Interagency Guidelines, FDIC and AS IS Values

[CANative]

George, I appreciate that some people want to excel at their occupation and be the best at what they do, and you are certainly in that category, but seriously? That is an unrealistic expectation.

Don't blame the messenger, sorry to burst your bubble and that stuff.

Wow... so on a public web site you are okay with telling the world you have no problem with being a second or third rate appraiser?

 

[mark hurlock]

George, I appreciate the fact that you and your high level authorities have identified the problem of institution employees not knowing their rules. Did you and these authorities identify the cause of this problem?

 

[mark hurlock]

Wow... so on a public web site you are okay with telling the world you have no problem with being a second or third rate appraiser?

I think the question is whether this topic establishes if an appraiser is second or third rate not your lame interpretation of what I said.

I didn't comment on what an appraiser should or shouldn't do or even what I do. I said George's expectations are unrealistic.

I suspect the discussion is a bit over your head to understand.

 

[George Hatch]

George, I appreciate the fact that you and your high level authorities have identified the problem of institution employees not knowing their rules. Did you and these authorities identify the cause of this problem?

As Sylvester used to say: Sufferin' Succotash!!

See, this is why I have no qualms about responding to you in kind.


The point I'm trying to make is that it's not necessarily realistic to expect bank employees to be conversant about all the various appraisal issues. They're bankers, not appraisers. They already have a lot to know about.

And yeah, if I'm familiar with one of their requirements I don't think it's out of line for me to inform them of the situation so as to help them avoid problems later on. Sure, I could let them twist in the wind and find out the hard way and after the fact, and I doubt anyone would realize I simply allowed them to make the mistake, but I just don't think it's the responsible thing to do.


If I'm the appraiser then that means I should be able to identify what goes into my appraisal assignments, even when that means playing 20 questions with an otherwise uninformed client (which we all work with from time to time) in order to figure out what they need. That expectation is not aspirational, either; it's a hardwired minimum requirement for all appraisal practice under our professional standards - something we expect of every appraiser, every time.

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Allow me refer you to the ASBs rationale on this so you can see I'm not just making stuff up as I go.



The ASB retired SMT-10 because the info no longer had the status as a Supplemental Standard after they retired the Supplemental Standards Rule. However, the information and instruction therein did not suddenly become irrelevant to appraisers.

The ASB subsequently moved that info to a new AO 30. In it, the ASB mentions that an appraiser who accepts one of these assignments is responsibile for identifying these elements - which in the SOW tree are classified as assignment conditions.


Without parroting the entire AO (which I think every appraiser should read at least once in their careers), let me refer you to two sections:

In the section entitled USPAP APPLICABILITY, the ASB said:

"A client that is a federally regulated financial institution expects compliance with the applicable regulations and guidelines. An appraiser's obligations are established in the course of considering and accepting an assignment. Appraisers must recognize and adhere to assignment conditions that apply in an assignment to satisfy the following USPAP requirements:" (which include the ETHICS RULE, COMPETENCY RULE, SOWR, SR1, SR2, etc)

In the section entitled "Failure to Adhere to Assignment Conditions", the ASB reiterates that:

- an appraiser who represents that an assignment is or will be completed in compliance with applicable assignment conditions, and who then knowingly fails to comply with those assignment conditions violates the ETHICS RULE.

- An appraiser who unintentionally fails to comply with or fails to recognize those assignment conditions violates the COMPETENCY RULE.

And then they proceed to lay out the associated and related violations of the SOWR and SR-1 as well as SR-2.


These are not my opinions and I didn't make them up - all I'm doing is pointing out the obvious. Sure, an AO from the ASB represents their opinion and rationale on the subject and is not classified as part of the USPAP itself. Nevertheless, you should believe it when I tell you those folks are way more informed about how appraisal standards work than most appraisers. So although you might be able to rationalize a different standard of care it would have to be pretty convincing to outweigh the rationale the ASB uses in an AO.


