Appraisal Scoop

HVCC Appraiser Talkback Survey: What’s Really Going On?

According to David Brauner, Editor, WRE and Senior Broker, OREP, The HVCC Appraiser Talkback Survey has been posted about two weeks and so far appraisers have provided some pretty interesting results (see below).

"Our Survey Says (so far) In our Working RE/OREP Appraiser Talkback Blog (and elsewhere), many appraisers predict that the profession can not continue to attract competent professionals, capable of producing reliable reports, given the relentless pressure for lower fees and faster turn times from appraiser management companies (AMCs): the most competent and talented will migrate to professions that are more profitable and satisfying, goes the prediction"

Do most appraisers really believe that there is no future for them in this profession? And if so, what does this portend for the future of honest lending? 

Here are some early results:

• 57 percent who responded say they expect to be appraising full time five years from now. What do you say?
• Over 65 percent respond that they are satisfied working with appraiser management companies (AMCs) at least some of the time (35 percent respond “never” satisfied).
• Over 79 percent of respondents report that, at least some of the time, pressure for a fast turn around time results in a product that is less reliable for the end user, compared to a report where adequate time had been allowed (only 21 percent say this never happens).
• 85 percent say being able to copyright or register ownership of the intellectual property contained in their appraisal reports is an important issue. Isn’t this interesting?

What’s your experience? Complete the survey and let us know.

Lenders, as well as the regulators who are charged with protecting the public, might be interested to know what percentage of appraisers feel that low fees and fast turn times make their reports less reliable.

Discouraged appraisers might be interested to learn whether a silent majority of their colleagues have figured out how to make a profitable and satisfying living from AMC work without the hassles associated with mortgage brokers. Maybe we all can learn something from the survey and follow up stories in Working RE Magazine.

Why is it important for you to participate?

First, the absence of comprehensive survey data makes it impossible for industry leaders to formulate and promote the appraiser-friendly agenda that is long overdue. Lobbyists will tell you that finding a consensus on anything among appraisers has long been a stumbling block to progress. A much stronger case can be made to regulators with hard data in hand.

The absence of feedback from colleagues also makes it impossible to assess your own experience relative to others and to learn from their mistakes and successes. Fill out the survey and we’ll bring you the stories.

Finally, there is this:  Appraisers predicted the lending collapse years before it happened; those who complained about reckless lending, inflated values, lender pressure and the imprudent use of AVMs, were labeled anti-progress, shortsighted, incompetent…and worse.

No one paid much attention to the “Chicken Little” appraisers, except to mock them, but this time, the sky really did fall.

Here’s a chance for appraisers to come together as a group, speak with one voice and be heard. If you've already taken the survey, you may want to go back to weigh in on several new questions suggested by readers (Additional Questions Suggested by Survey Takers).

You can find a link to the HVCC Appraisers Talkback Survey at www.orep.org  or www.workingre.com  or click: www.surveymonkey.com/s.aspx?sm=1drQU6WrYbQ73E4wH2vKVw_3d_3d   

Visit our blog at http://www.orep.org/wordpress-2.7/wordpress/  Working RE Home

Sen. Charles Schumer Introduces The Fighting Real Estate Fraud Act of 2009

DA's Don't Have the Resources or Manpower to Fight New Wave of Mortgage Scams Amid Foreclosure Crisis.

New national legislation would send millions to DA's offices in NY and federally funded (2009 Omnibus Appropriations Act) Mortgage Fraud Units in DA offices across the country

The creation of Real Estate Fraud Units will employ staffers who will be able to focus exclusively on real estate crimes that plague homeowners and prosecute scammers for their crimes.

“Housing scams are a nationwide problem and they require a nationwide solution,” Senator Schumer said. “Homeowners in New York and across the country have suffered for too long because of scam artists who feel they can take advantage of people without any repercussions. These fraud units will help protect homeowners from these criminals and ensure that rather than walking away from their crimes, they are prosecuted to the fullest extent of the law.”

The Fighting Real Estate Fraud Act of 2009 establishes a competitive grant program in the Department of Justice for local District Attorney’s offices to fight real estate fraud. Under this bill, real estate fraud includes crimes involving misrepresentations and forgeries to general applications, tax returns, and financial statements, appraisals and valuations, verifications of deposit and employment, escrow and closing documents, and credit reports.

