I checked with my E&O provider and was told that they are covered.

As evidenced by my own experience when 2 out of 5 orders I indicated a need for increased scope of work because the PDC data was insufficient. Since then crickets…

Note that most of my work from a desktop and PDC perspective is investigatory because of my position with certain organizations and having first hand knowledge of the process is paramount to crafting communication with regulatory parties. One has to balance what is USPAP compliant vs the Public Good. The GSEs are not the only ones that just want things to “go through” at the lowest possible cost and without barriers. Legislative bodies are all about “affordable housing” and lowering the costs of entry, which includes appraisals. We are fighting a freight train of populous opinion and if something is USPAP compliant, then what is the problem? The recent “clarification” on HB 1110 is a prime example of what the law says and how the AG will interpret it which are completely opposite of each other, yet the AGs “opinion” as to how the DOL should act is what makes res appraisers allowed to appraise properties zoned for “at least 6-units” which technically they should be anyway, that was never my argument, the argument was how the law was written that precluded res appraisers from performing that process. So while I agree with the AGs opinion, it is not what the law says as written. Everything possible is being thrown at appraisers right now, intentionally or not, that will have a lasting impact on our profession, and not in a good way.

Signing off for a couple days, Regards

Thanks. Every day I tell myself; Simple is better. Then the issues are so darn complicated. I’m giving it up soon anyways, the appraisal industry is cooked beyond recognition. GSE people purposefully mis manage everything appraisal related, because they would rather advocate for stake holders than for American citizens. As goes the appraiser, so goes the American consumers financial security in housing. Soon to be a distant memory. Just in time for the next big short too.

Have a good one.

Great points. I wrote something about this just the other day on the new thread. How the use of alternative products skews existing market data, which sends out the domino effect down the line.
https://appraisersblogs.com/the-sales-agents-derailed-this-deal/#comment-40343

The notion that it’s only 50% or whatever, of a million dollar loan… Even a hundred thousand… These relief policies would not exist if lenders were loaning their own money, were not able to offload losses back to the public coffers, were not operating on a fractional reserve basis.

The question what exactly would be wrong with full service appraisals being a fixed requirement for everything which costs more than, let’s say a vehicle? They run full service full fees for; (see the complete mortgage lending origination fee lists) for everything, over and over again, regardless of the loan amount. Somehow the appraisal is not as important anymore?

Here is the neat part; So they can get rich, not be held accountable for driving up housing nationwide to unaffordable levels, rake bigger commissions, and all the appraisers get fired. Got to save the borrowers ten dollars on an appraisal report. Never mind they’re paying 3x total multipliers on 6%+ agency commissions which are amortized over thirty years.

We all know how these things play out, the notion that appraisers can ‘upgrade’ the service order is not applicable with most originators. Especially not those whom use amc’s. They simply drop and replace the appraiser instead.

State the insurers name specifically if you can. That would send a shock wave to the pro desktop advocates if they’re completing this work, and have that same insurer.

Has anyone to date requested the PDC inspectors professional liability insurance or general workers insurance and received a copy of that? Who’s insuring the property data collectors? Or is this just a default position that they’re basically insured by the appraiser and held harmless at all times?

Mr Ford was digging into this years ago. He posted multiple examples of the at the time quasi property data collectors re using images, not having accurate data, a host of issues with hybrid reports.

I’ve learned quite a bit about houses, construction principals, materials, environmental factors, appeal factors, value in use, improper alterations, how to totally save or destroy a home with a few simple changes, etc, etc. These are skills simply impossible to recreate from looking at photos from a desk. One does not need to be a math genius to be an effective appraiser, but they do need to be able to understand that a house is not just numbers on a piece of paper.

To your comment
The WA state boards have already stated at ACOW meetings they expect USPAP to be upheld on all reports regardless of the scope of work. This includes verification of data from third party sources. If we have to verify the size of the house, there is only one way to do that and the is a physical inspection. The state boards agreed and pointed out that the PDC’s information must be verified.

