Evaluations & USPAP - Question from a bank staff appraiser

[George Hatch]

Name something in USPAP itself which you think would be better left unsaid. Or which should never have been reworded.

 

[Terrel L. Shields]

Name something in USPAP itself which you think would be better left unsaid. Or which should never have been reworded.

I cannot think of one single thing that would alter the final value. Not one. Name one that does.

 

[Non Sequitur]

Name something in USPAP itself which you think would be better left unsaid. Or which should never have been reworded.

George, we're nearly 40 years into this. The near constant changes and explanations are a sign of a failed experiment.

 

[Terrel L. Shields]

Changes in USPAP and all the Selling Guides (FHA, FNMA, et al) are like most laws, most wars, most changes in bank regulations). They are intended to fight last years war, last years defalcation, last year's failures...and not anticipate the next wrinkle in the crooks repertoire of nonsense.

 

[TerryRohrer]

Pick whichever point in the process you want to criticize or defend and a case can be made. But look at the whole of the standards and regulatory structure and there can not be a sound argument that appraisals overall are superior to those from 35 years ago.

We all see bits of the crap passing through the system. If the system were effective, that would be decreasing. The thing that hasn't changed is that lenders and insurers remain in control and their intent and commitment to manipulating the results is deeper and stronger than ever. Now, we are entering a phase where all semblence of propriety and objectivity are being thrown out in broad daylight. The users of appraisals are rewriting appraisal standards and methods and rewriting "appraiser"/data collector qualifications without any restraint from TAF or the ASC or Congress or the FHFA "regulators."

The real **** show is unfolding before our eyes while the foxes are gutting the hens.

 

[Terrel L. Shields]

The users of appraisals are rewriting appraisal standards and methods and rewriting "appraiser"/data collector qualifications without any restraint from TAF or the ASC or Congress or the FHFA "regulators."

The more appraisers who feel abused by the "tips" or other complaints that are frivolous or unjustified (the appraiser discriminated against me because I am left-handed), the more refuse to do secondary market, or FHA, or rural property for either, or perhaps they avoid certain ethnic groups in fear of a racially related complaints. That feeds directly into the mantra of the appraisal 'shortage.' Yeah. There is a shortage of appraisers willing to fall on their sword. And why is that?

Secondly, fees are a big problem. Too many appraisers are so strapped that they are short-cutting the process and filling in piffle in hopes it will fly through. They are ignoring defects so as to not have to address them, etc. Secondly, if you have any sort of reasonable expenses, $270 net after technology fee puts you down in the $20-30 an hour range which is the same my local Sneeze-N-Freeze will pay for a night clerk. Starting wages in the chicken plant is $20/hr. So, if they cannot punch one out in 4 or 5 hours they are not making wages. This invites sloppy work. Yeah Yeah, I know someone will step in and claim there is no difference between the qualify of the $800 an appraisal appraiser than the $250 one. I don't believe that for one minute. OTOH, perhaps some do get too much for what they are actually doing. It is kind of like the bidding process in construction. You throw out the high bid. You throw out the low bid and average the rest. The closest to the average gets the job.

 

[George Hatch]

George, we're nearly 40 years into this. The near constant changes and explanations are a sign of a failed experiment.

Except for the conversion to the SOW rule (which is easier to explain/understand than DEPARTURE from "complete" ), the other changes since then have been primarily about clarification and elaboration of the previously existing concepts and principles, not changes which affect how appraisers do appraisals. What has changed is the improvement of the defensibility of your work against challenges based on creative interpretations of those criteria.

Appraisers mostly get disciplined for one of only a handful of reasons: They're deliberately lying about the attributes of their subject or the comparability of their comps; not doing what they said they did, not meeting the user-driven requirements of their assignment, and not keeping up with the housekeeping minimums in their reports. THESE particular problems can be ascertained as an objective observation - go/no go. They either did or didn't do as alleged. Appraisers who claim confusion are generally incapable of pointing out which section they don't understand.

Q: "What part don't you understand"? ​

A: "USPAP gets updated every 2 years"​

That's the answer we always get. We just got it again in this thread. And let's be honest - that answer isn't responsive to the question as asked or to the allegation they are making.