The Attorney General is authorized to make grants on a competitive basis through the Bureau of Justice Assistance to DA’s offices to assist them in investigating and prosecuting real estate fraud. The bill authorizes $100 million in grants for FY2010 and each year through FY2013. These grants will be used for hiring specialized staff to offices in need of specialized resources to combat scams.

Schumer added, “The recent foreclosure and refinancing crisis, following a sharp increase in home values created a perfect storm for these housing scammers to swoop in and fleece homeowners. With this bill, these criminals will be stopped.”

Source: Senatro Charles E. Schumer Press Release

NAR Calls for 1-Year Delay on HVCC - Letters to Fannie Mae & Freddie Mac

 

Download Williams Fannie Mae HVCC Delay 04202009

Download Koskinen Freddie Mac HVCC Delay 04202009

This is a Call to Action! Please contact your Senators and Representatives TODAY and urge them to STOP or DELAY (for at least 12 months) the implementation of the Home Valuation Code of Conduct ("HVCC") which is de facto regulation, forced on Freddie Mac and Fannie Mae by New York Attorney General Cuomo.  The file below contains a list of key talking points to bring to the attention of your legislators.

Please contact your legislators today at their in-district offices, as Congress is currently in recess. You can access the contact information for your legislator here. We encourage you to keep trying to contact them if you are not initially successful. It is vital to the overall effectiveness of this call.

Please forward the Call To Action pdf below to your mortgage broker and appraiser contacts.

Download CAMB Call To Action

 

The 1004MC-71 Industry Update Part 2; Frustration Turns To Panic

This is the second in a four-part series dealing with the new 1004MC form (MCF) by David Braun, MAI, SRA.  In Part 1 of this series, David began with a discussion of where appraisers are NOW . . .and gave some direction on where we're headed.  In Part 2, David's looks at appraiser's frustration with the 1004MC and in Part 3, he gives us a "What Goes Where and Why" look at the 1004MC.

I have been talking to a lot of appraisers who are getting a little uptight.  Consider that for most residential appraisers their personal financial position has been deteriorating the past couple of years because of a decreased demand for appraisals during the height of the housing crisis. Now, throw in the new requirement to perform a market condition analysis (MCA) on the 1004mc-71 form, while the work load is increasing.

The typical residential appraiser is in no position to turn down work.This scenario has left a good number of appraisers in a state of frustration and panic as they attempt, but fail, to produce a credible MCA in a reasonable time period. Some have reached the point that they say the heck with a credible MCA, I would be happy if I could just get the blanks filled in on the 1004MC-71 form (MCF). What should appraisers do to get over this hump?

My suggestion is to begin to think positively. Most appraisers (90% plus) can meet the challenges of performing a credible MCA on the new MCF. So, most all appraisers are stating a fact when they say, “I can do it!” However, there is a set of skills that has to be developed, each fitting together like the pieces of a puzzle.

Let’s talk about a few of these necessary skills.

1. The first and most important skill is being able to recognize what data should be gathered in the analysis.
2. The second is how to perform the database searches that are necessary to gather all of the meaningful information.
3. The third step is assembling that information on a spreadsheet for analysis.

The appropriate data to gather is any property that was exposed to the market (listing, pending, expired, withdrawn, sold etc.) that potential purchasers of the subject property would deem competitive to the subject property. Appraisers typically think of pertinent data (comps) in the forms of closed sales and active listings. However, would a property that is very similar to the subject that was actively listed on the market at $220,000 for over a year and was recently withdrawn by the owners be meaningful information for the appraiser? Of course it would. A MCA that is based on a lot of types of data has some real potential to aid the appraiser in the valuation process. The data-basing term for these different types of comparable properties is a “Record”.

What search parameters should be used when gathering these comparable property records?   This is best answered by considering what the appraiser is going to do with the data. The MCF is basically a trending analysis; but what are we trending? Many appraisers search for comparables by a sales or listing price range; which is an incorrect method. We are not so much interested in how many properties are offered and how long they have been on the market in a specific price range. The appraiser is not trying to trend a price, he/she is trying to trend a specific property type in a specific location by price over time.

Click here to continue reading . . . .

I Joined Twitter, Now What Do I Do?

Some of you may have notice the new Twitter widget on the left side of Appraisal Scoop?  The Appraisal Scoop twitter account includes links to all of the posts on Appraisal Scoop but also many stories and ideas that are of interest . . but just couldn't be developed into a full-blown post or article.

