Proposal to Eliminate the VA Fee Panel
VA Fee Panel – The Appraisal Institute does not believe that a move to a lender select program, such as those found in the conventional or FHA mortgage markets, would improve timeliness, nor would it be in the best interests of veterans.
On May 18, the Subcommittee on Economic Opportunity held a legislative hearing on the Discussion Draft of H.R. 7735, Improving Access to the VA Home Loan Act of 2022. The bill is sponsored by Representative Mike Bost, R-Illinois, the ranking member of the House Veterans Affairs Committee, and Senator Dan Sullivan, R-Alaska, a member of the Senate Veterans Committee. It would require the VA to consider when an appraisal is unnecessary and when a desktop appraisal should be used and, a move from the VA Fee Panel to a lender select program. Mortgage Bankers Association advocated for the proposal while the Appraisal Institute opposed it.
Desktop appraisals are faster and less expensive than in-person appraisals. They allow appraisers to view and assess property virtually rather than in-person, which cuts down on closing costs for homebuyers and accelerates the buying process.
(b) WAIVER OF REQUIREMENT FOR CERTAIN PROPERTIES.
— In prescribing updated regulations or program requirements under subsection (a), the Secretary shall consider making changes applicable to —
- certification requirements for appraisers;
- minimum property requirements;
- the process for selecting and reviewing comparable sales;
- quality control processes;
- the Assisted Appraisal Processing Program;
and- the use of waivers or other alternatives to existing appraisal processes.
(c) DESK TOP APPRAISALS.
— In prescribing updated regulations or program guidance under subsection (a), the Secretary shall provide guidance for the use of the authority under section 3731(b)(3) of title 38, United States Code, taking into consideration —
- situations in which the use of such authority would provide for cost savings for the borrower;
and- situations in which a traditional appraisal requirement could cause a delay substantial enough to jeopardize the ability of a borrower to complete a transaction.
Appraisal Institute letter to Chairman Takano & Ranking Member Bost
Dear Chairman Takano and Ranking Member Bost:
On behalf of nearly 16,000 members of the largest organization of professional real property appraisers, this is to express our concern and opposition to H.R. 7735, the “Improving the VA Home Loan Benefit Act,” which if enacted, could degrade the VA Home Loan Program and home buying process for Veterans. The VA appraisal process is widely regarded as the “gold standard” in credit risk management, and this is illustrated by the fact the VA outperforms other federal loan guarantee programs by large margins. We believe the strong appraisal risk management components unique to the VA program directly contribute to this strong standing and Veteran benefit.
We continue to hear anecdotal concerns about the VA appraisal process compared to the conventional or FHA process. We urge further investigation into these claims before taking extreme action to radically change what is roundly a successful program.
Turnaround Times
We continue to hear whispers of slow turnaround times for VA appraisals. However, we have yet to see credible and quantifiable data that supports this claim. One thing that may be contributing to the different estimates on paper is that the VA counts their turn time differently than the conventional market. With the VA, once the appraisal assignment commences, the clock starts, and it does not end until the appraisal is completed. With a conventional loan, if there is ever an issue with scheduling the assignment or something occurs that is out of the hands of the appraiser, the clock stops and does not proceed until the issue is resolved.
Additionally, the VA has the Tidewater Initiative –a notice of value that occurs if the appraisal is below the contract price, which is more robust than anything available in the conventional market. Tidewater provides consumers and stakeholders opportunities to provide relevant information to the appraiser that maintain appraisal independence. While this benefit adds time to the VA process, it provides great benefit to consumers and stakeholders in providing a direct path to provide relevant information to the VA appraiser.
These issues alone could explain much of any apparent differences in timeliness between programs.
Special Authorization
This legislation is unnecessary because the VA does not need any special authorization to perform streamlined or “desktop” appraisals, as included in Section 2c. A provision in the “Blue Water Navy Vietnam Veterans Act of 2019” allowed the VA to initiate a hybrid appraisal program to address perceived slower appraisal turnaround times in rural areas. This program has been rolled out as the Assisted Appraisal Processing Program (AAPP). Under AAPP, the appraisal report may be completed based solely on information gathered by a person with whom the VA fee panel appraiser has entered into an agreement for such services. Other VA appraisers, non-VA fee panel appraisers and appraisal trainee/apprentices are eligible to perform this work with the VA fee panel appraiser.
This program is still in its infancy, and we suggest that greater emphasis be placed on both lender and appraiser education on its availability. A minority of VA lenders currently accept the AAPP process, and this contributes to slow uptake on the part of appraisers.
