Author: Woody Fincham:
This article is a first hand account of the 5/22/2008 Virginia Real Estate Appraiser’s Board meeting. These are the author's own opinions. They are not intended as an attack on FNC, INC or any one listed in the article. The article is intended to inform the general appraisal public of the landmark Virginia State Appraiser's Board policy process.
May 22, 2008 - Real Estate Appraiser’s Board, Richmond, VA: Today the Virginia State Board for Real Estate Appraisers met to discuss among other things, a petition submitted by George Dodd, SRA. Click Here to: Download Virginia_Appraisal_Board_Petition_052208.pdf
The petition was written to prevent online sites, or web-portals from changing or otherwise altering reports that appraisers prepare. Web-portals would include such companies as: AppraisalPort, RELS, and other AI ready required companies. It also seeks to limit the illegal PDF stripping down, and programs that erroneously copy information from reports such as Lighthouse.
The fight to protect appraisal data was front and center in Richmond. There were several people there to watch and learn, including Chief Legal Officer for FNC, Neil Olson and Mark Chapin, Vice President, Zone Sales and Business Development for ZAIO. Within the galley were several appraisers from across the Commonwealth of Virginia. From one-man shops to multi-appraiser/multi-area shops, everyone wanted to watch as Virginia bravely looked to change the playing field for the industry.
The meeting was mostly formal business as usual, licensing sanctions and the typical stuff. Traditionally, public comment is limited to 5 minutes. A motion passed to hear Mr. Dodd's petition and up to speak first was Mr. Olson. He spoke well and politely, agreeing that the issue was indeed serious in nature, and that appraisal report delivery has changed since the days of typing a report and sticking photos in the report and dropping it off at the bank. Download Neil_Olson_FNC_Response.pdf
- He made it very clear that the conversions were done by the appraiser. It seemed he was very determined to make it known that essentially the liability of the conversion rested with the person initiating the conversion: the appraiser.
- He also compared the PDF format and the AI format as being relatively the same. Mr. Olson discussed how the major component of the AppraisalPort site was to check for viruses.
Many of you may be wondering why that is an issue. Really, it has always been the appraiser’s responsibility to make sure that all reports are sent in secure manners. There has always been the requirement that appraisers have complete control over signing their reports. So why should we be concerned with things as they are enough to try and see that a state board requires non-licensed companies to stop their business practices?
It has to do with the requirement of many of these companies to force an appraiser into either doing these things with their reports, or be forever blacklisted from receiving work.
They are asking appraisers to send in work in a format that essentially allows them to unlock your data, use it how they see fit. The data is essentially pulled out into sections, including your signatures.
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Personally, I have had files converted, and some of my intended scope of work prepared information was removed and not sent. How do I know this? I have received calls form underwriters wanting to know where the referenced aerial photo is. I open my original and there it is right where I had it, but evidently the underwriter only gets what the converter knows how to convert.
In many cases, the individual software companies have their own designed and proprietary forms, that don’t convert in other software companies’ programs. This happens in the AI ready conversion sometimes as well. Narrative pages can be removed, along with additional scanned in information and such.
It sounds serious doesn’t it? They are saying it is fine that we as the appraiser, have defined our scope of work in such a way to include additional information to help a lender decide if the risk is acceptable on a property, and someone decided to not include it. Shouldn’t the appraiser have complete control over their “opinions” and support their conclusions how they feel comfortable?
Mr. Olson, again being the good public speaker that he is, made some references to the board asking that they exercise caution on regulating Web-portals. He loosely stated that Google and Yahoo would be required to be regulated as appraisers use those for business, too. This seemed a little more like the “Spin Zone”, which I am sure is typical of any company that is potentially going to loose their ability to loose the right to do business in a state.
The author of the petition, George Dodd spoke next. Mr. Dodd compared PDF delivery to the AI formatting. He made it very clear that PDF delivery was a simple means of delivering and actual copy of the printed document as the appraiser prepared it. He correctly stated that the AI format allowed behind the scenes things to be done with the data.
“The problem is that appraisers are being forced to convert”. This a very underlined point in Mr. Dodd’s comments. He stated that he felt it was wrong for an appraiser to be forced to convert a report and be left with the liability of information being left out.
FNMA/FMLC guidelines were also touched on by Mr. Dodd, and are attached to this article. Click Here to: Download FNMA_XI_203_Appraisal_Report_Forms.pdf They essentially state that while FNMA pretty much defines your scope of work within the forms. An appraiser is supposed to add to and develop a more concise scope of work if the property warrants it. By allowing a third party such as FNC, INC or Lighthouse to not transfer all of the page sin a report, the appraiser is being told that your scope of work can only be what we allow you to convert.
A few others, me included, spoke as appraisers and how we each felt about the situation. As the article author, I will leave my own statements out, but each appraiser said they supported the idea that appraisers should control their own work, and reporting.
The Board discussed the fine points some, and in the course of that, it was stated that regulations like this could take somewhere around 2 years as a minimum to get though the democratic process. That was not something any appraiser sitting in the room wanted to hear.
Mr. Dodd, beginning what would be the trend for the remainder of the meeting, asked the Board if they were prepared to not find an appraiser guilty of breaking regulations, if the report had been sent through one of the web-portals in questions. This rolled through the room like as silent explosion. George Dodd had basically summed up the inability of the board to do anything, as a means to allow rule breakers to step away without penalty.
Many of you understand that boards do not exist just to penalize the bad people, but also spend a lot of time creating policy and approving educational items. The sad fact is that they do spend a lot of time on punishing bad appraisers. Having a statement like George’s out there was not something, I think, anyone on the Board wanted to hear.
A member of the section in the Commonwealth that investigates complaints was there. Their job is to see if the complaint or problem is warranted to be in front of the board as a breech of policy. He did state that they would normally view something where data had been altered as a problem that would most likely not make it to the board.
As the board was preparing to wrap it up, the Chair, Ms. Diane Quigley, saw that Mark Chaipin, was a little fidgety. While Mark had not volunteered to speak in the comment section, she prompted him to speak up. He stated that as a member of the ZAIO organization that he felt that no single company such as ZAIO, or FNC, INC should be judged as part of the whole, but rather on individual merit.
It should be of note that Mr. Chaipin, who is also a certified appraiser, sat with Mr. Olson throughout the meeting. Many times they shared some low spoken communications and much head shaking. It did not appear that they liked what many folks had to say, or thought that any of the concerned appraisers present were worth hearing from.
While I am trying not to editorialize here, I felt their body language and obvious self-promotion of their respective companies was a tad hubris. Most members of audience found it odd that two high profile members of two major appraisal data companies were not just friendly, but shared similar thoughts and feelings were so obvious about it in public.
The state Board did decide to form a special committee to look into the issue closer. The committee will review information and make a recommendation to the board at the next meeting in August.
Author: Woody Fincham - http://www.fmava.com/ - Woody is one of the founders and managing appraiser for FM & Associates. He has recently become an instructor with a local real estate school, teaching broker pre-licensing and real estate agent pre-licensing. Woody is a Certified Residential Appraiser in Virginia, as well as North Carolina. Woody is also a Member of the a la mode labs project
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