Appraisal Scoop

California Appraiser Sues WAMU, First American, eAppraiseIT, and LSI - Refused to check "Stable"

Jennifer Wertz, a California Office of Real Estate Appraisers (OREA) licensed real estate appraiser, has filed a 12 count lawsuit against Washington Mutual Bank, First American Corp., eAppraiseIT, Lenders Services (LSI), FNIS, Inc, and Susan Richter.   

I've abstrated and edited portions of the lawsuit for ease of reading on this blog.  The complete, un-edited document, can be downloaded here: Download WertzPrimarySuit.pdf 

Thanks to Pamela Crowley of http://www.MortgageFraudWatchlist.org for the tip!

UPDATE

• 1/17/08: Money Magazine: WaMu Accused Of Appraisal Fraud
• 1/22/08: WaMu Continues To Take Its Lumps on Appraisal Practices

According to the lawsuit, Jennifer Wertz, beginning in 2001, began providing real estate appraisals to WAMU.  Jennifer was receiving approximately two to three appraisal orders each day and earned in excess of $100,000 a year from WAMU.

In or about July 2006, WAMU began to outsource the management of their appraisal services to national appraisal management companies. WAMU began outsourcing their appraisal work through LSI and eAppraiselT and Jennifer Wertz accepted their offers of to provide appraisals for WAMU and others, through LSI and eAppraiseIT.   

Exhibit 1 of the law suit includes the LSI Independent Contractor Agreement signed by Jeniffer Wertz.  Typical of AMC contracts, it contains a hold harmles clause, which causes me to wonder how THAT will come into play?

Jennifer Wertz was considered a preferred real estate vendor which means that Wertz's worked had previously been used and WAMU was familiar with and considered Plaintiff's work to be proven.

Jennifer continued to do real estate appraisals for WAMU through LSI until on or about August 2007 when LSI and WAMU terminated Jennifer Wertz's contract.

According to the suit, Wertz did appraisal reports for WAMU directly, or for WAMU through LSI, for a period of six years. Throughout the six-year period, Jennifer's appraisal reports always met or exceeded industry standards, as well as WAMU standards.

On or about May 21, 2007, Susan Richter (a Sales Manager employed by WAMU) informed Jennifer Wertz that a loan for which Wertz had prepared an appraisal report had been declined because Wertz had indicated in her report "declining" market conditions.  Richter insisted that Wertz change her appraisal report to indicate "stable" market conditions so that the loan could be approved.

Click here to continue reading . . .

Outside the Boxes: Part 7 – Picture = 1,000 Words

In part 6, we continued the construction of the housing market addendum by developing an economic indicator matrix. Next we need to provide observations and clarify the trends. - Patrick Egger

(Click Here for a recent TV interview with Patrick)

Observations make a difference

The economic indicator matrix provides the reader with a regional of trends for key housing related data. While some readers may draw their own conclusions from the data, including several brief paragraphs with your observations and conclusions, sets the stage for the next step down in the "top down" market analysis perspective.

Using the matrix, comment on the trends, key ratios and reinforce the obvious. This will help the reader grasp your logic and keep pace with your analysis. Essentially, you simply want to draw upon the data, restate what the trends are and what's driving the market.

• For example, in Las Vegas we're making national news with record high listings on the MLS and record low sales, bad news that you need to acknowledge and also explain. While the listing volume is high, much of it (estimated 30%) is un-sellable due to speculator held inventory at price points that are far above market. 
• Also impacting the market, potential buyers on the sidelines, looking for the market bottom. How do we know this, single family rentals and rents are up significantly over the past several years and so are apartment rents. Something I perhaps should have shown on the matrix example last time and didn't include.
• Core economic indicators (employment, hotel occupancy rates, visitor volume, gaming revenue and taxable sales are performing above past years, indicating a good local economy.

Effectively, the economy is doing well, despite woes in the housing sector market and its important to relate those facts to the reader. Housing demand has shifted from buy to rent, and in-migration, while below historic levels, is still a very positive number. They key here is to reinforce the obvious and provide the reader with some perspective.

Click here to continue reading . . .

25 Things You Must Do to Web 2.0 Your Company

InmanTV: Panelists share views on Internet trends

While slowing markets present a prime time to return to sales and customer service basics, today's home buyers and sellers expect a modern approach. These panelists discuss ways that traditional brokerages (and appraisers) can add interactive and engaging online techniques without sacrificing tried-and-true traditional company values.

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Free Webinars by a la mode - Marketing, Data Collection, Desktop Sketching

The market for appraisal services is down in a lot of states and many appraisers have a renewed interest in ways to improve their marketing or modify their business plans.  a la mode is aware of this and is offering three FREE webinars to help.  These three classes are free to everyone and start this week!  The following is from a la mode . . .

Desktop Sketching with DaVinci – January 16 at 10 AM (Central Time) - Did you ever wonder why your sketch couldn’t be as easy to do as the rest of your appraisal report?  At a la mode we wondered the same thing and our solution was DaVinci Desktop, our new free sketcher that’s built right into WinTOTAL.  If you’re tired of wasting time redrawing your entire sketch because of one line you had to change, retracing walls you’ve already drawn to build your second floor, or trying to figure out the exact order your sketcher wants you to draw the first floor, garage, and patio then this is the class for you.

Marketing Your Business with Appraiser XSite – January 22 at 3 PM (Central Time) - With the downturn in the market, now more than ever appraisers are feeling the need to actively market their business.  Websites have long been a favorite marketing tactic among big name businesses, but they can work just as much magic in your typical appraisal shop.  Whether you already own an Appraiser XSite, are an Elite member, or are just looking for a way to bring new business in during the downturn, we’ll show you how to make your Appraiser XSite into an effective tool to cultivate new business relationships.

Field Data Collection with DaVinci – January 24 at 3 PM (Central Time) - Whether you just received a new Tablet PC over the holidays or you’ve committed yourself to streamlining your business this year, this class is the one for you.  DaVinci Mobile Pro completely revolutionizes the way you do your field inspections.  Imagine if you could eliminate the time it takes to rekey your field notes without sacrificing the ease-of-use of your trusty pen and clipboard.  That’s exactly what DaVinci Mobile Pro is designed to do.  Come see how appraisers are saving up to 20 minutes per report using a la mode’s up-and-coming DaVinci Mobile Pro. 

 

FHA Appraiser Roster Requirements - Appraiser Testing No Longer Necessary - Effective 2/7/2008

According to HUD document 24 CFR Part 200 "FHA Appraiser Roster Requirements" - FHA appraisal requirements now conform to those of conventional mortgages, it is no longer necessary to test FHA Appraiser Roster applicants for knowledge of FHA specific requirements.

HUD has also concluded that the examinations required by the AQB criteria are acceptable indicators of applicants’ knowledge and competency to perform accurate appraisals, including those for FHA-insured transactions. Download 24 CFR Part 200 08-8.pdf

SUMMARY: This final rule explicitly conforms the eligibility requirements for applicants to the Federal Housing Administration (FHA) Appraiser Roster to longstanding HUD practices, as well as to existing nationwide industry practice. Only appraisers on the roster may perform required appraisals of properties that are to serve as security for FHA-insured single-family mortgages. Among other requirements, the current regulations require that an applicant must be a state-licensed or state-certified appraiser and pass a HUD examination on FHA appraisal methods and reporting. This final rule codifies HUD’s longstanding practice and the nationwide practice that such certification or licensing comply with national criteria for education, experience, and passage of a state administered examination. This final rule also eliminates the requirement for applicants to pass a HUD test on FHA appraisal methods and reporting, because the test has become duplicative of the national examination requirements for state licensure and certification and, therefore, unnecessary.

1. HUD recently undertook a review of the appraisers listed on the FHA Appraiser Roster and determined that the credentials of all currently listed appraisers comply with the applicable AQB criteria. As a result, the provisions in the May 16, 2003, final rule for a 12-month phase-in period are no longer necessary.
2. HUD has also determined that no State in fact ‘‘grandfathered in’’ appraisers who had been licensed prior to establishment of the AQB criteria, a concern at the time of the publication of the May 16, 2003, final rule. Consequently, today’s final rule does not contain these unnecessary provisions.
3. This final rule also eliminates the requirement for applicants to pass a HUD test on FHA appraisal methods and reporting - effective February 7, 2008.

Click here to continue reading . . .

The Rise and Fall of Real Estate Values: Who Controls the Ride?

The International Association of Assessing Officers (IAAO), in this month's professional journal Fair & Equitable , has published an article by John Lifflander, ASA. 

John has been appraising for more than 25 years, and is president of Covenant Consultants, Inc., an appraisal and property tax consulting firm which specializes in the valuation of semiconductor plants, paper mills, food processing plants, and other large industrial facilities.

John Lifflander's article, The Rise and Fall of Real Estate Values: Who Controls the Ride?  begins:

"Assessors are facing the challenge of assessing property in a roller-coaster of a real estate market. In the past several years values have increased quickly, but now they are descending in most areas, making valuations more difficult and increasing assessors' workloads. To understand how to deal with this problem, it is helpful to understand how it occurred."

John's analysis offers perspective on how the Feds, Lenders, Investors, Buyers & Sellers and Appraisers have ALL been players in the real estate meltdown.

The article discusses:

• The Federal Reserve's impact on availability of money and the loosening of lending requirements
• The Mortgage Lender's creation of exotic loan types and Loan Broker's that rarely have a stake in what happens to the loan after its made
• Appraisers that are pressured to inflate values to retain their livelihood
• Buyers and Sellers that hide "concessions" that inflate the reported sales price
• Investors and Speculators that want to ride the wave of sky-high prices.

Click here for the complete article.

Why Bank of America Likely Can Fit Countrywide Under Its Cap

Have regulators been encouraging a purchase?

WASHINGTON — Flying in the face of conventional wisdom, Bank of America Corp. has found a way to buy Countrywide Financial Inc. without violating the federal law barring any one bank from controlling more than 10% of the nation's deposits, observers and analysts said Thursday.

The Charlotte company has been hovering around the 10% cap for more than a year but always manages to find a way to slip under that threshold when it finds a deal it can't resist. And Countrywide, offering B of A the chance to dominate the mortgage business, is another such opportunity.

Sources closely involved with the deal — which had not been announced late Thursday afternoon — said federal law would not require B of A to count Countrywide's roughly $60 billion of domestic deposits when calculating its national share. That's because B of A simply would acquire Countrywide and continue to operate it as a thrift, instead of merging it into the national banking operation.

Click here for the full American Banker story: Why Bank of America Likely Can Fit Countrywide Under Its Cap

Declining Market: New LSI Policy — Two Pendings/Listings on all appraisal forms except REO reports

The following is from a notice sent from LSI's Chief Appraiser - Download LSI_Pending_Sales.pdf

As of January 7, LSI implemented a major policy change designed to help appraisers determine the direction (increasing, stable, declining) of the submarkets, by requiring two listings/pendings be added to every analysis.

Even in markets that have had no declines, there are submarkets that are deteriorating, and unless we provide some support for this, we run the risk of assuming the stability is still there, and only listings will tell you when the slide is beginning.

FAQ for New Policy of adding 2 Pendings and Listings to your analysis;

1. Fees: While LSl does not dictate fees, we do not expect this policy change to impact our costs. The scope of work in a declining market would dictate the prudent appraiser performs an analysis of listings and pendings, so we expected this research has been performed all along. Gridding of these offerings is to assure our clients of the direction of the submarkets in every region of the country.
2. Maps/photos: As with any gridded item, we expect the appraiser to include a comp photo of the listing or pending sale and its location noted or, the sales location map.
3. Duration of Policy; Until further notice. This policy is to be applied to all residential appraisals with one exception: REO reports that already have a page adder for consideration of competing listings need not add still more listings We expect to maintain this policy until the murky national picture clears and it becomes apparent that most markets are turning from a threat of decline to a likelihood of increases. At that point, we expect to suspend this blanket general policy for all but the known remaining areas in decline.
4. Granularity: Several have written to argue that you track and report the supply and demand, price changes, etc. based upon a broader database. This might be regular MLS statistics, or an online database that breaks it down to single family or condo. Use of average LP to SP ratios offered by MLS statistics may tend to mislead. They are incorporating properties of different types, locations, pride ranges, and attractive to different buying groups. This averaging process is not granular enough. To better support the estimate LP to SP ratio, build your adjustments from the data you find which is similar, proximate, and most current in your subject's locale, in other words, from your closed comparable sales.

Download LSI_Pending_Sales.pdf

UPDATE: Runt Rants - Calling ALL Arizona Appraisers!

I mentioned the important meeting of the Arizona Appraisal Regulatory Board in a Runt Rant earlier. The date I posted is incorrect. The correct meeting date is next Thursday, January 17th. All other information remains the same. The actual agenda for the meeting will be posted at the Board's web site on Wendesday, January 16th.

I think the meeting could be very important for Arizona appraisers. If attended in mass by Arizona appraisers, it could send a message to the Arizona Board, to other states' Boards, and to the ASB that the issues are important and should be given high priority in Arizona, and in other states across the country.

Were Acorn operating in Arizona, I and all of Acorn's appraisers would attend.

Here's your chance to lead Arizona!  Good luck!

Two up and coming Arizona appraisers, Julie Friess and Juan Restrepo (an immigrant to this country) have been attending the monthly Arizona Appraiser Regulatory Board meeting for several months.  These young entrepreneurs are trying to understand the problems of the board and learn what they can to improve the situation.

This month's meeting is especially critical...as the Appraisal Subcommittee and the FBI will have representatives there. It could be a very good opportunity for appraisers to make a point by their presence.

Arizona is one state that has problems with significant value pressure with many mortgage brokers shopping for comp checks to guarantee a value can be reached. A significant number of appraisers are doing just that, and the good guys are at a disadvantage because complaint investigations are slow and enforcement is difficult.

Click here to continue reading . . .

Zaio Announces 2007 Key Metric Results - Press Release

CALGARY, Jan. 8 /CNW/ - Zaio Corporation (TSX-V: ZAO - News) is pleased to announce the fourth quarter and year-end results of its Zone sales to appraisers and real estate images added to the database across the United States.

In the fourth quarter the Company sold 226 Zone licenses compared to 204 in the third quarter. The fourth quarter marked the first sale of licenses under a new "Large Purchaser" program.

Several firms have purchased over 25 Zones each under this program, including a firm which purchased 45 Zones representing the entire Indianapolis, Indiana Metropolitan Statistical Area (MSA). Zaio continues to have discussions with prospective purchasers of Zones in entire States, MSAs and multiple counties. Zone sales for the year amounted to 992 bringing the cumulative number to 1,526. While this represents 20% of the total Zones in the United States, it actually represents over one third of the major metropolitan areas which are most important to national lenders

John Ross, Managing Director of Zone sales stated: "Lenders and other potential clients for the quality data are encouraging us to complete the "Appraisal Data Warehouse(TM)" as quickly as possible and we are motivated to speed up the process while not losing sight of the fact that we insist on licensing only to appraisers who are leaders in their market.

Click here for the full Press Release.