Dear ASC: Details… Why They Matter

Mark Skapinetz

Dear ASC: Details... Why They Matter. 

DETAILS… NO MATTER HOW SMALL OR BIG NEED TO BE PRESENTED. If not, you failed. ASC, today you failed us all.

Over the past several days, the Real Estate Appraisal Industry has been the subject of scrutiny with the release of the PAVE Report that the Interagency Task Force developed on Property Appraisal And Valuation Equity set forth by the Biden Administration.

On March 23, 2022, there was a public meeting to unveil the Pave Task Force report on Racial Bias in the Real Estate Appraisal Profession. You can watch the press conference below as well as read the entire report here. This blog is not going to cover this event; however, it is going to cover another event that took place on March 24, 2022.

 
On March 24, 2022, there was a hearing on “Bias in the Home Appraisal Process” in Washington DC by The Senate Banking, Housing, and Urban Affairs Committee. The purpose of this hearing was to hear from witnesses, Jim Park, the Executive Director of the Appraisal Subcommittee (ASC), and Melody Taylor, the Regional Director for the Mid-Atlantic office of Fair Housing and Equal Opportunity for HUD and the Director appointed for the Pave Task Force, about discrimination in the home appraisal process as well as discuss the newly released Pave Task Force Action Plan. Both witnesses testified about studies that outline bias amongst appraisers that can impact the value of homes by tens of thousands of dollars. They also spoke about the need for more appraisers from diverse backgrounds. Represented on the in-person panel were various senators consisting of Sherrod Brown (D Ohio), Bob Menendez (D NJ), Tina Smith (D Minn), Jon Tester (D Montana), Patrick Toomey (R Pennsylvania), Chris Van Hollen (D Maryland) and Elizabeth Warren (D Mass).

 
While I am not going to cover the event in this blog post since you can watch and listen yourselves, I am going to discuss the missed opportunity the ASC had to let everyone in on the details and issues that not only the Pave task force missed but the ASC missed on as well. This hearing made it very clear that the ASC has zero idea of whats happening.

So before I get into it, I want to point out the issues the ASC whiffed on presented in three parts: 1) the shortage of appraisers that were brought up multiple times, 2) the barriers to entry, and 3) the educational requirements and diversity

1) Shortage of appraisers:

In this hearing, it was stated many times that there is an appraiser shortage. That appraisers are aging and that the barrier to getting in resides in appraisers not willing to train their competition. While some of that may be true, this was the perfect opportunity for the ASC to state other facts (they once again failed) that haven’t been mentioned before, and I will discuss them here.

HVCC, now Dodd-Frank, and its implementation in 2009: it was the day Appraisal Management Companies came into the mainstream. In 2009 overnight, Appraisers from across the country were stripped of every client they worked hard to obtain, maintain and have a relationship with. Implementing the now-defunct HVCC (Home Valuation Code of Conduct Law) created by then-Attorney General of NY and now disgraced Governor Andrew Cuomo. AMCs have been around before HVCC; however, this law made it so that there would be a third party in-between the Appraiser and lender. Appraisers could no longer solicit work from lenders or mortgage brokers. The role of the AMC was to manage the appraisal process, locate and assign appraisal orders. Now, this is where it gets messed up. The law never stated how an AMC would be compensated. So AMCs decided they would take a portion of the Appraiser’s fee to pay themselves. Overnight appraisers charging $500 for an appraisal were now subjected to offers from the AMCs to perform jobs at half that fee and sometimes even less.

As time went on, fees started to rise; however, to this day, the AMCs still broadcast orders out to many appraisers to find the cheapest and fastest Appraiser instead of the one that has the most experience. This drove many appraisers out of the profession and still, today keeps appraisers from taking on trainees. How can an appraiser take on a trainee and make it financially feasible for their business to succeed at such low fees and at the mercy of the AMCs? Why is this detail being left out? It’s an important one, I think.

2) Lender requirements:

Many lenders and their AMCs do NOT allow Trainees to inspect properties independently. See, most lenders want the Mentor/Supervisor to accompany the trainee to every job and guide them along the way. Fannie Mae does not prohibit trainees from inspecting alone as long as the Supervising Appraiser follows the rules. To go even further, each State has its requirements for trainees and inspections. This complicates things even more. So we have individual States that also set their requirements combined with lenders that set their own. Why does this have to be so hard? This wasn’t mentioned at all during the hearing. So we are going to state there is a shortage of appraisers and a barrier to entry due to competition, but not mention that the lenders and others make their own rules over this. Ant it’s the Appraisal profession’s fault?

