Appraisal Scoop

Viability of the Appraisal Profession - Guest Post by David Towne

GUEST AUTHOR: Dave Towne, Certified Real Estate Appraiser - Towne Appraisals. 16422 Britt Rd., Mount Vernon, WA Phone: 360.708.1196 eMail: dtowne@fidalgo.net Web: http://www.TowneAppraisals.com

Appraisers……

Those of you who desire to ‘read the minds’ of those players with direct bearing on appraisers will want to read the latest TAVMA newsletter. TAVMA is the Title/Appraisal Vendor Management Association – a trade organization now with diminished membership (only 27 + 5 affiliates) from its heyday in the mid-2000’s.

http://www.tavma.org/Articles_NEW/TAV_NL_Spring12.pdf

The lead article is written by Jeff Schurman who use to be the Executive Director of TAVMA. While in that position, he often wrote articles not very complimentary to appraisers or to the plight we have in being paid fairly. At the time, he advocated the AMC ‘wholesale price’ model in paying appraisers, and lobbied against AMC regulation at the state level.

Now, he’s beginning to question that model and the viability of the appraisal profession.

Mr. Schurman has his own consulting business (associated with TAVMA), and has a Blog in which he writes about mortgage lending issues. http://www.mortgagethirdpartyriskblog.com/

In an entry on April 10, 2012 he states this:

“The current environment is not conducive to attracting large numbers of young professionals into the appraisal business. I doubt anyone would seriously dispute this claim. So if the appraiser population continues to decline it will one day dip below the relevancy quotient.”

That brings me to the AQB. While many appraisers were sleeping, or sitting on their thumbs, the AQB instituted new ‘requirements’ for a person to qualify to become a Certified Real Estate Appraiser – either Residential or General (Commercial). Existing state certified (licensed) appraisers will be grandfathered, but effective Jan. 2015, an applicant for Certification will have to have a 4 year college degree.

In practical application, due to time-in-grade requirements as a trainee, an applicant will have to have a 4 year degree by December 2013, otherwise will not qualify to become a certified appraiser.

The ‘licensed’ category does not have such stringent requirements, but FHA and many lenders WILL NOT USE a ‘licensed’ appraiser. Some states are moving away from, or have eliminated, the ‘licensed’ category.

Are there those among you who really believe a 4 year college degree is absolutely necessary to appraise a residential property? The fallacy of that argument is that somehow a sheepskin equates to quality work. That’s absolutely wrong. Quality work comes from within the person in terms of their own attitude, ethics and willingness to learn, and has nothing to do with a 4 year degree.

The result of the AQB action, and the AMC model paying lower than ‘real’ fees parallels the concern Mr. Schurman expresses.

These are the real threats to the appraisal profession viability long term, not the UAD process instituted by Fannie/Freddie or report data acquisition that I see so often expressed.

 

GUEST AUTHOR: Dave Towne, Certified Real Estate Appraiser - Towne Appraisals. 16422 Britt Rd., Mount Vernon, WA Phone: 360.708.1196 eMail: dtowne@fidalgo.net Web: http://www.TowneAppraisals.com

UAD Reporting Consistency - Clarification by FNMA and Steetlinks

The following StreetLinks document is re-posted from the WinTOTAL Users Group

On April 10th, Fannie Mae and Freddie Mac announced the publication of a new UAD Update document and an Updated UAD Specification Appendix D, which details the Field-Specific Standardization Requirements for compliance with UAD appraisal reporting. Additionally, StreetLinks' Executive Management Team has been in recent discussions with UAD experts from Fannie Mae regarding their early stage analysis of appraisals that have been delivered via the Uniform Collateral Data Portal (UCDP). As a result of our discussions, we have a few clarifications, which are also included in the Updated UAD documents, that Fannie Mae asked us to emphasize with our appraisal partners.

Fannie Mae is now able to pinpoint significant differences between reported data for a single comparable property or subject property that has been used across multiple appraisal reports.

In particular, they are concerned about information that changes from report to report when the same subject or comparable transaction is utilized by the same appraiser in two (or more) independent analyses.

For example, instances have been identified where a comparable property has been described in one report to have an Adverse View, while in a later report, completed by the same appraiser, the same comparable property transaction is described to have a Neutral View or Beneficial View. Similarly, Fannie has found that Quality Ratings or Condition Ratings assigned by the appraiser have changed for the same comparable property transaction from report to report. Finally, Fannie Mae has identified comparable property characteristics such as GLA, room count and other basic features that have changed significantly from report to report.

