Lender Select...is that the problem?

[Terrel L. Shields]

I got a PM from a forum member that basically said "amen" to my point in a reply where I ventured that all the education and discipline is not going to change the situation until chosing the appraiser is taken out of the hands of the lenders. Some third party needs to choose the appraiser and the lender should have no recourse in that choice.

We need to get to the point where the mortgage broker cannot choose the appraiser. The Realtor cannot choose the appraiser. The borrower cannot choose the appraiser.

We have laws that basically prevent the Realtor and Borrower from choosing their own but those are not treated as laws just suggestions by the bankers.

Do you think Rosters are a workable solution? I do. It works for VA. It worked for FHA. It can work for conventional and fannie lenders, too. Let Fannie mae create a computerized system that places mortgage appraisers on a roster and rotates the work. This evens the field out between pro and neophyte. The newbie can charge the same as the pro and the pro can get as much work as everyone else. A lot of top notch appraisers are basically twiddling their thumbs unable to compete with cutrate trainees. Even if the get higher fees, they tend to be sitting behind a glass with a sign which reads 'break glass in case of emergency'...

What thinks the group?

 

[PL1957]

This evens the field out between pro and neophyte. The newbie can charge the same as the pro and the pro can get as much work as everyone else.

This seems to imply that the newbie and the pro produce the same level, or quality of work. Do you really think so little of our profession that you don't think there's a dollars worth of difference between what's produced by a neophyte and a pro?

The "user" of the appraisal should be in complete control of the ordering process. If the lender is using the appraisal for his lending decision, why shouldn't he have the choice as to the degree of expertise he thinks is necessary to meet his needs? Theoretically, licensing/certification has set the floor for the MINIMUM competence needed.

Would you ever consider selecting a plumber to work on your house based on some type of rotation? How about the dentist who works on your teeth? IMO a rotation policy does nothing but institutionalize mediocrity because an appraiser in that type of system knows that the quality of his work (above a minimum) and his client service have absolutely nothing to do with getting his next assignment.

 

[Tim The Enchanter]

The lender should be able to choose the appraiser. What about staff?

The mortgage broker should not be able to choose the appraiser. Imho. :happy:

 

[Terrel L. Shields]

PL said

This seems to imply that the newbie and the pro produce the same level, or quality of work. Do you really think so little of our profession that you don't think there's a dollars worth of difference between what's produced by a neophyte and a pro?

Does the plumber charge the same whether he shows up or whether one of his apprentice plumbers show up? Which will take the longest to get the job done if encountering a problem?
Many fees are set. The newbie VA appraiser earns the same fee as the Mike Garrett's of this world and as Mike well knows he makes pretty much the same as more than 10 years ago. I have no problem competing with a newbie for the same fee. Do old brokers command higher commissions than new ones?
In the appraisal world, if it were perfect, the fees would be equal. The difference is that the old head through experience and skills honed by the ages, would produce a more reliable report faster than could the newbie, who should spend far more time on an appraisal to insure that the level of quality was acceptable.
Instead, we have a system which rewards sloppy work. Faster cheaper. And that is only going to be done by the unskilled, the youthful, or the crooked. In other words, under the current system, experience counts against you...Leveling the playing field would imho be an improvement.

The mortgage broker should not be able to choose the appraiser

I would be fine with the system which required all mortgage brokers to go thru fannie mae for their appraisers. Conventional in house banks do not reward their LO's with commissions usually. They want profit margin which means their loans have to perform. Too many foreclosures and you are out the door....Those kinds of bankers are not the problem. They want the best appraisers AND often, if the borrower is a very good customer, they will make the loan even if the appraisal does not meet the LTV guideline. That's because they are allowed to make judgments about the borrower..which is not the function of the appraiser. The MB on the other hand has the problem that no matter how much other property the borrower owns, nor how good their job is, nor their credit history or score...it doesn't matter...the property must appraise out.

