Let the borrower order it. The case for it.

[Michigan CG]

I have long been an advocate of letting anyone order the appraisal ... with the understanding that a full and complete review will be done by a certified appraiser from within the market area. I believe if everyone knew their work was going to be reviewed prior to the loan being approved ... the quality of the work product would go up. Reviewers should be required to have a minimum of five years in the business as a certified appraiser and ALL reports should be so reviewed.
Most will say, sure they will just pic a reviewer that will agree with the value. Perhaps that is so, but it is also just a likely that number hitters who go outside the area for comparable sales will realize that there will be reviewers with much more experience and perhaps then the quality of our product will be increased.

That is an excellent idea. When you know you will be reviewed you will spend more than 20 minutes doing your adjustments and actually put thought in them. Imagine the number of reports a reviewer would send into the state getting rid of unethical appraisers. After abut a year everyone would get it. NO PUSHING VALUE.

 

[TN Pro]

In seven years, I can recall very few instances where a homeowner tried to twist my arm on a value, to overlook deficiencies, etc. Mortgage brokers, OTOH ---- it's standard business practice for them. 95% of the time, I'd say.

Its funny how experiences differ. I have had worse pressure from borrowers than loan officers. And, over the last year, the M.O. for the borrower in distress who needs that value to be hit is to sit there and sob while telling me that this loan is going to save them, sometimes while showing me pictures of their children.

Dean

 

[Wendy]

Take away the target and you take away most of the pressure.

 

[Lee Lansford]

I have long been an advocate of letting anyone order the appraisal ... with the understanding that a full and complete review will be done by a certified appraiser from within the market area...

And THAT (the need for a "full and complete review") is the best indicator of THE problem: one can't trust the appraiser community to provide a credible appraisal.

 

[PropertyEconomics]

And THAT (the need for a "full and complete review") is the best indicator of THE problem: one can't trust the appraiser community to provide a credible appraisal.

Actually lots of business have quality control to assure their products are the best they can be .... and that is what we need.

 

[J Grant]

who is going to pay for a certified review appraisal on every report, just so a borrower can order it? Imo, only way to solve problem is rotation panels , or very severe penalties for mortgage brokers, plus making them fiscally responsible for any overvalued appraisals, plus a board where appraisers could report pressure by lenders or anyone else. Letting borrowers order imo would be a disaster. a lot of them would shop by price alone, again letting the cheapest, volume type number hitters dominate the business. the business would become a nightmare. imagine a homeowner, calling numerous appraisers for fee quotes, or to see who will do a free comp search, etc? imagine the time you would waste talking to them. expenses would go up, as appraisers would have to run constant ads etc to get volume calls. Pressure would come directly from homewoners, or from people who recomend them, like realtors. Plus, many more direct lawsuits to appraisers. MB's, though sleazy, at least are professional. Homeowners, if they think you did a poor job, would be suing and complaining like crazy. Plus, the potential for personal one on one bribes would be there...the same sleazy appraisers who would do anything and make any value to get a MB's business would now just swtich their tactics to homeowners.

 

[PropertyEconomics]

We are more worried about the pressure than we are in getting the appraiser to resist it. I think the borrower should pay for a review. Its THEIR loan ... isnt it?
We worry about law suits, we worry about appraiser pressure, we worry about getting MB out of the business.

We worry about all the symptoms but we never stop the disease as I have stated before.

I think we have made too big a deal about who orders and who pressures instead of focusing on IF YOU LIE YOU WILL BE CAUGHT .. simple as that. Reviews are the way to help curb the problem. A rotation panel, which I am also in favor of, only means that part of the appraisals will be done correctly and part will be number hitters. The problem still persists ... there never is anything that addresses the direct issue of appraiser education, appraisers learning to say no, and appraisers owning their work.

Order an appraisal, review that appraisal .. .and let the chips fall where they may.

 

[TN Pro]

I came to this country because i thought it was the land of opportunity.
A rotation panel doesnt sound like a good opportunity to me.

Dean

 

[appraisalondemand]

agree or not

I came to this country because i thought it was the land of opportunity.
A rotation panel doesnt sound like a good opportunity to me.

Dean

Dean,
though I agree a rotation panel does not sound like the best opportunity for us...it may be better regulated for the lending industry. Remember you can always appraise RE for private ventures, Divorce, retrospectively or many other reasons other than a loan.