Twitter is a micro-blogging platform and it's a little different from any other online or social media tool. When people first begin using it, it can seem overwhelming and confusing. How can you really type anything of substance in 140 characters or less?

The first thing I usually advise is that you take some time getting familiar with how it all works. Put up a picture of yourself, find some others to follow, and "tweet" some updates. It may seem a little like you are talking to yourself to do this especially if you are not being followed by anyone else. But it helps to see activity when someone comes upon your page and is making a decision whether to follow you or not.

Once you have observed and participated a little, there are a few things you can do to help you build relationships. Why is that so important? It all goes back to establishing that know, like and trust factor. People like to do business with those they know, like and trust, right? Here are some of the ways to use Twitter to create rapport and get more visibility for your business:

1) Give value. Share links, offer advice and answer questions. I usually suggest a balance of 85% non-promotional tweets to 15% promotional tweets. When you are sharing interesting tidbits, they do not (and should not) be all about your services and offerings. On Twitter, people are looking to learn more about you the person, not just you the business owner. Of course, once they feel that they know you better, they are more willing to eventually buy from you!

2) Engage others. Ask questions, use the @ function to spark conversations and re-tweet others' messages. This helps people get to know you, but it is also a chance for you to demonstrate your expertise. You don't need to outright sell in order for others to see that you have something of value to offer them. Before you know it, others will be re-tweeting (sharing) your helpful information with others, leading to more visibility for you.

3) Use your profile to your advantage. You are able to link to your website in your profile as well as include a small blurb about who you are and what it is you do. Although you don't have a ton of space to write here, be sure to give a little snapshot of your personal self as well as your professional self. This is a great way to get others to explore your offerings, become your subscribers or clients and boost your traffic.

Most of all, remember that Twitter is a place to be you, listen, respond and be helpful. The results for your bottom line may not be immediate, but you are building your reputation and strengthening relationships each time you participate. And that's great for business!

Christine Gallagher, MLS, MSIS, founder of CommunicateValue.com, teaches solopreneurs and small business owners how to use online marketing and social media to communicate effectively and authentically and attract more business. For FREE tips on how to build profitable relationships, leverage technology and create your own successful online business, visit http://CommunicateValue.com Article Source: http://EzineArticles.com/?expert=Christine_Gallagher

AMC Appraiser Agreements & Indemnity - TSI Appraisal Services Appraiser Agreement Reviewed

        AMC Appraiser Agreements and Indemnity - By Peter Christensen

We are receiving many calls from our insured appraisers about AMC agreements. Many of our calls in the last fews days have concerned the TSI Appraisal Services Appraiser Agreement. This agreement is worth looking at because, though more extreme than others in its one-sided wording, it illustrates the typical legal problems for appraisers found in AMC agreements.

With regard to the TSI agreement, appraisers are particularly concerned about the indemnity section. Indemnity provisions are a recurring issue with AMC agreements. The bottom line is they are usually an AMC's attempt to shift potential liability by contract from the AMC to the appraiser. Because of the current mortgage crisis, this attempted shifting of liability is occurring more than ever.

Section 7 of the TSI agreement is entitled "General Indemnity." From our insurance and legal defense perspective, the main problems we see in this section (and in various other AMC agreements) are:

1. Indemnity Provision. The first paragraph of section 7 requires, in part, that the appraiser:

"indemnify, defend, save and hold harmless [TSI] from and against any and all liability, claims, damages, penalties, losses, fines, judgments . . . [and] any other costs, fees and expenses . . . in any way related to . . . [among other things] any appraisal report submitted to [TSI] by Appraiser pursuant to this Agreement."

Simply construed, this means the appraiser is promising to pay TSI for any cost or loss of any kind (including criminal or civil fines ordered against TSI) for anything related to an appraisal submitted by that appraiser. This is an unusually broad indemnity provision because TSI could conceivably take the position that the appraiser is required to indemnify TSI for losses caused by TSI itself in handling an appraisal or resulting from TSI's own negligence.

For example, if TSI conveyed erroneous instructions to the appraiser which resulted in a problem with the appraisal and the lender client demanded that TSI make up a resulting loss, TSI could conceivably demand that the appraiser pay TSI for TSI's own mistake. As another example, class action litigation is becoming more common against lenders and their subsidiary AMCs, TSI could, here again, argue that appraisers whose appraisals are the subject of such a lawsuit must indemnify TSI for defending the lawsuit because it relates to their appraisals. There may be questions about whether such an overbroad indemnity provision is enforceable under various states' laws, but that is a question that would only be resolved after an appraiser is embroiled in litigation by TSI.

