Removing the Definition of Personal Inspection
Why is the ASB proposing to remove the definition of Personal Inspection?
Several days ago, an appraiser posted the following comment which we have decided to publish as a free-standing post because we believe it deserves attention:
Amazingly, while these are horrible – everyone seems to miss the real issue that will hit us all in 2023.
As of 2023, if the ASB gets its way in a few weeks, the word “inspection” or “personal inspection” will no longer be defined in USPAP. That means they don’t even have to play this game. “Desktop” appraisal is just a stopgap until 2023. After that, they can say looking at pictures on a screen constitutes an INSPECTION. It’s no longer a desktop or a hybrid, it’s a “full inspection”. Because the ASB says “inspection” should mean the “common dictionary definition” of the word – which is ANYTHING – since the dictionary says it is “to examine closely” and doesn’t say thing about being PHYSICALLY PRESENT. Sure, the ASB gave themselves a nice bit of CYA that you can bury a line deep in the Scope of Work about what the inspection was, but the vast majority of homeowner and homebuyers are going to get appraisals that no longer say “Desktop” or “Hybrid” but rather LOOK like “full interior inspection” appraisals but the appraiser never set foot in the property. A few years ago we would have called that FRAUD.
How many of you commented to the ASB? THIS is where the power is and we’re doing nothing about it. TAF needs its statutory authority removed ASAP.
Second Exposure Draft of Proposed Changes for the 2023 USPAP and Comments
Definition of Personal Inspection
The ASB has proposed to remove the definition of PERSONAL INSPECTION. Removing the definition of personal inspection will make it possible for the common dictionary definition of “personal” and “inspection” to apply to each word. Without a definition, the client and the appraiser can use the common dictionary definitions to understand the meaning of the phrase in the context of each specific assignment.
If adopted, there will no longer be a definition of PERSONAL INSPECTION in USPAP…
PERSONAL INSPECTION: a physical observation performed to assist in identifying relevant property characteristics in a valuation service.
Comment: An appraiser’s inspection is typically limited to those things readily observable without the use of special testing or equipment. Appraisals of some types of property, such as gems and jewelry, may require the use of specialized equipment. An inspection by an appraiser is not the equivalent of an inspection by an inspection professional (e.g., a structural engineer, home inspector, or art conservator).
Veros comment:
We agree with the decision to remove the term “Personal Inspection”. We would add the following to this paragraph: “With the advent of new and improved digital technology, the appraiser has a variety of sources to obtain subject property characteristics without personally inspecting the property. Some of these sources include using a homeowner-assisted phone application, a trained third party to provide photography and/or video, MLS photos, prior appraisal reports on the subject, satellite images, and other associated data the appraiser deems reliable. All these sources can be used in combination to provide basic information on the subject property characteristics, features, condition, and quality. The appraiser would be responsible for clearly describing the type of inspection performed and the sources used in a manner that is not misleading and would produce credible results based on the scope of work for the assignment.”
Appraisal Institute comment:
The term “inspection” has been in USPAP, and in the appraisal body of knowledge, for decades. The definition is clear as to what an appraiser’s inspection is and is not, and Advisory Opinion 2 serves to further clarify. While an appraiser may choose to use a different term, we do not think it is necessary for USPAP to change the term. We do not support its removal.
ASA comment:
Personal Inspection
We are opposed to deletion of this definition, and instead favor a more nuanced approach that considers the factors we discussed previously. Some examples may include:
- Technology Assisted Inspection: The process of the person performing the appraisal utilizing technology (such as drones, phone/computer video, etc.) when providing a valuation service.
- Inspection by Others: Utilizing an individual other than the person performing the appraisal to perform an inspection within a valuation service.
- Outrage Over Connect by ValueLink’s New Monthly “Junk Fee” - November 27, 2024
- ARCC Discussion Exposes GSEs Agenda to Reduce Appraisal “Friction” - November 22, 2024
- FHFA’s Appraisal Waivers Expansion - October 29, 2024
As a person who identifies as an appraiser, I call B-S on this whole issue. Ridiculous.