 

[john snyder]

In spite of the safeguards the undue influence continues via either MB or borrowers/homeowners.

I agree with an appraisal is an appraisal if for the same intended use and scope.

Now the latest Cumo (sp?) thing is hey we can't trust the brokers and the appraisers to converse without undue influence so lets do what - go to AMC's?

Are the AMC's going to get you in the property? No the homeowner/borrower MB or realtor and sometimes all of them are going to continue to have contact round robin or not,

A homeowner/borrower will sue you or turn you in whether in "high or low " values if they feel shorted in money one way or the other. Heck I see both examples in compliance hearings on the board I serve on. Some have merit some don't. Each case is different. Do you think there will be a lesser chance of suit or state grievance - they are going to get your report within 3 days - probably with your phone number in bold print someplace.

And as far as fee, isn't the fee being unduly influenced by people other then the borrower who is paying a larger gross fee and isn't the borrower the party that will be paying everyones salary via a 30 year mtg? Let them be the client. What if the borrower were client over the past ten years? Would it be worse or better? Could it really be worse? Really.

Look, the market weeds out good performance at a reasonable fee and the lesser quality work. Same as any other profession. It ain't ever going to be foolproof.

What is that saying about the "bitter taste of poor quality work at a low price lingering on well longer then good quality at a fair price. "Must be a Sunday because I used to know that one by heart.

Do you really think that the +/-$ 400 a borrower is paying to a Mb/Bank, AMC of which the appraiser gets what 60%+/- helps the borrower or would that fee be better spent by the borrower (its THEIR MONEY)on a local geographically competent appraiser? The borrower after all is the person that is funding the real estate and lending industries?

Many of the mistakes I see in this fiasco is geographical incompetence due to the lender/MB demanding a low rate or value check though these are becoming less and less, then moving on to a licensed but geographically incompetent appraiser to peg a price that does not know the area.

A borrower on the other hand is going to trend towards someone more local, that has been referred or well regarded, and has a better chance of being geographically competent.

For instance most local appraisers will have better market evidence, that has lived in the community, knows the neighborhoods etc. This is the local appraiser that the borrower would call if given that option instead of the lender/mb AMC that will assign the report without knowledge of does the appraiser really know the area and the lender/mb/AMC may/does just pick an appraiser that says they serve a dozen counties or will go statewide for crikey sake?

It may not be perfect to let the borrower be the client, intended users etc. but I would be willling to wager the local well respected appraiser would do a better job then letting someone pick the appraiser for the borrower that is driving 50 plus miles to an area they have never even been to the local MacDonalds let alone has any idea where the schools are. Remember who is paying for this?

Hasn't the ordering via use of banks/mb put us in this fiasco? Put the money to better use. Would there be more or less bad appraisals if the borrower picked the appraiser and the bank-AMC reviewed it. If the review process is sound the bad ones will get weeded out.

I tend to believe most borrowers would want geographical competence to validate the deal or to say "hey bud, it ain't worth that much' instead of "you know we would like to use the more geographically competent appraiser but you know they charge $ 25 more then the other appraiser". Does that happen?

Really now, is that a fair concept to the borrower that again funds the industry? Does the borrower even know if the appraiser knows the area? Presently is there knowlege that the appraiser assigned to the borrower has any knowledge as to how well the appraiser knows the area or is it just lowest fee wins because they are on a list that says they work the area. AMC's are progressing in their ways however if lowest fee wins then let the borrower interview em and pick em. Its their money.

After 35 years in this biz I find that more and more I am called by homeowners/borrowers to estimate the market value because there is substantial unknown risk out there. These are homeowners/borrowers that want to know the best answer. These same folks would probably pay extra rather then less to have that answer given to them without undue influence from someone on a commission, someone trying to expand the corporate bottom line, none of whom really "pay" for the appraisal. Those companies are reimbursed and then some at closing for the appraisal or have already collected the appraisal fee up front. Money that in the old days was inthe appraisers bank account the same day as inspection, instead of a corporate entity that get use of the what $ 100M in appraisal fees for 30 to 60 days?


As Lewis Black might say " What i can't talk to the homeowner/borrower- the folks paying for this? Is this the USA?

jbs