Other Concerns
VA Fee Panel
The Appraisal Institute does not believe that a move to a lender select program, such as those found in the conventional or FHA mortgage markets, would improve timeliness, nor would it be in the best interests of veterans. The strong loan performance of VA speaks to this point.The VA recruits appraisers on an ongoing basis to the Fee Panel, and the Appraisal Institute has assisted the agency in marketing the opportunity to the appraisal community. VA officials report that it actively recruits existing licensed and certified appraisers to the Fee Panel. The agency has undertaken efforts to proactively contact licensed and certified appraisers encouraging application to the Fee Panel, and these efforts have resulted in better coverage by the VA Fee Panel in recent years.
Desktops
The VA Home Loan Benefit Act attempts to advance desktop appraisal assignments in the VA process, drawing comparisons to how Fannie Mae and Freddie Mac have released desktop allowance in recent years. It is important to recognize the GSE desktop allowances have a great deal of constraints built around them, including limitations to existing portfolio loans, credit score requirements, loan-to-value (LTV) constraints, and a massive uniform appraisal data system supporting it. In contrast, VA has limited resources, guarantees 100 percent LTV, and has a small percentage of loans below 90 percent LTV. If the Benefit Act were to be enacted as is, it would be introducing high risk into an already high leverage situation.Reports of Veteran Discrimination
Appraisal Institute members have heard concerning reports that some real estate agents may be consulting clients to avoid working with VA contracts, giving preference to conventional or cash offers. That would result in outright discrimination and a fair housing issue under some state laws, which treat Veterans as protected classes. We believe this issue is serious enough to warrant further investigation by the House and Senate oversight committees in in concert with the VA.In sum, we believe the VA appraisal process is sound and deserves broad support by the mortgage and housing sectors. We believe there are ways in which the program can be enhanced – education and awareness on the AAPP program, being one. We look forward to working with you to see that occurs in a timely and efficient manner.
Please contact Bill Garber, Director of Government and External Relations at 202-298-5586,
bgarber@appraisalinstitute.org or Brian Rodgers, Manager of Federal Affairs, at 202-298-5597,
brodgers@appraisalinstitute.org if you have any questions or would like additional information.Sincerely,
Appraisal Institute
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It is my belief the elimination of VA appraisal standards and approved Appraisers of same would add to higher rate of error in appraisals as well as potential higher rate of foreclosures.
Now would be the worst time to do away with the panel, volume has slowed considerably with rising rates, and with the costs of everything going up and inflation more people will be In danger of losing their homes. Appraisers will be needed to provide accurate valuations, not desktops! the past 3 years were complete craziness with record low rates and a the biggest refinance boom since the mid 2000’s and appraisers were blamed for causing delays, but no one could keep up with that volume. It’s going to be slow going until the midterm elections!
The VA way is the best way to appraise real estate for the nation. I continue to see outrageous sales prices being made by leaving the market area for conventional and FHA appraisals. Of course realtors and bankers want to now control the VA way as they know they still have conventional and FHA appraisers under their thumbs.
The tidewater program is the best I have ever seen. It allows the public to feel they have input in the appraisal process, and allow the appraiser to review any additional comparables that may have been overlooked by accident before the report is even submitted.
The entire country should have been put under the VA way instead of the management company way. But we all know why it wasn’t.
Lenders and Realtors do not like VA because VA appraisers do not fear losing their clients, we are allowed to do our jobs, without the stress of fear, and provide accurate evaluations to the public.
Lenders know all about it too. The younger appraisers by now have hopefully had that illuminating light bulb over their head moment. The same lenders whom push appraisers around by way of amc’s, know all about fee sharing, driving down appraisers fees if the lender happens to assign direct, all those lenders turn right around and comply with VA fees for VA loans. They know the quality difference, the know the compensation difference, they know how many appraisers refuse amc service, and due to lax fnma & hud oversight, they don’t care. I warned the VA appraisers, you’re not safe from these influences. Funny, now the AI rises up to do something, after 15+ years of amc abuse. Thought they were shielded and it would not happen to them. We’re all swimming in this same fish bowl.
What no one is looking at is that these other organization have a bidding system for appraisals. So the lowest bidder gets the job. Not always the best appraiser but willing to do the job for less money. LAs such, I have only seen form fillers rather than true market analysis appraisers found in the VA system. Yes, I am a VA appraiser for over 20 years and love to work with the VA. They are fair and YES we have turntime requirements.
Example, I had a FHA appraisal recently done on my home. It was sub-standard! Many technical errors along with no due diligence. They missed major issues which would be q reason to report to the State Board and this individual would mostly likely be fined or license taken away. It was that bad.
I AM a VA appraiser. The VA process is without question the “GOLD STANDARD” of how appraisals should be completed from start to finish. The VA can always add more qualified appraisers when the need is there. The elimination of the VA appraisal program would be a grave mistake. As a veteran myself, I appreciate the program and the way the VA appraisal program functions.
