July 2008 ASC Q&a- Wink Wink Comp Comp

[Bearslide]

Mike Phillips;1646523]If there is one argument that should be scrapped and never mentioned again, it is the argument that the states should do this or that. Yes, the states should do many things, but it ain't gonna happen for a variety of reasons, starting with - they don't have a dog in the enforcement fight. Never have.

The residential housing market is a national priority, not a state level priority. It should be regulated at the federal level.

I'll tell you what my state legislators care about -the voters. Not the citizens of the state of Florida - only those who vote. Needless to say, regulating appraisers, or the mortgage industry isn't at the top of the voter's lists. My observation is the Florida DBPR could care less what the ASC and certainly TAF think. The only thing that will make Florida regulate anything is being forced to do so.

Another thing I get sick and tired of hearing about - the fact that TAF has no authority to do this or that. They have the ability and the obligation to write appraisal standards for the good of the public, regardless of whether those standards are enforced or not. That's all I ask - they need to grow a pair of coconuts, get their noses out of the backside of the mortgage industry, learn to write clearly, and do the right thing. A document that is not understood by the people who rely on it is worthless. USPAP is damn near worthless.

TAF needs to go back to square one and define and discuss (in an appropriate level of detail, for once) exactly what the phrase "maintaining the public trust" means. Let's discuss (1) public, (2) trust and (3) maintining the public trust, IN THAT ORDER!!!

It would be helpful if TAF took the time to mention that the client is the entity with whom the appraiser has contracted - no less, but certainly no more. The appraiser is ultimately responsible to the public, to society and not the damn client. That is why the appraiser's product must be credible, regardless of what the client wants.

Last but not least let me state it is a damn crying shame that through this entire mees we haven't seen a single member of TAF stand up and offer an assessment, explanation or an apology for anything. I hope I remain in this vocation long enough to finally see a true activist emerge from TAF, one who is capable of commanding appraisers' respect because he (or she) demonstrates their determination to work in the public's best interest.

Written with true fire and passion....most excellent piece of penmanship. While I champion the states stepping up to the plate, I am in agreement with your sentiments. How refreshing and right to the point. Cudos - now I hope TAF is reading.............

 

[Rice Brewer]

Rice, I suspect that you resist the pressure as do many other appraisers. If I am correct in my assumption, you must possess the "tools to refute the 'pressure'."

The ASB can do "this" or "that" in response to your concerns and you know what? At the end of the day, the ethically-challenged (and, those who are just ignorant) will circumvent their best efforts. Lee

I resist the pressure because I know what is really being asked "Guarantee a value and you will get the paying job" and that - as they say - just ain't right.

You are right re: there will always be those that circumvent the efforts. We can't legislate morality or ethics. Well, you can but who is going to enforce it? In the end, we all have to be happy and comfortable with the face in the mirror.

 

[Rice Brewer]

Here is a perfect example of what I just referred to. If that were true, appraisers would not be able to converse ahead of time with the lawyer about the testimony, not be able to testify in mediation, not be able to consult with clients in many needed ways, or respond to follow up questions by clients like underwriters.

I knew there were holes in my point but threw it out anyway to see what would stick.

 

[George Hatch]

You guys really do need to join a union and organize your following. It's the only type of entity that will fight the protectionist battles you guys are seeking. A union would lobby Congress to make comp checks a federal crime; and then the ASB would have to find a way to pretzel twist USPAP to fit that prohibition in. A union would also lobby for set appraisal fees and guaranteed minimum turn times so that your life would be easier. You might be able to get a union rep to sit in with you on those meetings when a lender wants to put you on a do not use list.

The dues will only be a couple hundred bucks a months.

You're wasting your time wishing for TAF to empanel an illiterate activist ASB member who would ignore logic, reasoning and existing law to twist USPAP into something more favorable to your business interests. It's your time to waste though, so have at it.


It's already unethical to accept and perform contingent fee assignments. It always has been. Everybody already knows it's unethical, including all those thousands of appraisers who do it every day. Repeating it over and over to them isn't going to increase that awareness because it's already really high. Rewording those prohibitions isn't going to make any converts. Their problem isn't that they don't know; they just don't care, and rewriting USPAP won't make them care.

If you want to live a life without comp checks I suggest the first thing for you to do is to fire all your MB clients. Wherever there is a comp check problem, there's a MB at the bottom of it. You should be addressing your problem, not just the symptom.

Even after you get rid of comp checks, you're still going to have those damn brokers and their perogatives to deal with. Whether the pressure comes at the beginning, middle or end of the assignment makes no difference, no difference at all. That's what you guys have been missing. You're so busy looking at the one tree you're missing the forest.

