Understood. We’re on the same page. That requires judges, lawyers, and court rooms. I don’t care if they are giving out free pots O gold to appraisers with real life rainbows and leprechauns in little green hats, I’m not going into situations like that on purpose. My days are numbered, time is running out. I was in this for consumer protection, a sincere belief in the American dream. You should apply for a government grant to support the public by way of appraiser based housing and best process counseling, and I’ll be your full time guy. The servicing industry side of things is what evaporated in real time.

The FED has all the gold (or at least the promise of its lesser equivalent). They are in turn answerable to the taxpayers.

Jack, hybrids and AVMs have never had credible acceptance by honest, informed professionals. They are purely tools to facilitate fraud agaisnt investors, by the same GSEs that can’t be trusted to operate unsupervised by their conservator…The U..S. Government, in the form of the FHFA.

Did around a little bit for an AVM White Paper FHFA had written a few years ago…where their own study proved AVMs were not nearly as reliable as appraisals.

I think you missed my point baggs (or I failed to make it clear).

My concern isn’t about the work volume available to appraisers that engage in hybrids. Of COURSE they and their E&O will be the ones to pay.

The opportunities for more honorable appraisers, will be in the litigation cases where we will be hired by the complainants rather than by the respondents.

At pretty good fees, I expect.

Hybrids and AVMs are here to stay. The old saying is the one who has the gold is the one who makes the rules. Unfortunately, the banks have all the gold.

Found the rule.

§ 12-10-614, C.R.S. Appraisal management companies – prohibited activities – grounds for disciplinary actions – procedures – rules.

(b) Requiring an appraiser to indemnify the appraisal management company against liability, damages, losses, or claims other than those arising out of the services performed by the appraiser, including performance or nonperformance of the appraiser’s duties and obligations, whether as a result of negligence or willful misconduct;
https://dre.colorado.gov/real-estate-manual-and-position-statements
Chapter 6, appraiser license law. Pg 18.

(r) Failing to disclose to a client the fee amount paid to the appraiser hired or engaged to complete the appraisal upon completion of the assignment; or
———————————————————-
Is the indemnity agreement valid or not? The amc agreement is confusing because it says ‘from or in connection with’. And every amc has some indemnity agreement language variance. Every single amc requires appraisers to sign these agreements.

Mr Ford said; ‘No one goes to court with a “value acceptance” or hybrid as their only value support.’

That’s where amc indemnity agreements come into play. Special hint; Appraisers will not be the ones initiating lawsuits. But if they were foolish enough to complete that work, they may be the ones paying.

AMC’s basically ignore any and every state rule which prohibits them imposing indemnity agreements, the amc imposes them anyways. Mr Ford which would win in an actual court setting? The amc whom proves the appraiser signed these agreements? Or the appraiser whom would say the agreement was null and void because of the state rules, so the appraiser signed the agreement anyways so as not to be excluded from the work force?

This is a key thing most states missed in terms of amc regulation; Prohibiting indemnity agreements imposed upon appraisers. One ponders if the lending and amc industry would have pursued these mass appraisal methodologies if they were liable, rather than passing all the risk and cost to the appraiser. For appraisers seeking regulatory correction, a good idea may be to start with having your state impose a prohibition on indemnity agreements for appraisers, and actually enforce penalties and sanctions when lenders and their amc’s routinely ignore those engagement limitations.

https://appraisersblogs.com/amc-indemnification-certification

When you observe the building department approve projects outside of existing zoning allowances, you are observing them padding their budget, aligning themselves for a raise in the future. They say whatever needs to be said to justify the action. In my state they say high density housing is to protect the open spaces, so they stack em and pack em in special zoning districts. If you want to see something really disconcerting just search for; Micro Housing. That comes after the townhomes. Dig into those city rule books, somewhere in there should be a counter mechanism to recall or sanction the people whom break the rules.

