Are Bifurcated Appraisals Legal in Your State?

VaCAP Board

VaCAP Board

Coalition of Appraisers in Virginia at Virginia Coalition of Appraiser Professionals
Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.
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Are Bifurcated Appraisals Legal in Your StateLately there has been a push for bifurcated (hybrid) appraisal products. Those promoting these questionable products claim it will reduce the amount of time to obtain an appraisal. Most appraisers are screaming foul play, and for good reason. It is because of bad players doing questionable things that licensing became mandatory in Virginia. Mandatory. Licensing of appraisers protects the public trust.

We all know splitting the process will not save time, but rather create delays. The only reason for this questionable product is the profit of the amc, nothing more. And then there is the quality of the information being provided and the credibility of the appraisal report that relies upon it. Consumers, investors, appraisers and insurance companies all have raised concerns about bifurcated appraisals.

Well VaCAP wants to share something with each and every one of you. It has been discovered that the Code of Virginia may not allow this type of product.

Here is what Virginia Statute states:

§ 54.1-2011. Necessity for license

  1. After December 31, 1992, except as provided in § 54.1-2010 and in subsections C and E of this section, it shall be unlawful to engage in the appraisal of real estate or real property for compensation or valuable consideration in this Commonwealth without first obtaining a real estate appraiser’s license in accordance with Board regulations promulgated pursuant to the Administrative Process Act (§ 2.2-4000 et seq.).
  2. After December 31, 1992, except as provided in § 54.1-2010, it shall be unlawful for any person who is not licensed pursuant to this chapter to perform an appraisal in connection with a federally related transaction.
  3. Notwithstanding subsections A and B of this section, an individual who is not a licensed residential real estate appraiser, a certified residential real estate appraiser, or a certified general real estate appraiser may assist in the preparation of and sign an appraisal if:
  1. The assistant is under the direct supervision of a licensed residential real estate appraiser, a certified residential real estate appraiser, or a certified general real estate appraiser; and
  2.  The appraisal is reviewed, attested to be accurate and complete, and signed by such licensed residential real estate appraiser, certified residential real estate appraiser, or certified general real estate appraiser in accordance with this chapter.

If that does not raise some questions of legality, perhaps this will:

From the Commonwealth of Virginia Department of Professional Occupational Regulation, Virginia Real Estate Appraiser Board, Appraisal Management Company Regulations:

18 VAC 130-30-160. Prohibited acts.

The following acts are prohibited and any violation may result in disciplinary action by the board:

#10: Failing to act as an appraisal management company in a manner that safeguards the interests of the public

We are not professors of law, nor are we licensed to practice law, but we can read and comprehend the English language. You must be licensed or directly supervised by someone who is licensed to assist with the appraisal and an amc cannot engage in practices that do not safeguard the public.

Is providing property data that is intended to be used in an appraisal report providing significant assistance? If an amc orders a bifurcated appraisal are they harming the public? What is the verbiage in your state’s laws and regulations?

Now The Appraisal Foundation is asking for comments on the 2020-2021 USPAP Exposure Draft. The main area of change is the report options. This has a ripple effect to lessen the standards and provide more opportunity for substandard work, which could be harmful to public trust.

Promoters of the bifurcated (hybrid) appraisal product argue the scope of work rule allows these products to be done in accordance to USPAP. Does anyone else find it interesting The Appraisal Foundation wants comments on the proposed Scope of Work  Rule?

Appraisers not only have the opportunity to voice their opinions on the proposed changes to USPAP, but expand your comments to include your opinion of the bifurcated appraisal products. Explain how they are harmful to consumers, neighborhoods and the economy. Public trust is paramount to the Appraisal Standards Board.

The deadline for comments is July 15th, so please take a stand for your profession and send your comments to The Appraisal Foundation.

To listen to the webinar about the changes click here. To see the Exposure Draft click here. Send your comments to ASBComments@appraisalfoundation.org

VaCAP Board

VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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82 Responses

  1. Vincent R Simon on Facebook Vincent R Simon on Facebook says:

    They’re here and large banks are using them . I see this come up monthly on your feed and frankly, appraisers can’t do anything about it but complain . The big lenders don’t care about you, they care about the bottom line and that’s saving money, or putting more money in their pockets . It’s grown from 2-3 companies for hybrids to numerous . Appraisers can gripe all they want but.. it’s here .

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    • Jesse Ledbetter on Facebook Jesse Ledbetter on Facebook says:

      Some of us know that this is the next set up for the next financial collapse and are posturing to not be made the scapegoats again.

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      • Avatar Mike says:

        I have noticed the market already starting to trend downward in some areas. Prices are getting too high and affordability has become an issue. Don’t assume anything in today’s market.

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      • Dawn Aubrey on Facebook Dawn Aubrey on Facebook says:

        This and Senate Bill 2155 that was recently passed & signed….. this next crash is going to be worse than the Great Depression. No joke. I’d give it 2-4 years

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      • Vincent R Simon on Facebook Vincent R Simon on Facebook says:

        Jesse Ledbetter your all doomed. Lol

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    • Avatar Advocate says:

      Not everyone is sitting back letting others control our future. Positive movement is being made on many fronts and individual appraisers are stepping up and refusing to stop advocating for the profession. Like it or not, those that matter are listening.

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  2. Gregory Beck on Facebook Gregory Beck on Facebook says:

    Not if we don’t do them

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  3. Vincent R Simon on Facebook Vincent R Simon on Facebook says:

    That’s what people say about a $200 1004 lol

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  4. Avatar Mike says:

    Why would any appraiser who values their license be part of hybrid appraisals. Everyone needs to just say no to these. Great discovery by VaCAP. Everyone should check their own state and comment to the ASB.

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    • Vincent R Simon on Facebook Vincent R Simon on Facebook says:

      Why would they stoop to low fees. 1004s 1025s. As the markets slow, I’ve had people at CE courses say, hey. Bills and mortgage take presidence over what others say about my fees. . there is no consistency. Ask around , people who complain will just follow like pawns if that’s the way the industry takes it. If being an appraiser is doing it from a desk, their will be plenty of people ready. Black Knight has a few, Valuenet, Wells Fargo US Bank, JP Morgan Chase , and that’s just a tip if the iceberg .

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  5. Vincent R Simon on Facebook Vincent R Simon on Facebook says:

    Been in 14 years. Finished coursework to tech. I’ll be out soon. I can see the writing on the wall as you . 4_5 years 100 or less hybrids. Your choice. I’m done. ..

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  6. Avatar IMJSAYN says:

    This article was shared on various social media and is being debated. Several appraisers are claiming that a third party inspection is not significant assistance, and that as appraisers we have relied upon data collection performed by others, such as home inspection reports or surveys, etc.

    My question is… if the data collection, the property inspection, photographing comp photos, typing/form filling of the report, calculating adjustments, etc. are performed by others (people or software) and not considered significant assistance, then what is significant assistance?

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    • Avatar Advocate says:

      I have seen the comments on other formats as well. Some people just will never understand a different point of view. These are the very same people stating USPAP allows this and have their blinders on because this is statutory issue, not a USPAP issue. BTW, those claiming it is allowed, are the same people you see commenting throughout the day because they have nothing better to do. Please take their comments at face value.

