Dodd-Frank provision and Mandatory Reporting

[Wm. Hattaway]

Recently my neighbor wanted me to look at an appraisal that was done on his property and give him my opinion. I asked if he wanted a review and he said no just my opinion :Eyecrazy:. I also see that several appraisers have come into possession of appraisals that they have complained about on this forum, however they did not submit the appraisal to their State Appraisal boards as the Dodd-Frank provision 14.7.1.2.1. and Mandatory Reporting would suggest they do.

Separately I also had a conversation with a member of my States FREAB. She knows that I am a staff appraiser and what company I work for. She commented that other appraisal companies have been reporting appraisers per Dodd-Frank but that my company has not, why not? My question to the forum is; what is your opinion as to what level the appraisal has to rise to, or sink to, in order to be reported to your States Appraisal board?

 

[NORTON]

Interesting question...I think the responses will be varying, from turn them all in to why should we be doing the state(s) job.

Side note, if your neighbor would have asked u to perform a review, would you have included any language in the report that the client and you have a non professional relationship? I've always wondered how to word such a situation, thanks.

 

[Meandering]

Frank/Dodd
SEC. 1472.
``(e) Mandatory Reporting.--Any mortgage lender, mortgage broker,
mortgage banker, real estate broker, appraisal management company,
employee of an appraisal management company, or any other person
involved in a real estate transaction involving an appraisal in
connection with a consumer credit transaction secured by the principal
dwelling of a consumer who has a reasonable basis to believe an
appraiser is failing to comply with the Uniform Standards of
Professional Appraisal Practice, is violating applicable laws, or is
otherwise engaging in unethical or unprofessional conduct, shall refer
the matter to the applicable State appraiser certifying and licensing
agency.

You are not involved with your neighbor's transaction.

 

[hastalavista]

You are not involved with your neighbor's transaction.

Bingo!
Neither are those forumites who receive an appraisal via this forum (for whatever purpose) unless they are engaged to do so as part of the transaction.

As to your company reporting violations, I believe the IFR has clarification on this: the threshold is something like, if it makes a material difference.
So, minor issues are not a problem.
Issues that affect the credibility of the value, or are misleading such that a decision is made one-way that would not otherwise be made, are probably reporting-issues.

If I were in charge of a company that had to determine what is a reportable issue, and what isn't, I'd set up my own criteria along something like this:
A. Do the issues need to be addressed? If no, no problem.
B. Once the issues are addressed, is there any remaining concern? If no, no problem.
C. If the issues are not addressed, can I rely on the report? If no, then a problem.
D. The issues were addressed, but not in a manner that I thought was appropriate? This is the real tricky area. I'd want to set-up my system so the reporting-process doesn't degrade into some kind of reprisal scheme. If it were me, I'd have two people sign-off on this issue within my organization.
E. If I decide to file a report, I need to be specific in my allegation, and the support for that allegation has to be persuasive. Again, if it were me, I'd have more than one person sign-off on a reporting-action.

 

[Wm. Hattaway]

You are not involved with your neighbor's transaction.

Thank you for response. I was worried about receiving my neighbor's appraisal and what my responsibility would have been. So may I assume a review appraiser be responsible for this provision of the Dodd-Frank act?

 

[Meandering]

Thank you for response. I was worried about receiving my neighbor's appraisal and what my responsibility would have been. So may I assume a review appraiser be responsible for this provision of the Dodd-Frank act?

No

A review appraiser is not involved in the transaction either, and is not one of the named entities that is responsible for mandatory reporting.

The AMC management, the lender's management, but not the review appraiser.

Consequences of not reporting are not on the shoulders of a review appraiser.


.

 

[Wm. Hattaway]

No

A review appraiser is not involved in the transaction either, and is not one of the named entities that is responsible for mandatory reporting.

The AMC management, the lender's management, but not the review appraiser.

Consequences of not reporting are not on the shoulders of a review appraiser.
.

Thanks again.

 

[hastalavista]

No

A review appraiser is not involved in the transaction either, and is not one of the named entities that is responsible for mandatory reporting.

The AMC management, the lender's management, but not the review appraiser.

Consequences of not reporting are not on the shoulders of a review appraiser.

Marion:

In your opinion, is it incumbent on the employee (review appraiser) of the entity (let's say the AMC) to bring up concerns to the employer regarding Dodd-Frank reporting violations, or
Is it the responsibility of the entity (employer-AMC) to have a system in place that provides for the reviewer to alert the entity that a reporting violation may exist?

I believe it is incumbent on the entity (employer-AMC) to have a system in place, but if there were no system in place, I (as an employee) would alert my employer that there isn't a system and I would want to know what the employer wants me to do so it can meet its regulatory obligations.

If I am an employee of the entity that is responsible, and I am the first-line of review that would discover DF reporting-issues, then I would be very uncomfortable if no such reporting policy was in place.
Yes, I'm an employee. I'm also a licensed appraiser. I know about the requirement. While I may want to argue that I'm not personally responsible, I don't think I could argue I have no responsibility as a member of the organization to bring the concern to management's attention.