 

[xmtraterbcra]

More emphasis needs to be given to system design and engineering, rather than just regulation and enforcement.

For example, putting out automated radars with cameras is a lot more effective than more severe laws or more police on the road. - You design the system with the appropriate gates and channels, delays, feedback mechanism, etc., etc., it will function on its own quite efficiently.

So, in this vein, I keep saying an Appraisal Registry is the way to go:

1. All appraisals would have to be entered into an online registry which would provide a registry number that goes on the appraisal. Appraisals would not be valid without this number. There would be a registry fee to support the system, of something like $20+/-. It would be as easy to validate an appraisal as it is to search an appraisers record in the ASC National Registry.

2. The appraisal number could be verified by possibly anyone or only authorized groups. Online look-up by registry number would show the appraiser's name, the lender and the property address and date of appraisal. Other information would be provided based on security authorization. This solves the problem of identity theft, among other things.

3. So-called comp-checks are also appraisals and would have to be registered. It wouldn't be worth the trouble or fee really. It would require most appraisers to charge a minimum fee of about $50 to do a comp-check. AVMs would likely be used instead.

4. Electronic uploads and updates can be handled quite efficiently. I won't go into it here.

5. Uploading of reports would give enforcment a lot of leverage in doing reviews and analysis. For example, they would be able to search and compare appraisals for a given location.

6. The psychological effect would be akin to driving through an intersection that you know has a camera.

This is about the simplest solution to problems discussed, that I can imagine.

Bert Craytor, SRA

 

[Carnivore]

Commentary: I simply do not understand the ASB penchant to aid readers in finding the words necessary to 'Loop Hole' yourself around current standards.

end


Question two is interesting to me because of their acceptance of the word comp check and bringing fee into the issue of standards. They did correctly point out in a very roundabout way that utterance of a value is an appraisal subject to Standards 1 & 2. I dont know about you, but I think it is pretty clear to me when something becomes an appraisal.

What they ignored in this question and answer is how important Intended User and Intended Use are to the question of ethics. If the requestors ask for a bare minimum appraisal(comp Check) it is imperative of the appraiser to know and report the Intended Use of that appraisal. This is where the problems and intent of the bare minimum appraisal begin to be exposed.

How are you going to get around the connection to a subsequent event without lying about it?

This is where the word "free" came into the picture and caused the dilema. Why would you complete and report a bare minimum appraisal for free?

Example:

Client: "I need to know the market value of a property for the purpose of marital asset distribution." Is there a way to give me a rough idea without spending a lot of money?

Appraiser: "Yes, from what I know of the subject I can give you a verbal report on a range of value or a point type value. whatever you want."

Client: Thats great, what is the fee if any? Also, if its over a 100K then we will need a more detailed appraisal for the court. Can you do that also?

Appraiser: Lets just do the first report with a fee of $35.00 and go from there?

Client: Could the value be different between the two reports.

Appraiser: Thats possible.

Client: OK, lets move forward and if the first report exceeds $100K then I will let you know if and when we need the second report.

Appraiser: Well, I, err, gee, ummm I need some time to think about this....

 

[William K]

Its really not surprising at all to me. It's the bureaucracy of trying to cover all doors and windows to keep the intruder out ,in the mean time the intruder has been in the room the whole time.

It is a classic CATCH 22!

You can perform a comp check for free ( just can't get any paying work because you performed the comp check for free)
You wouldn't perform a comp check if you couldn't get work from it.

If you give something of value to get a paying appraisal report you must report it in the appraisal report.

Since you can not perform a comp check based upon receiving an order for a full paying appraisal you can not report it in a report you can not perform.

I may not like it , but it is logical in a disturbed way.

Would have preferred,
Q: "Can an appraiser perform a comp check or the alike for a client or potential client?"

A: NO, an appraiser may only perform an appraisal in compliance with USPAP . The choice is the appraiser's as whether to not charge or charge whatever fee they want.

 

[Carnivore]

For mortgage assignments there is no way to seperate the Comp Check(the so called USPAP bare minimum appraisal) from a so called Full(the asb's term) appraisal.

USPAP has only one type of appraisal: 1. USPAP Compliant Appraisal and Report PERIOD. There minimums are the norm.
There is no such thing as USPAP minimum standards report and a USPAP Maximum Standards. There is only one USPAP compliant standard.

So for a FRT the Intended Use is to make a loan decision. To me it is unconvincing to say you do free com checks without an expectation of the future paying assignment for a lender!

I am fortunate because of NC State Laws:


93E‑1‑4. Definitions.

