AUTHOR: Micheal W. Armentrout, VP AM Appraisals, Inc. Mike has been involved in full time real estate valuation since early 1992 and has experience in numerous Central Ohio markets.
As the clock ticks down on the final outcome of the HVCC, appraisers anxiously wait to see how the implementation of such sweeping reform will affect their businesses. In recent months we have no doubt seen, read, and heard untold numbers of opinions and viewpoints on the OFHEO/Fannie Mae proposal.
After reserving judgment for quite a while, I have concluded there is very little that would be beneficial from such a measure. Though I am sure the goal may be noble, ending pressure on appraisers can never happen. Simply by nature of what we do, almost everyone has an opinion or unspoken desire for a specific result in an appraisal. Yes, mortgage brokers and lenders have had their share of unscrupulous snakes in the grass of whom we can all share stories but while HVCC attempts to cut off that threat, will it control the calls from homeowners, sellers, buyers, realtors, disgruntled investors, divorcees etc. etc.? We don’t seem to hear that auctioneers, antiquities appraisers and other value estimators have the same concerns even though their businesses could be hurt by unhappy recipients as well.
Loan officers indeed do have a biased interest in a specific outcome of an appraisal but why should that disqualify them from ordering it?
Do we get upset when an attorney in a divorce case wants an appraisal even though his/her client can be dramatically affected by it? Simply ordering an appraisal does not imply undo pressure but even when pressure does come from subsequent communication, are we saying “we can’t handle the pressure and feel like we must cave to their demands”? I trust that the majority of appraisers are stronger than that and for those who aren’t, please find another job.
I must confess I cried the same woe of lender pressure for many years but I was never afraid to say “No” because I was not willing to lose my livelihood in this business due to poor appraisals. Integrity and moral character aside, the thought of legal and financial liability along with lender approval was more than enough to keep me on the straight and narrow.
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Before anyone writes me and says “but Mike, there are hundreds of appraisers who set aside all that and went for the quick buck” I would say I know. I do enough review work to realize that fact but I also know that because they went for the quick buck, chances are their longevity in the business is doomed. It is much more difficult to find a bad appraiser who has been doing it for a long time because they can not sustain those practices forever. Some get caught by the lender, some by loss mitigation, and even some by legal investigation. For the remainder, I propose that a lack of enforcement is the driving cause.
HVCC was initiated by a governmental agency and GSE that have an interest only in how appraisals affect the lending end and have no real interest in making our industry more professional or trustworthy.
"Why do we allow ourselves to be portrayed as whining toddlers who blame everyone else for their spilled milk? We may not want to bite the hand that feeds us but that hand now has a gun in it and guess where it’s pointed."
Not only is it doubtful that HVCC can totally eliminate pressure from appraisers, I consider it to be anti-capitalistic though I am confident it was not designed to be. If implemented as proposed, it would effectively shut down appraisal businesses with client bases that took years to build and force them to start over by shifting the majority of their client pool to AMC’s. Many may have already started this process in anticipation of January 2009 but the majority of AMC’s look at appraisers as a database result and not someone they want to establish a professional relationship with which could result in a quest for form fillers, the likes of which we have never seen before. Reputation, communication and expertise will be replaced by turn time, syntax and slashed fees.
In my dealings with large AMC’s, I have rarely if ever talked to the same contact person twice which makes establishing a business relationship difficult to say the least and heaven forbid if you have a complex question about the assignment, that will just add two days and five calls to the process when this was aimed at simplifying the ordering process.
Why is no one talking about the fact that some of the larger AMC’s are at least partially owned by Lenders? Talk about a conflict of interest! Even though HVCC makes provisions for this, it seems like a fiasco waiting to happen yet we are to believe this will solve our problems.
As we enter the fourth quarter of 2008 and eagerly wait for word on any changes to the HVCC, I can’t help but wonder if the days of striving for quality clients by providing the highest level of valuation services, communication and achieving a great reputation for quality will soon come to an end. Appraisal businesses will be forced to focus their highest priorities on database and directory placement to impress data processors and not on the quality of their appraisals and services.
AUTHOR: Micheal W. Armentrout, VP AM Appraisals, Inc. Mike has been involved in full time real estate valuation since early 1992 and has experience in numerous Central Ohio markets.
AM Appraisals, Inc.
3316 N. High Street Suite C
Columbus, OH 43202
614.267.2467
614.267.0074 (Fax)
614.617.1513 (Pager)
marmentrout@amappraisals.com
www.amappraisals.com
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