New “Misleading” Definition Inviting Problems
I perused the latest copy of USPAP and saw a new definition on the list: Misleading.
While I appreciate the attempt by TAF to create clarity and their hard work, and appraisers need standards to operate by and USPAP should be that standard, the addition of this word to the list is symbolic of over-regulation.
“Misleading” as a word is a qualitative term and the courts will determine whether something is “intentional” or “unintentional.” In Webster’s dictionary, the word “mislead” already has a negative connotation.
“to lead in a wrong direction or into a mistaken action or belief often by deliberate deceit”
With this USPAP change, appraisers should immediately be less responsive to clarifications requested by banks for obvious clerical mistakes. In other words, if the appraiser made an “unintentional” error that could reverse the meaning of a particular description, they were – by USPAP definition – misleading and that was a violation.
Why would an appraiser ever make a change in their report going forward that was requested by an underwriter? Appraising involves human beings and human beings make mistakes and we need some flexibility. What if a “comma” was missing that changed the interpretation of the description that was made? With this new definition of “misleading,” it doesn’t matter whether the appraiser unintentionally made the error or intentionally made the error. An overzealous soul could go after the appraiser for being misleading but that would be determined by the courts anyway. This new definition is just inviting problems and not protecting the public trust.
This reminds me of the idea behind appraisal standards, to begin with. Making standards more detailed and specific every two years doesn’t make appraisals more accurate or more trustworthy. There is a point where doing things like this devolve into busywork and is not helpful to the profession or the consumer. This is why I believe that USPAP should be updated no less than every five years.
I respectfully request that TAF removes this definition in the next edition and any other qualitative definitions that should be determined by the courts. Otherwise, I am going to propose new definitions for words starting with “The” “A” and “With.”
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I completely agree with the every 5 year update cycle. Yearly “guidance” documents can be produced, but the core of USPAP should not change very often.
What’s misleading is having to take this course every 2 years and remember what was retired, like the good old departure rule which never made sense and what now is new, like the exposure time of a made up listing at a hypothetical point in time! Yeesh!!!! Please make this every 5 years and get it right!
Sorry, but if it was every 5 years look how much of our money they would lose. $200 every two years would now be $200 every 5 or would they just charge $500? ;{ )
in California Cert res is now over $1000. every two years!
Does that include CE or just the license fee? Insane if that’s just the renewal fee
Just the license fee for 2 years
Larie St. John just sent my check…
Agree re misleading Johnathan.
What’s even MORE misleading is the perception that any state regulatory agencies are actually following USPAP guidelines in the first place. WE are mandated to follow it however state agencies are not. California DENIES ANY OBLIGATION to follow it AND that their appraisal reviews (as defined in USPAP) are in fact reviews at all!
In fact, effective January 2019 they had th language in the States Business & Professions code related to mandatory appraisal compliance changed so that it now reads California BREA RE appraiser/Investigators are PROHIBITED from performing appraisals or appraisal reviews. Through the use of pure sophistry, they now perform “investigations”. The practical side (or impractical side) is that they now find ‘facts’ and relate their “fact” findings to USPAP violations. This includes the Highest and Best Use disagreements. The appraiser will opine a credibly supported opinion, but if the investigator disagrees they will find a “fact” of a USPAP violation! For example. Retail zoned property is concluded to have HBU as “retail’.
In one actual (present) case, the state was contending that HBU SHOULD have been retail medical marijuana sales even though such use is in direct violation of federal law; AND that such use was lottery-based; a matter of chance, and a right of a tenant-operator and not an owner. This was presented to the Administrative Law Judge as a ‘fact’.
California is not alone in this trend. AARO has been promoting the idea that “investigators” can do appraisal reviews without calling them reviews and then report their findings as facts that override professional appraiser opinions.
They IGNORE such national USPAP experts as Ted Whitmer (MAI, JD, TX Appraiser) and George Dell. Both of whom provide very clear guidance on determining USPAP compliance…and reviewer obligations.