      The difference I see is public data vs private data and the control of the process. When we pull tax data, it is general information available to the public. We verify the data by our inspection of the property. When we use a home inspection report, it is because we observed something that does not appear correct. When we appraise by plans and specs, we verify the improvements after completion. When we have someone type the report, we supervise the person completing the task.

      The property data is being collected for the sole purpose of completing an appraisal and the appraiser is relying on that information as being accurate to base our conclusions is significant assistance. The appraiser never observes or verifies the accuracy. We are not in control of that data or the person obtaining it. We have already seen examples of the fraud that occurs with these products.

      I think Virginia got it right when they initiating mandatory licensing. The S&L’s had unlicensed individuals doing questionable things, so they made everyone be accountable to the public with licensing. Virginia law does allow an unlicensed individual to complete these tasks, they just need to be supervised by the licensed appraiser who takes responsibility for the work.

      These hybrid products are a step back to the wild “anything goes” S&L scandals. The unscrupulous amcs found a loop hole in USPAP and thought they could run with it. They were not thorough enough to think state laws would be an issue.

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    • Vincent R Simon on Facebook Vincent R Simon on Facebook says:

      Those hybrids the appraiser does the report calculates the adjustments and grabs comp photos , if needed by MLS. So the body of the report is completed by the appraiser who gets third party information. From my understanding, theses are ordered on a very low LTV loans.

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    • Danny Wiley on Facebook Danny Wiley on Facebook says:

      The phrase actually used in 2-3 is “significant real property appraisal assistance.” FAQ 255 explains that this is assistance provided by someone else acting as an appraiser. Only an appraiser can provide significant real property appraisal assistance. Assistance in an assignment can certainly be provided by others, but if they are not acting in the role of an appraiser such assistance is not significant real property appraisal assistance. This can all be found, in writing, in the USPAP publication.

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      • Avatar Advocate says:

        I don’t think any one is disputing what USPAP states, That verbiage is not in Virginia Law and USPAP states we must follow state law. If the issue was in front of a Judge, State Law would prevail, no question of that. The intent of licensing is to protect the public. These products are extremely harmful to the public. This can easily be proven by just the few examples we have all seen already. The lack of standardization of these questionable products and the fact that consumers, appraisers, investors and insurance companies are all expressing concerns should be a huge red flag to everyone.

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        • Danny Wiley on Facebook Danny Wiley on Facebook says:

          Well, these services are not new. They have been used by lenders for over ten years now. So, where has all the concern been during the past decade, over which time lenders have ordered hundreds of such appraisals every day??

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          • Baggins Baggins says:

            We’ve been on about this for more than a decade. Being unaware of the counter argument does not diminish the validity of the argument. If the appraiser can outsource all duties, but none are required to be noted as significant assistance…. Have you taken a moment to actually listen to what you are saying. Logical fault because if anyone can do it, we’re just puppets holding the signature and surely we provide more than that. ‘Use our typing services and get back to doing what you love, appraising.’ If I’m not writing unique report language to describe the subject and market, actually analyzing this or that and coming to logical professional conclusions based on experience, what am I doing here anyways?

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            • Danny Wiley on Facebook Danny Wiley on Facebook says:

              On about this for over a decade, huh? Could you cite some of those previous articles. ?

              I would have hoped that the “database war” would have taught appraisers that our primary value is in the analysis of data rather than its collection

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              • Avatar Mike says:

                What good is an analysis if it is based on garbage data? There is no way any appraiser can get a feel for a property by a few pictures that someone else took. We use all our senses when at a property. Do we hear the traffic from the interstate highway? Do we hear the planes overhead? Do we smell the sewage plant down the street? Do we see the junk yard next door? Are you approached by the corner prostitute when you get out of your car? All these things are considered when doing an appraisal. Can you honestly say you can determine all these things based on a few photos and check boxes? These are garbage products that have no business being done.

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              • Baggins Baggins says:

                How does one provide effective oversight to the dollar an hour India typing service guy, who’s other job is working with massive fraud companies and it’s virtually legal over there to target Americans. Reluctance to face and research the issue does not diminish the gravity of these concerns.

                http://appraisersblogs.com/?s=india

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                • Avatar Mike says:

                  I have never done business with any of these companies, but my understanding  is you are providing the information to them to input in to the report. You then can verify the info is accurate before signing.  You are in control over the process.. Hopefully no one is stupid enough to send them their signature, but then again, reading some of the comments, I am not to sure about that.

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              • Baggins Baggins says:

                Mr Danny, a special treat for you, the gift of a highly educational news article. Enjoy. You want articles? We’ve been linking them here routinely for many years now. Be careful what you wish for. Myself, I don’t trust them and refuse all of their services, around these parts we put America first and we’re proud of it. We do not take pride in crushing American competition by selling out to overseas service providers and placing American consumers at great risk in the process.

                https://www.theguardian.com/news/2018/jan/02/the-scammers-gaming-indias-overcrowded-job-market

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          • Vincent R Simon on Facebook Vincent R Simon on Facebook says:

            The numbnut doing the inspection includes all those externals , with the exception of the prostitute. Aerial views, and alot of BIG NAME LENDERS don’t feel it’s garbage lol. I’m so glad I’m out. . this is hilarious

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            • Avatar MIke says:

              It does not matter what the big name lenders think. It matters what the investors think. The investors have already expressed significant concerns over these products. Have you not heard the presentations by Moody;s specifically on these products? Then there are the articles by Bloomberg and Moody’s. Lets not forget about all the warnings from E& O companies.

              Big lenders were the same ones doing those stated income loans and the other products that killed the economy. Putting them is charge is a very steep slippery slope.

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            • Baggins Baggins says:

              Vincent, good one!  When nobody goes to jail, everything is legal. The Holder Doctrine is still in effect, despite renaming the approach. Arrest all these banksters whom play it fast and loose. There is no accountability and it’s gone so far, fee skimming is legal again among other even more egregious practices. Hey, what’s your fee and turn time?

              The Shills are here in force, trying to reframe the issue. The issue is these behaviors are criminal. Hybrids are just one of many new high risk approaches, a consequence of a lawless regulatory body, a paper tiger where law is purchased and no individual is ever held accountable. Arrest all of them, put them in shackles and orange jump suits. Being ‘white collar’ should not excuse the obvious lack of ethic and accountability. They can shill on this one.

              http://wallstreetonparade.com/2015/09/a-closer-look-at-the-eric-holder-doctrine-and-the-1-87-billion-cds-settlement/

              It is worth noting that Holder frequently settled cases in a similar manner – with the skimpiest of details disclosed to the public as if we the people are children to be protected from meaningful knowledge of just how insidious Wall Street’s crimes have become courtesy of the revolving doors that spin between white shoe law firms, Wall Street and the corridors of power in Washington.

              Until that revolving door stops swinging, until campaign finance laws are reformed, until Wall Street is brought to heel, trust in America’s major institutions will continue to erode – as will the country itself.

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              • James Tracey on Facebook James Tracey on Facebook says:

                In this country, take a cue from our President, It’s perfectly legal to lie every day, multiple times a day, without consequences until you are under oath. Then you just lie some more.

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                • Baggins Baggins says:

                  I believe you mean the past several presidents. Please don’t make me post a maga picture, blame the fed, not the latest potus. Fed has been on with this for over a hundred years. Fake news is psychologically toxic, it does strange things to the mind. Citizen Press, at your service.