The WA DOL has cited that PDCs are not “appraisals” and that their “analysis” does not rise to the level of “Analysis” that would be considered part of the “appraisal assignment”. Something I vehemently disagree with and that ACOW is trying to change through the legislative process. That said, there are ways to verify with reasonable credibility the accuracy of a PDCs sketch without having to physically go to the site. There are numerous tools through public sites that can be used to measure a property and see its perimeter in order to verify a PDC sketch/GLA calculation. If an appraiser is unable to independently verify the credibility of a PDCs data, then absolutely that order should be elevated to a higher scope of work requirement.

As for your E&O not covering you, I do believe that most now have a rider that can be added to an existing policy. Yes, it is more money and one must weight the benefits vs cost, but there is coverage out there. Not 100% on that, but its Pres Day so I can’t call my E&O to verify

Desktops have never been anything remotely close to accurate or reliable as full service appraisals in the first place.
**Completely agree, never said they were as accurate.

For the pdc inspectors, good luck trusting that data,
**Again, agreed. However, if the PDC includes a sketch that has the same perimeter and similar dimensions as is available through public records or other sources, which I acknowledge not all municipalities have, then the appraiser has independently verified the validity of the PDCs sketch and GLA estimate

Baggins, sorry but this is a pet peeve of mine, you are an intelligent and well written person, please don’t use “irregardless”, it is not a word, in fact it is the opposite of your intended sentence. The “ir” is a negative which when placed in front of regardless makes the term “not-regardless”. The term is just “regardless” there should be no “ir” in front of it.

It remains the sole responsibility of the appraiser to be able to verify the accuracy of all data relied upon.
**Agreed, If the desktop appraiser cannot verify the accuracy of the data, then they need to reject the PDC and escalate to a higher level scope of work.

the appraiser does not get to instruct them in any way what so ever, ask any follow up questions, or instruct them on best methods
**Agreed, and if the data as presented is insufficient to achieve credible results, then reject the PDC and escalate to a higher scope of work.

Many of us never performed desktops or drive by’s in the first place for the same reason.
**Acknowledged, and I agree that in instances when a credible result cannot be achieved from a desk or drive-by perspective that the assignment should be rejected. Sadly, most appraisers don’t really know and have not been trained to ascertain what is an “acceptable” level of verifiable information to achieve credible results and subsequently accept anything offered to them.

The appraisal is required for more reasons than just checking a box for compliance.
**Yes, it is part of the risk matrix being performed by the lender and/or in accordance with the GSE protocols.
Note that in previous threads and discussions it has ALWAYS been my argument that appraisers are arguing the wrong point. It is not whether or not desktop appraisals, drive-by appraisals or Hybrids are USPAP compliant, because so long as a credible valuation can be arrived at with the available data, then they are USPAP compliant. What appraisers and the general public should be arguing is at what point is “less than” a full appraisal acceptable. Example: the result of the Lehman Bros debacle and the MBS revelation resulted in an average loss across the US of roughly 33% in property values. That is the largest decline in values in any of our lifetimes. I personally appraised areas that declined 50% in 6 months. That said, if a lender is making a loan on a property with a 50% CLTV, what is the reason for a “full” appraisal? Fed guidelines merely require “adequate documentation” for the compliance check box. If a AVM has a high enough confidence level and even if it had a 10% indicated margin of error, the risk of “loss” on the investment is near zero on the collateral part of the risk equation. You don’t need an appraisal of any kind. Sorry to burst anyone’s bubble of self importance, but what does a “Full appraisal” do in this scenario? Increase the risk level from zero to really really zero? What we as appraisers and society in general need to be concerned about is not that the GSEs use these products, but rather that they use these products at levels that are unbelievably scary. For Freddie
https://sf.freddiemac.com/tools-learning/loan-advisor/our-solutions/ace-eligibility-table

• No cash-out refi transactions with LTV/TLTV less than or equal to 90%
• Purchase transactions with LTV/TLTV less than or equal to 80%

Those numbers are wholly unacceptable in my opinion. I get that in the no cash out refi the money is already out there, but if its not already owned by the GSEs and was a portfolio loan to some other entity, there is no reason to take on that risk. Maybe 70% is acceptable across the board if the borrower had a credit score north of 750, but otherwise, these figures are what is going to be the downfall of this program.

