Georgia Fines Clear Value Hybrid Appraiser
So, do you think it’s ok to do bifurcated hybrids?
On January 31, 2018, what appeared to be egregiously deficient Clear Capital “Clear Value” bifurcated hybrids were exposed in AppraisersBlogs. See What IS a “ClearVal Appraisal”?
The properties were in Georgia. The appraisals were performed on a desktop basis by an appraiser in Indiana. Total fee was $250. Out of that $250, AMC Fee was $225, and the Indiana desktop appraiser was paid $25.00. Keep that fee in mind as you read through the attachments.
Two complaints were filed by AGA™. One with the State of Indiana, and one with the State of Georgia. We believe bifurcated hybrids as typically promoted and practiced are inappropriate and should not be permitted to be referred to as appraisals. As promoted, & as a practical matter USPAP compliance despite claims to the contrary is not feasible except as a hypothetical or philosophical argument. These were prime examples.
Indiana responded first. After several calls with their Assistant State Attorney General she determined they lacked the legislative authority in this specific case to do anything. They were clearly interested and concerned about the issues raised, but the specifics of these cases were outside their authority. We should not read anything into their inability to act officially in this specific instance.
The Georgia complaint took a little longer to make and to hear back on (they don’t accept online complaints). A few months ago, we were contacted by one of their investigators for follow up inquiries. He was very thorough and impartial. He had done considerable ‘homework’ prior to contacting us. He was very much aware of the (potential) issues at hand. We were highly impressed at Georgia’s Real Estate Appraisers Board efforts in this matter.
The Georgia Real Estate Appraisers Board notified us of their findings by letter dated 10/30/2019.
Twenty three (23) separate violations of Georgia Real Estate Appraiser requirements were identified by the Board. Some were significant. Some were more administrative in nature. ALL are Georgia requirements and or expectations for appraisers licensed or certified there.
A fine of $2,500 was levied. GREAB did not require proactive public posting of the charges and findings. It’s possible this was part of a negotiated settlement or they may simply have felt the educational / deterrent aspects of the findings were adequately addressed by the fine. I’m redacting the appraisers name here for the same reasons, though I’ve previously listed it. It’s no great effort to find it out, but the name really isn’t important. It is the collective findings of the Board that are important.
The fine levied was 100 times greater than the fee received by the appraiser. In addition to violation of USPAP, several Georgia specific state violations were reported. Those who still consider doing bifurcated hybrids should keep the competency requirements of USPAP in mind.
Anyone doing them is not only undermining their profession, they are risking their license. Anyone doing them in a state where they do not routinely practice is a damn fool.
Due to all the phony hype about quality and accuracy and being done by ‘trained inspectors’ it’s going to take a while to demonstrate to state regulators how egregiously bad these ‘products’ are. ALL of them. Including 1004P.
Some states are still swayed by the sophist arguments that it is the appraiser rather than the format that determines USPAP compliance. While theoretically true, when the form and format is so restrictive and dependent on unreasonable assumptions that compliance is impossible outside of a philosophical discussion then it is the fundamental product that is deficient.
ALL hybrid reports invariably state nothing prevents the appraiser from adding such additional information as they deem necessary. It’s their promoter’s way of passing the buck back to the appraiser. Even though the online formats often limit the number of alternative comparable sales. Or, they prohibit adding the number of addenda required to explain and adequately support conclusions.
Most importantly they do not allow a reasonable fee (as required under Dodd Frank), or sufficient time to properly investigate, analyze, develop and report credible appraisal results. The systems are set up to provide appraisers with ‘suggested’ pre-selected comparable sales, and even adjustments in some cases.
The only way they ‘pencil out’ is for the appraiser to use the provided default data; to assume highest and best use conclusions, and zoning; and not waste ANY time verifying data such as development standards or code compliance. In short, act as a rubber stamp typist with appraiser credentials.
Georgia took the first step. The remaining 49 states and District of Colombia now need to go on record affirming that they will not turn a blind eye to products that are designed to be deficient, value affirming rubber stamp processes.
Any appraiser that has a copy of a bifurcated hybrid they want forwarded to their state board may send it to me or to AGA™. Member, or not. Email janbellas@appraisersguild.org; markskap.aga@gmail.com or mike@mfford.com.
We strongly urge AGA™ Members (& anyone else) not to perform these types of assignments unless the inspector is your own licensed trainee and you are given a fee sufficient to compensate you for the four to twelve hours normally required for a USPAP compliant appraisal; the client does not control your signature, and the form and format cannot be ‘rearranged’ once uploaded. Even then, the appraiser is on extremely thin ice. It is best not to do them at all.
NOTE: Similar complaints are currently pending in other states. A follow up to this complaint will shortly be filed against both the AMC and the lender involved. THEY are obligated to assure appraisals are USPAP compliant and credible before delivering them.
Clearly, they are not doing so.
- The New & Improved Fannie Mae “FRAUDULATOR 2.0” - May 15, 2023
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Mike, thank you for all the outstanding work you do for appraisers and the public. This article hopefully will open the eyes for many looking at an opportunity to still appraise, but not leave the office. As some of us end toward an age where crawl spaces are lower and smaller and attics higher and ladders more daunting, we need to remember NOT to cut corners. It is the licence and livelihood of the appraiser that ultimately suffers, along with the public (borrowers) and not the lender or AMC. Again thank you for fighting for us.
Thank you Bonsal Henry. It is a collective effort. The original reports were sent to me by a concerned Georgia AGA Member. Other examples of bad hybrids performed in other states have been sent to us by other appraisers and other organizations that prefer to remain anonymous.
I ask ALL appraisers (AGA Members or not) to forward any ‘suspect’ completed hybrids to me at mike@mfford.com or via janbellas@apprasersguild.org. We understand that sometimes anonymity is necessary for those bringing problems to light.
My hope is other states follow Georgia’s lead.
Excellent article. Did either the Georgia or Indiana appraisal board have anything to say about the AMC that ordered the bifurcated hybrid?
Bill, not yet. THAT is usually a separately required complaint. We intend to follow up with both states & most likely CFPB.
I’m an appraiser trainee what’s a bifurcated hybrid, have not heard this term?
