July 2008 ASC Q&a- Wink Wink Comp Comp

[Rice Brewer]

Rice, the ASB understands.

You are right in that they seem to "understand" how it should be done. What they don't understand, IMHO, is that they have left the door wide open to abuse and pressure.

 

[Hamlet]

Nice in theory, but the problem is that they do not want us to perform a “comp check” just because they are curious. They want the “comp check” as an upfront guarantee. How many times have you heard the excuse that they do not want to charge the borrower for an appraisal unless the deal will work?

How then can the second appraisal not be contingent on the “comp check”? How many “comp checks” that do not meet the needed target number turn into real appraisals? How many of those that performs these free services meet S1 and S2 and retains a work file?

The question should have been worded:

Does USPAP allow an appraiser to perform “comp check” assignments for free knowing that the borrower does not want to pay for an appraisal unless the deal will work?

 

[Bearslide]

The powers that be created skippy - now they must ensure he can continue to function.

You got it Donna - a comp check is nothing more than a guaranteed value check - always has been, always will be.

 

[Lee Lansford]

You are right in that they seem to "understand" how it should be done. What they don't understand, IMHO, is that they have left the door wide open to abuse and pressure.

Rice, the point is that when it comes to "pressure", the ASB does not control--the ASB does not have authority over--those who would "pressure" appraisers. The ASB can only inform those appraisers who are subject to the USPAP as to what is, and what is not, acceptable behavior on the part of the appraiser.

Lee

 

[Hamlet]

You are right Lee, and that is where the regulation needs to be, on those that request these comp checks.

 

[Lee Lansford]

...
The question should have been worded:

Does USPAP allow an appraiser to perform “comp check” assignments for free knowing that the borrower does not want to pay for an appraisal unless the deal will work?

As the ASB has indicated (p. 3 of the July USPAP Q&A): "...the appraiser would have to ensure that receiving a 'full' appraisal assignment is not contingent upon the result of the 'comp check' assignment."

Now, I agree that many appraiser willingly and knowingly don't give a hoot about pronouncements from the ASB...but what would you have the ASB do about those appraisers who elect to ignore their advice? A "USPAP cop" can't accompany each appraiser as the appraiser goes about his (her) work day.

The problem is not the ASB and their pronouncements...the problem is that there exist too many appraisers who work against what is the right thing to do.

 

[Lee Lansford]

You are right Lee, and that is where the regulation needs to be, on those that request these comp checks.

I agree.

Unfortunately, the ASB has no control over those who make the requests.

 

[Lee Lansford]

The powers that be created skippy - now they must ensure he can continue to function.

You got it Donna - a comp check is nothing more than a guaranteed value check - always has been, always will be.

The "powers that be" (if you refer to the ASB) neither created skippy nor do they work to ensure that skippy can continue to function. "Skippy" works contrary to the ASB and the ASB's pronouncements. "Skippy" is the "enemy"...not the ASB.

 

[George Hatch]

How did they leave the door open to abuse and pressure?

The Management section of the Ethics Rule prohibits appraisers from accepting the second assignment if it is contingent on an improper assignment condition. How much more clear about it does the ASB need to be?

The question as asked referred to the initial freebie appraisal, not the second one. The ASBs response adressed it anyway by saying that, under USPAP, the appraiser wouldn't be disclosing the freebie in the second report because they wouldn't have accepted that "paying assignment" in the first place due to the prohibited contingency. There are no disclosure requirements in USPAP for appraisal assignments you don't accept and reports you don't write.

You're wasting your time if you're trying to get the ASB to commit to a position that if the "market value" of the freebie is $125 and your competition lets it go for $100 they are giving the other $25 away as an undisclosed payment. It's not the ASBs job to get involved with how much or how little money you should make or are allowed to make, and they aren't going to do it regardless of how many times you ask them or how you phrase the question.

 

[Mr Rex]

Appraisers are told how to handle comp checks. Its the lenders and their associates that continue to want to play the "why buy the cow when the milk is free" game. Maybe with the banking house of cards falling down around them will they see that they are buying spoiled milk to start with in this particular little card game. Nothing good can come from MBs shopping to find some one to hit the number. They know it, we know it, the real question is will they (the lending side) do anything to prevent it? Eliminating MBs ordering appraisals is certainly one step forward and toward that goal.