UAD and Forms Redesign
Last year the hot topic was Appraisal Modernization – mostly bifurcate appraisals and UAD changes. In late 2019, FHFA decided to not do much more on bifurcated. However, the GSEs have been working on UAD fields. There is an active work group of appraisers advising the GSEs on UAD changes. There has been a sample of what is being worked on floating about the internet.
Per Danny Wiley, Senior Director of Single Family Valuation at Freddie Mac since 10-19, in a Facebook post, this a very preliminary UAD list and is not to be relied on as representing what will eventually be done.
I have been following the discussion on the Sales Comparison Grid among appraisers who are on the committee and not on it. The overall opinion is that it adds too much detail, resulting in a lot more work required. FYI, members of the appraisal work group have signed confidentiality agreements.
Per Scott Reuter, at a recent webinar, the GSEs are still working on UAD changes and planning on no more fixed forms. Instead, they will be working on a long term plan for a format similar to Turbo Tax, where for example, it is a condo so you only use the parts of the appraisal relevant to condos. He said they had a three year plan and have “maybe” another year to go.
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- UAD and Forms Redesign - May 6, 2020
- CA Appraisers 50% Decline & Fees Up 76% - January 3, 2020
- The Future of Residential Lender Appraisers - February 1, 2019
Add 10 more lines or a 1,000, but until agents and local governments get on board to also express such features, having a single set of data points (the subject), is meaningless.
Seek the truth.
FYI, members of the appraisal workgroup have signed confidentiality agreements.”
Excellent, so much for “transparency,” on an issue that affects the entire industry.
Can we please stop quoting motormouth Wiley. This man lies every time he opens his mouth. Has he done his on-camera interview for the US Department of Justice over the price-fixing schemes they had going on at Service link?
Hey Lyle Radke and Danny Wiley, the topic of modernization needs to be put on the back burner and lets have the GSEs, FHFA and lenders address the true issues facing appraisers! We need a true overhaul of the parasitic AMC business model. The AMCS have had no positive impact on the entire appraisal industry. I will say it again! THE AMCS HAVE HAD NO POSITIVE IMPACT ON THE ENTIRE APPRAISAL INDUSTRY. The AMC parasitic business model harms the appraiser, the consumer, the housing market and ultimately the entire valuation process. The AMCs have been the road block to appraisal modernization. Remove the AMCs and allow appraiser’s to hire and properly train new appraisers. Lyle Radke and Danny Wiley can promote all the bifurcated and hybrid appraisal modernization products they want however when the AMC is allowed to retain over 60% of the appraisal fee, utilize appraisers with no geographic competency and the AMC is allowed to utilize unlicensed individuals or realtors (who have a vested interest in gaining a new client) to complete the inspection I see nothing but resistance from appraisers. The AMCs consistently blame the appraiser for all their failures however it is the exact opposite. Remove the AMCs, pay reasonable customary fees, allow the appraisal profession to transform on its own without the interference from the AMCs and then you will have true modernization? Are you listing Danny Wiley or Lyle Radke? Get the parasites our of your bed and lets make the appraisal profession exactly what is was intended to be! You want to promote modernization lets start with removing the AMC Now! Now we have a national pandemic. Most appraiser’s are without work. This week I received orders from xome, clear captial and proteck for 1004 interior inspections. The fees offered range from 180-275. Bradford technologies just offered me a desk report which requires 2 values with a non-negotiable fee of $50.Why is this remotely acceptable? Your want quality reports, you want quick turn times, you want to promote bifurcation then do it responsibly! Lyle and Danny If you consider yourselves appraiser’s why isnt this AMC behavior being addressed? Danny and Lyle if you had to earn a living in this current AMC dominated and manipulated market could you? Would either of you allow your own children to become an appraisers only to be taken advantage of by the AMCS? We are all appraisers in this together so lets work together to clean this mess up! Danny and Lyle we need your help to end this nonsense!
Danny and Lyle won’t fix this problem because they are in bed with the very same entities you mentioned in your post.
Appraisers should have a choice in selecting or electing those who represent us on any of these committees and there should be transparency regarding who they are. The whole bifurcated appraisal concept obviously was not developed with the input of any worthy voice of appraisers in the field. The leadership seems to be listening to voices of those with an ulterior motive or vested interest in AMC’s or software and technology development rather than the appraisers themselves. We need a congressional investigation and overhaul of the AMC’s and their role in the profession. Our profession has been decimated by the introduction of the AMC’s and with no oversight, only the least knowledgeable and least skilled who are willing to work for peanuts are able to make a living without working 80-100 hours a week. If appraisers are to have time and energy to train new recruits and to have the time to develop credible reports without undue pressure and micromanaging, we need a whole new system. I for one would like to see a union, lobbyist or other paid representation of appraisers similar to that of the NAR. I would be willing to pay if we had a unified voice!
To spread such truth Cotton, a select few of your peers will see you as the problem and coach others accordingly. You see, one can’t expose the underbelly of this profession, without becoming the target / problem child. Those that seek and expose the truth must be sad, unhappy with their profession, unhappy with their personal lives, etc.
Don’t believe me https://theappraisercoach.com/make-changes-that-make-you-happy/ just ask the Appraiser Coach.
Amen for spreading the truth.
So true Cotton. Also what about transparency? Also how they look for one word letters and numbers but no explanation. Everyone wants appraisers to write about everything to approve the loan. The appraisals are now like books with all the comments the lenders want.
More power to them as long as it makes it more efficient for appraisers. For the last 20 years in this industry its been about making more rules, formatting requirements, liability and less pay for the appraiser, while everyone else makes rules to make themselves more efficient and profitable. I hope the “appraisers” that are working on this project are being “advocates” for appraisers and not “sellouts”!
AMC PARASITE BUSINES MODEL
“The AMC parasitic business model harms the appraiser, the consumer, the housing market and ultimately the entire valuation process. The AMCs have been the road block to appraisal modernization.” [Cotton]
ART: One modern definition is “something that is created with imagination and skill and that is beautiful.”
