Lie – Ability
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Tax payers should not be LIE-ABLE for the actions of greedy bad players!
Michael Simmons, Principal and founding Director of AXIS Appraisal Management Solutions, a national AMC had an article published in Appraisal Buzz titled “What If?” on October 2, 2017.
The article, which I believe was intended to spark interest and membership in the Collateral Risk Network (CRN), is an epic failure. Thank you Appraisal Buzz for shedding some light on the garbage being discussed at a CRN meeting! Of course no independent appraiser even remotely gives any credibility to this group. We all know who and what they are.
First, let me say, I completely understand Mr. Simmons’ “What If” comments are purely hypothetical and every person in America has the right to free speech. However, a little common sense goes a long way. With common sense comes knowledge and respect. Mr. Simmons has demonstrated the extremely low level of his knowledge of the financial and economic system of our country. As a result of his lack of knowledge, he has lost respect; respect of the very people he needs for his company, Axis Appraisal Management Solutions to be successful. Not very smart in my opinion.
Let me ask a question. Not a “What if” hypothetical, but a sincere honest question to put things into perspective.
Why are appraisers licensed?
There are many reasons why appraisers are licensed and they all lead back to one thing and one thing only… Public Trust.
The savings and loan collapse was the underlining cause for appraiser licensing and a desire to protect the public. The savings and loans were forced to close their doors because of poor decisions from greed. The bad players had consequences for their actions. When that financial disaster occurred, a sound regulatory system was put into place to protect the public. Education, training, testing, licensing and continued education requirements were all put in place to demonstrate to the public the appraiser has the knowledge, skills and training to perform the tasks at hand. The old saying” if it’s not broken, don’t fix it” applies here. The licensing of appraisers has protected the public for almost 30 years and continues to do so today.
The independence of appraisers should never be compromised by anyone. This would include Appraisal Management Companies, Lenders and certainly not Fannie and Freddie and others that insure the loans. No lender, AMC or GSE should ever be involved with training appraisers. It is a huge conflict of interest as they simple are not unbiased.
In the article, Mr. Simmons points out the people on the Agency Relations Committee. Where are the independent appraisers? Why are they not the majority of the people on this committee? The representatives from Fannie, Freddie and HUD all have a conflict of interest. They should not be even involved, much less those making suggestions. Are these people using taxpayer money to attend? Where are our regulators and why are they not stopping this absurdity? Risk assessment is not part of the appraisal process and suggesting short cuts, even in a “What If “ scenario demonstrates a clear lack of understanding of how we got here and the entire financial structure of our economy.
The Savings and Loan collapse happened because of greed. The great recession of 2008 happened because of greed. However, no sound regulatory system was put into place to correct the bad behavior of those greedy people and organizations in 2008. The tax payers bailed out the banks and sadly, those same greedy people and organization are still around today. In fact, the doors were opened wider for more greed and more bad players; the onset of Appraisal Management Companies. Somehow Fannie and Freddie got further off track. Rather than insure good sound lending practices, they are now underwriting loans (Desktop Underwriter), determining the value of the property (Collateral Underwriter and Property Inspection Waivers), and are in discussions and development of modules to train appraisers, all at the tax payers expense.
Greed, Greed, and more Greed; all at the tax payer’s expense.
Appraisal Management Companies are not appraisers. They are not part of the appraisal process. Nowhere in the standards of USPAP are Appraisal Management Companies mentioned. Appraisal Management Companies are supposed to be a third party with no bias. I equate Appraisal Management Companies to the answering service your Doctor’s office uses for after hour emergencies. They exist to merely move information; nothing more. The hiring of low level, under educated people is the basis for that analogy. Mr. Simmons’ article reinforces the extreme low level of knowledge of these greedy players.
Side Note: Appraisal Management Companies are part of no solution. They have created more problems and more and more appraisers refuse to accept assignments from them. Remove Appraisal Management Companies from the appraisal landscape and the industry will move forward.
Pick a value, if you don’t like that value, pick another…
“What If there is a way to use appraisals and PIW’s in concert? I then suggested that all loans be recipients of appraisals, but in those cases where the single point of value that an appraiser defines doesn’t quite work for the best loan pricing, Fannie or Freddie could use their vast reservoir of data to run a collateral analysis (their own internal Black Box which is at the heart of their PIW). If the value range supports the higher value point, Fannie or Freddie could offer the lender the better pricing for the lower threshold LTV.”
How does this protect the public? How does this help the borrower? This “What if” statement does nothing but show how greedy and clueless these people really are.
Lenders, the ones who have the money to lend are supposed to rely on unbiased third party information (aka: facts) to assess the risk in the loan. Do banks ask employers to change the dates of employments? What about their income? What about credit reports?
Dear Employer, we are attempting to close a loan on your employee, Mr. Smith. Can you please reconsider a higher salary for Mr. Smith?
Dear Equifax, TransUnion and Experian, we need a 700 score to make our loan work, Can you please reconsider Mr. Smith’s credit score of 698 so we can close our loan?”
Isn’t an appraisal an unbiased third party product just like a credit report and verification of income? If Fannie and Freddie are underwriting the loan (Desk Top Underwriter), valuing the property, (Collateral Underwriter and Property Inspection Waivers), how are they relying on unbiased third party information? Doesn’t that remind you of what was happening with the Savings and Loans in the late 1980’s/ early 1990’s?
Why does the Collateral Risk Network even exist? Are these people opening themselves up to increased scrutiny? Are their meetings considered collusion? Undoubtingly yes, an argument could be made there is something more going on here.
Greed, Greed and more Greed…
What if Underwriters were held financially liable if a loan goes bad? What if the AMC owners are held financially liable to the lender for a bad appraisal? What if the executives of Fannie and Freddie were held personally liable for all loans that go bad? What if those greedy players engaged in illegal activities actually went to jail for their crimes?
Tax payers should not be LIE-ABLE for the actions of greedy bad players!
By John J. Appraiser, Certified Real Estate Appraiser – author requested to remain anonymous because of the actions of greedy bad players