Another Threat Looming

Dave Towne

Dave Towne

Certified Residential RE Appraiser at Towne Appraisals
AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003.
Dave Towne on e-AppraisersDirectory.com
Dave Towne

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Rural Areas Appraisal Waiver Threatening Appraisers & Bad for America!

Senate Bill raising de minimus value to $400,000 will also waive appraisals in certain situations in rural areas

Folks, while the TriStar Bank appraisal waiver issue is important for appraisers, there is another insidious threat looming:

Senate Bill 2155 passed the Senate this week, and is now in the hands of the House of Representatives.

That bill, if fully ratified as it stands, and is signed by the President, will undercut the need for appraisals in two ways:

  • the current de minimus value of $250,000 is raised to $400,000, which means lenders can use non-appraiser evaluations to establish property value for a mortgage – for a heavy majority of properties
  • it also has a waiver component which will allow no appraisals in certain situations in rural areas

So it’s not just ONE BANK involved with waiversif a compromise bill is passed with these provisions, it means mortgage lending policies across the US and territories will radically change and appraisers will be affected.

See the Rural Counties PDF embedded below and look at the counties in your state that are shown to be “underserved”, and thus will be included in this legislation.

Everyone needs to start contacting your House of Representative members NOW, and express why these provisions are bad for America.

Here is the language from S. 2155:

SEC. 103. Exemption from appraisals of real property located in rural areas.

Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended by adding at the end the following:

“SEC. 1127. Exemption from appraisals of real estate located in rural areas.

“(a) Definitions.—In this section—

“(1) the term ‘mortgage originator’ has the meaning given the term in section 103 of the Truth in Lending Act (15 U.S.C. 1602); and

“(2) the term ‘transaction value’ means the amount of a loan or extension of credit, including a loan or extension of credit that is part of a pool of loans or extensions of credit.

“(b) Appraisal not required.—Except as provided in subsection (d), notwithstanding any other provision of law, an appraisal in connection with a federally related transaction involving real property or an interest in real property is not required if—

“(1) the real property or interest in real property is located in a rural area, as described in section 1026.35(b)(2)(iv)(A) of title 12, Code of Federal Regulations;

“(2) not later than 3 days after the date on which the Closing Disclosure Form, made in accordance with the final rule of the Bureau of Consumer Financial Protection entitled ‘Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z)’ (78 Fed. Reg. 79730 (December 31, 2013)), relating to the federally related transaction is given to the consumer, the mortgage originator or its agent, directly or indirectly—

“(A) has contacted not fewer than 3 State certified appraisers or State licensed appraisers, as applicable, on the mortgage originator’s approved appraiser list in the market area in accordance with part 226 of title 12, Code of Federal Regulations; and

“(B) has documented that no State certified appraiser or State licensed appraiser, as applicable, was available within 5 business days beyond customary and reasonable fee and timeliness standards for comparable appraisal assignments, as documented by the mortgage originator or its agent;

“(3) the transaction value is less than $400,000; and

“(4) the mortgage originator is subject to oversight by a Federal financial institutions regulatory agency.

 

Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on e-AppraisersDirectory.com

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33 Responses

  1. David Wimpelberg David Wimpelberg says:

    It’s also bad for something else: AMCs. The AMCs have been screaming appraiser shortage loudly and fiercely. And the result? Cut out appraisals, and therefore cut the AMCs profit margin.

    My advice for appraisers working with AMCs: Keep a close eye on your receivables.

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  2. Debbie Biehl on Facebook Debbie Biehl on Facebook says:

    They already have some of these waivers in place.

    But, you have to ask yourself, what banks will allow this when these loans are higher and the buy backs would kill them.

    I can see if these are high credit score loans, low LTV and low debt Ratios.

    There is also other qualifiers before you can NOT do the appraisal because of no available appraisers in an Area.

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  3. Diana N. says:

    I’m sure it will come back to bite them in the butt and they will find some way to blame appraisers AGAIN. 

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  4. Dan Johnson on Facebook Dan Johnson on Facebook says:

    More internal bank evaluations

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  5. E J B says:

    Well, I contacted both senators to no avail and contacted my Congressmen with nothing but form letter responses. And guess what, all 8 of the counties I cover in SE GA are on the list and the majority of my work is from local community banks. WTF, I’m done.

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    • Diana N. says:

      Looks like you might have a forced retirement 🙁 🙁  I hope not for your sake.

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    • EJ, truly sorry to hear that. I’d start looking to see what alternatives are available in other appraisal work.

      I haven’t thought of myself as having completely giving up sfr loan work but I just realized the other day when talking to my favorite AMC (seriously) that the last sfr loan appraisal I worked on was on my birthday 2/2015. Actually it was a review.