With the understanding that this information is now being closely monitored, it is important for appraisers to be very consistent in their reporting of property information or explicitly document the reason for changes to reported data when the same subject or comparable transaction is used in multiple analyses. Since the property characteristics for the subject should be described and rated as they existed on the appraisal's effective date, (or for a "subject to" report, as if the improvements/repairs had already been completed on the appraisal's effective date), and property characteristics for a comparable property should be described and rated as they existed at their time of sale; there are very few instances where the data should actually change from report to report. Only if the appraiser has discovered new information about the property as it existed on the relevant date, or if the property has been involved in a subsequent transaction would a change to how the property characteristics are reported be appropriate. In these rare situations, the appraiser should clearly document the new information which led to the reporting change.

As it relates to this issue, the UAD Update April 2012 document includes the following additional instructions:

Appraiser Selection of Condition and Quality Ratings In other documentation, the GSEs have previously communicated that the appraiser's selection of the Condition and Quality ratings must be based on a holistic view of the property and any improvements.

When selecting the Condition and Quality ratings, an appraiser must:

• Consider all improvements to determine an overall Condition and Quality rating. The appraiser should then select the rating that best reflects the property as a whole and in its entirety.
• Describe the subject property as of the effective date of the appraisal on an absolute basis, meaning the property must be rated on its own merits. This requirement also applies to any other rating or description, including the View and Location. The rating should not be selected on a relative basis, meaning it is not selected on how the property relates or compares to other properties in the neighborhood. Additionally, the Condition and Quality ratings for comparable properties must also be made on an absolute basis (again, each comparative property on its own merits), not on a relative basis, and reflect the property as of the date of sale of that comparable property.

When an appraiser selects a rating and/or description of the subject property for a sales transaction, the selected rating and/or description must:

• Remain the same when reflecting that specific transaction. For example, if a C4 rating is selected for the sale of the subject property, then that property remains a C4 when using that specific sale as a comparable in future reports. The same expectation holds true for ratings and descriptions of comparable sales; when a comparable is used in a subsequent appraisal, the ratings and descriptions of that property should not change from one appraisal to the next when it reflects the same sale transaction.

It is also important to note, however, that properties can have the same rating or description and still require an adjustment. For example, all water views may not be equal. In this instance, an adjustment should be made and explained in the comments section of the form or an addendum.

StreetLinks recognizes that there may still be some subjectivity in assigning quality and condition ratings, particularly when the appraiser believes that a property shares characteristics of more than one rating standard. However, as clarified by these updated Fannie Mae documents, there should always be consistency when the same appraiser is assigning the rating for a particular comparable transaction according to their own interpretation of the criteria involved.

StreetLinks would recommend utilizing the Comparable Database or Comparable Archiving function available in most appraisal forms software packages in order to keep a catalogue of all of the comparable properties that the appraiser has analyzed (along with their assigned ratings), so that they can reasonably verify that the property is being reported consistently between appraisal reports. This is particularly helpful for those situations when a comparable property may exhibit characteristics of more than one rating standard resulting in a "judgment call" on the part of the appraiser.

The UAD Update can be found at the UAD page on Fannie Mae's website at www.efanniemae.com/sf/lqi/umdp/uad/index.jsp by clicking on the UAD Update April 2012 (.pdf) link.

In order to strengthen your quality metrics with StreetLinks, please incorporate these clarifications within your UAD compliant appraisal reports on an immediate basis.

Source: StreetLinks

GSE's Update Uniform Appraisal Dataset (UAD)

Since the implementation of the Uniform Appraisal Dataset (UAD) in September 2011, Fannie Mae and Freddie Mac (the GSEs) have been monitoring the use of the UAD and working with lenders and appraisers to support the successful adoption of the new appraisal dataset.

To continue to aid lender staff and appraisers working with the UAD, and support the successful submission of the UAD appraisal report in the Uniform Collateral Data Portal® (UCDP®), today we are providing updates, clarifications, and reminders regarding the UAD.

The GSEs will provide future updates as needed. In support of the use of the UAD and successful submissions to the Uniform Collateral Data Portal® (UCDP®), the GSEs are providing this additional guidance for using the UAD

• New Uniform Appraisal Dataset Update resource document provides you with updates, clarifications, and reminders regarding the UAD and successful submission of the UAD appraisal reports to the UCDP.
• Updated UAD Specification Appendix D, Field-Specific Standardization Requirements includes additional information relating to the selection of Condition and Quality ratings, as well as additional information with respect to each condition rating.

Both of these documents, in addition to other UAD business resources, are available for you and your staff on FreddieMac.com.

