Double Trouble - How Risky Are Hybrid Appraisals, And Where Do The Hazards Lurk

[George Hatch]

My state board is required to investigate every complaint. Not sure why you think the example is outrageous. That’s what most complaints are - homeowner based on origination based appraisals. It was dismissed.

That’s why state boards are finally seeing what hybrids are- they rarely saw complaints because they rarely been used for purchase/ Refi until now. And most appear to be concerned.

My state also considers every complaint, but they dismiss the ones that are frivolous (which is about 30% of them). For an 82sf GLA error that an appraiser actually made (as opposed to merely being alleged but not defended as in Terr's example) they might hand out a private letter that goes in the licensee's file. Licensees in this state don't get get suspended or revoked or even significantly fined simply because they made a relatively minor mistake.


If you were a reviewer working for a lender and an 82sf error actually came up how would you handle it? Ban or suspend the appraiser on the zero tolerance basis or perhaps just make the note and tell them not to do it again? Because a state board should be acting with even *more* discretion (not less) when considering that taking an action against someone's license directly affects their entire career. We should want gov't to act with relative restraint insofar as legitimate errors are concerned. Simply making a mistake is something completely different from lying, cheating, and stealing.

 

[jay trotta]

IMO the search for the "magic mushroom" will never die, greed is the end result

multi national wedges are in order

There have been some great articles on Home Inspections and some are exactly what & how the Home Ins. is suppose to be provided, the last one I think was in Working RE and makes many good points. Handing out so called "Inspections" to random people is a question, that may come back to bite people; signing off for someone else's inspection is another story in itself.

Sometimes it pays to peek at what others do; Agents / Outside Inspectors Etc., so you can then make a determination as to the Quality of that Information. When someone points out the Inspector provided the Wrong House Information (photo's and all), you can decide to "withdraw" form the assignment. It also clarifies how "qualified" those Inspectors may be.

The reason we all traveled thru all the handstands & CEU's over the years is to protect (ourselves) & serve the Public Trust we signed up for in the beginning. I would believe that Home Inspectors and everyone else that required State Licensure, doesn't allow anyone to "Act" on their behalf. Interesting how many believe they control State Law.

 

[chad hampton]

My state also considers every complaint, but they dismiss the ones that are frivolous (which is about 30% of them). For an 82sf GLA error that an appraiser actually made (as opposed to merely being alleged but not defended as in Terr's example) they might hand out a private letter that goes in the licensee's file. Licensees in this state don't get get suspended or revoked or even significantly fined simply because they made a relatively minor mistake.


If you were a reviewer working for a lender and an 82sf error actually came up how would you handle it? Ban or suspend the appraiser on the zero tolerance basis or perhaps just make the note and tell them not to do it again? Because a state board should be acting with even *more* discretion (not less) when considering that taking an action against someone's license directly affects their entire career. We should want gov't to act with relative restraint insofar as legitimate errors are concerned. Simply making a mistake is something completely different from lying, cheating, and stealing.

My state will request your workfile for every complaint they receive. They may very well dismiss the issue regarding SF.

And every time you now try to get work, they don't ask you if you've ever been found guilty. They ask have you ever had a complaint filed against you.

I would be in favor of what you suggest - dismissing frivolous complaints as soon as they come in the door, but that isn't how my state (and most others than I'm aware of) operates.

I've actually suggested to boards that a $100 complaint filing fee be required which will be refunded should the complaint have merit. But that would probably put investigators out of work overnight.

 

[djd09]

see the problem is the regulators. they sit and wait until some broker whispers in the borrowers ear about an unjust value. the same handful of crooked appraisers rolled through ne ohio during the boom because the stupid lazy State did nothing.

 

[Terrel L. Shields]

My state will request your workfile for every complaint they receive. They may very well dismiss the issue regarding SF.

