Independent Appraisers GSE/Cuomo Proposal 3/19/08

[George Hatch]

It's a preliminary proposal. That means it's the first step of many. If it does get eventually get accepted it will only be after many people have exercised their influence on it. Including you.

Hopefully there will be something in it for everyone, and hopefully nobody will get everything they want. Just like with an honest appraisal.

 

[George W Dodd]

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[timd354]

Originally Posted by timd354
To everyone who worked so hard on this proposal, many thanks for the hard work. I think that the proposal addresses many of the problems that we have in the industry, but I do have some questions and concerns. I worked for 10 years as a loan officer before starting my own appraisal business over 4 years ago, so I am very aware of the concerns of all parties involved in our business. If you could be kind enough to respond to these concerns, I would be very grateful:

1. Will mortgage brokers be able to order appraisals through the IVPI or must the lender still order the appraisal?

Yes, anyone could order an appraisal. This helps not only the Mortgage Broker but the Consumer too. Appraisal portability is a key aspect.

Okay that is a sensible provision and I do not think that anyone will have a problem with that.

2. Will lenders be forced to order their GSE related appraisals through IVPI or can lenders still set up an appraisal process that is demonstrably and truly independent of the lender's loan production staff as specified in the Home Valuation Code of Conduct?

This is a complicated question and I understand the concern. An Appraiser has an established relationship with a good Lender. How does this Proposal affect this?
We stressed over these very same issues, it is not an easy thing to give up. But in the end, so long as the Lender has the purse strings the Appraiser will always be under their influence. The answer is not easy, but to really work there must be a shield between the Users of appraisal services and the Appraiser. When the Appraiser no long has to fear being cut off from business because they didn't hit the number.

I do not believe that this is a complicated question at all. Either the answer is yes or no. Apparently, the way that you want things to be set up, then the answer is no. As a follow-up question, do you believe that it is not possible for a lender to set up an appraisal process that is run by the compliance department (whether the compliance department uses an in-house ordering system or the compliance department contracts the ordering out to a third party vendor) that is free from the loan production side and can be properly regulated? If your answer is "No", then I would submit to you that the lender cannot be trusted to process any part of a mortgage loan at all and that all mortgage processing and underwriting needs to be done by a third party not connected to the lender.


3. Who will determine the fee for appraisals ordered through and assigned by IVPI? I see this as a real problem because different appraisers chrge different fees and it seems to me that the IVPI is going to have to either cap the fees charge by an appraiser come up with a fee schedule in order for the system to work. Lenders obviously will balk at paying say $750 for a typical, non-complex 1004 just because the guy in the rotating list who was assigned the appraisal charges higher than typical fees; conversely, as an appraiser who charges a minimum fee of $400 for a 1004, which is acceptable in my market, I will balk at being dictated a lower fee. The big problem here is that the rotating list will take away the market for establishing appraisal fees.

You are correct, different regions have different rates. And it should be stated that different properties require different amounts of work. Complex and rural properties are much more time consuming than a typical subdivision property.
Fees will have to be based on these factors. And it is likely that IVPI will have to set base fees otherwise it could become impossible to coordinate property.
That said, IVPI has a seperate charge that is not part of the appraisal fee. The appraisal fee goes to the Appraiser. I believe that these fees should be paid upfront at the time of order. Then when the appraisal is loaded in the Vault, the Appraiser's fee is sent automatically, and hopefully electronically, to the Appraiser.

The separate IVPI charge is of no concern, it will be what it will be. The real problem is with the IVPI setting appraisal fees. How will these fees be set and by whom will they be set? What do you think a typical fee will be for a non-complex 1004 in the average market, how about the more expensive areas, like DC or NY or California?

4. How will the IVPI establish that an appraiser is geographically competent. For instance, I am licensed and certified in Maryland, Virginia, and Washington, DC. I am not currently geographically competent in the whole state of Virginia or the whole state of Maryland (though I am geographically competent in much of Maryland - it is a very small state). I regularly appraise and am geogrphically competent in Northern Virginia, all of DC, and the all of Maryland west of the Chesapeake Bay with the excpetion of Garrett and Allegany counties. But how would the IVPI know that except by taking my word?