8 Biggest Appraiser Liability Cases - Appraiser Law Blog

8 Biggest Appraiser Liability Cases (Updated) By Peter Christensen (Appraiser Law Blog)

I have described below the 8 biggest appraiser liability cases with which I am familiar that are currently pending in the U.S. These are cases that specifically name appraisers, appraisal firms or appraisal management companies as defendants. That's an important distinction because the appraisal industry has been fortunate that only a small fraction of litigation about financial losses blamed on appraisal deficiencies actually names any appraisal defendants. Yet, the stakes below are very significant for the appraisal industry because the realistic measure of damages at issue in just these 8 cases -- not the plaintiffs' puffed-up alleged damages -- is more than what the whole industry paid last year for its professional liability insurance on a collective basis, by a factor of 3 or 4.

The cases below are ranked based on the approximate alleged damages demanded by the plaintiffs or the proposed settlement amount. The first two cases involve incredible damage claims, but I wouldn't draw any conclusions about those two cases, other than the fact that they show appraisers are very much at risk for big claims made by parties who are neither their clients nor intended users. The plaintiffs' claims in those two cases are outlandish.

One thing that is remarkable overall about these appraiser litigations is that they continue to be filed long after the peak of the real estate bubble and beginning of the lending crisis in 2006-2007. Most of the claims in these cases concern appraisals delivered in 2005-2006. See related article on www.readimember.org (registration is required and limited to appraisers): "What is the Statute of Limitations for a Lawsuit Against an Appraiser in My State?"

1. $8 billion alleged damages. Luxury resort development appraisals. Property owners v. lender and appraisal firm. Filed January 2010.
2. $2 billion alleged damages. Luxury resort development appraisal. Borrower v. lender, appraisal firm and appraiser. Filed February 2012.
3. $250 million alleged damages. Luxury resort development appraisal. Hedge fund loan investors v. appraisal firm. Filed October 2011.
4. $153 million alleged damages. 219 residential appraisals. FDIC v. AMC. Filed May 2011.
5. $129 million alleged damages. 194 residential appraisals. FDIC v. AMC. Filed May 2011.
6. $75 million pending settlement. FHA residential appraisals. Whistleblower appraiser v. lenders, AMC and individual managers. Filed May 2009, settlement pending.
7. $48 million alleged damages. Residential appraisals. Lender v. mortgage originator and appraisers. Filed 2010.
8. $20 million alleged damages. Industrial property appraisal. Tenancy-in-common investors v. appraisal firm and appraisers. Filed 2010.

The NY attorney general's suit filed in 2007 against a national AMC is still pending, but the NY attorney general does not appear to be seeking compensatory damages and is seeking instead statutory penalties or restitution in amounts that have not been specified in public documents.

Source: Appraisal Legal Defense and Insurance Blog by Peter Christensen and Robert Wiley - Legal issues and insurance matters affecting residential and commercial real estate appraisers

Do Energy Upgrades Add Value to Existing Homes?

GUEST AUTHOR: Debra Little was selected to direct this study because of her combined expertise in home performance and residential appraising. She led a team of senior appraisers who were on site in Los Angeles. See Debra at the ACI national conference in Baltimore this March where she’ll be presenting twice on this study

Results of a valuation study of three existing homes located in Los Angeles indicate the energy upgrades in these cases, added 6-9% to their current market value. In query of proof that energy upgrades contribute value, the study determined appraised market values of the before and after upgrade conditions.

The question is how much, in today’s market? Debra Little, a home performance consultant with an appraising background, directed the study, “Most would agree that it’s rational to expect a knowledgeable buyer to perceive added value. A text book scenario is when we have a shopper looking at two houses with prime assets that are similar in location, size, age and amenities, and the only differentiation is that one house has energy upgrades and the other does not. We would expect the house with the upgrades to sell first. The question is, will it earn a premium?”

The challenge for appraisers is in finding direct market evidence, comparables, required to make a strong enough case with a level of support acceptable by underwriters. It’s particularly challenging when valuing upgraded existing homes, which represent the majority of the market focus of the emerging home performance industry. There is more evidence for new energy efficient homes than is discoverable in the existing home sector.

Data affirmation that energy upgrades add value to existing homes may be a long time coming. Along with energy upgraded homes, the numbers of happy home owners continues to climb. How can happy home owners be a problem for valuation affirmation?

Two reasons why evidence is tough to find in the existing home sector:

1- Happy owners of energy upgraded homes don’t often sell. This is a compelling part of the story as we witness market transition. As home performance contractors are out there doing good work, they are creating a segment of occupants who are so comfortable in their homes that now cost less to live in, they are looking to stay, not sell. These homes don’t often turn over. What is the value of a home that is so treasured by its owners, they say they will never sell?

