Gao Report Released

[Matt Barr]

May 14, 2003

GAO report released; cites need to develop consistent criteria for determining and reporting state compliance with Title XI requirements

[*] States, ASB, AQB: We're underfunded; ASC: pushes back on tapping into surplus

[*] $250,000 de minimus cited as "gap in Title XI coverage"

[*] ASC urged to "explore potential options for assisting states in carrying out Title XI responsibilities"

GAO report 03-0404, Opportunities to Enhance Oversight of the Real Estate Appraisal Industry, was released to the public today, the culmination of more than a year’s worth of investigation by the General Accounting Office (GAO) into the efficacy of the federal appraiser regulatory structure.

Appraisal Intelligence: http://www.appraisalintelligence.com/pub/h...nes/1160-1.html

 

[Fred]

All GAO reports are on web page, listed by release date.

GAO Home

 

[Austin]

If any one wants to read the GAO report, all 108 pages, you can find it on the AI forum at the address below:

http://www.appraisalinstitute.org/govtaffa...ads/d034041.pdf

I read the summary and conclusion and here is basically what they said: The problem is lack of funding. If the government agencies just had more funds and could come up with more creative methods of raising funds (taxes) they could get the bad appraisers. They never address the appraisal community; it is all about the government agencies, a clear case of putting the foxes in charge of the chicken coop. Not one word about the real source of the problem, that being lender pressure. Why? Because the people that regulate the lenders are the same people that compose the Appraisal Subcommittee that regulate the lenders so how can they regulate themselves?
This is like saying people should sin less so we are forming a committee of the worse sinners to regulate sin and if we catch some one sinning we will blame it on the licensed and certified preachers because if they had done a better job of convincing people not to sin we would not have this problem.
This is what happens when you have a political class running the country. No one wants to do anything because their son or daughter works over in that department and any reform could impact their retirement pension and or career advancement. Just another government smoke screen to mask the real problem. If the GAO had had more funds maybe they could have done a better investigation. Maybe if appraisers had more income we could do a better job of getting the bad apples. What we need is higher appraisal fees and then we could pay $100 for a copy of USPAP thus a source of funds for the regulators.

 

[Restrain]

They did at least MENTION the high de minimus. That's the first time anyone's ever even looked at that.

 

[Fred]

R,
Actually Rep Barnard who was chair of the committee that did the House investigations in S/L and who was a leader in the move to create FIRREEA went balistic when the 100K de minimis was announced in 1990. Problem is - that is how they wrote the law. The banking agencies are responsible for determining when appraisals are needed up to $1 million.

The GAO report doesn' t say much. My reactions are 1) yawn and 2) use a larger font next time.

 

[Austin]

The 108-page GAO report can be summarized as follows:

1. $250,000 de minimis is a gap in Title XI. (Profound conclusion wouldn’t you say? I never would have recognized that fact.)
2. Problem is bad appraisers and more funding would help. (Wonder if lender/appraiser power relationship could possibly underlie this problem?) That is to controversial to tackle so we left that one alone.
3. There is a lack of uniformity in appraisal regulation. (No hock? Another profound revelation!)
4. Appraisal Subcommittee has all of the power to regulate the appraisal regulatory process and the committee is composed of the lending regulators bought and paid for by the lending industry so what the hell do you idiots expect?

Summary: Yawn!!!! Business as usual in Washington. Another report completed and it’s on to the next assignment. Besides, who really gives a damn? Price inflation is good for the economy. Creates equity and supplements people’s income on a tax-free basis. Actually a negative tax basis because the equity take-out is tax-free income and the interest is tax deductible so it is actually a government subsidy to a tax-free income that creates growth in the GDP. Politically expedient too. We can give the unions a 5% raise every three years and pay for it with a 6% inflation rate over the same three-year period. That way the idiots think they are getting a raise when in fact they are losing purchasing power.

 

[Pamela Crowley (Florida)]

Press Release Source: Appraisal Institute

Appraisal Groups Call on Congress to Investigate Appraisal Regulatory Agencies; Respond to GAO Report
Wednesday May 21, 11:21 am ET


http://biz.yahoo.com/prnews/030521/cgw033_1.html

Good article and I applaud the AI and others involved for getting this into the media. Much, much more needs to be done.

Appraisal Institute members adhere to a strictly enforced Code of Professional Ethics and Standards of Professional Appraisal Practice.

If that really were true, I'd join them. I'd like to see them clean up their own ranks, too. It's too bad that the AI has become what it is now.
(Please don't start an AI bashing section here.)

 

[Austin]

Pam: I agree. The article reads like most AI statements: “We would like to exploit this issue by using it as an excuse to issue another unsolicited testimonial as to how great, competent, honest, and ethical, not to mention how morally and intellectual superior we are……yada yada”
I really love the AI despite their best efforts to pee everybody off. If you ever figure out the fact they are a labor union it will all make sense. Where would we be without them though? They do a lot of good despite their best efforts to screw thing up with their vanity. Pride comes before the fall as they say.

 

[Fred]

Austin,
I agree that AI deserves credit for siezing on every issue as an oppurtunity to grandstand, however, can we just shine a little bit of light on their call for an "investigation?"

It was a House committee under Douglas Barnard 20 years ago that uncovered widespread fraudulent, sloppy, inflated (etc.) appraisals and their contributory effect in the S-L Crisis. This is what led to FIRREA, Title XI, and the current system. The investigation I would like to see is what percentage of these bad appraisals were emblazoned with certain designations.

Fast forward to today. The AI currently has under its jurisdiction about 20,000 (?) appraisers. That is more than any state and fully 1/4 (?) of the profession. So the other investigation I would like to see is how much could the regulatory "problem" be mitigated, if the AI dedicated as much time and money to self-policing as they spend on self-aggrandizing and preening in front of Congress. Here we have the GAO stating that the state boards are under-funded, but it seems to me if the largest organization would actually enforce its own code fo ethics instead of proffering some claptrap about "qualifications," they could be gift-wrapping the "bad" appraisers for the state boards.

 

[Pamela Crowley (Florida)]

But, but, but..... but!!!

If they did that, how many members would be left to pay for their lobbyists?!?!?!?!