Exposure Draft USPAP 2018-19 - Appraisal Foundation

[George Hatch]

Well, there you go again.

A comp check is the assignment. Upon delivery of the comp check, the assignment is complete.

A draft report is a preliminary communication. The assignment is on-going after delivery of the draft report.

It's pretty simple, really. Like most truths, explanation does not require lengthy diatribe.

So you still categorically reject the existence of phased assignments and/or multiple reports for the same assignment, huh?

Interesting, 'cause the ASB has already issued a couple of FAQs that acknowledge them:

CHANGING THE SCOPE OF WORK AFTER THE REPORT HAS BEEN SUBMITTED
Question: Sometimes after submitting my appraisal report, my client will ask me to perform
additional work. This can mean looking at more or different comparables or
developing another approach. Do these requests for additional work create a new
assignment?

Response: No. Requests to perform additional research or analysis change the scope of work, but do not
create a new assignment. The additional work can be performed as part of the original assignment.
The appraiser may decide, as a business decision, to treat the request for additional research and
analysis as a new assignment, but it is not required.

ARE INSTANT MESSAGES OR TEXT MESSAGES APPRAISAL REPORTS?
Question: I perform appraisal assignments for a client who asks to be notified of my final
value conclusion via instant message or text message. Is this communication to the
client an appraisal report that must comply with USPAP?


Response: Yes; this communication of assignment results is considered an appraisal report. Instant messages or text messages are written communications and, for assignments involving real property, are subject to the requirements of Standards Rules 2-2.

Oral appraisal reports of real property (where assignment results are communicated by the spoken word) are subject to the requirements of Standards Rule 2-4.

 

[hastalavista]

So you're saying that you don't recall hearing of clients calling appraisers up and asking them for comp checks or instructing appraisers to give them a heads up if value was coming in short or tossing appraisals they didn't like so they could shop around for the bigger and better deal? And that you can't imagine FHA numbers being issued - from the defensible position - after the lender has received an advance unsigned copy of an appraisal report with a favorable result?

Come on, George. I appreciate the rhetorical effect of the question, but I think you know I've acknowledged poor practices have happened; pre-USPAP and post-USPAP. They continue to happen. That's part of the point: One is going to follow USPAP or not.

We know what kinds of violations have occurred in express violation of the existing rules. What we cannot know is the extent of conduct that conflicts with those rules that we avoided as a result of prohibiting them.

The Ethics Rule is the Ethics Rule is the Ethics Rule. One cannot produce and communicate fraudulent or misleading results. Period. One either follows that rule or doesn't. Draft reports are not a masquerade that covers up unethical behavior. And, again, the chances of draft reports being used as part of the UAD-compliant URAR are so small that it is unreasonable to use that as an argument against draft reports. I would venture to guess that draft reports will not impact the fraud or poor practices that current exist when completing those types of assignments. They don't need a "draft report" option to do the unethical things they do.
It is a non-issue as far as I'm concerned, but I get that you have a differing opinion.

I think it's shortsighted to completely ignore how the lowest common denominator will use such rule changes to their benefit or to say they won't exercise their alternatives if/when the circumstances arise. People doing bad things directly in violation of the existing rules is bad enough. Enabling them to do the same thing from the defensible position and on the legitimate basis is arguably worse.

My bold. The bolded part is a fundamental component of our disagreement. I don't see this proposed change enabling anyone to do something unethical that they wouldn't or cannot already do. It doesn't make it easier. In fact, I would argue that if they use this method to try to do something unethical, it will be easier to identify. This isn't a "Swiss Cheese" change that creates holes crooked appraisers are going to exploit.
Indeed, unethical behavior will be easier to identify because now, they just lie about what they are doing "I never did that"... and if there is a document that is found to the contrary, they're hung. Under the draft proposal, if they say, "Hey, you have no complaint against me... this is a draft!", there is a document that can be examined, and if it is determined that they did something that was misleading or fraudulent, they are hung. Let them grasp onto the "draft" theory of protection if they commit fraud. It isn't going to help them one bit.

And I think it's especially shortsighted to do it for the purpose of kissing the legal profession's *** and in furtherance of their win-at-all-costs client advocacy.

Ok. I'm interpreting this as a significant motivation of your argument: Screw the lawyers, why should we change our process to assist them!
We should change the process because it helps us when we are engaged in those assignments. It is to our benefit. We are always supposed to operate with ethics rule being the primary guiding light. Those who don't will continue not to do so regardless.
And, USPAP is designed to work for appraisers and the users of our services. We always consider stakeholder concerns in developing our standards. Hopefully, I'll say this once here so I don't have to read it being twisted in a new post: "stakeholder concerns" does not mean bend-over for any particular client's desire.


But, I'm repeating my arguments. I've posted my reasoning, given examples of the SR1 and SR2 machine, how they work with and without the draft exposure being adopted. I acknowledge that conflicts with state laws are problematic and would like to get them resolved prior to adoption. If I thought the conflicts were so significant that this change would cause more harm than good, then I'd be against the change. I don't see the enforcement nightmare (as long as conflict with state laws are reduced or eliminated) to be the likely outcome. If I thought this change would negatively impact mortgage financing appraising (UAD compliant URAR, FHA, or any other segment) I'd be against it as well.

I'll continue to follow this thread as I can always be convinced that a danger I don't see does, in fact, exist.

 

[Ken B]

So you still categorically reject the existence of phased assignments and/or multiple reports for the same assignment, huh?