Geographically compentency is essential to provide reliable appraisal services. I think you answered yourself very well in the question posed. The concern is with "skippy" who will travel anywhere and everywhere to do a job even if they lack compentency. That will not work under IVPI because a) it's a rotational basis and b) the Appraiser is expected to have access to data sources including the local MLS systems.

I did not answer the question at all....again the question is how will the IVPI know, aside from taking the appraiser's word, that he is really geographically competent. My local MLS covers almost all of Maryland, all of DC, Northern Virginia, South Central Pennsylvania, and parts of West Virginia. By subscribing to just 3 more systems, I could have MLS coverage for all of Maryland, Delaware, south central Pennsylvania, most of Virginia east of the Blue Ridge Mtns, part of West Virginia, and DC. Having these MLS subscriptions would not make me geographically competent in all of these areas.

5. How are local areas for appraisers going to be defined? by county, by MSA, by zip code?

Most likely by a combination of County, City, and/or zip code.

Okay.

6. How many local areas will an individual appraiser be allowed to be on the panel for?

Geographical compentency determines what areas an Appraiser can cover. There is no benefit to covering the entire State because of the rotational system.

There cannot be only one rotational system per state if the state is broken down into numerous coverage areas, that simply just would not work as some appraisers cover some parts of the state and other appraisers cover other parts of the state. I would think that it would be next to impossible to coordinate the rotation between geographical areas, especially for appraisers whose coverage area covers multiple states (I cover parts of MD, VA and DC and if I got my West Virginia and Pennsylvania licenses I could develop fairly coverage areas in those states too and never drive more than 75 miles from my home - I live in Maryland, which is a very small state). Thus, it seems to me, that the more areas one covers, the more assignments that he is likely to receive.

7. Will the number of approved appraisers for each local area be limited or unlimited? This is a very important question becuase the system will not work if it is unable to provide a sufficient amount of work for each approved appraiser to make a decent living. On the other hand, if it is not possible for new appraisers to be added unless an existing appraiser is removed from the panel, then this presents problems of fairness.

This is an open Panel. The Panel will never be closed. If there are 1000 eligible Appraisers they all can be on the Panel. There are no guarantees in life about anything. If there are too many Appraisers in an area then some are going to move to other areas or find other work. IVPI can not be responsible to provide enough work to "make a decent living".

There are some guarantees in life and one guarantee under such a system is that there will be a whole lot of appraisers who will not make a decent living, especially in a slow market. It seems to me that under this system, some appraisers will survive by doing non-lender work, but a whole bunch of appraisers will end up essentially becoming part time appraisers who will have to get other jobs to either supplement or become a main source of their income. In my opinion, that will cause a further erosion in professionalism within our industry.


8. What standards of service will be required from appraisers? From the lenders perspective this is very important, because sometimes speed is an issue. When I was a loan officer, I hated doing VA loans, because it usually took more than 2 weeks to receive even a typical non-complex appraisal back from the panel appraiser....there was even one appraiser, who in the late 1990's claimed that he did not have a fax machine or email and insisted that all orders be sent to him via the U.S. mail...there are some cases where there is a legitimate need for a lender to recieve an appraisal quickly.

The current system is based on speed and look where we are at. It takes a reasonable amount of time for any professional to process an order. The guidelines we suggest are 5 to 7 business days for a typical appraisal from the time it is ordered. Complex and rural properties are determined differently as location may dictate.

I do not advocate that a system be built based upon speed. My point, however, is that sometimes there are legitimate reasons for appraisals having to be done in a quicker time frame as long as a quality work product can be produced within that time frame. This new system does not reward anyone for providing service above and beyond just some arbitrarily decided upon baseline.

9. Will the standards for being accpeted to the IVPI panels be increased from just being state licensed or certified and not having any deisciplinary actions? If so, what will the standards be and will AI or other designations be any factor? If not, then how does this address the problem of the many existing state licensed and certified appraisers who are not competent?

Is somebody paying you to ask these questions? It's easy to get on the Panel and there will be many resources available for the Appraiser to use to help with assignments (review panel). Mistakes happen for all of us, but there is a big difference between an honest mistake and deliberate action. If an Appraiser does not provide the level of professional to produce a USPAP appraisal report then it's either going to be correct or the issue will be taken to the State Appraisal Board. Mistakes happen and we can fix them, IVPI will never hide and deny.

