Environmental Issues Notice to Appraisers
Response to LRES email concerning appraiser’s responsibility regarding environmental issues
Fellow Appraisers,
Have you asked yourself WHY a few more of the larger regional AMCs are joining organizations like REVAA?
In my opinion, it is because they and their clients (usually GSE lenders) KNOW that they are not truly compliant with Dodd-Frank’s C&R requirement.
Despite disclaimers or advisories like this, they also know that the bulk of their work products are ‘probably not compliant’ with USPAP. Notices like this don’t normally get set out until ‘after the fact’ issues arise.
REVAA recently helped coerce the State of Virginia (through threat of litigation) into issuing an AMC license to a large firm that had been practicing without a license, and which had a ‘tainted’ reputation at best in the SE United States.
They also helped limit the damage to a minor wrist slap when the State of Louisiana recently brought suit to enforce C&R fees against a large AMC down there.
It is NOT REVAA’s fault! They are providing a service for which there is a demand. THAT “demand” is the one sought by AMCs to help them continue unfettered abuse of appraisers, while pretending to conform to C&R requirements and other AMC regulatory burdens.
I sent the following to LRES on receipt of a generic email notice (see below) from them concerning appraiser’s responsibility for reporting environmental issues impact. I’ve never actually done a job for them that I can recall because the fees offered are usually from ½ to 1/10th of what I consider to be “reasonable” given assignment complexities. I DO stay on their list in order to be aware of what is going on.
For example, they now post proudly on their website that they are new members of REVAA. I personally read & interpret that to mean “This is a firm that is telling me up front, that they would prefer to hire industry advocates than to negotiate with appraisers directly, OR to seek honest C&R fee input.”
I have offered to discuss C&R with them, but I’m not naïve enough to think they will do so openly or honestly. What I DO expect, is that they will follow the model of other AMCs in suppressing fees paid.
The only real question though is what, if anything, will appraisers do about this ongoing bulk notice “compliance” trend?
Their site is http://lres.com.
Reply to LRES Email Notice sent on 02/05/2016
Gentlemen, this is among the BEST cautions I have ever known you folks to put out. It is encouraging. However compliance will depend more on your own internal efforts than on any appraiser. You ARE aware that the Federal Government and ASC / FFIEC & CFPB see “virtually no separation space” between the regulated lender, and their AMC. Similarly, positive step that it is, this “notice” will not assure compliance unless appraisers are 1. paid a ‘reasonable’ fee (your fees are generally NOT reasonable), and 2. that they are given adequate time to do the research. For example, take the Porter Ranch issue going on right now. How many even know about it? How many are ALREADY BEING TOLD to just “assume” their way around it? I’m on top of this specific issue, but on a specific appraisal assignment I’d still have to spend several hours investigating AND DOCUMENTING the impact on any given property appraisal.
We have many issues facing us. I’d like to speak to your senior executives some time about (trying to) implement a true ‘cost plus’ pricing system…and not just the fantasy systems being promoted or supported by REVAA and MBA.
Respectfully,
Mike Ford, VP/Chairman NAPRC AGA OPEIU/ AFL-CIO (714) 366 9404
The original LRES email copy I received is below.
Dear LRES Corporation Approved Vendor,
LRES relies on our business partners to monitor local environmental issues that could impact the analysis and valuation of real property in products ordered by LRES. We depend on your expertise in your respective areas to ensure that any issues are properly disclosed, reported, analyzed and evaluated in the products that are delivered back to LRES.
As an approved business partner, LRES requires that you:
- Maintain an active list of environmental issues in your markets and areas.
- Notify LRES prior to conducting work on a file with any environmental issues that may impact the subject property. Only proceed with work on the file when approval is given by LRES.
- Be aware and have the required knowledge and competence to complete the assignment that you have accepted.
- Provide an adequate disclosure of the issue(s), include comparable sales and listings that are impacted by the same situation or;
- Ensure that sufficient commentary is included to indicating reason if non-impact. (E.g., “Typical marketing time averages 120 days and XYZ environmental issue occurred on 01/01/01 therefore adequate time has not elapsed for a market reaction to this issue.”
- Ensure that the report provides clear requirements for testing and third party verification of the environmental issues (if applicable).
A useful resource in identifying environmentally impacted areas is the EPA website. You can search your state by clicking on this link.
Sincerely,LRES Corporation
If you have any questions regarding this message please contact us.
765 The City Drive South, Suite 300
Orange, CA 92868
www.lres.com
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The only real question though is what, if anything, will appraisers do about this ongoing bulk notice “compliance” trend?
Mike, here is my attempt to answer your question. Approximately 3% of the licensed/certified appraisers are moving out of this occupation each year for a variety of reasons. I believe that Appraisal Management Companies are one prominent reason many are leaving. The study conducted by the TX Real Estate Research Center concluded that 1/4 of appraisers refused to work with any AMC. The U.S. Valuation Profession Fact Sheet – December 2015 indicates a current total of 76,800 active appraisers with 31% being residential appraisers.
Based on this information it appears to me that the number of appraisers available to provide the massive profits for the AMCs are diminishing. Of course it is not just the AMC problem. The abuse is handed down by Fannie, Freddie, FHA, VA, etc. When you add to these AMC problems all of the additional parasites sucking on this occupation there is no wonder that our numbers continue to decrease. As an example consider all of the various appraisal organizations seeking membership dues, the subscription fees to newsletters, the Expos, etc. Because of all these parasites I believe the state should issue each of us a Flea Collar with our certification!
