Appraisers Should Bristle

Jeremy Bagott

Nonprofit Making Bacon at the Public’s Expense. Appraisers Should Bristle. Stealthy vice again masquerades as public virtue. The head of yet another government-subsidized nonprofit was found funneling cash to cronies while raking in obscene compensation. The nation’s long-suffering appraisers will recognize the pattern in a porcine publisher they are forced to frequently slop as frenzied Beltway porkers go whole-hog on the swill.

Revelations surfaced recently about a New York City nonprofit receiving government subsidies to aid the homeless. The nonprofit then lavished a garden of earthly delights on its boss and his cronies. Jack Brown, the chief executive of CORE Services Group, a New York City provider of services to the homeless, was found to be receiving a salary and benefits of over $1 million a year.

A New York Times investigation published last year found that the housing boss also hired relatives and steered millions of dollars to for-profit companies he controlled. The story is all too familiar.

For 2020, Brown received a 15% raise and $40,829 bonus from CORE, bringing his base pay to $386,298, the New York Post reported. He got another $460,000 — an 8% increase from the previous year — from affiliated groups. On top of that, he received $188,461 — an increase of 16% — and a $22,500 bonus from a related nonprofit called CORE Services Group NY Inc.

“It’s way out of line,” Daniel Kurtz, a lawyer specializing in nonprofits and former head of the state Attorney General’s Charities Bureau, told the Post.

The nation’s captive appraisers will see striking parallels in a freeloading 501(c)(3) publisher that has learned to harness government’s coercive powers to maximize its proceeds by continually changing its national appraisal standards, the copyrighted “Uniform Standards of Professional Appraisal Practice.” The publisher also receives annual government grant funding of up to $1 million a year via a dishonestly labeled “National Registry Fee.” With little accountability, the publisher’s tiny federal patron treats the commandeered cash as something akin to a slush fund. The rogue entity operates outside the Congressional appropriations and review process.

“Appraisers are tired of supporting this Beltway barnyard,” said appraiser-author Jeremy Bagott. “The $40 annual fee multiplied by 80,000 appraiser licenses nationwide buys a lot of finished hogs.”

The publisher sells copies of its standards to captive buyers at monopoly pricing. Meanwhile, it receives annual subsidies from the obscure federal agency whose executive director was once an employee of the publisher. The nonprofit is known as the Appraisal Foundation. It has harvested other government handouts and even applied for and received PPP relief during the pandemic, despite the fact that its government handout is guaranteed in a federal statute.

For calendar year 2019, the most recent IRS filing available, the tiny nonprofit’s long-tenured president, David Bunton, received $458,927 in compensation – $354,537 in reportable compensation from the nonprofit plus an additional $104,390 from related organizations.

Bunton lists just 14 employees at his organization, from which he draws income that is more than twice the salary of the chairman of the Federal Reserve, who oversees 20,000 employees and controls the nation’s currency and central bank. In fact, Bunton’s organization pays him more than the salaries of the Federal Reserve chairman and U.S. Treasury secretary combined.

In 2020, details surfaced that Bunton was “retired in place,” receiving internal retirement pay in 2017 on top of his regular CEO pay, effectively more than doubling his reportable compensation to more than $760,000 that year. It would be no one’s business if his diminutive organization were not receiving guaranteed federal money each year and not exercising a monopoly at the expense of a class of citizens.

Over a recent eight-year period, the nonprofit received $6.5 million in federal grants and parlayed that, thanks to monopoly pricing, into $27.6 million in publishing revenue.

His group partners with private corporations, and representatives of lobbying groups sit on its board. It receives no-bid contracts from federal agencies, such as the U.S. Department of the Interior, and assigns resulting projects to former trustees on the CEO’s executive compensation committee. Bunton and a clique of favored trustees travel the globe on junkets to places like Paris, London, Rome, Rio and Singapore. In the world’s grand salons, these global villagers trade jabs and jousts with notables like the former British Chancellor of the Exchequer Alistair Darling.

