Appraisal Scoop reported previously (click here) on the May 22, 2008 Virginia State Board for Real Estate Appraiser's (VREAB) meeting 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.
August 19, 2008 - Legislature and policy is one of those things that can baffle most people. I know that sometimes I can get downright angry at the inefficient ways government can work sometimes. Here we all are in Richmond, VA, the front lines to the fight for appraisal portal conversions.
On the 19th a decision was to be made as to whether or not appraisers were to be allowed to continue to do business with companies that require reports to be converted to formats that were not the true copy of the appraisers report. A victory would not be had by either side of this fight .
Neil Olson, Chief Legal for FNC, Inc was there to give presence to the companies who want to continue to require appraisers to submit limited reports. * See comments I once again applaud Mr. Olson for being the lone offense, as no one from First American was there, no one from Lighthouse, no one from any other company that would be even slightly allied with FNC’s struggles. There were no lenders there to support Mr. Olson’s claims from the lender’s side. Without a lender there to agree this is the only way they want these reports, Mr. Olson appears to be painting with broad strokes when he insists they do.
George Dodd, SRA was there to thank the board for their time looking at and considering his petition. This same petition asked that no companies that required the practices of conversions of reports be allowed to do business in the Commonwealth of Virginia.
The committee was required to recommend that the petition be rejected. It was simply not written in such a way that was enforceable. The petition sought to limit an industry that it did not oversee. The Board’s opinion was to leave the committee open to further discussion and allow it to look even deeper into the entire process.
Mr. Dodd humbly accepted that decision, as if he knew it was coming. He seemed pleased to get the opportunity to continue on to help shape what is ultimately going to be an important step in the re-establishment of appraiser’s independence.
Over the last several months there are some things that should be taken into account that cannot be just coincidence. When the Board originally met in the late spring I began this series of stories. The first one seemed well received. The second one was followed by something I did not expect. Within a day of the second story being published Fannie released a statement:
"Since relocating our appraisal ordering process to AppraisalPort in April, we have discovered limitations within various appraisal software providers using the AI Ready format when trying to send the level of documentation that the NUC requires."
I have no clue if yours truly had anything to do with it. I do hope that I had a small part in it. Within this same time frame AppraisalPort released something that they had never offered prior in their previous several years of operating. They finally made a PDF converter available for their ENV format.
Click here to continue reading . . .
Many appraisers had brought up the true concern that if an appraiser could not keep a copy of the report on their computer, they were USPAP non-compliant. AppraisalPort finally, seeing the flaws in their concept, quickly and very silently released a viewer via a website. Now appraisers could convert the ENV into a PDF and keep a true representation of the report they converted.
Within the last 4 weeks AppraisalPort has released a new User Agreement. You may view the new version of the User Agreement by clicking here. One can only assume that this is yet another reaction to the “frustrated appraisers”. Mr. Olson still contends the only reason appraisers are up in arms about the conversion is because it is inconvenient to use.
In this agreement, AppraisalPort requires that they are to be left out of any legal claims for information that is left out or otherwise erroneous. That is a funny requirement when it is they that are requiring the appraiser have the appraisal report altered in the first place. It looks like they are possibly wary of their own requirements.
LIA, Liability Insurance Administrators released a statement about such agreements on their website, stating they may not be able to cover appraisers who work under such employment agreements. THINK about that!
This agreement that AppraisalPort is requiring will mean that possibly millions (billions?) of dollars of mortgages could possibly be void of E & O insurance. This means that each lender that uses Appraisal Port may underwrite loans that have no insurance. Think about the potential risk that arises from that.