      I just haven’t missed it. Land appraisals are a good alternative (make sure you charge a LOT more than you normally do for an improved property with house). Litigation work, tax work. Look into ERC (Employee Relocation Council). I guarantee THEY aren’t about to stop using appraisals. They have also always paid more. Significantly more. VA and FHA are not likely to accept waivers…yet. Credit Unions may or may not. My guess is the stupidly managed (as opposed to merely being poorly managed) ones will use waivers.

      Commercial and apartments may see reduced scope products. Hard to say.

      EJ, this was one of those well organized efforts by promoters that was well on its way long before we ever heard about it. Most groups wanted to get by with a very visible but on the whole ineffective letter writing campaign to stop it (the letters were great but needed extra outside targeted efforts). Not enough coordination to pull it off. AI and maybe ASA could have influenced it. My guess is that the 3 million member NAR probably supported it.

      What aggregator of data out there has their own proprietary AVM; national records database, owns appraisal portals and has gross revenues of about a Billion and a half per year? My guess is they were also a huge behind the scenes player…right along with ABA and MBA.

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      • EJ says:

        I do some attorney work in the form of estates and divorces and also do vacant land. There is still work for individuals wanting to know how much to ask for FSBO sales and I guess evaluations should come into play also. I’ll just have to see what happens. I don’t see these small banks wanting to portfolio a bunch of loans not knowing how much their collateral is worth. I’ve pretty much burned all my AMC bridges over the years.

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  6. E J B says:

    Forced retirement is right. 30+ years ago I assumed that this business would be a great supplement for my SS. Well it has been but now what ? SS sure won’t pay the bills and I refuse to work at Wal-Mart. I’m sticking it out to the bitter end.

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  7. Diana N. says:

    Same situation, but it’s getting more and more frustrating.  

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  8. Debbie Biehl on Facebook Debbie Biehl on Facebook says:

    If you are there the appraisal will be done correct?
    There are caveats with this Bill.
    Did you read it all?

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    • Debbie, the caveats are only as good a the mechanisms for monitoring them. Make no mistake this was written for the sole and exclusive benefit of the banking, mortgage lenders, NAR, NAHB and Data/Hybrid promoters such as First American and CoreLogic. Caveats are the first things to be stripped away in the inevitable follow on “clean up” Bills to come. Just look at what happened to FIRREA.

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      • Debbie Biehl on Facebook Debbie Biehl on Facebook says:

        Didn’t say it’s beneficial for us, but Who in their right mind wants the buy backs. There are no bail outs anymore.

        We as appraisers are on the cusp of extinction in many ways. We pay for all aspects of our appraisal. All the software, advertising, AMCs, Pay fines if we make a mistake etc…
        Then we have USPAP. The the Lender gives it to Fannie Mae to put into a data base and Fannie uses it against us

        Why don’t we Copyright our work and charge the users of our work a large fee?
        And those using AMCs are giving two thirds of their Fee to them.
        Technology has already taken a ton of what we do, but we GIVE it to them.
        Won’t need a ton of appraisers in the future.
        What do you think Core logic is doing. Buying up every thing statistical and valuation related.
        Titan analytics is owned and operated by Core logistic. Landsafe, and Realcomp.
        Soon we will all be extinct.

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        • I’ll carve out a niche helping borrowers (buyers and refis) to sue their lenders that used AVMs and took advantage of them by putting them in predatory loans they could not afford using property that can’t be sold for enough to pay off the debts..

          Heck, ALL the time I currently spend trying to organize opposition to appraisal abuses could be spent paring with some ambulance chasing attorneys and going after the big bucks!

          Got some real deep pockets there.

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          • Baggins Baggins says:

            I’m in! Theoretically this could all come back down the line through portfolio management companies like Stewart Lending Services. Would love a real job at an outfit like that, work from home of course. If the entirety of origination work falls out, companies like that will likely become busier than ever.

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        • Dan Frushour says:

          Debbie, I agree. I taught prelicensure classes in SE Mich for many years and have been suggesting for some time that our industry should collectively consider copyrighting our work.

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          • Dan every time its proposed it gets shot down as being impractical; or impossible depending on who you ask. Personally I agree even if it DIDN’T offer meaningful protection. It might make some of the thieves think it protects the work.

            You do know of course that getting two appraisers to agree to the same thing is easier said than done, right?

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  9. John Sudlow on Facebook John Sudlow on Facebook says:

    I retired in 2008 because the handwriting was on the wall.