2. Mortgage Repurchases. Another significant issue is raised in the second paragraph of section 7. In this part, the appraiser:

"agrees that if a mortgage lender is required to repurchase a mortgage loan for any reason in any way related to [among other things] . . . any appraisal report submitted by Appraiser pursuant to this Agreement, Appraiser shall pay [TSI] an amount equal to the repurchase price paid by such mortgage lender to repurchase such mortgage loan."

The appraiser is further required to

"pay the reasonable attorney’s fees of [TSI] incurred in enforcing Appraiser’s obligations hereunder, including, with [sic] limitation, the obligation of Appraiser to pay [TSI] an amount equal to the repurchase price of a mortgage loan as set forth above."

There are obvious problems with this provision. In particular, there could be many reasons why an originating mortgage lender might be contractually forced by a mortgage purchaser to repurchase a mortgage based on something in an appraisal that have nothing to do with any error by the appraiser.

For example, what if the appraisal disclosed that the subject property was being used commercially and the originating lender was required to repurchase the mortgage based on the disclosure of this fact in the appraisal? That's not an error by the appraiser. Yet, under the language in the agreement, TSI could conceivably argue that the appraiser is financially liable for the repurchase price.

Aside from that unfairness, why should the appraiser be required to pay TSI at all for a repurchased mortgage? TSI isn't the lender and has not sustained any loss. (Of course, TSI might well be guaranteeing repurchase demands to their lender clients and trying to pass that cost on to appraisers). Finally, a repurchased mortgage does not even necessarily result in a loss to the originating lender or a loss equating to the full repurchase price. Yet, under the provision here, the appraiser is required to pay TSI the full "repurchase price" paid by the originating lender. Like the first paragraph, there are serious questions as to whether this language would even be enforceable by TSI -- one of the main issues being that the provision could be construed as an unenforceable penalty. Once again, however, this is a question that would only be resolved in court after TSI has sued an appraiser.

Click here to continue reading . . .

Class Action Suit Says Wells Fargo, "Rels Valuation" Illegally Strong-arm Appraisers

First appraiser suit against Wells Fargo and Rels claims companies blacklist appraisers.

SEATTLE – Today two real-estate appraisers filed a proposed class-action lawsuit against Wells Fargo (NYSE: WFC) and Rels Valuation, an appraisal management service, claiming the two organizations pressured and intimidated appraisers to deliver artificially inflated home appraisal values to help close loans and increase profits.

The suit, filed in U.S. District Court in San Francisco under the Racketeering Influenced and Corrupt Practices Act (RICO), claims that beginning in 2004 Wells Fargo and Rels colluded to punish appraisers who refused to inflate appraisals by denying them future appraisal work.

Rels is one of the largest appraisal management companies in the country, acting as an intermediary between banks and appraisers. Appraisers, by law, are intended to be independent and autonomous from the influences of others, but according to the complaint are compelled to do the bidding of Rels, and through them Wells Fargo.

“We plan to show Rels effectively tells the appraisers what they want to see in the valuation, and if they don’t deliver, they are locked out of future work,” said Steve Berman, the attorney representing the plaintiffs and managing partner of Hagens Berman Sobol Shapiro.

According to Berman, Rels provides the appraiser with a predetermined figure called the ‘Borrower Estimated Value’ and expects the appraisers to deliver reports with values exceeding the Rels-supplied figures.

“We heard from appraisers who say that after providing bona-fide appraisals that come in below what Rels wants, the company contacts them and strongly suggests they reevaluate the property,” Berman noted. “If an appraiser refuses, we contend Rels simply refuses to use them again.”

Don Pearsall and Timothy Savage both claim Wells Fargo tried to strong-arm each of them into inflating appraisal values, violating the laws and regulations of the Uniform Standards of Professional Appraisal Practice (USPAP). The USPAP rules clearly state an appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions - something the lawsuit claims Rels does on a regular basis.

According to the compliant, Rels and Wells Fargo have given appraisers predetermined comparable properties to base appraisals, further compromising the appraisers’ independence.