Subscribing to the idea that removing checks and balances, as if no corruption is present or ever will be present, not the real world.
**Agreed. As a former fraud investigator for FNMA, I know all too well the Fraud perpetrated on FNMA. And before you roll your eyes, I am very outspoken about their current lending policies, including the use of PDCs that are not licensed appraisers. There is and always will be corruption, but so long as the data available can achieve a credible valuation result, then the checks and balances remain intact.

Predatory engagements are just around the corner at all times
** If you are saying they are at some point in the near future going to exist, then I disagree, however the point I believe you are saying is that they currently exist and could be the next order received, and to that I agree.

You guys do subscribe to tele health.
**Yes, but only for those “discreet” prescriptions

Again, my point has never been to argue that the use of these products is always acceptable. My argument has been that if done correctly by the desktop appraiser, they can be USPAP compliant and be performed with credible results. The challenge is that most desktop appraisers do not want to rock the boat and reject an assignment because it does not meet the “ability to verify data in the determination of credibility” because they become a troublemaker and will lose the pipeline.

Go for it. In fact; You should specialize in desktops which rely on pdc’s, so then you could charge even less.

https://www.appraisalinstitute.org/advocacy/washington-report-and-state-news/washington-report-and-state-news-recent/2023-12-regulators-struggle-to-address-gse-tips-on-appraisal-irregularities

Let’s examine current trends; Automatic complaint generations against appraisers is an ongoing event with GSE’s. What would make writing out more specific complaints which stick be possible? Desktop appraisals perhaps? Simpler work products?

Appraisers whom complete these things are practically begging to be turned into state boards, providing easier to examine work products which will lead to higher cases of penalties and repurchases, higher ratios of boards being willing to invest the time to clear or pursue the complaints.

If the market goes south, the billions of dollars investor people are not going to be satisfied with state boards excuses of inadequate manpower to investigate. They’ll turn the forensic review, switch back on an entire review industry whom looks at portfolios one at a time. Big contracts will incentivize the revamping of dozens of specialist forensic review companies digging into every single appraisal out there, just like what happened fifteen or so years ago. There will be rolling suspensions and revocations lists as investigators hand workable complaints to state boards to conveniently and swiftly process on a silver platter.

Like moths to a flame, the appraisers came back, despite the risks. Waivers… Desktops… Third party data fillers. Runners. Skippies. Robosigners. What’s new? All they’ve done is put a different descriptive label on inadequate working products which have already failed in the past to deliver as promised. Now with even less accountability and even more outsourcing!

The other concerns that I have are the legal concerns, specifically with E&O insurance. I have contracted by E&O (a larger one) and they have stated based on state board comments they would NOT cover the new hybrid appraisals due to the lack of verification of data that we are signing off on. If my E&O insurance is not willing to cover me on any assignments related to hybrid work, then why would ever want to do them? The WA state boards have already stated at ACOW meetings they expect USPAP to be upheld on all reports regardless of the scope of work. This includes verification of data from third party sources. If we have to verify the size of the house, there is only one way to do that and the is a physical inspection. The state boards agreed and pointed out that the PDC’s information must be verified. If this data had been discovered to erroneous in a complaint and they are not verified, it is on the appraiser head. SOOO, there is not E&O that would cover me and the state boards would come after me – so they have stated. That being said, I don’t think the state boards have the resources to follow up with anything they have stated, but that isn’t the point.

Desktops have never been anything remotely close to accurate or reliable as full service appraisals in the first place. In fact, desktops used to occupy the space which is now reserved for outright appraisal waivers. The notion that desktops make an adequate substitute for full service appraisals is an idea rooted in flawed logic.

For the pdc inspectors, good luck trusting that data, especially when the results are controlled by interested parties whom can omit, curate, or otherwise alter the inspection data before it comes to the appraisers desk, the appraiser would never be the wiser. If appraisers whom stall deals get blacklisted even to this day, what would one presume would happen to critical PDC inspectors?

Not being responsible for the actions of a third party is not the same as being held accountable for the reliability of signed conclusions, irregardless of the reliability or lack there of from various data providers. It remains the sole responsibility of the appraiser to be able to verify the accuracy of all data relied upon. As we say; qualify the data first.

Pdc’s, the ‘person’ performing the inspection, their names are omitted from the report, the appraiser does not get to know who they are, the appraiser does not get to instruct them in any way what so ever, ask any follow up questions, or instruct them on best methods. This is not best practices.

Many of us never performed desktops or drive by’s in the first place for the same reason. We were around to watch over a hundred thousand licensed appraisers wash out, having also gone through similar mental gymnastics to justify the downgrade of the profession and their own personal credibility. In the end, all the appraiser has is the integrity of their license and reliability of their conclusions.

The GSE’s are taxpayer backed entities. The appraisal is required for more reasons than just checking a box for compliance. Desktops were present in the working space specifically for the lowest risk compliance check box only requirement. For them to have shifted to substituting for actual verification of hundreds of thousands of dollars of loans…

Subscribing to the idea that removing checks and balances, as if no corruption is present or ever will be present, not the real world. It is the very presence of the full service detail (the check to the balance) which inhibits the fraud. Remove this check and balance, fraud and hucksters of every sort will flood into the space.

That’s just how it works and no argument about the validity of reduced checks and balances for convenience sake will ever stop this inevitable end point in any industry, much less lending, where some of the biggest commissions lay. That is the very reason such robust and redundant checks and balances systems are put in place, as a response to the predictable cyclical nature of crime and finances.

Predatory engagements are just around the corner at all times, so appraisers and appraisal systems managers as well, should be careful what they wish for. One day you may find yourself against the wall and will rue the day that all you were to the processors was a dollar sign on a conveyor belt, your approval or denial, rubber stamped. You guys do subscribe to tele health.

I have a base fee that I use which is grounded in how long an average appraisal takes me to complete, some I do quicker, some I don’t. If some unforeseen issue causes it to take much longer than an average report that is my fault for not seeing it when I quoted the fee and I eat it. However, I research every assignment I am given before agreeing to the fee and turn time, and if I determine there are complexities that will cause the assignment to take longer then I increase the fee. I don’t do waterfront properties for the same fee as I do tract homes, I increase the fee accordingly. Time = money, if you increase your fee because something is going to take more time, then you are in fact basing your fees on time, whether that is per minute, per hour, per whatever, its all about time. So please don’t say working per hour is BS, unless of you charge the exact same for every property you appraise no exceptions, then I just worry about your sanity.

Dave,
Just curious…. If you don’t believe in the cost approach,
How do you support your remaining economic life figure?
If you have to supply a land value for your clients or they require you to perform the cost approach and you cite extraction or as some call it abstraction, how do you “extract” the land value without calculating the depreciated value of the existing improvements, which requires a cost approach?
To that end, do you only use vacant land sales to support your lot size adjustments? or do you somehow divine the contributory value of the existing improvements to subtract from the sale price in order to determine the underlying land value?
Again, just curious.

As for the “high density tract homes” comment, Not exactly sure what you mean, but if that is not a characteristic of homes where you appraise, which is the case where I appraise, then AVM analysis is likely not something that is going to be very accurate. If you are suggesting that AVM analysis is not accurate in high density tract home areas, then I would suggest that you should wake up sleeping beauty, cuz the world and technology has changed and you should probably upgrade your camera from that polaroid instamatic you are using.

