‘Clean-Slate’ Laws, Bad Policy Could Dispatch More Felons to Borrowers’ Homes

Clean-Slate Laws, Bad Policy Could Dispatch More Felons to Borrowers Homes. 

The idea of unlicensed individuals being hired off the streets and paid a pittance to video and photograph the interiors of borrowers’ homes, which would include the exact location of valuables and children’s bedrooms, has been unsettling to some. 

An astute real estate broker recognized the name of a Michigan man awaiting sentencing in an armored-car robbery. The latter had been engaged by one of six companies authorized by mortgage giant Fannie Mae to dispatch so-called “data collectors” to borrowers’ homes.

The broker alerted the bank and the National Association of Realtors. New, progressive laws designed to conceal felony convictions from employers, combined with a recent policy decision by Fannie Mae and Freddie Mac that authorizes the use of low-paid, unlicensed “home data collectors” to replace state-licensed appraisers, all but guarantees more such incidents.

In California, state Senate Bill 731 – a so-called clean-slate law – will take effect in July. The law dramatically expands eligibility for those with felony convictions to have their criminal records sealed or expunged, meaning those records can no longer be accessed by potential employers. In New York State, Assembly Speaker Carl Heastie promised to consider a similar clean-slate bill before the end of session in mid-June.

States with broad felony and misdemeanor sealing and expungement, according to the Restoration of Rights Project, are Arizona, Arkansas, Colorado, Illinois, Indiana, Kansas, Massachusetts, Michigan, Nevada, New Hampshire, New Mexico, North Dakota and Washington. Many more states offer what is called “limited felony and misdemeanor relief.”

Vermont has had an expungement process since 2011. It removes arrests or convictions from a person’s criminal record as if it never happened. Opponents of such laws question whether sealing the records of criminal convictions is safe for America’s workplaces.

Combine the trend to seal the records of felons with the push by mortgage giants Fannie Mae and Freddie Mac to replace many of the nation’s 80,000 heavily regulated state-licensed appraisers with a combination of computer algorithms – known as “black box appraisals” – and unlicensed human inspectors called “property data collectors.” The data collection process, according to Fannie Mae, entails a full interior and exterior inspection of the borrower’s home.

In a recent presentation, Veterans Administration Chief Appraiser James Heaslet revealed that one of the six companies recently contracted with Fannie Mae to replace or augment appraisers had engaged an individual with an armed-robbery conviction as a home “videographer.”

Paschal Uchendu, 27, of Mason, Michigan, was reportedly awaiting sentencing and out on bail, having pleaded guilty to bank larceny. He and two other men were facing up to ten years in prison, up to three years of supervised release, and fines in excess of $250,000. Looking to earn a few bucks until his sentencing on March 8, 2023, he was reportedly approved by a company called Class Valuations to enter borrowers’ homes to perform various tasks.

Heaslet, a retired Marine Gunnery Sergeant, is skeptical about the use of non-appraisers to enter homes. “The veteran always comes first,” he said. “The VA is always concerned about the protection of our veterans, about who goes into veterans’ homes.”

As of this writing, the VA only allows licensed or certified appraisers or, where applicable, licensed trainees to perform interior inspections of veterans’ homes. The idea of unlicensed individuals being hired off the streets and paid a pittance to video and photograph the interiors of borrowers’ homes, which would include the exact location of valuables and children’s bedrooms, has been unsettling to some.

Leigh Brown, a real estate broker, video-blogger and coach based in Charlotte, North Carolina, questions whether borrowers should let property data collectors into their homes at all.

“We’re getting these emails that for $50, $60 [or] $75, they’ll pay you to walk into a house [and] do an inspection without a license,” she said. “The data collectors aren’t under a regulatory body. As a consumer, do you want them in your house? They might all have great intentions. They might all be honorable people, but I’m a bit of a skeptic. I just don’t know who they are.”

In the Michigan armored-truck heist, it was reported that a real estate agent in the Grand Rapids area recognized the man’s name from local news accounts and flagged him to the lender and the National Association of Realtors.

“I’m not a fan of heavy regulation, but regulation has its place,” said Brown. “This is crazy. Why in the world are our institutions trying to get rid of certified appraisers? There’s too much power getting consolidated into the hands of big banks.”

John Dingeman, chief appraiser at Class Valuation, LLC, the company that engaged Uchendu, contends the property data collector – called “scanners” internally at his company – had not yet been convicted when his company engaged the man and thus would not have been on any criminal database.

“Class takes these allegations seriously,” he wrote on an appraiser bulletin board, “and we wanted to take the opportunity to provide clarity. We have a standard protocol where all scanners are background-checked. As you are aware, a background check will reveal all convictions. However they will not reveal pending matters. The scanner at hand had a pending criminal matter that was not revealed in the background check. As soon as Class became aware of this matter, the scanner was removed from our panel prior to completing any services.”

According to the Veteran’s Administration, Uchendu had already been convicted in the theft of $1.2 million while being approved to work for the company as a property data collector.

Many business leaders, including those with banks, have applauded the wave of clean-slate laws being passed by the states.

Nan Gibson, executive director of the JPMorgan Chase PolicyCenter, said in written testimony to the New York legislature in early 2022. “By reducing barriers to employment for those with criminal records, we will be able to get more people back to work more quickly.”

The nation’s borrowers, brokers and sidelined appraisers have been less upbeat.

Jeremy Bagott
Image credit flickr - Governor Tom Wolf
Jeremy Bagott

Jeremy Bagott

Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

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8 Responses

  1. Avatar Pat says:

    Classless should be fully exposed for their lackluster business securities.
    What else is being hidden.
    Could it be invoices?

