Dodd-Frank, Interim Final Rule, or GSE Appraiser Independence?

[Bob Ipock]

1) AMC does not love you any more so they just stop calling you. No need to remove you from their list of good boys or add you to the bad boy list.

2) Why would any appraiser want to work for a client that does not want to use them?

NC has it in the board rules......but no action has been taken against any AMC.

21 NCAC 57D. 0311 Removal of an Appraiser from an Appraisal Panel

If an appraisal management company decides to remove an appraiser from its list of
qualified appraisers, the appraisal management company shall notify the appraiser in writing of
the reason for removal. Such notice shall be sent to the appraiser by registered mail, return
receipt requested, to the appraiser’s address business address contained in the records of the
Appraisal Board. The notice shall include a description of the appraiser's illegal conduct,
substandard performance, or otherwise improper or unprofessional behavior, or of any violation
of the Uniform Standards of Professional Appraisal Practice or state licensing standards. It shall
also notify the appraiser of any dispute resolution process that the appraisal management
company may have in place through which the appraiser may dispute the removal.

 

[Howard Klahr]

... But as a practical matter a lender or AMC cannot manage 56 different policies. So policy and processes need to be standardized. It is also just good business practice.

Really, the insurance industry seems to not only manage, but in fact continues to defend continuing the current process of state regulation of their industry. It seems that regulation at the state level is possible at least for someone.

 

[Elliott]

Denis,
Do you really think that an AMC excluding you wrongfully could ever be discovered or enforced? I don't expect anyone in this industry to speak for me, defend me, or protect me. The thousands of regulators and bureaucrats surrounding us are there to move papers around their desk, get promoted, and calculate their retirement benefits.

 

[GCJim]

Todd is correct. But as a practical matter a lender or AMC cannot manage 56 different policies. So policy and processes need to be standardized. It is also just good business practice. And a lender or AMC must be able to defend their decision to regulators. If they don't have a fair and transparent process they put themselves at risk.

The AMC expert speaks, heheheh. How transparent.
What a complete bunch of GARBAGE company-speak. Is this what you are advising your AMC 'clients' in your finest buzz words? 'Transparency' my AZZ. This is all a line of complete crap. If they want transparency they can certainly be first in line and start insisting on full disclosure of where the MONEY really goes on the HUD-1 for the 'appraisal fee'.
As a practical matter, AMCs cannot and do not manage appraisers or appraisals. Appraisals are more EXPENSIVE now, and likely take LONGER to the consumer than ever.
They (AMCs) manage the siphoning (theft) of fees for the new 'profit center' (now THERE'S a buzzword), and that's it. That is ALL they do.

 

[Mary Tiernan]

Denis

A few web sites with some reference to the specific rule you question:

https://www.samco-AMC.com/dodd-frank-act-and-federal-reserve-interim-final-rule

The above is an AMC quick reference page.

Below is a link to the Fannie Mae Appraiser Independence Requirements, linked here via OREA California. See paragraph B(8).

http://www.orea.ca.gov/pdf/FNMA-AIR.pdf


and here is a list of Q&A from Fannie MAe with Question 24 being of interest to you

https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/hvccfaqs.pdf

 

[Mary Tiernan]

The Appraisal Institute provides a state AMC Model Act here

http://www.appraisalinstitute.org/newsadvocacy/downloads/modelprovisionsamc.pdf

with reference to removal of appraiser. Many states have included it.

But, I believe the wording is only available on Fannie Mae AIR, Appraisal Independence Requirements, which are not really laws, just recommendations by Fannie.

 

[DTB]

The passages might as well have included that all appraisers get a free puppy and a handful of balloons. woohoo


Just cordon off the "special" appraisers in the system and when a "special" assignment comes up, then we'll call them. If a tree falls...

 

[hastalavista]

Denis,
Do you really think that an AMC excluding you wrongfully could ever be discovered or enforced? I don't expect anyone in this industry to speak for me, defend me, or protect me. The thousands of regulators and bureaucrats surrounding us are there to move papers around their desk, get promoted, and calculate their retirement benefits.

For the record, I bring up this situation not because it affects me personally: I'm working on a project as a consultant and this is an issue that is being examined.

As to "wrongful exclusion", I don't know who would be the ultimate arbitrator of that finding.

I do think this:
I do support notification to the appraiser if they are excluded from from an otherwise approved or open panel.
I think that notification should be made by the entity who makes the decision; if it is the lender, the notification can come through its agent (the AMC), but the lender should be identified as the decision-maker.
I think the reason for the exclusion must be stated; if linked to specific assignments, those assignments need to be listed and the specific reasons need to be stated.
I think an appraiser can be excluded for reasons other than appraisal issues; for example, if I am unprofessional in my business dealings with a client or its agent, there should be no expectation that the client must continue to use me as an appraiser (this works both ways; I wouldn't work with an abusive client, they shouldn't have to work with an abusive appraiser); in such cases, the reason needs to be cited.
Finally, I think the appraiser should have the opportunity to rebut the accusation and have the original, deciding entity reconsider; that reconsideration should contain a comprehensive response to the appraiser's rebuttal. This way, everything is on the record.

A system using the above guidelines may not stop wrongful exclusions from occurring. It would make them more onerous to execute and more risky. It would not be difficult for a regulatory entity to review the data to see if certain patterns exist.
An easy example would be this:
Appraiser is excluded from a list because of an alleged poor appraisal.
Regulator reviews original file and sees the original assignment was for a refinance.
Regulator reviews original appraisal and replacement appraisal. Regulator concludes the original appraisal wasn't that bad, and the replacement appraisal was actually worse.
Regulator notes that replacement appraisal satisfies refinance LTV, while the original appraisal did not.
Regulator asks for additional files where replacement-appraiser was used as the 2nd opinion of value.

The question the regulator is trying to determine is if there is a pattern occurring? A one-off may be due to coincidence. A pattern, however, shifts coincidence over to suspicious. Suspicious activity by a regulated financial intuition is a problem. That creates the reason to widen the investigation and dig deeper in an audit. A potentially costly event for the regulated institution even if nothing is amiss, and a significantly costly event if something is amiss.

If this was the process, exclusionary lists would still exist. But it would be in the institution's best interest to ensure that exclusions are made for legitimate reasons and not illegitimate ones. It further increases the risk if lenders use the practice to "shop" appraisers/appraisal values.

And, in the end, "risk" (IMO) is why the appraisal process for residential mortgage lending is broken. Currently, there is no significant risk for using poor appraisals: even with the so-called buyback push; we've read enough anecdotal stories on this forum to conclude that many of the push-back reviews (USPAP and non-USPAP) are of poorer quality than the original appraisal, and are completed with an apparent bias and not objectively.

Lenders are responsible for the quality of the appraisal reports they obtain.
Lenders have little risk in regards to not diligently obtaining quality (even minimum-standards quality)... although there appears to be some shifting in this stance (I think some lenders are aware that their risks are increasing).
So, enforce the existing regulations and make it a meaningful regulatory risk for lenders not to carry out their existing obligations and ensure that quality is one of the primary criteria used for appraisal assignment/review decisions.
The objective is not to penalize a lender for missing a one-off. The objective is to ensure that there is no pattern of practice which undermines the system: which is consistent with the mission of most bank/lending regulators.
Monitoring the process of exclusionary lists can be a useful tool in the overall regulatory oversight scheme.

 

[hastalavista]

Denis

A few web sites with some reference to the specific rule you question:

https://www.samco-AMC.com/dodd-frank-act-and-federal-reserve-interim-final-rule

The above is an AMC quick reference page.

Below is a link to the Fannie Mae Appraiser Independence Requirements, linked here via OREA California. See paragraph B(8).

http://www.orea.ca.gov/pdf/FNMA-AIR.pdf


and here is a list of Q&A from Fannie MAe with Question 24 being of interest to you

https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/hvccfaqs.pdf

Thanks, Mary!! :new_smile-l:

 

[J Grant]

Good post, Denis, hope the ideas get implemented.