Mark White, a fellow Certified Residential Appraiser in Virginia, wrote to LIA to ask for more comment. Download Mark_White_VCC_AI.doc. From the email:
Indemnity and Contractual Liability (proprietary rights, confidentiality, equitable relief) (Section 8 and 10) – We understand that many appraisers are asked to enter into contracts that contain an indemnity or hold harmless provision. Unfortunately, the provisions of the policy issued to you by Liberty would not provide coverage to AppraisalPort (FNC, Inc.), or any of your clients pursuant to an indemnity or hold harmless agreement that you may have signed. Further, the policy would not provide any additional coverage to you for any added expense or obligation which you incur as a result of such an agreement.
How is it that a company that requires a report to be altered to such a degree that the reports are rendered so differently that Fannie Mae’s own requirements are being violated? I find it even stranger that Fannie Mae ever though that using this type of service was an intelligent move at all. Here we are with a major GSE already teetering on the brink, recently having signed the Cuomo proposal in order to keep the company from being investigated.
This company is also getting the biggest bail out by the public in my 31 years of being on this earth, and possibly the history of the country. It is almost surprising that Fannie Mae was intelligent enough to actually pull back and at least re-examine using this kind of technology. I feel that if Fannie Mae is questioning it all, something must really be wrong with it. Keep in mind, this not a knock against just AppraisalPort, but EVERY company that requires appraisers to alter their reports in order to submit them to a lender client.
If the largest E&O company for appraisers will not cover appraisers who work under this agreement, then any appraiser that knowingly does the work anyway would break any state laws that require the appraiser to have E&O insurance. It also means that every lender that requires appraisers to have E&O insurance would be willingly violating that policy to receive reports from any company that asks for these kinds of agreements.
It seems what started as a simple outcry from appraisers has snow balled into something much larger. If AppraisalPort is so sure that business must be done this way, then why do they need to be excluded from any harm that they create from requiring these ridiculous conversions? It is likely that had they thought it through, and agreed to include the lender in such a way as to receive the reports as true copies in PDF that would then be forwarded to AppraisalPort to then be converted at the lender’s request, there would have been a compromise that everyone would have lived with.
One has to wonder if there really are other reasons for such an obvious mistake. Many appraisers in the fight, and within my own articles, have asked that we meet in the middle. AppraisalPort simply swatted at the appraisers like we were gnats, more of a nuisance then a reality. That same hubris made them assume that appraisers are just angry about the inconvenience of converting. They were wrong, as we wanted to keep the credibility in our reports, not have them subjected to technology designed and kept at levels from 1998.
The appraisers that are fighting this fight understand that we need the ability to report accurately and in ways that allow our reports to be justified and defendable. We know that a 1004 FNMA is not a report, but a summary of all the work that goes into creating a credible opinion of value. The days of treating appraisers like form monkeys is coming to an end, and thank God for it. It is a shame that the Intelligence that FNC, INC et al show in being market innovators is overshadowed by their under-valuing an entire industry of residential appraisers. It casts a shadow on every person and organization that took part in the development of AI Ready, and the other formats that require an appraiser to subject honest work to crippling limitations.
The battle is far from over, and there is no truer test of man’s will than the ability to outlast a slow battle. I am proud to be in the midst of good Virginians such as George Dodd, Mark White, and Fritz Hoffman. I am also proud of the supporters from all over the country that have been at these meetings like Pam Crowley, Carl Schneider, Michelle Best and Al Torres. These are but a few of many, many appraisers that are just trying to do the right thing. I hope to have more for you all as this progresses onward. I look forward to your comments.
Prior Articles In This Series:
- Virginia REAB Holds "Special Meeting" on Appraisal Delivery Webportals: Part 2 of 3 - MISMO Standards
- Virginia REAB Hears Petition To Prohibit Use of Appraisal Delivery Webportals That Transmit Altered Appraisal Reports
- Virginia REAB Holds "Special Meeting" on Appraisal Delivery Web Portals: Part 3 of 3 - FNC's Chief Legal Officer Responds
- Part 2: Slow But Steady Wins the Race - Virginia REAB Hears Petition To Prohibit Use of Appraisal Delivery Webportals That Transmit Altered Appraisal Reports
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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