July 2008 ASC Q&a- Wink Wink Comp Comp

[Fred]

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.

Any constructive advice? What else besides making it unethical to hit pre-determined values can the rule-making body do? Where are these other magic words that the ASB can't find?

 

[Fred]

A cow in a field surrounded by holes with a donkey poking out of each comes to mind for some reason.

The problem with "Comp Checks" all along is that the obtaining of an assignment by its very nature is contingent upon the comp check value.

Disagree. One can only enter into an agreement to hit a pre-determined number, by entering into an agreement. A unilateral assumption or expectation by one of the parties is not an "agreement."

The problem is, you have the same set of facts on every "update." The results of a prior appraisal (virtually always) create an expectation on the part of the client or user about what the results of a subsequent appraisal.

Just my NSHO, but the truly unethical don't need to provide comp checks. They only need the target value.

 

[SANDY]

Any constructive advice? What else besides making it unethical to hit pre-determined values can the rule-making body do? Where are these other magic words that the ASB can't find?

Ummm!! How about recognizing the fact that the practice of performing comp checks could, has, and will lead to unethical behavior on a wide scale so let's not allow comp checks in the first place!!!!!

Chew on that one Mr. Socrates!!!

 

[Carnivore]

Just my NSHO, but the truly unethical don't need to provide comp checks. They only need the target value.

True, but the Comp Check with the corresponding expectation is indeed a fishing expedition for the unethical. So the ethical appraisers makes a stab at a possible legitiamate assignment. Eventually they learn to just hang up on: Hey Buddy, I have some real nice people.... CLICK

 

[ockyappraiser]

I keep reading that the Appraisal Foundation and AQB have no authority over the states. That's simply not true. Ask your state regulatory board. The state boards are "certified" by the AQB and fall under the Appraisal standards part. If a state board wanted to deviate from the national guidelines, they could be de-certified. The net result would be that lenders would drop licensees in that state as their certifications would also be out.

Watch what is going on in Congress right now. We are naive if we think that Congress is not moving to put all mortgage origination including appraisal regulation under tight national control.

 

[Fred]

Ummm!! How about recognizing the fact that the practice of performing comp checks could, has, and will lead to unethical behavior on a wide scale so let's not allow comp checks in the first place!!!!!

Chew on that one Mr. Socrates!!!

I don't think Socrates's students could avoid answering the Socratic questions without getting tossed from class. So, where are the magic words I asked for? I don't see any proposed language.

You can't come up with the language because you are employing the fallacy of false cause. "Comp checks" per se don't "lead to" unethical behavior, any more than the appraiser licensing exam "leads to" unethical behavior, any more than hammers "lead to" bad carpentry.

Go ahead, take another try. Let me see those magic words the ASB can't find.

 

[Mike Kennedy]

try collusion, conspiracy, solicitation to commit fraud, fraud, bribery, and blackmail.

 

[Fred]

True, but the Comp Check with the corresponding expectation is indeed a fishing expedition for the unethical.

Not necessarily. All the "comp checks" and the one requested "update" could be competent and ethical appraisals. And as you have agreed, the unethical do not need the "comp check." Just look at what your arguments would look like if you would stop using the term "comp check" and called them what the are, appraisals. That was the gist of one of GH's post.

Yoiu are describing something similar to "forum shopping." That's when people filing a legal claim try to get the case in front of a specific court, because they anticipate a favorable outcome. Notice, the lawyer who wants the word "God" taken off currency and out of the Pledge of Allegiance always seems to end up in the Ninth Circuit. Coincidence?

The problem for your argument here, is that as long as the court is giving its own opinion, they are not doing anything wrong. Inside the profession, one cannot stop the forum-shopping of outsides. That is, the ASB cannot regulate clients.

The solution you want has to come from the GSE's or federal regulatory agencies. They are the one in a position to curtail forum-shopping by LO's and MB's.

 

[xmtraterbcra]

The problem is that there is no uniform definition of "comp check." I'm in the camp with Mr. Shields, that a "comp check" is a contingent assignment. In my experience, I have only heard that term used by MBs and AMCs, and 100% of the time it means "if you guarantee the number I need you get the assignment." I'm not one to twist the terminology so that I can pretend it is something else so as to obtain work from these unethical folks.

"Comp Check" is not clearly defined anywhere. Basically, in my opinion, from the way it is used, in it's cleanest form it is a preliminary estimate of value that potential clients use to decide whether it makes sense to proceed on what appears to be a possilby risky business transaction. In particular, mortgage brokers and loan officers don't want to waste their precious time on putting together a loan package that has very little chance of closing.

In its dirty form, the potential client is determined to make the transaction happen regardless of the true value of the collateral and is sending out numerous requests for comp checks to find an appraiser who is enough of an idiot or crook to give him the value he needs. Actually, this is such a problem, that "comp checks" should in general be advised against.

Note that I don't do comp checks, because I don't need to - I have other work. But for many, it is the only way to get work and stay in business.

The solution is, per USPAP, to treat the Comp Check as an appraisal. Require all appraisals to be registered with a "stamp" fee of say $20+/-. The fee plus the work required, plus the visibility and thus responsibility would make them far less desirable to deal with. Zillow, et al, is the place to go for a real comp check.

Furthermore, I would add this to the regulations: Only one appraisal per business transaction by a given appraiser or appraisal company!!! So, if you want to do a comp check - that's all you are going to get. Period! The real business is going to go to someone else. [Oh you say you and your buddy over at AMC xyz will arrange to do comp checks for each other ... but that would be apparent by an inspection of the appraisal registry - and such collusion would be interpreted as multiple appraisals for a given transaction by the same entity.]

Bert Craytor, SRA

 

[Carnivore]

Not necessarily. All the "comp checks" and the one requested "update" could be competent and ethical appraisals. And as you have agreed, the unethical do not need the "comp check." Just look at what your arguments would look like if you would stop using the term "comp check" and called them what the are, appraisals. That was the gist of one of GH's post.

Yoiu are describing something similar to "forum shopping." That's when people filing a legal claim try to get the case in front of a specific court, because they anticipate a favorable outcome. Notice, the lawyer who wants the word "God" taken off currency and out of the Pledge of Allegiance always seems to end up in the Ninth Circuit. Coincidence?

The problem for your argument here, is that as long as the court is giving its own opinion, they are not doing anything wrong. Inside the profession, one cannot stop the forum-shopping of outsides. That is, the ASB cannot regulate clients.

The solution you want has to come from the GSE's or federal regulatory agencies. They are the one in a position to curtail forum-shopping by LO's and MB's.

Steven,

I dont recall disagreeing wwith GH. I said earlier that they only muddied the waters by using something other then correct terminolgy, i.e appraisal.

I disagree with the ASB twisitng this so someone can loop hole there way from the comp check to another assignment without exposing the impropriety of it all.

Mike and I both made the point earlier, specific to lending, the comp check is always a contingency. What other reason could there be when it comes to a lending decision?