2- The second reason is the need for accurate, accessible, sales data of green homes. By now, many of us have heard the call for “greening the MLS”. More data may actually exist but goes unreported. To get there, training is needed for real estate agents, appraisers and lenders. And, we need to get 800+ MLS systems up to speed, or create another information solution. Is it realistic to hope this will happen any time soon?

When there are no comparables what methods can appraisers use to read the local market? Debra Little continued, “Our mission going into this assignment was to turn every stone in search of evidence. We knew that after we exhausted our typical sources, we would need to dig deeper.”

There are approved methods available to appraisers when challenged with valuing a unique property or a variety of other factors that can make market evidence scarce. Several approaches may be employed, and then reconciled with the others for a resulting range of value. A white paper will be published later this year that will describe the approaches employed in this study.

Energy and non-energy benefits. Energy efficiency, as it reduces operating expenses, produces numbers appraisers can work with. Proof of performance as evidenced by utility records will be one of the foremost considerations. Non-energy benefits such as improved durability and indoor air quality are also important but more difficult to quantify. The control of heat, air and moisture of a house envelope should significantly extend its effective life. Effective life is a question appraisers raise, not only about the house being valued but each comparable researched.

Appraisers may include further support of their conclusions by citing what they term as secondary evidence.

Secondary evidence is in accelerating growth mode. We know that energy efficiency awareness is increasing and home owners are responding by talking with their dollars as they invest in their homes. Incentive programs and home performance contractors are driving the business of energy focused remodeling. Build It Green, California’s premier green certification program surpassed the 10,000 mark in 2011 for number of certified new homes. Shoppers are asking about operating costs. Financing for energy upgrades is a hot topic as the market spurs new opportunities and innovative loan products, some of which require valuation of the home “as improved”.

We see these market shifts, but appraisers must ask how they translate locally.

A look at the effects of upgrades on two of the study’s homes. Family “A” opted for extensive upgrades as summarized: envelope, mechanicals, interior and exterior water fixtures and a 2.5 kWh solar PV system. Attic and crawl space were air sealed and can lights replaced to reduce infiltration. New insulation was installed to crawl space walls and ceiling, and to attic. A new heating/AC/ducts system and variable speed pool pump completed the improvements for a total cost of $44,500 after their $8,000 rebate.

The appraisers were able to obtain 3 months of utility records subsequent to the completion of work which they measured against the contractor’s modeling projections. This house appears to be on track for total annual savings of 73% or more.

This family is enthusiastic about the results. Mr. “A” boasted that their recent bill was $19 as compared to $110 for the same month last year. “My wife and I have discussed the possibility of moving in the future but have concluded that we are not willing to compromise in living without the benefits of energy upgrades we have become accustomed to. If we were to put a number on it, we would definitely be willing to spend 5-10% more for a house with upgrades that are at minimum, equal to or better than what our home now has.”

The second family, with a smaller budget, chose a similar but less extensive scope without solar. Their case is interesting in two ways.

1. The result they’re most excited about is the notably improved indoor air quality. Their sons suffer from asthma. The significant reduction of asthmatic symptoms they experienced immediately after the upgrade work was an unexpected benefit. They are thrilled!

2. The second, and an interesting twist for the appraisers, was the home office over the detached garage with literally loads of electronic equipment. A disaggregation of the electric bill indicated a large plug load. This required the appraisers to differentiate the effects of upgrades to the house as separate from the office, in effort to derive relatively accurate numbers to account for energy savings.

This case underscores the need for appraisers with green expertise to have the skills to analyze utility records and understand how a house uses its energy, as well as the recognition that energy upgrade scopes of work often produce important non-energy benefits, such as healthier indoor air.

These cases are two examples of happy home owners who now have experiential knowledge. Having lived in their upgraded homes for a few months, they now value the improved comfort, indoor air quality, reduced costs and other aesthetics so much, they say they would not want to move. They stated to effect, that if they were shopping today, they would want a house that has, at minimum, similar energy efficient elements and they would spend more to get it.

Knowledgeable buyers. The definition of market value incorporates the concepts that buyers and sellers be willing, able and knowledgeable. Home shoppers who could be defined as “quite knowledgeable” about energy efficiency today are ahead of the curve. They represent a minor percentage of the collective market. A few examples were found where shopper education is occurring with focused intent. The study looked at two businesses that are extraordinarily proactive in informing their buyers; Green Earth Equities in Fresno, CA and Green Canopy Homes in Seattle. Their model is to buy distressed properties, improve with deep energy upgrades and resell with fast turn times. Their effort to educate not only the individual buyers but also their local communities is a key to their success.

