• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

A chance to change things in Ohio....

Status
Not open for further replies.

Paul Bellamy

Freshman Member
Joined
Jan 27, 2003
This is my first venture onto the AppraisersForum board. I am not an appraiser, but I work as a nonprofit director for an Ohio advocacy group that is concerned with mortgage lending in general, and subprime and predatory lending in particular.

I was struck by the number of appraisers who signed the Petition (appraiserspetition.com) to try to surface and deal with the widespread issue of "bubble numbers" that are being dictated by lenders who need a certain value to make the deal work. We see this as a very common (but not exclusive or universal) feature of the worst subprime and predatory lending in Ohio.

We are currently trying to prepare a list of witnesses for a hearing before the "Ohio Predatory Lending Study Committee", appointed by the Ohio legislature to investigate predatory lending abuses around the state and then charged to prepare suggestions for legislative and administrative reform.

It seems to me that a good number of you are concerned with the current state of the appraisal industry and would like to see some real changes that will put the ethical operator back in the driver's seat---as opposed to the "malleable" appraisers who are currently thriving with the lenders' acquiesce and support.

I am looking for potential appraiser-witnesses to go to Columbus to testify about the reality of the situation that is portrayed in the "Appraisers Petition."

I would be happy to have confidential discussions "off the board" with anyone who would be willing to contact me to explore who could testify, and how best to present a picture of the reality that prevails in Ohio today. Maybe that will cause the Ohio legislature to take action. At least some of the study committee members are ready to hear about this issue and one or two have some real power in the legislature.

Paul Bellamy
Lorain County Reinvestment Coalition
440 567-2670
[email protected]
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
All Ohio Appraisers on this forum need to respond to this post.

Mr. Bellamy,

If you do not get a good response very soon, please let me know. I'll do whatever I can to help you.

Pamela Crowley
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Mr. Bellamy,

If your organization is serious about dealing with this aspect of the predatory lending issue, there are some very definite and achievable goals you can help us accomplish:


For the lender side:
We can push for legislation that will require that copies of all valuation products used to underwrite loans are automatically provided to the borrower, whether those products include appraisals and appraisal reviews performed by licensed or certified appraisers, 'evaluations' provided by non-appraisers, computer-generated valuation products, commonly known as Automated Valuation Models (AVMs) in all their various forms; or Broker Price Opinions (BPOs) as performed by real estate agents and brokers. If the underwriting of a loan uses a valuation product of any type, a copy of that product should be provided to the borrower prior to the close of escrow so that they can make an informed decision. This aspect of the lending process should be made as transparent as possible so that the lenders can be held accountable.

We can also push for requirements that appraisers be engaged directly by the lender rather than through the use of third parties such as mortgage brokers or other loan originators. These parties may account for as much as 80% or more of the 'lender pressure' issue because they are commision compensated and don't get paid unless the package (including the appraisal) gets past the lender's underwriting process. Further, the engagement of appraisers by lenders should be further restricted to prohibit the loan origination side of the business from being involved with the process. Appraisers should be engaged by the underwriting staff at the lender, whose activities in turn should be carefully monitored and held to accountability standards. This kind of restriction can be done on a statewide basis but should also be presented to the Appraisal Subcomittee and the various federal agencies as a nationwide policy as well.

On the appraiser side:
We can push for rigorous and fair enforcement of existing appraisal regulations by the state appraisal boards, using due process of law and a professional appraisal and review standards as defined in the Uniform Standards of Professional Appraisal Practice (USPAP). Scofflaws should not be tolerated, nor should the wheels of this particular branch of the system grind too slowly. Every day that a crooked appraiser is allowed to pollute our gene pool they are doing drastic damage to our industry, to our clients, and to the public. This includes our state and federal governments.

We can push for restrictions against using non-licensed persons to provide appraisals and valuation services for mortgages. A real estate agent performing a BPO in order to get a listing is one thing; but a lender using an (unregulated and unaccountable) BPO or other unregulated valuation product as a cheap way to get around legitimate and necessary appraisal standards and due diligence is quite another. This heinous practice should be outlawed.

As you can see, we believe that the sources of these problems include unethical appraiser conduct as well as unethical lender conduct. This misconduct has been tolerated and ignored for far too long. Treating one side of this infection will do no good if the other side is left to fester. In addition to the predatory lending issue, this type of misconduct has other and even more widespread ramifications. The recent phenomena of collapsing Enrons, WorldComs and other corporate scandals may pale when compared to the BILLIONS at risk as a result of this type of misconduct.