Plaintiff Pearsall, a long-time appraiser, completed an appraisal for Wells Fargo and Rels in 2007. After submitting his report, Rels asked that he alter the report to reflect the company’s desired views on the property.

After refusing, the suit claims Rels blacklisted Pearsall, stripping him of a large portion of his income.

Timothy Savage, an appraiser in Vail, Colorado, also submitted two appraisals to Rels in 2009, which the company rejected, asking him to increase the appraisal values. After refusing, Savage received a letter from Rels informing him that he is no longer included on the approved panel of appraisers, the suit claims.

“We’ve heard from appraisers across the country sharing similar stories - bullied into inflating prices and blacklisted when refusing,” Berman added. “Apparently the treatment that both Tim and Don experienced is the same for hundreds, if not thousands of appraisers.”

The lawsuit seeks to represent all state-licensed or state-approved appraisers nationwide who’ve been removed as an approved appraiser by Wells Fargo or Rels Valuation. The suit asks for treble damages and is the first lawsuit filed on behalf of appraisers against Wells Fargo and Rels.

You can learn more about this case by visiting www.hbsslaw.com/appraisers . If you’ve performed appraisals for Wells Fargo or Rels Valuation and been blacklisted, you can also contact attorneys at wfc@hbsslaw.com.

Click here for the filed suit.

About Hagens Berman Sobol Shapiro

Hagens Berman Sobol Shapiro is based in Seattle with offices in Chicago, Boston, Los Angeles, Phoenix, San Francisco and New York. Since the firm’s founding in 1993, it has developed a nationally recognized practice in class action and complex litigation. Among recent successes, HBSS has negotiated a pending $300 million settlement as lead counsel in the DRAM memory antitrust litigation; a $340 million recovery on behalf of Enron employees which is awaiting distribution; a $150 million settlement involving charges of illegally inflated charges for the drug Lupron, and served as co-counsel on the Visa/Mastercard litigation which resulted in a $3 billion settlement, the largest anti-trust settlement to date. HBSS also served as counsel in a $850 million settlement in the Washington Public Power Supply litigation and represented Washington and 12 other states in lawsuits against the tobacco industry that resulted in the largest settlement in the history of litigation. For a complete listing of HBSS cases, visit www.hbsslaw.com .

The Appraisal Bubble - In Run Up to Real Estate Bust, Lenders Pushed Appraisers To Inflate Values

The Appraisal Bubble, by Joe Eaton - reprinted by permission of The Center for Public Integrity

In 2004, years before plummeting real estate values turned Fort Myers, Florida, into a top five foreclosure capital, appraiser Mike Tipton faced a dilemma.

Tipton’s employer, eAppraiseIT, sent him to value a two-bedroom home in a new subdivision built by the developer D.R. Horton. Paperwork given by the appraisal management company to Tipton included a $245,000 estimated value.

But after inspecting the home and comparing it to five similar houses that had recently sold, Tipton set the value at $237,000, $8,000 less than the estimate. He knew the difference might disappoint DHI Mortgage, the prospective buyer’s lender, which is a subsidiary of developer D.R. Horton. And indeed it did.

The lender, in a process appraisers say was common in the boom days before the housing bubble burst, asked Tipton to redo the appraisal. It sent paperwork through eAppraiseIT asking him to reconsider the value. It gave him different homes to use for comparisons.

“If you read between the lines, they wanted a larger value,” Tipton said. “I told them no, I wasn’t changing my report.”

Tipton, who like many other appraisers is paid by the job, says he was never given another appraisal for a D.R. Horton home. “All I can say is D.R. Horton has remained an active developer in Lee County,” Tipton said. “I didn’t see any further appraisals for DHI Mortgage. So you tell me.”

Carrie Gaska, a spokeswoman for First American eAppraiseIT, declined to comment on why Tipton received no further orders from the company for DHI Mortgage properties.

Tipton is among dozens of appraisers who have told the Center for Public Integrity that for years lenders across the United States have pushed them into inflating the value of homes to justify higher mortgages. Appraisers and lenders alike are demanding better oversight of the industry. In addition, the Center has obtained copies of lenders’ “blacklists” containing the names of thousands of appraisers; some appraisers say lenders used those lists to exclude those who refused to inflate home values.

The Center also found many appraisers who say they bowed to lender pressure to “hit the numbers” in order to remain in business. These appraisers, along with the lenders who pressured them, helped pump air into the housing bubble that led to widespread economic devastation, according to dozens of appraisers, lenders, and others with intimate knowledge of home loan practices.

