The Government Screwing Over an Entire Industry
This just in: In a recent memo, the CFPB wants you to know that if you are buying a home, that you can contest your appraisal. By the way, anyone at any time can contest an appraisal for any reason. This isn’t new. Not at all. In fact the CFPB doesn’t really give two craps about your opinion of value or the Appraiser’s opinion of value. This has nothing to do with you or the appraisers or value. Nothing at all. What they’re doing is they’re agitating. Because they have an agenda. That being the agenda of both the GSEs and HUD. It’s to find a way to irrationally undermine the work of professional residential appraisers because they want to move to a fully automated appraisal format, and the more that they can dirty the narrative in their favor, the quicker they get to their objective and look like they’re Superman. And I’ll tell you why in a minute.
But here’s the CFPB:
Accurate appraisals are essential to the integrity of mortgage lending.
Stop there for a second. Obviously! But by saying this, they’re insinuating that we’re not getting accurate appraisals. If that’s the case, then how do you explain the last six decades of appraisers and appraisals of the work that they did, just perfectly. Those words are intended to undermine.
But continuing with the CFPB:
Overvaluation can decrease affordability making it harder to sell a home or refinance, and increasing the risk of foreclosure. Undervaluation can prevent a homeowner from accessing accumulated equity, whether through sale or in home equity loan. Both over- and under-valuation keep individual families and neighborhoods from building wealth through home ownership.
Agreed! A hundred percent! And again, with over 60 years of residential appraising, that’s clearly worked out. I say what’s the issue? Why are they telling people right now to make stinks about their appraisers and their appraisals? Better yet. Why all the recent negative press about appraisals over the past year? I mean I follow this stuff as closely as anybody. For decades and prior to about a year ago not a peep about appraisers. Nothing! They were doing a great job. And then overnight, bang! They became wildly prejudicial, coming up with bad values. It’s like the entire appraisal industry just started smoking bath salts all at once and then went face eating crazy. I doubt it, but that’s kind of what they’re saying here. How about this. The government screwed this whole thing up by taking away appraiser Independence, forced hard-working independent appraisers to take orders from AMCs, and never thought about the unintended consequences of HVCC. That was the policy. And the government doesn’t know how to roll back bad ideas and just say my bad. What they do is they pile more bad ideas on existing bad ideas as an exclusive means of fixing problems. See, post HVCC, at the dawn of the AMC era, where appraisers lost the vast majority of their fee to dispatchers who at the time had no idea what they were doing, decided to just get out of the appraising business because they were dealt the rust of hands. What the federal government did was make the profession of residential appraising very unappealing to the next generation of appraisers. And for those appraisers who were left standing, well it would be incumbent upon them to train the next generation of appraisers because that’s what the profession calls for: an inordinate amount of time working under the tutelage of a fully licensed appraiser, so you could learn the ropes and do a good job. Now why in the hell would I do that if I was an appraiser considering my loss in income, my increase in drive time, and the growing scrutiny on my work.
In short, the policies that blossomed out of HVCC, created an industry where the old was not willing to train the new. Now this has led to a shortage in appraisers and you know how the whole supply and demand thing works out, don’t you? Too much demand, not enough supply means the cost of any good goes up, and for appraisers this was payback time. The cost of residential appraisal went through the roof, and turn times, well they went to bed. So the feds came in scrambling and tried to change the requirements and regulations for appraisers to lower the bar, and the barrier to entry, and gave appraisers more latitude in terms of what they were doing. It turns out that was a day late and a dollar short for the industry. So now we find ourselves with a dwindling pool of residential appraisers because that’s what happens when you screw over an entire industry.
So what happens then when this endangered species goes extinct? Kapush! I’ll tell you. Here’s what the government’s doing. Smear them. Smear them! Say it’s always been their fault. Say their values are just *bleep*. Say they’re *bleep*. Justify your actions by pointing a finger at the industry instead of yourself. How DC of you to do this. And then, come in and say: “I found a better solution. We will go a hundred percent automated. I’m from the government and I’m here to help.” I hope you understand that reference. So yes, the appraisers are bad, and with this memo make sure you let them know. Courtesy of the CFPB. Fight your value, anyone, anywhere, because when you do it, it makes it easier for the feds to push yet another half big policy down your throat, under the guise of it’s a good idea. Automated. Give me a break! And if you disagree with me, remember when Zillow decided to use their automated algorithm to go buy a whole bunch of homes? How did that work out?
The Dwindling Pool of Appraisers: