Evaluations & USPAP - Question from a bank staff appraiser

[Ricky LaFleur]

It is frustrating to hear the appraisal boards ripping an appraiser for not defining the neighborhood description how they arbitrarily would have while apparently not recognizing that evaluations have only taken hold because of the "cost prohibitive" nature of a full blown appraisal, as the lenders like to call them. For a state to make it more difficult for an appraiser to perform evaluations is really speaking out both sides of its mouth. Usually I see a bank employee doing evaluations. Don't think I've ever been asked to complete one.

 

[George Hatch]

It is frustrating to hear the appraisal boards ripping an appraiser for not defining the neighborhood description how they arbitrarily would have while apparently not recognizing that evaluations have only taken hold because of the "cost prohibitive" nature of a full blown appraisal, as the lenders like to call them. For a state to make it more difficult for an appraiser to perform evaluations is really speaking out both sides of its mouth. Usually I see a bank employee doing evaluations. Don't think I've ever been asked to complete one.

I agree with that completely, and I consider it a gross overreach on their part to impose additional requirements on the assignment that the user never asked for.

The argument I would make is that the expectations for an eval-level SR1/SR2 are different than the expectations for an FRT/GSE type lending assignment. There is no call for a state board to be engaging in any creative dance interpretation as to exactly where lie the minimums for any given assignment. The issue of "how much is enough" has already been explicitly addressed in the SOWR:


The operative term therein is "for similar assignments", which does not mean "for all assignments" or anything close to it. There is a distinction to be made between the different types of assignments that a client or user might choose to use. If they think the BPO-level SOW is sufficient to their usage when an unlicensed individual is performing it then that SOW doesn't somehow become automatically insufficient for their use just because an individual holds a license. The licensee still has to hit the housekeeping requirements in SR1/SR2 but that isn't some onerous burden that's going to cost the individual a lot of time/effort.

I'd argue that point in front of any appraisal board in the nation and I'd direct my comparisons to what the appraisers on these boards do in their own day job - they don't do one-size-fits-all for every assignment. They adjust to the use/user at hand. As is intended in our standards.

 

[Mejappz]

t is frustrating to hear the appraisal boards ripping an appraiser for not defining the neighborhood description how they arbitrarily would have

That's minor compared to the serious issues these rogue boards are involved in. In the last two months, we've seen appraisers face disciplinary actions for USPAP violations—some for not writing notes on paper, while others failed to mention a ditch filled with dirt that was supposedly a pond. They engage in these practices while disregarding their state laws. I suppose for them, the ends justify the means.

 

[Ricky LaFleur]

That's minor compared to the serious issues these rogue boards are involved in. In the last two months, we've seen appraisers face disciplinary actions for USPAP violations—some for not writing notes on paper, while others failed to mention a ditch filled with dirt that was supposedly a pond. They engage in these practices while disregarding their state laws. I suppose for them, the ends justify the means.

I'm sure there may be worse things going on than the example I gave. I suppose if the end goal is to run off anyone with common sense, they may be achieving what they set out for. I would think a better intent for being in those positions would be to help the appraisers coming before them become better at what they are licensed to do, rather than collectively playing judge with no jury. I knew a few who were quite helpful in the past but got replaced over time. More recently, I've called the state board to ask for help in understanding certain issues, but they specifically will not provide any insight as they don't do that. "Okay... so you don't want to help an appraiser who is trying to comply with how the board will interpret the rules, you're just interested in arbitrarily enforcing the rules as you see fit on that particular day?... Sure, sounds good."

 

[Non Sequitur]

That is my mentor (on my CR). He told me recently at a USPAP class that I should get into "Evaluations" on Commercial Property. I said, "Mike, why did I go through all the classes, experience, that difficult exam etc. to earn my CG then if a licensed CG is not necessary on these multi million $ properties. He didn't have an answer for me, but I knew it already, based on who i know at that "age" in the areas covered his territory. Multiple retirement income streams, eligible for social security, etc. It is OK to "dabble" if you don't need an actual income from appraisal. Appraising for fun is different from trying to earn a living. As I learned when the CG I was supposed to replace at the firm wouldn't retire until the state took his license (happened years after I left). Nobody realized I did that guy's work for him FOR YEARS. I had much respect for him. He was a WWIi Vet and he taught me a great deal, but at a point, you are taking income from young appraisers with families to supplement your boredom. I'm not going to do that. In fact, I'm becoming rather tired of the whole business. The next post will be George saying how "Bitter" I am. Betcha.

Great post.

 

[Non Sequitur]

Evaluations are what they are and mostly they are used by most banks I know, for updating values when an ARM balloons. They were never used by the banks I worked for as origination.

Eh, not from my experience at a community bank. When portfolio loans came up for renewals a VC (not an Eval) was completed to determine if anything changed and to confirm the collateral was still sufficient to cover the bank's rear end. Evals were definitely used to originate loans, both residential and commercial. While some were abundance of caution situations, most were under de minimis transactions that the bank felt comfortable handling internally. When those loans came up for renewal a VC was ordered on the Eval. And in the case of a renewal with new money being funded, an Eval was routinely completed if the prior Eval or appraisal didn't support the new LTV or the Eval or appraisal was too old (and that's a moving goal post).

 

[Terrel L. Shields]

If they think the BPO-level SOW is sufficient

an evaluation has its own standard. For instance, it requires a personal inspection of the property and USPAP does not.

 

[Terrel L. Shields]

some for not writing notes on paper, while others failed to mention a ditch filled with dirt that was supposedly a pond. They engage in these practices while disregarding their state laws. I suppose for them, the ends justify the means.

This is the kinds of idiocy I cannot defend, and George dismisses as a "state problem" and not a USPAP problem. Well, it is a problem with the appraisal laws and that circles right back around to the over-reach of TAF rewriting the rules bi-annually for absolutely no reason whatsoever. We could operate under the 2003 USPAP as easily as 2024 and not be one whit less accurate.

 

[George Hatch]

If it wasn't for the lawyers and their role in society of arguing the meaning of "is" then most of these edits would be completely unnecessary. The "racial bias" allegations being just one example. It's always been unethical for an appraiser to allow their personal biases against people to impede the impartiality and objectivity of their work. To the advantage or disadvantage alike.

More clarification and elaboration improves the defensibility of the appraiser's conduct when working to specs. It only become punitive to people who are either uninformed or otherwise trying to play games with those specs.

 

[Mejappz]

This is the kinds of idiocy I cannot defend, and George dismisses as a "state problem" and not a USPAP problem. Well, it is a problem with the appraisal laws and that circles right back around to the over-reach of TAF rewriting the rules bi-annually for absolutely no reason whatsoever. We could operate under the 2003 USPAP as easily as 2024 and not be one whit less accurate.

Absolutely It’s ridiculous to see these changes being dismissed as just a "state problem" when they really impact the core of appraisal practices. The constant rewriting of USPAP is entirely unnecessary and only adds to the confusion and chaos in the industry. Most of the complaints from the stupid users stem from competency issues, which TAF significantly influences by setting the educational qualifications. The frequent changes every two years is a money grab rather than improving of the system. It’s frustrating to see the focus on compliance over real competency, which ultimately undermines the profession. TAF has been in control for nearly forty years and failed miserably time for a fresh start.