Appraiser Independence Violation?

[hastalavista]

I lack time to pore through every page in Dodd Frank, TILA, Fannie etc, to find a link to their verbiage about appraiser independence/ lender selection of appraisers. The link I provided in post above is from Freddie Mac that a lender can not allow a RE agent to select the appraiser (paraphrasing, see link for their language.

My reasoning is not "tortured" at all. Of course a RE agent excluding a specific appraiser is a form of selection, and a lender permitting such is allowing the RE agent to participate in the selection of the appraiser. What if an agent excludes one appraiser after another until their pet favorite gets assigned ? Or agent excludes simply because an appraiser came in ""low" on a deal a year ago? Or they don't "like" an appraiser?

You miss the point, which is significant (both the "point" and the fact that you miss it).
Lenders, per the Freddie, are the ones who select the appraiser. The lender can decide who it wants to use. Any stakeholder can complain to the lender.
What if the appraiser is abusive? Do you think the lender is required to use an abusive appraiser in a transaction to "protect" the independence of the process?
What if the borrower requires a weekend inspection and the originally selected appraiser is not available on the weekends? Do you think the lender is forced to make the the borrower meet the appraiser on the appraiser's schedule?
The obvious answer is, "no". Now, the lender can decide to keep the original appraisal and tell the borrower to go take a hike. But, the lender can decide to cancel the assignment with the original appraiser as well (in the first case, that would be likely, in the second case, it is iffy: I had a borrower tell me he could only meet weekends on Monday. I'm out of town the next two weekends; i called the lender, the lender said, "OK, if you are available in three weeks on Saturday and can inspect the property, do it then." I said, "sure". When I gave the borrower the option, they were able to meet me on a weekday. But, the borrower certainly could have said "no" and the lender certainly could have found another appraiser.

If you are going to cite something to make your point, cite something that makes your point. Your citation in this case does not make your point; you have to contort it to fit with what you are trying to assert.
Otherwise someone is going to take your citation, try to use it to make a point, and lose. Not only lose the argument but perhaps lose a client.

Of course a RE agent excluding a specific appraiser is a form of selection, and a lender permitting such is allowing the RE agent to participate in the selection of the appraiser.

(My bold)
Now you are getting closer to how it works. It is up to the lender, not the agents. An agent (acting as an agent on behalf of their client) can request a lot of things from a lender. The lender is the one who makes a decision if the request is one that it decides to accept or reject.

 

[J Grant]

IF there is a legitimate reason an appraiser can not fulfill assignment in a timely manner, such as appraiser can not come out for 2 weeks, or on a weekend (well first of all one would assume appraiser and client would work that out), but If it's a case such as that would mean loan deadline would pass or such, and it is up to the lender at that point, and lender decides that since appraiser X can not fuflill assignment in a timely manner, they will choose appraiser Y, I can see where that can be a circumstance and a lender can keep a record for their file of why they did that.

I cite that what exists, I cant' cite things that don't exist simply to make my point. The verbiage in Fannie is what it is, it says under any circumstances. I did not write it so if you want to write to Fannie and point out they did not allow for time scheduling conflicts, please do so!

 

[J Grant]

What would an appraiser have to do or say to be labelled abusive? Note the agent typically tries to block an appointment prior to inspection, so what could an appraiser say that is abusive?

If an appraiser curses or verbally attacks an agent perhaps, but when has that happened?

 

[hastalavista]

"Q23. May a person on a lender’s staff who is not part of the loan production staff and does
not receive a bonus or commission based on loan closings provide an appraisal
management company a list or panel of appraisers to use for loans involving a
specified mortgage broker, real estate agent, or loan officer?
No person on a lender’s staff may provide an appraisal management company a list or panel
of appraisers to be used for loans involving a specified mortgage broker, real estate agent, or
loan officer. AIR specifically prohibits lenders from accepting appraisal reports completed by
an appraiser selected, retained, or compensated in any manner by mortgage brokers and real
estate agents. Mortgage brokers and real estate agents must not be involved in the selection
of appraisers for an approved panel or specific assignments under any circumstances. Please
refer to Section IV.A for further information regarding who is authorized to select and retain
appraisers. "

The above right from Fannie. Note they state ANY CIRCUMSTANCES, that would also mean the circumstance of selection by exclusion, since there are two basic methods of selection that exist, one is to pick a person, the other to exclude a person. I presume Fannie did not state that specifically because they they don't every form of gaming the system that might occur.

Selection by exlusion means the agent had a hand in selection and they are not the client, they have a vested interest etc

.

Requesting an appraiser to get the assignment is selection.
Requesting another appraiser is not selection. It isn't. The agent doesn't select the first appraiser and the agent doesn't get to select the second appraiser. The lender selects the appraiser and the lender does not allow those parties to make the selection. But certainly the lender has the ability to consider the reasons why a party requests another appraiser and can decide if that reason is valid and wants to proceed.
Even in the excerpt you cite, it is directed to "the lender's staff".
Lender, JGrant. It is up to the Lender. The lender determines.

Find another citation (they may exist) that says an agent is prohibited from requesting another appraiser if you want to make your point using a citation.

Why are appraisers supporting this in any way shape or form would be the question

It may be a question for you if you believe all appraisers have some inalienable right to appraise a property without question.
I can think of a dozen reasons why an appraiser would be questionable to the agents that are 100% legitimate.
You use the example of an agent who doesn't like an appraiser because the continually low-ball his/her sales. That isn't a good reason and if the lender was asked to change out because of that, that would be an issue.
What about the case where the appraiser is rude to the agents and borrowers? Would that be a reason to ask for another appraiser?
What about the case where the agent of the buyer discovered the appraiser was related to the seller? Would that be a reason to ask for another appraiser?
In either of those two examples, would the lender be within its right to re-assign the appraisal?

The citations you excerpt are to lenders and are designed to ensure that the lender, not any parties, are the ultimate decision-maker in selecting the appraisers. The lenders are required to ensure that the appraisals are done in compliance with the USPAP which means they must be done in an independent, objective, and impartial manner.
An agent who has a legitimate concern about a particular appraiser and raises it to the lender is not interfering with appraisal independence or taking control of the appraiser selection process.

Again, your general statement is just plain incorrect.

 

[J Grant]

Selection is done by selection and it is done by exclusion. I already cited 2 examples, I don't have all day to peruse the internet. If you want to find examples to cite for your position, then please provide them!

My view is that the regulations and verbiage are what they state: the lender selects the appraiser, not RE agents, not vested parties. You see it differently. Of course there may be an extenuating issue or extreme case of something involving an appraiser where I might agree that removal of an appraiser is warranted, I can't say that is not possible. The fact that an agent does not like an appraiser, or an appraiser came in "low" on a deal is not one of them

 

[hastalavista]

What would an appraiser have to do or say to be labelled abusive? Note the agent typically tries to block an appointment prior to inspection, so what could an appraiser say that is abusive?

If an appraiser curses or verbally attacks an agent perhaps, but when has that happened?

Now you are backpedaling.
Do yourself a favor: Stick with "If an agent tries to get rid of an appraiser because they think an appraiser won't hit the value, that is wrong and the lender should never cave to that" you are on solid ground.
When you say a request by an agent for another appraiser cannot be made, cannot be agreed to, and puts the agent in charge of the selection process, you are on thin air.

 

[J Grant]

You have cited nothing to support your position that a RE agent can select by exclusion.(saying they do not want appraiser Y who a lender selected to do the assignment) How is that not interfering with lender selection?

Fannie, Freddie etc state what they state. I cited what they state.

Perhaps pose the question to Fannie or other Agencies about selection by exclusion by a RE agent and see how they respond.

 

[hastalavista]

Selection is done by selection and it is done by exclusion. I already cited 2 examples, I don't have all day to peruse the internet. If you want to find examples to cite for your position, then please provide them!

I don't have to find anything to refute your position. Your citations don't support your absolute statement that "exclusion is selection" and certainly doesn't support your assertion that agents, who represent the buyer and the seller, cannot request another appraiser. And, doesn't support the conclusion that a lender cannot select another appraiser if the request has legitimacy to it.

My view is that the regulations and verbiage are what they state: the lender selects the appraiser, not RE agents, not vested parties. You see it differently.

No I don't, but evidently I cannot make it any plainer to you that selection by the lender is selection by the lender.

Of course there may be an extenuating issue or extreme case of something involving an appraiser where I might agree that removal of an appraiser is warranted, I can't say that is not possible. The fact that an agent does not like an appraiser, or an appraiser came in "low" on a deal is not one of them

Finally; the famous JGrant walk-back.

 

[J Grant]

I was trying to be polite and reasonable in engaging with you by saying of there can be an extenuating case. A drunk appraiser or the like. How is that back pedaling from my position? Unbelievable.

My position is the lender selects the appraiser, not a RE agent or vested parties, and at request I found and posted two agency's verbiage on it. I can't change their language/what they wrote . If you want their language to include selection by exclusion, ask them to comment on it, perhaps it needs an official comment. Exclusion is a form of selection, how it can the mandate that lender selects, and not agents/vested parties, not encompass the fact that exclusion is a form of selection?

If I have five different crayon colors to choose from and I eliminate (exclude) all but the yellow one, the exclusion was part of the selection process.

 

[hastalavista]

Unbelievable.

My thoughts exactly.

My position is the lender selects the appraiser, not a RE agent or vested parties, and that a RE agent , and I cited two agency's verbiage on it. I can't change their language or what they wrote .

You don't have to change their language. It is clear as written. The lender is responsible for the selection of the appraiser.

If you want their language to include selection by exclusion, sorry it's not in there, but since exclusion is a form of selection, how it could it not encompass that?

(my bolds)
It is you that want that language, not me. And you are right, it isn't in there.

I'll try this one more time to differentiate "exclusion" from "selection":
Q. Who decides to select the appraiser?
A. The lender.
Q. Can an agent select the appraiser?
A. No. Per Fannie/Freddie that is not allowed.
Q. Can an agent request a different appraiser for any reason?
A. Of course they can. Some reasons are illegitimate and some are not.
Q. Who determines if another appraiser should be assigned to the order?
A. The lender.
Q. If the agent requests another appraiser, does the agent get to select that appraiser?
A. No. The lender selects the appraiser.
Q. What if the agent, buyer, or borrower doesn't like the lender's selection, has asked for another appraiser, and the lender refuses? What can the agent do?
A. Go find another lender or accept the lender's decision.
Q. But how can the agent select the appraiser, even if there is a legitimate reason to do so?
A. The agent cannot select the appraiser under any circumstances. Only the lender can select the appraiser.