A Reality Check for Appraisers
I am not selling road-apples to my fellow appraisers…
Appraisers as a group DO NOT PAY ATTENTION to what is going on within the profession OR seemingly unrelated areas that affect the profession.
- FNMA & Freddie ALREADY HAVE authority to fund loans without appraisals. This is in anticipation of an appraiser shortage.
- AI has appointed itself the ‘voice of all appraisers’ in America. They actually made the statement at the California TAF meeting in June that they speak for all appraisers interests AND that they put those interests of the entire profession above their own. (source-live meeting; TAF/ASB Redondo Beach 6/26/15). In itself this is not a good thing. They exclude the views of competing organizations, AND ALL of the independents across the country.
- AI is seeking (and has had partial successes) in getting dual standards approved in individual states that allow certain appraisers to ignore USPAP and follow THEIR alternate standards which now include provisions PERMITTING CONTINGENCY FEES! Whether this is a good thing or a dangerous and bad thing is not the issue. The issue is that they are using their clout to pass legislation that affects ALL of us AND pretending to speak for us in the process! THIS is what AB 624 was all about in California. I’m told they succeeded in passing it’s similar bill in Texas and seek to do the same in TN and Illinois.
- The TAF and International Valuations Standards Council is pushing TAF to adopt THEIR standards. Sounds benign right? THEIR standards are more oriented toward Wall Street CPAs and the actual and theoretical impact on money that certain business mega-transactions have. Transactions so large that the actual underlying value of the host currency can be affected. By the way when you hear the AI or anyone else talking about “What is the value added” to appraisals for these foreign market participants think Goldman Sachs, AIG, Societe Generale and all the other too big to fails from 2008 and 2009. No doubt some form of uniform standards SHOULD apply to these international transactions, but that is NOT THE DOMAIN of single family residential appraising in America! Frankly even most commercial REAL ESTATE transactions are not or should not be part of the concern in this area. The transactions involved are securities and stocks or bond purchases/sales. THAT is the realm of business valuation-not real estate valuation. How many appraisers know OR even CARE about the merging of RE appraisal ‘standards’ and those of BV?
- When you hear that the era of “big data” is here and anyone that doesn’t buy into all the hyperbole surrounding it is a Luddite, then think of FNMA’s own admittedly FLAWED data base where decades of adjustments were compiled and analyzed so that they can us when OUR adjustments are not in sync with our peers. Of course that is the SAME database that was created back when FNMA WAS requiring adjustments to be within certain guidelines (or explained-which few did). Back when if you made an adjustment over 10% or 15% line item; or net and gross adjustments exceeded 15% and 25% it guaranteed a fight with underwriters and at a minimum a desk review. Shortly after adopting the use of that database for Collateral Underwriter (CU) FNMA admitted that even their own data showed appraisers had been appraising to the guidelines rather than to the market. While they dumped the guidelines THEY KEPT THE DATABASE that they use for CU!
- CoreLogic recently touted a national values study based upon millions of transactions where they reviewed the appraisals. “Big Data” at its best, right? Of course they have still not disclosed whose permissions were obtained in order to violate borrowers confidentiality, or which appraisers authorized THEIR professional work product to be used for this study for which none of the contributing appraisers were paid for the unauthorized use of their expertise.
- Of the 19 to 21 State Coalitions that are reported to exist, I only know of a relative few that are either active OR effective. VaCap is very active and appears to be effective. North Carolina, South Carolina, Louisiana, Tennessee & possibly California are active and effective. Tennessee & Illinois are unknown to me. In any event, there are perhaps seven that ‘do’ anything in their states. None to my knowledge are doing anything on a national or federal level which is where the GSE policies and TAF regulations/policies originate. Illinois just lost 943 appraisers over last year. Why are they not up in arms over it? Self centered interests?
- “Commoditization” is the new AI buzzword for appraisals. They foresee and want your and my unique professional products to become the commodities that the AMCs and banks already treat them as. Regulations are being tweaked toward this end as we ‘speak.’ I did not become a professional appraiser to be a purveyor of commodities. I’m not selling corn, wheat, or grain futures. I am not trading in carbon credits. I am not selling road-apples to my fellow appraisers. Each and every single appraisal I perform is unique. It is NOT a commodity any more than a lawyers professional advice is, or a doctors diagnosis and treatment is. I have no need to twist the English language into a pretzel to make what I do a “commodity”.
- It may seem I’m on a tear against the AI. That’s not true. I am on a tear against a few of their policies that BY THEIR OWN ADMISSION “only affect a very small number of appraisers.” (AI Lobbyist, Redondo Beach TAF meeting, June, 2015). I still hold the SRAs and most MAIs of the AI in high regard individually. They still have some of the best courses out there, though I’m also very impressed with the ASA and other peer groups offerings.
- How many knew that the prohibition in the original FIRREA of 1989 against anyone requiring a specific designation in order to do federal related transactions was removed sometime around 2009 or 2010?
Would a ‘boycott’ solve any or all of these things? No.
Are we stuck with whatever someone else dictates to or for us? Maybe.
