Appraisal Scoop

Runt's Rants - Appraisal Fraud: A Personal Experience

Not all things that happen in life are good. Same in business. Problems arise. As in life, how we respond in business to those problems defines us and our business more than the successes. This week it's time to talk about the other side.

One of our staff appraiser's state license was revoked on November 9, 2006. We were not aware of the revocation. The now illegal appraiser did not inform us of that fact. The matter was brought to our attention by one of our Clients who monitor license notifications at the Appraisal Foundation website. We called our state regulatory agency in January and confirmed the information. The illegal appraiser was removed from our staff the day the confirmation was made, all security clearances were immediately canceled, and the locks on our offices were changed.

The revocation was for an incident which occurred prior to his joining our firm, and the revocation issued as a result of his not providing the work file information requested by the TALCB. The illegal appraiser, hired in May of 2006, informed us after his employment of the complaint and showed us a letter from the TALCB exonerating him of the charges. The TALCB letter was evidently forged. All of this was discovered in the first week of January of this year, including another forged document the fellow attempted to use to clear his name. The TALCB staff attorney informed us that TALCB had not issued either letter.

The reports the illegal appraiser did for Acorn were being fully reviewed by our senior appraisers from day one and those reviews continued to the last day of his employment. Our general impression of his work was favorable, and we found him to be conservative in his value conclusions. That experience certainly added to our surprise at what had happened.

From November 9, 2006 until the first week of January 2007 the illegal appraiser was performing appraisals for Acorn as an unlicensed appraiser!   Appraisals which were sent to our coveted Clients with his signature.  Scores of appraisals were involved.

Click below to read the REST of the story . . .

The Appraiser Blacklist

You are on a major, big-volume lender’s do-not-use list. The big-volume lender is not calling anymore. You do not know why or how it happened, but you know it is starting to cost you real money.

Word spreads that you’ve landed on one client’s blacklist and soon their calls are petering out, too. All you want to know is why someone flagged you as “do-not-use.” You want to give your side of the story.

To make up for some of the lost business, you are trying to get on the approved list of a new client. Among the information you are asked to give is whether you have ever been removed or denied approval from another lender.  Now you have essentially been blacklisted in advance.

Next, your E&O insurance is up for renewal. Your renewal application asks whether you know of any circumstances that could result in a claim against you. Do you?

What does it mean if you are blacklisted? How do you find out why you’ve been blacklisted? What are your rights?  Click here to read Matt Barr's article The Appraisal Blacklist in the Communicator.

Mortgage Fraud: $4 Billion and Rising

The FBI's estimate that mortgage fraud costs lenders $1.2 billion a year is off the market by more than $3 billion. And others say the cost could be even higher. Lew Sichelman takes a look at the numbers and the scams behind them.  Full Story: Fraud: $4 Billion and Rising

From an appraiser's perspective, the article is refreshing in that it does not lay all the blame for the current level of mortgage fraud at the feet of the appraisal industry.

Ronald Frazier, president of LSI, and Arthur Prieston, chairman of the Prieston Group, give their thoughs on the causes of the unprecidented rise in mortgage fraud by title companies, commissioned loan officers, builders, and scammers.

Click here for the full story: Fraud: $4 Billion and Rising 

Appraisal Organizations of the World UNITE!!

The following is a joint statement from the AI, ASA, and ASFMRA appraisal organizations (download here) . .

March 5, 2007

TO: All Members of the Appraisal Institute, American Society of Appraisers, and American Society of Farm Managers and Rural Appraisers

We wish to inform you that the governing bodies of the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers and the Appraisal Institute recently took action confirming a commitment to the goal of unifying the profession under one association. As you know, our organizations have been working for some time to identify areas of mutual cooperation. Our combined government-relations initiative is one example where such cooperation has been ongoing for several years.

Through the work of the Cooperative Efforts Project Team, a 15-member group made up of five members from each organization, it has become clear that unification of the profession, broadly referred to as the Property Economics Profession, is a goal that all three of our organizations can and do support. Their input and study of the issues over the past several years have guided us in taking the action announced here. Over the coming months we will be sharing with you a plan for unification involving our three organizations as it is developed. Because much already has been accomplished by the Cooperative Efforts Project Team, we believe the necessary steps can occur over the next 24 months.