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    • Retired Appraiser Retired Appraiser says:

      Smart guy John! I would have had $100,000 more in the bank if I had quit in 2008 rather than 2009.

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      • Jack Of All Trades says:

        Right on retired , I wish I could of said that I walked away from it, but the truth is I ran like hell from it, I refused to take part of that extortion from the pimp AMC’s. I told them at the time where they can shove there $200 orders at.

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  10. This has always been coming. There is a massive appraiser shortage and there is an intense graying of the appraisers. Banks are not stupid, the de minimus maybe potentially raising, but there is no change in loan exposure. Lenders know that. In some parts of the country its a chronic situation with long wait times for work to be returned. If you are worried about work, start a conversation with lenders you once worked directly with. The AMCs have cut the appraisers off, but now is the time to get back in there and remake your old and definitely new contacts. Using brokers opinions of value to underwrite a loan is something everyone will have to work with, but with Zillow, Redfin, etc. already out there, they really don’t have to go very far from their desks. These data mining companies are writing some spiffy software that is only going to get better (well one my say at this stage the only way is up – but think back even three-years and how far they have come.) Educate your clients to the dangers and talk about appraiser fees positively. $350 to $450 for an appraisal on a $300.000 home is chump change. It will be fine.

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    • John, what shortage is that?

      I don’t work for AMC chump change which is what $350 to $450 non complex sfr appraisals are today.

      If Refin, Trulia, Zillow, Realist, CoreLogic RealAVM, Bangalore Bob, Hyderabad Harry or Pakistan Pete, and others of their ilk are all I have to worry about then I’m golden.

      If banks and AMCs WANT to create the massive shortage you are referring to, then I will welcome it. When they DO want or need an appraisal, then what you cite as a reasonable $350-$450 price, and what I think should be a $650-$750 price will jump to $1,000 – $1,250 or more.

      What the heck, if it’s rural tack on an extra $500 to the base! With all they saved not ordering appraisals they can afford a premium.

      Agree on rebuilding old lost relationships or new ones as opportunities arise but not at the cost of reduced fees.

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      • Baggins Baggins says:

        AIR certification regardless of who signs it, is a joke unless every single person on the distribution staff are licensed appraisers or alternatively there is a senior appraiser whom calls all shots on panel. People without any mortgage, realty, appraisal, or even underwriting experience have absolutely no business being ‘assignment managers’. They’re more pliable and will railroad appraisers in their ignorance without even understanding they create unacceptable assignment conditions with last minute mandates and imbalanced distribution methods. Amc or not does not matter if the assignment people are not constrained by any personal licensing and subsequent ethical principals. These unlicensed unaccountable employees will find clever ways to make these waivers happen and I would not put it past any of them to just falsify a few quick ‘appraisal request’ papers and make a regular habit of obtaining waivers the easy way. The worst thing to happen to unlicensed people is they will probably not even lose their job. With no accountability the waiver program will be immediately abused from day one. But that’s the plan, that’s why these powerful lending groups like the waiver proposal, a wide open door for abuse of process.

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  11. Baggins Baggins says:

    Because poor people do not deserve the same level of valuation protection.

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    • Jason Miller says:

      “(A) has contacted not fewer than 3 State certified appraisers or State licensed appraisers, as applicable, on the mortgage originator’s approved appraiser list in the market area in accordance with part 226 of title 12, Code of Federal Regulations; and

      “(B) has documented that no State certified appraiser or State licensed appraiser, as applicable, was available within 5 business days beyond customary and reasonable fee and timeliness standards for comparable appraisal assignments, as documented by the mortgage originator or its agent;

      This implies, to me, that IF an appraiser is not available, THEN the waiver is possible. If you are available and willing to accept an assignment, you’ll get the work…

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      • Jason, Your post is very logical but its not usually that simple.

        ONE email blast with only three rejections is all it takes (even if the actual order is accepted by one outside of the three rejections – it can still be canceled). So, what was that customary fee again in item B? Who establishes normal turn around times?

        AMC with 48 hour turn time? OK, so that gets you 7 days BUT there are cyclical times when even a more reasonable norm of 7-10 days is not enough in an urban area. So it might bump up to a 2 week ‘norm’. That’s for a non complex deal. Say it turns out to be an unexpectedly  extremely complex assignment? Fee may be ok but turn time could become substantially longer. You do 50% of the work including appointment/inspection and comp observations but now tell them delivery is going to be 3 weeks instead of 2 and they can cancel saying “JACKPOT! No appraisal needed” cancel and we’ll send you your $75 trip fee?

        Loan officers work the phones and marketing tends to run in specific geographic areas at any given time. This tends to produce slight geographic imbalances in demand. Demand spikes are not uncommon. In fact they are exactly what the AMCs; AVM hucksters and banks are contending is a shortage now.