Home owners and buyers will drive the market. Real estate professionals with green expertise may be pivotal catalysts as they are on the front lines, working face to face with these decision makers. Agents can help guide to ask important questions about utility costs, longer term operating and maintenance considerations as well as cost and availability of energy. Appraisers are called to define and report the actions of buyers, while they recognize the complexities of new building methodologies, standards, products, terms, trades and sources. Lenders need the knowledge base to understand all these.

Proof of value of energy efficiency upgrades. Until more energy upgraded homes actually sell, the task to find proof as expressed in dollars will be a tough job for valuation analysts. Appraisers will need to look beyond their typical sources to find what evidence they can. It may not be 100% proof, it may not be undoubtedly clear, but they are called to understand the current state of their local market. As more real estate professionals gain green expertise they will be key contributors to the awareness building of home owners as well as the affirmation of their green-informed buying decisions.

A white paper on this study will soon be published and look for Part 2 later this year, the study of four sold energy upgraded homes.

________________

GUEST AUTHOR: Debra Little was selected to direct this study because of her combined expertise in home performance and residential appraising. She led a team of senior appraisers who were on site in Los Angeles. See Debra at the ACI national conference in Baltimore this March where she’ll be presenting twice on this study. Contact Debra Little, Debralittle1@gmail.com , 530 320-2107, PO Box 2183, Nevada City, CA 95959

Bradford Technologies Brings Regression Analysis To Residential Appraisals

First appraisal technology to provide statistical analysis for GSE-approved appraisals

SAN JOSE, CA – MARCH 10, 2012 — Bradford Technologies, an innovator of valuation tools and solutions for residential appraisers and parent of the AppraisalWorld online community for appraisers, has announced the redesign of CompCruncher, its valuation technology used by appraisers to prepare statistically supported valuation reports. One of the major changes is that the system now provides regression-based analysis for GSE-approved appraisals. CompCruncher 2.0 is the industry’s first and only appraisal technology to enable regression analysis for the most commonly used residential appraisal forms.

The original CompCruncher produced Collateral Valuation Reports (CVRs), a highly accurate alternative valuation report. CompCruncher 2.0, however, can be used to create Collateral Valuation Reports as well as traditional residential appraisals on GSE-approved appraisal forms. The process of using CompCruncher will remain largely the same. But once an appraiser uses CompCruncher 2.0 to develop a value, he or she will then be offered the option of choosing the type of report to produce: a CVR, the GSE-approved appraisal form 2055, and soon the appraisal form 1004.

CompCruncher 2.0 is currently in beta testing with several lenders and appraisal management companies. Only certified and trained appraisers can use CompCruncher or CompCruncher 2.0 to create statistically supported valuations of any kind.

“Our lender partners have told us repeatedly that they want to bring the level of reliability they get with the CVR into traditional appraisals—that’s why we created CompCruncher 2.0,” said Jeff Bradford, CEO of Bradford Technologies. “Now every appraisal can benefit from the higher accuracy that results from scientific analysis. Values can be determined based on analysis of literally hundreds of properties, rather than a handful of properties—for 100 percent of the appraisals used in the market.”

More than 2,000 appraisers have been trained to use CompCruncher to prepare Collateral Valuation Reports. Working in concert with some of the nation’s largest appraisal firms, Bradford will be offering no-cost training on CompCruncher 2.0 to current CompCruncher users. The company anticipates that in 2012, it will train 5,000 more appraisers to prepare not only Collateral Valuation Reports, but also statistically supported traditional appraisals. The Collateral Valuation Report is being used by several Top 20 banks.

“Values for an entire multi-trillion dollar industry are being supported by 25-year old valuation methods for an appraisal product that today is quickly becoming a commodity. It’s time for our industry to make some serious changes in the way we value properties,” said Mark Linne, the company’s chief strategic and valuation officer. “We need to move away from the art of appraising and start incorporating science. Most appraisal technologies tout efficiency and speed, but accuracy is where we need to focus—and CompCruncher 2.0 has the ability to bring that accuracy into virtually every residential appraisal in our industry.”

About Bradford Technologies, Inc.
Founded in 1987 and based in San Jose, California, Bradford Technologies has long been recognized as the leader in innovative appraisal solutions. Among the company’s offerings are ClickFORMS™ hassle-free appraisal processing software, the AppraisalWorld online community and services portal for appraisers, and the Collateral Valuation Report (CVR) produced by CompCruncher™, the first statistically supported, USPAP-compliant valuation product. Bradford Technologies is dedicated to building trust and reliability in the appraisal profession and providing leading edge solutions for appraisers, appraisal management companies, lenders and consumers. Bradford Technologies is recognized as a Top 50 Service Provider by Mortgage Technology magazine in 2011. For more information, visit: www.BradfordSoftware.com and www.AppraisalWorld.com.