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                  • James Tracey on Facebook James Tracey on Facebook says:

                    If you post a MAGA picture, I would immediately discount your judgement because no one with sound judgement would support Trump.

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          • Mike Ford Mike Ford says:

            Danny the ‘concern’ as you call it has always existed. It has to do with FAILURE TO COMPLY with USPAP..

            I’ve put the challenge out repeatedly to ANY AMC or con-job software promoter or any other hustlers that think they have written up a USPAP compliant report on one of these garbage products. Redact whatever AMC or appraiser info is needed but leave enough property address info for verification.

            So far the ONLY two samples that have been put in my hands so to speak are those I posted in these blogs and that have also been submitted to the Indiana AG’s Office and the Georgia RE appraisers Board for investigation. BOTH appraisals resulted in the investor losing money as a direct result of the over valuation in each appraisal.

            The challenge still stands. Not ONE of these already completed bifurcated crap products can pass USPAP muster. Nor are any likely to be compliant in the future for the fees paid and the time estimated for completion.

            IF these products are so wonderful, and if they have been used for over ten years then why is it NOT ONE USPAP compliant result can be provided for one of these $225 ‘forty five minutes to complete’ products ?

            Seems like it would be pretty easy to put my contentions to rest and demonstrate “how mistaken I am” simply by providing the proof.

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            • Danny Wiley on Facebook Danny Wiley on Facebook says:

              Mike. Over the past 10 years there have been plenty of parties who have challenged the process via formal complaints to state boards. In no case has a state board found any inherent USPAP issue with the process. And they can’t because there is, as you well know, no USPAP requirement to inspect a property.

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              • Mike Ford Mike Ford says:

                Danny, The First American PACE PRO product was so infamous that both ASC and Board of Governors of Fed Reserve got involved in stopping its (early) release and use.

                There are currently TWO specific complaints with states over hybrids (Indiana & Georgia). The two hybrids referred for complaint oddly enough can be viewed right here in AB. (Just look up Clear Val and the Indiana appraiser doing desktops for property in Georgia via third party inspections. Tell us if you think either one of those ‘appraisals” is USPAP compliant. (Additional information-since the appraised values the renovation work was completed and SURPRISE! The investor could NOT refinance them for anything remotely close to the ‘as repaired’ appraised values in order to pay of his construction/renovation loans.

                The second item is – you are side stepping the challenge. YOU HAVE NO USPAP Compliant Completed Hybrid that you can redact non public private information from and submit to peer review.

                Sophistry is a loser’s argument when you have no definitive support for your position. I repeat the Challenge to you directly to provide one single (already completed) bifurcated appraisal product that you think is USPAP compliant. Just one..

                Certainly with your involvement in promoting these turds you must have seen at least ONE that was USPAP compliant in the past tent years, haven’t you?

                Until proponents can submit just ONE USPAP compliant biifurcated appraisal dated, signed and delivered BEFORE todays date, y’all are making misleading and deceptive representations about their validity.

                SHAME on you!

                PS- Linked hybrids referenced http://appraisersblogs.com/clearval-value-hybrid-appraisal

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      • Mike Ford Mike Ford says:

        An inspector who opines as to property condition or market conditions or property freedom from adverse external influences and supports specific views via a CMA for ‘purposes other than securing a listing from an owner’ IS acting as an appraiser.

        By the way, the pre printed form language also says the appraisers deems (or has reason to believe) the data being provided is credible. IF its insignificant assistance & data, then why must an appraiser offer opinion about its reliability one way or the other?

        The reasons for excluding cost and income approaches are required to be property specific- yet why do we see pre printed boilerplate in the forms themselves saying they were considered and deemed inapplicable or not required for credible results?

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  7. James Tracey on Facebook James Tracey on Facebook says:

    Old time appraisers going out and actually completing an inspection are a drag for lenders. They see appraisals as a profit center. The reports take too long and we charge more because they are built like armored tanks so we can survive the next collapse with minimal liability. It’s a death spiral. The current administration won’t even support breastfeeding babies in 3rd world countries because of industry pressure. Do you really think they give a rats ass about appraisers? I am at retirement age. It doesn’t matter to me. It’s malpractice to encourage trainees to get into this profession. Become a lawyer, it’s easier and takes less time.

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    • Baggins Baggins says:

      Interesting concepts. Agreed. To effectively train someone in this harsh climate for mortgage lending, they would have to pay me. Otherwise I’d end up just cheating with outsourced services to try and somehow double the volume under an already overtime schedule and dramatically reduced income compared to those before me. That billion dollar a year that management companies raked off the top, that came from somewhere, from our pockets. But James, let’s get on to the most important question. What’s your fee and turn time and can you return reports 48 hours after inspection? My management company had me take an ethics class, and that makes me totally qualified to deal with like appraisers and stuff. Our technology fees are low, choose us! It’s true, nobody cares about the appraiser. Then again, it’s a good life, I can tap into the power of real estate without having to actually work directly with all the crooks of the industry. It’s a tentative engagement at best but somehow carries on. My favorite line to throw at prospects whom show up like clockwork a few times a year, “I’m trying to get out, you’re trying to get in! Have you read appraisersblogs.com lately? You really should before you commit to this industry.”

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      • James Tracey on Facebook James Tracey on Facebook says:

        Quicken is testing the response from appraisers for a new product where they pay an appraiser 60-70 to inspect and photograph “ low risk” property. And then another $125 if a “ modified” 1004 is deemed necessary by somebody. That’s about $200 less than a regular report. That would wipe out most appraisers. It simply wouldn’t make economic sense to continue appraising real estate.

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        • Baggins Baggins says:

          It’s interesting, their sales approach. These amc’s and their clever ‘we’re testing this and trying out that’ new product approach.  I spent more time trying to get removed from amc lists then I ever spent trying to get on them.

          They rehash the same sales efforts over and over with varied branding.  Trust me, none of them are testing anything.  What they are doing is playing lap dog for lenders special interests in a concerted effort to eliminate the essential checks and balances system we call valuation security, aka the appraisal profession.  What you are really seeing is a systematic dismantling and retooling of an entire industry through various racketeering and collusion efforts.  The appraisers whom hold out hope still shout RICO.

          Turns out that many of these big name amc’s are actually spin offs of title companies.  The rabbit hole goes deeper.  Do you believe in coincidence?  The gravity behind all of this has been well known since the founding of this country.  Lenders are more dangerous to our liberties than a standing army.  I personally refuse to ever assist in the branding of taking a loan or attaining credit as a sexy or low gravity effort.  Loans have the most serious of consequences for regular Americans.

          When lenders and management companies shill for avm’s, hybrids, middle men, and india outsourcing, what they are really doing is shouting a vote of no confidence in our Constitution and way of life.  They are actually proud of selling their own country out to make a quick buck.  They have no concern for all the other Americans they put out of jobs and place in harms way.  Because they do not understand what is on the next page through historical context, they are eager to turn the page.  Traditional old fashioned manual process works and works well.  They would have us believe running the appraisal industry with the same software approach as Wall Street would yield a different result.  Logical fault.

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          • James Tracey on Facebook James Tracey on Facebook says:

            AMCs are usually owned by the banks who use them. Another profit center.

