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HVCC and the "Basement Appraiser"

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Mike Kennedy

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[FONT=Arial, Helvetica, sans-serif]Pugh, Panelists Discuss Pressure, HVCC at MBA Conference [/FONT]
[FONT=Arial, Helvetica, sans-serif]Appraisal Institute President R. Wayne Pugh, MAI, addressed the Mortgage Bankers Association conference attendees, stating that while “appraisers have to learn to say no (to pressure), there are also structural problems that foster complications.” One such problem is that while 15 states now have laws on the books strictly prohibiting lender pressure, there is no national uniform standard. His remarks came as a panelist on a session titled, “Appraisal Compliance/Appraiser Independence: More Important than Ever” as part of the MBA’s national conference held October 19-21 in San Francisco.

Pugh added that the Appraisal Institute remains very active in Washington, D.C., to ascertain what opportunities will be coming out of the government’s $700 billion bailout. “It’s really just emerging at this point,” he said. “But, before, when they shut down a financial institution, they ordered two appraisals on each non-performing asset. If they don’t do that this time, taxpayers would be at great risk,” he said.

After Pugh’s comments, panelist Rick Langdon, Chief Appraiser for Wachovia, addressed the Home Valuation Code of Conduct, which arose from the agreement between Fannie Mae, Freddie Mac and the New York Attorney General Andrew Cuomo. Langdon, who has followed the issue closely but claims no inside knowledge, says the HVCC “is a good framework for establishing independence.” He says that while there is “no question there is opposition” to the first draft made available for comment – “appraisers, brokers, lenders: all have issues” – but “the basement appraiser finds a lot of what they have been looking for” in the draft, he said. Brokers, on the other hand, he says, are looking at the clause that prevents them from the ordering process and “most are looking at how they can somehow still” do so.

He says that the first five sections of the draft – covering appraiser independence, lender requirements (to provide the borrower a copy of the appraisal, and to select, retain and pay the appraiser), reporting structure, and requiring employees who select appraisers be trained in appraisal – should remain relatively intact. However, Langdon expects that section six – in which it is spelled out that appraisers cannot be employed by the lender, an affiliate of the lender, an entity owner by the lender, a settlement services provider, or an entity owned by a settlement services provider – “is going to look totally different, no doubt about it.” Langdon said the first five sections are fairly straight forward, however, section six “is the section that needed to be challenged by the lender.”

Langdon said he does not know when the Code will come out, or under what form, in that it could come out under Cuomo or Congress, “or does it go away and Fannie and Freddie put it into their rules?” Langdon wonders. Regardless, he says, a Code is only part of the solution needed. “Appraisal innovation – getting innovative tools into the appraisers’ hands because the industry needs it – will dramatically improve service and quality,” he said. “And I’m not talking AVMs – they will be used at a different level.”

Langdon pointed to Wachovia’s e-value check system, which allows analysis of 50 to 5,000 properties, including a “time adjustment” feature that is so critical in a down market where suitable comps being less than 90 days old are harder and harder to come by. Langdon also points to looking at listings and pendings to help in that area.

Pugh added that the current crisis that is happening in the United States “is starting to show up all around the world” such as Asia, Germany and the rest of Europe. Pugh was part of an Appraisal Institute convoy that recently spent time in the two continents and he relayed some of his first-hand experience from the past month.

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Profession? Hardly. An army of Independent "Basement Appraisers" in the mind of at least One Lenders' Chief Appraiser.

Who knew?
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Flakey

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Greetings from the basement

Langdon, who has followed the issue closely but claims no inside knowledge, says the HVCC “is a good framework for establishing independence.

Langdon expects that section six – in which it is spelled out that appraisers cannot be employed by the lender, an affiliate of the lender, an entity owner by the lender, a settlement services provider, or an entity owned by a settlement services provider – “is going to look totally different, no doubt about it.”

Guys like this are either that arrogant or stupid or they just don't care.

Mr. Langdon, you are talking out of both ends but it all smells the same.

Wachovia stock - 5.92 -0.05 (-0.84%) Oct 30 3:51pm ET
 
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I just had a conversation with a very long time World Savings staff appraiser. The story is that when Wachovia took over, they would order appraisals from a World staff appraiser and if it wasn't 'good' enough to close the loan they wanted, they would toss that one out and order another one through their Wachovia appraisers that would hit the value wanted or not disclose negative issues. What kind of 'chief appraiser' allows this kind of conduct?

A whole lot of deep BS in that article and in that conference.
 

William K

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I wonder if all Attendees received the complimentary boots upon entering the conference?
 

dobie

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I just had a conversation with a very long time World Savings staff appraiser. The story is that when Wachovia took over, they would order appraisals from a World staff appraiser and if it wasn't 'good' enough to close the loan they wanted, they would toss that one out and order another one through their Wachovia appraisers that would hit the value wanted or not disclose negative issues. What kind of 'chief appraiser' allows this kind of conduct?

A whole lot of deep BS in that article and in that conference.

I can attest to this. I did an appraisal back in May for World that did not make value. The reviewer told me they would just order another appraisal if I did not lose my time adjustments.

I did not change it and never heard from them again. Then the topper, they told me they were cancelling the appraisal and paying me a trip fee. Problem was their(our) contract stated that when I delivered the appraisal the fee was fully earned.

I had to go up the chain of command and get some of the adults in that operation involved.
I finally got my fee but like I said it was my last fee. Nice guys eh?
 

mp2277

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Educate me, what exactly is meant by "basement appraiser"?
 

GCJim

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New Jersey
'Pugh' is the operative term here, as in STINK.
 

Lloyd Bonafide

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California
I can attest to this. I did an appraisal back in May for World that did not make value. The reviewer told me they would just order another appraisal if I did not lose my time adjustments.

I did not change it and never heard from them again. Then the topper, they told me they were cancelling the appraisal and paying me a trip fee. Problem was their(our) contract stated that when I delivered the appraisal the fee was fully earned.

I had to go up the chain of command and get some of the adults in that operation involved.
I finally got my fee but like I said it was my last fee. Nice guys eh?

That is unbelievable. I'm glad you got your full fee. If that had happened to me, and they tried to stiff me on the fee, I would have thought about showing up at the FDIC offices with a complaint.
 

panappr

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California
I used to work for World many many years ago (prior to licensing when it was privately owned) as an appraiser, reviewer, trained new appraisers (fun), and they even gave you a company car (took the Impala) with free gas, imagine that. It was a great company to work for and they treated their appraisers so well. It was a great staff and we were all so committed to protecting and preserving the integrity of the company. There were never appraisal or value issues, the appraisal department was separate from loan production and had allot of clout (utopia).

How did this concept go so wrong???:fiddle:
 
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