Real Estate Appraising is an ART not a science, an artist is a creator. An appraiser creates an opinion of value. Unfortunately, many people do NOT understand that an appraisal is NOT the number needed in a file in order to make a “deal” go through.
How many times appraisers gets calls from AMC’s employees asking: why did you did not use comp 1A or 1B, or heard the most absurd statement: “but Zillow says”……
The AMC model reminds me of the Howard Roark courtroom speech in Ayn Rand’s book “The Fountainhead” where a clear comparison is made between a creator and a parasite.
Everyone complains about AMCs yet everyone still does work for them. Stop working for them and you will stop complaining about them.
WITH MISTLETOE YOU GET A kISS, Are parasites confused with production and the mislead
Thank you for taking the time to address this Ann.
I’ve seen or heard nothing encouraging about the proposed new forms or processes. Danny Wiley’s involvement in the process is not something I am encouraged by.
Appraisers need to remember that it is WE who establish what produces credible analyses and results for our profession. Not former Servicelink appraiser Danny Wiley; not Freddie and not FNMA. All have proposed solutions at various times that directly conflicted with USPAP.
DW’s most recent incident being a purported claim that no Extraordinary Assumptions are allowed at all in a 2055 report form. He’s of course wrong. He COULD have said no EAs in place of additional work specifically required by his organization, or other GSEs (assuming they authorized him to speak for them) but he did not.
Even with the additional research to obtain credible ‘validation’ an appraiser would still need to employ an EA that owner supplied pictures and claims; mls information or other source data is correct. No appraiser can truthfully certify as to conditions they did not personally observe without such an extraordinary assumption.
USPAP requires specific disclosure when such EAs are relied upon.
MISMO and their partners at Freddie and Fannie, TAF, and even ASC to some extent are geared toward full automation of real estate appraisal. Both residential and commercial/industrial. They have made no secret of this and it has been published several times (including articles here in Appraiser Blogs).
As the GSEs and their money pump loan purchasers for Wall Street undermine appraisal credibility we must remember that principles don’t change to accommodate desired forms. Principles don’t change in order to facilitate loan fraud against investors. Principles don’t change to expedite loan processing or diminish the impact of defect disclosures. Principles don’t change due to TAFs willingness to ignore them.
Real estate appraisal like medicine, remains BOTH an art and a science. All the hyperbole about non-existent artificial intelligence (“AI”) will never change that.
There is still demand for real appraisal standards in litigation; eminent domain, estate planning, tax filing, insured losses, listings, and a host of other non-loan uses. FNMA, Freddie and Danny Wiley don’t get to change the principles required for these.
If that is so, that would mean that every report would have to have an EA, because in every report one uses comp data from other sources (MLS, etc.). 🙂
Do we cite an EA that the MLS data, etc about the comps is correct?
No, we don’t do that. And we don’t do that because assuming data sources are correct is an ordinary assumption, not an EA.
I encourage all to read the text printed on the 2055 – and I mean really read it. The requirements to have a data source for the subject’s condition, and the prohibition on adding assumptions, have been printed right on the 2055 since the form was introduced in 2005. These are not new concepts.
And, my statements on this issue have been backed up by TAF/ASB representatives during presentations on the topic.
Well, Well, Well, look what the cat dragged in. Have you done your on-camera interview for the US Department of Justice yet? You know the last corrupt company you worked for that is accused of a significant price-fixing scandal.
Well, I have to agree with Wiley. EA’s are badly overused. Ordinary assumptions can be obvious and spelling out exactly what you did and did not do CYA better than any EA.
Respectfully, both you and he are wrong. Here’s the actual excerpt from FNMA. It says NOTHING about prohibiting EAs at all. That was pure Danny and all wrong. Apparently, an ‘assumption’
What it does address is the need for sourced interior condition conclusions…even though those, in turn, will still be an assumption. Stating that one of the things that you DID do was to interview the owner and then to assume the owner was accurately reporting interior conditions would still be an assumption.
“Lender Letter LL-2020-04, Impact of COVID-19 on Appraisals, one issue we’ve observed is that some appraisals rely on assumptions about the subject property condition. Whether completing an exterior-only or a desktop appraisal, the appraiser must have a data source for all the relevant characteristics including interior condition. Obtaining that information, whether it be from homeowners or other sources, is not only encouraged, but is required. This is addressed in the FAQs regarding the temporary flexibilities (Q47):
As stated in Lender Letter LL-2020-04, the appraiser’s certification #10 was removed recognizing that the appraiser may have to rely on information from an interested party to the transaction (borrower, real estate agent, property contact, etc.) and additional verification may not be possible. The removal of this certification acknowledges this could affect the assignment’s results. If adequate information is not available to complete the appraisal, the assignment cannot be completed.
The standard GSE appraisal forms include certification 10 that obligates the appraiser to verify “from a disinterested source, all information in this report that was provided by parties who have a financial interest in the sale or financing of the subject property.” We intentionally removed certification 10 from the revised certifications, required for our temporary appraisal flexibilities, in recognition that there may be scenarios where an interested party is the only available source for some subject property data. When using the temporary flexibilities, we encourage appraisers to communicate with homeowners or agents to fill any gaps in the descriptive information needed to perform the appraisal. The appraiser cannot assume that the condition is “average” or “similar to the exterior of the home,” for example.”
So, IF you can reach an owner or find an mls you can do it based on an assumption that data is accurate. If you can not speak with an owner or find mls then you must decline the driveby (and desktop). I have no problem with this. Of course, I’d increase my fee for both appraisal types for the additional pain in the ass…including canceled assignments.
IF you do it based on owners’ information being stated as if factually verified or simply as fact (with no assumptions), then you put your license at risk if it isn’t accurate. Misleading reports no longer require intent.
Every report DOES have assumptions!
Just for fun Danny I suggest YOU read USPAP 2020-2021 Definitions page 4, line 11-112
“Extraordinary Assumption: An assignment specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.”