As appraisers, we are held to a very high standard of professional and personal conduct. That standard of conduct should be rigorously enforced by the state appraisal board. The other parties with whom we deal with in these transactions should be held to comparable standards, which should also be rigorously enforced. If we can accomplish these two tasks, the misuse of appraisals and other valuation services for predatory lending purposes as well as normal lending activities will be drastically curtailed, if not abated.


George Hatch
 

Paul Bellamy

Freshman Member
Joined
Jan 27, 2003
Mr. Hatch,

Thanks for your thoughtful response. I am new to this "appraiser thing,"
and while I'm clear on the ramifications for all the players in mortgage lending, I dumbfounded as to how the problem got so bad without any evident insituttional response to clean it up.

Can you tell me which appraiser (or other real estate-related) trade groups are the most candid and committed to changeing the status quo? So far, the only website discussion of the problem from a trade group I've found is on the NAIFA site. Are there others?

We need a credible, representaive industry "voice."

Thanks.

Paul

Mr. Bellamy,

If your organization is serious about dealing with this aspect of the predatory lending issue, there are some very definite and achievable goals you can help us accomplish:


For the lender side:
We can push for legislation that will require that copies of all valuation products used to underwrite loans are automatically provided to the borrower, whether those products include appraisals and appraisal reviews performed by licensed or certified appraisers, 'evaluations' provided by non-appraisers, computer-generated valuation products, commonly known as Automated Valuation Models (AVMs) in all their various forms; or Broker Price Opinions (BPOs) as performed by real estate agents and brokers. If the underwriting of a loan uses a valuation product of any type, a copy of that product should be provided to the borrower prior to the close of escrow so that they can make an informed decision. This aspect of the lending process should be made as transparent as possible so that the lenders can be held accountable.

We can also push for requirements that appraisers be engaged directly by the lender rather than through the use of third parties such as mortgage brokers or other loan originators. These parties may account for as much as 80% or more of the 'lender pressure' issue because they are commision compensated and don't get paid unless the package (including the appraisal) gets past the lender's underwriting process. Further, the engagement of appraisers by lenders should be further restricted to prohibit the loan origination side of the business from being involved with the process. Appraisers should be engaged by the underwriting staff at the lender, whose activities in turn should be carefully monitored and held to accountability standards. This kind of restriction can be done on a statewide basis but should also be presented to the Appraisal Subcomittee and the various federal agencies as a nationwide policy as well.

On the appraiser side:
We can push for rigorous and fair enforcement of existing appraisal regulations by the state appraisal boards, using due process of law and a professional appraisal and review standards as defined in the Uniform Standards of Professional Appraisal Practice (USPAP). Scofflaws should not be tolerated, nor should the wheels of this particular branch of the system grind too slowly. Every day that a crooked appraiser is allowed to pollute our gene pool they are doing drastic damage to our industry, to our clients, and to the public. This includes our state and federal governments.

We can push for restrictions against using non-licensed persons to provide appraisals and valuation services for mortgages. A real estate agent performing a BPO in order to get a listing is one thing; but a lender using an (unregulated and unaccountable) BPO or other unregulated valuation product as a cheap way to get around legitimate and necessary appraisal standards and due diligence is quite another. This heinous practice should be outlawed.

As you can see, we believe that the sources of these problems include unethical appraiser conduct as well as unethical lender conduct. This misconduct has been tolerated and ignored for far too long. Treating one side of this infection will do no good if the other side is left to fester. In addition to the predatory lending issue, this type of misconduct has other and even more widespread ramifications. The recent phenomena of collapsing Enrons, WorldComs and other corporate scandals may pale when compared to the BILLIONS at risk as a result of this type of misconduct.

As appraisers, we are held to a very high standard of professional and personal conduct. That standard of conduct should be rigorously enforced by the state appraisal board. The other parties with whom we deal with in these transactions should be held to comparable standards, which should also be rigorously enforced. If we can accomplish these two tasks, the misuse of appraisals and other valuation services for predatory lending purposes as well as normal lending activities will be drastically curtailed, if not abated.


George Hatch
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
BEST OF LUCK to you sir PLEASE keep us posted as to how many a OHIO Appraisers respond. THANKS FOR TRYING
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Mr. Hatch,

Thanks for your thoughtful response. I am new to this "appraiser thing,"
and while I'm clear on the ramifications for all the players in mortgage lending, I dumbfounded as to how the problem got so bad without any evident insituttional response to clean it up.

