Lowering Appraisal Standards

[Meandering]

Lowering Appraisal Standards as an Appraisal Solution?

A short video from the National Real Estate Post.

Remember when the "quality" of an appraisal was the hot topic, and that USPAP was the minimum standard? Well now your high quality appraisals are causing problems.

.

 

[Ken Masla]

How are the state boards going to deal with all the complaints?

 

[Eli]

How are the state boards going to deal with all the complaints?

Judicially. This FTC thing may change some things. I really wonder if it won't force separation of fees. It has a strong possibility of it.

The bank regulators don't hold a candle to the FTC or the State of LA on Antitrust issues.

The FTC and LA are inside looking out. Trust me. Or outside looking in. Either way you want to look at it. Lol

 

[JTip]

Well now your high quality appraisals are causing problems.

Bring back summary reports......

 

[Terrel L. Shields]

Bring back summary reports......

That seems to be central to the issue. Res appraisers no longer summarize their findings, but create what basically is a form driven self-contained report...with one caveat. The lender may decide to add to the scope of work willy nilly and you get into the gotcha trap. And more and more appraisers and reviewers are in the mode that we must detail in minutiae all the factors we address - thus buying into that narrative. So is the Pavlovian response to not make any or very minimal adjustments (GLA only for instance) and simply reconcile the resulting numbers? What's wrong with that? Nothing in USPAP requires we make adjustments if none are warranted and "ranking" is a method of presenting sales and choosing the best comp as the "right" answer.

Within the confines of the form reports required, there are built in pitfalls that trap appraisers who are otherwise very competent. Face it, there are posters on this board, some who post rather frequently who had had to face a board and didn't come out on top. Why? Were they nincompoops? No. I bet most of the infractions were, in part, related to the very forms they used and the way it was filled out...the HBU trap being one...In the early days we all X'd the box and did very little else since most of us thought a residence with an R-1 zoning was obviously going to be a HBU of residential...duh. Not enough for USPAP. Same with land values in the cost approach. Plugged in a small number under 15% and now that gets you a trip to the board... so we were all stupid and USPAP is a self-explanatory guideline...sure. By 1995 the GSEs and FHA were trying new tricks, adding requirements, etc. (I recall distinctly going to an FHA class where the reviewers wanted us to fill in the grid with either Superior, Equal, or Inferior, and make adjustments accordingly. That was mid-late 90s..what changed?)

To top that off, USPAP issues are terribly common on this forum. Are we that dumb if USPAP is a book of self-evident truths? Or, is it not only a little more obtuse than that but is extremely complicated by the SOW - what we used to called Supplemental Standards - from FHA, VA, Fannie Mae, et al? And that SOW in turn is even more complex given that individual AMCs and banks have individual rules, many often not even written down by them and maybe 20 more pages of supplemental supplemental standards...duh. I don't know how anyone can write a single secondary market report that meets all the requirements to the letter and unequivocally.

 

[DWiley]

Bring back summary reports......

How would that help? The change in the report label did NOT change the report content requirements.. (new) Appraisal Report = (old) Summary Appraisal Report

 

[Meandering]

I just think it's funny that USPAP mandates so much - based on a client fully understanding the property, the report, the value, the reconciliation - and now - intended users really don't want to know that much anyway.

And let's all giggle over the fights 5-6 years ago, that appraisals were of crappy quality, reliant upon USPAP as a minimum that wasn't enough to convey understandings to intended users.

It's also too funny that we are protecting "public trust" while the banks are engaging in "safe and sound" practices, yet, we're the ones doing too much.



Why don't they just stop with the smoke and mirrors and set the standards according to the reps and warrants?

When reps and warrants are high, the "quality" of appraisal reports has to be high. When reps and warrants are released, the quality of appraisal reports can be lowered.

After all, lenders don't need to understand any of it. Their regulators just need someone to blame when the house of cards all fall down..

.

 

[Mr Rex]

Per the recent interview with the new top appraiser at Fannie in the Summer 2017 Working RE mag, "...Personally I'd like to see the forms be more dynamic than they are now. Less focus on free form text and more focus on standardized data fields..."

 

[Bobby Bucks]

The overwhelming majority of those complaints are due to the number in the contract price box being higher than the number in the opinion of market value box.

 

[Mike Kennedy]

The overwhelming majority of those complaints are due to the number in the contract price box being higher than the number in the opinion of market value box.