July 2008 ASC Q&a- Wink Wink Comp Comp

[Mike Kennedy]

The appraisal should be ordered by the underwriting department of the lender.

Solves nothing when most Loan Underwriting Departments ultimately report to an Exec who heads up BOTH UW and Origination and typically CAME from the Origination side of the buz. $$$ talk - b.s. walks.

Thet Get what they Want. They control approved appraiser lists, THEY control the # of SARS reports, THEY decide on the volume of Lender complaints to State Boards. They run ALL aspects of mortgage lending .........and those who forget that are dreaming. The Banks which have gone, or are going, under financially rewarded fraud.
Period. The Regulators allowed them to do so. Period. Policitians at the State and Federal Level are owned by the $$$ industry participants NOW, THEN, and always will be.

LENDERS: "Unbiased, Objective, Independent in Residential Mortgage appraising. HELL NO - NOT WHEN WE ARE PAYING FOR IT! gimme the damn number we tell you or get lost." ( p.s. DONT FORGET TO LOOK VERY HARD AT THE CONTRACT PRICE - YOU WILL PAY THE PENALTY WHEN U FAIL TO HIT THE $$.)


and the Band plays on...... I posted it two years ago, last year, and this year....... the SUB-PRIME GANG IS NOW DOING EXACTLY THE SAME THING WITH FHA. The exact same results will occur.

AMEND TITLE XI (AND THE USPAP) MAKE IT BINDING ON MORTGAGE LENDING USERS OF APPRAISAL SERVICES AT THE FEDERAL LEVEL - AND ENFORCE THE DAMN THING.

 

[Carnivore]

It seems like they did step up on this issue, it's just that some don't like the answer.

Those standards already say that unethical contingencies are prohibited.

Danny,

Maybe its time for them to re-visit the Ethics section of USPAP. It does seem to me that we are out of step on this issue. Look at other professions and how they handle their pre-engagements; Lawyers, RE Agents, Mortgage Loan people, Contractors, etc ect. They all do a form of Pre-something to get the job! Free Estimates, Free BPO's, Free legal Consultations(1st visit's)
etc etc

The conduct section does not say anything of contingencies. It appears the management section about ethical behaviour is the culprit.

4. the attainment of a stipulated result; or

5. the occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose.


I can give an examples of assignments that I believe are legitimate but seem to fly in the face of the management section and are in compliance with the Conduct Section.

REREAD THIS BECAUSE I MADE CHANGES

 

[Mike Kennedy]

Sure Carni - and revoke the advocacy clause too. It's fine - really. The Independent and arms-length Objectivity requirements mean nothing anyway. They never did.

 

[DWiley]

Maybe its time for them to re-visit the Ethics section of USPAP...

There is nothing in USPAP that prevents an ethical appraiser from handling a "comp check" request ethically. I have a template I have created that meets the documentation requirements for an oral report of a "desk-top" appraisal. Anyone who can read and use a word processor could easily create such a template to handle requests for "comp checks."

The real issue, in a lot of cases, seems to be the fee. Just as AMCs get away with their low fee structures because appraisers agree to accept them, as long as a large group of appraisers are willing to provide free "comp checks," clients will continue to ask for them.

Of course some (many?) aren't really looing for a "pre-appraisal," they want a guarantee of a specific result on the "final appraisal." As George pointed out, this is prohibited regardless of whether or not one does a "comp check."

 

[Mike Kennedy]

"Of course some (many?) aren't really looing for a "pre-appraisal," they want a guarantee of a specific result on the "final appraisal."


Really? Who knew?

 

[Pamela Crowley (Florida)]

Why does it seem like we are trying to figure out the best way to mop up the water spilling over a dam instead of fixing the dam?

If comp check requesters and the people who perform them are the problem - what is the best way to solve that?

I can offer some ways that are not:

1 - Do not make oral reports, desktops, or drive-by's illegal. What the comp checkers are doing now is wrong, what makes anyone think that making it more wrong will stop it? Don't take good, reasonable tools away from good ethical appraisers.

