An Extraordinary Year for Appraisers
Some thoughts about what we learned from 2018 to apply to 2019:
- We have always been our own worst enemy as evidenced by the behavior of AI National who kept thinking up initiatives for its members without asking for membership feedback – remember this when their “taking” initiative is attempted in 2019.
- Through Appraiserfest and a vibrant appraisal coalition network, we are learning to fend for ourselves and find we all actually like each other.
- State level political action was the battleground as AI National’s Scott DeBiasio continued to work hard for AI National to further devalue our profession with evaluations.
- Regulators and the GSEs pushed hard to normalize appraisal waivers or push wildly inaccurate and inefficient appraisal replacements like AVMs and hybrid reports, viewing us as about the same as obsolete television repairmen. Their irrational logic that ignores quality damage completely, making me wonder if this is being done at the behest of the Corelogic and other data monopolies who have a big lobbying presence.
Remember that appraisers are here as the last line of defense to the consumer and to the taxpayer, yet we have a limited voice. Our progress for more transparency in 2017 & 2018 showed us we could have more of a voice. In 2019, we will continue to more effectively press the quality concerns that are being driven into the ground by most existing institutions after moral hazard was established in all the 2008 bailouts.
President & CEO at Miller Samuel Inc.
Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.
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Image credit flickr - Tim Green
Johnathon, ultimately I think appraisal unity is going to be needed if we are all to take on the adverse issues affecting us. That includes AI. They still have a large number of honest, & competent members. I think the rest of us will have to let AI take care of AI issues. I’m not averse to butting heads with them on specific issues when necessary but alienating them rather than seeking to expand cooperative areas may not be the best approach for 2019. We had many MAIs and SRAs at Appraiserfest too. Hands of friendship were extended on both sides.
Lenders and regulators ignoring the risks of so-called alternative SUBSTANDARD methods and approaches are certainly influenced by the false claims of accuracy and presumed expertise of CL in the analysis of data, but CoreLogic isn’t the worst of the culprits. Merely one of the most prolific. Like a hydra of mythology. Powerful, but not particularly bright.
MISMO is our biggest threat. Following that, TAFs willingness to adopt rules, language and interpretations for eMISMO Members benefit is. Next comes AARO – an organization that has no legitimate business to exist but which undermines USPAP by backroom unofficial regulatory policy setting, circumventing states legislations. Appraisers need to focus their attention there. MISMO has published their goal of fully automated loan processing (including appraisals) in their collaborative talking points memo which I’ve previously published in several forums including here.
They have published a desire to 1st END hybrids (presumably after they have served their purpose of numbing appraisers; the public and regulators to the degradation of appraisal integrity and requirements for credibility. Next, they have stated they first need commercial appraisals graphs and charts eliminated (because data mining them is not practical yet) so that they too can be replaced by automation. Lastly, they have cited the ultimate goals of complete elimination of appraisal as part of their fully automated loan processing objectives.
What started as a worthy objective to assure better communication throughout the loan process has morphed into a monster that seeks to eliminate all the necessary and long accepted checks and balances to assure mortgage market stability.
I’m also willing to bet a lot of taxpayers and consumers are unaware that their tax protection laws and regulations have been eroded. Where in rare instances previously, a borrower might be asked for a copy of their tax return most loan applications today include signing an authorization for release of electronic tax return data direct from IRS to the lender for income verification. Previously, third-party disclosures by IRS for any purpose required written notification to the taxpayer that had happened. It’s still a pretty big deal among IRS agents and their superiors today. It makes me wonder how MISMO managed to circumvent this. Probably tied to the politically driven financial legislative changes being sought to strip away consumer protection and financial regulatory safeguards.
Serious privacy issues aside, such direct electronic reporting of return summaries only report adjusted taxable net income rather than actual net income. They are not the same. Asset depreciation and other deductions reduce tax obligations without necessarily reducing actual net income. Consumers have surrendered rights to privacy though regulatory agencies have finally latched on to a method of preventing one form of falsified borrower financial reporting by mortgage “loan officers” and brokers.
In fact, one has to wonder what the purpose of a correspondent loan officer or loan broker will be going into the future. If not to ‘package’ or sanitize borrower profiles, what purpose will they serve in the future? Mortgage opportunity outreach and advertising? That actually can be done more efficiently online by computerized lending.
There’s a certain irony between the MISMO intended goal to eliminate appraisers and their actually accomplished achievement of eliminating the benefits of brokered loans, and loan brokers.
In any case, our work as appraiser & appraisal issue advocates is certainly cut out for us all in 2019.
Setting aside the issue with the AI for a moment, a much larger issue to me is the willingness of appraisers to allow just about anyone to push them around. One need only to read the post on The Appraisers Forum, and on Facebook to get what I mean. Too me, the appraisal report is MY WORK. It does not belong to anyone else. It is “For Use” by the client and intended user. But, as long as I have followed the scope of work by VA, FHA or whatever entity or client that has hired me, I will not, on a whim, or to placate some phone monkey, administrative person, or “reviewer” that has no license or qualifications, tell me how to write a report. Yes, I know, the Scope of work can be an ongoing process, but that depends on whether or not I agree with it. If the client wants changes, they better be in the agreed scope of work, VA, FHA or secondary market requirements. And, just because “Fly By Night” mortgage company gets a copy of my appraisal, does not make them my client or an intended user of my report.
As to the AI. All I will say is I do not belong to any National Appraisal Organization. Don’t need them. I have always been a “Lone Wolf” in this business. I do belong to a state coalition, and am a founding member. Even with that I sometimes ask myself why. I did 20 years in the U.S. Navy and retired as a Chief Petty Officer. I would have stayed for 10 more years but the CNO, Admiral Zumwalt started to screw that up by allowing a diminution of the dress code, personal looks and actions, and I said Adios to that. Since then I have worked briefly for real estate companies and was at one time a District Director of a Franchise of the Century 21 system. When they started messing with that and selling off the system, I said goodbye to that as well.
State and local groups are the way I see appraisers maybe finding a voice. I would be glad to be part of that.
Concur re being pushed around Don. Regrettably, many appraisers simply don’t have the confidence to push back when asked for some unnecessary or foolish revision. Some continue to say “Just do it and move on to the next job,” not realizing doing so only encourages the ex-Taco Bell employee AMC clerk or ‘reviewer’ to continue violating appraiser independence rules.
I’m glad you joined and support your state coalition. It’s a necessary step for all of us though many of the policies and laws originate at the federal level and will have to be resolved there. State coalitions have limited effectiveness on changing those. That’s where national organizations become necessary despite your (and many others) independence philosophy.
It’s not that different than what our original 13 colonies had to overcome. Thirteen ‘independent’ colonies would never have defeated the British and we’d all still be speaking with funny accents. Fortunately, 13 UNITED colonies or states joined together for a common cause. We’d love to have you as a member Don (AGA), but ASA has also proven themselves to be focused & capable at preserving appraisal integrity.
Which don, Don.
Independent Appraisers start at the appraiser! Appraisers are responsible for most of the situations this blurb is complaining about. More appraisers have been caught for helping somebody be a krook than the Hamburger helper forced him into being one. Appraisers don’t have to be professionals but being merely a technician with no published ethics is hard to justify.
Starting each and every job with a engagement letter would be a start. Identifying your client is very important in California.
Collecting money from an attorney is difficult when you share a client!
Identifying the job to be done is critical, sometimes the appraisers job is in clarifying the problem.
Do we want our future to be isolated to single Payer situations Or WHAT?