When used in this Chapter, unless the context otherwise requires, the term:

(1) "Appraisal" or "real estate appraisal" means an analysis, opinion, or conclusion as to the value of identified real estate or specified interests therein performed for compensation or other valuable consideration.

(2) "Appraisal assignment" means an engagement for which an appraiser is employed or retained to act, or would be perceived by third parties or the public as acting, as a disinterested third party in rendering an unbiased appraisal.


Mesage to Zaioista's Keep Trying Boys In NC you will have to lobby the State legislature to make any favorable changes to the General Statutes. A cheap BBQ lunch at Uncle Bubbas is not going to be enough, this will cost you big bucks.

 

[Ken B]

Wow. Go George!

You guys really do need to join a union and organize your following. It's the only type of entity that will fight the protectionist battles you guys are seeking. A union would lobby Congress to make comp checks a federal crime; and then the ASB would have to find a way to pretzel twist USPAP to fit that prohibition in. A union would also lobby for set appraisal fees and guaranteed minimum turn times so that your life would be easier. You might be able to get a union rep to sit in with you on those meetings when a lender wants to put you on a do not use list.

The dues will only be a couple hundred bucks a months.

You're wasting your time wishing for TAF to empanel an illiterate activist ASB member who would ignore logic, reasoning and existing law to twist USPAP into something more favorable to your business interests. It's your time to waste though, so have at it.


It's already unethical to accept and perform contingent fee assignments. It always has been. Everybody already knows it's unethical, including all those thousands of appraisers who do it every day. Repeating it over and over to them isn't going to increase that awareness because it's already really high. Rewording those prohibitions isn't going to make any converts. Their problem isn't that they don't know; they just don't care, and rewriting USPAP won't make them care.

If you want to live a life without comp checks I suggest the first thing for you to do is to fire all your MB clients. Wherever there is a comp check problem, there's a MB at the bottom of it. You should be addressing your problem, not just the symptom.

Even after you get rid of comp checks, you're still going to have those damn brokers and their perogatives to deal with. Whether the pressure comes at the beginning, middle or end of the assignment makes no difference, no difference at all. That's what you guys have been missing. You're so busy looking at the one tree you're missing the forest.

 

[SANDY]

If there is one argument that should be scrapped and never mentioned again, it is the argument that the states should do this or that. Yes, the states should do many things, but it ain't gonna happen for a variety of reasons, starting with - they don't have a dog in the enforcement fight. Never have.

The residential housing market is a national priority, not a state level priority. It should be regulated at the federal level.

I'll tell you what my state legislators care about -the voters. Not the citizens of the state of Florida - only those who vote. Needless to say, regulating appraisers, or the mortgage industry isn't at the top of the voter's lists. My observation is the Florida DBPR could care less what the ASC and certainly TAF think. The only thing that will make Florida regulate anything is being forced to do so.

Another thing I get sick and tired of hearing about - the fact that TAF has no authority to do this or that. They have the ability and the obligation to write appraisal standards for the good of the public, regardless of whether those standards are enforced or not. That's all I ask - they need to grow a pair of coconuts, get their noses out of the backside of the mortgage industry, learn to write clearly, and do the right thing. A document that is not understood by the people who rely on it is worthless. USPAP is damn near worthless.

TAF needs to go back to square one and define and discuss (in an appropriate level of detail, for once) exactly what the phrase "maintaining the public trust" means. Let's discuss (1) public, (2) trust and (3) maintining the public trust, IN THAT ORDER!!!

It would be helpful if TAF took the time to mention that the client is the entity with whom the appraiser has contracted - no less, but certainly no more. The appraiser is ultimately responsible to the public, to society and not the damn client. That is why the appraiser's product must be credible, regardless of what the client wants.

Last but not least let me state it is a damn crying shame that through this entire mees we haven't seen a single member of TAF stand up and offer an assessment, explanation or an apology for anything. I hope I remain in this vocation long enough to finally see a true activist emerge from TAF, one who is capable of commanding appraisers' respect because he (or she) demonstrates their determination to work in the public's best interest.

You got that right!!---Try suggesting that TAF adopt some pro-active rules on appraisers to prevent some of the lender abuses and listen to the forumnites howl about how we don't need more regulations---How about they adopt a regulation that says all appraisers must have an engagement letter, or a regulation that says no appraiser can accept an assignment with any indicated value on it or any one of many other pre-emptive rules they could adopt to stop lender abuses?
I guess the air is too sweeeeet up there on their high mountain top to get engaged in the battle going on in the trenches!!! maybe we should ask TAF this question-----What would your peers do? ha ha ha