 

Media Contact
Jeri Yoshida
Strategic Vantage Marketing & Public Relations
JeriYoshida@StrategicVantage.com
310.396.8813

Updated (2/28/12) FHA Valuation Protocol FAQ's

THANKS! to appraiser Dave Towne for finding the latest HUD/FHA issued update to the Valuation Protocol FAQ document dated Feb. 28, 2012.

Here are just a few of the topics covered:

What are the new construction documentation requirements for appraisers on properties 90% or more complete?

Mortgagee Letter 2005-48 states that a termite inspection is no longer automatically required unless there is evidence of active infestation, it is mandated by the state or local jurisdiction, is customary to the area, or at the lender’s discretion. Can you provide more clarification of exactly how lenders should apply "customary to the area?"

Is the appraiser still required to report well, septic and property line distances on an addendum to the URAR or is this only required when problems are noted? How is the lender to determine if these distance requirements are met if the appraiser is not required to identify?

Is it mandatory for a well/septic report to show distance to lot lines?

Is a well located in the basement okay? If not allowed by FHA, what if local laws permit it?

Does the appraiser determine what inspections are required or does the lender determine that?

Are oil tank certifications still required for underground tanks with no evidence of surface contamination?

Noted lead based paint still seems to be an issue that is unclear in the minds of some appraisers and lenders. Should the lender automatically call for painting only if the home is pre-1978, or should further measures be taken in all cases?

When is the cost approach required for an FHA appraisal?

If there is a manufactured home on the property, does it have to meet FHA standards if it is only being used for storage or has a family member living in it, but is NOT paying rent?

Please discuss the ongoing treatment of garage door openers that don't reverse with pressure. What about the sensor beam that stops the door when something breaks down?

Does the appraiser need to state the remaining economic life or just effective age?

Does the appraiser have to change the appraisal based on the “new” information?

Can information regarding sales of properties after the effective date of the appraisal be used?

Should data on the 1004MC mirror that in the neighborhood section of the appraisal report?

Can FHA Roster appraisers use foreclosures, short sales and other distressed sales?

 

PR: New Calculator From Appraisal Logistics Helps Lenders Uncover True Cost of Internal Appraisal Management

Tool assists in investigating in-house appraisal process, cost-per-loan savings

ANNAPOLIS, Md., Mar 01, 2012 (BUSINESS WIRE) -- Appraisal Logistics, the leading provider in compliance risk management for appraisal independence, announced today the availability of its proprietary Internal Management Cost Calculator built to uncover the true cost behind internal appraisal management. Using this calculator, lenders will be able to determine the most appropriate avenue for achieving and maintaining appraisal independence standards by exploring an alternative appraisal strategy.

The Cost Calculator breaks down the internal management process line-by-line so that users can input specific data and receive a true estimate of bottom line cost. The calculator takes into account overall loan and appraisal volume, appraisal management platform costs (if any), appraisal fees, dedicated staff salaries and operations requirements for working independently of loan processing staff.

Birgitta Natale, Mortgage Operations Manager for United Nations FCU said, "We spent eight months going through a careful appraisal management review and selection process. We determined there would be significant advantages to outsourcing the management process, and in fact, managing the process internally would increase our risk -- we need specialists to keep up with moving regulatory targets. Throughout this process, we were able to reduce our overall cost per loan, produce stronger appraisals and decrease our compliance risk."

Appraiser independence standards within the Dodd-Frank Act, known as AIR, is a code of conduct that now applies to all mortgage financing. Lenders are required to ensure appraisal independence in order to support the industry's goal of reasonable financing. According to the Interagency Appraisal and Evaluation Guidelines, "an institution should not select a valuation method or tool solely because it provides the highest value, the lowest cost, or the fastest response or turnaround time.

Frank Danna, CEO with Appraisal Logistics said, "Independently, these criteria will not provide complete compliance coverage, or a quality appraisal. Furthermore, the Guideline states that loan production staff cannot be at all associated with the appraisal review process. For smaller community banks with fewer dedicated staff, it becomes challenging to differentiate between loan production and appraisal management. This management calculator provides institutions with a means to investigate the actual expense of an in-house appraisal process. If lenders are not investigating their options in some form, then it is a missed opportunity to quantify what current expenses are, and could be, by selecting a different approach."

