The CFPB is reviewing bias in Automated Valuation Models (AVMs). The proposed rules are a joint effort by the Consumer Financial Protection Bureau, the Office of the Controller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration and the Federal Housing Finance Agency. These agencies are concerned AVMs may reflect bias in design and function. The mathematical models rely on biased data resulting in inaccurate valuations. Basically the agencies are stating historical data going back to redlining is built into these models and do not reflect current market data. Remember markets are not static and are...
On February 22, 2022, Maxine Waters sent a letter to HUD Secretary Marcia Fudge, TAF, ASC and AI regarding ongoing appraisal bias and discrimination. She is calling on the federal regulators and AI to investigate appraisers’ misconduct and potential illegal discrimination. She will also be introducing legislation to address ongoing discrimination. Maxine Waters’ letter “highlights longstanding racial inequities plaguing America’s home valuation system”. The letter highlights longstanding racial inequities plaguing America’s home valuation system, particularly in Black-majority communities and other communities of color. To illuminate the severity of this issue, Chairwoman Waters references an email recently sent by an appraiser...
SEE the differences between the THREE versions of the 1004 reports, what I euphemistically call “flavors.” Appraisers, recent watercooler discussions by appraisers focus on the new ‘desktop’ appraisals many will be requested to do. Now that the GSE’s have “formally” approved non-appraiser-inspected reports for first mortgage lending (or will very soon – not sure of the exact effective date), you may want to actually SEE the differences between the THREE versions of the 1004 reports, what I euphemistically call “flavors.” I spent a number of hours at the end of January reviewing our current ‘full’ 1004 form, and the new...
As Real Estate Appraisers, we are encountering an assault on our profession from the GSE’s with the hybrid appraisal reports, the rollout of the new desktop product and with appraisal waivers. These junk reports and the waivers continue to undermine the public trust in our industry and leave the appraisers exposed to great risk and the consumers left holding the bag if their mortgage goes south. This impacts not just us, but the Real Estate profession as a whole, because if the public loses trust in the industry, we will all lose, not just the appraisers. As appraisers, we need...
I can and will decline to do any of these Catch-22 Fraud facilitating misleading products promoted by a GSE… There are many legitimate times and reasons a desktop appraisal may be performed. In every single one of them, it is assignment specific based on the assignment specific needs of the client with a mutually agreed upon scope of work between the client and the appraiser. They also include a scope of work decided upon and explained in the appraiser’s own words. Any relevant extraordinary assumptions and limiting conditions dictated by the nature and use of the assignment are able to...
Why is the ASB proposing to remove the definition of Personal Inspection? Several days ago, an appraiser posted the following comment which we have decided to publish as a free-standing post because we believe it deserves attention: Amazingly, while these are horrible – everyone seems to miss the real issue that will hit us all in 2023. As of 2023, if the ASB gets its way in a few weeks, the word “inspection” or “personal inspection” will no longer be defined in USPAP. That means they don’t even have to play this game. “Desktop” appraisal is just a stopgap until...
Hybrid Appraisals were tested and failed. So what does Fannie Mae do? Let’s call them Desktops with third party inspectors. Fannie Mae has announced they will soon start accepting Desktop Appraisals. The appraiser does not inspect the property; however an interior floor plan including walls is required. This in itself is over and above what most appraisers typically provide. We understand Fannie Mae’s decision is based on risk; however, risk is not part of an Appraiser’s analysis under USPAP. Will State Appraisal Boards look the other way for USPAP compliance? How will an Appraiser who does not inspect the property...
Are desktop appraisals with third-party inspectors protecting the public, or are these products about to destroy the very profession I love so much. The Uniform Standards Professional of Appraisal Practice (USPAP) are the key to maintaining public trust in real estate transactions. USPAP is pretty much the equivalent to the Bible, but it MUST be followed for appraisers. Created by the Appraisal Foundation, USPAP set forth the guidelines for how appraisers should perform their work. By following these standards, appraisers ensure that they act in a professional and unbiased manner. To expand, even more, USPAP states, “While USPAP does not...
Scofflaw U.S. Agency Taps States For Its Backchannel Budget VENTURA, Calif. (February 4, 2022) – History is replete with cautionary tales about federal government enterprises with unchecked funding sources – that is, those outside the annual congressional appropriations process. One alternately funded enterprise was nicknamed “The Little Green House on ‘K’ Street.” Harry Daugherty, President Harding’s attorney general, set up the organization to accomplish ad hoc goals. It became a den of corruption that led to the Teapot Dome scandal. A half-century later, H. R. “Bob” Haldeman, President Nixon’s chief of staff, set up a similar off-the-books enterprise called the...
Fannie Mae has decided to make at least 2 significant changes… The New Year is here and along with that comes change. The appraisal industry and the appraisal profession is no exception to this. Change is something we should embrace provided that the change is for the betterment of those effected by the change. Before we make a change we need to identify what we are trying to accomplish and will the purposed changes achieve the desired results and is this the best way to accomplish our objective. I am not sure that we have identified the problem that we...