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          • Mike Ford Mike Ford says:

            Baggs, you are right. Few if any are still owned by banks (Rels was an anomaly). Few understand the true part of this drama being played by title insurance companies. Best example I can cite is First American..Lord knows we’ve written about them enough here.

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        • Mike Ford Mike Ford says:

          James, actually it creates an entirely new market for us. That of doing full appraisals for buyers or sellers or refi owners that want to sue their lenders; agents, loan officers and the idiot appraiser that signed off on these garbage products. I’m already pricing my basic quotes from $1,000 to $1,500 base for planned litigation. Highest quote so far $4,000 (accepted by both attorneys and their client).

          There will also be Qui Tam opportunities down the road once the GSEs suffer actual losses as opposed to predicted losses.

          I’d much rather spend time helping wrongly accused appraisers that try to do good work, but I’m not adverse to helping build the scaffold for the hybrid facilitators to eventually hang themselves on.

          If nothing else, we have collectively created an incredible amount of data including much which is demonstrated fact vs opinion to be used by Congress after the next crash. Maybe THEN some people will go to jail.

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  8. Avatar Milton P says:

    The property inspection is like the foundation of a house. The foundation is the base in which the house Is built on. The inspection is the foundation of the appraisal in which the appraisal completed. There is entirely too much that can get misinterpreted. These products are not protecting the consumer as our license dictates. Those claiming the scope of work dictates the assignment need to go and read the ethics rule. There is a reason the ethics rule comes first in USPAP!

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    • Baggins Baggins says:

      Revision to process 2018. The fee skim off the top is the foundation which appraisal management built their house upon. The outsourced services provided by underqualified non licensed persons in a routine manner for the past decade has been the mechanism which allowed that to happen. 10,000,000,000 dollars redirected to non qualified persons instead of qualified appraisers, and counting.

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    • Mike Ford Mike Ford says:

      Agree. As is the neighborhood inspection. It is like the soil study for that foundation the house is built upon. Google earth or other satellite services simply cannot see all relevant neighborhood issues and conditions. Best example I can think of with national prominence is Porter Ranch gas leaks (google it).

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  9. Vincent R Simon on Facebook Vincent R Simon on Facebook says:

    Big Corp has no ethics.

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    • Baggins Baggins says:

      Vote with your wallet. Same as it ever was.

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      • Vincent R Simon on Facebook Vincent R Simon on Facebook says:

        I vote for the hybrids and let the bottom feeders survive . Afterall they were doing full reports with inspection for 200 this way 100 they don’t have to leave their walker

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  10. Mike Ford Mike Ford says:

    Interesting question. IF they are labeled as evaluations, chances are they are ok regardless of what state laws say about appraisals. It’s when they are called BOTH an evaluation and an appraisal or claim USPAP compliance that issues arise (in my opinion only).

    Look at the language used in “ClearVal” garbage previously addressed on this site (btw formal complaints have been submitted to both Georgia and Indiana on those). Indiana opened a case and Georgia ‘received’ the complaint.

    Looks like we’ll find out if they are legal (as done) in at least those two states.

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  11. Avatar Last Word says:

    The 2018-2019 USPAP FAQ 255 states the following:

    Examples of contributions made by appraisers that constitute significant real property appraisal assistance include identification of comparable properties and data, inspection of the subject and comparables, estimating …

    If the person inspecting is not licensed and provides assistance, (not significant assistance) , Virginia law requires them to be directly supervised by the licensed appraiser. If the person is a licensed appraiser, their assistance must be disclosed in the report. This is problematic for Hybrid products.

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  12. Mike Ford Mike Ford says:

    Isn’t it amazing how the name of the ‘product’ keeps changing? Both regulators and hucksters alike (& or as is often the case, the SAME people) started calling these ambiguously ‘evaluations’ (allowed under FIRREA); until they became hung up on the very few limitations of true ‘evaluations’. One of which is they cannot be called an appraisal.

    Next they came up with ‘alternative valuation products’.

    Then still more ambiguously ‘hybrids’

    Then after proper ‘leveraging; value added and big data’ salting’ they became bifurcated appraisals.

    Whether the product is referred to as a pile of steaming pony loaf or ordinary road apple, it is still shyte!

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    • Baggins Baggins says:

      We understand your frustration and hesitation to alter your normal methods. But our new lending client is really excited about these and we’re trying to make a good impression. What’s your fee and turn time for a product like this?

      There will never be a successful regulatory approach for non accountable individuals. That is why we have professional licensing. Enter ‘management companies’. Because they’re not doing anything they can control everything and skate around existing legislation. Their company licensing is irrelevant.

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  13. Avatar Mark Skapinetz says:

    Break away from the AMCS and their garbage and the lenders and from the BS. Amcs are creating more and more hybrids and the sellouts are supporting it. Time to take it all back and move on from this. APPRAISERFEST 2018.

    http://www.NOV123.com

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  14. Avatar Active Appraiser says:

    Danny Wiley works for AMC Servicelink which is why he supports new “products”.

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  15. Vincent R Simon on Facebook Vincent R Simon on Facebook says:

    Service link. Lol.

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  16. Baggins Baggins says:

    Dear James Tracey; If you post a MAGA picture, I would immediately discount your judgement because no one with sound judgement would support Trump.

    Let me ask you, what’s it like to be a parrot in a cage, screeching RED BLUE RED BLUE. Do  you need a political cracker or something? Weaponized media is real. Don’t pretend this is a cnn board packed full of people whom just want to cry about politicians. “Liberty, too big to fail.”

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    • Avatar Cotton Cornell says:

      Baggins. FYI liberalism is a mental disorder. Trump is the best president this country has ever had. MAGA! Trump 2020 lets make democrats cry again!

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  17. Avatar Cotton Cornell says:

    These hybrid products are 100% destructive to the appraisal profession and public trust. The only people who oppose are the ones who will profit off the backs of hard working appraisers. The AMC business model is destructive and abusive to our entire profession. If you complete these hybrid products just understand that you are aiding in the downfall of a profession. Just say no to hybrids!

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  18. Avatar Mark Ziegler says:

    Any update(s) on the status of the legal filings? Appreciative of variances from state to state, I simply can’t comprehend how these reports could be considered USPAP-compliant. It appears these services are now being sold to private capital participants as superior to the commonly used BPO’s. The report that’s the subject of this thread isn’t poor, it truly is criminal.

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    • VaCAP Board VaCAP Board says:

      Mark, The Virginia Real Estate Appraisal Board formed a committee to discuss hybrid appraisals. The committee allowed for public comments, which there were many. In the end, the committee cited 4 or 5 statutes and regulations for appraisers and amcs that make this products non compliant. The consensus of the board was these products do not protect the public or investor and ultimately taxpayers. The committee will provide their recommendation to the full board in February. We can not guarantee what will happen, but we suspect the board will be issuing some guidance to all appraisers and amcs. There are 16 other stats that are also discussing hybrid appraisals.