In making this commitment to the goal of unification, our organizations recognize that a long history of mutual involvement already exists, including our original sponsorship of The Appraisal Foundation and development of the Uniform Standards of Professional Appraisal Practice. Other initiatives, both national and international, have led to very positive relationships that will only foster an atmosphere of respect and high intentions.

We look forward to communicating with all of our members in the coming weeks and months as our team works through the issues. It is our intention to keep you informed regularly through every means possible. We recognize that our members will make the final determinations on future of the profession, but we will do our part to deliver a plan that will both fortify and advance the profession for the benefit of all.

Appraisal Institute members may comment at [email protected]

Terry R. Dunkin, MAI, SRA, President, Appraisal Institute
Leslie H. Miles, Jr., ASA, International President, American Society of Appraisers
Ray Brownfield, AFM, ARA, President, American Society of Farm Managers & Rural Appraisers

Humor: Housing Crash in Bloomington, IL?!

A housing crash?!  Well . . .it's more of a crashed house!

A Bloomington, IL couple caught a falling star Monday morning, not quite in their pockets but in a bedroom of their house. | Photo gallery | Video

A chunk of metal that crashed through the bedroom window of David and Dee Riddle’s home, 25 Partner Place, just after 9:30 a.m. appears to be a meteorite, but it also could be a piece of space junk, according to preliminary analysis by several Illinois State University geology professors.

However, the professors who had a look at it agree that whatever the heavy, gray object that crashed through their window is, it definitely came from space.

Robert “Skip” Nelson, a professor of geology at ISU, came out to Riddles’ home to take a look at the object, which is about the size of deck of cards.

Nelson said that based on the density of the object, the metal could be a combination of iron and nickel or a heavy stainless steel. It is unlikely a satellite or spacecraft would contain metal that heavy and dense, Nelson said.

“In my 36 years of investigating meteorite calls, this looks like the real thing,” Nelson said.

Click here for the complete story.

Are real estate appraisals outmoded?

The real estate appraisal system is broken and needs to be fixed . . .according to Marcie Geffner, a real estate reporter in Los Angeles, and contributor to Inman News.  In her recent article Real estate appraisals are outmoded she says:

"The fundamental problem is the conflict of interest among the lender who selects the appraiser, the borrower who pays for the appraisal and the investor who relies on the adequacy of the appraiser's opinion. Lenders are in a powerful position to pressure the appraiser to "hit" pre-ordained numbers since, as a group, lenders don't suffer the consequences of inflated valuations. Rather, the loans are sold to investors, who have become so mesmerized by the prospect of high returns that they've willingly ignored the reality that too many of the loans are justified by fictional appraisals."

Offered as solutions to the problems, she suggests :

• Allowing buyers to directly select the appraiser and pay for the appraisal
• Using In-house appraisers that are employees of the lender
• More enforcement of current laws and increased regulatory audits
• Rethinking of "traditional" appraisal methods in favor of more sophisticated analysis.

See if you agree or disagree with her assessment of the appraisal industry and the direction it should take!  Click here for the complete article.

USPAP Q&A - Financing Concessions & Analysis of Prior, Withdrawn, and Expired Listings

The ASB has released three questions in their March Q & A.  Many residential appraisers will find the first question a timely issue as it relates to sales and financing concessions. 

The next two questions are reprints from the Foundations 2006 frequently asked questions publication.  These two questions discuss analyzing and reporting prior listings for the subject property.

Sales or Financing Concessions: The real estate market I appraise in has slowed down over the last 12 to 18 months, and it is now extremely common to see seller concessions as part of a purchase transaction. What are the USPAP requirements regarding proper treatment of sales/financing concessions?

Click here to read the ASB March 2007 answer to this question! - Thanks to ICAP

Insurance Appraisals: Appraising Appraisers and Appraisals

I'm from Bloomington, IL, the corporate home of insurance giant State Farm Insurance (and Country Companies Insurance), so I'm used to seeing articles in my local paper about lawsuits involving disgruntled property owners and their disputes over property settlements.  If you're like me, you may have wondered just how some of those disputes are resolved and what role the appraiser plays?