While I am on this topic, I’ll add a solution. You can agree or disagree. Any loan being sold to Fannie or Freddie must follow Fannie and Freddie guidelines. If you are a mortgage company or a lender that says a trainee cannot inspect but you are selling it to the GSEs, you need to step aside and go by the GSEs’ guidelines and laws. Yes, again, Fannie allows trainee inspections so you do not need to make up your own. If you are lending your own money, then you can make your own rules otherwise follow the FNMA rules. Pretty simple.

The Past has no merit.

Let’s take a wild ride into the past. Remember AppraiserLoft? Coester VMS? There were a few others. These AMCs closed up owing appraisers a lot of money that many never saw. So many appraisers started to pick and choose which AMCS they would work with. I am in GA. I work with two AMCs out of 150+ registered AMCs. Is it my fault that I don’t work with all of them? No. Is it my fault they abuse the system? I think not. Am I required to work with everyone? No. The government created a system that hasn’t been looked into deeply enough as far as I know. Funny enough, during the hearing Senator Toomey stated “Government has no place in housing.” Interesting comment. You speak of change and more… Then start by looking at what’s in place and start paying attention!!! Stop creating more issues until you solve the ones already existing.

4) Education and diversity:

I am all about diversity and getting more appraisers into the profession. I am a one-person shop. I want to take on a trainee and do more, but I don’t owe anything to anyone as a business owner. AMCs pay fees that are below normal fees. They have become the rulers, and I risk losing business if I don’t comply. Lenders make their own rules, and my liability has gone sky-high. So why would I want to train anyone? I worked my tail off to be where I am, expecting others to do the same. I am okay with potential appraisers getting their education online as most of us do our continuing education that way. I’m not okay with having the in-person experience requirements taken away, as I see that as a crucial part of the appraisal process. But as you can see, the ASC’s excuses are not the total truth. The truth resides in everything NOT being said and what I have stated above. The ASC can paint a pretty picture all they want or a bad one. NOONE is talking to boots on the ground appraisers. The ones that are now being accused of these biased actions and more. The ones that are currently taking the responsibility and doing their job correctly that may land them in a lawsuit or have their character questioned.

The ASC decided they would take the easy route today. They failed all appraisers in my opinion. They are too scared to face the actual truths due to stakeholders, AMCs and backlashes. If Congress, Senators, and others want to know the realities, they need to go to the people who do the work, spend time with them, learn about the profession, etc. The ASC and others are only thinking about saving their face to remain relevant in the eyes of government, yet they forget the details that matter in all of this.

I am a proud Certified Real Estate Appraiser in the State of Georgia. I am also the President of the American Guild of Appraisers. Facts and details matter. It’s clear that the ASC, TAF, and everyone else don’t care about the details. They care about themselves. DETAILS… NO MATTER HOW SMALL OR BIG NEED TO BE PRESENTED. If not, you failed. ASC, you failed us… again.

As the title says, DETAILS MATTER. You leave them out and you paint one picture. You make them known, another is painted. So why are our supposed leaders leaving out details of the major issues I described above? Why aren’t these part of the explanations revealed to our politicians and decision makers when the opportunity is given?

DETAILS MATTER.
 

Mark Skapinetz

Mark Skapinetz

Mark Skapinetz is a Real Estate Appraiser in Marietta GA with extensive knowledge in Residential Appraising.  He is President for the American Guild of Appraisers (AGA). Featured on Podcasts as well as published interviews in Valuation Review. He is the creator of the 100% Real Estate Appraiser Group, Skap The Appraiser and co-creator of Appraisal Forum & Festival (AppraiserFest).

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14 Responses

  1. Avatar Pat Turner says:

    Thanks Mark!!!!

    5
  2. Avatar Bill Johnson says:

    It seems to me your asking any and all parties to “seek the truth” Mark.

    If only they had taken my advice.

    Seek the truth.

    7
  3. Avatar CJK says:

    I like how the one guy said that properties in his market did not support his value, so he went to different markets with higher prices. Some people cannot comprehend that not all properties are considered equal. The other guy had the issue with the drive by, well that is the lenders’ fault. What in the world is going to happen with FNMAs desktop reports? If people are upset now, what are they going to do when the appraiser no longer even drives by the house and a part time Walmart employee takes the photos.

