USPAP Will No Longer Be Misleading
Back in early February on Appraisalville, I questioned a new definition that appeared in USPAP for the term “misleading.” Many others took to their platforms to criticize it, such as Phil Crawford of the Voice of Appraisal podcast and Dave Towne, a prolific writer of all things that keep appraisers sane.
Dave writes today:
Gad zooks… I (and lots of others) hope and wish the Appraisal Standards Board would QUIT making changes to USPAP every friggin’ two years! There is no way to satisfy everyone’s individual perspective as to how USPAP should be written.
Here is the problematic definition from the current version of USPAP.
While I didn’t question the intent of TAF (the irony of this statement doesn’t escape me), I felt they had overstepped their bounds and the determination of the qualitative nature of intent was for only for the courts to decide. This situation is likely a result of the too frequent two-year updates. After three decades, there isn’t much to update in our industry and therefore the operating boundaries of TAF are more likely to be inadvertently crossed as reasons for changes become harder to find.
The definition of “misleading” unleashed a wave of criticism because it meant that if an appraiser made an inadvertent error (think about the 800+ fields on a URAR), they were essentially a criminal. This exposed appraisers to a potential tsunami of litigation and real estate attorneys were excited about the prospect.
There is always the usual good-faith attempt to rationalize the pretzel logic but all this did was heighten the confusion and angst of appraisers. For what purpose?
Thankfully it looks like the definition of “misleading” has been scratched in the Second Exposure Draft 2022-23 of USPAP:
I am thankful that the industry response has influenced this edit and appreciative that The Appraisal Foundation listened.
Please don’t forget to submit comments to the other proposed changes by July 30, 2020.
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Staying vocal, keeping the public informed via social media, and working together as a profession helps!!!
In other words, seek the truth, spread the truth, and push the truth onto others who at times want to avoid the truth.
Seek the truth.
Who’d want to issue an E&O policy under that definition? No one, that’s who.
This business has gotten to be about like political potshots. If you use the wrong verb, pronoun, adjective, tense, etc., it’s Katy, bar the door. The whole point to this business should be to report market value estimates as correctly as you can. That’s what I do. It’s up to the borrowers/buyers, etc. to know if the $100 garbage disposal is stuck or running smoothly, or is even there. Another thing…..if the rural appraisers miss one by 10% even that may be $1200. If a metropolitan appraiser misses one by 10% it may be $100,000. I could be off on 50% of what we do all year and it would be unlikely to total $100,000. Point is…it is more important to get the value estimate right than to use the exact right word or get sued or a bad review. So, let’s be sure to rehash and analyze every word or comment that we could possibly put in a 45 page report for a $32,000 home. Shorten the forms, shorten the commentary, shorten the click boxes.
Well, perspective and all. As long as the taxpayer is backing gse lending, no deal, and that is a dangerous suggestion. The limited risk in one area is inconsequential compared to the bigger picture of taxpayer backed investments throughout this country. Those with lessor means are forced to cover the losses of those with greater means, hence the problem. The relationships of worth to proportion are inconsequential when this much gravity is being managed by bureaucrats not accountable to those they supposedly serve.
If you want lasting meaningful solutions, advocate the government gets out of the business of mortgage lending. aka; wind down the gse’s. History repeats. I find it amazing that appraisers still give any credit to ethics, given the wild west anything goes climate within the lending community so many of us serve. You know, if our ethic gets in their way, call the friendly appraisers up, rewrite the book, sub people out, sweep it all under the rug.
Ethics is supposed to be about morality, nothing more, nothing less. Tell me this industry upholds the highest ethic and I’ll redirect your attention to the monopolized software providers, eroded ‘appraiser independence’, roll over to cfpb fictitious interpretation of C&R (safe harbor rule), highlight the systemic ingrained defrauding of home owners where cost savings are not returned via amc junk fees and strongarming fee depression, point to the proliferation of irresponsible service duty outsourcing, detail the irresponsible nature of not requiring licensed appraiser panel managers, and finish with a question. What’s your fee and turn time?
Whether or not the definition of “misleading” is removed from USPAP, it will always be a violation to be misleading. You cannot say that the residence has a typical residential view because the it backs up to a subdivision if the front faces a mini-storage property. That is misleading. As a profession, we need to spend more time looking at the bigger picture and not so much time nit-picking. If you want to support the removal of the definition, that’s okay with me, but no one should ever support lowering liability by allowing inaccurate reporting. That would be misleading.