If management told me "don't worry about it" (in writing), then I've carried out my minimum responsibility (in my opinion) and then I can make a determination if that is good enough or not for me (which might have consequences to my employment).
I'd prefer management design some policy that is consistent with the intent of Dodd-Frank.

But I don't think I'd stand-pat and assume I might not be collateral damage in a cleansing regulatory action just because I'm an employee.

 

[Meandering]

Marion:

In your opinion, is it incumbent on the employee (review appraiser) of the entity (let's say the AMC) to bring up concerns to the employer regarding Dodd-Frank reporting violations, or
Is it the responsibility of the entity (employer-AMC) to have a system in place that provides for the reviewer to alert the entity that a reporting violation may exist?.

Denis,
Encumbrances on employees and employee responsibilities are facts, not opinions and are usually written in employee guidelines and policies. One of the great advantages of unions is that they make management actually write employee policies and abide by them. Alerting or not alerting an employer is within the realm of the employer's policy and has nothing to do with anyone else's opinion.

I believe it is incumbent on the entity (employer-AMC) to have a system in place, but if there were no system in place, I (as an employee) would alert my employer that there isn't a system and I would want to know what the employer wants me to do so it can meet its regulatory obligations.

If I am an employee of the entity that is responsible, and I am the first-line of review that would discover DF reporting-issues, then I would be very uncomfortable if no such reporting policy was in place.

That is a lot of if's there Denis. If you where the new hired guy and walked in off the street with your first review job, you are going to run and tell management how to run their business, what their regulations are, what their consequences are for following or not following their regulations, well good for you! Maybe you can get promoted, or may be you could look for your next employer. Just depends on the company you are employed by, doesn't it?

Yes, I'm an employee. I'm also a licensed appraiser. I know about the requirement. While I may want to argue that I'm not personally responsible, I don't think I could argue I have no responsibility as a member of the organization to bring the concern to management's attention.

If management told me "don't worry about it" (in writing), then I've carried out my minimum responsibility (in my opinion) and then I can make a determination if that is good enough or not for me (which might have consequences to my employment).
I'd prefer management design some policy that is consistent with the intent of Dodd-Frank.

Really? Why not request a personal interview with the regulators and discuss that situation with them, because on top of the F/D you have read all the regulations concerning your employer and just know that you are the most qualified to decide if their business model falls within all the laws and regulations that they are obligated to abide by.

But I don't think I'd stand-pat and assume I might not be collateral damage in a cleansing regulatory action just because I'm an employee.

Really?

So you think that after months and months of back and forth bickering and fighting in the House and the Senate with Bank lobbyists, Appraisal lobbyists, mortgage lobbyists, builder lobbyists and lobbyists of god knows who else, that everybody just forgot about review appraisers, so that's why they don't appear in the law as being responsible parties?

Really Denis?

Really?

And being that states enforce USPAP on Appraisers and they don't enforce Frank/Dodd on appraisers, that we, review appraisers, should be written into the Frank/Dodd and be included in sanctioning for not reporting USPAP violations to....our employer? The state? Really Denis?

Come on.



.

 

[hastalavista]

Denis,

...

Come on.

:laugh:

OK, you see that an employee of a named entity who is doing reviews has no obligation to raise a concern with their employer regarding the Dodd-Frank provisions.

I'm not as convinced as you, but I'm not discounting your position/arguments.

And, yes, if I were hired off the street to do reviews as an employee, I would raise my concern on day one (I'd raise it in the interview).
But that's me. :new_smile-l:

I typically raise all my concerns regarding appraisal practice and what the client(employer) is requesting if I believe there may be an issue, conflict, or if I just have a concern.

Most of the time, my concerns are resolved.
Sometimes I bring up an issue that the client hasn't considered, and they change their policy... like when a national lender used to require the Cost Approach on all their appraisals regardless of its applicability: I spoke to the EVP that oversaw loans and appraisals: raised my concern that making a blanket requirement like that more likely degraded the quality than added to it. He agreed and the policy was changed.
Or, like the time when a client sent out a revised engagement agreement stating that they wanted "or assigns" on their client-line. I raised my concern (discussed on this forum, BTW) that "assigns" is not a client-type identifier and that could mean anyone. They agreed (they explained what they were trying to achieve, and it was legitimate); they changed their policy to identify the other potential client.
Obviously, I've had disagreements with clients: like the ones who have told me to "give no value" to the unpermitted addition because it doesn't have permits. Those clients didn't agree with me and we ended up parting company.

So I don't hesitate to bring my concerns up with my clients or employer.
I doubt that you would either.
But I asked for your opinion (because of your work regarding Dodd-Frank, and I believe you know it better than most.. myself included) and wanted to hear it, so I appreciate your response.

:new_smile-l: