While this is a really old thread I am in the same boat but without the grand kids! Starting my 20th year in the business, LR with very little time over the years to jump up to the CR or CG. Even back in the days when we were allowed to take a week long income cap class and a test I didn’t have the time with 2 jobs and kids. As in your case my problem, not yours. Sad however that experience is not more of a factor, I’m not knocking an education by any means but over the many years in this field I have reviewed reports from all licenses and I have seen good and bad stuff from each. Within reason I think anyone can become proficient in this field. I wish as an industry as a whole we would do a better job of teaching, I learn a lot from the review of a well written report. I also learn a lot from a good AMC, they look and review the report differently than I do. I welcome the questions as a challenge and a way to learn and get better. My biggest fear as I near semi retirement is that they will require all reports be completed by CR & higher, I really liked doing FHA work and had a solid 10 year business then it was gone.

I would like to see something that allows me, at my age, to continue to grow in this profession.

I only have, in my planning, about 10 more years or so before I retire.

Cost benefit of college and time away from my young grandchildren disallow the returning to school.

My problem, not yours, I am fully aware of.

Why could a Licensed not sit for a Certified Residential exam if say, the license has been held for 5 (or 10-pick a number) years and never a disciplinary action was taken against the Licensee. You could implement a similar approach for a Certified Residential to upgrade to a CG.

Fly-By-Night Lending, Inc. was a correspondent of (arbitrary name) Wells Fargo; or Aurora. They made a stated income loan. The lousier the buyers credit score was, the MORE likely it was that they’d get a 2% Option ARM WITH a prepayment Penalty. They got a FNMA (or Freddie or even Indy) commitment before they ever funded the loan.

Fly-By-Night got paid; the former stripper-now (unlicensed) loan officer trainee, that found the lead got paid; her broker got paid three times as much PLUS the rebate. Wells Fargo got paid. The Account Executive got paid. The AE and the Broker split the prepayment penalty premium based on their predetermined kick back arrangement.

Six months later FNMA bundled it and sold it to New York Securities Fund Series E-1832, and FNMA got paid. Real Estate and an interest in a single parcel of Real Estate stopped being sold at that point.

NYSF-E1832 was a Bundled Security by “Too Big to Fail, But Not Dumb Enough To Be Self Insured. TBtF,BNDETOBSEI marketed the fund (NOW it is a PERSONAL PROPERTY interest) as an insured investment. The SEC was on holiday that summer. AIG wasn’t real sure about all their exposure on this one so they reinsured through Societe Generale. NOW your investor from Singapore or Greece or whatever comes along and says I want $500,000,000 from Menu A and half that from Menu B.

The guy that originally bought the house out in Riverside County, CA  survived the first interest rate bump to 4%, but knows he’s in trouble. It is scheduled to be bumped again (based on the LIBOR rate which we now know to have been criminally manipulated). So too do the other 1,000+ individual owners that were included in NYSF-E1832 (know they are introuble-but at different times); so after making his payments for a full 17 months he goes back to refi out of it, into a new Option ARM. Lending policies have been getting just a little bit more cautious AND he was foolish enough to have waited until 11/09/2008. The day they turned off the Real Estate Market Switch.

Back to your original concern (sorry ’bout that- I DO get windy). Your guy in Singapore IF he has any inside trading contacts is bailing out of his fund just as fast as he possibly can because the bleeding THERE has already started AHEAD of the default  / decline back in Riverside County.

Where is the ‘value added’ to him derived from an appraisal? Absolutely none. Nor should there be. We don’t appraise personal property! He should have been listening when that guy with the initials EF spoke out.

Its also why no one without a NACVA course under their belts should be calling themselves “valuators” in America. We are Real Estate Appraisers.

Hi Mike, comments will no longer be hidden unless they get more than 40 dislikes. Just FYI, hidden comments can still be made visible if you click on the word “hidden”.

Vince I may have disagreed with you on this one item but Im disappointed to see a ‘comments hidden’. Part of the learning process is for us  to consider ALL information; including that we may disagree with. I hope BlogTeam will reconsider this policy if it is something within their logistical abilities.

Yes to what Mike Ford said.
An appraisal for most properties is relatively straight forward in concept, execution and presentation and should stay that way. Look at a standard definition of “market value” used out there in the trenches. Fairly simple. 

If some client wants verification, speculation, or what ever, on some other aspect the real estate – let them go find it. But, it’s not our job (not my job anyway) to provide them with such.
 