Frank Danna, CEO for Appraisal Logistics, will be a featured speaker in Valuation Review's upcoming educational webinar, "The Perfect Appraisal: Building A Reputation That Feeds Business Growth" on March 8 at 2 p.m. ET. Click here to register for the event.

About Appraisal Logistics

Appraisal Logistics is the leading provider in compliance risk management for appraisal independence. With a team of industry experts and a nationwide network of highly qualified and trusted appraisers, Appraisal Logistics provides immediate and exceptional service to regional and community banks and standalone mortgage originators to ensure each appraisal is 100 percent compliant in a customized, customer-focused environment. For more information, please visit www.gotoals.com or call (443) 949-7862.

SOURCE: Appraisal Logistics

PR: American Guild of Appraisers Petitions Federal Reserve Board and Consumer Financial Protection Bureau to Overturn Regulation that Threatens Viability of Professional Appraisal Practice

WASHINGTON, Feb. 23, 2012 /PRNewswire via COMTEX/ -- The American Guild of Appraisers (AGA), a national organization of real estate appraisers that is an affiliate of the AFL-CIO's Office and Professional Employees International Union (OPEIU), has petitioned the Federal Reserve Board ("Fed") and the Consumer Financial Protection Bureau to overturn a regulation adopted by the Fed that is contrary to the Dodd Frank Financial Reform law, threatens the viability of professional appraisal practice and undermines the legitimacy of real estate appraisals relied on by lenders in making residential mortgage loans.

In the aftermath of the national financial collapse brought on in part by badly underwritten subprime loans, Congress found that inadequate appraisals resulting from undue pressure on appraisers was a contributing factor. To address the problem, Congress enacted a series of appraisal reforms in the Dodd Frank law to ensure appraiser independence and accountability. A key component of the legislation is a requirement that appraisers be paid "reasonable and customary fees" for their work. Responding to evidence that appraisal management companies have been dominating the market and pressuring appraisers to accept assignments with unreasonable requirements and unreasonably low fees, the law specifically prohibits basing fees on the current practices of appraisal management companies.

Last year the Fed adopted a rule that allows appraisal management companies that control up to 80 percent of residential appraisals to pay appraisers a fraction of what a customary and reasonable fee would be as defined in the law, sometimes as much as 50 percent or more below the prevailing rates. As a result, industry experts report, the problems that Congress sought to address have been exacerbated. And the reliability of residential real estate appraisals is once again subject to question.

Peter Vidi, President of the American Guild of Appraisers explained, "Under the regulation we are seeking to overturn, the borrower doesn't save a penny but the appraiser gets a fee that is as much as 50 percent less than prevailing rates. What the borrower doesn't know is that perhaps less than half of the fee that they are required to pay is actually going to the appraiser who performs the appraisal. The rest goes to the appraisal management company. AMC's are often owned or controlled by lenders that make big profits without the borrower's knowledge that his fee is an additional profit center for the lender or the subsidiary management company at the expense of the borrower."

Vidi and many other leaders in the appraisal profession believe that the practices of appraisal management companies are threatening the reliability of appraisals to the detriment of borrowers and taxpayers. Vidi noted, "In addition to paying low fees, appraisal management firms are pressuring appraisers to meet unreasonable deadlines and often condition work on an appraiser's willingness to cooperate in ways that compromise the integrity of the appraisal process."

Vidi continued, "Most licensed and certified appraisers are hard working, competent and honest, and under the current circumstances, many are choosing to leave the profession. Those who remain are having to take on too many assignments just to earn a living and are dependent on the appraisal management companies that control the business."

The petition was filed on behalf of the American Guild of Appraisers by lawyers, Matt Schneider and Ben Lambiotte of the law firm, Garvey Schubert Barer. Schneider commented, "We believe that the Guild has a strong legal case that the Fed has violated the Dodd Frank law. We are hopeful that the Fed and the new Consumer Financial Protection Bureau, which is specifically charged with protecting the interests of consumers in financial transactions will reexamine this rule and make the changes necessary to carry out the intent of the law."

The petition also asserts that the Fed failed to comply with the law by not providing an opportunity for public comment on the proposed rule. In fact, after the rule was adopted, more than 1,400 comments were received by the Fed in response to the rule. Schneider claims that the Fed was obligated under the Administrative Procedure Act, to provide notice and opportunity for comment prior to adoption of the rule and that the Fed was further required to consider and address comments submitted as part of the rulemaking process.

Vidi noted that he has no illusions that getting this problem fixed will be easy. Vidi said, "For the appraisal management companies and their owners there is well over $100 million annually at stake. For the taxpayer who is left holding the bag when bad lending leads to defaults and for the borrower who often overpays for a home, this is a serious matter. For real estate appraisers, this one of several related issues that will determine the future of the appraisal profession."

