And…………………….  Follow up.

Rick, FNMA does not now, nor did the in the past purchase the data up through 2014 that went into CU up until it’s release. There are past articles on this blog about it, but I read and reread their original approved patent application for the CU process.

(1) Not one of the seven software /CU system designers was a licensed appraiser when the program was announced. A couple had expired or no longer active lower level licenses. (January, 2015)

(2) Less than two weeks after the release of the first version of CU FNMA announced that because a majority of appraisers appeared to appraising to line item adjustment “guidelines” that they were discontinuing those guidelines (FNMA Lender Letter February 2015).

(3) FNMA KNOWS by the language of their licensing agreement with lenders requiring unspecified “human review” but not necessarily a review by an appraiser for comparable sales disputes that they have created a built in PROBABILITY of widespread USPAP violations.

(4) CU as originally designed could have been an exceptional tool in the hands of trained and experienced appraisers but perhaps FNMA was aware even then of how easily abused it was.

(5) The current version either has less than one full years data, OR includes all the bad pre 2015 data that FNMA was compiling (data from appraisals adjusted to guidelines rather than reflective of market perceptions). you know…the original so called “peer” data.

(6) The current version also couples with FNMAs own proprietary or adopted  AVM or DAY 1 valuation software. They are not about to admit to Congress that the system is garbage. The Federal Regulators that KNOW the system FNMA is suing, is garbage are also not going to upset the apple cart.

The BEST thing taxpayers can hope for is that FNMA and Freddie be severed from ALL warranties from the U. S. Government.

Its worth going back and reading old blog articles on CU.

RA Im going to be as apolitical but as factual as I know how on this one though most long time readers know my weird beleifs.

The actual collapse of 2009 started under a GOP administration however it was opposing party Senators and House Members that set the policies in motion that brought the system down. HVCC was created by a democratic Attorney General (now a Governor). Under President Obama C&R fees were addressed and a CFPB was created. NEITHER of which had any teeth. We more than any other group in America should understand that one. NOW, two of the only three states that have made meaningful efforts to enforce C&R fees is under lawsuit from FTC Commissioners appointed under a prior administration.

No one side is to blame for any of our appraisal problems. BOTH Sides however either contributed directly, or failed to do anything once bad polices and laws were identified. FIRREA which was the last good finance reform and appraisal legislation passed, has been chipped away at by special interests for over 28 years now. By BOTH SIDES!

Imho Gary Miller is right on this one. We serve ourselves better recognizing historic facts and keeping the political or partisan hyperbole out of it.
I’ve found great appraisers in both parties as well as independents.

He was blessed by being in one of those states that still maintain personal and professional integrity among regulators. There ARE a few left. Unfortunately, there are more than a few that go the other way.

States that have already proven on more than one occasion that they do not understand or even adhere to USPAP themselves are: Minnesota; Maryland, Illinois, Texas (past Boards-may be different now), Oregon (remember the infamous ‘late reports equal USPAP charges? TAF/ASB both say state was wrong. State claims they aren’t wrong until Administrative law judge adjudicates issue-never mind what the creators of USPAP THINK compliance is!) and California.

It would be naive and risky to think it is only these six that are seriously problematic. I’ll be writing an in depth article on this in late August or early September with case file citations.

Mike,

Thanks for the compliment. As to your point the only thing I can see myself doing is education, education, education.

My mentor was 35 years into this business before he retired three years ago, but about 8 years before that he was pulled before the board for something a RE agent was unhappy with. I watched when called in front of the board he was prepared with rapid responses and it seemed like he danced circles around them (to me anyway). I was just in awe of his knowledge and with that they thanked him for his appearance. If I remember correctly 6 months later he was informed it was a closed matter with no action taken against him.

So, again all I can do is be aware, up to date and educate. Hopefully that will carry me through this profession I enjoy so much.

Koma

Kudos Koma! You are absolutely right. The real problem is if one of the self serving loons actually does turn the report into the state. Though you may have done ‘everything right’; in MANY states they’d still find something wrong.

There is NO UNIFORMITY in USPAP comprehension or enforcement among the 57 states and Federal Territorial jurisdictions..

Example; They complain about value; MAYBE you even gridded their alternate comparables intending it to be nothing more than an addendum to an original report. Lender comes back and insists that you need new signature date so they can distinguish “between the two report versions.”. You agree for whatever reason.

Now the state has TWO different reports with two different dates.  Did you disclose in the ‘second report’ signed certification section that you did a prior appraisal merely days before? Most likely not since you never intended this to be anything other than an addendum BUT YOUR STATE REGUALTORS need to justify their existence. Even though the addendum references the original report…it is NOT in the signed certification.

