Mandy,
I saw your first post and I would have responded to it myself had a couple other veterans on this board not beat me to it. In your post, you described a situation where you, an unlicensed individual, have spent enough time and effort to learn how to develop and write appraisal reports. You had two questions: how trained are you to be able to write a report that your mentor would sign, and how appropriate and customary is a 20% fee split with no taxes or other withholding?
Without seeing your reports, it would be impossible for any of us to know how good they are, so we have no way of knowing where your true technical progress had led thus far. The mere fact that your supervisor will sign off, apparently without much, if any, correction or input can be considered one of two ways; either the reports are that good and your are well on your way to being a good appraiser, or the mentor of whom you are speaking has such low standards that they'll sign anything. Assuming the former (you are that good), a 20% commission is too little to give to a person who is that good, except if they have no license. Assuming the latter, 20% is about right.
Now for the question that everyone else was addressing, and that is the propriety of an unlicensed person doing appraisals and having a licensed appraiser sign off. The way you describe the situation, you are taking orders from a mortgage company, probably the majority of which will be placed with federally regulated lending insititutions. By your description, you are going out and doing the entire appraisal, from beginning to end, by yourself and with no help. You are taking the finished appraisal report to your mentor, who signs off, and then submitting the appraisal report to your client. You made no mention in your first post of your mentor making corrections or even doing the valuation itself. In fact, your implication was that you are doing the entire thing and delivering a finished report.
Apparently, I am not the only appraiser on this board who interpreted your comments this way. Pamela Crowley is a forum moderator on AppraisersForum.com, and Mike Garrett is an appraisal instructor in Colorado who teaches pre-licensing courses to appraiser hopefuls, such as yourself. Suffice it to say that at least some of the comments you're getting are from people who know. Nobody here is actually giving you bad advice, we're merely responding to the situation based on the way you have described it.
Now a word of caution in regards to advice given to you over the phone from the OREA. If your question was
"Is it permissible in California for an unlicensed individual to assist in the preparation of appraisal reports?", their response would invariably be
"Yes", because there's nothing wrong with that. However, if you asked them
"Is it permissible for an unlicensed individual to go out on appraisal inspections and conduct appraisals alone and with no personal supervision, then producing a report that the mentor signs with essentially no other input or formal acknowledgement and identification of the extent of professional assistance rendered by this unlicensed individual?", I'm sure the answer to that question would be very different.
Here's a couple questions for you.
When you get an assignment from one of these mortgage broker clients of your, are you entering into an agreement with them to produce an appraisal?
Do you call the borrower and identify yourself as an appraiser, working on their home for an appraisal to be delivered to your client?
When you show up at the door, are you introducing yourself as an appraiser?
You seem to be able to conversant with cut and paste features of this board. Here's one for you; it's from the California Business and Professions Code, which contains some of the laws appraisers have to comply with:
11320. Practice without a license; prohibition; application of other statutes
No person shall engage in federally related real estate appraisal activity governed by this part or assume or use the title of or any title designation or abbreviation as a licensed appraiser in this state without first obtaining a license as defined in Section 11302. Any person who willfully violates this provision is guilty of a public offense punishable by imprisonment in the state prison, or in a county jail for not more than one year, or by a fine not exceeding ten thousand dollars ($10,000), or by both the imprisonment and fine. The possession of a license issued pursuant to this part does not preempt the application of other statutes including the requirement for specialized training or licensure pursuant to Article 3 (commencing with Section 750) of Chapter 2.5 of Division 1 of the Public Resources Code.
11321. Authorization to use title, designation and abbreviation; authorization to perform and sign certified real estate appraisal reports
(a) No person other than a state licensed real estate appraiser may assume or use that title or any title, designation, or abbreviation likely to create the impression of state licensure as a real estate appraiser in this state.
(b) No person other than a licensee may sign an appraisal. A trainee licensed pursuant to Section 11327 may sign an appraisal if it is also signed by a licensee.
© No person other than a licensee holding a current valid license at the residential level issued under this part to perform, make, or approve and sign an appraisal may use the abbreviation SLREA in his or her real property appraisal business.
(d) No person other than a licensee holding a current valid license at a certified level issued under this part to perform, make, or approve and sign an appraisal may use the term "state certified real estate appraiser" or the abbreviation SCREA in his or her real property appraisal business.
Of particular relevance to your situation is B&P-11320 in its entirety; and B&P-11321(a) and (b). Did you happen to catch the fines and jail time associated with unlicensed appraisal activity in connection with federally related transactions?