Then look up the word infer. (as it relates to defined market values having inherent inference that title transfers). There is an assumption inherent with our very definition of value. We don’t disclose it separately twice as an ‘extraordinary assumption’ because it is already stated once in the definition and English speakers know we are talking about an assumption of a transfer. This is possibly the most extraordinary assumption any appraisal can have.
Do you know of any assumptions made in an appraisal that are NOT assignment specific? Stop trying to redefine the English language or quibble over its usage.
Now, I don’t know about you or your own presumably deficient work (based on your own comments) but all the appraisals I’ve ever written DO include an assumption that data sources used have been assumed or deemed to be correct. That includes mls, etc.. Abandon your usual sophistry and take a current course on real estate appraisal practices and procedures.
For what it’s worth your own employer’s ‘sacred’ “thou shalt not modify” forms include a statement that the SOW CAN be expanded upon, and further that SOW INCLUDES assumptions.
Above and beyond Freddies guidelines as interpreted by Danny Wiley, are obligations to comply with USPAP in federally regulated transactions.
When FNMA hires you, then you can speak for them with authority. When FFIEC hires you, you can speak authoritatively for them and GSEs as well.
For our part, if we need to write to senior Freddie Mac, FFIEC and ASC to ask why they are promoting this misinformation nationally, we will do so.
Your sending emails out to AMCs telling them to make sure all their appraisers are aware that an EA is insufficient related to the interior condition was a misguided effort to expand the scope of work required for any drive-by or desktop appraisal under covid, without extra compensation fo the additional work YOU were suggesting is required.
A desktop or drive by does NOT include an interior inspection. Not all property sold or refinanced has a published record of interior pictures and current condition reports. For that matter, not all sources of ‘public records’ such as CoreLogic RealQuest or Realist are accurate all the time. We must necessarily make assumptions based on the limited scope appraisal assignment ordered.
No appraiser in their right mind is signing a report saying 2nd party data IS factually accurate. We condition its use by stated assumptions that it is accurate. These in no way detract from FNMA/Freddie preprinted language.
As a result of YOUR emails to AMCs (copies passed along to me), I am encouraging all appraisers to charge no less for a COVID driveby or 1004 than they normally do for a full appraisal. YOUR ridiculous interpretations and categorical expansion of scope eliminate any pretense that these save time or work. In fact, I personally think YOU have added about $200 EXTRA work to each such assignment. Work that previously was not specifically required to be as in-depth as you want to make it through the elimination of reasonable and necessary assumptions.
Your own; Institutional, and even regulatory focus on micromanaging of the process rather than substantive issues of real estate appraisal is undermining our profession as well as the public trust.
“Stop trying to redefine the English language or quibble over its usage.”
Its what people who have not had a real job do. They have to justify their existence somehow. DW’s last real job was about ten years ago when he ran an Appraisal Sweatshop in TN.
“all the appraisals I’ve ever written DO include an assumption that data sources used have been assumed or deemed to be correct. That includes mls,”
Yes. That is the point. Assuming data sources are correct is an ordinary assumption, not an EA.
Just as one must have data for the condition of the comps, one must have data for the subject’s condition. It cannot just be assumed.
What I have written and posted is simply repeating what has been printed right on the 2055 for 15 years now.
Quotes from the actual form –
“The appraiser must be able to obtain adequate information about the physical characteristics (including, but not limited to,condition, room count, gross living area, etc.) of the subject property…”
“Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted”
So, One must have a data source for condition, and one cannot add assumptions about condition (or anything else). I am not sure how much more clearly it can be stated.
“When FNMA hires you …” What about Freddie? 🙂
Geez Danny LOOK UP EA definition in USPAP. There is NO DIFFERENCE between an assumption and an extraordinary assumption! (I copied it verbatim above but verify for yourself). That’s exactly the kind of quibbling that leads to miscommunication and misunderstanding in the first place. You took a simple concern and miscommunicated it and then try to support that miscommunication with spurious reasoning.
BTW when you quote from the form, quote the whole thing. It also states that SOW can be expanded upon by the appraiser AND that includes extraordinary assumptions which are a part of the scope of work.
As for Freddie-lets see how long that last once we send them copies of the emails you had sent out and the posts here; and those with a Texas appraiser you’ve been communicating with via email. As contrasted with how FNMA worded theirs in their most recent lender letter. (posted above under reply to Terrel’s post) “Smiley”.
Mike, you asked this question:
Do you know of any assumptions made in an appraisal that are NOT assignment specific?.
Yes, I do. 🙂
As a quick example, the assumptions that are pre-printed on the 1004 (or any other GSE form) are not “assignment specific”, because they apply to all assignments, not just to the current assignment.
Your assert that there is no difference between an assumption and an extraordinary assumption – Your quote was:
There is NO DIFFERENCE between an assumption and an extraordinary assumption!
They, pray tell, why is there even a distinction made in USPAP?
EAs are assumptions one is making for a specific assignment that are not typically made. That is the reason one is required to call them out clearly and conspicuously – to alert the reader that you are assuming something you don’t normally assume.
And regardless of what one might think the forms should say, what they do clearly say is that one may not modify, add or delete assumptions
“Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted.”
They have said that since 2005.
I have never asserted that reports don’t contain assumptions, so I don’t know why you attributed that view to me. What I have asserted is that adding assumptions (including EAs) is prohibited (for GSE work), and I have provided support for that statement. I have not offered any personal opinion; I have provided the actual statements.
More sophist thinking is not resolving this.
Saying any assumptions used apply to all appraisals is pure sophistry. When I am writing an appraisal report, I am writing a report on an appraisal on a very specific property. It has a specific address and it has a specific legal description. There is nothing generic about it at all, even though I may use a reprinted form to report it. Every single statement in it is assignment specific. Now, there may well be a body of work that does usually have the same assumptions that can be predicted, but they are still assumed individually for each and every assignment…or described otherwise.
