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!