Hybrid Committee Meeting Recap
The Recap
The VREAB Committee meeting on hybrid appraisals met last week. The turnout was a decent one. Some traveled a great distance to attend. There were appraisers, assessors, consumers and trade group representatives in attendance.
The meeting started with the Appraisal Foundation Video on Hybrid Appraisals.
Public comments followed and many spoke and shared their concerns. Examples of hybrid appraisal products were submitted to the committee.
Protecting the public was a key discussion and the following existing Virginia laws and regulations were discussed.
54.1-2009 Definition of appraisal-
“Appraisal” means an analysis, opinion, or conclusion relating to the nature, quality, value, or utility of specified interests in, or aspects of, identified real estate or identified real property. An appraisal may be classified by subject matter into either a valuation or analysis. A “valuation” is an estimate of the value of real estate or real property. An “analysis” is a study of real estate or real property other than estimating value. The term “appraiser” or “appraisal” may be used only by a person licensed or certified by the Board.
54.1-2011 Necessity for license–
C. Notwithstanding subsections A and B of this section, an individual who is not a licensed residential real estate appraiser, a certified residential real estate appraiser, or a certified general real estate appraiser may assist in the preparation of and sign an appraisal if:
1. The assistant is under the direct supervision of a licensed residential real estate appraiser, a certified residential real estate appraiser, or a certified general real estate appraiser; and
18 VAC 130-30-160 Prohibited Acts-
The following acts are prohibited and any violation may result in disciplinary action by the board:
1. Violating, inducing another to violate, or cooperating with others in violating any of the provisions of any of the regulations of the board or Chapter 20.2 (§ 54.1-2020 et seq.) of Title 54.1 of the Code of Virginia, or engaging in any acts enumerated in § 54.1-111 of the Code of Virginia.
2. Failing to act as an appraisal management company in a manner that safeguards the interests of the public.
18 VAC 130-20-180. Standards of professional practice.
C. Use of signature and electronic transmission of report.
1. The signing of an appraisal report or the transmittal of a report electronically shall indicate that the licensee has exercised complete direction and control over the appraisal. Therefore, no licensee shall sign or electronically transmit an appraisal which has been prepared by an unlicensed person unless such work was performed under the direction and supervision of the licensee in accordance with § 54.1-2011 of the Code of Virginia.
The Result
The general consensus of the committee was Virginia Statutes and Regulations already in existences were sufficient to protect the public. The committee clearly understood what was transpiring in the market may not be in compliance with these Statutes and Regulations and this is problematic for appraisers and amcs.
What Happens Next
The committee will report back to the full Board at the next meeting in February. Any action taken, such as issuing a guidance document, will be decided upon the full VREAB.
VaCAP wishes to thank the Virginia Real Estate Appraisal Board for forming the hybrid committee and taking the time to discuss the growing concerns over these products.
In the news
Last week, an article by Ken Harney appeared in the Chicago Tribune. The article titled “Push to Cut Back on Home Appraisals Sparks Controversy” talks directly to the consumer about how absurd the proposal to increase the threshold to $400,000 is. Please share this article to help the consumer understand the risks involved with what is being proposed.
Also, the Philadelphia Business Journal reports the Radian Group has purchased Independent Settlement Services. A Quote from the article:
“In an interview earlier this year, Thornberry said he would like to grow the company’s mortgage and real estate services businesses to the point where it consumes a larger percentage of the Radian’s total revenues. It currently is responsible for about 15 percent of total revenue (mortgage insurance is the dominant product) but did not turn a profit in 2017.“
See the article here.
We will most likely see more AMC’s merge or get bought out in the coming months.
- The New Con: Hybrids, Waivers & AMCs Threaten Public Trust - December 16, 2024
- VaCAP Supports Shane Lanham’s Legal Fight - September 10, 2024
- It’s Just Responsible Journalism! - February 21, 2024
Think about what the laws in Virginia are saying. Even if a licensed appraiser does a property inspection and another licensed appraiser signs the report, the signing appraiser must have direction and control over the property inspection. Â Appraisers and AMCs could get themselves in trouble otherwise.
It would appear control of the process and control of those assisting have to be under the direct supervision of the signing appraiser. Is there any scenario in which a hybrid appraisal, similar to what is being introduced in the market would be allowed in Virginia? Only scenario that comes to mind is allowing a Trainee to inspect when the licensed appraiser is confident in their abilities.
USPAP requires competency. This includes knowing and following local, state and federal laws and regulations. When was the last time you read your own state laws and regulations?
