Unintended consequence of reviews

[BRCJR]

This attitude is typical. It’s also why there are so many poorly developed appraisals in the universe.

Wonder how many independent appraisers, that complete a review for a lender, turn in the report to the state?

 

[TerryRohrer]

Appraisal reviews are intended to increase quality in the industry. They are intended to catch questionable reports before they are used to support lending decisions. Typically, when an AMC or Lender review spots and issue, revisions are requested. That's all good.

If the intent of ALL reviews was to increase quality, all clients engaging reviewers would be willing to pay a reasonable fee for reviews and a subsequent appraisal if that were part of the SOW. In my experience, more are looking for a rubber stamp at a minimum cost.

However, if bad appraisers were routinely reported to their appraisal board.... maybe there would be fewer bad appraisers. Allowing appraisers to fix a report until it passes... with no other consequences.. just rewards and perpetuates bad appraising.

Agreed, but as noted above, most lenders are loath to hamper delivery of appraisals that facilitate the deal, regardless of the facts.

 

[George Hatch]

The explanation I have heard (several times) is the client doesn't want to deal with the potential legal liability. Easier to just blacklist

 

[timd354]

The explanation I have heard (several times) is the client doesn't want to deal with the potential legal liability. Easier to just blacklist

There is definitely some truth to that. Additionally, if a lender has sold numerous loans done by an appraiser into the secodary market and then proceeds to get that same appraiser disciplined, they are inviting scrutiny of those loans which could result in potential repurchases if issues are found.

 

[timd354]

It is much easier to just stop using that particular appraiser.

A lender does not want to become known as the lender that "turns you into the state". That reputation stops appraisers, even good ones, from wanting to do work with you.

To be honest with you, I would not trust some of the decision makers at certain lenders to make good judgments regarding whcih appraisal to turn into the state and any state inquiry into an appraisal creates major issues for that appraiser, even if he or she is later completely exonerated. The other issue, is that even though appraisers who do review appraisals are no better as a group than the overall pool of appraisers, there is tendency for some QA analysts and underwriters at the lenders to automatically assume that the review appraiser is always right when the review appraisal states that the appraisal being reviewed is problematic.

 

[BRCJR]

To be honest with you, I would not trust some of the decision makers at certain lenders to make good judgments regarding whcih appraisal to turn into the state and any state inquiry into an appraisal creates major issues for that appraiser, even if he or she is later completely exonerated. The other issue, is that even though appraisers who do review appraisals are no better as a group than the overall pool of appraisers, there is tendency for some QA analysts and underwriters at the lenders to automatically assume that the review appraiser is always right when the review appraisal states that the appraisal being reviewed is problematic.

...and for some reason the higher value opinion seems to always, most times, be considered the "right one".

 

[timd354]

...and for some reason the higher value opinion seems to always, most times, be considered the "right one".

That is absolutely untrue. If there are two valautions in a loan origination file and the lender sells that loan into the seconday market and uses the higher vaue, they had better have a very strong case of why using the higher valaution is appopriate, otherwise there is a very good chance they will end up repurchasing that loan.

 

[BRCJR]

That is absolutely untrue. If there are two valautions in a loan origination file and the lender sells that loan into the seconday market and uses the higher vaue, they had better have a very strong case of why using the higher valaution is appopriate, otherwise there is a very good chance they will end up repurchasing that loan.

You misunderstood my point, most times the lender (loan officer) does think the higher value is more credible. Maybe because the borrower does too.
I did not say they always use it.
Most of the time a second appraisal is obtained by a regulated lender because of a value concern. Very few times will a lender order a second appraisal because of an USPAP concern. They barely even know what the USPAP is.

 

[Terrel L. Shields]

Allowing appraisers to fix a report until it passes... with no other consequences.. just rewards and perpetuates bad appraising.

The alternative is to see 70% of appraisers blacklisted and then the Feds will suddenly decide they do not need ANY appraisers including reviewers like you. Mistakes happen and unless there is clear and compelling fraud, then I see no reason not to question the appraisers decision and ask for a revision.

If a revision automatically means a sanction, then expect the profession to disappear within 18 months. ...especially considering that all the fee appraiser gets anymore are the most complex assignments.

 

[sputnam]

Secondly, 99% of appraisers don’t understand that most state appraisal boards will not entertain much less prosecute an appraiser over a value issue. If you’re going to file a complaint you have to file it on the basis that it fails Stds 1 and 2. It fails proper development and or reporting.

Almost every revision request in my practice involves a Standard 2 violation. None ever involve a challenge of the appraiser's opinion of value... unless of course, I'm reviewing an ROV request. The AMC doesn't care as long as the appraiser fixes the issue and resubmits the report. I know of one instance when management submitted a complaint to an appraisal board.