The Sheriff
Member
- Joined
- Mar 21, 2007
- Professional Status
- Certified Residential Appraiser
- State
- Arizona
Ron... I appreciate you easing the concerns of your constitutents. Honestly though, Arizona Fed is in the same pickle with these mortgage loans because they slept with the devil (inadvertantly I might add). I used to do appraisals for Arizona Fed through a management company called LSI when I worked at my prior firm. The fees we received on these appraisals were approximately $200 per appraisal from LSI (this was in 2005 and 2006). Working for the manager of my firm, I received a 34% commission split per completed appraisal. Essentially, I was making $68 per appraisal before taxes.
Your borrowers though are paying anywhere from $350 to $500 per appraisal (on a standard tract home). So, 40% or more of the appraisal fee is going to a company in Pennslyvania that is just assigning a regionally located appraiser in their database the order for that area. They also have a recent high school graduate commenting on typos or a computer generated print out that states a guideline might have been exceeded on the appraisal once it gets turned in (their idea of quality control - who cares if the value is way off - the computer can't possibly see that).
I cared about everything I placed on paper then (and I still do), but how many appraisers felt slighted by the fee they were being paid by the money hungry management company, but had to take the work so they could eat and feed their families? Now, to do work for LSI in AZ, you might be lucky to get work for $160-$175 (if you're the lowest bidder). Arizona Fed has sacrificed quality work (possibly inadvertantly) by utilizing a management company that pays the lowest bidding appraiser that lacks the necessary experience to adequately help protect your portfolio.
To place things in perspective, an appraiser I know that is struggling for work (like most in our industry) just accepted a retrospective review from RELS management company for a property that got foreclosed on by Chase recently. The property, located 15 mins from me (but an hour from the appraiser doing the review), was clearly over-valued at the time by about 10-15% (if you did some digging, you could see the declining trend that wasn't obvious from a straight MLS search). I looked at the numbers and the subdivison, and pointed the fact out to the other appraiser. His initial thought was that it was within 5%, so the value was correct, the owner just got in over their heads. I asked him what data he had, and he told me where he searched. I then pointed out where he looked at comps was on the wrong side of the street (the dividing road split the cities of Queen Creek and Gilbert - and I'm sure you now realize he was looking in Gilbert to make a high builder value in Queen Creek work).
So... and take this for what it's worth... the first email I receive from him stated, 'I just got my first Field Review assignment. Do you have a template or sample report I can take a peak at? -- would be a big help Mr. King Reviewer.' His comment over the phone when I told him that the value was well off... 'I don't want to spend much time on it though because I'm only being paid $175 for the review.' Can you see the problem here? Oh yeah, he has the highest certification awarded in Arizona for appraising. He's not a bad appraiser by any means... just a product of the management nonsense currently diluting our industry.
I feel bad because you guys have a lot more loans out there that are bound to head to foreclosure. You know your books better than I do... but I know the competency of the individuals that unfortunately helped value those books. I wish you luck in sustaining the credit union... but the system is broke and really needs to be fixed if you want to move forward. I'd say 95% of the good appraisers that really understand value are turning their backs on the ridiculously low paying management work. That leaves you with about 5% of the appraisers in AZ with a clue that might do work for your business (that's not great odds to sell your investors on). The rest of the appraisers completing work for Arizona Fed... the form fillers that lack the competency to understand the vicious market they helped create, or the backbone to adequately value you a property without fear from builders, brokers, agents, and management companies from black balling them if they bring in an appropriate value.
Good luck Ron... some of us do care about the long term sustainability of Arizona Federal and hope you will truly see what created the mess you are trying to efficiently clean up.
Your borrowers though are paying anywhere from $350 to $500 per appraisal (on a standard tract home). So, 40% or more of the appraisal fee is going to a company in Pennslyvania that is just assigning a regionally located appraiser in their database the order for that area. They also have a recent high school graduate commenting on typos or a computer generated print out that states a guideline might have been exceeded on the appraisal once it gets turned in (their idea of quality control - who cares if the value is way off - the computer can't possibly see that).
I cared about everything I placed on paper then (and I still do), but how many appraisers felt slighted by the fee they were being paid by the money hungry management company, but had to take the work so they could eat and feed their families? Now, to do work for LSI in AZ, you might be lucky to get work for $160-$175 (if you're the lowest bidder). Arizona Fed has sacrificed quality work (possibly inadvertantly) by utilizing a management company that pays the lowest bidding appraiser that lacks the necessary experience to adequately help protect your portfolio.
To place things in perspective, an appraiser I know that is struggling for work (like most in our industry) just accepted a retrospective review from RELS management company for a property that got foreclosed on by Chase recently. The property, located 15 mins from me (but an hour from the appraiser doing the review), was clearly over-valued at the time by about 10-15% (if you did some digging, you could see the declining trend that wasn't obvious from a straight MLS search). I looked at the numbers and the subdivison, and pointed the fact out to the other appraiser. His initial thought was that it was within 5%, so the value was correct, the owner just got in over their heads. I asked him what data he had, and he told me where he searched. I then pointed out where he looked at comps was on the wrong side of the street (the dividing road split the cities of Queen Creek and Gilbert - and I'm sure you now realize he was looking in Gilbert to make a high builder value in Queen Creek work).
So... and take this for what it's worth... the first email I receive from him stated, 'I just got my first Field Review assignment. Do you have a template or sample report I can take a peak at? -- would be a big help Mr. King Reviewer.' His comment over the phone when I told him that the value was well off... 'I don't want to spend much time on it though because I'm only being paid $175 for the review.' Can you see the problem here? Oh yeah, he has the highest certification awarded in Arizona for appraising. He's not a bad appraiser by any means... just a product of the management nonsense currently diluting our industry.
I feel bad because you guys have a lot more loans out there that are bound to head to foreclosure. You know your books better than I do... but I know the competency of the individuals that unfortunately helped value those books. I wish you luck in sustaining the credit union... but the system is broke and really needs to be fixed if you want to move forward. I'd say 95% of the good appraisers that really understand value are turning their backs on the ridiculously low paying management work. That leaves you with about 5% of the appraisers in AZ with a clue that might do work for your business (that's not great odds to sell your investors on). The rest of the appraisers completing work for Arizona Fed... the form fillers that lack the competency to understand the vicious market they helped create, or the backbone to adequately value you a property without fear from builders, brokers, agents, and management companies from black balling them if they bring in an appropriate value.
Good luck Ron... some of us do care about the long term sustainability of Arizona Federal and hope you will truly see what created the mess you are trying to efficiently clean up.
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