Author: Woody Fincham: This article is the second of two first hand accounts of Virginia Real Estate Appraiser’s Board meetings. 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. See Part 1: Click Here.
June 4 - Richmond, VA - REAB Committee Meeting Regarding Dodd Petition - Today was the very first committee meeting concerning the Dodd Petition. It brought together several people from the last State Board Meeting. The committee is chaired by Pat Turner, with Harry Little, Richard Pruitt, and Diane Quigley. Of course typical staff from DPOR is there, as well as a public audience. Included in the audience besides myself: George Dodd, Jane Allen, Tim Butler, Alex Ulinski and Neil Olson. It was both heart warming we had as many as we did attend, but also a little discouraging there were not more.
Mr. Turner kicked off the meeting stating that he felt no new regulations were needed, nor was there a reason to allow for the petition to go through as written. The books already had the proper language in them to give the state a reason to take notice. Mr. Turner also stated that certification 24 in the 1004 was one of the main problems that the board will have with converted reports for web-portal uploads. He felt the actual language there, was straight forward enough to indicate the way some of the portals work, FNMA guidelines are not being met.
That means FNMA’s loans may be technically un-sellable by their own rules. That seems to be a very big problem to me, but I always say, I am just an appraiser some things are too big for me to understand. Imagine what the media would do with that little bit of information, they would love to lead a story about how Fannie Mae and the rest have technically allowed these companies to help force appraisers to. In my opinion, it seems like FNMA has no interest in seeing that appraisers are in compliance or not, they just started using FNC, INC for their REO management.
Why would FNMA want to use a platform that makes an appraiser back into a corner and change his workflow and scope of work. Is FNMA indicating that they have no confidence in real appraisers and our proven ability to out perform electronic appraisals and other alternative valuation products? They seem to think a BPO is something of value, and we all know better than that. (Back to the matter at hand…)
Mr. Turner went on to give a rather thorough opinion of what he sees as the REAB’s job to do, and what to consider as the best interest of the appraiser’s practicing in the Commonwealth, but in turn to also protect the public at large.
“The Profession has been manipulated…all our profession is, is common sense and honesty “. He was very clear that he is not an opponent of electronic delivery as it saves time, money and is efficient. He stated: “Certifications bind us, and bind the client, in my opinion”.
USPAP and the further definition of FNMA’s scope of work within the 1004 gives strong statements and implications that the report remains as prepared when using software and then delivering either in paper format, or in PDF format via electronic means.
I think that Mr. Turner makes a great point regarding the certifications bind both the client and the appraiser. Often times in a business contract, an attorney will warn that if it is important enough to put in writing, it applies to both parties. When I had my employee contracts written up, I was advised that requiring a period of commitment time meant that if I let someone go prior to the agreed on date in the contract that I could be held liable for lost wages up to that point in time. It seems only common sense then that if a client asks for something , that they are prepared to honor that from their own end of the transaction as well.
Mr. Dodd did interject and ask if the board was going to try and regulate electronic portals. He also made an interesting comment/observation regarding the fact many of the designers of the residential data base (RDB) with the appraisal institute have gone on to positions on the Standards Board. The RDB, is what became FNC.
I assume what Mr. Dodd was trying to communicate is that the ASB has been very quiet on the use of this technology as many of the people involved have had their own personal interests involved. The ASB’s relative quiet response to the problems unregulated technology is offering is a bit disturbing, as the entire industry depends on their expertise, seems a bit odd. Technology changes so fast that the ASB really needs to stay up on and have a real opinion about this issue. More mortgage use reports are done than any other kind, so the advice and policy they have would more than assist with the problems we all face.
Mr. Olson was next to speak and was very quick to cite the example of using the Commonwealth’s own Town Hall site to allow public comment on pending issues and petitions. He stated that just like AppraisalPort, the interface with the web posting software only allows certain things. As an example: only a maximum amount of words can be used. While that is a fine example, the reporting of an appraisal is a little more important than a web post. The Town Hall website will allow you to post as many times as you want, so if you run out of space, you can send the rest in another posting. If you like, you can show up to the Board Meetings and speak, or even send a letter to the board to be entered by a board member as comments.
The problem with the arguments Mr. Olson has presented thus far do not support the reasoning why the technology being used re-defines the scope of work on all reports sent via the portal . The software vendors out there all make their source codes available, as does FNC, INC so that partnered vendors can develop for one another allowing appraisers to submit their work. Why will big companies that make the amount of revenue that they are making, not invest in the quality of honest reporting so that an appraiser can be allowed to submit forms as seen fit by the licensed/certified appraiser?
FNMA guidelines state that we are allowed to enhance our scope of work whenever we feel the need to in order to properly report value. AppraisalPort, Lighthouse and the other converting software that I have personal experience with does not properly allow a true and accurate report to be sent. Unless they have taken the time to build the converters properly, the appraiser can only send what will convert.
Yesterday I ran a test showing that AppraisalPort would only allow me to send through their converter 24 pages. The report that I put together had 33 pages in it. That’s 9 pages that are not supportable.
The one statement that really burns me was the warning that the Limiting Conditions that I submitted was automatically removed and their own placed within the report. How is this even remotely legal, or USPAP/GSE compliant? Should not an appraiser have that be their sole discretion. Client requests are guidelines for us to cerate our own scope of work. Ultimately the end decision lies with the appraiser, and sometimes client requests may be unreasonable or plain out of line. Mr. Olson repeatedly stated this is the way the clients want it. I would love to have some executive members from some of the lenders present to defend that very statement. How would a Lender even remotely agree that what Mr. Olson is stating is true and accurate?
Mr. Olson was kind enough to answer my questions regarding this, as well as Mr. Dodd’s. We both had the same basic request: “Why can’t your portal accept both an XML version and a PDF version that is directly delivered to the client?” We can not say what a client does with a report after they receive it is right or wrong. If they want an XML version to run through a quality control program, that is fine. I think most of us would agree that technology is a wonderful thing, and should be used. It should not be used when it interrupts the quality of the actual report.
My big question for all these software and web portal companies is why can’t an appraiser send a PDF report, and then if the client desires, an XML can be converted from the PDF? Lighthouse has that right now in their tool options. If a smaller software vendor can develop that kind of program, you and I both know that a big company like FNC, or even lenders like Bank of America et al can have access to the same kind of program. The difference is that they want appraisers to be completely responsible for the conversion. If they convert it, and something weird happens with the data, they are then liable.
References:
- USPAP 2008-2009: Standards Rule 2-1 - Click Here
- USPAP 2008-2009 - Record Keeping (ETHICS RULE) - Click Here
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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