July 2008 ASC Q&a- Wink Wink Comp Comp

[Lee Lansford]

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, what authority does the ASB have over the users of appraisal services?

The easy and correct answer: None.

I believe that you are jousting at windmills.

This is an important point: the ASB has NO authority over users of appraisal services! I can understand your frustration, but if you fail to understand this point, the result is that you direct your frustration at the wrong party.

 

[George Hatch]

Sandy,

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.

You seem to be thinking that the comment "USPAP is promulgated for appraisers and users of appraisal services" to mean that the ASB can enact standards for the conduct of the users of appraisals.

If so, the ASB would have to have the authority to compel users to comply with our standards. However, one look at structure of The Appraisal Foundation should put that notion to rest. TAF is not a governmental entity. It doesn't have the right or the ability to make, judge or enforce law or public policy. The only way USPAP becomes an enforceable standard is when a governmental agency or jurisdiction accepts or adopts it, when it's required by contractual agreement, or when the individuals decide to abide by it.

In short, the ASB doesn't force anyone to do anything. The state appraisal boards and the federal government do that via licensing requirements. The ASB just establishes appraisal standards that are used by other people, much the same way the Financial Accounting Standards Board establishes professional standards for the accounting profession. There literally is no USPAP police.

Instead, the term "for appraisers and users of appraisal services" means exactly what it says. USPAP is intended to delineate appraisal standards - how to conduct oneself while performing and communicating various appraisal services - for the benefit of appraisers and users of appraisal services.

It is obvious that the users of appraisals don't perform appraisal services, which is why USPAP does not apply to their conduct. The way that users benefit from USPAP is that it provides a set of standards they can use to see if the appraisal services they are getting conform to our minimum requirements and are thus suitable for their usage.

One example of how a user of appraisal services can benefit from looking at USPAP happens when they suspect an appraiser is pulling their chain about what they can and can't do. For instance, when an appraiser declines to accept an assignment with a contingent value requirement and cites the Management section of the Ethics Rule as their reason for not cooperating, that client can go to that section and read it for themself. In that way, they can determine that the appraiser is not just being stubborn or antisocial but does in fact have a legitimate reason for why they cannot do as the client originally requested.

The same can be said for any set of professional standards. When I go to get a haircut from a licensed barber who is abiding by their professional standards, I as a consumer am not subject to those standards, but I do benefit from them to the extent that I can demand that barber act in conformity with them.

Get it?

 

[Ken B]

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.

Perhaps an understanding of the difference between "promulgated for" and "binding upon" would help clear up the confusion?

 

[William K]

Great, now we want to see if there are different standards for "full appraisals" vs. "comp checks" as used in this Q&A. You guys just seem to refuse to believe that both are "appraisals" (and are treated as such in this AO) and are subject to the same minimums in USPAP.

-------------
Not at all, I firmly believe they are appraisals. My problem is why did the ASB have to call them something other than appraisals, why did they use SLANG terms and call them " Comp Checks" and " Full Appraisals"?

"Question:
[FONT=Times New Roman,Times New Roman]Does USPAP allow appraisers to perform "comp check" assignments for free? [/FONT]
Response:
[FONT=Times New Roman,Times New Roman]Yes. However, the appraiser would have to ensure that receiving a "full" appraisal assignment is not contingent upon the result of the "comp check" assignment."[/FONT]

The flaw is the question is loaded! There are 2 issues to address Comp Checks and Fee.( simple answer)

Better response to question

IF " Comp Checks" are less than the minimum appraisal requirements under USPAP they are not permitted. USPAP requires APPRAISALS to be performed in compliance with it's standards.
Fee's are not regulated by USPAP!



[FONT=Times New Roman,Times New Roman][/FONT]

 

[George Hatch]

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.

Well, at least now you're looking in the right direction. The whole problem has been one of inadequate enforcement of existing laws and regulation, not of the appraisal standards themselves. I think we are all in agreement that had the lenders and loan originators been put under the same type of restrictions that we have, and the regulations on both sides been appropriately enforced, we would have never gotten to where we are now.

It took the S&L bailout of the 1980s to bring the appraisal profession under the common set of appraisal standards and to regulate our conduct. But because they only took a superficial swing at regulating the lenders' conduct the job of holding everyone accountable was left unfinished. Now that the Mortgage Banking Bailout II has come along, the fallout from that will be sufficient to finish the job.

It's a tragedy that it had to come to this, but apparently nothing short of a catastrophe was going to be sufficient. So here we are.

Notice that the appraisal profession isn't really getting all the heat right now for these problems, even though our donkeys enabled some of these excesses. We seem to be getting off very lightly, all things considered. I don't think the current trend toward blaming the lenders and loan originators happened by accident or oversight. I think we've made a pretty good case with the public for how these excesses occurred. It really helps that we were complaining about their conduct long before any of the fallout came to light. We beat these lenders to the punch.

