HUD Files Against Appraiser & Rocket Mortgage

[George Hatch]

Appraiser was licensed in Colorado May 2020, having moved from PA/NJ. Effective date of the report was January 2021. Maybe bias, likely lack of competency, maybe both

I daresay half of the appraisers licensed at the CR level have little/no experience appraising 2-4s so although we can't make any assumptions about this individual, unfamiliarity with appraising this property type is another possibility.

I don't think you have to have your finger on the pulse of appraising 2-4s in order to competently consider the issue of location in comp selection for 1-4s.

 

[Mejappz]

Appraiser was licensed in Colorado May 2020, having moved from PA/NJ. Effective date of the report was January 2021. Maybe bias, likely lack of competency, maybe both

During COVID Solidifi was notorious in my area for hiring appraisers who had been out of appraising for years

 

[Mejappz]

Meanwhile FHA has serious issues of their own.

https://appraisersblogs.com/uncovering-flaws-in-FHA-appraisal-n-loan-review-process/

 

[TerryRohrer]

Meanwhile FHA has serious issues of their own.

https://appraisersblogs.com/uncovering-flaws-in-FHA-appraisal-n-loan-review-process/

Very likely no plans being shaped to address those issues. Show up, cash check. Rinse, repeat, retire.

 

[Dublin ohio]

This is somewhat damning

d. Associating the Subject Property with Areas That Have Higher Concentrations of Black Residents

23. On several occasions and for a variety of purposes, Mr. Mykhailyna needed to identify the geographic area most relevant to the Subject Property. In each instance, Mr.Mykhailyna did so by focusing on areas with relatively high concentrations of Black residents, ignoring closer, more predominantly White areas. For example, he defined market area by ZIP Code and considered the Subject Property’s marketability tied to that of two ZIP Codes with higher concentrations of Black residents but not to two closer ZIPCodes with lower concentrations of Black residents.

24. In selecting comparables, Mr. Mykhailyna chose properties only to the east of the Subject Property, in areas with higher concentrations of Black residents, ignoring several closer duplexes to the west in a more predominantly White area. In contrast, Mr. Mykhailynaused comparables from that area when appraising a property with a White owner in the same neighborhood as the Subject Property. Five other appraisals of the Subject Property relied heavily on comparables to the west of the Subject Property in more predominately White areas. Mr. Mykhailyna’s purported justifications for not using any comparables from these areas are belied by his practices when appraising nearby properties with White owners, as well as by the characteristics of the comparables he did use.

25. Mr. Mykhailyna was more willing to view the Subject Property’s neighborhood favorably when appraising nearby properties with White owners. For example, he made area adjustments reflecting a more favorable view of the neighborhood, and he described thearea’s access to amenities more favorably. He also incorrectly associated the Subject Property, but not a White homeowner’s nearby property, with a local school that had a higher concentration of Black students.

 

[shrubberyvaluation]

I dunno what is/isn't actually in the report, but by the time an appraiser runs into this they need to get to disclosing the existence of such and explain why they didn't consider the locations as similar as the subject. If they can't articulate the reason why then they should be giving serious consideration to whether the location actually is dissimilar. There might be a valid reason for their opinions but any such reasoning that isn't presented in the report might as well not even exist.

I almost always acknowledge that there are other sales in the area which I consider to be less similar and comment in general why they're less similar as a group. Whether those other sales are selling for more or for less.

With a complaint like this, Rocket shot themselves in the foot by not aggressively reviewing the appraisal. In no case should any lender want to take the risk of being the last party to find out about their problems; always better to know sooner rather than later. If I were a lender and someone was accusing me of violating their civil rights I'd be looking for a field review w/comps and a comprehensive sales analysis going back several years. This is not a situation to be counting pennies.

View attachment 89010

Sometimes those farther away to the East are more similar to those of the west, location. Sometimes the subject is located with a major road close to the west that is a neighborhood boundary and no good comparables to the west are found, despite them being similar physically. Adjustments should not be based on standards that AMCs or lenders have, they should be based on the market.

 

[shrubberyvaluation]

Oh really so now we have "standards" being set by corrupt AMC and online lenders?

View attachment 89012

Yep, market be damned, its their standards that matter, not the market.

 

[shrubberyvaluation]

Appraiser was licensed in Colorado May 2020, having moved from PA/NJ. Effective date of the report was January 2021. Maybe bias, likely lack of competency, maybe both

Or the possibility that the comparables were the best. But I'd say a high chance of lack of competency. I doubt HUD has some high competency of the area.

 

[shrubberyvaluation]

This is somewhat damning

d. Associating the Subject Property with Areas That Have Higher Concentrations of Black Residents

23. On several occasions and for a variety of purposes, Mr. Mykhailyna needed to identify the geographic area most relevant to the Subject Property. In each instance, Mr.Mykhailyna did so by focusing on areas with relatively high concentrations of Black residents, ignoring closer, more predominantly White areas. For example, he defined market area by ZIP Code and considered the Subject Property’s marketability tied to that of two ZIP Codes with higher concentrations of Black residents but not to two closer ZIPCodes with lower concentrations of Black residents.

24. In selecting comparables, Mr. Mykhailyna chose properties only to the east of the Subject Property, in areas with higher concentrations of Black residents, ignoring several closer duplexes to the west in a more predominantly White area. In contrast, Mr. Mykhailynaused comparables from that area when appraising a property with a White owner in the same neighborhood as the Subject Property. Five other appraisals of the Subject Property relied heavily on comparables to the west of the Subject Property in more predominately White areas. Mr. Mykhailyna’s purported justifications for not using any comparables from these areas are belied by his practices when appraising nearby properties with White owners, as well as by the characteristics of the comparables he did use.

25. Mr. Mykhailyna was more willing to view the Subject Property’s neighborhood favorably when appraising nearby properties with White owners. For example, he made area adjustments reflecting a more favorable view of the neighborhood, and he described thearea’s access to amenities more favorably. He also incorrectly associated the Subject Property, but not a White homeowner’s nearby property, with a local school that had a higher concentration of Black students.

23. How is this damning? What if they happened to be the best comparables? Should I compare to zip codes with lower concentrations of Black residents to make HUD happy even if not the best?

24.Sometimes closer properties are on the other side of a neighborhood boundary. But if this is true it does seem damning.

25. This seems damning also.

 

[Elliott]

From the complaint: "Property values in the area were generally increasing around the time of the Subject Appraisal, which was the only appraisal of the
Subject Property out of seven conducted over nine years that indicated a drop in the property’s value."

That's a lot of appraisals.