Was just today talking to one of our City councilman who says the planning manager is rubber stamping all proposed developments that are in direct violation of ordinances as it relates to site size, green space, size of homes etc. they just want more people in the city and of course more tax paying citizens. They have turned our wonderful city into high density affordable housing townhomes and small single family home with just over .10 of an acre. Planning manger approving things without even putting them to a vote. They are worried that we don’t have enough affordable housing in our small city which borders Lake Lanier. I told him that they are ruining this area with townhomes so close to the lake. They need to take advantage of the lake and be like the North Shore on Lake Michigan. High end homes should be here not small townhomes. He agreed. He said the Hamlet of Flowery Branch has been ruined by the city planning managers focus on cramming houses into every open space there is!

Of course this is mass assessment. The methods will not hold up on a national level. The latest vogue trend in progressive politics is to mandate by imperial decree increased housing density in areas which were not designed to support such capacity, as well as imposing limits on assessment value rises via novel programs, such aa yearly percentage increase cap limit. These parity based approaches will have unpredictable unintended consequences. Half of the progressive politicians are slamming appraisers for supposedly repressing their home values. The other half are actively working to suppress home values using government mechanisms to save on taxes. The use of waivers, the already excessively high demins thresh hold, has already led to massive over valuation of our entire housing markets.

There are possibly millions of rule variances out there distributed through all the counties in this country. Assessment rules, allowances, caps, limitations, various exceptions based on home values, sizes, occupancy, age, location, special zoning districts. Whatever you can imagine, there is probably a special rule in some district somewhere, and the rules are always changing. Theoretically even if the tech industry hired enough workers to keep up with this data, the industry would require more people than the appraisers they replaced. And they would not have the same skills or experience to properly analyze and value the real property. Appraisal Modernization!

I also never went to Blockbuster to obtain 1/4 to 3/4 million dollar mortgages.

Any investor foolish enough to treat such loans as a drive through convenience item deserves the inevitable losses they will incur.

I can stay as busy as I wish without GSE work.

I expect it will be much more once consumers start suing lenders for predatory lending or collusion to defraud them.

No one goes to court with a “value acceptance” or hybrid as their only value support.

Let’s call these tools what they really are: glorified Zestimates. They fluctuate more wildly than gas prices and are about as reliable as a weather report in March. One day your house is worth a fortune, the next day, it couldn’t buy a dilapidated shack.

Without the seasoned eye of an appraiser carefully reviewing which sales to include and exclude, these are nothing more than weapons of mass financial destruction. They lack the rigorous training and keen analytical skills to determine accurate valuations. But accuracy isn’t the goal is it? No, it’s all about the money honey. They funnel unsuspecting buyers into purchasing overpriced homes, which benefits someone, but it sure isn’t you.

So watch out – the crash is coming. Don’t get lured in by the siren song of effortless home valuations. Unless you want to end up bankrupt and broken down on the side of the road, steer clear and let qualified appraisal experts call the shots.

What has always struck me is why did they change the name from Appraisal Waiver (a meaning which is quite obvious to the general public) to “VALUE ACCEPTANCE”? Pretty tricky way to lure the buyers/market into thinking oh hey… the lender has completed some sort of appraisal or analysis and has determined that the property that I am paying hundreds of thousands for or more… is worth at least what I am paying for it. I call it deceptive marketing to all parties involved.

The public has NO clue how hard they will suffer by these deceptive practices. There is no explanations given to the buyers when their loan qualifies for “Value Acceptance” protocols, you can be sure of that!

Going forward, mortgage purposed appraisals need to be succinctly reported with value opinions supported with replicable data-metric analyses that are included in the appraisal report. Otherwise, our mortgage clients are moving onto other service platforms without us! This isn’t only a legislative driven issue, its a market-client driven issue. Either our professional appraisal services meet our client expectations, or they will progress without us. Now, with some market segments the lending decision risk doesn’t always need our appraisal service, but for others they will continue to need our professional appraisal service and experise – if we stay relevant to the purpose and expectation.

