Michelle you are aware are you not that this is a REAL ESTATE  appraisers blog?

Neither FIRREA nor USPAP address imagined life of loan issues or ‘value added’ concepts. If YOU look at an ordinary appraisal assignment it doesn’t ask what the value of the security will be in the future. We leave that to the fortune tellers and other economists that so consistently predict major economic national disasters in time to prevent them. Some, though not most have even achieved 20/20 hindsight!

Fortune telling is the realm of BV analysts or accounting theoreticians and as it is applied to individual Real Estate (which is what WE appraise) I have not in thirty + years seen one instance when it was anything other than …wait for it…”BULLSHIT!”

Maybe a little more common sense and willingness to call out when the Emperor is wearing no clothes would eliminate a lot of the misdirection and deception being bandied about by special interests these days.

What I do notice as having been a common thread over the past thirty +- years  is that people trying to convince me that water aimed at my leg by some stray canine is really rainfall fall back on velvet gloved criticism in the form of meaningless euphemisms. Those who resist are luddites. Backwards – rather than progressive. Stuck in the past. Lacking education. Simple.

“This is a new accounting or auditing provision that moves the valuation cheese to a new dept. with most lenders and with that, a lot of other changes may happen. Look down and forward for direction instead of up from the weeds and backwards”  No Michelle. It’s a pile of steaming pony loaf!

Michelle the biggest problem is that in the use of the terms “appraisal and appraiser” right now we no longer can tell if a person is referring to a Real Estate Appraiser or to a Business Valuation expert. In the latter, are they they speaking as a BV expert or a CPA? When TAF blurred the distinctions they created greater rather than less confusion.

The life of the loan has absolutely nothing to do with the market value of the property today. Nothing. DCF is rarely used (legitimately anyway) for SFR appraisals (you cited 1004’s so my assumption is we are talking about SFRs). Market value is at its core a cash or cash equivalency (to the seller) or typical financing terms comparable thereto. Lender returns or expectations have indirect influence on value only to the extent that financing is or is not available, and at what rates. Knowing return expectations won’t say whether a subject is worth $225,000 or $237,500 today.

Lets call “Predictive Valuation” exactly what it is. Bullshit. Blue smoke and chicken bones analysis counched within an aura of math and advanced scientific study and manipulation of statistics that starts off with requiring the personal opinion of the practitioner as to what data to scrub, adjust or eliminate.

The “science based” study of market adjustment starts off with the premise that THEN it is ok for personal experience and opinion to be used to ‘clean up the data’, while personal experience of an appraiser is dismissed out of hand. When economists can accurately forecast all details of the national economy 3, 5 or 7 years out I’ll open my mind a bit more. So far they can’t even truthfully tell us with 20/20 accuracy what happened in the past let alone what will happen in the future.

Michelle, respectfully to you, when ‘predictive valuation’ goes beyond the scope of education and ability of the typical appraiser I will welcome the change. Because then I can focus ALL my attention on contacting consumers that have been manipulated and lied to about LTVs (hence rates, & all related disclosures); their property value and a host of other issues and providing much higher cost EW services for them in court.

Baggs, probably less recourse; lowered standard or no standard alternative products. Need to look into mechanics of how FIBA will work. We need our OWN appraisal regulation / Act passed. Stand alone Bill.

We cant keep trying piecemeal solutions to appraisal issues. We were ALL too slow to get decent items inserted into Choice. Its also too partisan. We’d have been as divided as the legislators are for similar reasons. We MAY have a fair shot at getting it amended downstream though.

(1) let’s stop the AVM/hybrid/evaluation end run first
(2) Get control of the profession back again from states and TAF. TAF is NOT a friend to appraisers or professional appraisal practices. They are riding the fence with their feet in both camps AND willing to change basic principles to remain in existence
(3) In over 29 years they STILL haven’t gotten USPAP right? THEY have allowed trust to be eroded by not standing up to abuses and merely offering restated interpretations of USPAP leading users to think all the crap they are promoting is ok because TAF has conditionally said that technically in can be (but only with provisions no one will be allowed to follow for fees & time allowed /offered).

Oh my, there is just so much to read. Any chance we can somehow get an appraisal fee provision added at this late stage? (per below comments). Was there any mention of reg z and C&R?  What will change for us?

The bill repeals the FDIC’s authority, under the Dodd-Frank Act, to guarantee bank debt during times of severe economic distress.

Each agency must develop a process to allow impacted parties within the private sector to provide input with respect to the development of regulatory proposals containing significant federal mandates.

Subtitle A–Separation of Powers and Liberty Enhancements / (Sec. 717) The bill repeals provisions of the Consumer Financial Protection Act that require courts to defer to determinations by the agency (as converted from the CFPB by this subtitle of the bill) regarding the meaning or interpretation of federal consumer financial law. (C&R penalties possibly a reality then?)

I don’t know, I read through it, and did not once get mention of reg  z, C&R, or appraisers. CFPB really sank this industry with the fictitious safe harbor provisions on C&R. What will happen with that? Can we please get a simple rule that the appraisAL fee must go 100% to the appraisER, and all other parties must have separated fee and fee disclosure? ie; the amc’s, the panel managers and staff, their tech people, just everyone who’s funded from the appraisal fee these days. The free market will sort it all out, if we can get everyone’s hands out of the cookie jar. We’ve got a cost offloading problem, because it seems the entirety of order management costs was all offloaded exclusively on to the appraisal fee! At this point it’s a verifiable fact that with many distributors, the majority of the appraisal fee does not go to the appraisal, or towards what the appraisal should represent, an application of check and balance. Rather, with many distributors, a portion or even the majority of the appraisal fee is distributed to tech organizations, data organizations, management organizations, and somewhere at the end of the line, if there is anything left, the appraiser actually gets some of the appraisal fee.

Reading the (complete text of floor arguments) on both sides they cant get past the partisan rhetoric. It’s too bad because the good provisions of the old and new won’t get fair hearing on their own merit. They ‘ll be buried under obfuscation and outright lies (both sides).

Hopefully we can ALL do better on the  ‘soon to become’ an issue FHFA Working Paper. We are out in front of that issue now and a few related follow up concerns.

H.R.10 – Financial CHOICE Act of 2017

Financial CHOICE Act