3.6 Crunch Time

[chad hampton]

USPAP is worthless in todays valuation world. Should be scrapped.

There is no reason that 100% of a lender's valuation products aren't being performed by appraisers. If lenders want some garbage BPO type product, appraisers should be the ones doing it. If they are ok with anyone performing the appraisal inspection, then USPAP and state laws should be changed to allow the appraiser to send their unemployed cousin out to do the appraisal inspections.

This was the arguement appraisal groups made 15 years ago when BPO laws got changed to allow agents in NC to do them for banks. Appraisal laws do not permit appraisers to compete in this market space. Lenders told us they wish they could go to appraiser's for 100% of their valuation needs.

So yeah, this profession has some problem. Like my first USPAP instructor said 25 years ago, the value of this license is that when a bank needs a value, you are the one they have to come to. So protect that at all costs. He sure was right.

 

[chad hampton]

We have the fox guarding the hen house now. I think the disconnect is that some think the GSE are moral, ethical bodies. I think of them as thousands of the country's most unethical loan officers wrapped up into 1 giant company. The idea they want honest valuations is comical. Hell, if it were up to them, they'd have loan officers doing all their appraisals. They want the appearance of honest valuations while pushing through every loan they can.

It's smoke and mirrors. Snake oil. Don't feel bad if you fall for it. Most of the country is gullible too.

 

[George Hatch]

But the well-being of lenders and AMCs is clearly relevant to their decision-making. As is creating more risk for the taxpayers.

I don't think anyone other than an appraiser could imply some expectation for impartiality or objectivity to any party other than the appraisers who assert that attribute in their day job.

I expect the borrowers will advocate for their own economic interests​

I expect the RE agents will advocate for their own economic interests​

I expect the Mtg Bkrs will advocate for their own economic interests​

I expect the Lenders will advocate for their own economic interests​

I expect the GSEs will advocate for their own economic interests​

I expect the politicians will advocate for their own economic interests​

​

I expect the appraisers will advocate for their own economic interests, but not for anyone else's​

If you expect differently than that expectation might conflict with your own observations over however many years you have been involved in this business.

 

[Surf Cat]

isolated from the principle of change" isn't a thing, particularly when the reference to appraisers keeping up with changes in the marketplace has been explicitly stated in USPAP from the outset. (SR1-1a).

Appraisal waivers and Property Data Collectors are not bound by USPAP.

Eligibility for appraisal waivers and inspection based appraisal waivers have been expanded, which means more loans can move forward without a full appraisal. This better serves the lender. Home borrowers, and the rest of the taxpayers? Not so much.... as evident in the aftermath of the Great Recession.

 

[George Hatch]

USPAP is worthless in todays valuation world. Should be scrapped.

There is no reason that 100% of a lender's valuation products aren't being performed by appraisers. If lenders want some garbage BPO type product, appraisers should be the ones doing it. If they are ok with anyone performing the appraisal inspection, then USPAP and state laws should be changed to allow the appraiser to send their unemployed cousin out to do the appraisal inspections.

This was the arguement appraisal groups made 15 years ago when BPO laws got changed to allow agents in NC to do them for banks. Appraisal laws do not permit appraisers to compete in this market space. Lenders told us they wish they could go to appraiser's for 100% of their valuation needs.

So yeah, this profession has some problem. Like my first USPAP instructor said 25 years ago, the value of this license is that when a bank needs a value, you are the one they have to come to. So protect that at all costs. He sure was right.

That's downright silly. Of course there's a reason for them not using conventional 1004s for every transaction. Time and money.

USPAP does allow appraisers to send out non-appraisers to do the fieldwork. Always has. The USPAP requirement is for SR-2 disclosure of did/didn't personally inspect, not for SR-1 development. It's the users who required appraisers to personally inspect, not USPAP.

 

[J Grant]

"apathy" doesn't imply any superior moral justification than "malice". Either way, the well being of appraisers is irrelevant to their decision making.

In most areas of human civilization going back to biblical times, malice, sure as heck, was looked at as immoral. In business terms, a better word then immoral might be unethical.

Judging by the pattern of events, which are too consistent in trajectory to be random or the result of apathy, the harm done to appraisers was relevant to their decision-making. They had to know that reducing volume via waivers and allowing a massive influx of non-appraisers to do the "data collection" would cause severe economic displacement and harm to appraisers. Which falls in line with their turning a blind eye to AMC fee predation. They sure moved fast to protect RE broker fees, so I don't buy it that fees are not their concern. Their agenda protected the fees on the AMC side

I do not see it as personal malice. I see it as a calculated decision to make appraisers expendable in order to get the money that used to flow to appraisers diverted to other parties. A side benefit also includes giving more control of the valuation to vested interest parties and middlemen.

 

[chad hampton]

I know, USPAP only said when there is an inspection it was considered significant assistance and needed to be done under the certified appraiser's direct supervision.

There will always be a need for a product when you can't inspect the property. Makes sense.

 

[George Hatch]

In most areas of human civilization going back to biblical times, malice, sure as heck, was looked at as immoral. In business terms, a better word then immoral might be unethical.

Judging by the pattern of events, which are too consistent in trajectory to be random or the result of apathy, the harm done to appraisers was relevant to their decision-making. They had to know that reducing volume via waivers and allowing a massive influx of non-appraisers to do the "data collection" would cause severe economic displacement and harm to appraisers. Which falls in line with their turning a blind eye to AMC fee predation. They sure moved fast to protect RE broker fees, so I don't buy it that fees are not their concern. Their agenda protected the fees on the AMC side

I do not see it as personal malice. I see it as a calculated decision to make appraisers expendable in order to get the money that used to flow to appraisers diverted to other parties. A side benefit also includes giving more control of the valuation to vested interest parties and middlemen.

My guess is that everyone including the govt knew from the outset that reducing demand for services would hurt appraisers. And that diverting to AMC engagement and the bundled fee would hurt appraisers. It appears to me that the damage was wholly irrelevant to their decision making.

What I don't believe is the idea that the lenders have somehow been unaware of how the AMCs operate when it comes to appraiser selection and engagement. That the AMCs have somehow deceived the lenders into operating this way against their knowledge, consent, enablement and encouragement.

 

[George Hatch]

I know, USPAP only said when there is an inspection it was considered significant assistance and needed to be done under the certified appraiser's direct supervision.

There will always be a need for a product when you can't inspect the property. Makes sense.

There you go again. USPAP never said that, either.

I think you should seriously consider refraining from stating what you think USPAP ever said or required, because most of these comments have been factually incorrect.

 

[Surf Cat]

The profession (if that what this still is) has allowed its own value proposition to be weakened by regulatory creep, product segmentation, and client demands that favor convenience over independent judgment.....this has nothing to do with USPAP.