If you read the AO it's clear that the ASB has not endorsed that little "don't ask, don't tell" approach you seem to be espousing here. If you didn't know what you were supposed to do in those assignments before then that was just incompetency on your part. But now that you do know the use of an avoidance strategy would rise to an ethical lapse.

 

[PropertyEconomics]

George... You're suggesting that appraisers should volunteer for more work to fulfill a lender requirement that they don't even know they have and won't pay for in order to feel more professional in an industry that doesn't care about professionalism.

Isnt an appraiser obligated to do the work competently and in compliance with law?

The rest of the post really means nothing ... appraisers are either ethical or they arent, they are either professional or they arent, they either competent or they arent ... you act like each of these are dependent upon the fee they are paid .... fee has nothing to do with the ethical and competent performance in a valuation assignment .... the appraiser is or they arent.

 

[CANative]

Isnt an appraiser obligated to do the work competently and in compliance with law?

The rest of the post really means nothing ... appraisers are either ethical or they arent, they are either professional or they arent, they either competent or they arent ... you act like each of these are dependent upon the fee they are paid .... fee has nothing to do with the ethical and competent performance in a valuation assignment .... the appraiser is or they arent.

I was being ironic. George got that. You apparently did not.

http://en.wikipedia.org/wiki/Irony

 

[Terrel L. Shields]

In the section entitled USPAP APPLICABILITY, the ASB said:

"A client that is a federally regulated financial institution expects compliance with the applicable regulations and guidelines. An appraiser's obligations are established in the course of considering and accepting an assignment. Appraisers must recognize and adhere to assignment conditions that apply in an assignment to satisfy the following USPAP requirements:" (which include the ETHICS RULE, COMPETENCY RULE, SOWR, SR1, SR2, etc)

In the section entitled "Failure to Adhere to Assignment Conditions", the ASB reiterates that:

- an appraiser who represents that an assignment is or will be completed in compliance with applicable assignment conditions, and who then knowingly fails to comply with those assignment conditions violates the ETHICS RULE.

- An appraiser who unintentionally fails to comply with or fails to recognize those assignment conditions violates the COMPETENCY RULE.

Exactly my point on the previous page, but it seems no one has taken it serious, least of all Mark. The discussion of the Interagency Guidelines in this forum over the past 10 plus years is limited...and probably 50% of the comments have come in the past few months as this issue is finally making news amongst the lenders themselves as they get written up for one of two issues. First, not following their OWN protocols that they established and were approved by the examiners, and second, not following the mandate of the Interagency Guidelines on things like "as is" values.

George's expectations are unrealistic

If so, then Can is more nearly correct than Mark is willing to admit.

appraisers are either ethical or they aren't

You mean you can't be a little bit pregnant?

 

[PropertyEconomics]

Yes Terrel .. you have it correct .. if one is a "little unethical" ... they are unethical. A little tidbit lost on so many in the attempt to justify just a "little overlook" of ethics.

Oh and by the way, as I know you are aware, ignorance has never been a defense, and for good reason.

 

[mark hurlock]

The point I'm trying to make is that it's not necessarily realistic to expect bank employees to be conversant about all the various appraisal issues. They're bankers, not appraisers. They already have a lot to know about.

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So you identified the banker's problem of their own employees not educated in their own banking rules is due to the bankers having too much to know so knowing their own banking rules is unrealistic.

Astonishing!

But you think a realistic solution is for appraisers to educate those banker's employees.

If you want to accept this responsibility for yourself, I have no opinion. If you expect all appraisers to welcome your expectation of them, I disagree.

I certainly would never consider an appraiser who disagreed with your ideology to be less of an appraiser than you.

I know this is difficult for someone like you to hear. Oh well.

 

[mark hurlock]

You mean you can't be a little bit pregnant?

I think it's more like, you can't legislate integrity. The expectation of doing so is unrealistic.