2 - Don't think that new AQB requirements will solve the problems. Having stricter licensing requirements will simply make the unethical people who really want to do this unethically jump through a few more hoops. Bad people are bad people. There are bad lawyers, doctors, accountants and business people at all levels of educational backgrounds.

3 - Do not turn over the appraisal ordering business to a government or quasi-government agency. That rarely solves any problems.

Now, some suggestions to fix the issue?

1 - The process of comp checking really boils down to value shopping. That is the issue. To fix that, the ordering of appraisals has to be taken away from MB's and LO's. There can be no involvement from the orginators. The appraisal should be ordered by the underwriting department of the lender.

2 - Licensing and enforcement from the lender's side should take place.

I dont think there is much more than that needed.

EXACTLY!!!

Thank you, Bill.

 

[Carnivore]

There is nothing in USPAP that prevents an ethical appraiser from handling a "comp check" request ethically. I have a template I have created that meets the documentation requirements for an oral report of a "desk-top" appraisal. Anyone who can read and use a word processor could easily create such a template to handle requests for "comp checks."

The real issue, in a lot of cases, seems to be the fee. Just as AMCs get away with their low fee structures because appraisers agree to accept them, as long as a large group of appraisers are willing to provide free "comp checks," clients will continue to ask for them.

Of course some (many?) aren't really looing for a "pre-appraisal," they want a guarantee of a specific result on the "final appraisal." As George pointed out, this is prohibited regardless of whether or not one does a "comp check."

I mispoke, I meant it is time to revisit the Management section. Specifically #4 and #5

 

[SANDY]

It seems like they did step up on this issue, it's just that some don't like the answer.

It does not matter how much "courage" a regulator has, they can only regulate those things within their jurisdiction. The ASB is authorized to promulgate appraisal standards. Those standards already say that unethical contingencies are prohibited.

The ASB is not authorized to regulate the activity of mortgage brokers. You might as well ask them to write stricter cosmetology standards because an appraiser somewhere got a bad haircut.

Nice side-step---- What about the statement I posted that says USPAP is promulgated for appraisers and the users of appraisal services? Get on point.

 

[SANDY]

The appraisal should be ordered by the underwriting department of the lender.

Solves nothing when most Loan Underwriting Departments ultimately report to an Exec who heads up BOTH UW and Origination and typically CAME from the Origination side of the buz. $$$ talk - b.s. walks.

Thet Get what they Want. They control approved appraiser lists, THEY control the # of SARS reports, THEY decide on the volume of Lender complaints to State Boards. They run ALL aspects of mortgage lending .........and those who forget that are dreaming. The Banks which have gone, or are going, under financially rewarded fraud.
Period. The Regulators allowed them to do so. Period. Policitians at the State and Federal Level are owned by the $$$ industry participants NOW, THEN, and always will be.

LENDERS: "Unbiased, Objective, Independent in Residential Mortgage appraising. HELL NO - NOT WHEN WE ARE PAYING FOR IT! gimme the damn number we tell you or get lost." ( p.s. DONT FORGET TO LOOK VERY HARD AT THE CONTRACT PRICE - YOU WILL PAY THE PENALTY WHEN U FAIL TO HIT THE $$.)


and the Band plays on...... I posted it two years ago, last year, and this year....... the SUB-PRIME GANG IS NOW DOING EXACTLY THE SAME THING WITH FHA. The exact same results will occur.

AMEND TITLE XI (AND THE USPAP) MAKE IT BINDING ON MORTGAGE LENDING USERS OF APPRAISAL SERVICES AT THE FEDERAL LEVEL - AND ENFORCE THE DAMN THING.

Bingo!!!!!

 

[Carnivore]

Sure Carni - and revoke the advocacy clause too. It's fine - really. The Independent and arms-length Objectivity requirements mean nothing anyway. They never did.

Mike

The conduct section handles that just fine. Its the management section that causes the problem.

Our business has several aspects to it. When we produce an appraisal service we have rules and ethics to follow. How is this any different then your continueing to receive work from a client because you did a good job on the first assignment. That in itself is a contingency.