The Last Line of Defense

The Last Line of Defense... Get Busy Living or Get Busy DyingAs I wrote recently, we learned a lot about both our industry and ourselves in 2018. We do provide an invaluable service to the lending community even though most of the mortgage industrial complex doesn’t appreciate or want it, largely because of the moral hazard generated by the taxpayer bailouts of 2008. Our expertise will be shifting to the consumer in the near term with some snapback to mortgage work after this all ends badly in the not so distant future. We just can’t sit around and wait for it. As was said in the movie “The Shawshank Redemption” we need to:

Get busy living or get busy dying.

I prefer the former, after all, we appraisers are the last line of defense for fraud.

In the current edition of mortgage fraud 2019, the regulators are leading the charge for removal of underwriting guardrails rather than the banks themselves. This is being done in the name of generating more mortgage volume to enjoy more fees. Falling mortgage rates over the decade resulted in falling loan volume because low mortgage rates were not the solution. Banks don’t trust the economy and the government any more than appraisers do.

This reckless behavior being pursued by regulators is all out in front of us to see and we as an industry need to point it out.

Appraisers are essential to help maintain the public trust, especially in the banking system, even as the regulators move away from safe practices. Exposure to consumers/taxpayers is expanding.

I am looking towards 2019 as a period of real opportunity from consumers for appraisers who seek it out, despite the repetitive mantra from large comprised institutions.

Jonathan Miller
Image credit flickr - Paxson Woelber
Jonathan Miller

Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.

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13 Responses

  1. I agree that bailouts (along with the secondary market) are why appraisers are seen as pests rather than as symbiotic helpers in the mortgage world. I guess we’ll all see how high this clock can go:

  2. Avatar Glenn says:

    “appraisers are the last line of defense for fraud.” Who happen to be thrown Into the mix of hungry entrepreneurial players (Commissioned Salespersons) who get a large piece of the transaction, and enjoy 75% less real estate training, experience, and limited liability when compared to the Appraiser.

    However, 2019 will change that with the Big Three (Zillow, RedFin and eXP Realty) embracing the “iBuyer” process. The Real Estate Cottage Industry Days are over.

    • Avatar Wayne Courtney says:

      Are you really serious? I have had a real estate broker license for almost 50 years and an appraiser before they began to issue a license. NEVER have I considered myself to be some type of defense for fraud. I most certainly NEVER considered Zillow to have any clue as to real estate values. Where in the world did you come from?

      • Baggins Baggins says:

        You can’t be serious. Appraisers stop fraud all the time simply by adhering to factual data and hopefully complying with ethical standards. The fact we’re here as a check and balance is a natural inhibitor to intentional fraud. Something that would be far less likely to happen with internally controlled individuals or programs. Outside vs inside. I stopped unintentional fraud the other day, multiple parties before me apparently thought a home was sized much larger than it really was. Everyone just copying others work and not verifying. I set the record straight on that one. Happens all the time.

        • Avatar Wayne Courtney says:

          I agree that appraisers provide the facts concerning a parcel of real estate. I do not agree that it is OUR job to stop fraud. If someone hires me to give them “MY”opinion of the value of a particular property that is what I give them. I am NOT employed to police the world. I have always thought that this world would be a much better place if EVERYONE were to mind their own business!

          • Avatar Jack Of All Trades says:

            I agree Wayne you just can’t make chicken salad with chicken sh**, appraisers being the last line defense is like having a pimple on your ask after your arms been torn off, lest we forget about all the scammers out there? Constantly dealing with them on a daily basis?

            • Avatar Wayne Courtney says:

              I agree! You will notice that there is some dude that gives the thumb down vote for every post that I make. This is the same dude that thinks that Donald Trump is responsible for a 500 point drop in the Dow. Some folks are just wired different! So pitiful to be them!

              • Avatar Jack Of All Trades says:

                Probably some amc troll, educator, coach or a AI member, I also got the thumbs Down.

              • Avatar don says:

                I agree with Wayne,

                I also was an appraiser for 57 years and a broker for 48. As many appraisers help the deal or not, that what keeps many in business. Appraisers didn’t used to be licensed and one of the largest divisions of NAR was the Institute whose members were Brokers. All groups have crooks, dishonesty is a personality disorder not a professional trait.

                Realtors are among the ??? are shoe salesmen are the ??? When an agent sells a house, the transaction stays in the neighborhood, and is remembered. When a shoe is sold no one remembers which store, let alone who was the sales M-Lady.

                A lot of appraisers don’t fully understand the sales process as adapted to MLS or any other process.

  3. Avatar chris says:

    They hate us!, Always have and always will! With all the over sold properties I have appraised this year, some upwards of $70,000, several as a matter of fact, most $30,000, cause we all know that is how the realtor gets the listing, and then their EGO comes into play, I feel like I am the most despised person in the world. They love and hate us, but all it takes is 1 deal gone wrong !

  4. Baggins Baggins says:

    We provide one thing for ordering companies but are held to an entirely different standard wherever the loans eventually end up. This industry wide shift away from safe practices is related to fractional reserve lending and the lack of available in-house loan opportunities. Because most companies offload the loan package to investors (usually via gse’s), and nobody ever goes to jail or gets in trouble personally for lending fraud, lending has become an unchecked free for all. It’s a miracle investors even buy these products, but the bail ins are written in these days, so the wheels grind on.

  5. Avatar Wayne Courtney says:

    You live in a remote part of West Texas and you are having a heart attack. The doctor says $25,000. for your treatment. No matter to me, you can check around and may find a cheaper price.

    You live in the United States and you need an appraisal for whatever purpose the appraiser says $750.00. and No matter to me, you can check around and may find a cheaper price!  Set YOUR price… The AMC says “we have an assignment” I say ok go and do it..they say but “we are not appraisers” Sucks for you!

  6. Avatar Wayne Courtney says:

    Just for your information the government is about to spend a lot of your tax dollars to do the 2020 census. They are hiring anybody that is blind, crippled or crazy to do this job. They are paying about $15.00 per hour for most places. From what I can tell, you can work part time or full time. This may be of interest to some appraisers who are just getting started or those who are sucking up to AMC’s!


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The Last Line of Defense

by Jonathan Miller time to read: 1 min