While expressing hope that the petition will be successful, Vidi acknowledged that if the Fed and the CFPB don't do the right thing, litigation may be the only alternative. Vidi said, "Suing the Federal Reserve is not something that the appraisal industry would do lightly, but there may be no other option. This is far too important an issue to appraisers and consumers to simply walk away. We are fighting for our livelihood and for the integrity of the work that we do. We ask all appraisers to join with us in this effort."

OPEIU International President Michael Goodwin said that OPEIU and AFL-CIO and their millions of members stand firmly behind the AGA. "We support concerted action by the American Guild of Appraisers to protect the integrity of professional appraisal practice and the profession."

ABOUT THE AMERICAN GUILD OF APPRAISERS/OPEIU GUILD 44The American Guild of Appraisers/OPEIU Guild 44 seeks to represent the interests of appraisers, developing a strong presence before the U.S. Congress and each of the state legislatures. By working closely and exchanging dialog with other like-minded organizations, the AGA works to educate consumers about the appraisers' non bias, independent role in the value process, while ensuring the accountability of both the appraisal profession and the financial institutions with which the appraiser provides services.

ABOUT OPEIUThe Office and Professional Employees International Union represents more than 108,000 members in the United States, Puerto Rico and Canada. OPEIU represents employees and independent contractors in banking and credit unions, insurance, higher education, shipping, hospitals, medical clinics, utilities, transportation, hotels, administrative offices and more.

Professional organizations and Guilds affiliated with OPEIU are a diverse group that includes physicians, pharmacists, chiropractors, appraisers, podiatrists, clinical social workers, hypnotists, teachers and helicopter pilots.

 

SOURCE Office and Professional Employees International Union, AFL-CIO (OPEIU)

Copyright (C) 2012 PR Newswire. All rights reserved

Is YOUR AMC client slow to pay? Here's what can you do!

GUEST POST: Bryan Knowlton is a Certified Real Estate Appraiser in San Diego County, CA.  Author of the annual Appraisal Management Company Directory since 2007.  You can read his blog at http://www.appraiserincome.com and sign up for his FREE Appraiser Marketing System at: http://appraiserincome.com/appraiser-marketing-system/

I just happened to be doing my own appraisal invoice billing the other day and just finished up my phone calls trying to collect on some outstanding invoices.  Most of the companies that I had a problem with have very legitimate answers and checks were being mailed.

For the 3^rd week in a row I had to just leave a message for ES Appraisal / Evalonline because I couldn't speak to anyone directly in the accounting department.  I followed up with emails and was starting to get discouraged, but figured it was an isolated incident.

I got a call from another concerned appraiser that was having problems collecting from ES Appraisal / Evalonline for months.  They were owed thousands for appraisal fees and they were experiencing the same run around that I was getting.

Occasionally emails are received stating the profile has been updated and a check should be received in 2-3 business days.  But the checks are never received.  Claims are made that checks are mailed, but you can not speak to anyone directly.

The payment problems seem to have started in December.

I decided to make a post on my appraiser blog to see if any other appraisers were experiencing the same problem.  Within an hour I was flooded with calls, emails and comments on the blog.  All the appraisers were experiencing the exact same problem.  Many of them had many thousands in unpaid invoices and were getting nowhere.

 At the time of this guest post, I have yet to receive payment and I am still getting inquiries from other appraisers on how to collect this debt. 

What seems to have worked with a number of appraisers that got stuck AppraiserLoft invoices is to contact the lender directly for payment.  Other routes include contacting your state licensing agency, the BBB and of course calling daily and asking to speak with the president, manager, etc...

On Feb 15^th I talked with Lori @ Es Appraisal and she stated they pay for all their appraisals, but there sometimes might be a delay on payments.

They run their checks once a month, usually on the work 30 days since submitted. This can sometimes result in delays on some payments being received for delivered appraisals. But with many appraisers comments below, it sounds like there are numerous appraisers experiencing payment problems.

Make sure to check your profile, confirm the address on your W9 is where checks should be mailed and update with a new W9 if needed.

Lori also stated you can email her directly with your account information, including your sign-up email and she will look in to it and contact accounting. Email her at lcarter@evalonline.net

Bryan Knowlton is a Certified Real Estate Appraiser in San Diego County, CA.  Author of the annual Appraisal Management Company Directory since 2007.  You can read his blog at http://www.appraiserincome.com and sign up for his FREE Appraiser Marketing System at: http://appraiserincome.com/appraiser-marketing-system/