It looks bad now, but the wheels of bringing these lenders under similar controls as we face are already in motion. The U.S. economy isn't going to lose a trillion dollars or more without considering how to avoid it happening again.

 

[George Hatch]

Better response to question

IF " Comp Checks" are less than the minimum appraisal requirements under USPAP they are not permitted. USPAP requires APPRAISALS to be performed in compliance with it's standards.


Fee's are not regulated by USPAP!

Pardon me for saying so, but had the ASB made their comment that way I'd be calling them idiots. I have pretty high expectations for them with respect to understanding USPAP.

What if the "comp check" is actually only a data dump and is not an appraisal at all? Which, BTW, is one of the possibilities that the ASB noted in this Q&A. What if you ran an AVM for your client per their specifications? You're saying the ASB should have told us that we can't perform either of those services because neither is an appraisal. And yet, when an appraiser performs such services they could fall under the category of "appraisal services" as defined.

BTW, as far as I'm concerned, the term "full appraisal" means exactly the same thing to me that "comp check" does if/when the latter involves an opinion of value. It would mean the same thing to you, too, if you were to just let go of your rage at any usage of the term "comp check".

 

[Ken B]

Notice that the appraisal profession isn't really getting all the heat right now for these problems, even though our donkeys enabled some of these excesses. We seem to be getting off very lightly, all things considered. I don't think the current trend toward blaming the lenders and loan originators happened by accident or oversight. I think we've made a pretty good case with the public for how these excesses occurred. It really helps that we were complaining about their conduct long before any of the fallout came to light. We beat these lenders to the punch.

Here is an interesting read. It just goes to show that failure to properly enforce existing rules and regulations is endemic to the entire real estate and mortgage lending industry.

http://www.miamiherald.com/static/multimedia/news/mortgage/brokers.html

 

[Stone]

Great, now we want to see if there are different standards for "full appraisals" vs. "comp checks" as used in this Q&A. You guys just seem to refuse to believe that both are "appraisals" (and are treated as such in this AO) and are subject to the same minimums in USPAP.

-------------
Not at all, I firmly believe they are appraisals. My problem is why did the ASB have to call them something other than appraisals, why did they use SLANG terms and call them " Comp Checks" and " Full Appraisals"?

"Question:
[FONT=Times New Roman,Times New Roman]Does USPAP allow appraisers to perform "comp check" assignments for free? [/FONT]
Response:
[FONT=Times New Roman,Times New Roman]Yes. However, the appraiser would have to ensure that receiving a "full" appraisal assignment is not contingent upon the result of the "comp check" assignment."[/FONT]

The flaw is the question is loaded! There are 2 issues to address Comp Checks and Fee.( simple answer)

Better response to question

IF " Comp Checks" are less than the minimum appraisal requirements under USPAP they are not permitted. USPAP requires APPRAISALS to be performed in compliance with it's standards.
Fee's are not regulated by USPAP!

I think it is quite obvious why they posed the question in a manner that used slang. That is the type of question they have been receiving and they were attempting to reach those who have questions about "comp checks".

 

[George Hatch]

Enforcement costs money, is slow and is reactive by definition. I still think that cutting the loan originators (who are many) out of the loop and keeping a closer watch over the direct lenders (who are few) will provide us with the most bang for our buck.

The only problem is that nobody really wants that. We value the "benefits" of the existing structure more than we value the level playing field.

 

[William K]

"Pardon me for saying so, but had the ASB made their comment that way I'd be calling them idiots. I have pretty high expectations for them with respect to understanding USPAP.

What if the "comp check" is actually only a data dump and is not an appraisal at all? Which, BTW, is one of the possibilities that the ASB noted in this Q&A. What if you ran an AVM for your client per their specifications? You're saying the ASB should have told us that we can't perform either of those services because neither is an appraisal. And yet, when an appraiser performs such services they could fall under the category of "appraisal services" as defined.

BTW, as far as I'm concerned, the term "full appraisal" means exactly the same thing to me that "comp check" does if/when the latter involves an opinion of value. It would mean the same thing to you, too, if you were to just let go of your rage at any usage of the term "comp check"."


No "Rage" as you state, just want the term to be defined!


As underlined above you state
"What if the "comp check" is actually only a data dump "

Well according to that "Comp Check" definition that is not an appraisal now is it?

at the end of your post you state
"as far as I'm concerned, the term "full appraisal" means exactly the same thing to me that "comp check" does if/when the latter involves an opinion of value."

Under that definition it's an appraisal.

So what is your definition of the term "Comp Check" because you have given 2 possible definitions in your response, and the ASB has given none.