AF New Appraisal Practices Board Appointment

[Karl]

"My message is simple: alternative valuation products are needed by our clients, and they want appraisers to perform them. Others have seen the need (notably BPOs) and have provided them to their clients for years".

Translated: IF we change BPO to APO we'll have a LICENSED NO!! Make that CERTIFIED LICENSED non bias third party individual "Hitting the number needed"

So cooperate or be dismissed!!

 

[Non Sequitur]

I’m going to Arizona on Friday to talk about Alternative Valuation Products.

What are Alternative Valuation Products? In a nutshell, the term is used to describe any product that provides a valuation to a lender, but is not intended to meet the guidelines or format of Fannie and Freddie. In other words-anything besides a 1004.

Ah yes-the venerable 1004. One of the most difficult challenges facing residential appraisers is that they have been forced down the cattle chute of conformity in what type of report they provide to clients. Maybe I’m making this statistic up-but I think that 93.675% of all residential appraisers provide a 1004 appraisal to any client-regardless of the intended use and the intended user. Lenders, lawyers, consumers-it’s always a 1004.

Does that make sense? Is the 1004 the all-purpose appraisal report format? I think not. The 1004 is intended for the needs of Freddie and Fannie. It meets their internal needs, their requirements. It’s not the all-purpose appraisal; but it is the default format for residential appraisals.

I have spoken to thousands of appraisers over the last several years. When I talk about the 1004 or forms in general – I mention that I think that forms have been the ruination of an industry; That residential appraisers have been pushed down a path that makes them really good form-fillers, but often stifles their skills at producing an appraisal. We have been focused far too long on the presentation layer – the report. We have been lead to believe that the report is the appraisal. We have lost sight (some of us at least) that it is the analysis, the process of determining the valuation of a given property that is our job. The form is merely the outcome of our appraisal findings. Form vendors have worked hard to make the form as efficient as possible and they have done a good job.

But at what cost? There are times when I am amazed that so many in our industry look to the 1004 and lament about appraisal fees that are dropping; that volume is down and that the industry is on the ropes.

But not all volumes are down. Last year, by some estimates, more than 12 million valuation products were completed by someone other than an appraiser. Say what? Exactly! These were alternative products that appraisers did not provide to their clients. These were products that for the most part could have been performed by appraisers. This is the alternative valuation product marketplace. Over a billion dollars is spent on these products. This is a billion dollars that could go into your pockets.

What are these products used for?

Here is the feedback from a top-ten lender on how they would like to use alternative valuation products:

1.As a replacement for BPOs in the valuation hierarchy for home equity origination.
2.An alternative to a URAR in non-agency (GSE) or portfolio loans (home equity, private client, consumer finance, community banking).
3.In default management as a replacement for one or all of the BPOs used throughout the process.
4.A replacement or alternative for current valuations in the loan modification programs.
5.Use in quality assurance programs to meet agency requirements.
6.As a second valuation for value dispute resolution and value reconciliation purposes.
I can already hear what you are saying beneath your breath. “The fees are too low.” “I can’t do those appraisals because I cannot meet USPAP requirements and provide that kind of report.” And worst of all-“these types of reports are destroying our industry.”

Nonsense.

My message is simple: alternative valuation products are needed by our clients, and they want appraisers to perform them. Others have seen the need (notably BPOs) and have provided them to their clients for years.

There’s a fundamental disconnect between those who advocate “alternative” products and the reality of the market.

First of all his numbers don’t add up, 12 million valuation products at one billion dollars is roughly $85 per pop. Given that BPOs and AVMs more than dominate the market how can competing with $35 BPOs and $20 AVMs at those numbers equal one billion in appraisers’ pockets? Are we to believe lenders would willingly pay three times more for an alternate product from an appraiser? Not in my lifetime.

I do agree with him that too many residential appraisers are form fillers and think the 1004 is the end all. But IMO this is the result of the last boom and the under trained noob horde that has all but taken over the residential side. IMO speed and greed has been the ruination of the residential side, not forms.

But even if forms, as Mr. Linne’ states, "have been the ruination of an industry” just what is the salvation? Well, if we go along with his line of thinking, more forms (described as alternative but forms they are) at a fraction of fees now charged for the forms that have been the “ruination” of our industry.

IMO what’s “nonsense” is the belief that lenders need alternative products which are, and let’s be honest, usually described as “just good enough.” The recent bust should have driven home the lesson of good due diligence, sadly it didn’t.

Lenders don’t need these alternative products, they want them like spoiled kids want to fill up on ice cream before dinner. Lenders dream of the day when they can pull a compliant valuation product with a few keystrokes just as they can now with credit scores. And I believe they will be able to one day, and that day will be the ruination of the industry.

What bothers me the most is that Mr. Linne' is now on a board that can make his thoughts and dreams reality. Heaven help the residential side of the industry.

 

[Lee Lansford]

Great idea--and after several hundred posts the appropriate answer will be as clear as mud!

If the truth must be known, you've entered into it.

 

[Don Clark]

Still wondering

If the truth must be known, you've entered into it.

I posted this on another thread:


Just wondering though .......Gary Taylor was just on the AQB. Did he leave that board or can there be dual assignments?