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      • Avatar Mark Ziegler says:

        Thanks for the response and it’s heartening to see around 30% of states at least “looking into this”. What I was actually wondering about was the GA case brought about by the IN appraiser and if this has brought any pressure to bear on Clear Capitol (and others) relative to these type reports. I’ve taken it on good (insider) advice that Clear Capital is intending to ramp production of the “as-is/ARV” reports by as much as 50% in 2019. Maybe Mike Ford can chime in, or anybody with any knowledge. What I’d really like to see is an investor (or class for that matter) go after the E&O Company of any appraiser willfully signing anything, regardless of its title, similar to the Clear Val example herein. For those of us in the Profession for more than a week, we’ve all seen too many times lender’s efforts to put “lipstick on the pig”. Simultaneously, we also realize that to most lender’s and AMC’s we’re nothing more than an (E&O) insurance policy to cover their tracks when they’re called out. I suspect that if E&O Carriers didn’t cover this type of activity, or for those willing the premiums were equated to the risks, no sane appraiser could, or would accept these type assignments. Just thinking the best approach might be to cut this off at the knees before it starts walking away on us.

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        • Thanks Mark, I haven’t heard back from Georgia except to acknowledge the complaint had been received. Indiana had no basis or authority to pursue it beyond the several calls to me (& I’m assuming to Georgia). It’s not that they were not concerned about it, but rather they had NO AUTHORITY to deal with it.  I was actually quite impressed by their thoroughness.

          My state’s laws (California) are (intentionally?) ambiguously worded.  IF I am NOT a licensed appraiser and if the bifurcated garbage is NOT for a federally regulated transaction, then they too would have no authority over it. It used to be clear that ALL licensed appraisers must always comply with USPAP, but again the language has been ambiguously reworded resorting to words like “covered transactions”.  As much as I criticize my state, I don’t know if the ambiguity is deliberate or simply state attorneys trying to flexibly cover all bases. Either way, it is a disservice to every single licensed appraiser in the state. WE must comply with standards of performance. UNLICENSED yahoos can call themselves appraisers and conform to NO standards!

          Beware of folks starting to lump evaluations; hybrids, alternative valuation products into a single category of discussion. It enables them to make statements about one item which if or when applied to another item would be untrue.

          1. Evaluations MAY be USPAP compliant, however old language in FIRREA that permits evaluations to be performed in lieu of appraisals prohibits evals from being called appraisals. Lenders & securities bundlers want it BOTH ways. Cheap, fast AND called an “appraisal’…even if they have to weasel around traditional wording via TAF redefining the English language and appraiser terms to accommodate them.

          2. No hybrid I have seen or heard about is USPAP compliant. ALL (as designed & promoted) would be gross violations of USPAP absent a huge amount of additional work by the signing appraisers to exempt themselves to much of the boilerplate and to augment the reports to make them compliant. Basically turn the $25-$75 mislabeled “appraisals” at least the equal of a USPAP compliant desk appraisal. Since so much of the misleading verbiage is already embedded into the hybrid “appraisal” form its a not very likely scenario. Not impossible, but exceptionally unlikely. As far as I’m concerned, firms that offer and promote them may as well be advertising ‘Fraud Facilitation’ services made easy! That goes for so-called software designers that make them (forms) too.

          3. NO AVM is credibly accurate enough to be called an appraisal. NOT ONE. Their hucksters argue they are almost as accurate but that is only true when the comparison is with some other form of garbage such as a hybrid. Corelogics REAL.AVM is a horribly bad joke that (in my experience) doesn’t even come as close as Zillow in terms of credibility. It’s laughable to anyone that knows the flaws.

          I agree that appraisers should stop all of these alternative products in their tracks. Or, at least those that purport to call themselves appraisals or to claim to be ‘almost as good’ as appraisals. WHY is an alternative to the MINIMUM standards necessary in the first place?

          IF Congress WANTS cheap products that fall far short of the minimal standards they themselves required to be established for federally regulated transactions, then we cannot stop them. What we can do is to make them own that decision publicly.

          Repeatedly.

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  19. Avatar Mark Ziegler says:

    Thanks Mike,

    Regretfully, my state (Wisconsin) is even worse:

    “458.02 Limitations and exceptions. Nothing in this chapter shall be construed to prohibit a person who is not a certified appraiser or licensed appraiser from appraising real estate or from cosigning an appraisal report with a certified appraiser or licensed appraiser if the person complies with s. 458.055″

    458.055 simply states you can’t represent yourself to be a licensed and/or certified appraiser in this state if you’re not. But if you don’t. “appraise away”.

    So, while in essence anyone can complete a real estate “appraisal” in the State of Wisconsin there are some obvious hindrances such as Federally-Related transactions that require licensure. However, our Rules of Professional Conduct under which Licensed/Certified Appraisers must abide state, in part:

    SPS 86.01 Standards. (2) All appraisals performed in conjunction with federally related transactions and non-federally related transactions shall conform to the uniform standards of professional appraisal practice (USPAP) in effect at the time the appraisals are performed.

    So it would appear, in sum, that 99.9% if not all bifurcated/hybrid/alternative “appraisals” would not be compliant in the State of Wisconsin for licensed/certified appraisers. I wouldn’t necessarily disagree with “Evaluations” depending although, as you say, they want their cake and to eat it too (called an appraisal).

    I concur that only Congress can lower the bar, but I suspect that only 10+/- years removed from the most recent catastrophe and bailout it’s extremely unlikely in the foreseeable future. Seems it would be easier to get there through lobbying for TAF and USPAP recommendations as opposed to Congress themselves getting their hands dirty. This is simply my observation as to why efforts to allow such products could and should fail as opposed to my offering suggestions as to how the “powers that be” should yet again “unchain” the lenders and allow them to run amok.

    I’d have to slightly disagree with your take on AVM’s, although not in its purest sense as it relates to Fee Appraisal work. I’ve built and calibrated numerous mass appraisal models over the years that were extremely accurate and in full compliance with USPAP Standard 6. Conversely, these were all built predicated upon Wisconsin Statutes requiring interior inspections and almost all with 90%+ interior access to the properties in the jurisdiction. While taxes can obviously be jockeyed by virtue of the mil rate, it’s clear to me that the only way an AVM can render reasonably accurate values is by virtue of a complete inspection of an overwhelming majority of the properties in their respective classes by a qualified professional and rendered relative to their specific locations. To remain relevant after initial development these must be maintained which rarely, if ever occurs.

    From a Fee Appraiser perspective I’ve yet to see a commercial AVM reasonably supportive more times than not, although you do get the occasional “blind squirrel”. I once had an AMC request I use a specific property in my report to increase value because it showed up in their AVM. When I questioned why a 2 family dwelling was included in a single family analysis they stated “we don’t know, but it’s there, so please use it”. Obviously, I didn’t. Through the years I’ve been asked to beta numerous “AAAVM’s (Appraiser Assisted Automated Valuation Models) as well as regression models integrated into appraisal software packages. Suffice it to say no one cared for my feedback, and especially as it relates to the primarily rural areas I cover.

    As far as Corelogic, it’s scary. I’d expect we all realize that the GSE’s, through implementation of the UAD and delivery format requirements have not so quietly yet not at all transparently set about to create their own “AVM’s” using our data and, most likely, with some assistance from the likes of Corelogic. While we can (and do) argue all day long about the merits of “forced uniformity”, any reasonable appraiser can clearly see that there can be varying degrees of quality and condition between properties with the same rating “as a whole” for very specific reasons. Corelogic (a la mode) has rolled out a feature called “SmartExchange” which is anything but. In addition to properties contained in your database, it also allows you to display “peer comparables” of the same properties. No names, no values, but certainly all property attributes they used in their grid. While you can’t determine an appraiser by name, there are certainly consistencies that allow you to determine the likelihood of a specific appraiser completing numerous reports. In a specific county I work in there’s an appraiser who deems every property they’ve ever encountered to be a “Q4”. In addition to aggregating the data we collect with no remuneration for such, it would appear Corelogic is complicit in attempting to coerce appraisers into “thinking the same as their peers” and potentially avoid FNMA/Freddie questioning. While this wouldn’t necessarily render more accuracy, they’d certainly sell clients on their greater degree of statistical uniformity.