Though they may have little to no appraisal experience outside the state agency, they have been TRAINED to CATCH this exact type of ‘egregious violation’. While it was never part of the complaint to them it is a technical omission that they can hang a $5,000 to $10,000 fine on. Especially if you are certified.

While no significant ‘USPAP violation’ ever took place; and most of your peers would argue NO violation took place, that isn’t how they see it. You find yourself charged with competency, ethics, SR1 and SR 2 violations. To them you have prepared and delivered a report that is ‘deceptive and misleading’.

Sound far fetched? The majority of the more than two dozen cases referred to me in the past year had similarly silly complaints being alleged. Good thing you have E&O because after they tell you to accept the settlement stipulation, and you say no they will pay up to $2,500 of your more than $10,000 in legal defense fees!

Can’t believe a USPAP compliant appraisal review and impartial investigation could go this far astray? What makes you think anyone has done a USPAP compliant review? THEY think they are exempt even when their own state laws require ALL appraisals to be USPAP compliant!

Good luck Rick!

There was a time I’d have tried to talk any serious appraiser out of quitting the business because we cannot afford to keep losing the good people.

Now? How can I in good faith and honesty encourage anyone to stay in this business any longer?

I only do it because at 65 years of age I’ve developed a stubborn streak that will not permit me to allow others to drive me out of my profession.

Why just this afternoon I spotted a whole new army of windmills just begging for a joust.

B, I don’t yammer on too much because you know it might come back (in a lawsuit) to bite you in the arse. You know if they’re not happy their going to try and hit you any way they can. Just saying.

Don’t feed the trolls.  Not that I don’t appreciate a good meal.  But…

Heck yeah Rubin, and having a good quick fire talking point set regarding CU is a helpful conversation tool every time.  ‘You know, why the reports have Q’s and C’s now.’  You break into that conversation by inquiring regarding how often they read appraisal reports.  Then segway into standard peramiters, bracketing and closed sales rules 1-3 within range, and then cinch it all together with mass assimilation of data and master FNMA approval based on blind peer group tracking.  Yep, always a wonderful conversation.  Great tool for taking control of a specific value conversation though.  If I can’t bracket it 1-3 sold, the FNMA CU XML review system will either fail score or hard stop the auto review.  Cash drives the markets, people on credit merely follow that.  Valuation conversations are as easy as direct categorical questions.  So tell me, do you have the hardwoods, granites, 3 car, developed lot, revamped utility like electric, heating systems, plumbing, etc, tell me what’s going on with your home.  People don’t mind getting fair value, just remember to gauge the leniency of the market and talk about that.  In some markets those improvements are necessary just to compete, in other more lenient markets a new linoleum roll and some blow in can make you a star.

Look up.

I have learned a few important lessons in my nearly 60 years on this earth. One thing I’ve learned is that I don’t have to accept every invitation to an argument I receive. Another is not to engage in a fight with a fool because he will drag you down to his level and beat you to death with experience.

Another +1 Appraiser BJC.  Fascinating stuff (rather, shocking).  One thing Id like to note from personal experience with realtors is the fact that maybe 1 in 20 know what CU is.  Just the other week I met with a realtor, one of the rare ones I respect and enjoyed working with, and despite her excellent knowledge of many things real estate, as well as a respect and appreciation for appraisers -the realtor had no idea what CU is!  I sent realtor a bunch of links and said spread the word.  But give it a litmus test you all -make it a point to ask realtors if they know what Collareral Underwriting is.  Again, from my experience Id say 5% (or less).  Back to your point Appraiser BJC -you are 100% correct in the sense the NAR is one of the largest (if not the largest) lobbies in D.C.  They’re surprisungly bigger than Pharma, Oil and Gas, many industries/PACs that you might think were much bigger (nope, NAR “trumps” them all -maybe with the exception of finance?).  Id have to look.  Great post BJC (thanks, Im going to be looking into this!).

Here Here!  Corelogic quite literally tried to ‘patent the valuation process’ a few years back.  Now they’re sweeping up MLS systems nation wide, soon to stake out a non-free market monopoly right there in Colorado.

This article in other words;  10-13% of all deals put together by Realtors in this country are assimilated well over and above existing collateral valuation for their perspective markets.  Aka;  1 in 10 Realtors is assembling fraudulent deals in an attempt to secure a sales commission by defrauding lenders.

Cash drives markets, not credits.  If a buyer wants to best the competition over and above existing collateral value points already clearly defined in the market, they need to;  Bring cash.  Cash contribution sets new highs, not credit.