I’d resist any efforts to redefine the simple classic definition. 

Hi Vince,

The whole issue is WHO specifically are the ‘clients’ you refer to? The disconnect between the need for/ benefits of an appraisal comes between FNMA and the sale of bundled securities that include loans that are represented to be insured for loss against the first 25%. NOT ONE of those ultimate end user securities investors are my client. Additionally they do not value the bundled security as the sum of the individual market value of its component parcels.

Its apples and oranges. If the AI wants to delude itself into thinking that (Entity BV) is the direction of  real estate appraisal in America (or the world for that matter), they will drastically precipitate the demise of the MAI designation.

Right now if the NY Trade Center needs to be appraised the 99.9% probability is that it will be done by a team of MAIs (and probably should be). You folks start rewriting standards and guidelines along the lines of the foolishness I heard being promoted by The AI at the recent (6/26/15) TAF/ASB meeting, and “Made As Instructed” will cease being nothing more than an offensive euphemism by jealous competitors. It will become a market wide perception.

Again,we appraise real estate; not futures; commodities, bonds, stocks, REITS or bundled securities comprised of partially insured collateralized loans. Looking to the future of our profession is necessary. Attempting to make it cross over into something it never was intended for, nor should be used for, is another.

I really enjoy and respect your views Vince. I just happen to disagree with them.

I don’t fault the appraiser. I’m saying the appraisal is irrelevant to the problem the lender faces, in this and many other cases.

Mike, could you please expand on your last sentence: “If [the lender] wants to know the market value of real estate today let them get an appraisal.” You simply assume this is an important function and that appraisers can do it well and with costs and benefits superior to any other estimation regime. I assure you, our clients are questioning these assumptions.

Bubba 100% correct! I was an agent back in the days when they still taught fiduciary responsibilities to ALL parties until some ass-hat attorney latched on to the idea that fiduciary treatment was just possible where commissions were involved. Anyway-that’s another story….or is it? The AI has new standards that allow for contingent fees.  No conflict of interest there is there? I’m sure it will do wonders for the profession’s credibility overall.

IMPECCABLE APPRAISAL!

If it was an “impeccable” appraisal to begin with, and three years later the market tanks, so what? You can’t fault the appraisal or the appraiser for that.

Although the lender, the appraisal police, and a host of others will try to pin it on the  appraiser. They need a fall guy. “We need a fall guy. Lets give them Wilmer” as Bogart says in the Maltese Falcon.

The system need a fall guy. Lets give them the appraiser….

Everyone hates appraisers Bubba.  It’s sad but a fact of life.

take the appraiser out of the equation, and who else can be trusted? personally, i wouldnt trust any realtor whos pay is based solely off of the sale of a property. i know many realtors in my area, and i wouldnt trust more than about 25% of them. i was a realtor for (15) years, and i saw all the nonsense people pulled or tried to pull to get paid, and things only got progressively worse when the market was slow. you want to see true chaos? take appraisers out of the equation to do thorough and honest valuations and inspections, and start relying only on AVM’s and realtors to do things like BPO’s, and watch what happens. let the 75% of realtors in my area take over everything, and watch how quickly things really get screwed up. for example, how rare are MLS sheets that are completely filled out correctly, or have well written descriptions of the property? in my area, they are pretty darn rare, and its these people that we will be relying on in the future for truthful, thorough, and accurate information for mortgage sales and refinances? yeah right. i dont foresee any problems there at all. LOL.

at least one honest and trustworthy human being will always be needed in any mortgage transaction to keep everyone else honest, (including loan officers), and that is what appraisers do. an appraiser is the only one anyone can trust 99.9% of the time in any sale/mortgage transaction.

the bleeding continues . . . . .

So, I will add the above statement to all my appraisals and tell those that expect the appraisal to protect them forever NOT to sell foreclosures when the market is down. THAT advice is worth far more than the $450 to $500+- fee I charged.

Respectfully, I think you have over analyzed this to the point that your postulating that trucks should now become airplanes. The underlying premise about collateral is that it does not USUALLY decline in value.

For me, ASB, the AI or anyone else to think we can predict OR account for these downturns in any credible manner is hubris. If the lender wants to move furniture (for some peculiar reason), let them rent a truck; if they want to travel across country quickly let them buy  a plane ticket. If they want to know the market value of real estate today let them get an appraisal.

Re: your other message, I and everyone else will agree with much of what you write, but I’m not sure you draw the right conclusions. Without a doubt, aggressive lending practices like no-doc loans and neg-am loans blew the financing system apart. Appraisals were irrelevant. I think you made that point yourself above. Appraisals were irrelevant. They don’t prevent bad lending, and they don’t fix bad lending. Better lending regulation is the answer to that problem, not appraisals. If, as you say, the lenders (and loan officers, securities underwriters, securities salesmen, etc.) didn’t care about the appraised values, what was the point of doing them? How did they protect the financial system, the lenders, the shareholders, or the taxpayers?

There were certainly egregious examples of appraisal malfeasance, negligence, incompetence, and fraud, as was true in the S & L times when FIRREA was passed. But imagine a regime of perfectly ethical and competent appraisers. Then imagine a shift in preference to hold more real estate equity and debt, resulting in increased prices. Now imagine a reversal of that trend. Appraisers are reporters, not market makers, and we will accurately report rising property values, then falling property values. But how does this help the lender get PAID BACK? Because that’s the lender’s only concern. What is the value added by the appraiser? If the market value estimate is accurate as of the date of appraisal, how does this help the lender get PAID BACK? That’s what appraisers have to demonstrate to have an ongoing role. The sad truth is that the appraiser can generate reams of analysis about supply, risk, value trends vs. income trends vs. historical inflation, economic weak links like reliance on a single employer, etc.; but if the LTV is what’s required by the lender, the deal is done. Again, where is the value added?

Hi Wayne, it’s a legitimate concern for you, albeit one that I don’t think is likely to actually happen.

New appraisers seeking experience are by default $250 appraisers if you and I are charging $500. I never paid a trainee more than half and doubt I would in the future. The market fee remains $500. If I started accepting $250 fees, then there is only $125 available for the trainee. No one is coming into this field capable of passing the license examination, for $375 a week,

I would lower the college requirement (or offer a more reasonable ‘in lieu of’) but NOT the experience requirement. The current thinking of AQB is just the opposite.

As part of that, I have also analyzed “neighborhood” (competitive market area) economic trends and conditions. This could be macro or micro.

On November 1, 2008 I knew that outlying counties in Southern California were showing increasing signs of leveling prices overall; and in some cases decreases appeared to be normal equilibrium in the market place, seeking its sustainable value absent the buying frenzy of 2004-2007.

Nothing I could have done would have adequately predicted Hank Paulson would come out mid month and say “The sky is falling! Give me sole discretion on how to spend a government bailout of $800,000,000, or the world as we know it will come to an end.”  THAT by the way, was the biggest theft in history up until that time. The immediate  effect was the same as someone walking over to a wall switch and saying “G’night folks. Time to turn off the real estate market and go to bed.”

FIRREA as originally written and passed provided all the protection lenders needed. If they only had 1 in 10 appraisals field reviewed I submit the recession and real estate collapse we all experienced could never have taken place. Knowing there was a 1 in 10 PROBABILITY of being ‘caught’ would have curbed nearly all inflated appraising going on (imho).

It was the lending side itself, that no longer had skin in the game, that put specious financing and qualifying programs into effect to generate more real estate backed securities sales for loans THAT COULD NEVER HAVE BEEN SUSTAINED from the day they were made.

A 2% pick a payment, option ARM with negative amortization provisions and two and three year call dates absolutely relied upon double digit inflation to force borrowers into refinances. No way does the average buyers income go up enough in two to three years to cover the payment spread between a maxed out 2% qualified rate loan and one that adjusts to 8% or even 9% in that same short period! This is not a case of appraisals not adequately identifying market factors. It was a case of those market factors as were reported AND sound lending practices being completely ignored!

As one of the very few center right, free enterprise advocating, capitalist, union organizers in the country it kills me to say this, but Wall Street is 100% to blame for the last fiasco! They corrupted the entire process including regulators. Im unwilling to change the standards of my “profession” to further accommodate them for rounds 2, 3 or 4.

No one cares what the individual house is worth in terms of collateral. So why would they care what it is worth  six months from now? All they will do is add another layer to the reinsurance process and tax payers in the USA will guarantee investors from France or the Netherlands don’t lose anything on U.S. Real Estate backed securities.

Now they want to do t all over again. Who cares? They know the taxpayers can be bled dry not only for today, but for future generations as well. THAT is not free enterprise btw. That’s criminal cronyism that would have made the Tea Pot Dome participants blush with envy.