    I apologize for going off the rails on a rant. It seems the political aspects of this discussion (as well as everything else in life lately) is never ending. Maybe I’m off my rocker but, as I see it, there might be a swifter, if not surer way of ending this professional degradation. When I first started in this profession, and for a decade thereafter, I never carried E&O. Good luck trying to get any meaningful amount of work today without it, merit notwithstanding. This goes for any product no matter the name, evaluations included. In essence, we’re the “fall guys” who can’t.or more so won’t be engaged without an active E&O policy.

    I’m open to logistics but, if you can’t or won’t bring an active E&O policy to the table, these products can’t/won’t be placed with you. This effectively removes the political argument (interpretation of USPAP and/or state regulations) and places it squarely on the shoulders of commerce (mandated necessity of E&O). I realize the difficulty, if not impossibility of getting appraisers in any effective number to rally behind issues in our profession. However, were insurance carriers to refuse to insure such risky behavior, it’s lights out. And while some carriers may choose to provide coverage for such products, it would likely be at a premium that would render completion of these reports for current fees economically unfeasible.

    I’m thinking out loud here and while I certainly can’t speak knowledgeably to the plausibility, appraiser’s are generally smart, typically resourceful and can commonly find more than one way to skin the proverbial cat. Personally, I think it’s time to use or E&O against them rather than for them. My $0.02.

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    • Great response post Mark. I don’t see it as a  rant at all.

      ASK your state if this is a regulation that is purely dependent upon punctuation and legal interpretation, or one designed to confuse and promote licensing violations?

      “458.02 Limitations and exceptions. Nothing in this chapter shall be construed to prohibit a person who is not a certified appraiser or licensed appraiser from appraising real estate or from cosigning an appraisal report with a certified appraiser or licensed appraiser if the person complies with s. 458.055 (I added italics and underline)

      Are they just saying a person can be a trainee (or property inspector for bifurcated-crap, provided they also obtain co signature from a real appraiser? The wording is as poor as my own states.

      If TAF and individual states are unable to write clear, concise laws regarding appraiser licensing, then its time they surrender that responsibility to federal lawmakers and quit trying to selectively blend USPAP into some, but not all state appraisal laws and regulations.

      One would think the regulatory clowns at AARO would have recognized this already.

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      • Avatar Mark Ziegler says:

        Thanks Mike.

        Back around 1991 I was investigating ways to accumulate hours for certification given the difficulty in becoming a trainee in my immediate market at the time. Note that, with the exception of AMC verbiage added last year, Chapter 458 of our Statutes (and related standards) hasn’t changed since this time. We were fresh out of the S&L debacle and into mandatory licensing and, while not required in my state, it was literally impossible to get a lending institution to engage you if you weren’t licensed and almost as difficult to get a trainee position without a license as well.

        I contacted Reg’s & Licensing to discuss their “read” on this statute, as well as to attempt to determine what they deemed “work and hours” acceptable towards the advancement of certification. They stated that while one wouldn’t necessarily be legally required to hold an appraisal license in the State of Wisconsin to complete appraisal reports, getting typical appraisal work without licensure would likely be impossible, They suggested I could seek out property owner’s that would allow me to complete a report on their property and/or offer my services for free in an effort to obtain the necessary hours of experience. They also stated I might want to contact the DOT in search of eminent domain projects, given all property owner’s affected were entitled to obtain a second opinion (appraisal) at the state’s expense.

        I contacted the DOT who stated it certainly would be possible to complete these type reports without being licensed and that they had a number of staff at the time completing this work who weren’t licensed as well. However, they went on to say that the department head was licensed and recently recommended all staff involved in these undertakings as it relates to value become licensed. While a little trepidatious of how this might work out, I did obtain mailing lists of those currently affected in my area and began mailing. For those that I actually spoke with, all stated they were satisfied with what the state had offered and, even though a second opinion wouldn’t cost them anything, they just didn’t wish to proceed. May have been a Divine Intervention given my level of experience at the time.

        Long story short, while it’s still “legal” to complete an appraisal report in Wisconsin without a license, it’s neither practical nor economically viable. I went on to obtain my appraisal licensure in early 1993 and became a State Certified Assessor at the same time as well. I then used my assessment hours to become a Certified Appraiser.

        The unfortunate part is that my state, and I suspect most others, rather than be concise simply elude to USPAP somewhere in their statutes. Then, if an issue and/or complaint arises and, depending upon who sits on the committee at the time, they “wing it” in interpreting USPAP. I regretfully had to assist a colleague recently in defending a complaint that was filed against her because the “value didn’t come in”. They were clearly coached by the lender in the filing and, after 2+ years of sitting in limbo, when they did proceed the matter was more of a protological exam than a USPAP fact-finding mission and never remotely addressed the frivolity and unsupported nature of the complaint. While I personally would have fought to get “called on the carpet” and expose these hucksters, my colleague detests confrontation. She chose to accept the slap on the wrist and “OK, you didn’t do anything wrong, but don’t do it again”.

        Speaking of regulatory clowns, one piped up quite recently: https://www.appraisalbuzz.com/hybrid-appraisals/

        While I suspect most have seen this, one can only reasonably surmise which way the winds are blowing at TAF. It appears to me that legislative and/or regulatory action regarding these type products won’t be coming any time soon and currently, from this angle, tends to side with the lender’s and AMC’s producing and encouraging this sausage.

        As I see it, there’s only 3 arrows left in the quiver: Make these products USPAP compliant; Manipulate E&O against them; “Just say no”.

        I think this thread fully demonstrates the resistance to making these USPAP compliant. And the third I see as a “broken arrow”. I’m aware of a small, but national group that meets online bi-weekly to discuss topics and trends related to these type products across numerous AMC platforms. Effectively, none have any concern regarding these products being USPAP compliant. Discussions include how to get accepted on the AMC panel(s), which assignments to accept and/or decline and why, as well as how to complete 10+/- of these reports 6 to 7 days a week in order to make a satisfactory living. Most AMC’s anticipate a 24 hour turn time, weekends included, and the scope creep on these reports are becoming worse than the typical 1004’s. It’s rather ludicrous what lender’s are anticipating and starting to demand in these “limited scope so-called appraisal reports”, especially as it relates to the fees paid. This is being touted in certain circles as the “next big wave” we need to jump on to stay ahead of the curve. And if they succeed in worming these type reports in for “limited” transactions, it’s unquestionable they’ll stump for use in all transactions. I believe if you’ve been in this industry for any amount of time you can hear the Beach Boys song coming; Wipeout!

        Win, lose or draw, it appears 2019 is shaping up to be one heck of a ride. Best Wishes to all!

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  20. Avatar pat says:

    There are a million hits here!

    keep it up, I dare you!

