July 2008 ASC Q&a- Wink Wink Comp Comp

[George Ellerman]

Is pimp the root word of pimple? That is what this thread is all about, no? :new_smile-l:

Actually it is derived from the Latin term "Pimpilius Adjusto" which means appraiser.

 

[Mike Kennedy]

"Pimpilius Adjusto" which means appraiser.

 

[xmmcsmielr]

This recent Q&A about comp checks debases the appraisal profession.

This degradation of our profession results from the Feds encouraging comp checks, which are a tool used by sleaze bag loan officers shopping for appraisers who will lie for them. Encouraging the use of this type of tool is extremely disappointing.

The Feds should retract their "answer" about comp checks, because it obviously was written by a group of dishonest appraisers for the financial welfare of that very same group, that continues to degrade our profession.

I'm so angry about this insulting standard set by an agency supposed to instill ethics in real estate appraising, that I challenge the AHs who wrote this "answer" to duels. One at a time, on the Washington Memorial lawn. Their choice of weapons and their choice of dates and times. My recommendation for the weapons is pistols.

 

[Hamlet]

This recent Q&A about comp checks debases the appraisal profession.

This degradation of our profession results from the Feds encouraging comp checks, which are a tool used by sleaze bag loan officers shopping for appraisers who will lie for them. Encouraging the use of this type of tool is extremely disappointing.

The Feds should retract their "answer" about comp checks, because it obviously was written by a group of dishonest appraisers for the financial welfare of that very same group, that continues to degrade our profession.

I'm so angry about this insulting standard set by an agency supposed to instill ethics in real estate appraising, that I challenge the AHs who wrote this "answer" to duels. One at a time, on the Washington Memorial lawn. Their choice of weapons and their choice of dates and times. My recommendation for the weapons is pistols.

Tell us how you really feel...don't be shy! :laugh:

 

[xmtraterbcra]

This recent Q&A about comp checks debases the appraisal profession.

This degradation of our profession results from the Feds encouraging comp checks, which are a tool used by sleaze bag loan officers shopping for appraisers who will lie for them. Encouraging the use of this type of tool is extremely disappointing.

The Feds should retract their "answer" about comp checks, because it obviously was written by a group of dishonest appraisers for the financial welfare of that very same group, that continues to degrade our profession.

I'm so angry about this insulting standard set by an agency supposed to instill ethics in real estate appraising, that I challenge the AHs who wrote this "answer" to duels. One at a time, on the Washington Memorial lawn. Their choice of weapons and their choice of dates and times. My recommendation for the weapons is pistols.

To appraisers who have to deal with Comp Checks on a daily basis, they boil down to a kind of promise to provide a value within an agreed upon range to get an order. In other words, you make these agreements or you'd better find another source of income. It's really either or.

To the OTHER SIDE, the side of the borrower and (let's say honest) loan agent, the Comp Check is, conceptually, a legitimate request to get a reasonable estimate of value before committing money and time to a transaction that is not likely to ever close due to inferior value of the collateral. To the OTHER SIDE, the appraisal is just a confirmation +/- of the comp check value - and they see nothing wrong with this. They don't see that the system is misused. It is up to appraisers to broadcast this sufficiently and loudly. Yet, when there are a number of appraisers, well-known appraisers, that say that comp-checks are OK - that makes any argument difficult. The Appraisal Standards Board is not helping matters much by closing their eyes to reality and engulfing themselves completely in the unreal world of USPAP regulations. I reiterate - we need systems engineers to re-engineer the system and make it work.

I'd say, that if the tolerances are that tight that a comp check is necessary - then it would be best to avoid proceeding with the loan. The LTV is evidently already too high. The risk is already in place. - If the borrower wants to proceed, to make matters most likely worse for himself and/or the lender, - then he has to unfortunately take on the risk of paying for a full appraisal. The system demands this, in order for it to function.

This, again leads back to effective enforcement. If you outlaw comp checks - how do you enforce that? Very difficult. The only way is to make every value estimate from an appraiser an appraisal - even nothing more than collecting and presenting comps. Every appraisal requires a stamped registration number from an online Appraisal Registry. All appraisal data has to be uploaded where it can be easily queried by enforcement. Verbal appraisals must also be uploaded.

- The catch is that most appraisers who complain about comp checks, don't really want enforcement breathing down their backs by having easy access to all of their appraisals in an Appraisal Registry.

So, we have a Mexican Standoff, IMHO.

Bert Craytor, SRA

 

[xmmcsmielr]

Enforcing the existing rules about comp checks is simple

Enforcing the existing rules pertaining to comp checks is very simple, IF a state board has the will to do so.

Stings:

1. Board investigator orders comp checks from appraisers.

2. Board investigator follows up with audits of the offices who complete comp checks.

3. If there are no appraisals logged in, no files for the range value reports, no support docs, then the Board issues a 30 day suspension for each comp check that violates USPAP.

4. Board publishes the results of the stings and audits in electronic, emailed monthly newsletters sent to the state's regulated community.

Likely result: a significant decrease in the number of appraisers who agree to complete comp checks that do not comply with USPAP.

Since the above type of enforcement is extremely unlikely, at least in Arizona with my state's disfunctional cabal of nine, part-time, politically appointed Board of Appraisal members who have virtually repealed USPAP by their shocking lack of enforcement, the recent Federal Q&A pours gasoline on the comp check fire and helps turn honest appraising into ashes.