USPAP does not make any distinction between an extraordinary assumption and your perceived ‘ordinary’ assumptions. It very clearly defines EA. That definition is not distinguished between extraordinary or ordinary. Just the opposite, USPAP says it is an assumption. Albeit one that is assignment specific.
Your statement “EAs are assumptions one is making for a specific assignment that are not typically made.” Again, look up the definition. It does NOT say what you are claiming. It’s pretty clear. It does not state or infer in any way that an EA is an assumption that is not normally made. That is YOUR reinterpretation. An incorrect reinterpretation.
You are repeating the same arguments I already refuted, based on the form’s own content. Read the statements about SOW being allowed to be expanded upon and then read the inclusions under SOW.
Clearly, we won’t resolve this without going to Freddie’s executive board level. It’s well worth the effort to resolve this once and for all.
The bottom line is that if NO ASSUMPTIONS at all are permitted other than preprinted assumptions, then appraisers can no longer perform these assignments under the 2020-2021 version of USPAP. Fannie and Freddie will have to redesign their forms to permit appraisers to complete assignments based on discovered conditions in the field. Right now if no assumptions are permitted, then ALL FNMA and Freddie assignments have become contingent condition assignments that are not allowed under USPAP.
No appraiser knows what they will run into until they actually start and progress quite a way through an assignment. Traditionally we disclose unexpected or non-routine conditions we find, and then dispose of them either by a reasonable extraordinary assumption; a hypothetical condition or a requirement for their correction, after consulting with the clients. Failing these things we do them as is, with appropriate discounting for whatever the unexpected condition is (if applicable). Telling an appraiser to progress to a point where they are forced to withdraw from an assignment is (1) a contingent assignment, (2) invites pressure (incredible pressure usually) from an AMC or Lender, (3) usually results in the appraiser having to forfeit all time and work to that point because most AMCs for GSEs will not pay for work in progress.
Appraiser’s risk has steadily increased for the past ten+ years. The most recent change in USPAP redefining “misleading” as intentional OR unintentional, has increased the need for clearly defined assumptions being disclosed. The metric of compliance previously was what our peers would do. Now it is black and white, with no provision for facts that an appraiser is not able to personally verify to the exclusion of all error, but which we are expected to act as if they are accurate. (hows that for careful parsing and avoidance of the word ‘assume’?)
I’ll ask Mark Skapinetz to have this brought up before the Freddie’s Board of Directors by AGA. I’ll keep the disparaging comments out of it, but Danny, you really need to stop parsing English in ways that are misleading appraisers and forcing them into non-compliance with USPAP or working-for-free choices.
I generally refuse to put up with the FNMA or Freddie Mac silliness ever since UAD. I decline most (nearly all) SFR and condo for GSE work. I’ll still do 2-4 units, but that’s only because the UAD silliness & theft of data hasn’t reached them yet. More and more, older, experienced appraisers are joining me.
For anyone who believes that there is no difference between an assumption and an extraordinary assumption, I would refer such a person to USPAP courses. The difference between an assumption and an extraordinary assumption is core material in the 15 hr USPAP course, and has been for over 25 years.
Or, just ask the ASB if the two mean the same thing. The term “extraordinary assumption” is the creation of the ASB, and they are the ultimate authority on its meaning.
I would also ask such a person to answer a very simple question – If they are the same, then why does USPAP distinguish between the two and provide different requirements for their use?
They are not the same thing, and I offered, in simple terms, what the difference is.
The prohibition on adding assumptions to the GSE forms has existed since 2005. It is not new. It is not even recent. Despite the existence of this text for such a long time, there are numerous social media threads that demonstrate that many appraisers have remained unaware of the prohibition, despite signing hundreds or thousands of forms with the prohibition stated right on the form.
Anyone who wants to have the prohibition removed is free to lobby for that change with the GSEs. Until such a change is made – the forms say what they say:
“Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted”
“Extraordinary Assumption: An assignment specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.”
That definition was not in USPAP 25 years go. We also had Departure Provision instead of Scope of Work Rule. One required a factual reason for exclusion of steps normally expected. The latter does not, though it is often limited. Citing what “used to be” does not address what is required as of May 15, 2020….or January 1, 2020. Specifically with respect to the reinterpretation of what misleading is.
There actually was a definition of EA in USPAP 25 years ago. And, though the exact wording was not the same, the meaning has not changed. What was an EA then is still an EA today.
For an appraisal, an EA is an assumption made for a specific assignment that one does not generally make in an appraisal assignment. The assumptions pre-printed on the GSE forms are a great examples of something that is NOT an EA, as those assumptions apply to a multitude of assignments, and are not specific to any particular assignment.
The difference is addressed in the 15 hour course material (yes, the current material 2020-2021 version). Any assertion that there is no difference between an assumption and an Extraordinary Assumption is not consistent with the USPAP course material (then or now).
If they were in fact the same, as has been asserted, there would be no need to even have a definition of Extraordinary Assumption.
No one need take my word for any of this. All one has to do is look at the USPAP course material. Or, one could also just ask the ASB.
And, for anyone who thinks the wording in the current definition of EA makes it mean the same as an ordinary assumption, then I encourage you to contact the ASB and provide that feedback.
Mike, some properties with dock rites DO NOT have water front or view. I have reviewed several foreclosures falsely citing licensed rights as physical attributes. I have also reviewed chicken houses converted to four plexes with ground level flooring and low ceilings fully rented.
Wouldn’t those be an Extraordinary assumption. All appraisals include H&B use as a basis for the OPINIONS given.
True. Not sure what the point is though Don. My brother owned access rights to a lake but also had no view of it.
His ownership rights were personal property since membership in the Lake association also required separate payments for its use. Non-mandatory as far as a ‘right’ to join the lake or clubhouse association.
I’ve also done townhome appraisals in Long Beach CA that had deeded dock rights without having views or even being adjacent. Those dock rights also had an additional burden of mandatory payment to the City for use. Its been awhile so ‘ve forgotten many of the details.