Susie Veljanoski Emig it’s when a third party (typically a non appraiser) goes out and performs the inspection part of the assignment. Whether it be a full interior or exterior inspection then send a the data to an appraiser to complete the report based off that data.
It’s also done at a fraction of the fee. $25-$100 for the appraiser completing the report.
Mark Skapinetz I thought that was illegal in the appraisal world, with confidentiality laws and all.
Susie Veljanoski Emig nope. However the appraisers takes on ALL of the liability with these products. There appears to be no repercussions for the “inspector” who does not do a thorough or accurate job. Most of these products are not USPAP compliant, it would be up to the appraiser for ensuring they are. Way too much liability for the appraiser -and clearly no where near enough pay. I would never rely on some unknown person doing an inspection, no idea of their qualifications or training.
Donna Halfpenny agreed, I would not either!!!
Mark Skapinetz thank you for the information.
I am saddened that Indiana did nothing. No action against the appraiser for not being Geographically competent or USPAP compliant? I hope they catch up quickly and start taking action in these matters.
Donna, their Assistant AG called me twice. They clearly wanted to do something but in the end determined they were not the state having jurisdiction against the appraiser for specific technical reasons. Those reasons may or may not apply to the AMC. We’ll find out.
PS: while disappointed on the issue of jurisdiction, we have NO complaint about Indiana’s interest or response. Obviously, we were happier with Georgia’s action but both considered the laws of their state as written.
Hopefully they will be looking into and changing their laws (as needed) and this goes for every state-not just Indiana. I am grateful that they took the time to look into it!
Thank you Mike. The reality of course is that thousands, tens of thousands, and or hundreds of thousands ???? of these assignment have been done, and with NO client or hired AMC punishment equal to or greater than the reward (say $225 X 50,000 = $11,250,000), there is a zero percent chance lenders and or AMC’s will change their ways.
Seek the truth.
Bill a journey of a thousand miles begins with the first step. That’s only 2,111,999 more steps of 2 1/2 feet each. I’m up for it.
Of course, if 80,000 other appraisers also take some of these steps that are only 26.4 steps apiece. Definitely ‘doable’!
Trust me. We have not overlooked or forgotten the AMCs or lenders involved. There’s another case pending before a different state board. I’ve given my word not to write or comment on its specifics until that state has its hearing on it later this month. Suffice to say, other groups are also taking some of those steps with us. It’s not nearly as daunting a task as it may appear on the surface.
Heck, I remember when appraisers thought Coester VMS was untouchable. Mark Skapinetz proved otherwise.
Nope
And so it begins. Great job Mike!!!
Thank you Jason. Much appreciated.
My opinion: I, my professional reputation, certification, profession and the public deserve better than bifurcated crap.
Is a Property Observation Report considered to be a Bifurcated appraisal?
Interesting question Russ. One large AMC has an inspection report which asks for the effective age, and to detail functional and external depreciation. How would one know without doing market analysis, etc?
It could become part of one. By itself it is not. Appraisers should be exceptionally cautious about doing them.
Hi Russ. Property Observation Reports are not tied to the bifurcated appraisal process at all. These reports are completed by appraisers and are intended to provide only the subject’s property characteristics for the client.
And why does “the client” need the property characteristics? Oh, so Appraisers can shoot themselves in their collective feet for pennies?
“Property Observation Reports are not tied to the bifurcated appraisal process at all.” Seriously, in what world is this statement even remotely accurate. Julie Jones has really gone to the dark side.
Yeh,
I used to do drugs back in the ’70’s as well. Then I grew up one day. “POR’s” (field inspections, call them what you will) are provided in the anticipation that under the engagement letter and SOW (the client, and not appraiser sets in most of these reports) and appraiser’s blindly accept, the data contained in this ancillary report is to be extraordinarily presumed accurate. I’ve never seen one completed by a licensed and/or certified appraiser and always have been requested to rely on this information for report purposes. After jumping through unrealistic hoops for the privilege of completing these type assignments for a specific AMC, it took 9 requests for an appraisal before I received one with an inspection report I’d agree to. Oops, not tied to the bifurcated appraisal process at all.
The “Property Observation Report” form is proprietary to Class and is not used in the bifurcated appraisal process. No opinion of value or marketability is provided by the appraiser completing the inspection and there is no downstream appraiser that completes a desktop.
Seriously? Are you that oblivious to what is going on? Every amc promoting bifurcation has a Property observation report and yes they are given to the appraiser completing the report. By definition alone, they are part of the process.
It is truly sad you promote and defend a product that clearly you know nothing about. No credibility at all!
You are using a generalized/blanket term relating to an on-site inspection, SOME of which are used in the bifurcated appraisal process by various lenders and vendors. I am referring to a specific form we created that is not used in the bifurcated process whatsoever.
Keep believing that garbage. It is all same stuff. Again, no credibility.
Do enlighten us.
Is this proprietary form completed by an appraiser, and only a licensed and/or certified appraiser?
What’s its purpose? Aren’t these used to determine if additional work (desktop, field) is necessary?
If this rises to a desktop level, is the appraiser who conducted the “POR” engaged for this assignment? If not, is the appraiser engaged requested to rely on any, if not all information contained in said “POR”?
Thanks for the education.
Hi Mark, I’m happy to share!
The Property Observation Report is a proprietary form we created to support one of our customer’s programs. For loans that’s have already received an appraisal waiver, the form is used to capture property characteristics so the client has insight into the condition of the collateral. In the event the appraiser discovers an issue at the property, they notify us and the order is upgraded to an appraisal which the SAME appraiser then completes.
We use our panel of licensed and certified appraisers to complete these forms and the appraisers set their own fees. Before ever completing one of these orders, appraisers are provided with an information packet which includes: FAQs, sample forms, sample engagement letter, and details about their USPAP obligations. This product falls under appraisal practice and not the communication of assignment results.
I hope that clears up any confusion about the form and its use. I am happy to answer any additional questions via email or phone call,.
-JJ
When Class Valuation is locally (San Diego) offering 1004’s for $340 when the property has a Redfin estimate of $9,067,216, and FHA units for $420 (VA pays $850) combined with the fact that we are not in the 1980’s, forgive me/us for questioning your tactics and true intentions.
