July 2008 ASC Q&a- Wink Wink Comp Comp

[Fred]

So, go ahead. While you are at it, try facing up to the challenge none of the naysayers will go anywhere near. Just show me the proposed language that excises only unethical so-called "comp checks" and doesn't otherwise make a mess out of normal, legitimate business.

See post #1

. Already saw it. Pointed out language problems as did others.

FWIW, this thread is about a USPAP QA. That thread is about legislation not USPAP, and has nothing to do with so-called "comp checks." Pam just warned us to stick to the USPAP QA. So naturally, my call for proposals, meant proposals for amending USPAP. Good try, though, it's almost in the same ballpark.


Also Mike, here is an excerpt from the ASB's text, Concept and Princples of USPAP, at line 1683.

"In USPAP a contingent form of compensation refers to a compensation arrangement that is dependent upon another event. However, the prohibition here is not against any form of dependency, but only those that involve events that are themselves unethical. For example, to receive payment for services once rendered, or even partial payment up front and the remainder upon the rendering is a dependent arrangement but not prohibited. If, however, receipt of payment is dependent upon the development or reporting of biased results, then the contingency is prohibited, because the ETHICS RULE prohibits the development or reporting of biased results."

See, it's not any contingency. It's only those contingencies based on something ethic, ie number hitting. So, no matter how much you imply "wink, wink" or state that the first appraisal or data dump is connected in some way to the later "fuller" appraisal, it doesn't matter, if there is no agreement for number hitting.

 

[George Hatch]

To all,

I apologize if anyone interprets my last as being critical of the AI's role in appraisal standards because that's not at all my intention. I'm merely acknowledging the role the AI and many of its members have played and continues to play in the development and promulgation of appraisal standards. I'm not a member of the AI, but that has never slowed me down from fully supporting the appraisal standards they have been so instrumental in developing.

You all may rest assured that had Congress decided to recognize the predecessors of the AI as "the source of appraisal standards and appraiser qualifications", and required membership in the AI I would have joined the org as a means of pursuing my chosen career. I might have even pursued a professional designation from them. I am not anti-AI by any means. I'm just an outsider.

My comments to Joyce were mostly about pointing out that her complaints seem to be primarily aimed at the licensing programs and the failures of enforcement therein. Not at USPAP as such. That is the same point we have been making to our loyal opposition all along - their complaints are really about the lack of enforcement of existing standards, not really about the standards themselves.

In that context, I would hope this thread stays on topic and doesn't veer off into some other emotionally-charged tangent.

 

[Michigan CG]

MANY THANKS TO MR. BRENAN FOR REPLYING TO MY RECENT INQUIRY, AND PAM CROWLEYS YEAR OLD PRIOR INQUIRY, RE "A THING OF VALUE" i.e. free comp check prior to receiving an ACTUAL "full" appraisal order.

IS AN APPRAISERS' EXPERTISE AND EXPERIENCE WORTH ........ZILCH? EVIDENTLY.

IS A RANGE OF VALUES EXPRESSED EITHER VERBALLY OR IN WRITING OR VIA ELECTRONIC TRANSMISSION BY A LICENSED APPRAISER AN APPRAISAL ???

SOMETIMES. SOMETIMES NOT. POSSIBLY. COULD BE - MAYBE NOT..........

IS ACCEPTING AN ORDER FOR A "FULL" APPRAISAL CLEARLY CONDITIONAL UPON PROVIDING A RANGE OF VALUES I.E. SOME SALES OR ALL SALES WHICH DEMONSTRATE CURRENT RANGE OF VALUES IN A NEIGHBORHOOD - REALLY CONDITIONAL ????

WELL - YES AND NO

TO PRE-COMP OR NOT TO PRE-COMP - ..........THAT IS STILL THE QUESTION....THE STATUS-QUO IS PROTECTED ......ONCE AGAIN..

NON-SPECIFIC ANSWER MEANS ..............THE GAME CONTINUES.....


Question:
Does USPAP allow appraisers to perform "comp check" assignments for free?
Response:
Yes. However, the appraiser would have to ensure that receiving a "full" appraisal assignment is not contingent upon the result of the "comp check" assignment.


REALITY CHECK FOR THE ASC: ........DUH.......... UNLESS THE "COMPS" INDICATE A MINIMUM $$ POINT OR MINIMUM RANGE OF VALUES SUFFICIENT TO "DO THE DEAL" - THE "FULL" ORDER IS ........NEVER.....ISSUED.


LAST TIME WE LOOKED - " A POINT OR RANGE OF VALUES = AN APPRAISAL". IMAGINE THAT. WHO KNEW??

The original post, 54 pages ago.......

 

[Bill_FL]

"That's what a comp check really is. They get a cheap (ie free in most cases) appraisal to see if it is worth committing more resources, time and effort (including getting a more expensive appraisal)." :Eyecrazy:


An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.

An appraiser must not advocate the cause or interest of any party or issue.

An appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions.


BIAS: a preference or inclination that precludes an appraiser’s impartiality, independence, or objectivity in an assignment.

CONTINGENT: dependent on or conditioned by something else

Circle the Wagons time boys.......rally round the flag?

Mike

Come on. You make no sense at all in these posts. Your passion for the subject is clouding your ability to be objective and look at facts. I have seen you throw out numbers like "99% of all comp checks are just contingency orders" (made that one up, but have seen you post similar). Where do you get this stuff? What you posted above was simply reposting USPAP. Big deal. You did not make your point at all. Your only original thought was "Circle the wagons". What?

