As the Lender IS responsible for determining whether or not an assignment is "Complex" - the LENDER must instruct its' AMC Agent to assign the appraisal to a properly Cert or Licensed Appraiser - PRIOR TO the assignment.
Mike-
We agree in sum. There is an alternative to the above:
The determination of the complexity will sometimes be made after an assignment is completed. The original appraiser makes the initial determination and the lender makes a determination when deciding whether to rely upon the report given the originator's license level. Obviously, if the lender determines the assignment is complex and the appraiser decides differently, there is a conflict. But, the original appraiser gets paid.
In my hypothetical case, the appraiser may be fully compliant. And, the lender needs to get a new appraisal. Both are following their own rules/regs. The lender is not happy that it needs to pay for another appraisal. I call that a business (or regulatory) risk. It goes with the territory.
In using the loan or sales price as a determinant, that could easily solve the issue.
However, I think it is reasonable to assume that if a large segment of LSI's work is now only going to go to certified appraisers, that is going to create a demand problem for LSI with its certified-contractors and its expenses are going to go up. (I say good: that's how free markets work.
)
What LSI is trying to do (IMO) is to get licensed appraisers to be their filtering mechanism. In other words, LSI will send the appraisal request first to a licensed appraiser; if the licensed appraiser can complete it, no demand change and no interruption of the flow.
If the licensed appraiser cannot complete it, then a certified is necessary; that may increase the demand but not as much as instituting a mandatory cut-off criterion.
I think most licensed appraisers will have no problem filtering the assignments for LSI.
I think all licensed appraisers will have a big problem filtering the assignments for free.
I also think relying on the appraiser to be the filtering mechanism when it comes to a value determination conflicts with the spirit of HVCC.
It is all about money (we all know that). LSI is trying to institute a change in policy that keeps the flow (turn-time) of assignments going out uninterrupted while applying some otherwise sound guidelines (if the assignment is at a value higher than $X, we require a higher license level) in a manner that is least costly to them.
If LSI uses a filtering system that it must directly manage, that will slow down the flow and increase the costs.
If it can use its appraiser-contractors to be the filtering mechanism, it will reduce the potential flow-interruptions and significantly reduce the costs of managing the process.
This entire scenario is a case where economies of scale are lost and become counter-efficient.
For a smaller organization, the process would be much easier to initiate and manage at the assignment-origination point. The costs of doing so would also be manageable.
For organizations the size of LSI, the large numbers create significant hits to the profit line if profit and expense ratios are not maintained. For organizations the size of LSI, it is ratios (expenses, profits, etc.) which get the attention of the decision-makers. For smaller organizations, bottom-line profits are important but quality is also easier to measure.
In LSI's case, it is too large to measure quality other than as a measurement of volume (
we are so large therefore we must be doing things right/well). And, its quality standard is based on the lowest common denominator (USPAP minimum & banking regs minimum).
