Appraisal Scoop

N.Y. Times on Ordering Appraisals - " . . Lenders Now Control the Entire Process"

The New York Times story "In Appraisal Shift, Lenders Gain Powers and Critics", by David Streitfeld, the author does an excellent job of taking its readers through the HVCC time-line and illuminating the current issues with appraisal ordering and pressure.

Below are a few quotes from the Times story:

“We’ve been begging for years for enforcement of existing state and federal laws regulating appraising,” said Mr. Kennedy, a leader in the appraisal community. “We thought we were finally going to get that. But the code is doing nothing except putting ethical appraisers out of business.”

“The code [Home Valuation Code of Conduct] is a formula for continued problems with fraud,” said David Callahan, a senior fellow with the public policy group Demos who has studied appraisals. “Appraisers have been asking for a long time for a reliable firewall between themselves and lenders, and are further from it than ever.”

"The final version of the code gives much greater leeway to lenders. For instance, lenders can hire their own appraisers if they “recognize” that complaints will be forwarded to regulators."

"The appraisal world was stunned. Dave Biggers, the chief executive of A La Mode, a maker of software for appraisers, said, “It’s like telling me I can steal as long as I ‘recognize’ that complaints will be directed to the police.”

"Under the code, the role of deciding what is pressure is assigned to a new entity called the Independent Valuation Protection Institute [IVPI]. If appraiser complaints are deemed valid, the institute is supposed to forward them to regulators."

"Seventeen months after it was announced, the institute has no staff and no appraiser complaint hotline. All that exists is a single Web page."

Click here for the complete  N.Y. Times Article

Related Story: Let's Put the Praise Back In Appraiser

Lloyd's of London filed a lawsuit against appraiser for misleading the company on his application for E&O coverage

According to the story by Courtenay Edelhart, Californian staff writer, Insurer suing Bakersfield appraiser. 

"Lloyd's of London filed a lawsuit against Newton, owner of San Joaquin Appraisals Inc., on June 16 alleging he misled the company on his application for errors and omissions coverage. The lawsuit seeks permission to rescind the policy, which it said was granted under false pretenses."

"Jerome N. Lerch, attorney for Lloyd's of London, did not return calls Tuesday seeking comment."

"There's more than an insurance policy at stake. If Lloyd's loses, it could be on the hook for millions of dollars because a defunct subprime lender is suing Newton and others over several appraisals done for Crisp, Cole & Associates, a now closed real estate company the FBI is investigating for mortgage fraud."

Illinois "Appraisal Bill" HB 1015 must wait a little longer!

After three years of trying, it finally took a new Governor and a persistent ICAP to get Appraisal Bill - HB1015 passed. The Bill passed in the Senate on May 13th unanimously!  It then went to Governor Pat Quinn for his signature.

According to T.J. McCarthy of the Illinois Coalition of Appraisal Professionals (http://www.ICAPweb.com ):

"The long awaited signing of the Appraisal Bill will have to wait a little longer. Today the Governor made an amendatory veto and sent the Bill back to the House of Representatives. This means that we will have to wait until the fall for the House and Senate to accept the Governors suggested amendments and ultimately get this 3 year Bill to finally become a law. ICAP does not anticipate any future problems."

Here is the Governor's letter:

August 10, 2009

To the Honorable Members of the Illinois House of Representatives 96th General Assembly

  Today I return House Bill 1015 with my specific recommendations for change. This bill contains language conditioning the Department of Financial and Professional Regulation’s rulemaking ability on compliance with the provisions of the Illinois Administrative Procedure Act. This language is a remnant of the controversy surrounding certain rulemaking undertaken by my predecessor’s administration. In approving House Bill 398, my administration is committed to upholding the law and respecting the constitutionally protected powers of each branch of government. I approved House Bill 398 as a demonstration of this commitment. My approval of House Bill 398 renders the language related to rulemaking in this bill moot. It is time to move past the battles between my predecessor and members of the General Assembly. I am, therefore, deleting this language from the bill.

Therefore, pursuant to Article IV, Section 9(e) of the Illinois Constitution of 1970, I hereby return House Bill 1015, entitled “AN ACT concerning regulation.”, with the following specific recommendations for change:

on page 12, by deleting lines 20 through 26; and

on page 14, by deleting lines 22 through 26; and

on page 15, by deleting lines 1 and 2.

With these changes, House Bill 1015 will have my approval. I respectfully request your concurrence.

Sincerely,

PAT QUINN Governor

 

You can read the bill as introduced here: http://tinyurl.com/oh9ec4

The following is a brief Synopsis of some of the changes.

Synopsis As Introduced Amends the Real Estate Appraiser Licensing Act of 2002.