    For the appraisers who are going to do the desktop reports get ready for the fallout they will be coming after you. Make sure your E&O is up to date. More and more complaints will be sent to the state boards, and this will be a cash cow for them. I was just in a class one of the appraisers said she did a desktop, and they ran her through the wringer, she will never do another one. They should just do away with the appraisers altogether and just base the loan on whatever the seller or borrower tells them the property is worth. They are all trained appraisers now, aren’t they?

    I lasted 39 years I hope I can hold out for 3 more. If not, I have money in the bank and own my home free and clear. I never received a government handout, nor did I cry every time things did not go my way. I was denied employment by the feds and the county because I am a white male (the assessor actually told me that) I did not let it affect me. It was a good profession, but it might be time for me to rest from all of my labors. I am getting old and no longer have the desire to deal with all of this stupidity.

    11
  4. Avatar Coach says:

    The racist appraiser narrative will soon collapse. I’m on my 7th foreclosure appraisal for the year already. The folks who have been complaining about racism because they got appraisals that came in low and didn’t get the value they expected will soon be screaming that we overvalued their properties.

    7
    • Avatar CJK says:

      Correct first they said we over valued the properties and that was the reason for the 2010 fall out. However, appraisers do not approve the loans the lender does, and the appraisal is just one part of the package. Now they say we are “low balling” the values. So, which one is it? What will it be next time?

      If the “white” appraisers are “low balling” the values for “black” owners, does this indicate that the “black” appraisers are increasing the values for the “white” owners? They cannot have it both ways so which narrative is it. FAMAs computer generated reviews check to see if the values are inflated, now they will need to check to see if they are low. Remember no matter what we do we will and have always been the “fall guy.” Appraisers do not set nor determine value, we simply report what the market is doing and give an opinion, why is that so difficult for some people to understand.

      A 3 bedroom, 1 bath, 1 car property in a market with an average sales price of $200k, is not comparable to a 3 bedroom, 1 bath, 1 car property in a market 5 miles away with and average sales price of $275k.That is because different markets have different values (appraisal 101). Not all markets are the same. Why can’t the people who are pushing the new narrative understand this? What is the major malfunction? When it comes to Real Property not everything is the same. Some of the people who are now attacking the appraisers should take 300 hours of appraisal classes and spend 4 weeks with us to see what it is we do, and why we do it. Before they start running at the mouth.

      8
  5. Kathy Morton Bunting Hoey on Facebook Kathy Morton Bunting Hoey on Facebook says:

    Well said!!

    4
  6. Avatar BigAl says:

    The barriers to entry:

    1/ AMC stealing a big portion of our fees
    2/ News media and elite politicians painting us all as racists
    3/ Increasing liabilities (desktops, the new fnma forms, ANSI requirement, false racist narrative, etc.)

    You gotta be stupid to be an appraiser or a cop these days. They want to diversify? Good luck finding idiots who want to become appraisers.

    7
  7. Avatar CJK says:

    I am trying to get a handle on this quagmire that is called “racist appraisers”, so I have some questions for the people who think they know everything:

    1. If a “white” appraiser (the evil racist), appraises a property for an owner of color, and the value is ABOVE what the owner was expecting, is the appraiser still considered a racist? Or only if the value is BELOW.

    2. If an appraiser of color appraises a property for an owner of color and the value is below what the owner of color was expecting, is the appraiser of color also considered a racist?

    3. If a “white” appraiser appraises a property for a “white” owner, and the value comes in below what the “white” owner was exception, is the “white” appraiser still considered a racist?

    4. If an appraiser of color appraiser a property for a “white” owner and the value comes in below what the “white” owner was expecting, is the appraiser of color considered a racist?

    If I am an evil “white” racist and I just appraised a property for a man of color, and the value was $40k above what he was expecting, what does that make me? Am I still considered an evil white racist? Should I assume that if the value comes in lower, I am a racist? If the value comes in above, I must know want I am doing? It is becoming more and more difficult to tell anymore with all of the name calling.

    I had this type of situation when I was a staff appraiser. If the value was low, the LOs would complain and cry like 12-year old’s that I did not know what I was doing. If the value came in higher, I was the best appraiser ever. Funny how that worked.