On a side note Julie, consider this a formal condition request as your partnership with InsideMaps (via a viewing of their 3D tour) resulted in the observance of religious items (crosses) on the wall. Is the future for appraisers to become video editors where we must blur out every CHRISTMAS decoration we find. You have 4 hours to address this condition
Seek the truth.
Our appraisers set their own fees, Bill. This will be my last comment on this thread, but I am available by phone and email for further questions.
Per Dodd Frank Julie your client has the burden of proof to show what method they used to establish a C & R fee. Appraisers bidding down to a dollar while you collect the spread (no return to the borrower), was not the intention of the law. As it relates to being available by phone and email, I say thank you, however in getting the low down via a 2 hour Class Valuation meet & greet and with getting $340 offers for properties valued at over 9 million, I won’t need a property observation report to form an opinion.
You have 3.5 hours left to address that condition I sent you.
Seek the truth.
Bull crap! AMC’s set the fees to ensure they retain most of it.. ….’but I am available by phone and email for further questions’ …….oh, your such an “authority” you sell out!
If your company states full appraisals are on time 94%, most appraisers are within 10 miles of the property, and the average turn time is 4.9 days, why when your company pays low $300’s for a 1004 would the borrower come out ahead when combined (appraisal waiver / property observation report) they are paying more and getting less?
As we the people own Freddie/Fannie and thus back these loans, please tell us how this scam offers increased protection to the public?
Seek the truth.
Hmmm. HORSE SHIT!
That was to Julies post – not Bill’s.
Regretfully Julie, as you’ve failed to take care of the condition request in a timely manner, consider this your formal notice of removal from our panel. The good news however, is your last appraisal invoice will be paid in the next 90 days per company policy.
Happy Wassalia.
Seek the truth.
Julie, stop with the BS. Every one know that this “bifurcated appraisal process” is the first step in pushing independent fee appraisers out of the picture so AMC’s can take over. Why is it that the AMC’s collect the greatest portion of the fee for these products when they are suppose to be acting as a “firewall” to protect appraiser independence? You’re a sell out.
So, the great state of Georgia, of which I am a member, was able to fine an Indiana appraiser who is not licensed in Georgia? I did not realize that was possible. Although I am happy if it is so.
The appraiser was licensed in GA. Lives in Indiana. And she apparently just renewed in October.
Aha
And that is where the appraiser messed up…should not have had a license in GA! I learned long ago that States do not have jurisdiction over people in other States – and Appraiser Boards have no jurisdiction over unlicensed people, as I found out after reporting a former employee that let her license expire and still did USPAP-level work. As I joke with my clients, albeit I have lived by this for 25+ years, I would never be licensed in a State that I do work in! Just ridiculous to subject yourself to unnecessary jurisdiction. Indiana was obviously right in this case. It wasn’t there jurisdiction. And Georgia wouldn’t have been able to do anything if the appraiser wasn’t licensed there. Lesson learned for that appraiser and firm!
Just wait for “National” licenses. Yup that there is the reason for it. You will sit at a desk and appraise every property, without regard to it’s neighborhood, market, county, state.
‘Cause appraisers don’t need no stinking knowledge, data or information, that could kill deals.
There is no such thing as uspap level work by an unlicensed appraiser.
The push for national licenses, is that the states won’t license appraisers anymore, but rather, a national entity run by Joan, Ernie and their buddies will both nationally license and vet appraisers. Yup, that’s her latest claim to fame. I the new name The Collateral Risk Agency. If they win this, there won’t be any state licensed appraisers. Only Joan licensed appraisers.
The thought leaders aren’t waiting.
https://financialservices.house.gov/uploadedfiles/hhrg-116-ba04-wstate-tricej-20190620.pdf
Anon-much of what you say is spot on. The other side of the coin though (and I am NO proponent of CRN) is that under state enforcement and licensing we have a Heinz-57 varieties type enforcement. The ONLY way THAT will be remedied is by federal licensing and elimination of arbitrary and capricious state enforcement policies.
I spoke with Jim Park about this some time ago. (I cannot represent HIS views one way or the other on net benefits)-It WOULD result in more uniform enforcement.
I see that as such a huge positive as to offset the normal reluctance of getting the feds involved in anything. Lets no lose sight though that FIRREA is federal; interpreted by a private corporation; influenced by MISMO; and AARO (State regulators doing end runs around their own legislatures).
I see no seat at the table for commercial vested interests such as CRN at all. AI; ASA, AGA, Coalitions (and all the other recognized professional peer associations) would likely have to agree to perform regional/local reviews. But I d also see a pre-screening dismissal process versus the current guilty til proven innocent process.
The current system is not working. States argue they cannot afford proper SR3/SR4 USPAP compliant reviews. Anything less is a cheat and deception to appraisers and consumers. There are actually fairly simple solutions, but the feds need to keep the so-called stakeholders out of the enforcement side. They don’t have appraisal licenses. Let appraisers set standards and minimum fees (C&R thresholds). Let stakeholders decide what level of detail THEY want in valuation. If Congress agrees-then give them a “less than” an appraisal product but stop undermining real appraisals to do it.
The root conflict of interest is that taxpayers back any of the risky behaviors of private lenders, or assist them through gse’s with operational costs. The invisible hand is tied up when the government has a financial stake in private lending.
Oh my, the above financial services upload file is a necessary read. Am scared now, bad feelings.
A 200 million dollar a year operational budget, built in technology fees, push for a national repository, and total control of both appraisers and appraisal management companies. You don’t say… Joan is making an aggressive push to take over the whole industry. The C&R portion is hopeful but coupled with their approach towards technology and efficient process the inevitable conclusion will be advocacy for hybrids on steroids with removal or disbandment of what remains of the spaghetti map of actually effective regulatory guidelines and institutions. Cherry on top is we get to adopt European standards. Yaee! Oh wait, didn’t we go to war and create an entirely new country to buck those off several hundred years ago? Is it me or did Joan just restructure the IVPI proposal for personal gain and a complete industry take over? Why not just revisit the actual IVPI proposal instead?
This singular blog may very well be the greatest source of pro appraiser advocacy and unbiased objective research in the entire appraisal industry.
http://www.workingre.com/wp-content/uploads/2013/08/IVPI-Proposalfinal.pdf
Baggins,
Maybe I’m missing something or just don’t get sarcasm. I believe the link you provided, for me at least, is downright scary at minimum. If I understand tis correctly, this was originally organized some 11 years ago in a different appraisal world with what appears to be no updates based upon the current world nor what appears to be any fluid method to adjust accordingly.
First, I personally have an issue with any entity that labels themselves a “Protection Institute”. Second, the States will never relinquish said procedures in the goals is this is proposed government cannibalism. The same likely goes for GSE Consolidation.
And citing Andrew M Cuomo as a “dedicated Leader”? Draw your own conclusions but, please do so with reasonable research.
The question they hope we’ll be asking at the end of this proposal is “why wouldn’t we want to do business this way”? That’s simple. First, this proposal is beyond outdated. Second, it simply creates what appears to be a compilation of GSE’s into what’s no doubt a quasi-judicial, if not an anticipated fully judicial body with no stated oversight. Oh wait, a bi-annual report to Attorney Generals who can’t litigate their way out of a paper bag, but are great political animals.
I have no idea where this proposal is today, or if it ever got any traction. I wouldn’t say the idea is without merit and not worthy of discussion, but it’s stale as an argument today. Good gig if you can sell it though. Maybe throw in some free housing for illegals and run for President.
Who said they were not licensed in Georgia?
Thank you AGA and everyone who works so hard for the appraiser profession.
But was the AMC fined?
Exactly. Mr Ford may have hinted at that above. Wait and see I suppose. Where would we all be without people like him? Mr Ford may have brought a sweeping change back around to this industry. Thank you.
Where is the federal government on this nonsense? That clown director at Fannie Mae “Lyle Radke” is the sell out appraiser pushing this bifurcation nonsense. He stood in front of all of us at a conference and had the audacity to tell appraisers not to tell him how to mitigate his collateral risk. Since bifurcation is clearly harming public trust, harming the taxpayers, the national housing economy and ultimately the appraiser why is this Radke clown not being charged by the federal government for lies, deception and treason? God bless this country and protect it from the clowns who mismanage the GSE’s! Funny how you steal a candy bar and get locked up. Defraud the American public and nothing happens? Can’t make this nonsense up!!!!
Look who’s the BOSS, they are all running from “Who’s the BOSS”. I vote for Dennis Rodman!
Or the big & rich dude! I’d rather have Bruce Springsteen. What a joke !!! Washington has gone down the tube.
Hell yes!
Does anyone know why this particular report and appraiser had a complaint filed, and who filed the complaint? Were there deficiencies in the report such that the lender was unable to use the report, and they filed the complaint? These “hybrid bifurcated alternative” reports have specific Intended Uses that are different from normal mortgage lending reports. (The actual complaint attached to this blog is missing the first 2 pages, so I can’t read it cover-to-cover.)
Dave, The AGA filed the complaints as one of our GA members was concerned after receiving the hybrid reports from a borrower. Apparently our member did a full appraisal on these and when sent the hybrids discovered all sorts of issues. The deficiencies in these reports led to significant issues with the borrower and properties purchased by using these reports.
Regardless of the LANGUAGE in the reports these hybrids and bifurcated reports have major issues and GA appears to have made that clear.
Dave, all 4 pages are embedded. Nothing is missing.
You need to scroll up and down. You can also click on the right arrow and click on “Presentation Mode” for full screen of the PDF or “Open” to save the PDF on your computer. See screenshot.
Also here are the links to the hybrid reports done by this appraiser:
http://appraisersblogs.com/wp-content/uploads/2018/01/Clear-Capital-hybrid-report.pdf
http://appraisersblogs.com/wp-content/uploads/2018/01/Clear-Capital-hybrid-report-2.pdf
Yes.
I filed the report.
I also wrote the article about these two properties over a year ago. ClearVal article. Read.
The borrower was effectively defrauded. There were REAL appraisals performed after these that disclosed significant error…not the least of which was that neither value opined in each report were supported. A VERY thorough review was done by GREAB. 23 violations. Many of which were very significant uspap violations.
As I have been saying for well over a year. These products induce fraud. The very design and marketing coupled with ridiculous fees assures uspap compliance will never happen.
https://www.valuationexpo.com/session/beta-launch-of-the-modern-appraisal-ce-session
Look who’s moderating the GSE SELLOUT seminar???
https://www.bbb.org/us/mi/troy/profile/real-estate-appraiser/class-valuation-llc-0332-90015044/customer-reviews
Now look at their customer reviews….
And where are the RICO cases for collusion from the states?
The GSE “guidelines” tell the public they are getting a 1004
the pilots???? Not available to the public
RICO should start with CA BREA.
Amen. The “Tar Pit” (BREA is Spanish for tar) doesn’t do anything and was supposed to be a bureau with a budget from the State for regulatory enforcement. It turns out that it is self-funded and as a result increased license renewal fees with a $400 “Registration” fee because of the declining number or licensees. The AVMs and PIWs that are currently in vogue have significantly reduced the volume of appraisal assignments to the extents that we are back to competitive fee bidding for assignments. AB5, the ‘Gig Economy’ control bill now requires fee shops to be businesses, with all of the attendant tax forms and insurance policies. I haven’t heard of any bifurcated appraisals but participation in one would be a serious violation of the International Valuation Standards (IVS) which members of the Royal Institution of Chartered Surveyors (RICS) must comply with. The property inspector would at least need to be an RICS member surveyor and properly vetted as such for their field report to be acceptable for use in an appraisal. The computer geeks and quants, along with the banks, won the fight, sad to say. I saw this coming two years ago but I had no idea how California would join in and promote this excuse for constructive fraud, and conspiracy to commit such.
That is Julie Jones. She used to work for Fannie Mae developing their UAD product before joining Class. Her job is to take the appraiser out of the valuation equation.
Hi Bill! Julie Jones here. Please conduct more thorough research: I don’t work for Clear Capital and I didn’t work on the UAD project at Fannie Mae. I am a certified appraiser who is a staunch advocate FOR appraisers in my current role at Class Valuation. Anyone interested in facts knows how to reach me…I’m an open book.
The most difficult ‘fact’ to acquire from an amc; What is their standard fee payout for a 1004 in a given area, and what is the consumer charged? Where can appraisers access those pre defined pre recognized fee tables, like the VA provides? If an appraiser charges less, are cost savings returned to the consumer? Save the tired PR lines.
Yes Julie, you are an open book. You went from the frying pan directly into the fire. You lost all credibility when you joined Class Valuation. Most appraisers consider you a sell out. You are extremely misguided if you think you advocate FOR appraisers working for an amc. You had a better shot of selling that garbage when you worked for Fannie, but seriously not much better.
In another internet site, you were referenced by the social media director of a larger AMC as the “go to” person appraisers should call to verify a “pilot” of hybrid appraisals, while you were at Fannie, because none of it was disclosed to the “public” and hence, appraisers had nothing in writing that said the “musts” and “requirements” of the Selling Guide not longer applied as “musts” and “requirements” even though, the Selling Guide is the information available to borrowing public. But of course the “public trust” is protected when the borrowing public has the Selling Guide access while appraisers get private emails.
Oh, and that Selling Guide, with it’s “musts” and requirements is what is available to the attorneys of borrowers, not pilot programs, with disavowments of the “musts” and “requirements” of the Selling Guide, or any outline of what is “acceptable” for the appraisal, so that borrower’s attorneys can assess if their clients were screwed over, or not.
SB, so entertaining thank you. Check out the YELP reviews, they are even better.
And I quote from an actual customer: “Who’s running that place, a bunch of monkeys!?”
Yes, from a regular borrower! HO HO HO! Merry Christmas!
https://www.yelp.com/biz/class-valuation-troy?sort_by=rating_asc
However, many of the reviews are focused on those classic mis understanding points between appraisers and consumers of appraisal services. Also I think the reviews do lend credit to Mr Ford’s assertion that there is tangible evidence that using amc’s, paying appraisers less, and demanding quicker service times, do have a negative effect on the end result of appraisal product quality.
Apparently Class Appraisal is doing the opposite of assuring the public trust. Because their CSR’s know nothing about appraisal theory or value process in the first place, they find themselves incapable of properly managing dispute resolution with home owners about value and selection related issues. A common amc symptom.
I’ll continue to drill this point home because the reviews of amc’s are consistent in this regard. “If amc workers were all required to have individual licenses, half of them would lose those licenses overnight.” They consistently disregard the public trust, consistently behave unprofessionally (I have been hung up on by amc’s too), are not interested in accountability, and constantly showcase their lack of understanding regarding the appraisal process they are supposedly ‘managing’. My vote stands for individual licensing for everyone involved in the appraisal distribution process, amc, direct, or otherwise.
Amc’s nationwide, actively confusing the public. I found it sort of interesting that very few of the reviews also pointed the finger at the mortgage lender. That’s where the blame should be placed. It is the mortgage lender that forced the amc upon all those customers.
Thanks Mike. Bifurcated is an accident looking for a place to happen. Dumb idea.
Thank you Anna. Obviously I agree 100%
Excellent work Mike! I’d like to see the issue taken up in Sacramento. It’ll be on our agenda for the winter 2020 meeting. With your help let’s see if we can get some traction with Jim Martin.
Yay Charles!! Go get them!!
Charles, Mr. Martin is not my biggest fan. Nor I, his. I make no bones about it. BREA under his leadership should just shut down. I’ll happily give you the ammunition if you think he’ll pay attention to AI.
We humiliated him in my case and I am testifying on behalf of another appraiser currently being screwed over by BREA. BREA no longer does appraisals or appraisal reviews as a matter of policy. Martin even got the law reworded preventing BREA Sr RE Appraiser/Investigators from doing any review or regular appraisals.
Best we can do for consumers in this state is to get BREA decertified by feds.
Let the Appraisers and AMCs continue to hang themselves. They have a year left.
Known as the QM patch, the rule exempts GSE-backed loans from abiding by the full scope of the Ability to Repay/Qualified Mortgage rule, which requires lenders to adequately verify a borrower’s ability to repay their mortgage in the underwriting process.
Recognizing that the rule has shifted an increasing market share toward the GSEs, the Consumer Financial Protection Bureau has expressed its intent to allow the rule to expire as planned.
The QM Patch was put in place since the beginning of the Ability to Repay rule in 2014, and is set to expire in January 2021
https://www.housingwire.com/articles/50224-fitch-end-of-qm-patch-could-drive-rmbs-losses/
So, We don’t even know if the borrower can repay the loan, and some inspector might have seen the property, and some appraiser sat at a desk, someplace, and valued it.
Oh yeah, Gonna be fun for attorneys.
Are the eye glasses a prop?
Outstanding work Mike (and others),
I’ve been anticipating the findings and conclusion(s) of this for some time. It’s understandable Indiana found they lacked jurisdiction in this specific instance but, I suspect with significant reason, similar reports have been completed in their venue and jurisdictional purview and will likely be addressed appropriately. I’m not remotely shocked at the outcome and rather surprised by the somewhat expeditious finding(s).
That said, USPAP is rather ridiculous regarding the bifurcated process for 2020-2021. They begin by stating someone conducting an inspection is effectively an “appraiser” or, at minimum, a qualified individual rising to that level. Yet, they contradict themselves as to whether this constitutes “professional assistance”. If I misconstrue this, please feel free to correct me as I’d appreciate clarification.
Understanding USPAP as of the effective date of the report under review and, in light of the fact the inspector wasn’t a licensed appraiser, how did the state determine this inspection was, in fact, professional assistance? I thoroughly agree with their conclusion but, from a legal standpoint, they make playing devil’s advocate relatively easy.
I’ve certainly been vocal in this forum about my foray into these type appraisal(s) and my ultimate conclusion to not complete them. In an extraordinarily strange twist, Clear Capital found my background check to be unacceptable to complete reports for them. Guess I’m just not corrupt enough.
While I’m loving the fact the appraiser and, to come, AMC and lender are getting (appropriately) raked, I still contend that when the E&O Insurers are forced to take notice (i.e. pay claims), this whole bi-foo-foo process will die the death it quite reasonably deserves.
Mark Ziegler
Excellent commentary. Thank you Mark. Personally, I’m shocked anything happened. And well under the governments normal 10 year cycle. Someone is going to form a committee or something to examine exactly why. Don’t hold out too much hope on private insurers functioning as the invisible hand, after tarp the lenders lobbied for bail outs to become bail ins, when it all pops next time around the burden will automatically fall directly onto the taxpayers shoulders. New bumper sticker for 2020: Honk if I’m about to pay your mortgage, again.
The goal of responsible consumers should be to pay off any and all loans as fast as possible and never extend the terms time frame. Isn’t it interesting the way mortgage lenders push the 30’s as a standard. Now with awesome new cost saving auto services. No appraisal required and next to nothing cost home inspections. Valid valuation sort of loses it’s gravity in a runaway climate like this with such inadequate accountability. The illusion persists, it’s more important to regulate what the borrowing consumers are experiencing, rather than apply such standards up the ladder to the monied lenders. I think I had read about this before, circa mid to late 1700’s.
Fine, but I think all of you have missed the point— The goal here (for the financing operation) is to, as they say in the used-car space to “Roll the unit”. And have any of you outtastaters heard of “Foster Owsley” ??????
I don’t believe anyone has “missed the point”. And Owsley is irrelevant regardless of in-state or “outtastate”. I hate to digress to my “Dealership Days” but, are you appraising Real Property or used cars by trade? Respectfully…
I knew Brown Owsley many years ago.
Missed the point, again.
Foster Owsley doesn’t even show up in an internet search anymore. Long forgot the relevance though. Name rang a bell but that was it.
Julie Jones wrote;
“We use our panel of licensed and certified appraisers to complete these forms and the appraisers set their own fees. Before ever completing one of these orders, appraisers are provided with an information packet which includes: FAQs, sample forms, sample engagement letter, and details about their USPAP obligations. This product falls under appraisal practice and not the communication of assignment results.”
Where have we heard the “Appraiser sets their own fee”..oh now I remember..it’s a stock, rote perpetuated marketing quip on every AMC website. I dunno, maybe in another life you were a Servicelink manager understudy?
While emphasis is placed on who performs the analysis (for the lenders benefit) any Mention of who exactly, consistently is performing and completing the “property observation reports “ being forwarded to the Appraisers to rely on is very shrouded and sketchy at best
Responding to “Residcert 12/5/19”
I do not have but 1 AMC where I DO set MY own Fee & where I can not rely on that AMC for Income due to low #s of orders in the area.
1) TRUE: Months back I was informed by an AMC Rep’ (my Boss) indicating the Fee schedule was “set” by what “the AMC determined to be Fair & Reasonable”. (work or don’t they don’t care) When I do request a Fee increase, I ONLY get that assignment after the REP’ decides whether I do or not. 90% of more of the time, the order is declined & re-assigned, even IF it’s $25 more. AND where this AMC is retaining half (+) of the Total Fee.
2) After my increase request, I am offered LESS assignments (as punishment).
3) POINT: the AMC Order system is set-up for the appraiser to fail. I ask for extended time away “to take care of an elder” over Thanksgiving & directly informed the AMC Rep’ & also their “Survey email” blast of listing dates of time out (dates where assignments would not be sent). While in Time Out, I received 4 assignments where I had to directly contact the Rep regarding the “acknowledged time out” & had to “System” decline each of them. Dings my rating UNFAIRLY.
Since back to work, I’ve received ZERO. POINT: this appears to be not a Round Robin assignment format & I am NOT one of the “Reps Favorite “. So again, IT has the appearance AMC Rep’ (your Boss) manipulate their system in order TO MAKE the appraiser look BAD. Look Bad: means I declined TOO many assignments; however, I did everything they requested regarding “Time Out” & with my Due Diligence of Notices. I am not Independent.
4) Point: same AMC, in speaking with a different Rep’, said “yes the system will appear there was a correction you needed to make. Although, it wasn’t but the system will indicate it WAS & your rating will be impacted. It is really is up to your specific Rep’ with the # of orders assigned “. unquote. Meaning: the AMC software system sucks & they know it is NOT a fair “rating system” so my BOSS decides when & if I work.
5) After years of being on their Approved List: Never has an Order been late that WAS my fault. Rarely, do I ever have an “actual report typo-or correction”. I feel pressure to kiss-a** to this AMC Rep in order to receive ANY work. POINT: there are no state rules by which an AMC must be fair to an Appraiser. The appraiser can be fired without a Formal Letter BY non-use of that Appraiser.
6) The AMC Rep is YOUR BOSS & where this AMC is the 3rd largest in the USA. WORD: Independent, a joke. In this area where there is AMC take-over for GSE work you must be a slave & also to their 10 (+) page Contract & 5 day turn where the clock does not stop, even for national Holidays.
6) Self-Employed Independent: I guess there is a very fine line BECAUSE I am an employee without fair treatment.
Responding Posts will say: GO get other work. Around here, to keep being an Appraiser, there isn’t OTHER work to sustain a Business. WHEN will the AMC be held accountable = NEVER. State Boards do not have the authority & Federal Gov’ allowed this to happen.
***FAKE NEWS: appraisers take TOO long & appraiser CHARGE is TOO high. Example: Lender FEE to borrower: $675, AMC retains $350, Appraiser gets $325. Where requested by Appraiser a higher Fee for complexity, the AMC shops (delays the process) for “any appraiser’s lower Fee” prior giving it to the initial Appraiser (no delay).
AMCs gone rogue, low fees, pressure, Appraiser’s high operating cost, and then Add to this Evals, 1004P, etc.: the demise of the appraisal profession.
For me, I will not be completing these products. The appraiser is the only one liable and for 5 – 7 years. Even my 92 year old mom, retired from RE said: “what appraiser would be that stupid, how can appraisers afford their business expenses, & the Power-that-be to allow this is insanity! In time, this type of lending will fail & the tax payer will be the ones cleaning it up AGAIN!” I think, this coming year unless something is done, they truly will need Waivers. The career is all but dead!
