Waiver Was a Snap – It’s All About Control

North Dakota Was Told Getting A Waiver Was A Snap - ApppraisersBlogsWhen North Dakota re-applied for a state-wide waiver, the appraisal industry was nearly unanimous in outrage at the audacity of the state to apply for one in the first place because its entire premise was false. Some of the facts brought up by the appraisal industry in opposition that were ignored were:

  • There were more appraisers in the state than there were a decade ago
  • There are plenty of appraisers in the cities
  • Rural appraisers have always been hard to find because the economics make nominally feasible to cover those markets
  • The economics of AMC-gouging of appraiser fees had forced more appraisers to specialize
  • The difficulty and limited amount of data in rural areas places even more pressure on the economics

The appraisal industry, known for its infighting to its own detriment, actually got together on this matter and various organizations, coalitions, and individuals wrote in to make the argument against such a waiver. And it was obvious to nearly all of us that the decision was pre-determined.

FDIC was one of the most anti-appraiser pro-waiver agencies on the ASC and was “hell-bent” on issuing a waiver. Both the FDIC and OCC even sent senior staff to North Dakota (and other rural states) to promote this push for waivers.

I pointed out last week that the waivers were being pushed by the banking members of ASC or worse, leading those in the banking industry down the waiver path. This bias was illustrated by the comments made by Marilyn Foss of the North Dakota Bankers Association (NDBA) who said that the North Dakota Appraisal Board has known about the rural appraiser challenge but hasn’t come up with a solution and NDBA wanted a solution. (The solution is economics but that’s not a topic the banking industry is willing to look into.) She basically said that FDIC encouraged them to apply for the waiver in 2017 because it will be a piece of cake per FIL-19-2017.

She stated that in May 2017, the FDIC published FIL-19-2017, which inspired the State to act on the issues of scarcity and delay.

So North Dakota applied.

And there is this (emphasis mine):

R. Clayburgh, the President of the NDBA, said that not all in-State appraisers are available to all lenders as some appraisers limit their work to specific lenders or appraisal types. He said legislative leadership brought lenders and appraisers together to address education requirements and that there is a potential for State educational institutions to set up a program to assist those who want to enter the appraisal profession. He added that lending has slowed due to the difficulty in finding comparables which delay lenders from receiving completed appraisal reports.

In other words, the view of the NDBA is that in periods when there are no comps, they need a waiver to make loans. Step back and think about that.

There were concerns raised by the banking industry on slow turn times, yet Corey Kost of the North Dakota Appraisal Board indicated that “turnaround times in North Dakota have improved over the past few years.”

The commissioner of the North Dakota DFI was basically told to apply for the waiver, and this would be an easy process. I don’t think they realized the outrage they would create in making that waiver request. North Dakota got their waiver thanks to the banking regulators but were quite beat up in the process, which may discourage other states from applying.

Bold emphasis mine on the following.

L. Kruse of the North Dakota Department of Financial Institutions (DFI) stated DFI’s mission and the reasons for the Request. She emphasized that a scarcity of appraisers in the State was leading to a delay in turnaround times on appraisal reports which was affecting the closing of loans. She said population is not the only indicator of scarcity and that in North Dakota there is scarcity by reason of geography. She said the high cost of appraisals is paid by the customer which causes harm. DFI does not feel the waiver would cause safety and soundness issues. She commented on the Interagency Advisory on the Availability of Appraisers issued in May of 2017 and stated that in a meeting with Federal agency representatives, she was told that waivers could be used to address scarcity. She said the request was submitted and provided evidence in good faith to provide relief to consumers.

After all, the premise behind the waiver is that banking regulators in their zeal to control the mortgage process, have sought to destroy independent valuation for no other purpose than that. Control. The justification for waivers has nothing to do with appraiser shortages (because there “appraisal shortages” was a false narrative cooked up by the AMC industry a few years ago during the refinance boom yet the reality was in the decline in appraisers willing to work for less than 50 cents on the dollar).

It’s 2019 people, and this ND waiver is preposterous.

  • Will result in only uninformed people performing USPAP compliant appraisals without training or experience
  • Imagine their personal liability?
  • Consumers and lenders won’t be able to file complaints
  • Non-licensed appraisers will be challenged to locate the hard to find data in rural areas that experienced appraisers can find, so… they will simply use whatever they can, which will decimate the quality of reports submitted.

When a regulatory action like the North Dakota waiver occurs, and it is completely illogical on all accounts, there are deeper underlying issues at play coming from above that have NOTHING to do with protecting the public trust.

This post is a continuation of “The Banking Industry Is Driving The Waiver Movement” story in Appraiserville, within last week’s Housing Note.


Jonathan Miller
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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3 Responses

  1. Avatar Bill Johnson says:

    If a state has (fill in the blank number of appraisers), and all work with AMC’s (not true), but yet appraisers aren’t mandated to sign up with EVERY AMC, then by default the lenders business model prevents them from engaging with most appraisers. This in part paints the illusion of a shortage of appraisers.

    Excuse me, I’m waiting for my Uber and I don’t know what’s taking so long. Perhaps it’s related to me only traveling in purple colored cars.

    Seek the truth.

  2. Donna Halfpenny on Facebook Donna Halfpenny on Facebook says:

    The only shortage of appraisers is a shortage of appraisers willing to undercut themselves and their industry by accepting below R&C fees and being treated unprofessionally by AMCs and lenders.

  3. Retired Appraiser Retired Appraiser says:

    Are you trying tell me that I can no longer reenter the “profession” and hire a well groomed chauffeur while outsourcing my work to typists in India?

    Say it isn’t so!


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Waiver Was a Snap – It’s All About Control

by Jonathan Miller time to read: 4 min