The Government Screwing Over an Entire Industry
The government wants 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…
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:
- The Government Screwing Over an Entire Industry - October 12, 2022
Couldn’t have said it better myself. Used to enjoy the business but after 55 years not anymore for exactly these reasons.
Good article – the lead perpetrator is Lyle Radke- Senior Director of Collateral Policy · Fannie Mae – Remember that name. Everyone pay attention.
While he was a candidate running for President, Joe Biden said publicly that Appraisers need more regulation.
HUD Secretary Marsha Fudge, the President’s appointee, is simply following the mandate of her boss.
Congressional Committee Chairman Maxine Waters too is onboard.
And, FHFA Chairman Sandra Thompson too told us via Housing Wire’s interview, released just this week, of how appraisers will be replaced with automation in order to eliminate racial bias.
For those who don’t know, FHFA is the overseer of Fannie Mae, Freddie Mac & the Federal Home Loan Banks.
Residential mortgage appraisers seem to have NO friends in high places. This certainly has the look and feel of a Conspiracy against all residential mortgage appraisers.
Joe & Maxine were fed a lot of bull by those in favor of automated appraisals. The republicans also did not defend us and were silent. AEI is the only one with a megaphone who spoke up for us before Bryan’s post.
Fully automated valuations, what can go wrong? Of course the algorithms will take into account people maintaining and upgrading their homes. They will consider people not being able to afford maintenance, upkeep, taxes or laying to waste their homes (see this in the last market crash). No actual eyes on the ground. Hummm, I say again, what can go wrong?
Sooooo, they (being the gamblers at the crap table) have decided they don’t need collateral verification! Desk tops will not work because we (hopefully) will not take responsibility for third party data. The end users, those that buy the paper, are not going to give this stuff an “A” rating and it will be seen as junk paper!
I’ve been saying this for years now the ultimate goal is to eliminate the appraiser if it walks like a duck and quacks like a duck it’s a duck
The goal here is to make the appraiser’s job so difficult they will voluntarily disappear into the night and it will end the appraisal industry
Stoked this one made it’s own article. Thanks.
Taking bets now how long it will take the mortgage lenders to pressure the avm providers, whom will immediately fold to retain their lender customers, subsequently slapping a highest and best avm zestimate on everything. You can’t regulate greed, nor the inevitable advocacy which will ride alongside the lack of individual licensing and absence of individual accountability. History repeats. If my eo insurer dares to extend coverage to an avm provider, I’m switching brands. One knife in the back as they insured amc’s was already too many.
Let’s explore that concept, whom will insure whom? That’s been a longstanding argument since I even started, they just need us for the qualified eo insurance. How does the insurance work on existing waivers and such? Is that perhaps a root cause of the unexpected first wave of repurchase buyback calls Jeremy wrote about? Some of the sleezy companies are actually fooling appraisers into attaching their insurance for a mere $50 on no adjustment hybrid ‘appraisals’. Obviously that is a quite limited pool of appraisers foolish enough to bite that hook. Thoughts?
Baggins – you sound psychotic – time to cash in!
Wait, how did I go from racist to psychotic? Or maybe it’s a good fit, like an all in one combo.
You never play around with paint 3d? It’s super fun and easy to use.
The crony-capitalist banks/lenders/secondary market are merely fulfilling the massive and ever-growing central government’s wishes.
The soon to be government controlled AVM system will be used to help employ the soon coming social credit score system. If you aren’t familiar with this diabolical system then you have had your head in the sand much to long. And if this surprises any appraiser, it should not. You can thank the quasi Marxist-Socialist-Communist-Fascist liberal left wing part of America and beyond for finally implementing what they have dreamed of for many decades. Lovers of the World Economic Forum, World Health Organization, World Bank, United Nations (lookup their published agendas) and many other power obsessed factions should be thrilled that worship of your globalist god and Gaia will soon be front and center. By the way, these agendas are not as much of a conspiracy as they are a massive mindset groomed over several decades. Their parts and pieces of a new world order are now converging, thanks in large part to the recent pandemic which opened up many portals/doors that had been restraining/frustrating the implementation of a new world order. There is one more big restraint that will be removed soon and then the movers/shakers will have carte blanche and appraisers will be irrelevant.
Wish they would attack the IRS in the same way.
On point! I’ve felt like a dinosaur for quite a while, and my long held predictions of extinction loom closer and closer. The sweet release of my appraisal “death” will be welcome in my head and heart. When I started appraising so long ago, I had such wide eyed vision and hope for a life long career which I loved. The government’s continued betrayal has numbed my heart beyond care. Thankfully these skills continue to fuel my evolution into other aspects of the real estate world. I suppose this is all just a cyclical metaphor for the circle of life. My rotting appraiser corpse is feeding the growth of new monster. Haha. Now leave me alone… I have to go measure another house. =)
Too much regulation!!
Better grab your hammers and go after the banking lobby and the bankers boys! (kidding…don’t go psycho). You’ve all known this was coming for well over a decade yet you endure the agony and whine about it on a daily basis. My suggestion is to enroll in George Costanza’s new Appraisal 101 course. The course is free on Google. Simply type in “George Costanza Opposite”. There is a golden nugget hidden within this video which screams to all intelligent appraisers. Spoiler Alert: If you keep on doing the same thing you’ve been doing you will get the same result. Therefore: If it’s not working for you (and it’s obviously not working for tens of thousands) get out and stop complaining.