GSE Exec Boasts Scheme to Slash Appraiser Numbers

GSE Exec Boasts Scheme to Slash Appraiser NumbersAt a recent appraisal event, a GSE executive, after a few drinks, privately told his nearby colleagues that we suck as an industry. Last year, Phil Crawford and I reported on GSE efforts to send unsigned complaints to state boards at scale. Appraisers had no recourse but to defend themselves from the state boards without knowing who their accusers were. The public pressure became real, and the GSEs backed off from their anonymous letter-sending campaign (see Cosmic Cobra Guy’s reference). The exercise showed how little they think of us as professionals because it’s easier to generate AVMs by pressing a button than to deal with a human being with professional insight.

That GSE jackass at the conference bragged that they plan to remove a considerable swath of the nation’s residential appraisers from their approved lists (they call it “de-populating”). I couldn’t find a secondary verification, hence “rumormill” but this is no surprise if it turns out to be true and the potential impact made it important enough to share. The Fannie Mae culture, and to a lesser extent, Freddie Mac, think they have it all figured out and don’t need a human being to tell them whether 500 feral cats occupy a house when estimating value. I was told by an appraiser at the 2018 Appraiserfest in San Antonio who worked in their Dallas offices that they adjust the dials on Desktop Underwriter whenever conditions slow down loan volume. That appraiser was livid about this practice. The GSEs don’t want appraisers to restrain loan volume by providing concerns about a specific property. The GSEs have been emboldened because their moral hazard was backstopped during the housing bubble as a near bail-out.

This action supports the bizarre bifurcated approach the GSEs have been championing for years. When they propose combining property inspectors, an unlicensed industry with no standards, with appraisers, hybrids become less accurate, slower, and more expensive than traditional appraisals. AKA Data Cancer. So, how is this a good thing? This hybrid product removes the appraiser’s eyes from the property, which is inextricably linked to the valuation process. I’ve always wondered why institutions in our industry constantly push more expensive, less accurate approaches to appraisals. It makes more sense to me now because the appraiser is being relegated to data collectors, as Lyle Radke told us. Thus, working with an inspector without standards and dumping that information into an AVM enables Fannie Mae to control the appraisal process fully, to hell with data cancer.

This “culling the herd” action by the GSEs would dramatically reduce the size of the appraiser ecosystem, which other entities like banks, lawyers, and private citizens also rely on for appraisal services. What happens to appraisal fees when appraiser supply becomes significantly constrained outside the GSE world as tens of thousands of us are forced to retire? Appraisal fees could skyrocket, pissing off the rest of the users of appraisal services, especially banks, who are often at odds with the GSEs.

What a fustercluck.

Jonathan Miller
Image credit flickr - Daniel X. O'Neil
Jonathan Miller

Jonathan Miller

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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23 Responses

  1. Avatar Kimberly DeFilippis says:

    Well stated.

  2. Avatar Luke Bader says:


  3. Avatar JL says:

    The best time to join a union was 20 years ago. The second best time is NOW.

    • Avatar Flash says:

      Join a union, really? So you are ok with monthly Union Dues on top of appraisal fees, a union representative and for a union to set the appraisal fees for residential properties.? Maybe Property Data Collectors could also form a Union of their own.

      Then appraisers get to meet in a union hall at night to make demands of our Union Leaders for when a union contract expires say 2-3 years per contract. If appraisers don’t like the new Union Contract then Appraisers can go on strike and stop all work until an agreement by the appraisers to vote yes to the new contract.

      So these union bosses have no idea of what an appraiser does or if they are even licensed in real estate brokerage or appraisal to negotiate for appraisers what a fair fee would amount too.

      I am sorry to tell you it is shear madness that an appraiser union could ever exist.

      I was a card carrying member of Teamsters Local 481 in the mid 1970’s and the cigarette smoke in the union halls was like low flowing clouds in the room of a couple of hundred members. While we were making demands for a new union contract we could bring in 6 packs of beer under each arm and it was a party. But on the night we would vote as a group to accept or to go on strike there was no beer allowed in the room during the vote.

      • Avatar Mark Page says:

        With your level of backassward thinking I find it hard to believe that you are an appraiser. Why don’t you talk about the NAR rather than what was obviously some backwoods union hall just outside of Hickville?

      • Avatar Mariateresa V. Canosa says:

        I was an appraiser for a government agency & was represented by a union. IT WAS THE BEST TIME OF MY LIFE. I was paid well & had great benefits. Your description of “union bosses” & the rest of the nonsense you wrote is beyond laughable & absurdly out of date. We never had meetings like you described. Our union dues were more than reasonable & well worth it, especially considering what we got for it.. Our shop stewards were also appraisers & good people, that we, the members, elected. No, it certainly is not “shear madness” – it is anything but that. Most appraisers have no idea how good it can be. Too many people believe utter nonsense about unions & are completely screwing themselves with their idiotic opposition to collective bargaining.

        • Avatar Flash says:

          So you worked for a local government agency which operated differently than independent appraisers at large. There is no comparison. None.

          Working for the local government agency is great and you were part of a union with a contract with the county. Again, no comparison at all to the real world of independent appraisers.

          On a national level, which Union do you suggest Real Estate Appraisers should become a part of?

          Secondly, are appraisers to contract with their unions directly with the Federal Government?

          Laughable since the government has said its OK to use Property Data Collectors for $20 per house.

          Teamsters Local 481 in San Diego, California was connected with Fedmart Auto Centers which were owned by Sol Price who later created the Price Club which he sold to Costco.

          • Avatar Mariateresa V. Canosa says:

            Actually, it was a state agency, in a large state in the Northeast, with a very large union. It was nothing like the description of the 1970’s – half a century ago, with smoke filled rooms & six pack of beer.

            • Avatar Flash says:

              “And thats the way it was”

              channeling Walter Chronkite when he signed on of each news broadcast.

              • Avatar wildman says:

                Flash go back to bed. Unfortunately, we screwed ourselves. Reagan broke the unions. There will be a change in our society when people wake up and realize how much Reagan screwed us over (Iran – Contra) with the unions. He gave Iran the arms. Now look where we are with that. There is no safe return on our money. Placing your savings in a bank, that’s a joke. As far as the appraisal process, it was setup to fail. The education process stinks. People making decisions for us are non-appraisers. Everything is about statistics. That will fail too. Statistics in itself has to be consistent. With every change they make it gets worse. People who are reporting it are not consistent, I don’t mean the appraiser. WE all know who they are. Local governments and the realtors who you may want to consider them a good union. They are not held responsible for disinformation they give us.

                • Avatar Flash says:

                  Presently I have 3 appraisals on my desk to complete. Kind of busy here.

                  Why are you continuing with a discussion on the lack of a National Appraiser Union which never has or never will exist due to economics of running a business and making a profit? Blaming Reagan for the lack of Appraiser Unions, Really?

                  You are just pointing at other actors or people. Statistics is a solid way to prove facts in the real world and a court of law.

                  Realtors belong to a National Association of Realtors or are Not Realtors and are Independent Real Estate Professionals. The Realtors have no Realtor Union.

                  Do you actually have something to discuss of merit to the present situation of appraisers in the real world?

  4. Avatar SCW says:

    So what now? Our goverment is allowing these hybrid appraisals, appraisers are doing them because they are starving and our elected leaders turn the other way and keep hicking up interest rates and destroying the housing and lending markets and no one is standing up for truth and what is right. Our elected leaders are allowing the genocide of the housing and lending business. It is clear as water there is no end game other than destroying the appraisal profession and lending all together.

    • Avatar Eric Kretz says:

      Well said, and some serious macro thinking.

      The only real question is – what is the appraisers course of action, as a collective? What can be done?
      The TAF and ASC are riddled in turmoil. Our elected officials are worthless. Appraisers have no representation in Washington and are truly hated by the NAR and NHBA, who realistically would be our only allies. We have no voice, platform, direction, and little ability to fortify our profession to those who mean to marginalize or remove us.

      Serious question – What can really be done?

      I’ve said here that it would be awesome as a profession that we give a big middle finger to everyone for 30 days. No appraisals performed for GSE’s, direct lending, no VA, no private work, no AMC’s. Nothing. Maybe then the GSE’s and general public would pay attention. I know that unrealistic and few of us could afford to do that, but it would be a start.

  5. Avatar Spencer Paul says:

    Why can’t we know his name?

    • Avatar Flash says:

      Flash is my nick name. I am a Real Estate Broker owner and a Certified Residential Appraiser in California. I was an appraiser even before licensing , so have seen several different real estate markets since the 1970’s to the present.

      My appraisal work plan shifted during Covid when I received 30-40 calls day for an appraisal. So at time I decided to do Nothing by the Rush reports delivered in less than 3 days with $1,500-$2,500 per report.

      The lenders were ok with it due to the limited number of appraisers willing to work during Covid, they just wanted reports on simple or complex properties in Silicon Valley.

      Lately for the last 3-4 years II mainly work for attorneys, trusts, expert witness testimony which can involve over 100 hours of prep time , discovery and testimony. I mostly use the GP General Purpose Form with 8-11 statistical charts and scatter graphs with data from the MLS CMA exported into the reports.

      In addition to Real Estate Brokerage, Appraisal and Consultant work I am as busy as I want to be, but have decided to add a MLO Mortgage Loan Originator License in the next 9 months from now.

      When the interest rate comes down in The first quarter of 2025 there will be a lot of work for appraisers or for Mortgage Loan Originators. It only a 28 hour course for the MLO and a grueling test so that’s an additional stream of income and can easily make a transition with their knowledge of real estate to sideline as a mortgage loan originator with for a bank, lender or under a Real Estate Broker.

      I have no intention of filling out the new appraisal forms when ever they come out in 2025 or 2026. I primarily do Estate, Legal Work, Inherited Homes, Divorce and Expert Witness Testimony.

      Plan your work and work your plan, or someone else has a plan for you.

      Ninety Five percent of my work is Non Lender work.

      Tom Melville, MRA, MNAA

      • Baggins Baggins says:

        What about the people who will need to engage in conventional lending systems in the future? Thank you for providing a professional and valuable service. Other market spaces, those services, also essential.

        • Avatar Flash says:

          I agree it is a mess. Frank Dodd created the mess we are in the present.

          When interest rates climbed as they have in several different real estate markets since the 1970’s there has been a fall out of appraisers due to lack of work between good and bad times.

          When rates increased, it is like a water faucet being turned off with respect to available appraisal work.

          Every time there has been an economic down turn in the since the 1970’s the appraiser is to blame. It was that way in the 70’s during loans made on home loans with 1st, 2nd and 3rd mortgages on one house. Then in the 1990’s lenders created a 125% loan for homeowners and also wanted a 130% loan until that idea collapsed the market with home foreclosures.

          I am still in appraisal for the same reasons you suggested for years. It tough times for sure. Andrew Cuomo while still part of the FHA helped create the Appraisal Management Companies along with Frank/Dodd government paperwork.

          Hundreds of Appraisal Companies with large staff members became worthless or worth less over night due to an inability to cover office expenses.

          The idea of Agreed Valuation Acceptance is what has removed a lot work and again puts homeowners in jeopardy of not knowing if they may have paid too much for a property.

          How is this good for the buyer?

          There were 20,000 appraisers in California 25 years ago now we are down to 8,541 total active licenses. so 53 % of that total is Certified Res Appraisers 4,526 and 31% General Certified Appraisers 2,647 , Licensed 10% and Trainee 6%. The numbers are expected to continue to decline in the coming months.

          Most Appraisers need a side gig in these times, whether to add a real estate license, MLO endorsement, add notary services to their profile.

          In the end lending is winning and it makes sense to consider a sideways transition into lending which still is making over $100K min a year to start.

          Looking at the other side of the Equation there has been over 600,000 Real Estate Agents who have quit the business due to a lack of homes to sell. I expect over 1 million agents to leave the industry. Now Listings agents will survive but buyer agents have to negotiate how much commission they are to receive in helping a buyer to complete a purchase. Buyers agents will probably make anywhere from 1-2, % percent of a sale as commission or can accept maybe a used car as commission for the sale of a house as acting as a buyer broker.

          Addition Non Lending Work is the only answer i have found with estate work and sometimes it allows me to represent homes owners with estates as a Real Estate Broker should they need to sell inherited homes.

  6. I sure hope that the industry powers that be change their minds, but it appears they are planning on AI for most of their valuations…. we were hoping to semi retire and still do a few appraisals per week to make ends meet. We shall see what happens.

  7. Avatar Pat says:

    Be patient
    The meltdown will come soon enough

    • Avatar Larry Fuller says:

      Agreed the meltdown is on the way. Going to be hard to stay patient but we must remain above board with our actions and direction.

  8. I thought there was a “shortage”? Yet, they are “culling the herd”. WOW


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GSE Exec Boasts Scheme to Slash Appraiser Numbers

by Jonathan Miller time to read: 2 min