All of these examples just reinforce our obligation to do our due diligence. Imho.
AMEN to all that stuff and more. Appraisers are ” techies” Not professionals, some of us attempted to be honest and professional about our assignment’s many did-do not know the difference! How many fee simple assignment’s were mistakenly done on Indian or leased lands, and other stuff.
Politician’s may never get it right, and appraisers can’t do anything about the laws, but we can clarify our assignments, and mitigate losses.
As a group SHOULD we encourage litigation!? At the least we would justify timeliness, and our fees.
As Fannie Mae has begun to examine appraisals completed using our temporary appraisal flexibilities in Lender Letter LL-2020-04, Impact of COVID-19 on Appraisals, one issue we’ve observed is that some appraisals rely on assumptions about the subject property condition. Whether completing an exterior-only or a desktop appraisal, the appraiser must have a data source for all the relevant characteristics including interior condition. Obtaining that information, whether it be from homeowners or other sources, is not only encouraged, but is required. This is addressed in the FAQs regarding the temporary flexibilities (Q47):
Another selectively incomplete quote Danny. Full text is above, just under Terrel’s post.
With USPAP changing their definition of misleading to include that there does not have to be any intent, along with other changes and actions by state boards, appraisers can be cited and fined for a simple mistake- just about anything. What happened to the focus being on getting the overall appraised value right! When regulators want to “raise” more money they can fine an appraiser for a transposed MLS number. With this new trend, I’m all for anything that can be done for an appraiser to CYA.
Directed to Dan Wiley:
I concur with Dan Wiley on EA. This is a non-issue. Beating a dead horse. I use EA’s regularly on litigated matters & certain trust-estate assignments.
On the other hand, it is obvious, having co-developed an AVM on behalf of Veros, beginning in 1999, that the new list of data line items has nothing whatsoever to do with developing more credible / more accurate appraisals.
The obvious benefit is in data mining for AVMs & similar processes & analyses. I am not opposed to this having done this with no data, but at least let the boots on the ground Appraisers know the true purpose of the 100+ new UAD data items.
The plethora of new UAD data items is what we could only dream of in 1999-2000, starting an AVM completely from scratch. This will not impact me personally as I no longer do low paying UAD / AMC / Lender / URAR assignments, but, will continue to alert those that do with the truth, from 30,000 feet up down to ground level.
By the way, an interactive APP is a great idea.
My primary question to Dan is to please explain how 100+ UAD/line items will be a benefit to a typical house or condo appraiser and why it is not a data mining system in disguise?
Craig asked this question – My primary question to Dan is to please explain how 100+ UAD/line items will be a benefit to a typical house or condo appraiser
Today, the actual 1004 form is 6 pages long, with three of those pages taken up by instructions, SOW, definition of MV, assumptions, limiting conditions and certs. Yet, the average residential appraisal report is much much longer and includes several pages of narrative.
Read any blog and you will see numerous complaints from appraisers about a reviewer asking about something already addressed in a report. It is a real problem. The challenge for the user is that there is no uniformity with regard to WHERE in the many pages of narrative something is addressed.
So, part of what the UAD team is doing is identifying those things commonly addressed in narrative, and making discrete data fields for those items. The result will be that users examining reports do not have to go on such a big Easter egg hunt every time that they are looking for something in a report. If executed well, this would greatly reduce revision requests caused by reviewers not being able to locate things already stated somewhere within the report, which should benefit both appraisers and users
Its not a problem if you read the report line by line / cover to cover and thus give it the time it deserves. However, if the quota is to churn out reviews every 10 minutes, then yes its difficult considering the appraiser has spent 10 hours compiling it. In addition, what is your definition of a reviewer? Is it an appraiser who works the area every day and already has an understanding of the market? Is it a teenager from an AMC working from a 100 question checklist so the lender will think they are getting there monies worth? Is it an underwriter from 25 states away? Either way, the reviewer is most often not the equal of the appraiser (licensed).
It would seem that with a proposed 100+ UAD line item form, that the new goal is to make the appraiser the Easter egg hunter. Having the subject sliced into a hundred smaller pieces (Easter egg hunting), will result in a single point of data (subject), while public records and or agents fall short in identifying basic characteristics (overall market data). Knowing and disclosing info on one property, is next to meaningless when the information is not disclosed by others (what is the result). The goal is always to make the appraiser work harder, have more liability, get paid less, and do everything in half the time and the new forms I’m sure will accomplish this.
Can’t wait for the 50 page AMC engagement letters where they provide line by line (guidance) for all 100+ lines, and of course there will be no room on the form to disclose what the AMC is getting paid.
Seek the truth.
Bill, you’re also a mind reader. I was going to write something similar.
I’ve been called much worse, and at times deserved it.
By the way Truth (brother from another mother), be careful of thinking like me, or otherwise you to may become the target of others.
Seek the truth.
Your response to my question was a great sales job to Appraisers on what is truly a Data Mining process.
Even the Appraisers & Appraisal organizations “assisting” on the development of the new 100+ UAD data items with GSEs have evidently been suckered into not understanding the true purpose of the proposed grid sheet.
I have no real problem with this myself, not doing any AMC/Lender work. Why? The AMC model is a predatory business in most cases, with speed & price, not accuracy, being the dominant goals. The GSEs, at the top of the Apex, could help the boots on the ground Appraisers.
Once the next iteration of the UAD Grid sheet is available, I’ll continue to spread the word to Appraisers about the data mining goal of GSEs, as I did pre-UAD, pre-PIW, pre-AW, pre-appraisal scoring and so on.
And to encourage ALL to get out of AMC-Loan work and increase skills to walk away, leaving the less skilled & less qualified to become compliant form fillers for accurate AVMs, while over time losing assignments in the 35th to 65th percentile price ranking & eventually 1 Sigma.
We are looking forward to seeing the next iteration of the grid sheet.
