Unintended consequence of reviews

[sputnam]

You should probably look at the applciable laws and regualtions of your state (North Carolina) before asserting what those laws and regulations actually require. If you had done that, you would have learned that the applicable NC regulations not only do not require the board to investigate every complaint, but actaully gives the board discretion to review the complaint and determine whether it should be investigated and mandates the board to dismiss the compalint if it does not appear that there has been a violation of USPAP or other applicable rules (see below). Thus, the NC Board certainly has the power to summarily dismess a complaint that does not allege any conduct that could be cosnidered to be a violation of USPAP or other applciable NC rules. Hopefully, the board uses this discretion to actually summarily dismiss any susch complaitns without bothering the appraiser who is the subject of the complaint.

Dismissing a complaint requires investigation. Yeah, the investigaton may be limited to just reading the complaint... but that still uses Board resources. Way to not see the forest because of a tree.

 

[DWiley]

None. Ask DW.

If you ask DW he will tell you that the answer is not "None."
When I ran a staff appraiser group, when it came to issues that would rise to the level of mandatory reporting, staff was treated the same as any other appraiser. I cannot speak to how others did/do things.

 

[DWiley]

Yeah, the investigaton may be limited to just reading the complaint...

When I was the lead investigator for my state, almost half of complaints were dismissed after the initial reading. This was primarily because the complaint did not allege something that would be a violation of any law or regulation. For example, it was common for a complaint to cite the fact that the appraisal report did not include the finished basement area in the GLA

 

[timd354]

Dismissing a complaint requires investigation. Yeah, the investigaton may be limited to just reading the complaint... but that still uses Board resources. Way to not see the forest because of a tree.

What are you talking about? I simply posted the actual regualtions governing how the board in your state is supposed to handle a complaint. It states "The Board staff shall review the
allegation to determine whether it shall be investigated"

Thus, per the regaulations of your state, the compalint can and should be dismissed without an investigations under some circumstances. Contrary to your assertion, simply reading the compalint is not an an "investigation" of the complaint, at least as far as the regulations are concerned.

Perhaps you need to consult a dictionary since you apparently do not understand the term "investigate". Per the Merriam-Webster definition pasted below, simply reading a complaint certainly does not fall within the commonly accepted definition of "investigate":

investigate​

verb​

in·ves·ti·gate in-ˈve-stə-ˌgāt

investigated; investigating
Synonyms of investigate
transitive verb

: to observe or study by close examination and systematic inquiry
intransitive verb

: to make a systematic examination
especially : to conduct an official inquiry
investigation
in-ˌve-stə-ˈgā-shən
noun
investigative
in-ˈve-stə-ˌgā-tiv
adjective
investigatory
in-ˈve-sti-gə-ˌtȯr-ē
adjective

 

[timd354]

When I was the lead investigator for my state, almost half of complaints were dismissed after the initial reading. This was primarily because the complaint did not allege something that would be a violation of any law or regulation. For example, it was common for a complaint to cite the fact that the appraisal report did not include the finished basement area in the GLA

This is exactly how every regulator should handle complants that do not allege something that is a violation of any law or regulation.

 

[Sadie]

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.

The down side is that AMC and Lenders rarely report bad appraisers to the state appraisal board. The reasons are understandable. They just want to close the loan. It's a big pain in the, um, paperwork to file a complaint. It takes a lot of time and effort.

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.

But sometimes, the bad appraiser learns and comes a not bad appraiser. It depends on the individual appraiser.

 

[Sadie]

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.

Typically, if its a purchase, when there is a discrepancy, its the lower value that is considered in the LTV.

 

[Sadie]

I did a bunch of reviews for FNMA & Freddie during and after the Ginormous Foreclosure Periods, and mostly the jobs were actually forensic. They knew or suspected fraud, and wanted someone to point it out and prove it. I assume they moved forward with many of those cases, because some were off-the-wall outrageous outright FRAUD. Straw buyers, houses that didn't exist, recording doc numbers that were total fantasy, sold prices that had no basis in reality, disappearing freeways. I always found it interesting to pull the threads to see how the perpetrators were thinking. A disturbing common thread I often found was that the Buyer/Seller/Borrower was the brains and recipient of the fraud, and some appraiser for 'peanuts' (I assume) put his signature an those fraudulent reports. Duh. Stupid.

In my previous life, I did forensic accounting work, and it is really interesting to see how ppl think they're going to get away with their financial manipulations.

The forensic reviews I did were the ones that on the surface looked bad, but it just turned out there was very limited sales data for the area. Therefore lots of adjustments and far away comparables. However there were ones that were out and out misrepresentations of the property and borderline fraud. Not sure what happened to them because I saw one of the 'bad' appraisers teaching a class.
Imagine my surprise.

 

[Sadie]

I’m not sure I understand the resistance to signing a complaint. It would only be an issue for the complainant if it were signed in bad faith.

An investigator for my state had the same opinion until he became the investigator. The complaintants can get quite nasty and harass the complaint filer.

 

[Sadie]

You need to realize that state agencies, with few exceptions, cannot adjust staffing on the fly like a private company. That said, maybe a quarter of the complaints filed in CA are dismissed fairly quickly as there was no violation or a negligible violation. The licensee will never even know a complaint was filed. About the same number are closed with an educational call to the appraiser when there was a violation but it did not significantly impact credibility. The rest will get a letter from the state requesting their workfile. As to how long it takes from there is a workload issue. The ASC requires complaint resolution by the state within 12 months unless there are documented circumstances. Again, the state has limited flexibility on staffing, and it takes 6-12 months to transform a new hire appraiser into an investigator. (CA is a bureau, not a board, and uses credential-holding staff investigators.) These stats are consistent with what I was telling the public before I separated from the state. They may or may not be valid today.

As for fishing expeditions, the goal of the investigation is to determine if there were violation of law, not issue citations (or higher). Fishing expeditions would be foolish, be a waste of limited resources, and serve no purpose ... but I understand why licensees need to think this.

Oregon is similar to California. In the past, there may have been a deeper dive, but I think there is not enough staffing for that. Also F/F are sending the state their investigation results, and I think they need to be more closely scrutized. Thereby backing up the pipe line