It really depends on how many of us choose to do something meaningful about our own futures. I hear a lot of talk about free enterprise, or appraiser independence. I’ve begun to realize that those still espousing this without realizing how long ago it was that we lost BOTH, are really justifying or rationalizing their own inaction. It continues to give them an excuse to do NOTHING aside from venting frustration on blogs.
You’ve all seen this before, but it is really getting critical that we coordinate our actions on a national basis. Even the best state coalitions can only do so much.
There are thirty days left to take advantage of the reduced membership dues at AGA covering the next years dues. $225 if you join prior to 12/31/15. After that I’m told it’s back up to $375. Call Jan Bellas at 1(301) 220-4100.
Merry Christmas to all & sincerest heartfelt Season’s Greetings to those of faiths different from my own that do not celebrate Christmas. Best wishes for a Happy New Year!
Certified General Real Estate Appraiser at Michael F. Ford Appraisal
Over 28 years appraising all property types and interests, in Southern California real estate. VP/Chairman National Appraiser Peer Review Committee, American Guild of Appraisers, #44OPEIU/AFL-CIO. - Michael Ford on e-AppraisersDirectory
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Image credit flickr - Solve Together
On a related note. Can someone from AGA look into this company.
freeappraisalreview.com
They offer free reviews for appraisals you submit to their website allowing them complete access to the report for automated review. Are they gleaning appraisal data in the process? And for what purpose? Their database? Corelogic database? Most software has E&O checks. Plus nothing in this life is free. NOTHING.
Something is rotten in the state of Denmark.
Hello. I ran some whois research, for this one.
Check this out: http://whois.domaintools.com/platdata.com
Learn to whois, and ip snoop! Ha! It’s childs play in todays advanced tech arena, requiring only simple searches.
And check the website language; http://www.platdata.com/about-us.shtml
There you have it, in a nutshell. A popular data review software service, used by major amc’s. They probably thought that since the program was somehow effective, they could offer it online like that. Probably something that remote underwriters use and such. I did not check out the software, but you can bet it’s an EO reviewer on steroids, somehow creating the illusion of better identification of ‘reporting errors’. So for all the arguments about privacy and such, these national major amc’s are simply uploading all of our data into systems like that. Who owns that company? Privacy is lost, in the digital realm, make no mistake about it.
http://www.platdata.com/mortgage-compliance-providers.shtml / Per the article, only one thing to say; Audit the Fed. I’ve been paying attention, and the root cause of all of it, is the fiat system. Silver is the lords currency.
This web site is a service of Platinum Data Services. When I asked a representative of that company how uploading an appraisal to that web site (not the client or intended user) squares with USPAP, the response was basically “it’s a business decision of the appraiser” as to disclosing potentially confidential info to a non-client entity. I would encourage all appraisers to be very wary of using this service.
Appraisers don’t care or want to help the industry. They don’t want to train trainees. The average age is in the 50s. The number of appraisers falls every year. The system will change because of this and at the end of the day it is the fault of the appraiser. The appraiser who never tried to make a difference, the appraiser who accepted a low bid, the appraiser who won’t take on a trainee, the appraiser who complains to other appraisers yet does nothing beyond that. The mortgage process has to change because of the appraiser. Soon home buyers and sellers won’t know what an appraiser is, they will know the value of their home. Long live BIG data.
I agree with you 100% John. For the most part, I’ve come to realize appraisers score lower in intelligence than any other career oriented group on planet earth. Who puts up with this much BS without making a single stand? I recommend a new law preventing appraisers from using the term “professional” unless of course the term precedes the word “idiot”.
i have to disagree with John. i think appraisers DO care and want to help, because their business is their livelihood. appraisers have been barking loudly for a very long time about all of the problems that are going on, because they do care.
the problem is, all the barking that has been done over many, many years, has fallen on deaf ears. the people in charge of the appraisal industry, dont do appraising everyday, and have probably never done one in their entire life. i doubt these same people have ever been in business for themselves, yet they are the ones who are telling appraisers how to do their jobs and run their businesses. our businesses and the appraisal profession are constantly being steered into a head-on collision, and all appraisers can do is brace themselves for the inevitable. thats the problem, and why appraisers dont seem to care – because they cant.
trainees. personally, i think veteran appraisers ARE willing to train other people, because as that population continues to retire, they WONT CARE about future competition. if they wont be in business in the next few years, they dont care about competition 10, 20, 30 years down the road! the problem with training someone is, financially it isnt worth it, and insane liability doesnt make it worth it either. if greedy banks and greedy AMC’s are only willing to pay $300 for an appraisal, (AND states/regulators continue to do nothing and allow it to happen), and the trainee/trainer have to do a fee split on that figure, it will NEVER make sense to anyone to train someone for $150! $150 will NEVER be worth the time or the risk. if fees ever get to where they should be for a 1004 – $550+/- $50, only THEN will we start seeing veterans willing to do some training, but it will NEVER happen before.
(i am barking again).
*crickets*
yeah, i thought so.
the bleeding continues . . . . .