    One day I was looking at a property that was at the end of the city airport flight path. I told the branch manager that he should check with the underwriter. The LO got all in my face and said that I did not know what I was doing. Two weeks later a plane crashed into a house next to the one they wanted me to appraise and killed everyone in the house. I was just trying to protect the borrower and the lender. That LO left or was let go soon after. APPRAISERS JUST DO YOUR JOB, DO WHAT YOU WERE TRAIND TO DO AND DO NOT LET THE NAME CALLING GET TO YOU.

    3
    • Baggins Baggins says:

      CJK: Skim this for a minute. It’s only racist when an appraiser does not hit target numbers for a refinance. Because if an appraiser comes in low for a sale that may lead to price negotiation and can be helpful to the color coded cause. There are so many people making a living off of this appraisal industry whom don’t have any valuation skills or know how themselves… Price is not the same as value.
      https://www.fanniemae.com/media/42541/display
      My solution: Everyone involved with appraisal distribution, review, management, or reporting, must be required to have an appraisers license themselves. Over the years I’ve had managers whom had their licenses yanked but were still in charge of national lenders appraisal requests, people whom had no other qualifications other than rising from the ranks of telecom workers, part timers, a long list of incompetent and predatory focused management engagements. I’ve only ran across a few outfits whom hire qualified licensed staff so I treat those ones like gold. The ongoing legislative change proposals as well as recent industry changes demanded by non appraiser insiders. People without appraisers licenses themselves but make their entire living off of this industry are having the most impact and influence on the rules and regs and that is one of the primary faults which must be remedied. That and point #1, the improperly co mingled amc billing. And now every time like clockwork when a government person wants to know what’s happening with the appraisal industry, they call to the non licensed amc corps for advice and guidance.

      edit, picture remove.

      1
  8. Mike Ford Mike Ford says:

    Well said, Mark.

    The upcoming meeting March 29, 2022, is going to rubber-stamp the new racism-ASSUMED legislative efforts.

    https://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=114561

    I just wish they (The House Committee Members who drafted the memorandum linked above) would STOP their own racist behavior toward my Latina daughter, and Asians! LatinX is an artificial construct attributed to certain activist “PC” professors, and generically by the LGBTQ Community.

    According to some definitions (please look them up-they are numerous, including Merriam-Websters), LatinX excludes individuals that haven’t adopted non-binary speech conventions.

    Since the term excludes people who self-identify based upon the DNA and the gender determinant chromosomes they were born with AND arrogantly and unilaterally redefines the Spanish language and its conventions, it amounts to hate speech. Just as certainly as the N-Word itself does.

    For the United States Government to tell Chicanos and Chicanas, as well as ALL other Latino People that THEIR native language is not acceptable is hate speech and racism. Ebonics is OK, but historic Spanish is not?

    My point: HOW can any federally authorized committee address the extremely weakly supported issues of perceived appraisal possible racism while they themselves are engaging in both hate speech and racist behavior in their own arguments?

    Lastly, WHY are no Asians included in any of these comparative value ratio studies? Don’t Asian people buy or refinance real estate? I could have sworn my past clients that only spoke Korean were Asian. The Korean-speaking interpreter I had to arrange for was Asian.

    Apparently, PAVE isn’t content to usurp the Spanish language from Latinos & Latinas who have not embraced speech affectations promoted by the LGBTQ Community. They even more quietly eliminated an entire race of people from even being considered!

    I’ve seen Asians. I know they exist. My Sister is a bi-racial Asian-American. I even know of one HUD complaint where an Asian heritage borrower complained that an Asian heritage appraiser was racially biased. (Seriously).

    Why then do PAVE, HUD, ASC, TAF, and all the other participants think Asians are too insignificant to be considered in their research?

    That really smacks of Racism!

    All in the interest of mortgage companies, AMCs, REVAA and other special interests who want automated valuation methods to be adopted.

    If only they had a scapegoat that would justify it.

    4
    • Avatar CJK says:

      To establish an independent agency to be known as the Federal Valuation Agency and real estate valuation standards and appraiser criteria, including promoting a fair, unbiased, transparent, repeatable valuation process, and for other purposes.

      22 ‘‘(g) APPRAISAL INFORMATION.—The Office for each agency shall collect from the agency and make publicly available on a website of the agency information regarding the race, ethnicity, and gender diversity of appraisal venders

      ‘‘(2) that investigation of any such complaint

      5 shall include a full review of the appraisals conducted within the preceding 24 months by the appraiser involved; and

      1
  9. great job keep up the good fight

    0

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Dear ASC: Details… Why They Matter

by Mark Skapinetz time to read: 7 min
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