As a real world analogy, we no longer go to Block Buster Video to get our entertainment, so unless we advance our mortgage appraisal processes to meet the current client and user expectations, our client base will no longer need us for part or all of their needs. So, we need to start by learning and understanding the power of Excel and Excel based resources available for relatively small subscription fees, you can also now use ChatGPT to tell Excel what you want/need, learn and understand how to utilize and include multiple linear regressions and metric analyses in appraisal reports. The marketplace and appraisal users expect tangible support for added credibility to our opinions and work. And if you think by diversifying your appraisal practice away from mortgage lending clients, your won’t need to do this, think again. With other appraisal services, supporting your conclusions and opinions with tangible data-metric analyses is fundemental to meet client expectations.

Also, for mortgage purposed appraisers, be ready to implement the new forthcoming UAD reporting process to your mortgage valuation service; that is designed to keep our mortgage valuation services relevant to the everchanging metric driven mortgage valuation marketplace.

Yes, we as appraisers are best prepared to provide mortgage purposed appraisals, but unless we get and stay current with client and intended user risk objectives, we will become Block Buster Video! When I entered the appraisal profession, typewriters were in the process of being replaced by computors – that many appraisers protested…with many retiring and/or quiting. That change in part provided appraisers like myself the opportunity to learn how to use computors and advance our appraiser careers for the next 40 years! Now going forward, its appraiser sourced metric driven charts and graphs included in our appraisal reports (not just high-level MLS charts and graphs), that the client-user marketplace expects for support and credibility of our appraisal valuation opinions.

Our Future is Our Decision… 🙂

However, lets not forget that the GSEs could not be trusted to competently manage their own affairs in the first place.

They are no more able to do so today than they were in 2008 or even 1989.

Back in 2014-2016 words like ‘leveraging’ or phrases like ‘value added’ became the mantra of those demanding changes to better facilitate loan fraud, and diminution of recognized appraisal standards.

Remember “bifurcated hybrid?” A phrase so discredited that replacement euphemisms had to be created to get past the negative stigma.

Phrases or terms such as “trained” PDCs or “value acceptance” were coined. Toss in the current magical buzzwords of diversity and equity and just about any foolish concept gained instant acceptance.

I note in the article that one of the GSEs seeks to bolster credibility by claiming to have a database covering over 40 years. What wasn’t disclosed is that in January, 2015 FNMA realized their arbitrary adjustment percentage guidelines were producing a preponderance of appraisers giving greater weight to guidelines, than to real world market reactions.

So over thirty years of the forty year database claimed is comprised of flawed or compromised data.

The very same flawed data that Collateral Underwriter was built upon.

Since FIRREA 1989 was first passed the so called ‘stakeholders’ (meaning every business benefitting from minimal mortgage processing rules / laws) sought to eliminate FIRREAs protections that they perceived to be onerous burdens.

They succeeded. The Departure Rule was replaced by the watered down and very vague Scope of Work Rule. False claims of shortages were promoted so that waivers permissible under limited circumstances by FIRREA could be invoked.

Reasonable and customary fee LAW (misnomer is C&R) was undermined by AMC lobbying organizations such as REVAA, with the improper interference of the FTC.

Falsely claimed shortages became a reality as more and more experienced appraisers refused to accept the substandard fees that lenders and AMCs conspired to price fix at rates 20 years out of date.

Toss in phony appraisal racial bias claims and micromanaged language, and even more experienced appraisers refuse to work for the dishonest GSEs.

Unless and until predictable outcomes (GSE failures Part Deux) result, ALL requirements for credible real estate appraisals will continue to be eroded.

Reread the original authors excellent article. Pay attention to the limitations of mass appraisals, AND the almost non existent audits of the process.

There’s good reason mass appraisal has never been acceptable for determining collateral value.

By the way, don’t overlook the new focus on acceptable price ratios versus value. A subtle substitution of terms that will become increasingly critical in the future…

As stakeholders “leverage” PC gimmicks over sound appraisal practices. Practices developed over 91 years (1933) shortly after the Great Depression of 1929.