DEAR HUD… What’s Your End Game?
Dear HUD, recently, within the past year or so, you have been on a crusade to prove discrimination and racism in the appraisal process. Your actions haven’t gone unnoticed by many within the appraisal profession as well as outside it. It’s become clear that you are the go to organization for complaints. Ok. Please read this in its entirety and see my thoughts at the end before making a judgement.
The reason I am writing you this letter is for a couple of reasons. First and foremost, I am writing this letter to ask you what your TRUE intentions are in all of these investigations? What is it that you genuinely seek to determine, and what are you trying to prove?
Secondly, I wrote this to ask some other questions. My main question is this.. WHY is it that HUD, when they get a complaint from someone alleging discrimination, immediately contacts the Appraiser and asks them if they would consider a monetary settlement before any investigation is done to prove guilt or innocence? I don’t know about you, but to me, this sounds like some episode from the Sopranos, and the first thing that comes to mind for me is the word extortion. Why would HUD ask for a settlement before an investigation has proven the guilt or innocence of the Appraiser? Would you mind explaining this to me? I ask because I have been privy to information that, indeed, this has happened multiple times. Why is it that when an Appraiser refuses a settlement, they are then sent a letter in detail asking for ALL APPRAISALS done in specific areas by the Appraiser from 6 months to 1 year prior to the complaint? What exactly are you trying to find here dear HUD, and what are you doing with all this confidential information for clients where you dear HUD are not named as the client? What’s your end game here? Where does privacy end for you to be able to gain all this information? Who gave you the rights to this? The lenders? Dear HUD, did you subpoena this through the courts?
Now that I asked my questions, I want to get into this more. I understand what has transpired over the past year. I know that many minority homeowners believe that Appraisers are purposefully appraising homes with racial ethnicity involved in their valuations, which is totally against the Uniform Standards of Professional Appraisal Practice or USPAP and all State laws. This came about after a story in Jacksonville, FL, that was put all over social media where a homeowner of a mixed-race family thought they were being discriminated against due to an appraisal that didn’t meet the pre-determined value of their home. I also understand that NONE of the information other than that of the borrower was made available to the public, and it’s still not known to this day if the second appraisal that came in much higher was the faulty one. Where is this information? Where are the appraisal reports? Where are the reviews of these reports? As it is well known and documented, the borrower is a lawyer for a large data gathering company specializing in AVMS (Automated Valuation Models) and a company pushing itself to gain more market strength with its products. So again, I ask… Where is the data? Has anyone looked into the lenders and the AMCs to find out what their roles were? Certainly not. Why would you do such an obvious thing?
There have been many other claims of racial bias in appraisals since this very first story went viral. Appraisers have been named; however, no further information has been put out to the public. Why is that? Months and months have gone by, and from what I understand, HUD has 100 days to investigate; however, those 100 days have passed with no one being found guilty or innocent. So again. What is the goal here? What are you trying to prove? What are you waiting for?
Recently HUD developed the PAVE task force made up of government entities. Upon reviewing that list of entities, only one entity out of 14 understands and knows how the appraisal profession works, and that would be the ASC or the Appraisal Subcommittee. So we now have 13 other entities that have no idea even how an appraisal is conducted, making decisions on the future of the appraisal profession. How in the world does this even make sense? This is like asking a bunch of 15-year-old kids to explain to you how to change a head gasket on a car with 0 training. I understand it’s a government-run task force; however, you once again have already made it almost impossible for the appraisal profession to be able to add any value to the discussion. 13 of the 14 entities have ZERO clue how to develop an appraisal, know how to select comparable sales, develop an opinion and well have zero idea how to come up with the highest and best use analysis of the property, yet this is going to solve all the issues? I laugh as well as most of you as well.
I was recently on the HUD webinar that had representatives from HUD and Zillow. Yes, Zillow is the algorithm that every homeowner thinks is set in stone. I was so disappointed with the lack of knowledge and information that the panelists had to work with. I was disappointed that there were no appraiser-related organizations nor appraisers on this panel to discuss. I was disappointed that the panel took Dr Andre Perry’s, Brookings institute study as fact when it has been proven to be flawed based on tax assessor and Zillow data rather than actual Appraiser data. I was disappointed that Appraisers working hard for lenders and borrowers could not present any discussion or counterarguments across this country. Most of all.. I was disappointed with the absolute lack of knowledge about the appraisal profession. What I saw was a well-thought-out, planned, and agenda-driven webinar.
Dear HUD, let me let you in on some things here. While you all are barking up that same tree, you fail to sniff out the other issues — the issues that resulted with the implementation of HVCC and then Dodd-Frank. See, you also need to be looking at the current system and how it just doesn’t work. Yes, the design of AMCs and how they may be part of this issue. I’m not saying they are the reason for it, but you may sniff out some details if you look close enough. Details like this: The AMC doesn’t choose the most experienced Appraiser but a cheaper one, one that may be only licensed one year instead of a 15-year Appraiser. How AMCs developed their own rules for Appraisers to follow, how they will charge a homeowner $1000 for an appraisal but pay an Appraiser $400 of that, how the AMC dictates what happens, how they would instead make $25 more than assigning the order to an Appraiser who lives in the area.. These issues have been going on for years but apparently, a blind eye has been turned, and of course, it’s always the appraiser’s fault. Y’all think that because Dodd-Frank became law that there is no way in the world that there could be any shenanigans happening? Here is a hint, I was dropped by 3 AMCs and their lenders because I DIDN’T hit their number. Again. Stop barking up the wrong tree. You won’t find the truth.
Before I close out here, I want to make it clear to everyone out there. While I can’t with absolute certainly state that the claims made are false with no merit and that maybe there were some appraisals conducted badly, it is up to HUD to start being more transparent. Discrimination and racism have NO part in the appraisal profession nor any part of putting a value on a home. Appraisers are to remain unbiased, and the color of one’s skin, ethnicity, and more should never be considered in a value. I myself will never consider any of these in my appraisals period. While many will say otherwise, Appraisers are Not the enemy here. Appraisers give their OPINION of the value of a home-based on their data, training, and expertise in their local market. However, HUD, the Pave task force, and others must take the time to learn how an appraisal is conducted, how it is performed, how it is developed, and how national and state laws apply. If they fail to learn any of this, then they have failed the public trust. They have failed to do their jobs correctly and failed to obtain as much information as possible.
In closing, dear HUD, you have an obligation to ALL Americans, no matter what race or creed, gender, age, religion or sexuality. The end goal and what’s expected here is that HUD and Appraisers protect the public trust. So what are you going to do? Are you going to continue to ask for money, scare Appraisers into your path of deception or do the right thing? Just know that in the end the truth always comes out. Anything short of the truth can make you lose credibility. What’s your truth HUD?