Appraiser Mike,

We cannot keep cleaning up your profanity-filled comments. If this continues, we will unsubscribe you and block your commenting privileges.

What you are saying is that you can perform a credible appraisal assignment from an exterior only perspective (2055) with the ability to see the front of the house, and maybe down 2 sides or if you are really lucky the rear because there is an alley but no cat smells and unless you can use Astral projection or have that cracker jack x-ray vision set of glasses have no data regarding the interior of the home. Yet, you somehow can’t complete a credible appraisal assignment with current photos of the entire exterior of the property, interior photos of all the rooms and some with multiple photos along with some commentary from a pizza delivery person who can’t discern the cat odor from the pepperoni embedded in his/her nostril? OH, and your liability is way less because you are relying on a 3rd party for which you are not responsible for their actions, unless of course the PDC is so bad that you should not have relied upon it in the first place which you have a right to do. AND of course the desktop appraiser needs to have geographic competence to know what external influences are potentially impacting the property.

to summarize this Paired Analysis of 2 assignments:
2055-exterior only SFR sit on the street, take pics of the front of the house rely on public records data regarding the size of the house and room count do my own research and drive each of the comparables taking a front pic. that may or may not look the same as when the property was sold because its 6 months old and the new owners have done “some work”
Yep, I can do a credible report with that

Desktop Appraisal
PDC report with exterior photos of all sides of the property
Interior photos of the property
Floorplan – that can be compared to public records data which is all you would have in a 2055
Sketch with dimensions and GLA calculation – again that you can compare to public records data
Some commentary regarding adverse/beneficial characteristics of the property that are confirmed with photographic evidence
Do your own research for comps and use MLS photos that best represent the sale when it sold.
Nope – I can’t perform a credible appraisal

Seriously? I get the whole fee structure thing, but to somehow suggest that desktop appraisals are not “Legitimate” is disingenuous at best, but more on the level of indignant narcissism. And if you tell me you don’t or wouldn’t accept “drive-by” appraisals, then the conversation is over because either you are lying or you have made a business decision not to do them which is your purview.

***This comment was edited by AppraisersBlogs Team. Profanity is edited out because it’s inappropriate within the context of this blog.***

I never said I enjoy making less than a Target employee, ***. ***. I do desktop appraisals because I am handicapped. I made over 80k last year doing desktops. Pretty sure *** like you hasn’t made that money ever. By the way, its part time to. I work 20 hours a week. Laughing all the way to the bank, thanks to *** who don’t want to do desktops. Thank you ***. By the way, real nice people work at Target.

In case people were not aware, one of the issues with the E appraise IT scandal which led to hvcc and the subsequent dodd frank reg z act, was that amc’s were altering appraisal reports without the appraisers permission, the re affixing the digital signature back in there. Sort of like XML files allow now as an industry requirement. That used to be a topic of concern.

The apparently better bright idea is to dilute the credibility of the data used behind the appraisal and legitimate signature, then send the appraiser down instead of allowing a defense for having identified purposeful manipulating the appraisers conclusions, forging the signature. What better way to circumvent this than to use unlicensed ‘inspectors’ hired by the same companies whom may seek to influence the appraisers conclusions. One could make a rather reliable prediction that ‘pdc inspectors’ whom are too thorough, probably won’t last long. Or nobody will be the wiser if managers of pdc persons omit relevant data. The difference between working with licensed individuals vs unlicensed.

https://appraisersforum.com/forums/threads/amc-asking-for-permission-to-use-my-signature.161439/
https://guide.freddiemac.com/app/guide/section/5606.3
https://www.hud.gov/sites/documents/DOC_36182.TXT

I finally found someone who’s been in an industry 22 years and enjoys making less money than a temporary Target employee.