When the owner, seller, buyer, Agent etc. Have a problem with the appraisal guess what they’re going to mention first. “The appraiser never entered the property.” Fellow appraisers, don’t do them.
We’ve been getting emails from appraisers as to what we can do as appraisers, how and were to comment and how to raise awareness of the dangers of this kind of change.
Unfortunately, the comment period for the second USPAP exposure draft ended February 4. We’ll all have to keep our eyes open for the third USPAP exposure draft. We can also raise awareness by sharing this article with colleagues and ask everyone to comment on future USPAP 2023 exposure drafts.
A good place to start and that may get the attention of politicians is the respective States Attorney General. There is enough information that a compelling argument can be made to support a reasonable belief it will have profound effects of the individual States bottom line. They understand money and budgets and have the clout to look into this and at least get an injunction until a study can be done.
I cant wait to start performing REO assignments in the next crash. This will come back to bite them in the ass. Appraisers have no voice and no say in the process.
Appraisers performing these might want to beware on the ramifications of when the next crash comes about because of these types of reports. That’s the only reason Lenders need us in on these reports OUR SIGNATURES!
This to me sounds like a scam, ie really take photos someone else has taken, no mention of photo shop etc. as those who take the pics aka the inspectors have 0 liability are not licensed, again we are responsible to insure we have reliable data and will be held to task for it. If this new way is so good why are they trying to disguise it as a full appraisal done by an appraiser, who gets the money difference between what brwr is charge and what the inspector and desk top appraiser gets? All appraisers should refuse to do desktops then they will go away. if the loan goes bad guess who they will come after. I have seen two bifurcated ones and they were
ASB needs a serious schooling of common sense on what a INSPECTION is.
AI knows.
Appraisers know.
ASA knows.
VEROS and ASB do not.
1) If you’re going to do desk top assignments; you’re cutting your own throat as well as this profession.
2) Desktop. “Simpler, faster, CHEAPER” than an appraisal inspection. However, by you doing so you’re going to rubber stamp this “product”. It’s YOUR SIGNATURE, YOUR RESPONSIBILITY, YOUR LIABILITY, time to think critical and just say NO to desk tops…
3) If I remember correctly, the last OREP commentary on desk tops is so that appraisers can quote: “do more loans” unquote. Since when does an appraiser do loans? Just saying.
I think it also said something about “from the comfort of your desk” What the?!?!…. heck yea, sign me up fer sure….lol
If I’m going to be tied to the desk and from this point forward never have liberty of time or the benefits of knowledge, experience, industry connections and personal connections gained from being on site, I want benefits and paid vacation. That’s no less than what those pushing these proposals enjoy. Let me count the times that I help home owners with direct conversations about process, home management, carving out solutions like subject to scenarios for construction in process, etc… That’s like every few appraisals. They’re just repackaging the same thing, repeated attempts at pushing through something which the appraisal community has already largely rejected. Official policy changes mean nothing. My final work products will not change.
I feel like Al Pacino did when Fredo sold out the family. Talk about folding like a cheap suit. We are being had by back-room deals. Incrediby dissapointing…..
As stated by others in various wording: More centralized power = more corruption. Proven to be very true again and again in the appraisal world in recent years.
Time to do away with centralized power (yah, right – good luck with that). In addition to shutting down the secondary market for residential mortgages, also:
>eliminate appraisal licenses
>eliminate the Appraisal Foundation and all state and federal level appraisal related departments
>eliminate appraisal management companies. Too many are self-serving appraisal mills that apply pressures that they were supposed to eliminate. But now the value pressures that used be lender originated are passed on to the management company and then ultimately to the appraiser. And the appraisal loses a slice of their fee in the pathetic process. What a bad joke.
>start new non-corrupted appraisal organizations with designations or degrees that become yours for life – similar to an MBA or PHD; as opposed to now if you don’t or can’t pay for your MAI, ASA, etc: you lose it.
Anyway, It is always nice to dream and wish for the impossible. By the way, this field is quickly tanking from a profession to governmental servitude. It is amazing that there is not more pushback, especially from small independent business owners. Maybe it is because we are nearly extinct. I predict that many will not be happy with the dark, power hungry, freedomless world they are allowing to take shape. Hang on for a very nasty ride.
It’s apparent we have not reached “herd intelligence” yet.
Appraisers are an easy target because they never learned how to unite. Even in all the recent blogs I read the condescending tone with one another is proof of that.
Thank you to AppraisersBlogs for publishing.
As the appraiser that originally posted the comment in this article, I would say the biggest issue is not hoping for a better exposure draft. The recent history of the ASB is that whatever the so-called industry advisory council asks for, they get. Having been to ASB meetings in person the overwhelming philosophy of the current board members is that they have to do whatever the Industry Advisory Council wants because their theory is that having appraisers somewhat involved is better than complete replacement. Basically they are in a suicide pact. There can be 1000 public comments opposing this but you will find in recent history that the ASB does almost exactly what the industry advisory counsel wants no matter what the comments say. This is why the focus needs to be on removing their authority on the state by state basis. Since all of the players that want this USPAP change are generally part of the industry advisory council to the TAF, they knew this was coming which is why hybrid and desktop appraisals have been making quite the news lately. It’s just an initial set up for what they will do in 2023.
Once “inspection” is no longer something in USPAP, they will have an easier time convincing all parties this is “compliant” and “safe”. Ironically, just last week I was denied access to two rooms of a home that I was appraising, with a “vicious dog” excuse. I was provided photographs via email by the homeowner after the fact. Of course I protested this and contacted the lender and would not finish the report. After much consternation the homeowner rescheduled the time for me to look at those two rooms, all the while trying to rush me out as quick as possible so that I would not notice the fact that they had completely removed all of the flooring in the bedroom and all of the bathroom tile and had just laid a series of rugs and personal property over them. This demonstrates how easily “condition fraud” will be accomplished when you have to rely on a third-party or a technology solution to “view” the house. No matter how slick the technology there is no substitute for being physically present. Not only that, how easy would it be for this homeowner to just slip a $50 bill to a non-licensed inspector to have him overlooked this? All they have to do is point the camera at the walls. Even these so-called 360° view systems could miss this if they just put enough rugs and laundry on the floor. Who would know and how will it ever be discovered? Until foreclosure or sale of course.
“There can be 1000 public comments opposing this but you will find in recent history that the ASB does almost exactly what the industry advisory council wants no matter what the comments say. This is why the focus needs to be on removing their authority on the state-by-state basis.”
I agree 1000%. Listen to any of their public conference calls. You’ll hear the refrain:
“Send us your comments, we read every single comment.”
“Send us your comments, we read every single comment.”
“Send us your comments, we read every single comment.”
Big deal, you read every comment. Do they apply reasoning, logic and critical thinking to arrive at a solution that the overwhelming majority of appraisers propose to solve a problem? Hardly. There is a reason why the AMC and appraiser comments were never made public during the PAREA decision. Why? 100% of the AMC’s were in favor and an overwhelming majority of independent fee appraisers were opposed. They bow to the pressure of the “industry council”. They always will.
That’s exactly what happened with the ansi advisement counsel. If you’ll recall that thread we posted the critical response links which contained many appraisers whom were almost universally in objection to ansi across the board measurement standards, but the standards were adopted anyways. The illusion of democracy in systems where those being affected have no real vote. Lots of that going around lately. Socialism: ideas so good, they have to be mandatory. Further examples of the cosmic cobra breeding farm.
