Background checks again.

[Evincere]

The background check train has left the station. Resistance is futile.

And I'll bet you know absolutely nothing about the life cycle or inevitable fate of trains.

(72) Megastructures - Train Wreck - YouTube

Its long, but REALLY INTERESTING.

 

[Delta85]

Very good post Marion although I still don't think all taking the low fees are bad appraisers however I have no doubt that the credentials/qualifications/competency of the appraisers that are taking the low fees has been and is decreasing steadily in general or as a whole. Not good for that business at all with the state/federal government appearing to be watching closer. And I think this train is just now boarding....

I think there are many, many quality appraisers who work with AMC that try and do as good a job as they can. Jobs are scarce and there are too many appraisers competing for the available work.

Before the AMC boom there were plenty of appraisers with questionable ethics and competency banging out numbers for the local broker making those deals work. Many of which had resumes with impressive credentials and decades of experience.

 

[The Warrior Monk]

Before the AMC boom there were plenty of appraisers with questionable ethics and competency banging out numbers for the local broker making those deals work. Many of which had resumes with impressive credentials and decades of experience.

An many more didn't.

The "quality" of the reports I was seeing by the newly licensed, fresh-out-of-proprietary school crowd was truly frightening. Not only couldn't many of these people not even fill out a form correctly, but utterly lacked any concept of appraisal principles. Fortunately, a large percentage of that crowd is out of business.

 

[J Grant]

An many more didn't.

The "quality" of the reports I was seeing by the newly licensed, fresh-out-of-proprietary school crowd was truly frightening. Not only couldn't many of these people not even fill out a form correctly, but utterly lacked any concept of appraisal principles. Fortunately, a large percentage of that crowd is out of business.

Where do you get this information from? How do you know that a "large percentage of that crowd is out of business?"

Regardless, the main danger to valuation is the great number of appraisers who mistake the definition of value with a market value opinion. They reason that if a buyer and seller have a meeting of the minds , it is market value except in extreme cases or where concessions obviously impact price. I finally understand on a core level why it is a fundamental of appraising that an appraiser never offer an opinion of value unless they do an appraisal. ( every utterance even verbal by an appraiser addressing value is an appraisal and needs a work file, aka an opinion of value is specific to the conclusions and research in an appraisal ).

 

[J Grant]

I won't be sad to see one single low fee bottom feeder 48 hr TT appraiser leave, I don't care if they did good work...anyone lowering a fee to basement level hurt the profession and is a coward at heart . And how many can afford to do good work at the low fees.. a dwindling minority. No matter how "efficient" somebody is, that only goes so far. Doing a "real" appraisal takes time, slapping any old comp and generic adjustments /comments in takes far less time, but eventually will catch up with these people.. however, since that can take years, by that time this business environment will have destroyed the careers of many appraisers who tried to do it the right way, and polluted the collateral assessment of a large pool of loans.

 

[Evincere]

I won't be sad to see one single low fee bottom feeder 48 hr TT appraiser leave, I don't care if they did good work...anyone lowering a fee to basement level hurt the profession and is a coward at heart . And how many can afford to do good work at the low fees.. a dwindling minority. No matter how "efficient" somebody is, that only goes so far. Doing a "real" appraisal takes time, slapping any old comp and generic adjustments /comments in takes far less time, but eventually will catch up with these people.. however, since that can take years, by that time this business environment will have destroyed the careers of many appraisers who tried to do it the right way, and polluted the collateral assessment of a large pool of loans.

Whats all this got to do with background checks.

 

[Eli]

Whats all this got to do with background checks.

Dont some new reg/proposed reg have the states doing the background checks and haven't many of them already been doing them? Where does the employee/independent contractor line get crossed is what I would really like to know. Does anyone know where that line is? I wonder sometimes.. I still see backgrounc checks being a responsiblity of the licensing authority.

 

[Eli]

You know good cop/bad cop, good teacher/bad teacher, etc....etc.....

I don't ask my policeman for his background check and I don't ask my childs teachers for their background checks.

 

[J Grant]

Was a bit off topic, response to M's post...

I understand why lenders order bg checks, it's about PR and CYA should anything go wrong.

Of course a bg check does to separate good appraisers from bad and has little if any bearing on true diligence regarding competent appraiser selection.

 

[hastalavista]

I still see backgrounc checks being a responsiblity of the licensing authority.

California has had background checks since it started licensing in 1991.
But I have no clue if they have ever re-run my background since 1991.

Background checks for licensing make sense.
But, why shouldn't individual entities, who are considering engaging 3rd party vendors, have the ability to require a background check?

If I wanted to do contract work with the FDIC, I'd have to go through a pretty extensive background check.
I'd have no problem with that because they'd pay for it.
It seems to me that an entity that is regulated by the FDIC might want to emulate their regulator's practice and require a background check on vendors who would be doing the same kind of work for them as they would be doing if engaged by the FDIC.
The only problem I have is if they want me to pay for it.
And even then, if it were one of my very good clients, I would pay for it if I thought the alternative was to lose the client.

I think fighting the ability of a FRI to obtain background checks on its appraiser-contractors is a losing battle.
I do think advocating that the FRI pay for the background check has legs and might be something that could be worked into AMC legislation (sort of a bank shot; states can't tell FRIs what to do, but they can tell AMCs what to do).

But with rare exception, other than via AMC regulation (which I detest anyway), I don't see how the states can enforce something on federally regulated institutions.
And, I don't see it as a realistic endeavor to try to get this pushed at the federal level.