And there’s evidence that Fannie Mae and Freddie Mac, the two largest purchasers of home loans, bought mortgages without ensuring they were made with accurate appraisals, according to an investigation by New York Attorney General Andrew Cuomo.

No one knows exactly how much of a role inflated appraisals played in the mortgage meltdown. But as an increasing number of homeowners face foreclosure, many remain unaware that the appraisal they paid for during the purchase process may not have reflected the true value of their investment, and may have allowed them to borrow more money than their home was worth.

Depending on the state where the homeowners purchased, the scheme may or may not have been against the law. Pressuring an appraiser to inflate the value of a property is a crime in at least 20 states and the District of Columbia, though it is often a misdemeanor punishable by a fine, a slap on the wrist that appraisers say does little to prevent the exertion of undue pressure.

“There is rampant corruption throughout the industry,” said George Dodd, a veteran appraiser in Virginia who has been advocating for more regulation. “The way it stands now, the public doesn’t stand a chance.”

Dodd said, that in addition to the appraisal ordered by the lender, consumers can protect themselves by ordering a second independent appraisal before a purchase. They will, however, still have to pay for the lender’s appraisal.

Fudging the Numbers

Richard Frank, an appraiser in Vero Beach, Florida, started appraising homes in 1998, when values were climbing. From the beginning, Frank said he stepped into a business arrangement in which lenders forced appraisers to abandon their standards if they wanted work.

Frank said lenders commonly gave appraisers an estimated value for a home on each appraisal order. Appraisers, who usually determine values by comparing homes to recent sales of comparable properties, often worked backwards from that estimated price to find recent real estate sales that would “make the value,” he said. Working backwards from the estimate was faster. Everyone made money. And since appraising homes is subjective — both an art and a science — it was easy to fudge numbers.

“The [supposedly comparable] houses might be bigger and better, but who’s going to know?” Franks said. “In an increasing market, your sins are buried.”

If an appraisal came in lower than the purchase price, the loan likely would be denied. Since loan origination staff is typically paid by commission, a failed deal meant no paycheck for them. If that happened too many times, Frank says, lenders stopped sending the appraiser work. “Put out, and you will get more dates. It’s just that simple,” he said.

Richard Bitner, a former subprime lender in Texas who has written an insider account of the mortgage industry collapse, backs up Frank’s story. Bitner says the pressure came more from the cozy relationship between lenders and appraisers than threats.

“The pressure applied didn’t really need to be overt,” Bitner said. “If suddenly [an appraiser] can’t make the values, at the end of the day, it’s pretty easy to go to someone else. You are here to make money.”

Appraisers say lenders did just that, sometimes asking appraisers to promise a value before they officially ordered the report.

Click here to continue reading . . .

The 1004MC-71 Industry Update Part 1; And They're OFF!

This is the first in a four-part series dealing with the new 1004MC form (MCF) by David Braun, MAI, SRA.  In this series, David begins with a discussion of where appraisers are NOW . . .and gives some direction on where we're headed.  In Part 2, David's looks a appraiser frustration with the 1004MC and in Part 3, gives us a "What Goes Where and Why" look at the 1004MC.

April first has come and gone; and the mandate to use the 1004MC-71 form (MCF) is firmly in place. Much like in a horse race appraisers are accelerating out of the blocks- with a few still stuck in the gate.  The form appears to have been primarily designed by Fannie Mae, with some input from Freddie Mac, and the Appraisal Institute.  The intent of this writing is to discuss the progress of appraisers to adapt to the form and to begin a converging of the various opinions of how the analysis should be completed.

The players in this scenario are the designers of the MCF, solution providers, appraisers, and reviewers. My personal expertise is as one of the solution providers, but also as an appraiser and fee reviewer.  I have 30+ years of appraisal experience, am a certified USPAP instructor, the author of APPRAISING IN THE NEW MILLENNIUM, Due Diligence & Scope of Work, designed and developed the USL Documenter II software, and the Regression Plus; for Real Estate Professionals.  I did not help design the MCF, nor have I interviewed those that did.

I feel the MCF is too restrictive (perhaps to keep it one page), but otherwise I believe it is a positive progression in the evolution of the appraising industry.  Now that most appraisers have access to spreadsheets they can assemble and analyze hundreds of records at one time. This is a stock pile of raw resources that appraisers can no longer afford to ignore. In fact, appraisers like in every other industry in America must exploit every asset at their disposal and evolve their research and development to a higher degree of efficiency.