• Makes changes throughout the Act that mark the transfer of authority to administer and enforce the Act to the Department of Financial and Professional Regulation (rather than the Office of Banks and Real Estate).
• Makes appraiser licensing/certification MANDATORY in Illinois, rather than voluntary.  Previously, licensing/certification was only mandatory in connection with federally related transactions.  It will now be mandatory for any appraisal service.
• Replaces "associate real estate appraiser" with "associate real estate trainee appraiser" throughout the Act.
• Changes the Real Estate Appraisal Board to the Real Estate Appraisal Administration and Disciplinary Board.
• Provides that a person who violates certain licensure provisions for a second or any subsequent time is guilty of a Class 4 felony.
• Sets forth additional education requirements for licensure under the Act.
• Removes a provision allowing a person who holds a valid license as a licensed real estate appraiser, issued pursuant to a predecessor Act, to convert that license to an associate real estate appraiser license.
• Removes a provision concerning licensed real estate appraiser's licenses issued pursuant to a predecessor Act and provides that an associate real estate trainee appraiser license may not be renewed more than 2 times.
• Adds a provision concerning temporary license suspension.
• Provides that an education provider may use an instructor who is a faculty member in good standing with an accredited college or university or community college or who is an approved appraisal instructor from an appraisal organization that is a member of the Appraisal Foundation. Imposes conditions on any rulemaking authority.
• Makes other changes.
• Repeals a Section concerning identifying a client. Effective Immediately

Source: http://www.ICAPweb.com

Approved Bill (Mark-up) Download IL Real Estate Appraiser Licensing Act HB1015

 

76 percent of REALTORS® are on Facebook

76 percent of REALTORS® are on Facebook, according to the 2009 REALTOR® Technology Report. The survey offers a snapshot of REALTORS® and the technology they are using.

Another tidbit – the top three tools respondents plan on purchasing or replacing in the next year are

1. a smartphone with email/Internet connection, 

2. notebook/laptop and

3. digital camera

Source: 2009 REALTOR® Technology Report

Appraiser’s ‘rock ‘n hard place’ issue – the Client name in a report

SPECIAL WELCOME to Appraisal Scoop's Newest Author- David Towne of http://www.towneappraisals.com/

This is one of those ‘don’t shoot the messenger’ type articles. It contains true information that most appraisers may not know, or think they know, incorrectly. But if you ‘say’ you write reports with USPAP compliance, you may want to read and heed this information. There is commentary included below that you may want to include in your reports to prove USPAP compliance on this topic.

The issue is this: “Does the NAME of a Client have to be shown in an appraisal report?”

This is a trick question, and may not be as obvious as you think. Some appraisers may know the answer, but my suspicion is many don’t. I spent a good part of a day discussing this with a ‘Client’, with Ralph Birkedahl at the WA State Appraiser Section, and reading my copy of USPAP. It’s been a learning experience for me.

So this is shared as a teaching experience. Class is now beginning………

This topic has relevance, due to the proliferation of AMC’s we deal with. Some of them do not want their name shown on the Lender/Client line, or anywhere else in the report. Often, you don’t find that out until you have already submitted the report, and they send back a ‘correction notice’ demanding that their name be taken out.

First, who is a client?A Client is defined in USPAP as ‘the party or parties who engage the appraiser for the assignment.’ That is often the AMC, but can be the Lender.

• Is an AMC your Client, if they place the order directly with you? YES.
• Does the NAME of the Client have to be revealed in the report? NO!
• Can the Client also be the Lender? YES.
• Does the type of Client have to be revealed in the report? YES.

Well then, what type of Client is the AMC?In my, and many other appraiser opinions, the AMC is an “Agent” of the Lender, because they are acting as the go-between from Lender to Appraiser. A ‘senior appraiser’ at one AMC also uses the word ‘agent’ to describe their relationship with the Lender who uses them for appraisal order placement and report review service.

USPAP is a sneaky document. It can be challenging to comprehend at times. And USPAP Advisory Opinions and the FAQ section are NOT legally part of USPAP, even though most people think they are. (No, they’re not! It says so in the USPAP book – Pgs. A-i and F-i.)

The ‘legal’ parts of USPAP are the Definitions, Preamble, Rules, Standards and Standards Rules, and Statements on Appraisal Standards. (It says so in the USPAP book – Pg U-i) Again, the AO’s and FAQ’s are stated as being ‘not part of USPAP.’ They are merely ‘opinions’ that help explain certain aspects of USPAP. Yes, they are ‘in the book’ but there is a legal difference. This is important to understand. (If you’re in court, YOUR defense attorney better know the difference!)

