July 2008 ASC Q&a- Wink Wink Comp Comp

[Elliott]

Wow! Send all reports to the state....I'm
not fond of over- regulation as a solution.
I've come to believe my actions are ethical
and professional, and virtually all agencies
and entities are less interested in being so.

I do hope appraisers take the time when
MBs get state regulated to give input on
appropriate, ethical behavior.

 

[George W Dodd]

...

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

Lee, he's referring to the ASB and their recent July Q&A. The AF is not a federal agency but is sponsored by the Fed.

The USPAP is not designed to specifically protect Appraisers, it was established to protect the users of appraisal services. The USPAP only protects Appraisers in a limited sense in that by not violating any of the standards it keeps them for having their license revoked. However the standards are intentionally not stated as a laundry list of do's and don'ts to allow for "interpretation" or "flexibility" of what the standards say and what they mean. Don't get me wrong, some flexibility is good but not when it gets twisted into a pretzel.

It's these grey areas that the users and some Appraisers use to justify what they do. Users do not have to conform to USPAP and are free to ask for almost anything (comp checks, etc), the catch here is that the Appraiser does have to comply with USPAP and something that seems insignificant to a user like a comp check but requires an Appraiser to do certain things. And we all know that some Appraisers are not doing what they are suppose to do to comply with USPAP when these requests are made.

Many times the users who request a comp check are in effect conditioning the assignment on the outcome of the comp check, otherwise they wouldn't be asking for it, and that can lead to a conflict with USPAP. The other issue is that users will often shop a comp check between different Appraisers looking for the highest value. To me there are more downsides to comp checks and I would favor a prohibition.

 

[Lee Lansford]

Lee, he's referring to the ASB and their recent July Q&A. The AF is not a federal agency but is sponsored by the Fed...

George, I'm aware. Hence, the inclusion of the "smilie" at the top of my prior post.

So, at the end of the day, there's nothing really different today vs. prior to the USPAP July Q&A.

There is no need for a "ban" on "comp checks"...we just need for appraisers to do as they are required to do.

Lee

 

[xmtraterbcra]

... it was established to protect the users of appraisal services....

It certainly doing a VERY poor job of protecting the US Taxpayer!!!

Bert Craytor, SRA

 

[xmtraterbcra]

...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

The recent Q&A is kind of silly. They really only leave a little wiggle room, and it's been like that for quite some time. Yet, that's all it takes ... As long as "under certain circumstances" a comp check is OK ... enforcement is left with the task of arguing over circumstances. To do this on a case-by-case basis with restricted enforcement resources is not productive.

For example, I've heard this: An MB calls to ask for a comp check. He gets the "receptionist". She does the comp check. Maybe she asks the appraiser his opinion. Maybe not. Sometimes she does, sometimes not. It's all verbal. Who did what? Who said what? I've heard them argue back and forth. Things get tense. In my presense (did that have something to do with it?), the appraiser tells the "receptionist": "No, I did not say that it would come in at that value. I did not say that. I only said it was possible." There's all kinds of possibilities here, including code language.

- But you know if you required that such comp checks had to be registered, you create some serious and really intractable problems for misuing them. First, it's going to cost to do comp checks to any degree. It takes some time and would probably cost $20 +/- to register a comp check. Second, appraisers would be liable for comp checks only if they were registered. [Logic being the requirement that all legitimate appraisals have to be registered and have a stamp/registry number - that could be verified by online lookup.] That is, appraisals and comp checks would only "exist" if they were legitimately registered - and the MB or whoever, would be free to access the online registry to verify that they are "legitimate."

If appraisers attempt to do comp checks "under the table" with such a system, they could be easily caught. For example, enforcement could mass mail comp check requests to a large number of appraisers through a cooperating MB and check the responses - and then follow-up by checking the registry after a week or so. Also, not registering an appraisal could be a misdeamner - and there would be clear cut prima facie evidence to back up such a charge.