        Risk of collateral inadequacy is not diminished just because an appraisal may cost more or take longer. That cracked foundation is not going to report itself to zillow.

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      • Baggins Baggins says:

        For Jason; These are syndicates whom have robbed pillaged and stole from American housing systems for a long time now. Your first mistake, trusting anything a lender says. Your second mistake, thinking they are not out to eliminate the appraisal profession. Your third mistake, presuming every idiot low level distributor will not be forced through the position of their employment to falsify paperwork and make waivers routine. It takes me 5 days to think about getting started on an order, make that 6 weeks for adequate balance of time. Notice how a ‘flexible’ definition of C&R has been abused this way? C&R could be a single day. Waivers will follow. Let’s see here how easy the waiver program will really be. I’ll contact 3 appraisers I know refuse service to our company or are very far away, elderly, whatever. Viola! Waiver.

        Senators should wear little NASCAR style labels on their cheap suits so we know who’s paid for their votes.

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  12. Realrose says:

    What has not been said is that many AMCs are owned by either banks or appraisers. What this waiver is all about in rural areas is to get the vote for trump because it will allow someone living in the boonies (where there are no jobs, or really low paying jobs) will be able to remodel their $50,000 crap shack into a $350,000 foreclosure once those people stop paying. There will be no new families wanting to pay $400,000 for a mini palace in the boonies because the kids who grew up there have to leave to go to the city to get a job. This is a political move to rid the banks and realtors of having to put up with the only honest person who values the home objectively. Therefore, everyone providing services to banks will become a rubber stamper until trump is re-elected, then the write-downs begin at the banks, and the foreclosures will become REO, then the new “evaluation” will become gospel. While all of us will be out of the business, they will have become successful in killing our profession.

    That’s ok, they are engineering the next bailout, so the taxpayers will pick up the tab, then the big money can buy up homes and rent them out. Don’t worry, when you are elligible for Medicare, they will get rid of that, and then they will take away our Social Security, then we can all just become slaves doing AVMs or die.

    Wake up people, there are real crooks in the Treasury and White House, Commerce, EPA, Energy, and all other cabinets. It looks more like the swamp has taken over the country than ever. I look forward to the day trump is arrested for his crimes which are way more than misdemeanors, they are all felonies, frauds, and some people drank the Kool-Aid, like trump was Jim Jones in Guiana, back in 1978. We are all getting punished and so when all our credibility is gone, people still have to eat, so they will whore for the banks as a last resort. 

    Right now we have AMCs as our pimps who get more than we do, and there is no disclosure to us about what they profit on our license, E&O expenses, data expenses, forms, experience, licensing fees, continuing education, and repeated bullshit coming from the people at TAF and ASC who have given in to the lobbyists for banks. Even our AI lobbyists are lightweights and can’t do anything else but sell us out. The head of the AI lobbying is a former mattress lobbyist, and the state guy is a failed politician who didn’t raise one dollar for his failed campaign in Maryland when he ran for a local office. Don’t forget, the AI and other appraiser supported organizations have sold us down the river so our designations don’t mean anything because they are looking for the inexperienced appraisers to do work for nothing.

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    • Baggins Baggins says:

      Trump derangement syndrome again? He’s living rent free in your mind. You do understand that the last president to truly stand up to the fed was jfk right? What if I told you right wing, left wing, both wings on the same bird. No, you’re only partially right. It is the consumers lust for credit and disregard for the dangers of debt that is the root cause of this. The lenders just gave consumers what they wanted and apparently they’re too busy thinking about politics to be concerned with the money in their own pockets these days. Branding works! You may have missed the recent disclosures regarding how many amc’s were recently identified as having been owned and created by title companies.

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    • Debbie Biehl on Facebook Debbie Biehl on Facebook says:

      Everyone has to realize that the Appraisal Institute is an Appraisal school.

      That is it, except they are in business to keep everyone going to their classes or they will not be in business.

      AMC’s are our direct competition and therefore competing for the same dollars we are.

      I do not work for them as they take my profits.

      No Lender will give money away today. Because even if they are allowed to do that, the same government who tells them they can will come back and fine them even more than they loaned.

      Rumor has it that the 1004 MC May be dropped from our reports. Freddie is still deciding whether or not to go along with Fannie. These reports do not need to be this long. If there are all these reviewers ? watching over us they can put any needed documentation in themselves. Extra Maps, comps they think they need, and write an addendum to please themselves. On their own review.

      Together we can have even more information!

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Another Threat Looming

by Dave Towne time to read: 2 min