Current and Past Members of the Appraiser Qualifications Board
2010 Board Members
Gary Taylor, Chair
Rick Baumgardner, Vice Chair
Chad Campbell
Charles S. “Scott” Seely
Jeffrey F. Lagrew
Wayne R. Miller

Appraisal Practices Board (APB)
The APB is responsible for issuing Valuation Recognized Methods and Techniques which are intended to provide support and guidance to those who require knowledge of the approaches to an issue that are recognized and accepted as appropriate and effective. The APB represents the combined judgment of leading valuation professionals and is composed of five to seven members. Members of the APB can serve up to eight years on the Board (terms can be set at 1-, 2- or 3-year increments, at the discretion of the Boards Nominating Committee).

2010-2011 Board Members (to commence work on July 1, 2010)
Gary Taylor – Chair
Jay Fishman – Vice Chair
Guy Griscom
Alan Hummel
Mark Linne
Alok Mahajan
Jim Vernor​

 

[Michigander]

It would be nice to see some women on board. Sorry that didn't happen (unless Alok is a woman's name).

 

[Don Clark]

It would be nice to see some women on board. Sorry that didn't happen (unless Alok is a woman's name).

Rare as hen's teeth. Lot's of good/great women out there that could do the job, I agree.

 

[TJSum]

Appraisal Foundation Appoints Mark R. Linné, EVP at AppraisalWorld, to The Appraisal Practices Board: New Board to Issue Guidance to Appraisers on Emerging Valuation Issues

Trustees of The Appraisal Foundation, a congressionally authorized non-profit organization dedicated to promoting professionalism in appraising through the establishment of appraisal standards and appraiser qualifications, announced Saturday May 22, 2010 the appointment of Mark R. Linné to its newly established Appraisal Practices Board (APB).

In 2009, with the unanimous consent of The Appraisal Foundation Board of Trustees, it was agreed that a new board be established, similar in structure and composition to the already existing independent boards, the Appraiser Qualifications Board (AQB) and the Appraisal Standards Board (ASB). According to the Foundation:

The purpose of this third board is to issue voluntary timely guidance to appraisers on emerging valuation issues that are occurring in the marketplace. This guidance will be of assistance to appraisers, appraiser regulators and educators. The new Board will enlist the help of market surveys to identify issues that need to be addressed and will empanel small groups of volunteer Subject Matter Experts (SMEs) to draft the guidance for review and approval by the Board.
​

The need for this type of guidance was underscored with the onset of the declining real estate market. Many appraisers had not previously faced this type of market condition and the impact of foreclosed properties and short sales. Because a majority of state licensed and certified real estate appraisers do not belong to a professional society, they had limited access to guidance. * Untrue. Independent Professional Appraisers avail themselves of ALL professional courses offered across the U.S. including those offered by appraisal organizations.

Mr. Linné, who is the Executive Vice President of Education and Analytics for AppraisalWorld, Inc, had previously served a representative to The Appraisal Foundation’s Industry Advisory Council (IAC) and served on its Appraisal Form Task Force and Alternative Valuation Task Force. The Appraisal Practices Board is expected to begin meeting in July, 2010.

There’s a fundamental disconnect between those who advocate “alternative” products and the reality of the market.

First of all his numbers don’t add up, 12 million valuation products at one billion dollars is roughly $85 per pop. Given that BPOs and AVMs more than dominate the market how can competing with $35 BPOs and $20 AVMs at those numbers equal one billion in appraisers’ pockets? Are we to believe lenders would willingly pay three times more for an alternate product from an appraiser? Not in my lifetime.

I do agree with him in that too many residential appraisers think the 1004 is the end all. But IMO it’s the result of the last boom and the under trained noob horde that has all but taken over the residential side. IMO speed and greed is the ruination of the residential side, not forms.

But even if forms, as Mr. Linne’ states,” have been the ruination of an industry” just what is the salvation? Well, if we go along with his line of thinking, more forms (described as alternative but forms they are) at a fraction of fees now charged for the forms that have been the “ruination” of our industry.

IMO what’s “nonsense” is the belief that lenders need alternative products which are, and let’s be honest, usually described as “just good enough.” The recent bust should have driven home the lesson of good due diligence, sadly it didn’t.

Lenders don’t need these alternative products, they want them like spoiled kids want to fill up on ice cream before dinner. Lenders dream of the day when they can pull a compliant valuation product with a few keystrokes just as they can now with credit scores. And I believe they will be able to one day, and that day will be the ruination of the industry.

What bothers me the most is that Mr. Linne' is now on a board that can make his thoughts and dreams reality. Heaven help the residential side of the industry.

Is this the Appraisal World that has just come out with the "Comp Cruncher" product? If so, isn't this a major conflict of interest?

 

[Ken B]

Is this the Appraisal World that has just come out with the "Comp Cruncher" product? If so, isn't this a major conflict of interest?

Would appointing someone who believes the only proper appraisal is a "full" appraisal (whatever that is) result in a major conflict of interest?

 

[TJSum]

Would appointing someone who believes the only proper appraisal is a "full" appraisal (whatever that is) result in a major conflict of interest?

If he has a hand in setting policy, which could shift more flow towards his company, how can it not be a conflict of interest?

 

[panappr]

If he has a hand in setting policy, which could shift more flow towards his company, how can it not be a conflict of interest?

Only if you think that way.