The section right before it (B&P-11319) is another one that has some relevance here:
11319. Standards for conduct and performance; additional standards
Notwithstanding any other provision of this code, the Uniform Standards of Professional Appraisal Practice constitute the minimum standard of conduct and performance for a licensee in any work or service performed that is addressed by those standards. If a licensee also is certified by the Board of Equalization, he or she shall follow the standards established by the Board of Equalization when fulfilling his or her responsibilities for assessment purposes.[/
What this means is that USPAP is applicable to any work or service that is defined or addressed in USPAP. Since you may never have taken the course, let me simply say that USPAP addresses appraisal, appraisal review, and appraisal consulting services for all types of property, including real property. In other words, if a licensee is in violation of USPAP, they are also technically in violation of this state law. Now you may be thinking that USPAP is irrelevant to you at this point, seeing as how you don't hold a license yet. Not so fast; the following is from the California Code of Regulations, Title 10, Chapter 6.5:
ARTICLE 12. DISCIPLINE
3721. Revocation, Suspension, Denial of Licenses
(a) The Director may issue a citation, order of abatement, assess a fine or private or public reproval, suspend or revoke any license, and/or may deny the issuance or renewal of a license of any person who has:
(1) Been convicted of a felony or any crime which is substantially related to the qualifications, functions, or duties of the profession of real estate appraisal;
(2) Done any act involving dishonesty, fraud or deceit with the intent to benefit himself or another, or to injure another;
(3) Been convicted for a commission or solicitation of a criminal act which involved or threatened bodily harm to others;
(4) Done any act which if done by the holder of a license to practice real estate appraisal would be grounds for revocation or suspension of such license;
(5) Knowingly made a false statement of material fact required to be disclosed in an application for a license authorizing the practice of real estate appraisal;
(6) Violated any provision of USPAP;
(7) Violated any provision of the Real Estate Appraisers' Licensing and Certification Law, Part 3 (commencing with Section 11300) of Division 4 of the Business and Professions Code, or regulations promulgated pursuant thereto; or any provision of the Business andProfessions Code applicable to applicants for or holders of licenses authorizing appraisals;...
The elements I bolded may apply to your situation. There's more, but nothing of relevance to this discussion.
Finally, there is the question as to ethics, a subject that is heavily covered in the USPAP:
Conduct:
An appraiser must perform assignments ethically and competently, in accordance with USPAP and any supplemental standards agreed to by the appraiser in accepting the assignment. An appraiser must not engage in criminal conduct. An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.
In appraisal practice, an appraiser must not perform as an advocate for any party or issue.
Comment: An appraiser may be an advocate only in support of his or her assignment results. Advocacy in any other form in appraisal practice is a violation of the ETHICS RULE.
An appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions.
An appraiser must not communicate assignment results in a misleading or fraudulent manner. An appraiser must not use or communicate a misleading or fraudulent report or knowingly permit an employee or other person to communicate a misleading or fraudulent report.
An appraiser must not use or rely on unsupported conclusions relating to characteristics such as race, color, religion, national origin, gender, marital status, familial status, age, receipt of public assistance income, handicap, or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value.
Comment: An individual appraiser employed by a group or organization that conducts itself in a manner that does not conform to these Standards should take steps that are appropriate under the circumstances to ensure compliance with the standards.
Again, the relevant lines bolded may apply to your situation. There are a lot more legal and USPAP references I could throw at you, but I wanted to limit it just to the ones I thought would apply to your situation.
You need to take a look at what you're doing. You describe yourself as a hard-working assistant. But can your actions be construed as engaging in unlicensed appraisal activity in violation of state law? Is the mentor that you are having sign off on your reports also signing the certification that states that they personally inspected the subject property and the exteriors of all of the comparable sales in the report? Is that mentor leaving your name out of the appraisal report, even though you did all or most of the work? If the answer to any of these questions is "Yes", you may be putting your entire future on the line for the 20% split of the appraisal fees (less taxes). If the OREA catches you or your mentor at this, you may never get a license and your mentor might lose theirs. You could even be prosecuted criminally. All it takes is a single complaint from one of your borrowers, one of your clients, one of the lenders who are relying on these appraisals, or even one of your coworkers or mentor. You are skating on thin ice; wafer thin.
Just in case you think we're kidding about this and the state might let you off for not knowing, I'd recommend you check out the state's appraiser newsletter. The OREA's web site has a "publications" page where copies of the last 6 or 7 newsletters are available in pdf format. If you'll click on the latest edition, you'll see that of 24 pages of newsletter, 12 of those pages are devoted to summarizing the discipline meted out by the OREA for appraiser misconduct. In particular, I think there were 4 license revocations, of which 3 were for unlicensed appraisal activity and/or fraudulently signing another appraiser's name on a report. That doesn't count the dozen or so licenses that were declined for renewal or resigned during the investigations rather than fighting the charges. This list of enforcement actions just covers the preceding 6 months. We get two of those newsletters every year, each with a comparable selection of discipline summaries. I've seen several instances over the years where licensed and unlicensed appraisers were referred to the county District Attorney or State Attorney General's office for criminal prosecution, again for unlicensed appraisal activity.
I never even got to the federal laws and regulations regarding appraisals.
Bottom line here is that this is no joke. As appraisers, we take this kind of thing very seriously. Your borrowers are paying for a professional appraisal performed by a duly licensed and qualified appraiser; they are not paying for an unlicensed person to practice their technique in hopes of striking out on their own.
Again, let me stress that our interpretation of this situation is limited to your description of your own activities. It may be that your work is competent and adequate, and for that you should be commended because that is an accomplishment in itself. But all your hard work is never going to pay off if you actually are taking in assignments and working on them without some real supervision and professional input. You should not be making unsupervised inspections as an unlicensed individual. At this stage of the game, your supervisor should be with you on each inspection and see each comparable that they are signing for. Once you get your trainee license, some of these restrictions will ease and you can go back to unsupervised inspections for those property types that you have competency. FYI, the state will allow you to accumulate up to 400 hours toward your experience requirements under the category of appraisal assistant.
I would wish you luck as you move forward, but it would only apply to the extent that you are following the rules, regulations, laws, and code of professional conduct that we are all required to follow. We assume that everyone who shows up on this forum shares that common ethic. Hopefully it applies to you as well. If so, we welcome you and hope to hear from you regularly.
George Hatch