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  21. Avatar Mark Ziegler says:

    OK… I had to “jump in the pool” and see what this is all about. The names have been withheld to protect the guilty. I recently completed a “bifurcated” report for one of the AMC’s providing this type service. The form is to be completed on their site and they recently upgraded to the “new and improved” report on their portal as of 01/01/2019.

    The subject is sited in an urban location and while not an anomaly per se, does display features such as being one of the largest Ranch style dwellings, significant LL finish and a considerably larger site amongst properties in its immediate market area. Client expectations are rather typical: 3 closed sales, preferably within 6 months, that bracket all of the subject’s value-related features. While this could be done, it produced an indicated range of value slightly greater than I prefer. However, this specific form only allows 3 comparables and while I actually added 5, only 3 could be used to reconcile value. While I need 3 specific sales to bracket, I’d have added an addition 1 or 2 in further support.

    Of additional significant note is that during the cursory analysis and, according to MLS and tax records, the subject last sold over 3 years ago and was stated as such in the report. The field report provided stated the subject to be in “average” condition with external negative influences for being sited within 3/4 of a mile from railroad tracks and an interstate. Imagine that in an urban location? Based upon readily available data the subject was considered a Q4, C4 with no external obsolescence for purposes of my report. This specific report allows for value-related adjustments and produces its own indicated value. Because they provide no documentation as to how their algorithm produces this indicated value, I chose to weight the adjusted sales and override their indicated value with my own. I chose to add additional verbiage that I believed made me as USPAP-compliant as possible. They weren’t crazy about it, but didn’t request I remove it either. This report paid $75, wasn’t terrible and took approximately 1.5 hours to complete. I suspect if I was familiar with the software, the subject was in an urban location and I had “canned statements” relative to USPAP-compliance, prior services, etc. that it could be completed in 1 hour +/-. Not necessarily terrible, but no one’s retiring on these. And so I thought it was the end.

    Underwriting came back stating they found a recent sale somewhere online. I questioned the underwriter as to where this data was found. It took them 2 days to respond that “Sorry for the late reply. I’ll have to get back to you”. When processing was screaming for me to complete the “revisions” I told them of this correspondence. It was elevated to a “senior” reviewer who cited a recent sale of $XXX found online but, again, provided no information relative to where it was found. An online search found the subject with photos on some goofball site like Trulia, but it never stated it was listed nor for sale and no FSBO data could be found either. A search of the WI DOR Transfer Return Site did reveal it transferred recently, although no verifiable proof it was exposed to the open market could be found. The sale was so recent that the local assessor hadn’t analyzed it as of yet for arm’s length validity. They also wanted to know why my indicated value was well below their inflated and inaccurate assessed value provided and suggested I adjust my condition from C4 to C3.

    Long story short, I had no evidence of exposure to the open market and recent arm’s length sale, and appropriately discounted the recent sale. I also pointed out the almost 30% higher and inaccurate stated assessed value and the fact they could provide no significant data warranting changing my conditional rating coupled with the fact they suggest the field observations be extraordinarily presumed accurate. With the additional 2.5 hours I’d now be better off at McDonalds.

    But it doesn’t end there. In an unbelievable twist I’m sure Mr. Ford would appreciate, the “new and improved” system doesn’t allow you to retain a copy of your work (can you say RECORDKEEPING violation). I questioned the senior appraiser about this. He stated the system was originally set up to deliver a PDF of your report directly to your email. However, an appraiser’s email account was recently hacked and they discontinued this practice. But, there’s a repository of your work accessible from your portal and you can download your reports from there. When I pointed out the fact that actually, there isn’t, or at least no links to said repository within the portal: Crickets.

    As if the forms aren’t questionable enough and “revisions” are as much, if not more rampant than typical AMC field work, the fact you can’t retain a copy of your own work for recordkeeping purposes is the USPAP coup de grace. At least, for this AMC it is.

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    • Avatar Pat says:

      Turn them in!

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    • Mark thank you for sharing your experience. As for turning anyone in, that is still the double-edged word commonly preventing more of these folks form being turned in. In this specific instance, it sure reads like you were trying to do a proper job given the scope of work. I WOULD encourage you to turn them in for:

      1. Limiting or directing what and how you reported appraisal results (3 vs 5 comps).

      2. An OPINION about a site or area external inadequacy being concluded by a non-appraiser (assuming the ground inspector is not an appraiser).

      3. Whether you ignored it or not it is completely inappropriate for anyone to be producing a suggested value to you during the development of the appraisal.

      4. It is 100% improper for Underwriting to come back and suggest you use a comp that supports a higher value. Especially when they can’t explain WHY it’s a ‘better’ comp.

      5. Processing pressure to complete the appraisal reconsideration while data remained unavailable from the client is unacceptable.

      6. Sr. reviewers jobs are not to find higher valued comps online either. Just as it’s improper for the ‘underwriter’, it is improper for the reviewer if he or she cant identify WHY it’s a better comparable.

      7. Asking WHY your value was less than their inflated value or assessed value is fine. Suggesting you DO something about it is not fine. Specifically suggesting you change your condition from C4 to C3 is grossly inappropriate.

      8. Record keeping. Document that when you accepted the order your understanding was that an accessible workfile copy of relevant data was maintained by them and available to you. Document further in your workfile that you requested access and were lied to about its availability

      I am assuming this was NOT a federally regulated transaction. I’m also not sure that’s relevant for an AMC, but that depends on YOUR state. That you had to add language to make it uspap compliant, suggests their form CLAIMS uspap compliance. If that is the case, then it doesn’t matter what state it was done in.

      Mark, your post was far too objective to describe this fly by night, uspap non-compliant, Dodd-Frank appraiser independence violating, deceptive, fraud-inducing, bottom of the barrel AMC properly, but it should not prevent you from turning them into the states AMC regulatory board. The primary reason is that you have requested report copies for your workfile and they have not been provided as promised.

      Pond scum like this firm should be called out by name, but I can appreciate your not wanting to go quite that far until the state also confirms that they are pond scum.

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  22. Avatar Mark Ziegler says:

    Hey Mike,

    I still haven’t been able to obtain a copy of that report, but I’m working on it. They’re not the greatest on communication. Obviously, were one to point out obvious USPAP Violations (or Dodd-Frank or TILA) directly to the AMC, they don’t “view it” that way.

    The report was for a large national lender that commonly sells to the secondary market. However, the AMC states the Intended Use is “Collateral Evaluation” so it’s virtually impossible to infer a specific purpose. They of course have the obligatory “canned” USPAP Compliance statements.

    I did get “blackballed” a couple years ago from a large national lender (I’ll name them; Flagstar) for not changing conditional ratings on cited sales because they couldn’t understand the ratings relative to chronological age. The majority of the cited sales were second, or “vacation” homes that were occupied seasonally, didn’t get remotely the wear and tear of a primary residence and the conditions reported were relative to effective age (the subject was a considerably older yet recently modernized vacation dwelling as well). When they stated I was “single handedly” devaluing local property values I requested they turn me into the State Board so that all the facts could come out. They didn’t.

    While this AMC should be turned in, the last dealing I assisted in with the board took over 2 years before it was even looked at. But I suspect that shouldn’t stop me because “pond scum” is a lot more polite than I’d put it. What’s somewhat interesting but not surprising is that after completing this report, they sent others over and became indignant when I declined to complete reports on properties that aren’t remotely suited for this type product. Especially in light of the fact that this specific form pigeonhole’s you into 3 comps they anticipate will bracket all the subject’s features. And never mind they’re unwilling to pay for the additional time necessary nor grant sufficient time to complete these appropriately. This is back to the future (a la S&L Crisis and 2007 – 2008) on a bullet train.