The Feds recent comp check endorsement encourages dishonesty in appraising and demonstrates a dimwitted understanding of the reality of comp checks.

The Feds should retract the recent Q&A and apologize for their mistake. Otherwise, it's pistols on the Mall, you AH Feds. Consider my gloves thrown in your faces.

 

[Scott Lanz]

All appraisal data has to be uploaded where it can be easily queried by enforcement. Verbal appraisals must also be uploaded.

Bert Craytor, SRA

I have a couple of questions from your post.

Are you suggesting this for commercial reports as well as residential?

Would the verbal appraisal be a voice file that is uploaded? (This was meant to be a little smart arse )

 

[xmtraterbcra]

I have a couple of questions from your post.

Are you suggesting this for commercial reports as well as residential?

Would the verbal appraisal be a voice file that is uploaded? (This was meant to be a little smart arse )

I've run into this counter argument before - you know how are you going to upload two boxes of supporting documents for my last commercial appraisal of a shopping center or whatever?

1. At a big commercial outfit I worked for, all final appraisal reports were PDFs zipped and uploaded to a central repository where any other appraiser in the world, with authorization, could download them. The zipped files may or may not have included a portion of the workfiles. I will note that Argus type files were often included. Clearly this is also possible for enforcement. HOWEVER, a big issue is that there is a lot of proprietary technology that goes into these complex reports, and making them availabe to enforcement officials who are licensed commercial appraisers that might quite well wind up working for the competition is a BIG issue - whether or not they sign non-disclosure agreements. This is an issue that has to be worked out. But, we are really concerned about protecting the taxpayer here ... the home mortgage market. So, I believe that we could exclude commercial appraisals and for that matter any complex appraisals involving property that is "possibly" worth more than some threshold limit -say $20M.

2. Verbal reports? Well at a minimum the order, requester and appraisal data has to be entered to get a Registration or Stamp Number. Whether the estimate of value has to be entered is optional. Attorneys might object in some cases. And yes ... if the appraisal report is required for a court case, then I think the value could be ommitted for reasons of what do they call it "privelige". (I'm a little rusty here at the moment - as is often the case on Saturday mornings.)

Bert Craytor, SRA

 

[xmtraterbcra]

Enforcing the existing rules pertaining to comp checks is very simple, IF a state board has the will to do so.

Stings:

1. Board investigator orders comp checks from appraisers.

2. Board investigator follows up with audits of the offices who complete comp checks.

3. If there are no appraisals logged in, no files for the range value reports, no support docs, then the Board issues a 30 day suspension for each comp check that violates USPAP.

4. Board publishes the results of the stings and audits in electronic, emailed monthly newsletters sent to the state's regulated community.

Likely result: a significant decrease in the number of appraisers who agree to complete comp checks that do not comply with USPAP.

Since the above type of enforcement is extremely unlikely, at least in Arizona with my state's disfunctional cabal of nine, part-time, politically appointed Board of Appraisal members who have virtually repealed USPAP by their shocking lack of enforcement, the recent Federal Q&A pours gasoline on the comp check fire and helps turn honest appraising into ashes.

The Feds recent comp check endorsement encourages dishonesty in appraising and demonstrates a dimwitted understanding of the reality of comp checks.

The Feds should retract the recent Q&A and apologize for their mistake. Otherwise, it's pistols on the Mall, you AH Feds. Consider my gloves thrown in your faces.

Ricardo,

It is not that simple. You have to calculate the amount of time and effort involved. What you are suggesting, I would argue, is in fact expensive for the benefit obtained. BUT, if there were an Appraisal Registry - this is how simple enforcement would be:

1. Get a cooperating MB to call appraiser X and ask him for a comp check. (5 Minutes).
2. Wait the necessary period of time, say 15 days. (1 Minute - make an entry in the Outlook calendar).
3. After 15 days, check if the appraiser registered the comp check. And check the details. (1 minute to log on and check registry.)

- If the appraiser hasn't registered the comp check - he's in trouble. If he hasn't registered the comp check but has done the appraisal, he's in more trouble. If the comp check value looks high, pull up some appraisal reports for similar properties from the Appraisal Registry (done by appraisers with a good reputation) and do a quick comparison. If something looks fishy, consider a desk or field review. It can't get more efficient than this.

Can't trust the State Boards ... Yes, I agree, that there can be a conflict of interest between State politics and accurate appraisals. The states want home appreciation - as that means more property tax - and that helps politicians. Skippy is good for home appreciation (well at least until the final big catastrophe hits and the US taxpayer is forced to come in and bail out the lenders in the name of saving the economy from total collapse) - So, we probably need to put the Appraisal Registry at the federal level and allow them to also monitor appraisal activity.

The basic tenant of Quality Control is to design systems to EXPOSE problems -not hide them.

Bert Craytor

 

[Lee Lansford]

...

The Feds recent comp check endorsement encourages dishonesty in appraising and demonstrates a dimwitted understanding of the reality of comp checks...

QUOTE]



"The Feds recent comp check endorsement..." ? ?


I guess I must have missed something.


Lee Lansford, IFA
AQB Certified USPAP Instructor