Guest Post by Fred Rossiter - State Certified Residential Appraiser - Seahaven Appraisal Services
This is the first of a two-part series presenting a case for, and benefits of, centralized appraisal ordering.
For there ever to be true appraiser independence, the direct link between the lender and the appraiser must be forever severed. A fundamental change must occur that replaces the lender as the appraiser’s client. This change would sever the appraiser’s current fiduciary to the lender.
Moving forward, the appraiser’s new client should be the new Consumer Financial Protection Agency (CFPA), the FHA, VA or a GSE (take your pick). The appraiser’s fiduciary would be owed to a government entity who has no motivation to corrupt him and instead, is interested only in quality appraisal reports and protecting the country from another housing melt down. Only then will there be an end to the lender’s coercion, intimidation, corruption and influence of this nation’s appraisers. This paradigm shift would insure the proper collateralization of this nation’s housing stock.
I envision a government web site, run by the new Consumer Financial Protection Agency (CFPA), that would be accessed by any registered lender or mortgage broker desiring to order a residential appraisal. The Home Page would serve as an engagement letter between the appraiser and a government entity. The lender ordering the appraisal would be noted on the appraisal report, not as the client, but rather as an intended user of the report.
The lender would populate the blank fields of the engagement letter noting the property address, zip code, contact info, type of appraisal product, turn around time requested, addendums requested, etc. No stipulations would be allowed. Once filled out, the lender would click on the Submit Information button.
The lender would then view the next page which would list appraisers (anonymously), who are actively licensed or certified, have a current E & O policy, and who are geographically competent (based upon the zip code) to appraise the subject property. Every appraiser would certify what zip codes they were geographically competent in.
This list of (anonymous) appraisers would be generated from the Consumer Financial Protection Agency’s database. Their database would be derived from the Appraisal Subcommitttee’s national registry but include fees and particulars inputted by each participating appraiser.
Qualified appraisers would be listed randomly as: Appraiser A, Appraiser B, Appraiser C, etc., with their basic and ancillary fees. An estimated fee for the assignment would be calculated and quoted for each appraiser on this page for the lender’s consideration. The appraiser’s qualifications, years of experience and industry affiliations would be listed. The lender would select one appraiser from the list of anonymous appraisers and simply click on Order an Appraisal. In doing so, the lender has selected an appraiser anonymously.
The appraisal order (engagement letter plus any purchase contracts) would then be automatically e mailed to the appraiser. The appraiser would have time to research the property before deciding whether to accept, deny, or conditionally accept the assignment based upon a new proposed delivery date and/or fee. The appraiser would have 24 hours to respond to the order or it would be automatically canceled and the lender would then be given an opportunity to select a different appraiser. The web site would automatically notify the lender by e mail of the appraiser’s decision.
If the appraiser accepted the assignment, he would set up the inspection time, inspect the property and complete the appraisal by the delivery date. The appraiser would be penalized, monetarily, for missing the inspection date and/or the delivery date.
Upon completion, the appraiser would download the appraisal report through the web site to the lender and the Consumer Financial Protection Agency (CFPA) where an original copy would be archived. Downloading the completed appraisal report would automatically trigger the electronic payment of the report by debiting the lender’s reserve account and crediting the appraiser’s account.
Only upon receipt of the completed appraisal report would the lender discover the true identity of the appraiser. The lender would be able to run a Quality Assurance check of the appraisal. The lender would be permitted to contact the appraiser directly to make any corrections or revisions. And, the lender or the appraiser would be free to refer any complaints or instances of negligence, fraud or coercion to state appraisal boards through a Consumer Financial Protection Agency (CFPA) Hot Line.
In Part 2 of this series, I'll present the "Benefits" of a Centralized Appraisal Ordering System.
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