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    • Another reader just sent me hybrid samples from Mueller. Deserves an article all alone.

      Your post reminds me when I worked for United Title Insurance’s Specific Property Inspection Division as Chief Appraiser. We did 704’s for HELOCS-pre USPAP implementation though USPAP had come out by then.

      I was declining about 38% of orders as inappropriate for drive bys. Large (now defunct) Bank complained. I was told flat out not to decline more than 25% under any circumstance, and optimally far less than that. Chairman sold off our division to a pair of snakes with zero morality…folks not bothered by any kind of standards. The discouraging part is that this attitude was typical of title companies operating in Los Angeles area. Some even own big appraisal software companies today.

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      • Avatar Mark Ziegler says:

        Hey Mike,

        Are you going to do a separate article on Mueller? They’ve been after me for months. I believe this has to do with the fact they have nominal business and even fewer appraiser’s in Wisconsin. This has become somewhat intriguing to me to sign up with these AMC’s just to see their business model and forms. My sticking point with Mueller is the fact you MUST be a W-2 employee to do appraisal work for them. I haven’t been an “employee” for over 20 years and I’m not sure I like the idea. I did speak with someone in one of the most heavily populated areas of Wisconsin and was told, while Mueller promised significant volume, for them over the past 6 months, 6 a month was average and 10 a month was a windfall.

        Of rather interesting note is that many of these “bifurcated” AMC’s have the same “sign-up” requirements as most, to include background checks. I was declined by Clear Capital because of my background check and they refused to provide information, discussion and/or reasoning as to this determination. I’d certainly be the first to say my background check is no nomination for Sainthood. However, in over 30 years of holding multiple professional licenses I’ve never had a complaint relative to my professionalism and/or professional conduct. Maybe I’m not crooked enough for them?

        In relation to declinations of assignments, it’s crazy. There’s a “lender laundry list” that says decline the report if it’s not located in “x” area, exceeds “x” indicated value, is a “unique X style”, displays “X or more acreage” etc. Don’t you morons ask these questions prior to placing the report request (rhetorical)? Nevertheless, the AMC’s still view this as a “declined assignment”.

        It’s hard to know specifically what you’re dealing with until you’ve been in the “belly of the beast”. I’ve stared it in the eyes and sincerely don’t like it. Not surprisingly, it doesn’t like me back.

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        • Mark, short answer “Yes”. The Mueller product touts itself as being USPAP compliant. In the generic draft versions I’ve seen I found at least half a dozen areas that are definitively NOT USPAP compliant; or are not compliant as suggested in their online default forms. Your ‘laundry list’ points out some other factors I was unaware of.

          The volume issue alone should be cause for ALL appraisers to decline these even if they were or could reasonably be made compliant. WHY ON EARTH would anyone do 6 x $50 reports for less than 75% of the cost of ONE normal appraisal?

          The BEST that can be said about any bifurcated hybrid product is their phony pretense of ‘allowing’ an appraiser to add whatever they feel is needed. Try adding a fourth comp for example. Many ‘suggest’ a specific AVM derived value that the appraiser is ‘allowed’ to override…provided they explain why THEIR results vary from that specific value.

          We are curious by nature so I understand why an appraiser may try out ONE of these. There is no excuse though for doing two.

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          • Avatar Mark Ziegler says:

            Working from the back forward, ONE as opposed to TWO in my world has to do with multiple AMC’s I’ve in fact done numerous reports of this type for numerous AMC’s within the past 10 years without the “bifurcated” label and, while many included a client-prescribed form (some embedded in common proprietary appraisal software programs), none generated their own values nor restricted appraiser latitude until as of late. These actually paid well relative to time and scope (back when there was effectively no competition) and afforded the appraiser full control over what was contained in the report to include support and commentary, significantly similar to that of the current “canned” desktop report with any additional commentary I deemed necessary.

            Somewhere along the line, this went sideways which, I’m quite sure had nothing to do with the banking industry (haha), I was never questioned when I remarked back then about the potential lack of qualifications of the “inspector” within the report, which I suspect is thoroughly unacceptable today. There wasn’t an ‘algorithm” that developed my conclusion of value, but rather I developed adjustments and supported my own conclusion of indicated value “back in the day”. And after having built and calibrated numerous valuation models for mass appraisal over my extensive years in this industry, I don’t want to remotely get started on the unreliability of the “algorithms” and AVM’s (cute buzzword for we have no conception of what we’re doing) that AMC’s request you rely upon today. See Zillow, Trulia, ad nauseum.

            Your mention of the addition of a “fourth”, or additional supportive comparable being unallowable is both factual and ludicrous in many instances. Attempting to bracket (which they expect) the features of a somewhat unique (and God forbid rural at the same time) property with only 3 sales in any given 12 month sales period is asking for less than a significantly supportive value. Offering $50 or less to complete such an assignment within 24 hours with no more than 3 sales allowed is virtually guaranteeing, regardless of the appraisers expertise or competence, a significantly unsupported indication of value.

            Appreciative of the fact things are significantly slow where lender work is concerned, I’d anticipate you could get 1 “normal” appraisal per week as opposed to needing 24 “bifurcated” reports for the same monthly income. I don’t necessarily concur, but can somewhat understand appraiser’s taking on this type of work in rather desperate times.

            What I don’t (and won’t) understand is so-called Professional Appraisers accepting these assignments in any market conditions. I don’t remotely deny I’ve dipped my toe in the pool. Just didn’t like the fact I found it to be a cesspool.

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            • There was nothing wrong with limited scope, USPAP compliant desktop appraisals. They did not pretend to be anything more than they were. You had the leeway to disclose or assume as necessary and reasonable in order to produce a credible product.

              And, like you said, fees were commensurate with the work. I’d do desktops for $250 all day long AND they would be better than the hybrid crap; and USPAP compliant. THAT is the problem. Lenders that want to defraud investors do not want honest disclosures about the products limitations. A decent desktop is more on the order of 3 to 4 hours rather than ten minutes (assuming HBU; zoning, supported market adjustments etc.)

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  23. James Tracey on Facebook James Tracey on Facebook says:

    What they want is your E&O and for you to take liability for the report even though you have no idea who is gathering data, taking pictures, choosing comps, doing interior inspection (are they even insured?). By spreading risk, lenders can offer lower rates.

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    • Avatar Mark Ziegler says:

      True James. I’ve done a number of these type “desktop” reports over the years well before the “bifurcated” craze. Never once have I relied solely on the data collected (Property Condition Report) and provided by a 3rd party, typically a local Realtor. In fact, I’ve fully addressed their lack of qualifications in every report I’ve completed. Seem with this “bifurcated” dealio they’re using staff “inspectors” who are likely, if that’s possible, less qualified than a local Realtor. I believe the reason for “inspectors” is that many of these AMC’s are starting to offer interior inspections and they can bring employee’s in under the corporate insurance umbrella. They may end up insured, although that has absolutely nothing to do with qualified.

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Are Bifurcated Appraisals Legal in Your State?

by VaCAP Board time to read: 3 min