Appraisers should begin to grasp the MCF as a tool to help them and not a hurdle to jump over.  In this new millennium...”appraisers must evolve from form-fillers and template masters to problem solvers.”  At this time most appraisers are simply trying to fill out the form with little recognition of its potential role in the appraisal process.

Over time, this will change and appraisers will recognize that when a good market condition analysis is performed, the appraisal is half way complete.  In the mean time industry leaders such as instructors, writers, and reviewers should keep pounding the message that the MCF is a viable tool that can provide significant insight and lead to a credible appraisal.

I have found that many appraisers are hung up on how get their MLS search results exported to a spreadsheet and if necessary converting that data to a standard spread sheet format which will allow for organization of the data and analysis.  This is not to imply that every appraisal market will require the use of a spreadsheet. Many rural markets with few properties will simply be done by hand. 

Appraiser’s coming out of the gates are like the early stage of a race for a human sprinter; their heads are mostly down right now, but shortly their heads will look up and they will be searching for points of reference to guide them.

These points of reference include books, seminars, automated tools, and the designers of the form. The successful appraiser will have to expend the energies to absorb information from all of these sources. Those that ignore this wealth of information and are content to merely fill in each blank on the form will find that the users of appraisals will intentionally and systematically begin to remove them from their approved appraisal lists.

Once appraisers make the effort to learn and evolve they will need automated tools in order to meet the budget constraints that they operate under. Most of the commercial form providers have integrated the MCF into their software packages.  But, they have built in little automation. I have been offering automated solutions to appraisers for almost a decade. But, as an appraiser it is difficult to appraise and develop software.  I have been delighted to see appraisers besides myself offering commercial report writing software and MCF tools. Many appraisers have developed tools, but most never make it to market. These efforts represent a significant shift in how automated tools reach appraisers.

It is my hope that these appraiser/developers will unite and support one another to better provide appraisers with the automated tools they need to do their job.  

Watch for Part Two!  David gives us a "What Goes Where and Why?" look at the new 1004MC Form!

Author: David A. Braun, MAI, SRA (President, Braun & Associates, Inc.) has been actively engaged in real estate appraisal, review, and consulting since 1976. David is also the author of Appraising in the New Millennium - Due Diligence & Scope of Work, 3rd Ed.  All of his products can be found on http://www.ScoopGear.com

Unfair State Board Complaints by a National Lender

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

 

We've observed a new pattern by a certain national lender. "Risk Management" at this lender has been submitting numerous complaints to state boards based only on single review appraisals which merely indicate "potential violations" of USPAP. I think the lender wants to show that it's "getting tough" on appraisers.

In general, I don't think the tactic of filing numerous board complaints based on "potential violations" of USPAP indicated by a single review is the right way for this or any lender to show good appraisal management practices. For one thing, the practice may backfire on the lender: appraisers subjected to the tactic may claim that it is being used to intimidate appraisers -- just as the blacklisting practices of other lenders have fueled lawsuits against those lenders by both appraisers and borrowers.

I think the better practice for lenders to deal with alleged appraisal performance problems is for a knowledgeable in-house appraiser to obtain and fairly consider the appraiser's view without any threatened action; if there are real issues, then the in-house appraiser should counsel the appraiser and give the appraiser specific usable advice as to how performance should be improved. Only where fraud or genuine incompetence is apparent should the lender file a state complaint.

"Sending anonymous, vague letters threatening appraisers with blacklisting and using form letters to file numerous board complaints about "potential violations" are not the answer."

The most troubling aspect of this particular lender's practice, however, is reflected in the lender's statement in the form letter that: "We are unable to provide any additional information for your investigation."

That's false. In several cases of which I am aware, the lender possessed written explanations from the accused appraisers which fairly defended the subject appraisal reports against dubious review appraisals. But the lender withheld this information from the state boards.

This is an unfair tactic, especially in those states that don't inform appraisers of the nature of the complaint against them and keep the identity of the complaining party anonymous. A lender like this shouldn't file a complaint, while withholding relevant information from the state and claiming "we are unable to provide further information."

Indeed, I've seen an instance where a related lender filed a board complaint in the same manner even after being informed by the accused appraiser that the subject appraisal was a forgery.

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