Garth you’re too negative about it all. You’re feeling down because the amc’s are abusive companies. You just need to market down long lists of lenders, signal to them you will not work for amc’s, and eventually you’ll run across direct assignment lenders and will land on their panel. Reminds me, another one sent me an invite just yesterday, I’d better answer that and say yes. You spend a lot of time getting there with careful marketing and steady solicitation but you know what they say in real estate appraisal; It only takes one or two good direct assignment clients and you’re golden.
Amc’s persist because appraisers continue to work for them. Nobody makes appraisers take those orders, they take them because they choose to click accept. You’ll see the light when you take the effort to land new clients. You’ll experience an immediate 100 to 200 per report fee uptick, reduction in kickbacks, more simple grading policies, and you’re somewhat more likely to deal with kind professionals as opposed to the crack the whip types, although be warned those people are still out there in the direct assignment world. Create manual manilla folders for all clients you market, keep them organized in hot or cold leads, write if they use amc’s or not, print out your emails for reference at a later date. When you run across ones that redirect you to amc’s let them know you’ll be available when they stop trying to force appraisers to work with amc’s because you’ve had enough and now are firmly committed to refusing all or most amc requests. Don’t market too fast, try like 1 or 2 a day. Keep them organized. Keep hot leads in the stack and like a light bulb switching on and off when you land a good one you’ll be busy and those leads will sit there. The thing you do not want to happen is to over market good clients because then you’ll lose one and unlike amc’s, there will probably be no going back. I’ve found instant approvals years later. Like recently this one who took months and months to consider my approval, finally gave me an approval, I just needed one more work sample current. Well, I’m too busy with the other guys whom picked me up when i asked to be picked up, never had time to send that in. They are on my to market list at the top of the stack, we’ll see if they are ready to work with me on time when I ask if I have need and time to work with another direct assignment client. I’m not a big money maker it’s not all that. So given the complexities and challenges, why would appraisers even consider suffering the middle management in the first place. I bailed on amc services years ago because it just became too much. Now I never deal with bids, always get direct assignment, and although challenging work with some of them, the orders keep on going. I have a steady modest income, very minimal kickback and revision request, and can basically ignore grading. There is no such thing as round robin, anywhere. It’s an illusion. Dare to dream but that’s long gone and not coming back. The way to win with direct assignment is to be willing to accept their predisposed fee for complex and easy work. If they dump only the tough stuff on you, keep marketing, eventually you’ll find one that pays the same for easy and complex work, and it will balance out and you’ll rarely be able to negotiate, but also will not need to negotiate because you’re enjoying full fees without sharing with middle management. Go online and surf for top 100 lenders in your state, market down the line, fill out apps, research them thoroughly before contacting, be professional, kind, to the point, and brief. Eventually you’ll get some traction.
After all, that’s how the amc’s stole those clients away from appraisers, effective marketing. Lenders are getting the picture and it’s not as bad as you think. There are a lot of lenders whom got away from amc’s. Cut your teeth in hard money lending if you can’t get traction on the GSE side. If more appraisers approached marketing this way, more lenders would get the message and switch back to direct. As long as the amc can provide coverage, expect the lenders to keep working with them. Especially in times of low rate and high demand, more lenders switch away because what a contrast; here is this appraiser saying he has no work and wants a client pickup, but will not work with amc’s. While on the other hand here is our selected amc saying ALL the appraisers are busy and nobody is even available, and they have boasts of max coverage and tens of thousands of approved appraisers. The lender says one of these guys is not being truthful and I think you can figure quite quickly the lender will understand it’s the big box amc whom is pulling them around. Now and then there are still caring people in lending, not usually, not often, but they are out there. Change can happen if we believe it will happen and we work hard for it. You could always bounce to the assessors office or something and press the easy button. Cheers.
re: QM patch expire article. Interesting read. An impossible task to think the gse’s can hold general default volumes near 4%. Not when high ltv’s are a standard, when credit requirements constantly change, the fed continues to roll out fiat, dropping it into housing by the billions. Borrowers are set up for failure like never before. Wild fantasies about shoring up valuation quality with clever gimmicks and new forms as expressed in above blogger commentary is not going to cut through to the real problems. None of it is straight forward anymore.
One could glean even more meaningful insight into the qm patch story by reviewing quantities of borrowers whom use various save my loan programs. Fannie combines and recombines, sorts and separates to come up with positive stats, it’s one massive illusion of safe investments. If the stats jump the coop they’ll massage patch expires and others like waiver based into some other category and call it a success. One day, they will lose control of it. Faith in the fed predicates gse’s, that faith is misplaced.
https://www.fanniemae.com/portal/funding-the-market/data/loan-performance-data.html
Uptick in reo work is happening. The other side of real estate. List agents have been telling me some of these people coasted a full year, sometimes two, never made a single payment. Until gse based ltv’s again never exceed 80/20 as a standard and people actually have skin in the game, federal lending and insurance programs will never successfully get away from hamp, harp, patching, etc. Save the day programs will just get rolled out with a new name and they’ll call that a success too.
It’s important to understand that appraisers, sales agents, amc people, even state regulatory authorities, none of us are supposed to know these things and focus in this manner. We’re all supposed to complete limited scope work, get paid, call it a day. Only by not understanding what a complex mess gse lending and fdic insurance has become, only then can we really get behind pors and pirs, hybrids and drive by’s, same functions basically, different names on different days. Nobody over 50/50 should even be allowed to touch those. Getting federally insured real property loans is not a constitutional right, it’s high risk lending activity. Many borrowers do not know what they are getting into. Agents of all manners are standing by to walk them home, sign here.
These ‘new’ products only make sense from a lending perspective, knowing taxpayers are backing it all. In that other timeline where we still resisted taxation without representation, these funding entities and corporations whom work with them would have gone under long ago. Borrowers are paying a cash equivalent 2.0 or higher multiplier on their sales price amount under various amortization terms and the lenders are competing for them with vendor service out of pocket costs drive downs. Such is how the game is played and the illusion established for the consumer. Anything with a signature is a contract, if you sign it, you own it. So my joke is, I am personally underfunded and that’s why I’m not sharing with middle managers or taking discounted fee or reduced sow appraisal requests. Merry Christmas!
Interesting aside Baggs. Back when I was Budgetary Counselor for the Nations largest federal credit union (NFCU); starting delinquency rates in banking ran about 4% in all consumer credit. The credit union had a start rate from 2%-3% and end of month carry over (beyond 30) rate of less than 2%.