When completing a Summary Report (our most common form report), Std 2-2 (b) (i) says “state the identity of the Client and any intended users, by name or type;” USPAP Record Keeping section of the Ethics Rule (Pg U-9) and the Scope of Work Rule also require the appraiser to identify the lender and any Client who actually orders the appraisal, again by name or type.

So….when we ‘nicely’ say to the AMC “sorry, but I can’t take your NAME out of the report” they fire back with FAQ #71 which says they don’t have to be named. (They actually are using the ‘wrong’ portion of the USPAP book, but I’m not going to tell them! Unless they read this.)

So, what are we to do??? Keep reading…USPAP, and here!

This is where it gets interesting. Statement #9 (Pg U-92, lines 2822 > 2823; Pg U-93, lines 2844 > 2857) of USPAP allows the identity (meaning the NAME) to be omitted, but we must so state that fact in the report. It is my opinion that since their name can be omitted, we still must identify them by type, because ‘or’ is used when ever this is written.

For the history buffs among you, Statement #9 was added to USPAP in 1997, after the public exposure process started in 1995. It is my contention, from the way it’s written, that this was added to protect some commercial clients. But Statement #9 also applies to residential assignments since it is a legal part of USPAP. And in 1995-1996, the AMC’s were few, so they were not even on the radar screen for this addition to USPAP.

So, here’s what I have decided to do – and you may use this in your reports if you like– in fact I strongly suggest you do so to be USPAP compliant. The following 4 paragraph statement has been added to page 1 of my Addendum, at the top. The check boxes are used to identify the Client name status and type is worked in also (Agent for the Lender). I have written this to try to cover all instances, but if someone notices that something should be included, let me know. You can re-write these to suit a very specific assignment, as necessary.

Click here to continue reading . . .

Local: Brady Homes Chosen For Extreme Makeover: Home Edition

Bloomington, IL - Brady Homes will build one deserving Central Illinois family a new home as part of the Emmy award-winning reality TV show, ABC’s Extreme Makeover: Home Edition.

Brady Homes was chosen as the contractor for this “Extreme” build due to its reputation for giving back to the community. They have built four homes for St. Jude and also homes for residents of Marcfirst, an organization for the developmentally disabled.

Brady Homes will be responsible for overseeing the project’s construction and event management while upholding the highest standards of quality craftsmanship, design, and energy efficiency. Not only will this home be built in seven days but all products and labor will be donated by partnering trades and suppliers.

“The Brady family has always believed in giving back to our communities and is excited about helping a family who is in need of a new home,” said Ed Brady, co-owner with Bob and Bill Brady of Brady Homes. “When Extreme Makeover: Home Edition called us, there was no doubt we were willing to take on the challenge of organizing the building of a new home in one week for a deserving family.”

Five families within a 50 mile radius of the Brady Homes’ office in Bloomington, IL, are being considered for the build, all of whom have been deemed “Heroes at Home.” On Tuesday, August 18th, one lucky family will be surprised by Ty Pennington, team leader of the show, and the design team when they hear a knock at their front door. 

“Brady Homes’ history for passion and commitment to their communities was clear to us,” said Conrad Ricketts, executive producer of ABC’s Extreme Makeover: Home Edition. We are seeking ‘Heroes in the Community,’ and both the family that will be chosen and Brady Homes are wonderful representatives of our theme this season.”

Please visit www.bradyhomes.com for updated information regarding media updates, volunteers, and contributions.

For interviews with Ed or Bob Brady about this project please contact Amber Geiser at 309-261-5839

Reinventing the Appraisal Process: What can be done to change the market's perception of the services the professional appraiser provides?

Why do consumers prefer Toyotas or Hondas vs. Chevy's, Fords or other American cars? It would seem that most cars provide basically the same features, but year after year Toyota and Honda continue to provide reliability and value beyond that of their competitors in the eyes of buyers.

While American car manufacturers have closed the gap, the public's perception has been fashioned by years of import performance that wasn't matched by American cars. Check any of the automobile rating agencies and at the top will be a long line of “imports” with high marks for quality, performance and reliability.

The appraisal profession is faced with a similar "perception problem".

From the client’s perspective, how reliable are real estate appraisals? Are they better off by letting an AMC (Appraisal Management Company) “handle the hassle” or could they be getting something better and more reliable?

What can be done to change the market's perception of the services the professional appraiser provides? When you consider that the consumer is making perhaps the largest investment of their life with the purchase of a home, logically, they should want assurance that it is a sound investment, something a good appraisal would provide.

We all know that the purchase of a home is an emotional decision and that tends to over-shadow logic. Still, you would think that with the median price of a home in the $200,000 plus range, a $300-$400 investment by the consumer would be a cheap insurance policy and in their best interest prior to taking the housing plunge.

Click Here To Continue Reading . . . .