Same here and apparently she was "sanctioned" for not providing the workfile...but but she had dropped her license before she knew she had a complaint, but it arrived to the state days before the investigator even let her know a complaint was filed and she wasn't notified until after the license had expired... And it is all rendered moot by the fact she isn't licensed anymore. She retired. What is the point except perhaps to satisfy ASC? Made no sense to waste time with.

 

[djd09]

delete

 

[Randolph Kinney]

delete

Traditional appraisal alternatives, like hybrid appraisals, broker price opinions and data-driven automated or desktop valuation models, can be incredibly useful and cost-effective tools. However, many in the industry, including the National Association of Realtors®, urge caution when waiving traditional, onsite appraisals for home purchase transactions in order to ensure purchases are based on sound financial principles and do not put undue risk on consumers or the market.

 

[mike32716]

Traditional appraisal alternatives, like hybrid appraisals, broker price opinions and data-driven automated or desktop valuation models, can be incredibly useful and cost-effective tools. However, many in the industry, including the National Association of Realtors®, urge caution when waiving traditional, onsite appraisals for home purchase transactions in order to ensure purchases are based on sound financial principles and do not put undue risk on consumers or the market.

NAR for all their faults does remember when easy financing ran amok, and the resultant economic Armageddon to their members.

 

[mike32716]

Talked to ex appraiser who hung up her shingle here in AR in June of last year. A month later gets a notice of a complaint from a 2017 appraisal and the board requested her to come to their office. She replied no way... I am out of business, what does it matter? Anyway, the issue ended up investigated and the worst error found was an 82 SF difference in size from her measurement and the homeowners. The board basically dismissed the issue except that since she didn't appear for the hearing, now has suspended her license for 2 years for not sending the work file...and wants her to sign a consent agreement??? Why? She retired a year ago. When you are retired, the workfiles are ground into paper sausage. But there is no fine. They basically said that if you were to ask to be reinstated, this was necessary. I say it is rather stupid...

But the point is this. When a "error" of 82 SF on a 4000 SF new construction exists, who is the homeowner going to blame? Who are they going to file a complaint against? Who are they going to sue? ...82 SF??? Do they sue the assessor for the measurement? The inspector? Nope...you can bet it is the appraiser if it is an origination loan regardless 40 pages of caveats and disclaimers.

82sf on a 4,000sf house is a rounding error.

Your friend is still technically an inactive certified appraiser since there is a time limit (depends on the state) for her to reinstate. The board was just following protocol. From a potential liability issue though, it would have been better for her to cooperate with the state, and get the complaint dismissed. Now she has a disciplinary record with the state which is ammunition for a complainant to take her to court, not to mention a blemish should she want another professional license (ex: real estate).

 

[chad hampton]

82sf on a 4,000sf house is a rounding error.

Your friend is still technically an inactive certified appraiser since there is a time limit (depends on the state) for her to reinstate. The board was just following protocol. From a potential liability issue though, it would have been better for her to cooperate with the state, and get the complaint dismissed. Now she has a disciplinary record with the state which is ammunition for a complainant to take her to court, not to mention a blemish should she want another professional license (ex: real estate).

Appraisers can be sued for reports that they sign? Hope they are thinking about that before their signature next to reports that are 50% filled out by 3rd parties. Including sketches, quality, condition, analysis, etc.

I wonder if the large AMC staff appraisers that are licensed in 10+ states, and signing off on appraisals in states they have never stepped foot in care much about any of that?

State boards need to stop this insanity soon (before it becomes too big to stop).

90% of the AMC's should also be joining into the fight. After the largest 2-3 AMC turn into huge appraisal companies, they will start eating up all the smaller AMC's around. Not hard to imagine, thousands of fake property inspectors in every state and a few hundred "appraisers" sitting in cubicle in an office building in texas. And they will keep 100% of the fee and spend about 30% on labor. You think mega corporations will be content with just destroying 80,000 small businesses? They won't stop until there are 2-3 AMC's left in this country. Complete market control is the goal. It's what parasites do, keep eating up.