world of the appraiser after dropping their 100 megaton bomb on the industry in May of 2009.  Do you realize how many billion of dollars in revenue banks have reaped from the appraisers pocket since 2009 via their AMC subsidiaries?

       

       

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      • Baggins Baggins says:

        Well it’s all a cover you know. Without the various bureaucratic time drains, we’d have to actually face up to the root cause issues. This is the Ron Paul argument, the government can never grow big enough to effectively regulate private lenders. This is the historical references to lenders being more dangerous to our liberties than standing armies. This is the reason why currency must be re tied to gold and silver, and the fiat system let fail. Sure, but let’s just revisit the appraiser deal, that should keep them occupied for a few more years. If lenders were lending their own money, they’d fight over competent appraisers.

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  21. Wayne says:

    To Retired Appraiser and Baggins:

    Sometimes you guys make comments that I completely agree with. Should we own gold? Heck, I do not know. When I was a kid riding my bicycle in the neighborhood my friends and I would pick up soda pop bottles from the ditch. If you had three empty bottles you could trade those for a coca-cola and a “large” butterfinger candy bar! On Saturday morning you could get into the movie with six coca-cola bottle tops. My dad had a coke machine in his business so we had enough bottle tops on Saturday morning to take all the kids in the neighborhood to the movie! Have you dudes priced a trip to the movie lately. My lady and I went recently…two senior tickets, one large popcorn, two drinks….beat the ears off of a $50.00 bill!

    Now folks think they should earn $15.00 per hour to flip a hamburger. I worked at the Dairy Queen for $0.40 per hour while in high school. I also shined shoes and mowed grass. I talked my father into helping me buy a Suzuki motorcycle. He had never been on a motorcycle and had no clue. This was the X-six scrambler and would go from 0 to 60 MPH in six seconds. I surprise myself that I am still alive!

    My whole point with this rant is that appraisers are for the most part under the control of the lending industry. It is they who select who will work and who will not. These folks lend other peoples money for a slice of the pie. Appraisers are just a cog in the wheel that assists them in earning their fees. They absolutely do not give even a tiny damn as far as public trust or other similar bull. If the appraiser does not assist in this process, the appraiser will be toast. I hope those that think otherwise have found other employment.

    From what I can tell those gurus in charge will begin to reduce the requirements to become an appraiser until it is to the point of $0.50 and two cereal boxtops. Get REAL….these lenders have already told you the value (by sending the sales contract) They just want your signature and E&O to earn their commission. Nothing else matters at all!  A new year is coming up…why not try keeping your money in your pocket for 2017 and not sending it to all of these parasitic groups that are creating problems with your career? No problem…just keep your money in your pocket and these parasites WILL go away! Good luck to all who continue to play this game!

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    • Baggins - Fact vs Fiction Baggins - Fact vs Fiction says:

      It’s easy to be stuck in this box.  Yes, I am a conspiracy theorist, but most of the points are not theory, they’re fact.  I’m better described as a conspiracy factualist.  This industry is experiencing the same influence as many others;  ‘compulsory planned obsolescence’.  You don’t know what you don’t know, but I warn you;  Once you’re educated you can not unlearn what you have learned.  It’s always easier to demonize free thinkers than to actually have to answer and debate the facts.  Want to talk about flat earth theory?  Why don’t we stick to industry and profit instead, something not theoretical, but completely factual and well documented, at least for now.  Welcome to your modern view of consumerism, most Americans would be surprised to find they’ve been played by free markets their whole lives.  Reasons why I love the goodwill and rarely purchase new.  Reasons why I refuse debt based consumption.  Reasons why hedge purchasing matters.  Reasons why you should not even have to hedge purchase in the first place.  “He was back woods, back wards, use words like yes mam and no sir.  He didn’t want it if he couldn’t make it with his own two hands.”  Growth, the holy grail of our economy. Yes it’s true, I’m still using the HP Laserjet 3200 w/ graphite 92A cartridges. I buy the cartridges which print 2500 pages for 20 bucks a pop on ebay these days. Get them while they’re still available. I’ve got a dozen right here in front of me. Still talking on the 1985 made in USA bell phone and still don’t buy into cellular and wifi services. I’m not voluntarily subscribing to planned obsolescence of my wealth. I called this one about planned obsolescence a long time before I ever even learned the facts. But hey; Truth is like a lion. Set it free and it will defend itself. Thrift matters. Repeat after me; Debt is bad, thrift is good. Repeat to infinity.
      I’m not sure the link worked, will repost link.

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    • Baggins - Investment strategy? That's news to me. Baggins - Investment strategy? That's news to me. says:

      Per the silver deal.  Well, whatever, buy a hundred bucks worth at a time but don’t over due it.  It just sits there, begging to be stolen.  I don’t have much but support the theory.  Gold is not very fungible, don’t need to risk mis placing a thousand dollar coin nor do I have time to worry about that.  If the economy collapses silver will merely have long term benefit like a hedge purchase.  Ingots are good for barter in theory but I’m not going to pay a buck over spot per ingot, it’s a racket that one.  It may take another congressional act of reconstruction for the tangible benefits to be realized as anything but an investment metal.  It’s the tying of silver to the dollar to stop rampant inflation tied to planned obsolescent consumerism trends that matters most and would have meaningful impact.  You can’t reform the irs with the fed unregulated and a fiat system where the irs functions as the debt recapture mechanism.  You don’t know what you don’t know.  That’s what they told me on the internet and I believe them.  For wealth, I have very little but also have a positive position because I accept almost no debt.  If things fell apart, I’d outlast the majority whom have all that supposed ‘wealth’.  If I was born in your day, I’d have made a true killing.  Then again, I’d probably have gone with the flow since my knowledge today comes from the antagonistic position many millennial like me were forced into.  Actually they call me a gen X’er, but whatever, labels. I’m only 40 something you know.  As long as I can eventually own this home completely without a mortgage, everything will be fine.

       

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  22. Baggins - Fact vs Fiction Baggins - Fact vs Fiction says:

    The reason I brought up the above, is because the term; “modernizing appraisals” should be considered what it really is, very bad news. We don’t need to modernize anything. I want to fed ex these reports from word processor, I’m sick to death of personal computers already. The thrill of tech is long gone for me. Like the bbking song, the thrill is gone. Modernizing is code word for inflating the corporate position and further deflating the consumer position.

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  23. Nora K King says:

    Clearbox is a joke of company. No successful appraiser is supporting their business model nor do good appraisers want to work for AMCs.  We need to have the background check be part of the licensing process and we need to put laws in place that are even tougher on AMCs.  Most of them are a joke.  I do very little work for them and I keep a list of all the laws they violate. The list is long.

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Modernizing Appraisals & Being Stuck in 1989

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