Once again it all gets back to speed. Everyone complains (NAR, NHBA, FNMA, ect) about how slow the appraisal process is, and the only solution they come up with is desktops? That shows the world the ignorance of these organizations.
VA is my bread and butter, and I waited 10 years to get approved to become a roster appraiser. They do that for a reason; to make sure you know what the hell you are doing. If they change the VA appraisal process, it’s not going to be better for the appraiser, the lender, or ultimately the veteran. Follow the money.
Speed… just today I received an AMC “bid opportunity” on a property that my bid was declined 8 days ago. You want to save TIME?? Get rid of the AMC business model!! In 2007 they were raising requirements to become an Appraiser because there were too many. NOW, not so much. Give me back my business, allow the Appraiser to actually make a $$ and turn times will NOT be your problem.
EXACTLY! Agree 100%
My realtor friend called me panicking one day. She said that all of the dates in the contract were expiring. The AMC had not ordered the appraisal in 3 weeks. I told her to send the loan to a lender that I worked with. After I talked to the appraisal department and told them what had happened the lender gave me the okay to do the appraisal, which was completed in 2 days, the lender closed that Friday.
My appraiser friend does a lot of work for this AMC he was able to verify that the appraisal was never ordered. He even called the AMC and said that he would do the appraisal, but the AMC was still procrastinating. Long story short, work with people who know what the hell they are doing. Stop blaming the appraisers for everything. 3 more years and I am done, if I can put up with this disaster for another 3 years. After 39 years it is getting old dealing with morons.
I just lost a client. I gave them a heads up that the same model home as the subject on the same street had just closed for 60k below what the subject was under contract for. They canceled the appraisal with me. Ordered it with another appraiser and closed the loan. I have not received any other requests from them after working with them for 5 years. They would even call me if they needed help with something. I wonder what comparables the second appraiser used; he must have gone to a differ market to support that inflated value. I tried to protect my client and they cast me aside. That’s okay I can sleep at night.
Guaranteed rate pulled a similar move on me. That panel is ran by a person who’s not even qualified to look at an appraisal, much less manage a panel of licensed appraisers. In the end I found out he was actually lying to the mortgage people and customers, whom were all out to get me, until I spoke to them in person and explained what was happening. If that guy would have had a license, I would have had it revoked. But he does not have a license, and still manages that panel. The other lender I lost was managed by an appraiser whom previously had his licensed revoked and then had an application to be a mortgage banker denied too. And he’s in charge of a national lender appraisal panel. Go figure.
Quality management matters. We can identify good vs mediocre appraisal management programs by two important and simple metrics; Not using an amc. And hiring a qualified licensed person (or preferably several licensed people), to administrate the appraiser panel. Of course it’s fine if there are support persons not licensed. But when a lender allows their appraisal panel to be managed by people whom have had licensed revoked, or have never had licenses at all, that is on purpose so the lender can manipulate the process. The amc requirement to have a licensed appraiser is a non starter, it means nothing, they have no independence or if they do, it’s quickly lost via lender pressure to the amc which passes down the line. Even qualified managers have a hard time standing up to lender pressure, it’s constant, and just the way it is. VA process is helpful because it’s like a clearinghouse approach, quite similar to the IVPI proposal imho.
The rotation panel is the ONLY system left with any credibility in lending. I have proposed for years that the Fed mandate a state-maintained panel copying the VA panel. This would promote consistency in reporting and give the Appraiser a better opportunity to say NO “when needed” without being fired for doing their job. Adding Uber Driver Inspections is an idiotic proposal, especially with the looming market volatility we are facing for the next 12-24 months. PLEASE pray for any common sense to be alive in The Swamp!!!
I am not a VA appraiser but I wish I were. There is no doubt in the mind of any fee appraiser that the VA System IS the gold standard. These appraisers are able to provide a credible appraisal without fear of losing work. The agents nor the lenders have any leverage over the VA appraiser because VA sets the panel and rotation. I still lose work doing conventional and FHA appraisals. It is really interesting how all of a sudden I’m out of the rotation of a specific AMC or bank after “missing a value.” This is not supposed to happen but it still does. I had two agents in the last year try to have an appraisal reassigned from me. I have to admit, both AMCs had my back and told the agents that they were violating law. As said above, all appraiser panels should work this way the VA system does. The VA System provides much less credit risk. The results speak for themselves.
The VA panel IS the gold standard for appraisals. The Veterans are protected against the AMCs that have ruined most of the conventional and FHA appraisal process. AMCs are shopping for the cheapest and fastest appraiser, so they can charge the homeowners $1,200 for the appraisal and pay the appraiser $450. No, that’s not an exaggeration. Our Veterans deserve the protection of the VA, and the VA’s oversight of the VA appraisal panel.
That’s what gets me. Reasonable consumer protections only for veterans, and all other regular nobody worthless bottom of the barrel non essential consumers and appraisers can get fleeced all day long without consequence. Amc’s previously tried to break into the VA realm, thankfully were denied. This website has an article on that years ago, use search tool upper right. And what is going on with this mythical unicorn, as if lenders processing times are more important than anything else? Make them wait.
baggins… I see socialism all over our country, firemen policemen teachers, 5 million government workers, I don’t know how many VA appraisers that includes.
The appraisal gods know that the VA way was the way to go, but they did not do it, 25% of the loans would have never made it to settlement and they all knew that.
So the appraisal God’s decided it was better in the public interest to get faulty loans, they learned that only 15% of the people will stop paying their mortgage, and that 50% they learned how to make a fortune off of between lawyers and repair costs.
That’s why I laugh when everybody’s complaining about the new measurement system, if we could not correct the loss of our clients and substitute it with AMC’s paying us 50% less than we used to get paid, I just cannot get a board anything else that has to do with appraising and righteousness
We don’t even have an idea of the repurcusions or results of avms, full waivers or desktops yet!!
If the economy stays on this path watch out.
So what do we do about it? Now that we know the mortgage lenders are all behind this push to rid the VA fee panel and independent appraisers. They are behind to the bogus lie there are not enough appraisers, appraisers are racists and appraisal waivers, the AVM and desktops appraisals are the best solutions.
Should we all sign a petition? What course of action should we take? Suggestions, anyone?
I think there is a possibility that the large mortgage companies are behind all of it. They desperately want to remove appraisers from the process. Some information I’ve seen in this blog suggest there were some irregular donations of small amounts from large mortgage company employees to certain political representatives documented in a public records spreadsheet. I have not researched it further. We need some type of organization that will defend us. I have joined the AGA and recommend all appraisers do the same. We need a collective voice or we may lose this business or have it muched reduced.
I have 47 years in the appraisal business. I’ve lived through it all. Going to lender-select appraisals was one of the worst mistakes FHA ever made and resulted in widespread fraud and manipulation, which had already been a long standing problem for the GSEs after they went this route in the 1970s. Despite every recent effort to erect firewalls between appraisers and lenders, manipulation remains a problem except with VA. The reason is simple: VA hires the appraiser and is the client. That is a firewall that works. As to slow turnaround, VA has always had timeliness standards for its panel and VA appraisers typically complete reports faster than conventional, FHA and AMC-ordered assignments. To close, for VA, the question is “Who are we working for, the lenders or the Veterans?”
Good answer
Wait, FHA used to order in a manner similar to the VA? That’s where the FHA standard minimum fees came from and lingered on, until at some point they just ignored their own guidance on minimal acceptable fees? I remember appraisers used to push this old document from FHA detailing appraisals must have a minimum $450 fee. FHA pushed the one rule which was what was it called again, not the junk fee rule but it was something similar, oh yes, ‘the unearned fee’ rule. Shortly after HVCC became Dodd Frank, and was summarily ignored by the entire lender and amc industry. This is where the old timers rooted their IVPI proposal from, because that’s what used to be in place and what actually worked. Learning new things all the time. Not like it matters, I’m dreaming of riding into the sunset on a lawn mower. I did not like VA panel, they demanded too much, every lender was immediately on the phone bothering me and I never fielded so m any emails and phone calls in my life. It was always the VP or someone high up, expecting me to treat every VA borrower like a golden nugget. People were like, you’re the only VA appraiser that ever answered the phone for us, and now I understand why. When given the chance the lenders do immediately apply pressure to the appraiser. It was the inability to turn down an order, they wanted 3 a week, they were all high end, all over town mountain to metro, it was relentless and every order came with high stress having sat in the que 3 months already. I filled out this time off form to catch up and it was approved 3 months after I’d already taken the time off. Would have liked to have stayed but I told them one a week and that did not fly. Maybe later.
Of course it is the mortgage companies and the amc’s that want the VA piece of the pie. We have a broken system for conventional loans, because the lenders are not impartial and they want more. The VA appraiser selection system is impartial and with a set fee and the borrower (Veteran) benefits from an impartial appraisal. Years ago, the lenders were successful in eliminating the FHA Panel and now want to eliminate the VA Panel. The public would benefit greatly from a change to a state regulated appraisal panel rotation system not controlled by any entity that benefits monetarily from transaction such as lenders and agents.
Where is the VA’s response?
My lead guy at VA retired! I wonder why?
What committee anywhere knows anything about appraisal turn times? CubiCasa or one of the other cash fat software providers paid some lobbyist to get in the ear of some higher up. Stay out of a system that works and employs hundreds if not thousands