“This nonprofit is like a holding lagoon on a Carolina hog farm in the middle of an algae bloom,” said author-appraiser Bagott. “You just can’t hide the smell. A profession that helps safeguard trillions in mortgage loans is ultimately at the mercy of a handful of lobbyist-influenced world citizens flush with U.S. government patronage and a license to mint money. Unchallenged power over decades has resulted in waste and abuse.”

Meanwhile, at Brooklyn-based CORE, federal and municipal investigators are rooting around. Brown, 53, previously worked for Correctional Services Corp., which was embroiled in an early-2000s Albany bribery scandal.

Last year, New York City pledged to cut all public ties with the nonprofit but just can’t seem to help itself.

“If there’s any more thankless job than appraising real property, it’s slopping hogs down on the farm,” said Bagott. “Appraisers must take this wasteful and abusive organization seriously. This nonprofit is makin’ bacon at the public’s expense while potentially putting trillions in mortgage loans at risk with its continually changing standards.”
 

Image credit flickr - Aaron Hall
Jeremy Bagott

Jeremy Bagott

Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

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4 Responses

  1. Baggins Baggins says:

    Thank you for looking into this.

    https://www.irs.gov/charities-non-profits/tax-exempt-organization-search

    I’m researching what are exact requirements for becoming and maintaining ‘non profit’ status. First, some general organization and their structure references for those newer to this industry.

    Wiki page; TAF ie The Appraisal Foundation
    https://en.wikipedia.org/wiki/The_Appraisal_Foundation
    Wiki page; Oversight mechanisms and institution references.
    https://en.wikipedia.org/wiki/Federal_Financial_Institutions_Examination_Council

    Found this which is interesting, perhaps someone could write them? The National Counsel of Non Profits.
    https://www.councilofnonprofits.org/trends-policy-issues/government-grants-contracting
    “The National Council of Nonprofits and its network of state associations of nonprofits are committed to improving the government-nonprofit contracting relationships and fix broken and antiquated grant/contracting systems in order to promote efficient and effective programs and services.”

    What can get a non profit status revoked, requirements, etc? A few links. And the irs complaint form for investigations into non profit companies. From NAR to TAF and beyond, wildly unjustifiable profits with inadequate service to their respective industry segments. All appraisers want is fair representation, these groups inability or reluctance to provide that, is what has led us here.
    https://www.irs.gov/charities-non-profits/irs-complaint-process-tax-exempt-organizations
    https://learning.candid.org/resources/knowledge-base/tax-exempt-revocation/
    https://www.nolo.com/legal-encyclopedia/protecting-nonprofit-corporation-tax-exempt-status-29895.html
    https://www.nolo.com/legal-encyclopedia/taxes-nonprofit-corporation-earnings-30284.html

    You know, it was one thing to get run around with continual uspap updates, always buy that book, take the class. Not ideal, but tolerable. But then for all these wealthy people who’s primary job functions are to be advocating for appraisers, to habitually capitulate to special interests whom clearly prescribe our complete replacement so their industries can capture the entirety of our industries income potential? As if our careers never existed? As if our contributions and investments have no meaning or merit? As if housing accessibility and affordability has anything to do with the individual appraiser? As if we deserve to be replaced by a myriad of other corporate scale industries and non licensed persons for the betterment of society? We are not subscribing.

    All you people and your for hire shills need to go. We want appraisers and industry managers whom will honestly represent us. We demand separated billing for amc’s to stop their constant financial incentive to pilfer our income and exclude us from working opportunities which meets true definitions of racketeering and/or anti competitive practices. We demand an immediate reversal of course on the wholesale exploitation of our hard earned career positions, our ongoing incremental replacement and services downsizing with desktops, hybrids, third party, avm, automated utility tools, avm certification programs in development, etc, etc.

    These people sit back like yes men making fortunes while we’re struggling to maintain very small humble 1099 businesses with extra ordinary high levels of excess regulation and improper competition simultaneously applied right next to inadequate representation. This is taxation without representation, the regular appraisers out here have no effective representation as we pay a fortune to maintain our licenses and keep struggling small businesses open. Oh which many will soon shutter.

