FHA Requirements vs USPAP

Mike Ford CA AG, SCREA, AGA, GAA, RAA says:

Bubba Jay, sorry to see you or any of the old timers go before you had originally planned to ‘way back when we were all new’. But you are right, we ALL have to look to our families best interests. Just a suggestion, why not keep the license active for two years “just in case”?

Mike Alderman, What you say is true. R.E. IS changing…as it always has. In 1971 I heard a story about old timers writing up offers on napkins on the hood of their cars…so with one of my more loyal clients I did the same thing. Offer made and accepted on a napkin (and cleaned up REAL fast by escrow instructions). Those were the wild and wooly days.

I got out in ’74 and went into Credit Union work til ’80-’81. Started a diving company in ’83, and then back to sales in ’84 when the Easton Act (disclosure panic) was the big deal in California. By ’86 I remembered why I got out in the first place and became an appraiser. I was an MAI Candidate back then (until licensing); training under an old time MAI; and an SRPA; doing a LOT of work for Resolution Trust after the S&L Bailout.

Fast Forward to Present- Through ALL the changes in the market the one constant is that the market itself actually WORKS! It gets manipulated, twisted, bent and subverted, but the actual R.E. Market WORKS. Not perfectly (even in open, true honest deals) because the participants are imperfect and have so many different motivations and requirements. But it works well enough to estimate the impact of most of those diverse motivations. Some measures can be proven, and some are derived from that first super computer that all of us ever used; our minds. Early on I was told to listen and pay as much attention to that computer as all the other ‘hard data’. It is NO LESS VALID just because it cannot be quantified mathematically. Even IRS refers to what they call “a smell test” before they decide to open up an audit case on tax returns. PURELY subjective! YOUR computer has already done all the calculations and distilled it down to a few answers.

We always knew our job was a varied blend of art and science, but those who currently use our services have been conned by software writers and hucksters into thinking it is ONLY a science. That THEY are the only ones with the solution to let non appraisers THINK they can determine values! Merely numbers to be crunched. When THOSE numbers don’t work, then keep searching until you find numbers that ‘appear’ to . The process is more important than the validity of the result.

Take music. It can be boiled down to almost pure math and pure science. A series of notes, pauses and timing. Take the purest music ever written, and the most technically ‘correct’ non musician playing it and compare him or her to a musical artist; a true musician. The result of one is science and sterile, the product of the other is art that stirs the soul. One teaches small children in a poor school district; the other plays in Carnegie Hall.

We need to be allowed to go back to practicing our art; coupled with softly applied but meaningful oversight to keep us honest. Professional peer groups used to do that. Now we require State and Federal Agencies to do it. Agencies & GSEs that only see the math and science.

Like FNMA who ADMITS their historic guidelines have skewed appraisal adjustments away from market perceptions for decades! In fact they have discontinued those fallacious guidelines completely. Well, ALMOST completely. The CU database that they use to tell appraisers that THEIR adjustments are “outside the model” is of course based on those very same ‘guideline’ adjustments that FNMA now admits were worthless.

Now if “that don’t make ya sit up, scratch yore haid; and say hmmmmm” nothing will!

I personally think we can direct a return to sanity. It just takes some real effort and cooperation among appraisers, and eventually those we deal with. Later this week I’ll post a draft proposal for a fair national (minimum) REASONABLE fee for our primary products. I’m not focusing on ambiguous “customary” anymore since that metric has been so perverted. Its based on the lower end costs and benefits of one of the higher cost of living areas; but for those so inclined you can recalculate it to your own local multipliers from the data and links it contains. IF we agree it makes sense, then ultimately we will have to stand WITH AMCS to get THEM the amounts from the banks that allows for us to be paid the amounts proposed! Right now, the banks and lenders associations engage in Sherman Anti Trust price fixing (in my opinion).

My intent IF we can get enough general consensus here, is to submit it to the AGA for review and for further submission to each of the State Coalitions, and Known Appraiser Peer Groups. My belief is we need to go for it nationally rather than piecemeal, state by state though we certainly need all coalitions support to do that.

YOU folks will find the flaws in it, I’m sure. Those that can be fixed will be corrected, but most importantly we CANNOT AFFORD to take another year to get started on this! Please address it fairly and openly, but without quibbling over minor flaws. We COULD get this in the works in months rather than years. Thank you.

Rick Astley says:

Amazing facts to know.