Appraisal Institute Accused of Covering Up Sexual Harassment and Test Flaws

[George Hatch]

Chief Appraiser at a lender (not an AMC) makes a point that gets hotly refuted whenever I make it.

I literally told you so, and got (falsely) called an AMC shill for doing it. By the usual morons.

However, while it's easy to demonize the AMCs, the pressure on price, turn time, and quality is out of their control for the most part. The AMCs, believe it or not, work on very thin margins and are at the beck and call of the lenders they serve, engaged in cutthroat competition against other AMCs for appraisal volume. Lenders typically work with multiple AMCs, and each is scored against the others based on turn time, price, and quality. This competitive pressure on AMCs translates into downward pressure on the cost and turnaround time for appraisals, while quality often becomes mere ‘safety theater’—pseudo-quality control.

To whatever extent these AMC-using lenders are applying these pressures to these AMCs at all, it directly indicates as to how these same lenders will act if/when further prohibitions are imposed on their conduct with respect to breaking up the bundled fee model. "They won't care about the fee" is not one of the reactions that we can reasonably expect of these lenders.

 

[jay trotta]

 

[Mejappz]

Of course, I’ve been calling for this for years. But sadly, it’s far easier to change a pronoun every two years to cash in than to confront real problems. As Hegel said: The cunning of reason. You can hide your crimes only for so long before they’re exposed. All of this could have been prevented. Honestly, the mortgage broker days feel like the good old times compared to this disastrous system—set up by idiots. So sad.

 

[Mejappz]

Problems are piling up at the Chicago-based Appraisal Institute, an influential group in the real estate industry because of its key role in property valuation.

They include a sexual harassment lawsuit filed by a former CEO, a lengthy investigation published by The New York Times and, according to the ex-CEO, entrenched business practices that allegedly undermine the integrity of appraisals done for homes and commercial property.

"Appraisers are supposed to have a special role in the real estate system," said Cindy Chance, who from September 2023 to September 2024 was the CEO of the 16,000-member group headquartered on Madison Street in the Loop. "They’re supposed to have the independence to collect information and make a professional judgment about the value of a property irrespective of what the lender or the homeowner or the real estate agent wants the value to be."

Because of what she alleges is entrenched "self-dealing and corruption" at the Appraisal Institute, Chance said, "There's not the security in our mortgage system that is necessary." That is, buyers of homes and commercial property may be receiving an estimate of value that is flawed, she told Crain's in an interview today.

Chance's allegations about the organization's practices are contained in a lawsuit filed May 8 in Cook County Circuit Court that also includes claims of sexual harassment against the board's current vice president and past president, Craig Steinley. (Read the complaint below.)

Chance said in her interview with Crain's she was told by institute officials that she was being brought in to "ensure that they made the changes needed to have that security" in the real estate valuation system, but she soon came to believe "that was all window dressing. They didn't want any change in their culture."

The former CEO told Crain's she believes the threat to a clear, unencumbered valuation process is so great that she wants the Illinois attorney general's office to investigate the group's practices.

Chance's allegations come on the heels of a lawsuit filed in March by the institute's former director of education and publications — someone hired by Chance during her tenure — that alleges the Appraisal Institute knowingly and fraudulently provided false scores on test results in the real estate appraiser certification process.

The claims from Chance and the former education director, Alissa Akins, aim at the core of the Appraisal Institute's mission, which it describes on its website as serving as "the go-to resource for the valuation profession" and "the gold standard in credentialing."

The Appraisal Institute's communications director, Bill Garber, responded to Crain's request for comment with a reiteration of a statement posted at the top of its website by its president, Paula Konikoff, that says: "The leadership and staff are fully committed to the highest ethical and professional standards—that is core to who we are and how we work every day."

Konikoff, a Los Angeles-based author on appraisals, wasn't immediately available to comment. Steinley, who heads an appraisal firm in Rapid City, S.D., did not immediately respond to a request for comment.

Steinley was the subject of a May 8 New York Times story where reporter Debra Kamin laid out claims of alleged sexual misconduct toward at least seven women over a 10-year period, including groping of buttocks and sexually suggestive, too-long hugs. Steinley told the Times he denied the claims.

Five days after the story appeared, Konikoff posted on LinkedIn that Steinley "has decided to step away from his public AI officer appearances, effective immediately. He said he makes this choice out of consideration for and in the interest of not being a distraction to the important and ongoing work of the organization and will cooperate with any investigatory effort." On this topic, too, the Appraisal Institute's Garber replied to Crain's by reiterating this statement.

The Times' description of the Appraisal Institute condoning an "old boys" culture echoes the portrait Kamin painted of another Chicago-based real estate group, the National Association of Realtors, in August 2023. It was followed by two successive presidents resigning and the CEO retiring early and being replaced with a new one charged with righting the ship. The Appraisal Institute is in part an outgrowth of NAR, although from decades ago.

Both Steinley and the Appraisal Institute are defendants in the lawsuit Chance filed earlier this month, which alleges he sexually harassed her and undercut her authority as CEO and that institute officials steadfastly protected business practices that harm consumers. Chance is represented by Anita Mazumdar Chambers of the Employment Law Group in Washington and Thalia Pacheco of Workplace Law Partners in Chicago.

The alleged harm, which the complaint mentions and Chance spoke about with Crain's, lies in the growing role of appraisal management companies at the institute, a relationship she told Crain's "is not for consumers' benefit."

