AUTHOR: Micheal W. Armentrout, VP AM Appraisals, Inc. Mike has been involved in full time real estate valuation since early 1992 and has experience in numerous Central Ohio markets.
Talk about deja vu, nineteen years after the Savings and Loan bailout brought us Title XI of FIRREA, the appraisal profession finds itself in the sights of politicians again. The Home Valuation Code of Conduct proposed by the OFHEO that could bring sweeping changes to the entire industry begs the question; what will become of USPAP and State Licensing?
With all the discussions and questions posed about the proposed code of conduct, perhaps we should wonder what happened to the accountability that USPAP and Licensing was aimed at creating. With just about any issue, policies and laws are only as good as their enforcement. State licensing boards are typically overloaded with cases and can only do so much with the manpower and funding they have. Is more bureaucracy the answer and how would the proposed system be implemented, managed and enforced?
As any appraiser who does regular review work knows, the current licensing system does not guarantee quality appraisals but it should ultimately make them accountable with fines, suspension or even revocation when reported and properly investigated. This was intended to be the safety net to catch appraisers who do not have the professional and personal ethics to perform qualified valuations.
It seems as though our industry has convinced itself that lender pressure is the driving force for the need for change and that the only way to change is by a new definition of appraiser independence.
But can independence simply be defined by not receiving value estimates and targets or by cutting off communication between appraisers and their clients?
Every appraiser who has lost jobs and clients because they appropriately refused to “get value” should know that this is not the case.
Understanding that this is a sensitive issue, can or should we be concerned that under such a system, appraisers might be inclined to “play it safe” by valuing properties in the low range of adjusted value and if so what impact will that have on lending?
Will appraisers be relegated to a world of automated orders, fill-in-the-blank reporting and poor communication? This get‘em, do‘em and invoice’em mentality sounds more like a vocation than a profession.