Why do you automatically assume that every appraiser is bad and unethical, except those who think like you? There are several appraisers on this board whom I have never met, but have the highest respect for their professional opinions. They have tried talking with you, but you simply keep regurgitating the same stuff.

Just because a lender orders more than one appraisal, with differing scopes of work does not mean that each order after the first order is a guarantee of the same value as before. Is that that hard to grasp?

 

[Kevin Mc]

Just because a lender orders more than one appraisal, with differing scopes of work does not mean that each order after the first order is a guarantee of the same value as before. Is that that hard to grasp?

Yes it is. Theoretically it is probably true. In the real world I would guess that to be a fairytale.

 

[Mike Kennedy]

Steven Santora;1649993]. Already saw it. Pointed out language problems as did others.

Ditto. Ditto.

FWIW, this thread is about a USPAP QA.

Clearly aware of that - I initiated this thread and one of two (perhaps more) recent letters to the ASB for clarification.

That thread is about legislation not USPAP, and has nothing to do with so-called "comp checks."

That thread is most certainly about Influencing the outcome of an appraisal INCLUDING "comp checks".

Pam just warned us to stick to the USPAP QA. So naturally, my call for proposals, meant proposals for amending USPAP. Good try, though, it's almost in the same ballpark.

Exactly - the language in that CT bill is specific and includes enforcement provisions and penalties. TITLE XI and the USPAP must be revised to close the "loopholes" INTENTIONALLY installed OMITTED by those who wrote BOTH. The ASB is authorized to revise the USPAP without requiring congressional amendment to Title XI.

Also Mike, here is an excerpt from the ASB's text, Concept and Princples of USPAP, at line 1683.

"In USPAP a contingent form of compensation refers to a compensation arrangement that is dependent upon another event. However, the prohibition here is not against any form of dependency, but only those that involve events that are themselves unethical. For example, to receive payment for services once rendered, or even partial payment up front and the remainder upon the rendering is a dependent arrangement but not prohibited. If, however, receipt of payment is dependent upon the development or reporting of biased results, then the contingency is prohibited, because the ETHICS RULE prohibits the development or reporting of biased results."

The example above specifically addresses Fee Compensation Variants allowing for Retainers. It does not address the topic of this thread.


Requesting OR Completing a "preliminary" order soliciting a preliminary value (in any form i.e. a thing of value) to generate a resultant "second, subsequent, full, live, real, actual" order must be prohibited on the "requester" and the "provider" sides of the equation when the Intended Use is a mortgage loan transaction and the Requester represents a Financially Regulated Institution. Revision to the USPAP is within the current authority of the ASB; petition for Amendment to Title XI for SPECIFIC prohibition and Enforcement Provisions including Civil and/or Criminal Designation as a Misdemeanor with attendant loss of license AND substantial FINES is within the authority of the Appraisal Subcommittee. Close the intentional loophole from 1989.

 

[Hamlet]

Just because a lender orders more than one appraisal, with differing scopes of work does not mean that each order after the first order is a guarantee of the same value as before. Is that that hard to grasp?

It isn't hard to grasp at all, however, it is a fair statement to make that there are very many MBs who will shop for the value before ordering the appraisal that the lender will see.

I doubt if many of these "comp checks" make it to any lender. The ones that don't hit the target are trashed canned and the ones that do, the "full" appraisal is ordered. Those that perform the "comp checks" know that they don't have to keep a file because the ones not used are trash canned and the others that become contigent orders, well they just pretend that the comp check and the next order are really one and the same.

To me, the only answer lies in removing those MBs from the appraisal ordering process. Sure they can order all the comp checks they want or use AVMs, but the loan package together and send it to the lender. The lender can order the appraisal.

 

[Ken B]

Yes it is. Theoretically it is probably true. In the real world I would guess that to be a fairytale.

Not a fairytale, just not a 1004 level appraisal.

Recently I appraised an undeveloped townhome subdivision. It, like many others, was approved prior to late 2005, but never got out of the ground. It had been previously zoned for commercial uses. After the lender received the results of my appraisal for the property in "as is" condition, I got a request to appraise the property under the hypothetical condition that the property had retained the commercial zoning.

By some recommendations posted here, I could not have developed and reported the second appraisal. By some assertions here, getting a request for another appraisal of the property by the same client should indicate something underhanded was occurring.

The appraisal world does not revolve around the little empire some of the posters are trying to create. Expand your horizons a little and think about the big picture, not the currently most visible one.

 

[Kevin Mc]

Not a fairytale, just not a 1004 level appraisal.

No argument from me Kenneth. I have (I'm sure many of us have) exact same scenarios like yours. Keeping in mind the OP and the "comp check" Q&A response from the ASB I was talking in a typical setting with MBs fishing for values with "comp checks". Your example is an exception to the norm, happens, but not often.

 

[Ken B]

It isn't hard to grasp at all, however, it is a fair statement to make that there are very many MBs who will shop for the value before ordering the appraisal that the lender will see.

To me, the only answer lies in removing those MBs from the appraisal ordering process.

That identifies the common element which typically involves the characteristics of an appraisal request which the ASB has identified as being unacceptable. That identifies the common element which some links have been provided in an effort to bolster the "no comp check" crowd. That is the common element that was identified in the newspaper article regarding mortgage fraud in FL. That is the common element which creates the conditions which permit appraisers to, for whatever reason, agree to the violate USPAP. That is the common element which I think the vast, vast majority here know must be controlled.

All these ridiculous efforts to throw stones at every other target other than this common element is a total waste of time and resources.