An outgrowth of the housing crisis of the early 2000s, appraisal management companies, or AMCs, are there to provide a buffer between a mortgage lender and an appraiser, to reduce lenders' ability to pressure appraisers to come up with valuations that artificially support a mortgage value.

But Chance wrote in a post on the organization's website in 2024 that "AMCs have created a race to the bottom in terms of fees paid to professionals and time spent on appraisals. Why? Because there was money to be made in being in the middle and there was nothing to stop AMCs from raising their fees while they reduced the fees they paid to appraisers. The public is not aware of this because AMCs do not need to disclose their fees—something the Appraisal Institute has long supported. The regulatory oversight of AMCs appears inconsistent and lacking in protections for the consumer."

This, Chance told Crain's today, is a larger issue than her sexual harassment case. The dispute between her and the institute, she said, "isn't a story about sexual harassment, it's a story about the security of our mortgage system, the biggest wealth creator that individuals have, and whether the valuations they're relying on are done by the best professionals." The existing structure, she believes, "is too insular. It's so important that an independent valuation reflects real value in the marketplace."

A former executive with the Urban Land Institute, Chance started work as the Appraisal Institute's CEO in September 2023, moving from Washington, D.C., to an apartment on North Michigan Avenue. A big part of her charge, she said today, was reworking the group's training programs, which studies had found to perpetuate racial bias in appraised home values, because appraisers traditionally picked their own trainees, informally passing along inequitable standards for valuation.

 

[Mejappz]

“Professional appraisal organizations are working to better understand where current-day housing inequities stem from and what can be done to combat them,” a previous AppraisaI Institute president, Rodman Schley, told Crain's in 2021. Two years later his successor, Steinley, told Crain's that eliminating inequality in appraisals “is a priority for the Appraisal Institute." The group had for several years focused its attention on “ensuring unconscious bias doesn’t play a role in appraisals,” Steinley said at the time.

Chance said today that when she started with the group she believed that "it's impossible to address the root causes" with the existing staff. In her first few months at the 100-person headquarters office — about half of whom are remote workers — she cut the staff by about 15%. She told Crain's at the time that "this is the beginning of a long series of changes we'll make."

Among them was attempting to reduce the influence of AMCs.

Chance's lawsuit alleges institute officials dug in their heels at suggestions of change. "I tripped a wire," Chance told Crain's today, "when I raised an alarm about something they didn't intend to change."

Over the next several months, the lawsuit alleges, institute officials blocked her from talking to the media, shortcircuited talk about sexual harassment claims against Steinley and undermined efforts at enhancing the diversity of appraisers' ranks. It was all, she said, "part of a culture that they think is fine."

After she was fired in September 2024, the lawsuit alleges, officials told others she was fired for embezzling $1 million during her yearlong tenure, a claim she denies. The complaint includes a claim for defamation related to these and other comments officials allegedly made related to her termination.

"It's toxic," she told Crain's. "Never in my career have I seen anything like it."

https://www.chicagobusiness.com/residential-real-estate/troubles-mount-real-estate-nonprofit-appraisal-institute?share-code=17472555547461665-196d1112e7e&utm_id=gfta-ur-250514

 

[Zoe]

“Professional appraisal organizations are working to better understand where current-day housing inequities stem from and what can be done to combat them,” a previous AppraisaI Institute president, Rodman Schley, told Crain's in 2021. Two years later his successor, Steinley, told Crain's that eliminating inequality in appraisals “is a priority for the Appraisal Institute." The group had for several years focused its attention on “ensuring unconscious bias doesn’t play a role in appraisals,” Steinley said at the time.

Chance said today that when she started with the group she believed that "it's impossible to address the root causes" with the existing staff. In her first few months at the 100-person headquarters office — about half of whom are remote workers — she cut the staff by about 15%. She told Crain's at the time that "this is the beginning of a long series of changes we'll make."

Among them was attempting to reduce the influence of AMCs.

Chance's lawsuit alleges institute officials dug in their heels at suggestions of change. "I tripped a wire," Chance told Crain's today, "when I raised an alarm about something they didn't intend to change."

Over the next several months, the lawsuit alleges, institute officials blocked her from talking to the media, shortcircuited talk about sexual harassment claims against Steinley and undermined efforts at enhancing the diversity of appraisers' ranks. It was all, she said, "part of a culture that they think is fine."

After she was fired in September 2024, the lawsuit alleges, officials told others she was fired for embezzling $1 million during her yearlong tenure, a claim she denies. The complaint includes a claim for defamation related to these and other comments officials allegedly made related to her termination.

"It's toxic," she told Crain's. "Never in my career have I seen anything like it."

https://www.chicagobusiness.com/residential-real-estate/troubles-mount-real-estate-nonprofit-appraisal-institute?share-code=17472555547461665-196d1112e7e&utm_id=gfta-ur-250514

I believe her. I think they are knee deep tied to AMCs and probably everything else she was trying to change. Sexual whatever included. When some of your members run AMCs, your hands are kind of tied. They didn't want changes she was trying to change including internal affairs. If she embezzled that kind of money, they would be in court.

A judge would be making that decision or a jury. Everybody would be on that including IRS, FBI, etc. They would not have a choice but to go to court. They would not be able to make that call. The govt would bring charges against her.

There would be a paper trail on that money. I don't think they operate on a cash basis.. There would be a paper trail. It has to come out of some account. Maybe they had a sex kitty piggy bank. LOL

I am being facetious. It is not funny to me. I don't believe she embezzled that money. IRS and FBI who knows who else would audit all their accounts.