USPAP went astray when we conflated appraisal with valuation; and appraiser with valuators (business valuators). Now “some” states’ Deputy Attorney Generals are testifying that the business expenses of tenants and tenant’s net operating income must be considered in the valuation of the fee and leased fee of the subject owner’s real estate.
They are now contending that economic characteristics of tenant interest analysis are required under USPAP even when the scope of work has nothing to do with those going concerns or business valuation interests (where sow is to determine owners fee or leased fee interest). They have conflated ‘realty’ with real property; and that as being equivalent or inclusive in all real estate.
As now defined in USPAP, “misleading- intentionally or UNintentionally” will now be determined as a factual finding regardless of the SOW or impact on any conclusions or report credibility. Mis-type an owner’s name; or address (seriously) and the report becomes “misleading”; hence not credible, hence a violation of competency requirements and anything else a ‘fact-finding’ reviewer can imagine.
Deliberate or not, the cumulative effect and impact of TAFs constant changes and reinterpretations of Common English has all but completely undermined the public trust in real estate appraisal.
For their part, State Boards failure to enforce prohibitions against non-appraisers and non-human “valuations” has completely confused the general public; and have become a tool which lenders and AMCs “review” real appraisals by real professional appraisers, applying God only knows what ‘standards’ or scoring criteria.
ALL of the fears we first had when CU was introduced and when we first learned CoreLogic had been stealing appraiser developed data have become true.
Unfortunately, those fears were underestimated. The ‘fact’ turned out to be far worse than the feared potential abuse.
“We have decided to clarify this word in a new revision to our latest USPAP release. We will require all appraisers to take a mid course update to the most recent update course to get up to speed on the use of this definition clarification. You will only be charged $175 for the update to the latest update.”
Sincerely,
The Appraisal Foundation
Where is government policy (Appraisal Foundation) going…. government rhetoric called” policy”…to attempt to hang someone for many times a simple mistake. NOW, we have a new requirement at the tune of $175.00 plus time for a governmental mistake to simply define a “word” namely “mislead”. This kind of thought process is typical of what is going on in Washington and with OUR Constitution….you are guilty unless you can prove yourself innocent of an action based on someone’s opinion and not fact which means “you are wrong unless you agree with me!!!…..Maybe Maxine Waters should be thinking and asking congress to investigate the CORELOGIC control of the financial and appraisal industries which are major housing/business controls.
It is interesting to note the acceptance of an assignment states you can not have a bias or interest in the production of any appraisal assignment with a 3 year history of any work completed which is acceptable.
Then the industry invented “Collateral Underwriting.” … which has allowed CORELOGIC to have taken the data from our reports (“Stole”) and made this data into a large database to control the financial and appraisal markets and value based input of “THEIR”analytics. With CORELOGIC now owning the major appraisal software companies like ACI, alamode and appraisal management companies to control markets everywhere .
Please do not forget this has all started in the 2008 banking debacle where the government literally took over the real estate financial market and the appraisal process with their government control in making all Counties throughout the USA to report field card data, sales, and/or other transfers of real estate called CAMAUSA (Computer Aided Mass Appraisal) for the benefit of value data and control. THIS IS NOT BY ACCIDENT, BUT A PART OF A LARGER PLAN CALLED “SOCIALISM” BASED ON CONTROL OF ALL OF THE DATA IN THIS COUNTY and possibly a path to “all government land ownership. The light better get turned on before it is too late.
There is a larger plan.
Appraisers are smart, They have used several definitions, some contradictory some logical extensions of the issues involved. The investigation for the estimate of value should precede all appraisal work and lead the reader to wither its a partial take from a larger parcel under the Federal rule, or the State rule , and explain the differences including special benefits. Appraisers have done this work for years and also accomplished loan work for all sorts of clients.
Don’t condemn appraisers with the label of stupidity, educate yourself!
Property with partial take loans are made on FHA, VA & conventional properties and the conventional FHA, VA appraiser should be able to address those issues for his client.