LOL....nobody has paid or consulted with me about these questions. I am just very concerned about the state of our industry and my and others' future in it.....anyhow, I guess your answer to my questions is "No". So apparently, somebody freshly licensed yesterday with minimal experience will be able to get on the panel just as easily as a seasoned veteran.


10. What was the process for appointing Pamela E. Crowley, Katherine A. Scheri, George Hatch, Michael E. Kennedy, Perry E. Turner Jr., George Dodd to the IVPI Organizational Committee and who made these appointments? Can we be provided a resume for all of the above listed persons?

They answered the call. I have never worked with a more dedicated and honest group of people. I am humbled to work with them.
Everyone is capable of doing something similar, take the call, look for solutions.

Your answer does not answer my question....if these people answered the call, then who made "the call" and how come myself, nor anyone else I received personally, received "the call"? Would I be wrong to guess that "the call" came from yourselves? I take your word that the entire group is very hard working, dedicated, and honest. However, except for this board, other online info, Pan's CBS interview, etc. I really do not know who you are and I am sure that a lot of others do not know who you are. So, I would greatly appreciate a more precise answer to the question posed and I would appreciate it if you posted resumes of everyone on the board. You guys are proposing to radically change the way everyone does business which may possibly result in a large dimunition of income to many appraisers and we really have no idea exactly who you are and how you were appointed to speak upon the behalf of an entire industry.

11. Do any of the existing appraiser organizations, such as the AI, have any role to play in the operation or the governance of the IVPI?

Everyone is welcome and encouraged to assist in these efforts. The AI to date has refused to answer our call. They may have different plans.

Okay.


I know that I asked a lot of questions, but this proposal has a huge potential impact on the future direction of all appraisers' careers and I appreciate any of the members of the IVPI board who will take the time to address these issues.
Never stop asking questions!
Please see my reponses and additional questions above.


I never do stop asking questions!!! I want to emphasize the point that, by asking these questions, I am not questioning your integrity or your dedidication to reforming a system that badly needs reform. However, I think some of your solutions creates terrible problems that need to be addressed.

I cannot and I do not see how anyone can support a system that will essentially determine how many appraisals I can do for lenders in my business and what I can charge...frankly, your system as proposed is anti-capitalist and, I hate to say this but it is true, un-American.
I am a very competent and honest appraiser who does good work and provides excellent service, but under the new system, I guess giving excellent service beyond the required bare minimum just does not matter. Additionally, as long as the work product is barely USPAP compliant, I that does not matter either. Whether I am an excellent appraiser who provides excellent service or a barely competent appraiser who provides average service does not matter, either way I will just be another number in the queue and will make the same amount of income as the inferior guy. Now, what effect will that have in the long run on overall professionalism and quality in the industry?

What I can and will support is a system that will set up regulatory systems, using tools such unannounced audits of lenders and appraisers, random appraisal reviews, stiff penalties including large fines and lifetime bans from the industry for persons breaking the rules, etc. I believe that all lenders can be made to set up an appraisal system run by the compliance department (all such systems subject to Fannie/Freddie preapproval and monitoring). These types of regulations, along with oversight and appraisal delivery to the lenders through the IVPI can be done in such a way to insure appraiser independence without sacrificing actual business competition and entrepreneurship.

 

[sbb04]

I'm Down.

... with it. Twenty years too late but what are you going to do?

I can tell you now the lenders are going to have a snit fit. That means absolutely no control over the appraiser. They successfully lobbied to have the FHA panel dissolved for this very reason and they still hold a lot of clout.

BTW, I'm not sure why these regs only apply to Fannie Mae/Freddie Mac. If Bank of America, for example, goes belly up in crap loans do you not think the feds will be required to bail them out?

The Proposal is an organizational plan not an operations plan. What has been presented for consideration is the Concept. The operations plan is what will answer these type of questions and provide the details you seek, and it will take time to complete. There is no point to developing an operations plan if the Concept is not acceptable.

Please read the Proposal and decide if it's a Concept that works and makes sense to you. If it does then we ask for your support. There are no hidden agendas, there is no personal gain.

 

[timd354]

The Proposal is an organizational plan not an operations plan. What has been presented for consideration is the Concept. The operations plan is what will answer these type of questions and provide the details you seek, and it will take time to complete. There is no point to developing an operations plan if the Concept is not acceptable.

Please read the Proposal and decide if it's a Concept that works and makes sense to you. If it does then we ask for your support. There are no hidden agendas, there is no personal gain.