    • Baggins Baggins says:

      One of the nice things about getting away from amc’s was tax time became simpler. Their end of year earnings statements rarely matched up with my internal numbers, even if tediously back dating or forward dating based on either assignment time, invoice submittal, or actual payment date. The numbers were not adding up. This seemed to be a possible benefit, as earnings appeared less, therefore a slightly reduced tax burden. Often my yearly according to the amc was thousands less than actual. Than I thought of auditing risk and what it would mean if these companies continued to consistently under report the actual compensation paid to appraisers. After all, I had actually deposited more than the taxable statements indicated. The lender direct companies I’ve been dealing with tend to have dead on accurate records of compensation paid. Problem solved. This gets really difficult to manage with auto deposit when one is working with a dozen different companies at once. To this day, still preferring and finding increased positive value in dealing with companies whom still mail paper checks.

      Suggesting amc audits. That’s worthy of a topic bump. Thank you.

  2. Chuck Minzenberger on Facebook Chuck Minzenberger on Facebook says:

    A Licensed Appraiser still needs to sign the file, you have to know when all this goes terribly wrong the Appraiser will get blamed, afterall they are responsible for signing off on the data and the data collector. Don’t think this will not happen.

    • Donna Beck on Facebook Donna Beck on Facebook says:

      Chuck Minzenberger if the industry would unite, and not take these desktops, it would send a message.

  3. Avatar Rick D says:

    They (the data collecters) may not be criminals but do they carry liability insurance, have they had any exposure to house construction and building systems and have they been interviewed? Do they have any personal and employment references? Who or what entity oversees their work quality ? I assume the answer to all of these questions is a big NO !

    • Baggins Baggins says:

      Well, the inspectors are sourced from these sort of networks. If you’ve got a pulse, you’re hired. Daily pay, no waiting. It may not appear at first this is on topic and relevant, but I assure you it is. One degree away, within the networks which distribute the work order requests, which these companies fulfill, are also other requests such as the photo takers and simple home inspector services, which the same companies also often fulfill. As those photo and simple inspection services, although they pay far less, are easier lines of work, they don’t need to advertise and solicit to get vendor fulfillment. They have years long waiting lists of desperate poorly qualified people whom spend their entire days picking up $8 per photo request orders and $25-$50 simple home inspection requests which are completed for everything from asset management to insurance for auto home and commercial, and now to include mortgage lending GSE work. Basically the amc’s are subbing qualified appraisers out for the asset manager type and basic insurance type fulfillment instead. Now your appraisal related home inspector (bifurcated PIR) also has additional skills, such as cleaning and winterizing toilets, trash outs, lock changes, serving eviction notices, bi lingual services necessary to work with foreign nationals, being skilled at taking photos of automotive accidents for insurance claims, etc, etc. True story. The things I learned in pursuit of commercial lawn mowing.

      Keyword search terms; Insurance photo taker jobs / field inspection photo gig, etc, etc.
      (read their vendor requirements ‘requirements of the job’ section. Does not appear to require special insurance.)
      There are literally thousands of these, I just picked a few randoms for example purposes. The first link to the property preservation network is the one which is more interesting because that reflects the array of fourth party companies whom pass these various approvals and get the contracts to provide the vendor fulfillment, and then sub out the work to fifty party vendors. (or is that sixth party if the amc then sends to the distributor, whom sends to the boss, whom sends to the workers. I have a headache just thinking about it.) Basically if you are just literate enough to read the add and respond, you’re likely to be hired. I was talking to one guy out of Texas whom was telling me all about how easy it was, to get more lawn mowing and other property related requests than one could handle, how to build a crew and easily bypass most of the oversight requirements. He offered to give me a free ride along just to get started. Imagine that. He loves it when the mower kicks a rock and breaks a window, because then he writes up a work order request for window boarding, easy money. Photos and property inspections on the side if the weather is bad or mowing requests are slow. Runs multiple crews, service for multiple companies. That’s how these things shake out in open networks which do not require licensing. $7 back ground check, instant gig worker status. This is the underside of ‘appraisal modernization’. And that’s why they dress it up and package the sale alongside fictitious racist appraisers slander. Otherwise this is an impossible sale. As if a refinance of ones home is equivalent in responsibility requirements to filing an insurance claim or hiring a guy to mow your lawn. PAREA is going to open the flood gates for the entire body of gig workers to become instant appraisers with equivalent vetting. Couple that with automatic records sealing. Clown world is here.

      In case anyone is interested, this is how record sealing looks.
      Think about this line; “The bill will also prohibit employment and housing discrimination based on the contents of a sealed criminal record.” That means that if Paschal Uchendu wants to be a property inspector again, after sealing, he can be, and everyone here would be guilty of discrimination for even mentioning his past. “As soon as Class became aware of this matter, the scanner was removed from our panel prior to completing any services.” Oh my dear Mr Dingeman, that’s borderline discrimination under these new programs. Be careful what you wish for. I’m not signing my name to anything with a third party inspector, ever. Appraisal management companies, ‘managing’ qualified professional appraisers right out of the picture since 2006.

  4. Retired Appraiser Retired Appraiser says:

    OMG! You mean there is a chance that Rudy, Donald, General Flynn will be inspecting my home in the near future?


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‘Clean-Slate’ Laws, Bad Policy Could Dispatch More Felons to Borrowers’ Homes

by Jeremy Bagott time to read: 4 min