In case you missed a few articles which explained the root cause of these shenanigans; the cosmic cobra breeding farm. Which is a reference to perverse financial incentives which in the end create more of the exact things the efforts were supposed to mitigate. ‘The cobra effect’.
https://appraisersblogs.com/bombshell-cobra-book-favorite-target-TAF-president-david-bunton
https://appraisersblogs.com/cracked-foundation-deep-dive-into-appraisal-regulatory-system-structure
(The explanation of the cobra breeding farm is in the first few minutes of this broadcast in the second link.)
Although ANSI measuring requirements are not related to USPAP or TAF, your point is taken. The GSE’s surveyed a small population of appraisers and discussed ANSI measuring at privately sponsored appraisal events which are attend by less than 5% of the total licensed and certified appraisers. Then Fannie Mae drops the bomb on the remaining 95% of appraisers that in 12 weeks you have to learn, implement and conform to ANSI measuring standards. This is the type of requirement that should be rolled out in 12 months, not 12 weeks.
ANSI came out in 1996 and was probably fine for homes built in 1996 or later. It is laughable when used for many much older homes. I have corresponded with Home Innovation which indicated to me that when ANSI measure standards do not work in these older homes ANSI declarations #2 & #3 should be used to opt out. In Fannie Mae’s interpretation of ANSI there is only a limited opt out for occasional use (GX001). Ridiculous! One of the most egregious ANSI issues is when a 2 story home from decades earlier has a 6’5″ 2nd floor ceiling height which does not meet the ANSI minimum 7′ standard so it is no longer square footage. The potential comps may or may not have the ANSI required 7′ height. There is no source for this comp information. The assessors do not have this information nor do the agents. Fannie Mae ignores this fact and merely states that the appraiser should simply keep researching as if there was some hidden source. Need more? In my state, New York, the assessors manual requires the lower level of raised ranches and splits to be measured as square footage if finished in a similar fashion to the upper floor since that is what the architect intended. Agents agree. ANSI says it is not square footage. Still need more? Only Fannie Mae requires ANSI. Freddie Mac, USDA, FHA (HUD), VA, and 48 states do not require ANSI.
2nd floors that are not ANSI compliant are typically legal non-compliant and are well accepted as square footage in subjects market.
Or not at all! And it’s unfortunate that not enough of us will decline and they will keep on rolling over us. I’m one that will be declining Fannie orders. I am pushing ever harder to work with local banks that keep their loans in house.
Here is the worst part of all of this… Once the public actually realizes THEY are being scammed out of a professional valuation of the biggest investment in their life, there goes the remaining hope for Public Trust. And then once they do realize they are the ones bearing the brunt of this nonsense (FAKE Appraisals) they will SUE us since we did not take a stand and just say NO to this Crap! Everyone here take that stand now and this will crumble around Fannie Mae’s and all lenders feet
That’s only the first part. Wait until they deal with data insecurity and predatory interests as a ‘digital fingerprint’ of the inside of their home is stored in cloud databases and shared among an ever expanding network of big tech enterprises and ongoing data brokerage.
https://appraisersblogs.com/changes-from-fannie-mae-ansi-desktop-appraisals-n-virtual-inspections/#comment-33283
Feedback is just a waste of time and effort as it means absolutely nothing. This was a done deal a long time ago in a back room somewhere in Washington. The ASB has buckled to the whims of their Brothern Government pals. The lame excuse being pontificated is due to the advances in technology? Really? I don’t know of any technology that can detect 20 years of cat urine or for that matter black mold and termite damage…. oh, that’s right, I digress, we will be getting that information from the unvetted, unbiased, unaccountable, “reliable” inspectors, yea, sure, that’s the ticket. Basically, we are being told that all appraisers are a bunch of mindless “stunards” who will drink any Cool aide they pass out. I like the idea of getting rid of the bunch of them and bringing it home to individual States to oversee because in the end, bad appraisals are going to affect their bottom line. I’m out of the ridiculousness and liability exposure the 1004 desktop brings with it, if for nothing else than I can sleep at night. Good night Irene.