When so many have become used to walking in the mud (stealing / data mining appraiser data), we can and often do forget our boots are dirty.
Its obvious what the’re doing Craig, but with mud on my boots, even I forget to remind people of the truth.
Seek the truth.
“Ditto what Craig said.”
Requesting a form entry area where appraisers are required to disclose all outsourcing, assistants, typing services, analytical programs, software selection, tech fees, the cost of those services, fill out the name of the vendor whom did that for them if it was direct assistance like typing or inspection, etc. Users of report services, readers of reports, end consumers, investors, and just everyone deserves to know if the appraiser is actually doing the work themselves or outsourcing everything, to what degree and what cost.
There should be a section which requires all parties involved, the client, the appraiser, and middle manager if applicable, to have clearly stated fees for services performed. Then they would share that with the appraiser as a standard process on order requests. Put it on the form and circumvent all the secrecy with fee raking, unearned fee issues, defrauding consumers, etc. It’s the pay to play argument because when appraisers discount their fees, cost savings are not returned to consumers. Such mandatory fee entry could go a long way towards C&R concerns, if all readers of appraisal reports could know right away how the fee distribution really played out with each and every single report. By cutting away some of the unearned fee raking pork, one might even save consumers some dollars. If the request was mandatory on form, amc’s, lenders, tech companies, everyone would immediately fall into better transparent compliance with honest information about fee distribution. Only in the appraisal line, are junk fees acceptable. That needs to end.
More questions and more work sounds appealing and good. Those outsourcing everything, glossing over intelligent reporting while leaning too heavily on minimum standards adherence have ran this industry to the ground.
Or as an appraiser may explain to a non appraiser; You actually know less about the real estate after having read that appraisal report. The appraisal was so lacking of substance, a light breeze blew the report directly into the trash can.
Let’s start putting all those panel application questions for claims and penalties, on the form itself. Bring some light to this industry by helping users of report services tell the difference between appraisers whom has never had a complaint or claim, whom does not use outsource shortcuts, against those whom do. With reasonable limitations.
I would impress as a core consideration, it is not the efficiency of the form or one specific process or approach which is the valuable aspect of the appraisal service. In fact quite the opposite. It is the detail of reporting, attention to analysis, quality reporting, bringing transparency and disclosure which is the cornerstone of the appraisers value the appraisal service brings to the table. Appraisers should have more latitude, not less, to be able to tackle talk about and analyze whatever comes up in each and every unique appraisal service circumstance.
At this point in time, lenders understand how many appraisers game the system, discount for volume, outsource everything, providing reports which have been reduced to mere regulatory compliance speedbumps. Who could blame lenders for calling for hybrids and wanting to substitute appraisers for automation when the appraisers themselves no longer care about the quality of their product, but rather have purposefully shifted this industry towards providing appraisals which are not very educational, do not explore details, are overly focused on liability protection, etc. I think expanding scope of work to requiring more narrative, transparent disclosure, more photos, and form filling may be a good thing. Appraisers should always be furnished a home inspection report if one was available, but at a minimum, there should be a checkbox for that too, did the lender provide a copy of a home inspection report.
When you read in the introductory lines: nobody should rely on this report for any reason. You know, well, there might be a problem with quality reporting issues here. When users of appraisal services read appraisers reports over time and realize there is nothing meaningful, unique, or new in there, it’s just copied language, it should not be surprising the perceived value of the service is so vastly diminished. When appraisers move in mass to things promoted by software providers like time saving typing and form filling utility tools, the end users end up seeing basically the same report generated from a thousand different appraisers. Why even pay for the service? If the goal is to automate everything, there really is no need to even keep up the pretense of needing an appraiser. If the goal is to reinvigorate the spirit of the appraisal service, to provide a meaningful independent analysis, an additional check and balance, bring more light and transparency to the process and the real property in question, then it is necessary to force disclosure on outsourcing and fee distribution issues.
There is nothing wrong with taking more time to care about your work and be a reliable professional. There is something wrong with being party to defrauding consumers whom experience no cost savings benefit, when the appraiser appeases assignment parties with parity fees driven downward past excess, to promote their placement at the head of the line, outsourcing basically everything to attain that efficiency. We could have simply gone to cost plus mandates and watched the appraisal industry revitalize itself, but instead the opposite happened. The existing 1004 form is sufficient for the need, which is to bring additional information to the table so users of appraisal services can make better informed decisions. What is wrong with the appraisal industry, is not the form, it is the wild west unregulated in the shadows unethical promotions of greed and self serving interests in the background. The racketeering and forced parity pricing makes it prohibitive to be competitive if an appraiser actually cares and wants to provide a better more detailed report product. Lenders and users can’t tell the difference, because cost savings are never returned to consumers, these reports basically cost the same on their side even though the appraiser may have a 100-500 dollar fee difference or more.
Someone better consult with Corelogic Matrix MLS on this too. They’re adopting European definitions of property type and are actively censoring appraisers and agents whom speak out against this on their blogs and public facing articles. Apparently now multi family no longer means income potential to them, it means multiple families, in attached housing. No more ranch housing and you can’t call it a townhome anymore if it has condo in the title. Logic has left the building. Systemic under training and inadequate training driven by a system of backwards rewards over several decades has rendered the appraisal service as meaningless in the eyes of many. That can be corrected by simply taking everyones hands out of the cookie jar and promoting a more fairly balanced working climate for appraisers. Let them provide the minimum, let them put in more work. Let them charge accordingly, and let that market driven fee land with the client. Force everyone else to bill separately. Provide simple questions to let users and readers of the service know what type of appraiser they are working with, and where the money went.
RESO = Real “Estate Standards Organization.”
I was able to convince RESO a few years ago to allow Appraisers to join as members. Previously, not allowed, unless one was a Broker.
Class D Membership is $50 per year. You can also volunteer for various committees and become part of the solution.
Otherwise we are simply bystanders, not knowing what’s going on, until after implementation.
$50 per year is a good investment in one’s future if it involves real estate and/or valuation.