A 4% default rate on secured home loans is HORRIBLE! If that is a good number, then what it demonstrates is that something in excess of 2% (50% of all delinquencies) are being pushed into charge off (NODs and repos) needlessly. The specific factor causing this would be MMI or PMI / VA 25% guarantees that require specific steps at specific points in a delinquency or the loss of insurance can result. It eliminates the potential for many if not most loan renegotiations or ‘work outs’.
For those interested, I’ll go into detail But, for purposes of this forum, I’ll provide the “Readers Digest” version.
2004: Good year by most everyone’s conclusion. I completed 238 HUD Foreclosure Reports that year. The whole nepotism thing took over not long after, and I didn’t subsequently do a bunch of work for the new HUD contractor in my market area. Basically, a 4% default rate has become “acceptable” in the industry.
The industry took a rather larger turn circa 2010-2011 predicated upon the circa 2007-2008 “crash”. The irony isn’t lost. From 2001 to 2007 the “fog a mirror” lending criteria was used which, inevitably, ended the way it did. During this period, large packages of mortgages were bundled and sold to Wall Street as “Mortgage-Backed Securities”. I withhold comment on appropriate due-diligence.
When foreclosure activity took off circa 2007 to 2010, many lenders and the GSE’s specifically took a beating with costs associated with the foreclosure process to include the maintenance, utilities, taxes and insurance on the vacated properties they acquired in addition to the stigmatized prices they were receiving and heat they were getting for “devaluing” neighborhoods. So, in government fashion, “let’s go back to the well!”
By 2011, the lenders and GSE’s in essence discontinued the foreclosure process if the owner didn’t vacate because, at least, they kept the utilities on and provided, at minimum, modest maintenance as well as generally prevented vandalism. So now what they do is bundle the non-performing assets and sell them to hedge funds at significant discounts, yet thereby avoiding the “foreclosure hassle”. I think the last “HUD Bundle” went for $14m+/-.
In many instances this is a good thing, as the note holder can often restructure the note to allow the borrower’s to remain in their home. This is an extremely lucrative game if you know how (and can afford) to play. Even the hedge funds cull these and “Mom and Pop” investors can get in on the game (to a degree and at that level).
There’s sophisticated software available that will allow you to determine which institutions have “seasoned” non-performing assets that have reached a point they can logically and in fiscal fashion dispose of. Big racket these days.
Learned something new from the pros, cool. Thank you both. That explains this unusual company whom tried a few times to send me orders. Talk about a tough gig. Lending One, Easy Knock program. From the engagement letter:
The Short Term Rental loan is a term loan where the buyer gives the sellers an option to purchase the property back at a previously negotiated price at the end of the loan, all while paying a negotiated monthly rent. In most cases this is not considered an arm’s length transaction as the contract price and contract rent are not the result of the typical buyer’s and seller’s actions. The concept is similar to a reverse mortgage.
My favorite part of the agreement terms;
Please note that representatives of LendingOne may perform an administrative, comprehensive or technical review of the report. Your full cooperation in any such review is deemed to be an integral part of this assignment. You further agree that as part of this assignment, you may be required to, and will, testify on behalf of LendingOne.
Court appearance for no additional charge with open ended intended user reviewers add, sure, what could go wrong. Can you imagine the inspection? So you lost your home, sort of, and are going to be paying rent instead, then you can get a new 50yr private mortgage loan. How does this work again? (Imagine being a consumer of lending services whom did not understand that in the first place, now explaining your new short term save your home rental agreement to the appraiser stupid or daring enough to have accepted this order.) It might be difficult for me to maintain my preferred conversational approach where I talk about the up side of refinancing the terms shorter, how to avoid getting moved to servicers like ocwen, general good home maintenance and credit management advice.
The necessary tie in to have a better understanding of then vs now, is this question: Has there been substantial changes in loan to value ratio requirements since those points in time when default rates were lower? I knew this was all tied up in the mortgage insurance game somehow. There appears to be a direct correlation between increasing defaults and reduced quantities of in house loan origination. The insurance becomes mandatory when the loan is bundled and sold, the servicing outsourced. FHA took so many losses already, pmi never drops off and you pay it through the life of the loan. Generates a lot of repeat refi biz though. Bingo!
I came in at the very end of the days where PIR’s were ordered to drop off pmi and other sensible loan changes. 2075’s were $150 a pop and all you had to do was take a photo. The current illusion presented to appraisers is that a hybrid is somehow as simple as a pir. After all, they’re both low priced quickie orders right? The lending use behind them appears to be dramatically different, which appears to be the substance of the ‘hybrid problem’.
Maybe in the wrong spot but, I regret to inform you that, in my brief foray into experimenting with bifurcated reports, towards the end the lenders were doing what I personally deemed to be “abusing” this system. Not only were they attempting to order this product for high LTV purchase appraisals, they were doing so for complex refi’s and purchases as well.
I’m reasonable and there’s a time and place for everything. But this is a prime example of “give them an inch and they’ll take a mile”. Problem is, it does take a little collaboration and this was something I just couldn’t consciously be a party to. I believe therein lies the substance of the “hybrid problem” you refer to Baggins. “Scope Creep” has now become “Appraisal Creep” for those unwilling to realize exactly what they’re accepting in terms of assignments.
You are the best. I’m going to look you up and call you weekly and even daily for inspirational appraisal advice.
We let appraisers set their own fees. That’s codeword for the appraiser whom provides the most thing of value will be assigned the order. If amc’s don’t know how to present a consistent fee by now, we can’t help them.
We all learn about them in our own way. Glad you saw the light. For what it’s worth you summarized it much more succinctly than I did.
$25 to do a 1004P and the Appraiser wasn’t even licensed in the state? Clearly that Appraiser was not sane and did not have competence in the market.
“1” and “2” in the citation would basically make hybrid desktop appraisals illegal. The Federal government is the one who approved them so that’s a huge issue. The other mistakes and errors seem to be related to the appraiser. Can’t image agreeing to do a hybrid for $25. I did one to check it out. It’s the same amount of work as a regular appraisal only minus the inspection. Not worth the low fee.