I can ask that same question of everyone on this forum who is claiming confusion and they invariably will answer with the same non-response. There is no part of USPAP an appraiser cannot understand *if they read it as written*. The problem there is that many appraisers have never read that material in that manner and are only doing the me-too of the defense that the donkeys use when they get caught lying. And unfortunately, that "many appraisers have never read it in that manner" has included some of the appraisers serving on the state boards.

 

[TerryRohrer]

The more appraisers who feel abused by the "tips" or other complaints that are frivolous or unjustified (the appraiser discriminated against me because I am left-handed), the more refuse to do secondary market, or FHA, or rural property for either, or perhaps they avoid certain ethnic groups in fear of a racially related complaints. That feeds directly into the mantra of the appraisal 'shortage.' Yeah. There is a shortage of appraisers willing to fall on their sword. And why is that?

Secondly, fees are a big problem. Too many appraisers are so strapped that they are short-cutting the process and filling in piffle in hopes it will fly through. They are ignoring defects so as to not have to address them, etc. Secondly, if you have any sort of reasonable expenses, $270 net after technology fee puts you down in the $20-30 an hour range which is the same my local Sneeze-N-Freeze will pay for a night clerk. Starting wages in the chicken plant is $20/hr. So, if they cannot punch one out in 4 or 5 hours they are not making wages. This invites sloppy work. Yeah Yeah, I know someone will step in and claim there is no difference between the qualify of the $800 an appraisal appraiser than the $250 one. I don't believe that for one minute. OTOH, perhaps some do get too much for what they are actually doing. It is kind of like the bidding process in construction. You throw out the high bid. You throw out the low bid and average the rest. The closest to the average gets the job.

I don't make any excuses for appraisers doing sloppy or inadequate work, but there has been essentially no consequence for that in 35 years. State boards focus on minutia and are mostly problematic for honest, ethical appraisers. Regulation as we all expected at the outset would turn the tide, but it ain't happening. The crookedest, least ethical appraisers are rising to the upper ranks in the regulatory mechanisms, infecting lenders/AMSs/GSEs with another layer of putrid rot, and demanding/encouraging/enabling incredible appraisals.

Those supposedly charged with acquiring sound appraisals, and those supposedly charged with ensuring that they do, are exactly like appraisers who claim their adjustments are based on paired sales analysis. They report what users want to see, using all the appropriate buzzwords, and add no substance whatsoever while enjoying all the resources and cash they can consume. And no one is bothering to part the surface of the protective slime to seek the truth.

 

[Red Flint]

They are intended to fight last years war, last years defalcation

Thanks for the Word of the day, Terrel !

The word "defalcation" comes from the Latin words de- meaning "off" and falx meaning "sickle". The word is analyzed as de- + falx + -atio, which literally means "cutting off with a sickle".

The word "defalcation" has been used in English since the 1400s. Its meaning has evolved over time, from originally meaning "curtailment" to eventually referring to embezzlement and other financial breaches of trust.

 

[George Hatch]

The reason appraisers get surprised with a complaint they cannot fight generally stems from the point that the users have used a lot of appraisals that didn't meet all of the requirements. They didn't enforce their own expectations. That doesn't mean those expectations didn't exist.

• "Why am I getting hassled for not applying a market conditions adjustment?
• "Because you didn't perform the analysis or make the adjustment as was expected"
• "But nobody ever told me I had to do it before"
• "Yes they did. They just didn't hold you to it before"

Frivolous complaints are a different problem. Shotgunning complaints with no specific allegations except for the value is a thing, but there's nothing in the appraisal standards that enables that. If states are proceeding without an actionable allegation then that's a state issue; same as if a state automatically rejects complaints that don't include an allegation. The last I heard a few years back, my state regulator was rejecting something like 30% of the complaints for lack of an actionable allegation. "I don't like it" isn't an allegation the state can resolve.

Take the septic location complaint we had here a few weeks back. The OP said there were several other errors of fact in that appraisal report. If true, should that appraiser have expected their state board to ignore everything else they found just because they didn't think the septic issue itself warranted a reaction? No, of course not.

"That isn't what they complained about" isn't a defense against what a reviewer finds when performing a review for a lender. Or a state regulator.