Several valid points Wayne. Wow, we are slightly lower in numbers than I thought (I had us at 80,000); near enough I suppose. I’m encouraged that so many are refusing low fee, AMC work but even that is not the solution anymore.
Like the MERS super virus plaguing hospitals today, the AMC business model is already morphing into something even more insidious. The new semi automated; bank “overseen” but AMC hosted automated management systems. Look at First American’s Model. These are coupled with a variety of ‘portal’ systems and other unique delivery systems that are also quite capable of stripping away whatever explanatory data an appraisal has, and forwarding only the value summaries to those making bulk securities purchasing decisions.
Anonymity is the key. Generic product advertising for the genre already suggests it is also being offered to enable lenders to pick there own selected appraiser ‘pool’. If orders suddenly stop, who does the appraiser contact to find out if there is a perceived problem with their work?
The last time the federal regulators looked at our banking system from top to bottom was before FIRREA pre 1989. Nearly 27 years ago. Even after TARP, no objective review was undertaken. Merely a series of stop gap “fixes” that have left it more screwed u than it was before the collapse and TARP! LOTS of money made by politicians though.
It is time to go back to FIRREA and start all over again. FIRREA II should be an honest analysis with the needs of ALL interested participants are considered; and the interests of American Taxpayers & public are put above all else. Somewhere in the process recognize whether the federal government still believes appraisers are needed. If so, then let’s have meaningful rules that are not subject to the ever changing whims of industry every six months; and other parasitic influences.
Wayne, I agree re fees but what is the alternative? No peer organizations at all? My Guild operates with about as low overhead as one can get. We have only two paid staffers. CaCAP operates with even less. Its 100% volunteer staffed.
The really big organizations have high dues for two reasons. (1) to pay their over priced lobbyists; and (2) operate their “other” appraisal related businesses. It would be nice if they would spend some time and effort to preserve the profession for ALL rather than a select few.
I thought something wasn’t right when I had to swim through the waste chemical/slurry pit to access the home. Thankfully the home owner had a semi clean towel for me. I couldn’t hardly blame her for the less than clean condition as she has only one eye. Something about the water and chemicals. I‘m not sure exactly what she said as I wasn’t paying much attention. I was trying to determine the source of an extremely foul odor! I finally asked her. She indicated that the slaughter house that adjoins her property discards the carcasses in the pond that they both share which it also the drinking/bathing water supply. It is nice to see property owners share and get along. She said she hasn’t had to feed her dogs in a few years. But she says that she has to replace them a lot more often as they just don’t seem to last as long. Go figure, right? I also noticed that the public gas supply was padlocked in the off position. She said that they don’t use it because they can bleed enough methane to heat and cook with by hooking up a hose to the water faucet and cracking it open just a little bit and then connect the other end to the heater or the stove. After inspecting this home I have decided to appraise it as a ”Green” home due to the many energy saving attributes associated with this property.
Thank you for the continued orders, Martin
Environmental Issues Expert
Corporation Approved Vendor
P.S. I wanted to thank you for the link to the EPA site. I was finally able to convince my brother-in-law that his wife didn’t cheat on him. That their kids were all the color of burnt toast with a little green tinge because his trailer is located on a super fund toxic waste site. Stupid, stupid, stupid!! To put it bluntly when his parents named him “dip stick” they were a lot wiser than people gave them credit for at the time.
come on mike, corelogic now owns 1000% of rels. be prepared for amczillo. they bought one of my favorite little amcs. of course the fees went down. nothing unusual about this request, they want photos of the co & smoke detectors also. dem short form, check the boxes appraisal, sure are looking like the narratives they were supposed to replace.
Tom, tongue in cheek noted.
The real bad trend example is the one at http://appraisersblogs.com/pace-pro-form-beware-appraisers
Where First American ‘just wants a little old reconciliation’ of “data sets”, and oh yeah, appraiser must toss in a VALUE there as well! IF the appraiser thinks just maybe a teensy bit more work is required then they are certainly “welcome” to do so.
All for $70 BUCKS! In my state we don’t care what euphemism you label it with. Having an appraiser provide a value is an appraisal. They can call this a “proprietary report” all they want, but it does not allow them to side step prohibitions against appraisers providing misleading reports; OR the requirement that AMCs have to also assure that is not happening. I suspect THIS particular form is so misleading that it would get it’s author in trouble even if their only training had been as a fast food clerk.
My personal opinion is that use of this form by an appraiser without also doing ALL the things required to develop and report an appraisal LEGALLY, goes far beyond being an encouragement to prepare a merely ‘misleading’ report.
$70 doesn’t even pay for the appraisers time to write all the required disclaimers; which would STILL not protect them! Go ahead! Tell me THIS is a customary or reasonable fee for an appraiser to develop a professional opinion and provide it in a written report.
Oh, and don’t forget to note the relationship between the owner of the software company that produced the form, and the “Mortgage Solutions” provider. I could have sworn they used to be just a simple title insurance company.
That this type of “service” can even be advertised without causing a major investigation into Dodd Frank compliance and FIRREA adherence should have ALL appraisers up in arms!
No, you & I do NOT have to do this, however we DO lose real appraisal work because of it….and the integrity of our profession.