Don't think I said that, did I?

Those are appropriate services for some intended users and some intended uses.

In that regard, they are similar to "comp checks" and preliminary communications such as draft reports.

One size does not fit all. Different users have different needs. So says the former attorney in the room, who even cites the basis for that need.

 

[George Hatch]

I have NO PROBLEM with making an exception for assignments involving attorney's interests if the profession decides that concession is necessary. What I do have a problem with is all the mental gymnastics that are being used to drag the uniform standards for all appraisal practice along for the ride as a means of hiding this concession. IMO, I think it's dishonest and misleading and ultimately serves to undermine the public trust in the appraisal profession.

The individual members of the ASB are engaged in appraisal practice (as defined) when acting in that capacity. They have a professional obligation to adhere to the ETHICS RULE and to act ethically within their understanding of the material. The TAF has previously (and apparently still does) instructs course participants for the USPAP Instructor Qualifications that USPAP is driven by concepts and principles, not by labels. Having received and reviewed numerous written explanations for why a labels-based approach to christening appraisal reports solely by nomenclature and signature rather than by the actions of the appraiser and the expectations of the users, these members cannot now claim to be uninformed about what it is they're attempting to do.

That being the case, I am beginning to consider the merits of lodging ethics complaints against the appraisal licenses of those individual members of the ASB who are pushing this rationale, because I anticipate they have had the exposure to the same material I've had and I have reason to believe that they know better.

 

[George Hatch]

BTW Ken - I have repeatedly asked you to address some very direct questions and you don't seem to be responding to most of them. FYI I do not consider reverting back to "not all assignments are like that" as being a meaningful response to a direct question.

To wit, if any assignment can have more than one report, then that guts the rationale that a report only occur at the end of an assignment, and it also guts the idea that a subsequent appraisal report can erase the fact that the prior appraisal report was also an appraisal report.

If you send a report in and end up doing a revision you have not rendered the same report; you have rendered an additional report; and indeed you will even put in a new report date to distinguish it from the prior report. Having done so, the prior appraisal report didn't get transported to the Enterprise and warped into the sun when you hit the send button for the subsequent appraisal report.

How do you square that with the "there can be only one" rationale you've been promulgating?

 

[Ken B]

Some say words have meanings. When the USPAP definition of "appraisal report" specifically defines it as something that is delivered to a client at the end of the assignment, I have to believe that definition is intentional. If a more inclusive definition were desired, one would think the definition would not be so very specific about the timing of the event.

So what, exactly, will you assert as the basis of the complaint? Your interpretation of USPAP, or the actual words it contains?

 

[Ken B]

BTW Ken - I have repeatedly asked you to address some very direct questions and you don't seem to be responding to most of them. FYI I do not consider reverting back to "not all assignments are like that" as being a meaningful response to a direct question.

To wit, if any assignment can have more than one report, then that guts the rationale that a report only occur at the end of an assignment, and it also guts the idea that a subsequent appraisal report can erase the fact that the prior appraisal report was also an appraisal report.

If you send a report in and end up doing a revision you have not rendered the same report; you have rendered an additional report; and indeed you will even put in a new report date to distinguish it from the prior report. Having done so, the prior appraisal report didn't get transported to the Enterprise and warped into the sun when you hit the send button for the subsequent appraisal report.

How do you square that with the "there can be only one" rationale you've been promulgating?

So you would rather have multiple revisions of a report floating around, all with your signed certification, but all slightly different in content and conclusions? That seems so...unwieldy.

 

[George Hatch]

"would rather" is immaterial at this point. i can think of no basis or rationale we could use to advocate that a subsequent report should automatically and categorically render the prior report non-existent and beyond accountability. If that becomes part of a specific appraiser/client relationship then that's between them, but pre-emptively declaring it so for all appraisal assignments isn't warranted.

If I was working in good faith and if the qualifier means anything that "to the best of my knowledge and belief" the following apply, then I think that's as applicable for an interim communication as for a final communication in an assignment.

Sure it's unwieldy. But so are a couple of the other things we do in furtherance of accountability and paper trails.

I really don't have a problem with multiple reports existing for the same assignment, whether its revisions to correct an error or omission I previously made or a report that is clearly labeled as an interim report. as a matter of fact, I have a couple clients that actually value the paper trail because it demonstrates that both sides are actively thinking their way through the various aspects of the assignment instead of doing the zombie walk. My guess is that you also have such clients.

If credibility starts with establishing realistic expectations then one of those expectations is that sometimes appraisers will make mistakes and sometimes clients will move the goalpost or request additional clarification after a report has been submitted. SOW can evolve throughout the assignment and the measure of the appraiser's conduct in an assignment is whether or not they got to "meaningful and not misleading" by the end of it, not whether they may have made mistakes prior to the conclusion of the assignment. I'd argue that point in front of any judge or any appraisal board.

 

[Ken B]

I wonder why the powers-that-be so carefully identified the timing of when a document becomes an "appraisal report", with all that such a designation of the document infers and requires under USPAP?

 

[George Hatch]

I wonder why the powers-that-be have (correctly) acknowledged that a tweet or a phone call transmitted to the client in advance of a written appraisal report can be considered an (additional) appraisal report in that assignment without clarifying or correcting the language that leads you to say that an appraisal report can *only* occur at the conclusion of an assignment, and by extension that an assignment can only have one report?

Because without asserting it that way there is no other rationale in support of considering a draft as anything other than a report. That's why the draft proponents need it.


The emporer has no clothes.