Most of the members & member companies are data geeks. All volunteers. A non profit.
I posted great commentary on my states MLS blog, and they shadow banned my comment and would not let it through. But had tried to use web trickery to make me think it was posted. I documented their censorship thoroughly, they got there by assigning a unique landing address to just me, upon accepting the cookie, so my post was visible to only me. Good thing I don’t save those cookies and keep full landing addresses visible at the top of the page. The reso definitions are stupid. Here, I’ll repost what ReColorado Corelogic Matrix is afraid to allow to be published. The below comment was in response to them backtracking one ‘new’ definition because too many people pushed back. Page link at bottom of this post.
Censored post start:
We’ll look forward to multi family being properly defined as well, releasing this push to accept the global definition and keeping with the American definition instead. Multi family does not reflect something that is attached to other units, creating a multiple string of single family attached housing, all with individual ownership deed. That is not multi family. Multi family is commonly understood as a property with a singular deed and singular owner which supports multiple individual units and requires income potential, such as a du, a tri, or a quad plex. The key point with multi family being a singular deed and singular ownership to all available units in that specific housing structure. aka; Sf housing with income potential, where someone has to be a landlord or units sit vacant. Homes without income potential, with only 1 unit to live in, and 1 owner, are not commonly referred to or understood as being multi family units in the USA. A sf unit being attached to another sf unit does not create a multi family housing scenario. If attached to other units like being in a townhome or condo setting, such single family units are simply, sf att units. Unless you’re in an entirely different country, then such housing may be referred to as multi units or flats.
Typically lenders define and place 5plex or higher multi family units into the commercial realm for defining lending access, as observable in the FNMA 1025 appraisal form. 5plex + units are off of standard sf individual lending forms for FNMA and are into commercial loan territory and apartment definition. Where as 2-4 multi family units are on a special FNMA 1025 form set with additional area for entering income potential and defining the size and feature of each individual unit. Multiple ownership of different units by different parties within an attached unit set would require something other than the multi family 1025 form because that would reflect attached single family ownership, and is not reflective of multiple unit or multi family ownership by a single party.
A single family unit with a properly partitioned accessory dwelling unit is an ADU and may be included in either or both sf or multi housing category. ADU’s may be supported in either an attached or a detached unit setting. Often defined by commonality of such reporting in the past and in that locale, spacial relationships of the size of the adu in comparison, along with specific zoning allowance and municipality definition for that specific location.
We live in the USA. We have our own definitions and do not need to or want to adopt a global policy or definition for everything. We’ll stick with standard non metric measurements, date formatting with the month/date/year approach, and our own commonly understood laymen terms for real estate.
Internet reference. https://www.bankrate.com/real-estate/what-is-a-multi-family-home/
Copy statement end.
I encourage anyone interested to stand up for the definition as you see fit, and post on the below web page. Then check back to that page and watch your opinions and comments become invisible. Apparently Corelogic Matrix now believes, if you can’t get them to agree, it’s best to apply shadowbanning censorship methods to open reader posters. It’s easy to identify shadowban tech though, just delete cookies or bounce back with another browser later. It is complex to install though, unique landing addresses tied to a cookie which look the same, with your comment visible to you, but are invisible to everyone else. So I’m convinced Corelogic is promoting this activity among their MLS groups whom they’ve been able to capture. The ability to censor members posts on their blogs is just another tool Corelogic provides the local MLS companies now. If they do not agree with your opinions, they make your comments invisible. It will appear as you posted but if they disagree they will then put your email on permanent shadowban so although it looks like you post, nothing actually is posted by you. Post it anonymously to test it, all dissenting opinions which go against the Corelogic narrative, even by their own MLS group members, is now censored material. How’s that for the next chapter in Corelogic monopolization? Make sure other appraisers and agents know this is happening. Test it yourself. Critical positions against new definitions will not be tolerated by Corelogic, no matter how factual or well formed your argument may be. And what amazing timing for these censorship tools to roll out with MLS providers in a similar time frame as reso and new forms. They’re using twitler methods and are creating the illusion of popular agreement, watering down anything critical of them. Here:
Baggs, I get the reason for the desired disclosure, but Im already sick and tired of having to do extra work or take extra steps to certify I haven’t cheated or gamed the system. That is what USPAP was supposed to establish before they turned meaningful standards and principles into meaningless drivel to accommodate loan officer sand state regulators. (Like elimination of Departure and replacing it with the SOW rule).
In order to work in my own country, I must now PROVE my right to work. While illegals don’t have to, and nothing is done. WHY is it that people that follow the law are the ones that have o take the extra steps to show they obey it?
So now because a few dishonest appraisers outsource without disclosure (SOW?) I’m supposed to add new forms saying in essence that “I didn’t lie, cheat or steal in preparing this appraisal and report?”
A better idea would be to have real estate appraisers rewrite USPAP WITH ZERO HELP FROM TAF OR MISMO! They can tell us what causes them difficulty afterward. But STANDARDS and PRINCIPLES are not supposed to be debatable items. Eliminate state regulation of federal law. PERIOD!
ASC can replace ALL state appraisal bureaus and agencies.
At least then we could reasonably expect uniform enforcement and application of USPAP.
Thank you Mr Ford. Well, you know, go for what is within reach.
We’re so far down this path, any disclosure which would stop cheating and gaming of the system would be important, and a big step to take.
I would not wish an appraisal career on my worst enemy. This is hands down the most corrupt industry I have ever worked in, or even read about. It’s so bad we’ve got people whom think they’re the good guys, doing irreparable harm without even recognizing they’re committing fraud and engaging in deceptive practices. The harm comes from the top down. It’s too late for top level reform. Have to inch back now, or abandon this form of check and balance all together.
Or I suppose I could just get with the fraud, adopt new business practices, work with amc’s, and ‘turn it all around’? But at who’s expense…
The OIL industry is worse, However we have had Presidential members from each of the Industries involved.