George,

Concept: Do away with lender pressure on appraisers and get rid of incompetent and dishonest appraisers.

We all support the concept, that is not an issue. The issue is in the details of the plan...and no one can intelligently support the plan until the full details a of the plan and the effect of these details upon the industry and the individual appraiser are fully known.

Please read my prior post and answer my additional questions if you have a minute....these issues are very important to me and, probably, others on this forum.

 

[sbb04]

It's been tried before.

There appears to be no stomach to punish incompetent and unethical appraisers and even less lenders who pressure. I've complained to my state appraiser board about specific instances of pressure and their response was that I needed to report it to someone else.
I've complained to the Appraisal Foundation and others about appraisers who openly advertise free comp checks and nary a response.
The big push to licensing in the early 90's was the supposed fix for appraisal problems which was more or less a joke.
The crux of it is that the appraiser must be independent else he runs the risk of being an advocate. Then the question is how do you ensure that independence.

George,

Concept: Do away with lender pressure on appraisers and get rid of incompetent and dishonest appraisers.
Please my prior post and answer my additional questions if you have a minute....these issues are very important to me and, probably, others on this forum.

 

[TN Pro]

timd354

great posts. you wrote what i, and many others who think the same way may have been too lazy to write.

Dean

 

[TN Pro]

Not only does skippy get punished in this whole deal (not just this proposal, but the Fannie one was well), but so do many of the good, ethical, professional, well educated, good businessmen/woman appraisers. Ive spent 6 years cultivating a diversified group of clients to the point that i dont have to worry about where the next order is coming from, and i certainly dont worry about lender pressure. You know why, i dont work for those dumb *** crummy people that bring the pressure down. I have, but i fired them and continued the quest for better clients.
Many of the people who are jumping on the bandwagon to sign stuff that they dont even fully understand are those same people who post here that they have no work, because "skippy took it all".
YOU CHOOSE to fight for work from people who like to hire skippy, and you knew that. Rather than get down and do serious research and look for the many good clients out there, you took the easy route.
Why should the good well prepared among us suffer with skippy, and the other people who had no right owning their own "business to start with".

 

[Zmcraney]

The proposistion has it's advantages and disadvantages, as anyhting else would (can't make everybody happy). My major concern is the lack of what we have all worked hard and strived for, our independence. The majority of the accomplished appraisers have busted their @$$ to build their business and clientelle to the point it is now, all to have it rationed out to you one appraisal at a time. In a way, it seems by joining such an organization or whatever you want to call it you lose what most of us strived for and attracted us to the profession in the first place. In essence, those that have busted their humps to build their business will no longer be at any benefit from those that just eeeek through life doing the bare minimum. if i am wrong please correct me, and I applaud the originators effort. A majority of the laws and regulations to control the very mentioned problems are already in place, they just lack enforcement by compotent people. Would it not be easier to rework the system already in place than to start all over from scratch??

 

[Mike Kennedy]

There appears to be no stomach to punish incompetent and unethical appraisers and even less lenders who pressure. I've complained to my state appraiser board about specific instances of pressure and their response was that I needed to report it to someone else.
I've complained to the Appraisal Foundation and others about appraisers who openly advertise free comp checks and nary a response.
The big push to licensing in the early 90's was the supposed fix for appraisal problems which was more or less a joke.
The crux of it is that the appraiser must be independent else he runs the risk of being an advocate. Then the question is how do you ensure that independence.

Please see the PDF Attachments in Post #2 for:


CUOMO/GSE "Home Valuation Protection Program and Agreement"

Pages 5-6, Section II, items 4, 5, and 7 :icon_idea:
____________________________________________________________

and in response:
____________________________________________________________

THE IVPI PROPOSAL,

Page 3, Last Bullet

Page 8, Section Two

Page 9, Section One, items 1, 2, 3, 6, 8,

Page 10, Section One, items 1, 4, 6, 7

Section Two, items 3, 4, 5


Keep in mind, both the HVPA, and the IVPI proposal, ARE based on PUBLIC transparency and Periodic PUBLISHED Activity Reports including Compliance Review, Liaison with State and Regulatory officials, and Resolution of Consumer, Lender, and Appraiser Compliants.

TRANSPARENCY and Effective Communication is included in the Mandate.