Marc Mayerson's Insurance Scrawl blog provides some insights into the parties involved, scope of the appraisal, "prematurely invoked appraisals", appraiser qualifications, and appraisal bias.  Here's an excerpt from his post:

"In many property-insurance policies, a party has a right to demand an appraisal, which is procedure in which the value of lost or damaged property is determined. Typically, an appraisal takes the form of what I call a 1 + 1 + 1 structure – each party appoints its own appraiser, and if the two party-appointed appraisers cannot agree on a number the two together then select an umpire (or a court will select an umpire to decide if the two cannot agree on one). That some form of alternative dispute resolution is used for valuation, however, does not mean that there is no room for judicial intervention in disputes involving insurance policies with appraisal provisions."

Click here to continue reading.

Runt's Rants - Grow an Appraisal Business Series - Part Six - The Plan

We've come to the last of this series. You may remember at the beginning that I mentioned the series had it roots in a query from an Internet friend looking for some thoughts on how to grow his appraisal business. He had asked a series of questions, and I tried to respond to each with my experience in growing my business. His last question was so on the mark that I'm repeating it here verbatim.

"Finally, the whole life/work balance dilemma. I know you love to play golf. I'd love to ride my bike every day for and hour or two (or three!). What do you think are the most crucial aspects of making this a reality?  Why/How has it worked for you? I see myself working till I'm well into my 60's and later because I like the challenge of what I do. I'd like to feel that after 20+ years that I hopefully accomplished something that's bettered not only myself, but others, in this pursuit."

That's an extremely worthy question! It shows a passion for life, not just work, but for life. Work should be fun, challenging, rewarding both financially and emotionally.  Try to remember that your work is a part of life, not life itself.

I spent half my business career in the employ of others. Big corporations. I was lucky. I generally had good mentors and learned business well. In retrospect those jobs were rewarding, but they extracted a price in time that now seems too high. My mentors were supportive, the pay was fine, the responsibilities were challenging. No one made me work 50 hour work weeks, no one made me travel, but I did those things because it was necessary to get the job done and to get ahead. In reality, my time, even my life, was given over to the corporation. No leaving work in the afternoon simply because the day was beautiful ... heck what would my staff think? No choosing to work fewer hours because I could do all my tasks in less time ... what would my superiors think?

The single most important benefit of owning your own business is that you can mold it to suit your life, to suit your interests. As your life changes and your interests change, you can change the business to suit the new environment. You can achieve that control and freedom, but it requires a disciplined, long term plan.

I'm going to give you my final thoughts, based on my experience that worked for me. If may not work for you, and certainly not in the exact same way. I talk about each of our businesses being a wonderfully complex stew, filled with the ingredients that we have available. What I have available may not be the same as you have. That's the fun part, the creative part. Mix, match, test, retest, all with the long term objective in mind.

Click below to read on . . . .

Locate multiple addresses - calculate distances - make your own mashup map - instantly!

How would you like to take any kind of street address list, for example copied from an Excel spreadsheet, and automatically geocode the addresses to get latitude and longitude coordinates?   Then, map the data in your browser, download it into Google Earth, save it to a web page, or transfer it back into your spreadsheet?

You CAN with Batch Geocode!

Batch Geocode provides an Excel template for data entry.  You could also use a data source of your own and map the address cells to match the online Batch Geocode tool. 

I downloaded their template, deleted the sample data and entered my own addresses.  After cutting and pasting the data from the provided spreadsheet, it looked like the graphic below.  A couple of clicks later, I had an interactive Yahoo! map with all of the addresses pinpointed. 

The spreadsheet also has provisions for changing the colors of the pins.  For example Group 1 might be green for sales, Group 2 might be red for listings, blue for pending sales, etc.  BatchGeocode will even allow you to link to photos and website addresses.

Appraisers and salespeople can also use this tool to calculate distances to multiple addresses from a single point, or get quick driving directions to multiple destinations. Using your own data, it just takes seconds to plot it into a fully interactive multi-point map.

Click below for the map that resulted from the data input above . . .