July 2008 ASC Q&a- Wink Wink Comp Comp

[PropertyEconomics]

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.

The real answer lies in education of APPRAISERS and ridding ourselves of the unethical in our business. Let all businesses thrive, but let ours set the means for that ethical standard.

 

[Ken B]

PE, I don't necessarily think that removing MBs from the appraisal ordering process will result in their demise. No more so than removing any party associated with the lender's production staff from the appraisal ordering process will result in the demise of the lender.

The one thing the HVCC got completely correct was this change in procedure.

 

[Fred]

Steven Santora;1649993 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.

Huh? The word "retainer" does not appear anywhere in the book. The phrase "Compensation variants" does not appear anywhere in the book.

The passage is one of two key precepts that underlie the answer you got from the ASB (which your OP calls the ASC). First, that passage is exactly why your arguments that the "full" appraisal is "conditional" have no USPAP significance. Of course, the other underlying precept is that the phrase "payment of undisclosed fees" was not intended for what you want to apply it to - and the ASB knows it.

 

[Hamlet]

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.

I understand that the world is not flat and the sun does not revolve around the earth.

I'm not advocating changing USPAP, although I do believe that the latest Q&A like many of the others leaves some to be desired. By that, I mean that the wording is understood by the ethical, but apparently not by those that are determined to make the deal work. In fairness however, I'm not sure that any wording would have the effect of stopping those on whom it has no authority.

I am simply advocating removing the MBs from the appraisal ordering process and enforce existing laws and perhaps a few additions on the lender side.

That is the part that is broken in my opinion, not USPAP and also why changing USPAP will have no effect.

 

[PropertyEconomics]

PE, I don't necessarily think that removing MBs from the appraisal ordering process will result in their demise. No more so than removing any party associated with the lender's production staff from the appraisal ordering process will result in the demise of the lender.

The one thing the HVCC got completely correct was this change in procedure.

Ken many here would like to see the demise of the MB business. Im personally for a free market system. Im not a fan in the demise of anyones business, unless of course they are unethical (which I dont think whole groups are) and then I vote for them to be banished.
Remember those here who strongly advocate ridding the business of MBs are met equally by MB arguements to rid the business of us. Its a very sharp double edged sword.

 

[Gregory Beck]

Could it be possible to have a very strict law that would not allow any lender to order any appraisal with a value number on that order. With that in mind the very large fine would go to the company ordering the appraisal. The problem is not the appraiser it's the lender trying to make the deal work. I was a mortgage broker for 10 years in NY I never once ordered a comp check on an appraisal I simply ordered the appraisal via off the approved list of the lender and I never had any appraiser approach me on value. The appraisal was just done and thats it, if the deal doesn't work the borrower didn't waste his money he rec'd a fair market value appraisal. Whats wrong with that. I've been in the appraisal business in FL 10 year now. I guess the industry changed. It always seems to come down to the Golden Rule He who has the gold rules.

 

[Hamlet]

The real answer lies in education of APPRAISERS and ridding ourselves of the unethical in our business. Let all businesses thrive, but let ours set the means for that ethical standard.

Are you sure it is really only the uneducated? I think there are quite a few who are educated to know what is right, and choose for greed to do wrong, especially when there is no enforcement or regulation or meaningful punishment.

I don't think it is enough for good men/women to keep their heads down and do right. Evil flourishes with intent.

 

[Hamlet]

Ken many here would like to see the demise of the MB business. Im personally for a free market system. Im not a fan in the demise of anyones business, unless of course they are unethical (which I dont think whole groups are) and then I vote for them to be banished.
Remember those here who strongly advocate ridding the business of MBs are met equally by MB arguements to rid the business of us. Its a very sharp double edged sword.

I'm not advocating removing MBs completely, just from the appraisal ordering process.

 

[Ken B]

Ken many here would like to see the demise of the MB business. Im personally for a free market system. Im not a fan in the demise of anyones business, unless of course they are unethical (which I dont think whole groups are) and then I vote for them to be banished.
Remember those here who strongly advocate ridding the business of MBs are met equally by MB arguements to rid the business of us. Its a very sharp double edged sword.

No problems here. :Emoticon_hug:

 

[Kevin Mc]

Its a very sharp double edged sword.

Indeed it is. Unethical people will find a way to cheat the system because that is what unethical people do. No amount of ASB rewrting of USPAP, HVCC rules and/or enforcement is going to stop them. As long as the government turns a blind eye to the realities of the game nothing will really change. The ball is in their court and no one else's. They appear to have little interest.