It would still be possible for an appraiser to develop a very tight arrangement with a given MB - especially if that MB could supply a large number of orders. But to develop such an arrangement with more than one or two MBs, would entail increasing risk of exposure. And with an Appraisal Registry - it will be easy to see who an appraiser does business with - and patterns will emerge regarding the appraiser and the MBs/lenders he works with.

With regard to the current situation, the ASB might as well just slam the door tight shut on comp check requests because they are impractical to do and one has to question the sense of allowing only comp lists to be sent out. It just make enforcement impractical.

-And that is how this whole "sleazy" (to use a common term on this forum) system functions: It's based on making the necessary enforcement at the federal and state level impractical. Although this is certainly only partially the fault of USPAP and the ASB.

Bert Craytor, SRA

 

[Mike Kennedy]

George, I'm aware. Hence, the inclusion of the "smilie" at the top of my prior post.

So, at the end of the day, there's nothing really different today vs. prior to the USPAP July Q&A.

There is no need for a "ban" on "comp checks"...we just need for appraisers to do as they are required to do.

Lee

A few hundred more USPAP courses oughta do it.

 

[Stone]

Missed a few days. Good to see that the same folks still don't want to put this on the appraisers but instead still want the appraisal gods to come down and hold our hands and keep the big bad lenders from making us perform unethically.

Follow the existing rules. Enforce the existing rules. Quit trying to legislate something that already isn't OK.

 

[Lee Lansford]

A few hundred more USPAP courses oughta do it.

THAT and a "USPAP Cop" to accompany each appraiser throughout his or her workday.

 

[The Warrior Monk]

The recent Q&A is kind of silly. They really only leave a little wiggle room, and it's been like that for quite some time. Yet, that's all it takes ... As long as "under certain circumstances" a comp check is OK ... enforcement is left with the task of arguing over circumstances. To do this on a case-by-case basis with restricted enforcement resources is not productive.

The recent Q&A can be summed up as follows:

• If it complies with USPAP, it's okay.
• If it doesn't comply with USPAP, it's not okay.

I think it is silly in that it is stating the obvious.

For example, I've heard this: An MB calls to ask for a comp check. He gets the "receptionist". She does the comp check. Maybe she asks the appraiser his opinion. Maybe not. Sometimes she does, sometimes not. It's all verbal. Who did what? Who said what? I've heard them argue back and forth. Things get tense. In my presense (did that have something to do with it?), the appraiser tells the "receptionist": "No, I did not say that it would come in at that value. I did not say that. I only said it was possible." There's all kinds of possibilities here, including code language.

Unethical people will always act unethical, regardless of what USPAP, USPAP Q&As, or any laws state.

As far as the registering of reports goes, it's simply not going to happen due the amount of resources necessary. But, with that said, it simply adds a larger burden on a segment that, for the most part, has rock-bottom fees. Packing on more and more regs on this segment simply will create more problems. Some people already find it intolerable and have left that segment behind.

 

[xmtraterbcra]

...As far as the registering of reports goes, it's simply not going to happen due the amount of resources necessary....

It may not happen because appraisers won't subject themselves to to continual monitoring of their work. That's because, I'm guessing, very very few appraisers have confidence that they can really turn out fully USPAP compliant appraisals.

However, if the feds ever come to the correct conclusion that a stable home mortgage system requires an Appraisal Registry and continual monitoring of appraiser activity, and they decide that what they really want is stability vs a 20 year cycle of boom/bust, then it probably will happen.

The resources issue is not an argument. Large companies already employ such systems internally, - and software vendors such as Alamode have had vaults for quite some time. The technology is there and just keeps improving. A $20 +/- fee for regstration would cover the expenses of maintaining such a system.

As far as fees, appraisers need to raise them to cover expenses and provide a reasonable living. The market will pay what it needs to pay to get the required valuation service. Too many appraisers have a "looser" mentality and are too damned quick to cave in to pressures for lower prices.

Bert Craytor, SRA