This can only be an issue if we chose to complete these assignments.
Mr Bagott gave you all a way out of this with his call for letter writing to the comptroller general. Here:
https://appraisersblogs.com/scofflaw-us-agency-taps-states-4-its-backchannel-budget
What is the point of mobilizing again and again and again year after year? It’s time for the cosmic cobra breeding farm to take a very long hiatus. Answer Mr Bagotts request if you want lasting relief. It’s time for this smoke and mirrors game to end.
A picture may be worth a thousand words, but in person observation is worth a million.
I have thought for years that the term “Inspection” implies something more detailed that what is typically the reality. I prefer, and use, the term, “Site Visit”. There is no ambiguity.
“SITE VISIT? means you visited the parcel of land the “improvement” sits upon. OR basically a survey and evaluation of the existing characteristics of a site and its surroundings. It defines nothing of inspecting the actual improvement.
“Site visit” may work for commercial properties or land, but it is a common, well-understood term in residential appraisal and also hard-coded onto most standard appraisal forms. To remove this definition for the “dictionary” definition lead to this suddenly being unclear and is an attempt ONLY to “muddy the waters” and pretend an appraisal is something that its not. They can “pretend” this is the same as most full, interior appraisals have been for decades when in fact, it is not. Yes, there will be a line buried deep in a scope of work statement explaining it, but that will not alleviate the mass confusion and outright fraud this will create with the public at large and even many lenders.
“On site visit” instead? I think the alternate description is an excellent idea. If amc’s hijack and re purpose ‘appraisal inspection’, nothing stops actual appraisers from providing an even better description of the inspection activities.
I personally have performed an in person appraisal inspection on site visit and we don’t need any stinking amc’s or unlicensed third party help! Wait, I’ll have to come up with something better than that but you get the gist of it.
I always state- “interior/exterior inspection of the improvement”.
Or simply… inspection of the property.
“nothing stops actual appraisers from providing an even better description of the inspection activities” you say. Yes- most of these “desktops” will have pre-defined ways to describe the “inspection” (or “non-inspection”) and any descriptions will be hidden in a thousand lines of legalese. It will show photos, sketches, etc. and “look” at first glance like a regular “full interior” appraisal done by an appraiser. Third party inspectors will be instructed to be purposely vague about their exact status and credentials when at the home. It will not be made clear to end users (and homeowners) exactly what occurred unless they dig.
That’s the only reason they want us in this equation…OUR LICENSE! Again we will be the only entity held accountable, that’s why I will not do these. 3,2,1…oh you’re not modernizing, you’ll be left behind, blah blah blah. OK, you go ahead, belive that, perform them and I sit back and watch what happens to those you do them and things go south.
I use “Property Observation” instead of Inspection. Just my two cents.
Henry –
The term “Site” can mean more than the land. As in, “The Hilton Hotel was the site of the conference.”
Is MAI considered to be a derogatory term?
Nice deflection. Apples to apples. Not apples to oranges.
And yes you should know better if anyone. But maybe not~
don’t know why some are being ticky tacky, we are all in this together, I think most agree changing inspection definition is not good, yes sometimes people confuse us with home inspectors. But bottom line when we say inspection we all know what we mean and so do users of our work. Desktops are being disguised as appraisals, why? kind of like all natural and organic, like food labeling issues. I wonder though if most of us wont do these, will we be censored from the full appraisal work, I bet is coming as I truly believe that those duly informed wont touch them so then they will try to force us to do them.
Now unlicensed people can do inspections, but trainees cant. What is going on?
Unfortunately, I haven’t taken the time to read and digest all of the above, but one thing has always jumped out at me about the whole scenario. To reference a photograph as an “inspection” is misleading enough on its own, but to put “observation” and “inspection” in the same sentence as if they mean the same thing is “intentionally” misleading if you ask me…. and that is more serious than unintentional fraud. Arguments?