Killing the 1004MC

[David Mescon]

I'm not arguing the finer points, George. My biggest point is why it's being used as a risk/quality tool for some to red flag appraisals that are outside the normal SDV.

It's about controlling appraisers and the appraisal process. The more power others are given over appraisers the more potency the process loses. It's a self-perpetuating cycle designed to completely spay and neuter appraisers. There are myriad reasons why various corporations and governmental entities want to achieve this. They are well on their way toward the realization of this goal. I am not a black helicopter type by any stretch of the imagination - I've just been reading the writing on the wall for many years. The more I watch the profession change, the more sure I become of reality of this process. The walls have been closing in since 1991/1992, (depending upon which state you're in), and the box just keeps getting tinier and tinier. The residential appraiser has largely been reduced to being a rat on a wheel. Pretty much like a hooked fish about to be plucked from the sea. All of the "rules" affecting appraisers which have ostensibly been established to "protect" the lending industry are a sham, and have been the result of those with the money pulling strings for their own benefit. Has USPAP improved the appraisal profession? Of course not, but it has been used innumerable times to take down appraisers, and to enrich the lives of a small number of people. USPAP was designed to be, and has been utilized as, a weapon. The mass of garbage appraisers born into the profession between the early nineties and the great recession would not exist without licensure because, quite frankly, they are not good enough, and could have never survived without the benefit of the very low universal bar to entry. The vast majority of lenders didn't just ask for a copy of your license, (because you didn't have one), - they actually personally vetted each and every appraiser before adding them to their fee panel. Expect more of these nonsensical conditions and practices, because as we all know, (WE DO ALL KNOW THIS - RIGHT???), the regulations, rules and procedures affecting appraisers will never become less onerous, only more complex and obfuscative, (i.e., more and bigger weapons; greater control).

 

[Meandering]

It's about controlling appraisers and the appraisal process. The more power others are given over appraisers the more potency the process loses. It's a self-perpetuating cycle designed to completely spay and neuter appraisers. There are myriad reasons why various corporations and governmental entities want to achieve this. They are well on their way toward the realization of this goal. I am not a black helicopter type by any stretch of the imagination - I've just been reading the writing on the wall for many years. The more I watch the profession change, the more sure I become of reality of this process. The walls have been closing in since 1991/1992, (depending upon which state you're in), and the box just keeps getting tinier and tinier. The residential appraiser has largely been reduced to being a rat on a wheel. Pretty much like a hooked fish about to be plucked from the sea. All of the "rules" affecting appraisers which have ostensibly been established to "protect" the lending industry are a sham, and have been the result of those with the money pulling strings for their own benefit. Has USPAP improved the appraisal profession? Of course not, but it has been used innumerable times to take down appraisers, and to enrich the lives of a small number of people. USPAP was designed to be, and has been utilized as, a weapon. The mass of garbage appraisers born into the profession between the early nineties and the great recession would not exist without licensure because, quite frankly, they are not good enough, and could have never survived without the benefit of the very low universal bar to entry. The vast majority of lenders didn't just ask for a copy of your license, (because you didn't have one), - they actually personally vetted each and every appraiser before adding them to their fee panel. Expect more of these nonsensical conditions and practices, because as we all know, (WE DO ALL KNOW THIS - RIGHT???), the regulations, rules and procedures affecting appraisers will never become less onerous, only more complex and obfuscative, (i.e., more and bigger weapons; greater control).

woohoo

Dave,

We should get together and write our own wipe paper about this. Even though I'm not an old guy with a 20-30 year certification to appraise. I still agree with what you have said here. The game is more than greater control. The game is to kill off the profession. Right now, lenders through their AMCs have greater control over the appraisal and process than ever before. I wish someone would explain why lenders will not accept any work that a trainee has worked on. They did for years, but not now. As with any speices, when it can not reproduce it will die off.

 

[George Hatch]

It's truly wishful thinking to believe that if not for licensing banks would have never turned over the majority of the residential loan origination to mortgage brokers or limit their lending activities to local markets or develop personal relationships with every appraiser they accepted work from.

In ignoring the effects of the evolution of technology and its effect on commerce at all levels, and blaming everything on licensing alone you are burying your head in the sand. Most of these changes would have occurred independent of licensing. All licensing did was slow down the barbarian hordes from unilaterally declaring themselves your peers without any training whatsoever.

If you want to know what the appraisal business would have looked like without any barrier to entry all you have to do is look at what the mortgage brokerage business is like.

 

[David Mescon]

It's truly wishful thinking to believe that if not for licensing banks would have never turned over the majority of the residential loan origination to mortgage brokers or limit their lending activities to local markets or develop personal relationships with every appraiser they accepted work from.

In ignoring the effects of the evolution of technology and its effect on commerce at all levels, and blaming everything on licensing alone you are burying your head in the sand. Most of these changes would have occurred independent of licensing. All licensing did was slow down the barbarian hordes from unilaterally declaring themselves your peers without any training whatsoever.

If you want to know what the appraisal business would have looked like without any barrier to entry all you have to do is look at what the mortgage brokerage business is like.

George, while your position is not without merit, we were both around prior to the farce we call licensing. The residential side of the profession had a system of checks and balances in place that was removed when licensure was instituted. Things were a bit different on the commercial side, which played no small part in the good ol' "debacle." While it is true the "hordes" were declaring themselves your peers left and right, it was actually often more difficult on the residential side to get away with that.

 

[George Hatch]

All I'm saying is that back in the day the cornerstone of the business was the personal relationship. Technology has rendered that aspect of the business fundamentally obsolete. I never meet most of my clients - ever; let alone have the same kind of face-to-face relationships I used to have back when we hand delivered reports or did our soliciting in person. These loan originators sometimes never even meet their borrowers. These lenders solicit business in states far away from their offices.

The whole commerce angle itself is fundamentally different than it used to be - far less personal and far less personal accountability. The regulatory angle is a factor too, I'm just saying it's not the only problem or, IMO, the biggest problem.


Yeah, the banks handed their responsibilities for vetting appraisers and reviewing appraisals to these 3rd parties but that would have happened regardless - they handled the brokers exactly the same way and are only now starting to get heavy with the AMCs because they are being compelled to do it.

We screwed up as a profession by not curbing our sweatshops. IMO, that's the single biggest factor in the donkey equation. These morons who ran the big shops off the backs of unsupervised trainees are/were Public Enemy No. 1. Arguably worse than the Anthony Mozillos of the lending industry. The only saving grace is that a down market forces everyone to clean their act up a bit because users are now reading reports for content and demanding more. Autopilot doesn't work as well now as it used to.

 

[David Mescon]

You're right George. We had much to do with our own demise. I tried in vain, numerous times, throughout the years to stem some of the criminality that pervaded our profession. I certainly wasn't the only one to attempt to do that. As is usually the case, the golden rule determined the victor - he who has the gold rules. Licensure, along with the loss of the six month buyback provision, set the stage for all that followed. I'd say that in this instance, at least, the bureaucracy made the first move - not the majority of the appraisal profession. Thanks, George, for your (as usual), very well thought out perspective.

 

[eld2310]

It's about controlling appraisers and the appraisal process. The more power others are given over appraisers the more potency the process loses. It's a self-perpetuating cycle designed to completely spay and neuter appraisers....(snip)

I completely agree. It seems like appraisers are viewed mainly as obstacles in the loan process, and if history has proven anything it's that people who make money from lending money will find a way to slither around, under, over, through or by simply assimilating anything in their way. It used to be the symbiotic originator/appraiser relationship that kept those questionable deals closing at a brisk pace...but with the HVCC and Dodd-Frank putting the kibosh on that mutual back-scratching, they're having to find new and different ways to control the appraisal process. And of course along the way they've figured out how to take a large chunk of our money, too.

I sometimes wonder if the AMC fee-skimming system is all that's keeping the Too-Big-To-Fails from simply vaporizing the appraisal industry and replacing us with software and outsourced data-entry technicians. I know what they make from us is small potatoes compared to the $500 billion they got from TARP and the $7.5 trillion they got under the table from the Federal Reserve, but they do seem to like the taste of our fees and maybe that's the only thing that's going to keep us around in the long run.

.

 

[Corbyn Reece]

Agree. The 1004MC seeks good information, but that information is not accurately available. I appraise a fairly dense area, but there still is not sufficient data to properly measure a trend.

Also, unfortunately, larger/more representative studies (such as by zip code) are not much better, as smaller neighborhood enclaves or different types of properties often do not follow general area trends.

I put disclaimers in my 1004MC saying as much.

I might suggest a form where the appraiser is to put in trend findings, either from their own 1004MC-type study or zip code, and then a small area to comment on the trend and let the underwriter do with it what they want.

 

[Mike Kennedy]

Things were a bit different on the commercial side, which played no small part in the good ol' "debacle."

1983 - lest we forget

http://www.emeraldinsight.com/journals.htm?articleid=844903&show=abstract

One MAI's perspective
http://www.appraisalmatters.net/?p=3751

 

[Lee Lansford]

As others have noted and which I will not repeat, the 1004MC certainly has limitations, but, that does not make it useless. Limited data is by itself instructive.

The local MLS has a search function for populating the 1004MC. Similar to many experiences expressed here, seldom are there a significant set of data within any particular period to distinguish a trend, but, that by itself is of interest.

I find that I always have to supplement what populates the 1004MC with data and analysis for the neighborhood and market for the subject's property type. I make good use of the MLS' search function for the 1004MC (but not for use in the 1004MC) by not limiting the search function to "comps" but for all of the subject's property type for the "neighborhood" and for 3 separate 12-mos. periods. This expansive search frequently yields sufficient data and readily identifiable trends.