    Keep us so busy and distracted, think we won’t notice or be capable of this kind of research and resistance? We have become professional investigators and masters of bureaucratic navigation by merits of our careers and the excess pressure applied to this industry, continually building over decades. If these people were tasked with regulating lawn mower safety we’d all be in heaps by the side of the road, dead and buried. They have clearly failed to provide the appropriate service and appropriate representation for this rapidly changing valuation services landscape.

    Appraisal management corporations (amc’s) are not appraisers, and neither are tech companies or politicians or lenders. Realtors are not impartial valuators or impartial observers either, none of those companies or persons have any business completing work which should be channeled to regulated licensed appraisers. The appraisal industry people are representing everyone except the majority body of individually licensed appraisers. Enough is enough. We want immediate revisitation of the ‘management rule’ because with improperly co mingled combined amc and appraisal service billing, when appraisers discount for an amc, they have indeed provided a thing of value to be the preferred selectee, as the amc pockets the difference and does not return cost savings to consumers. The same thing with technical services like avm’s, those are not appraisal valuation services provided by licensed insured individuals and should not be represented in consumer disclosures as appraisal service fees. We urgently request effective advocacy, which promotes full service, better compensation, capturing more work volume rather than capitulating to less, an expansion of encompassing appraisal license requirements for any and all tasks involved with appraisal ordering, valuation development, any and all real property identification and qualification for mortgage lending services, including reiterating the appraisers need for flexible voluntary developmental methodology (ansi mandate reference). Additionally we all want a refund for as many years of compulsory uspap books and classes.

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  2. Avatar Realist says:

    Often we look at scum like internet or financial scammers and say – just think what these very smart people could accomplish for good instead of destroying innocent people.

    The same goes for power hungry lowlifes. But lowlifes are worse than scum. Scammers know they are scum and are merely trying to be stealthy and not get caught. But the power hungry lowlifes try to project that they are upright, doing good, and model citizens. They are constantly building protective mazes filled with smoke and mirrors around them making them untouchable. These arrogant backroom deal makers don’t care about what is right and have managed to achieve accountability to no one.

    These morally depraved dictating loose cannons, who have nearly unlimited power over us, are growing in numbers exponentially in more and more power positions. It is the “power over others” mind set that is crowding out the “how can I serve others” component of appraising. Only a massive attitude change can turn this evil around. Most appraisers I know personally are still in the “serving others” camp – and are experiencing a form of hell on earth much due to the hypocritical, confusing, poorly thought out, inconsistent and USPAP violating dictates. In other word, the lowlifes are accomplishing what they set out do. The lowlifes get warm pats on the back and all kinds of rewards. Appraisers get repeated painful punches in the gut and their professional life sucked out of them.

    You begin to wonder if there are any truly good people left in power positions.

    10
  3. Avatar Pat Turner says:

    Realist,

    A brilliant observation. A good friend of mine (he’s in Tulsa and I am in Richmond) speak with each other about what you are speaking about. Between us we have over 75 years experience.

    It’s the appraiser that doesn’t know what they don’t know.

    There have been arguments ad nauseum regarding the easing up on the difficult entry requirements to appraising or not.
    No class or seminar can teach morals or honesty. No online class imparts day to day occurrences that knowledgeable professionals experience. I am even amazed at how the powers that be are doing everything they can to damage our reputations. Look how the Wells Fargo/Appraisal Waiver scandal got quieted down!!!

    We must teach our minions the pleasures as well as pitfalls of being a professional appraiser. BUT we can lead a horse to water……
    My suggestion?
    Either join and activate organizations that actually promote the interest of Residential Appraisers (ASA) or start a new one asap. The old way ain’t working.

    Oh……additionally, the appraisers doing these desktops and hybrids are just the appraisers that should not be doing them. They just don’t know it!

    When foreclosures start the lenders will want the best answers they can get.
    It’s not avm’s, desktops, drivebys, waivers, or hybrids!!

    7

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Appraisers Should Bristle

by Jeremy Bagott time to read: 4 min
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