 

[T.E. Faravelli]

Do you really think so little of our profession that you don't think there's a dollars worth of difference between what's produced by a neophyte and a pro?

Theoretically, licensing/certification has set the floor for the MINIMUM competence needed.

IMO a rotation policy does nothing but institutionalize mediocrity because an appraiser in that type of system knows that the quality of his work (above a minimum) and his client service have absolutely nothing to do with getting his next assignment.

That depends. Most of the residential TPO's don't care because it's all about the LCD - lowest price, fastest turn time and getting what the want - numbers. Commercial work is quite different were professionalism, in its various forms, most often makes a difference with a client.

In reality, licensing/certification has done the opposite - set the maximum. In terms of percentage most have the lowest level of licensing. Residential appraisal reports are more and more being viewed and treated as a commodity rather than a professional service.

I know of several lenders that use a rotation system for both residential and commercial assignment placement and it is generally not welcomed by the loan officers whom prefer to engage the appraiser directly. I can't image why?

 

[Tim The Enchanter]

Instead, we have a system which rewards sloppy work. Faster cheaper....
I would be fine with the system which required all mortgage brokers to go thru fannie mae for their appraisers.

I don't know if it would eliminate the sloppy work. Some people are just lazy or incompetent .

Conventional in house banks ....Those kinds of bankers are not the problem. They want the best appraisers AND often, if the borrower is a very good customer, they will make the loan even if the appraisal does not meet the LTV guideline. That's because they are allowed to make judgments about the borrower..which is not the function of the appraiser.

That's the best client to have. :happy:

 

[Terrel L. Shields]

In reality, licensing/certification has done the opposite - set the maximum.

i agree and AVM's and AMC's are not the problem just the symptom.

I don't know if it would eliminate the sloppy work

maybe not, but it will end the pressure to do work for a fraction of a reasonable fee which insures sloppy work. At least you know the appraiser is truly a retardo and not someone who knows better but is pressured to cheat by the cruel pinch of want...and you don't have to get down in the gutter to compete with them.

 

[Annemieke Roell]

I am not so sure if it is going to make a difference. What's more .... legitimate MBs and LOs who have competent appraisers they like and trust are now at the mercy of a crapshoot and can easily end up with an inferior appraisal report due to the quality of the appraiser "chosen" for them.

 

[Terrel L. Shields]

I think it cannot but help think those can be identifed. And once identified by the user of the report, they can request a review. That's the way it should work. If the report is bad, the review should catch it and if the review catches the same guy over and over...off the roster they go...just like FHA did...and fannie should. Yeah, an honest MB might want to use the same dependable appraiser, but how many MB's are honest? 90% of this site is complaints about being pressured on fee, time and value by MB's of SFR's.

 

[Pamela Crowley (Florida)]

It could easily start out with every licensed or certified appraiser on the panel. Value conclusions are a 5% range. From there:

The first 5 (minimum) appraisal reports are fully field reviewed by a panel in place that has a review designation.

* Find intentional misrepresentations: automatically removed from the approved panel and complaint filed with every State they are licenced in.

* Find errors or omissions that affect the value conclusion: Warning on the first, suspension from the panel for 3 months for the second, removal from the approved panel for the third for 1 year and report all 3 to every State they are licensed in.

* After a 1 year suspension, the appraiser can reapply to the panel. Reapplication to the panel after the years suspension would need to have their first 10 appraisals fully field reviewed which would mean that their first 10 appraisals would be delivered for no fee because what would have been paid now goes to the reviewer.

There is a panel of reviewers that would review the reviews of the problem appraisals to decide if they deserve action.

If the loan even MIGHT be backed by ANY kind of government or quasi-government agency, this panel MUST be used for the appraisal for that loan. Any lender that does not want to use this panel can choose to opt out, but the Fannie Mae forms CANNOT be used for that loan and CANNOT be eligible for ANY kind of government backing or government bailout of that institution.