They want hybrids for 1 reason, those who want to train appraisers for their appraiser mills, can’t train appraisers in the far areas, those newly trained appraisers won’t see the property but will in fact just sit there and be form fillers, paid $15.00 and hour with some benefits, that they actually pay for, and the companies can produce 100’s of these idiots with no real experience…Just another racket to pull on the American people all in the name of saving a few hundred dollars. Wait for the foreclosures and buy backs….they are coming soon !!!
Why do the Lienholders / Investors not want a pair of trained, experienced eyes on the VERY ASSET on which they are investing large sums of someone else’s money? (redundant question…) Seriously, crunching numbers on a property that hasn’t been verified by an experienced, qualified person as actually having the assumed features, floor plan, and/or no issues (sometimes only detectable by smell, sound or walking across the floors), much less getting a sense of the true condition (photos can be deceiving) should be recognized as the huge gamble to our economic stability that it is. Any Appraiser who has worked hard to obtain and keep a License / Certification should be very wary of signing any document based on a Site Visit by some unknown person or company, in addition to being aware of State / Federal Laws and individual E&O Provider requirements.
So…the Committee could be on the verge of doing something positive and beneficial, or they could be kicking the can down the road like they did with Coester so long ago; and lack of enforcement of C&R fees they passed.
Since a USPAP compliant bifurcated hybrid is rarer than silver-maned unicorns or simply does not exist, their advice to appraisers should be very easy.
“DO NOT DO THEM!” “You WILL be held accountable for any non-compliance with Virginia state appraisal regulations (as is pointed out in the post).
Could not agree more!
Protect just sent out a requirement that appraisers include a deed description for all Chase appraisals. My response:
Please be advised that only a title search provides viable legal description in a transaction. A mere copy of a dated deed can in fact be a document not related to the more accurate current information reflected in the assessment records. I advise that you forward results of title search to appraisers for insertion into the final document much like a contract change. This way licensed real estate appraisers can reference a third party who assumes legal title authority, not a responsibility in the appraiser’s wheel house. Ask yourself, if a lender adopted an abbreviated process where a title search WAS NOT prepared based upon an appraiser submitting a recorded deed. Not unlike desk top appraisals where third parties supply subject comp pictures.
DGB
One of my clients want the property public record enclosed in the report. They have no idea how to dissect my coverage area public records so could you imagine the questions asking me why my information is not exactly as it appears on the public record. One example is the PR shows the GBA not the GLA (without a breakdown) just to give you an idea. Hell we have RE agents that have been in the market for years that still don’t understand some of the info. I just tell them no that the information is located in my workfile and if that’s not satisfactory then use someone else.
Sorry didn’t mean to get off topic.
I just completed an sfr appraisal for a non-cash charitable donation. 3,751 sf per public records AND original mls house floor plan brochure from the builder. Owner paid $1.7 about 10 months ago. I appraised all 3,347 SF of GLA at $1.6 in a rising market. GBA of 3751 sf could be correct if it were looked at like a commercial building with ALL area included, however, that is not the historic custom here where LIVING area used to be the metric.
Mow mls is no longer saying ‘living area’ merely ‘SF”. Corelogic Request no longer reliably reporting consistent GLA as opposed to GBA. It’s a best guess game now. …and they think AVMs can tell the difference???
I guess if you just call it “SF” from now on, agents can never be wrong?
Ooh, Ooh I got another one… Client came back with a revision on a report because my public records info. on site size did not match theirs. My reports state that my PR info comes from the state assessor/county clerk (deed+plat)/county sheriff tax office and a few others. Theirs RealQuest (CoreLogic). I said Come On REALLY! (in my head) I did say please take a look at the copy of the plat I have enclosed in the report. Reply was Oh we did not see that.
Junk in Junk Out!
It’s worse now Koma. Corelamode reports BOTH the mls claimed size and their own country recorder based public record of size in their own Realist Reports so that it is impossible to simply report the correct size.
NOW you must explain the incorrect size citation as well as the correct one. Just for fun, in California, this past week I’m seeing nothing but “SF” where it used to show LA SF…and agents are including covered outdoor ‘living rooms’, finished basements, and even detached rec rooms or guest houses in the base “SF” which we used to know meant Living Area. Now we can’t tell what the hell it is!
Great job FNMA!
related; I spoke at length with an assessors appraiser the other day about data inconsistency with one particular property. I learned something new, that the particular assessor kept a track record of all publicly relayed data, and for some records, they corrected data at a later date due to some problems with data management from before systems updating. Over a 10 year period after this certain county was formed and took in data from multiple other counties for lands they acquired, they had re issued data for select properties via data clean up efforts 7 total times. It’s important to understand that data aggregators scrape data from one singular moment in time, or sporadically thereafter and are not getting real time updates from all data systems at once. In certain scenarios like I dealt with, one can determine at what point data inconsistency occurred, because the assessor themselves may have a record of when that inaccurate data was corrected and the public record corrected. That information is available with zero data aggregators and only available via manual research at the county seat directly.
Trying to get people to understand part of our job is verification is impossible. We are in a culture that believes something is news or not news just because it’s on the internet. If the county says it’s 1800sf…is 1800sf. Never mind the 420sf garage that’s included in it. On a simple ranch at 50 a sf, that’s 21000 overvalued. Borrower only puts down 8000. What could possibly go wrong?
Just got an order to do a physical inspection and complete a 1004p, which is a shortened version of a 1004, but one must address all the same issues (more narrative) for $200.00. Where’s the profit in this?????
All in the AMC’s pocket !!!
ACI Sky, Amrock And The 1004p
TruthBTold. All that big talk, and still working for amc’s. Remarkable. Some people never learn.
Baggins, I don’t work for AMC’s, just pointing out a fact. Your combative, elitist attitude is part of the problem. “All for one, and one for all”.
How does one get amc requests for proprietary amc patented short forms which are not FNMA forms, if they’re not being contacted by amc’s?
I’m not giving up my career without a fight. I will accept no quarter and no apologies from those whom continue to sell everyone down the river so they can land the next amc order. Nobody gets a free pass.
Baggins, I ask myself the same question and came out with a much more positive take. I figured they must be having a hard time finding a competent appraiser to do this kind of work!!!! So they’re contacting whoever they can find!! Maybe rejecting this kind of work is starting to have an effect???? The fight for your career is going to take a group effort and diplomacy – not attacks on your peers!
Fair. Thank you. I concede the point and apologize. Still though, I had previously taken the time to respond to nearly every single amc solicitation over a many year period, with logic and modeling consultation. Sanity has returned to my small one man office and I only rarely receive amc requests. It remains a fact that the majority of appraisers complaining about amc’s do so because they are still actively and willingly engaged with them.Â
“1004p? is that an approved FNMA form?” Regardless of how many amc persons I educated, all I accomplished was enlightening them individually and subsequently a new person was installed in their place shortly after. Once management learns how effective I am at actually educating their telecom workers on real estate ethic, they make a point of making sure those workers are not in contact with me in the future.
Great positive feedback
Amc fee bidding is a pay to play environment because costs savings are not returned to borrowing consumers. The appraiser who quotes the lowest fee is providing a thing of value and financial incentive to be the preferred selectee. Informing telecom workers they’re facilitating institutionalized fraud against consumers has the expected effect where they turn around and question the ethics of their own management instead.
Landed on a new direct panel last month for one of those big deal volume lenders. Every single order management clerk carries an active appraisers license. What great people to work with.
I get them sent to me by other appraisers. I haven’t made a secret of the fact that I contend ALL are fraud inducements by their very design…without exception.
I keep asking for JUST ONE bifurcated hybrid report copy that is truly USPAP compliant. So far no joy!
I do not work for AMC’s, I did for a couple months, and I was lucky enough to be put on the VA panel, I will never work for another AMC again. The VA system, with whomever they institute it with, is the way to go for our profession, it’s the only way to go for our profession, nothing has changed over the last 10 years and it’s gotten worse. And will continue to get worse, now that the volume has slowed up.
Pepsi challenge. List the lenders whom you find appealing when dealing with VA loans, that also apply similar standards of equality and fairness when dealing with non VA loans. You might want to hold off on accolades and praises to lenders whom issue VA loans but do not offer equivalent benefit to non veteran consumers and non VA panel appraisers.
Think about what they’re doing on that side of the desk. The lenders know full well how they’d better behave when dealing with VA loans. They do not apply that same standard of ethic when dealing with non veterans and non VA appraisers. The difference between lending approaches between VA and regular GSE lending is perhaps the best available illustration of systemic corruption and failure to provide ethical engagement as a standard rule, within the mortgage lending community. Not one senior lender agent or their processors were able to answer basic questions why they did not utilize similar engagement protocol outside of VA lending channels.
It’s a non issue.