I’ll go one step further with this as I have researched and that is there is an surprising link between the executives at Fannie Mae, Arch Capital, and CMG Financial and how Fannie approved Arch Capital acquisition of CMG. Now follow me here cause CMG Financial is an approved Mortgage Insurance writer for Fannie, which now Arch has obtained, but surprisingly for the past several years CMG requires all appraisal reports including FHA reports to be uploaded to Fannie UCDP now they hide this in stating a successful SSR is needed for FHA reports prior to FHA ead but this is not so as a typical FHA report will get a hard stop so this is in my opinion executives at the highest level filling CU with all appraisal data because there is not enough appraisal data for conventional loans to accurately give assurances to CU analysis and the appraisal waivers or rep and Warranty relief for appraisals we are now seeing. One step further Arch also provides reinsurance on securitized loans a extra form of risk sharing. Certain Lenders at Fannie Mae’s direction are misappropriating our appraisals of all kinds i.e., conv, fha, usda, etc. into UCDP  for Fannie Mae’s unlawful conversion of our appraisal assignment results to their CU database, all in unjust enrichment for their gain at our expense not just stealing our data but tortiously  interfering with our business relationships in contractural review work. More appraisers and other industry professionals such as realtors need to see CU for more than just Fannie Mae’s face value of stabilizing the market , NO it stabilizes and grows their bottom lines in the secondary market disguised in the primary market as a collateral risk tool. CU is socialistic technology only doing one party any good and it is Fannie Mae’s is the socialistic dictatorship type policies that have destroyed the market before and I predict within 5 more years will crash it once again right before Fannie and Freddie dismantle and combine   Policies in their common securitization platform as part of their joint LLC in Common Securitization Solutions, LLC. We as appraisers do not pay attention to the bigger picture but I urge everyone to research this theirselves and make your own judgement after seeing the facts hidden from the headlines of the future and we as appraisers should call on our realtor friends and encourage them to speak to their boards and the most powerful realty lobbyists in the country to keep Fannie Mae and their destructive policies in the secondary market where they belong and out of our pockets in the primary market.

In the land of the blind the one eyed man is king.

This explains why appraisers agreed to enslavement to Andrew Cuomo.  It also explains how Hitler and Drumpf came to power.

Speaking of metadata, how about Corelogic’s stockpile via .env files through Appraisal Port? How about Corelogic’s backed proprietary databases (for eg, I think ValueQuest, or its like)? For those of you doing mortgage finance work, have you received the call or email stating “Xyz data aggregator says your square footage is wrong, and your comparable analysis should include 121 Main, 122 Main, 143 Oak…”, et. I had to write up a clarification request because some 3rd party, proprietary metadatabase noted my subject property was 600sf larger than my ANSI guideline, first-hand measurements. After some digging I saw that a Realtor had listed my subject 5 years prior to my effective date (while listing my subject as a Rental!). My assignment was for the purchase of said property. I think it was Chase who was buying the loan and sounding the alarm (these emails from my client had red flags, asterisks, high priority, et, noting they needed clarification ASAP). This was a condominium so the Assessor did not report the data. Long story short, the onus was on ME to defend my work. Why wasn’t the realtor who listed this property for rent called? The putz flippantly entered an exaggerated gla/size within their listing. (One of many examples and reasons I don’t embrace any kinship with realtors -yes, there are a few good ones, but they are the exception).

Why doesn’t FNMA share CU? If their goal is to improve the quality of appraisals, share it! I don’t think appraisers’ objectivity would be compromised or predisposed. A shared CU database would help in countless ways. Personally speaking, CU would be (potentially) a great tertiary, supplemental source for discerning condominium GLA for competitive properties.

Im all over the place, but in a nutshell I wanted to give Appraiser BJC a +1. One last thing, do any of you ever feel like responding to a bogus revision/stip with “Hey man, roll the dice on this loan. If you trust your metadata, don’t approve the loan and send my report to the state (here is the state board’s email _____). However, if you trust your expert in the field, quit bothering me with your nonsensical requests for clarification”.

The writing has been on the wall for years now. Im actively searching for a new job. I like to think Im an excellent Residential Appraiser (modest, yet confident in my abilities). Scope creep has removed any semblance of work/life balance. I used to operate a small appraisal firm, but now Im back to kicking bricks as it’s difficult to maintain a decent staff to meet client demand. I have many good clients, but I do have to take some AMC work as they serve-up the brunt of it. Time for me to roll-the-dice on a new gig. An experienced appraiser’s skill-set is no longer valued (for the most part -some clients do reward expertise, but they are the minority). Thank you Dodd-Frank, and  Lord FNMA.

Good luck everyone!
Rick

Retired Appraiser, it is so ironic that you would be the one to post Proverbs 12:15…hmm.

And how did that work out for you?
Proverbs 12:15