Appraisers can join RESO now as Class D members for $50 per year.
I was able to convince RESO to allow Appraisers to join a couple years ago.
Previously, Brokers could join, but not Appraisers.
I suggest that all Appraisers join RESO in order to have an idea what’s coming down the road in R.E. Standardization.
This is primarily for MLS but will probably morph to appraisals & UAD.
Look no further than international definitions. RESO is the vehicle to bring easy access for foreign speculators into the USA real estate market. The vehicle which will be used to automate away individual representatives, further erode consumer protection.
The foreign speculators will no longer have to navigate our standards or local bureaucracies. Rather, the entire body of Americans, participators and professionals, will now adapt to other standards from other countries. Soon you’ll see a RESO compliant assessment reporting suite which will be one of the final stages of a complete American real estate take over, restructure assessment reporting in every state and every county.
When Americans lose control of their own systems, and their own sovereignty. RESO and MISMO.
No time to look into it right now but I’d bet my license the two groups are backed by the same people or groups in the background. At some point a conspiracy theory quits being a theory, when enough facts present to illustrate an obvious collusion. aka; racketeering and RICO. None of this is by accident or organic. None of this is for the good of this industry or for the good of consumers. You are watching a concerted takeover of our real estate systems from top to bottom, by a select group of corporations whom have silently monopolized every aspect of this industry possible, forcing the change on those whom would not go along willingly. It’s been a long time in the making, longer than we’ve been alive. It’s finally happening, and too few are willing to resist. Then one person at a time, one property at a time, actual home ownership levels per capita will continue to fall. Economic freedom and owning land are important cornerstones of liberty and freedom. This is a fight against liberty and freedom. The branding may be pleasant but these changes should frighten anyone whom understands how this country came to be. Because it can be disassembled in a similar manner. It is the bureaucracy between locations and between systems which insulated citizens from deceptive practices elsewhere. Eliminate that and carpetbaggers worldwide will have direct access. Look around, you can already see it happening.
Instead of speculating about what RESO is, I suggest that all Appraisers join, then volunteer for a workgroup.
RESO was formed by NAR in 1999 in order to develop R.E. Standardization for MLSs.
There is no foreign involvement.
I am a Broker member of RESO.
A few years ago I was able to convince RESO to permit Real Estate Appraisers to join RESO. Previously, Appraisers were not allowed to join.
Take advantage of the ability to join as a Class D member for only $50 per year.
Becoming a member will at least give some insight into future technology in Real Estate, rather than finding out after the fact.
Better yet, joining a workgroup will allow you to become part of the future.
I am not a paid or official spokesman for RESO.
Join RESO.org. $50/year
I went to bat for Appraisers so that you can join!!
If you think there is no foreign involvement as they adopt european definitions of property type… Am I still on planet earth? I don’t have to speculate what RESO is, Corelogic Matrix already brought it forward, and censored all public resistance and criticism to the matter.
Perhaps your definition of foreign involvement and my definition of foreign involvement differ. Don’t be naive.
The Universal Property Identifier (UPI): a global solution for accurate property representation
RESO’s core values align with those of open standards organizations across the globe. Our processes and products are collaborative, business-driven, transparent, innovative, open, inclusive, and measurable.
You’re going to really love the new global aspect of streamlined real estate in America which is readily inclusive to the whole world. You may however, have to kiss your current position goodbye and find a new job. Get ready to compete with the entire world whenever you may be lucky enough to find a local deal on a local property. I love globalism. You will too, or you will be shut out. American values will not apply. We’re going to leave all the protective bureaucracy in the past and the doors to American prosperity will be wide open for everyone to enjoy.
$50 a year is cheap enough…though every dollar spent now is buying less than it did last year. I may reconsider. Does Class D membership include ability to be heard formally? To effect or influence change?
Yes you can be heard formally. RESO has many opportunities available to volunteers for various committees or workgroups. There are conferences that you can attend.
You can make a difference. Like any all-volunteer organization, there is always a shortage of volunteers.
They’re promoting corporate chains, rewriting definitions, rules, regulations, seeking global integration tools, and claiming non profit. All that work for all that technology is not free, neither will be it’s maintenance and upkeep. They have top pay scale people from top industries working on this as employees from tech to realty. If you know; Who initially funded RESO? Who funds it today? The chain franchise members?
I went to the site and got ‘half’ registered? No place to make payment noted. Navigating site wasn’t very user friendly. I’ll try again tomorrow if I remember.
You’d think they would have better tools for the regular guy, having brought in top senior level technical coding and development experts from the military industrial complex companies. Unless of course, it’s not for the regulars. All that talent did not come cheap. This is not a non profit group.
Who is “They” that you are referencing?
I don’t recall exactly. I was scrolling through the members and developers lists or one of those pages with profiles and bio’s. Wow, lots of talent. Do a site search via google and hit all the pages, not just the front facing ones. I started to dig in there but said why bother, they’ve already won. My written objection was censored by the Colorado state Corelogic Matrix MLS group. Per my above comment. That kind of shadowbanning technology is not simple or easy to implement. And it rolled out exactly at the same time as the reso program. Coincidence? If you guys can make headway more power to you, but you won’t because their minds are made up and public input is just to keep people from getting too upset. Plans are in motion and they’re opening up speculation to everyone under the guise of ‘globalism’. You guys are going to really love the new global stage and the end to American exceptionalism. Even some of their own tools have ready drop downs to indicate what country you’re focusing on. It’s just only the US side is populated right now. But soon, as this system is developed unilaterally elsewhere, they’ll eventually tie it in together. Want to research for property speculation a half a world away, no problem, do that from the comfort of your 1,000 ft long rainforest wood desk while you kick up your alligator boots and puff on a fine cuban, overlooking the city scape from your penthouse office. Regular market participators, they may find themselves unable to scrape out those great deals in the future. Brand it as technological advancement and see if the people go for it. They’re carving out a new monopoly which is why they have every top name in the industry on board ahead of time.