Can you tell me which appraiser (or other real estate-related) trade groups are the most candid and committed to changeing the status quo? So far, the only website discussion of the problem from a trade group I've found is on the NAIFA site. Are there others?

We need a credible, representaive industry "voice."

Thanks.

Paul,

Follow the money. The lenders have the system right where they want it to be with appraisers in their sights as the fall guys - again (as with the S&L mess in the '80s). The 'institutions' are where the real fault lies.

Unfortunately, most of the trade groups are not doing much to clean up this mess.

Please let us know what you are looking for and what we can do to help you. I'm sure you've been reading here so you already know that most of us are very interested in promoting consumer education, ethical appraising, and actively pushing for the massive reforms that are badly needed.

Again, I, personally, will do whatever I can to help you help us. Many more here will, too. Let us know what you want. When is the hearing before the "Ohio Predatory Lending Study Committee"?
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Mr. Bellamy:

Please notice the number of 'hits' this thread is getting. Do not think that the lack of response is due to apathy or lack of interest.

In answer to your question as to the most appropriate professional group to bear reputable, reliable witness: I fear that there IS no single organization which will 'best' represent the concerns all appraisers have in this matter.

At present there is some effort being made to institute an 'umbrella organization' to that end.

The Appraisal Institute is a venerable organization but a tad ossified: and tends to focus more on commercial issues due to the primary makeup of the organization, I do none the less reccomend that you contact them. The NAIFA group, while well meaning, and possessing individuals who are very concerned about the issues your raise may not best represent industrywide concerns, either. There is a fledgeling Union group which may be able to provide some statistics, but it is my understanding that they do not have a balanced cross-section of members.

I honestly suspect that your efforts might better be focused on a few individuals from each organization and possibly some of the rural appraiser and other discipline groups, who would provide the insight and personal stories to support the concerns.

I personally reccomend George Hatch who posted on this thread as a contact, if he were willing to so serve. There are many others who expend time and energy fighting the percise issues you raise. It is apparent by the way certain individuals are treated by their state boards that issues exists even on a state level. The many references to the fox being in charge of the hen house on these forums may result in a catastropic situation that endangers not only my aged parents life savings but the very stability of our childrens future.

Pray continue your efforts, we will support them as best we can.

Best Regards!
 

Dale Smalley

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Florida
I an not a witness candidate but I can tell you Ohio has addition problems relating to declining markets is some of your cities. So to try and pin this one on appraisers succumbing to lender pressure will not be a strong case. But here is a hint follow the money trail.
 

Joker

Elite Member
Joined
May 28, 2002
Professional Status
Certified General Appraiser
State
Ohio
Paul,
I am an Ohio appraiser and am willing to discuss this issue with you. I am rather lucky in that I work primarily for local banks which do not put such pressure on their appraisers. However, weekly, I receive calls from mortgage companies desirious of placing an order, only if the property can be worth a predetermined amount. I may have been born at night, but not last night. I promptly turn those orders down. There are other companies who call and ask for a "pre-comp." The statement is made that an appraisal is needed only if the property is worth a certain amount. This irritates me to death. I do appraisals and I only do so AFTER having seen the subject property. If I give a value or a range of value, that IS an appraisal! If they want to order an appraisal and prepay (since I do not want my fee to be contingent upon reaching a predetermined value), I will be happy to do one. RARELY do I get a positive response. Usually, there's a hangup or I hear that every other appraiser does this for them, can I just give a ballpark range, yadda, yadda.

While we are on the subject of potential changes in Ohio law, I will give you another example of something that urks me. In Ohio, to charge for a manicure, haircut, or a host of other personal services, you MUST be licensed. However, any schmuck who wants to can do an appraisal and charge any fee desired. This includes BPO's for mortgage companies. I even know of a bank where a board member (not engaged in real estate) does many of the appraisals. Perhaps a place to start here is for Ohio to be a mandatory state, REQUIRING a certified or licensed appraiser for ALL fee apraisals.

Yes, I am eager to assist you and will call in the coming days. If you need additional appraisers, I will see what I can do for you. I think I know a few willing to eliminate some of this nonsense.
 

Tony in Ohio

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
I have responded to Mr Bellamy individually, but thought some of you regulars could point him to threads/liks that may give him some more ammo.

I am thinking of the financial troubles and banckrutcy some sub prime lenders have had due to bad loans, but I am sure you guys and gals can be creative.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks