More NCAB

[David C. Johnson]

<span style='color:darkblue'>Brad,

As part of a post (5/4/02 11:33:58 PM on this thread) as a response to a post by Steve Vertin in this thread, you wrote the following three paragraphs. Excerpts start with the first paragraph below the "line" where you are quoting Steve.

I have a question and a request. The question is about your text that I have bolded in the third paragraph. I have not done FNMA work for years, while ironically, I will be doing one this week at the request of the lender for a refinance since I had appraised it some years ago. But I was not aware of such a FNMA requirement for the rejection of Marshal & Swift's depreciation methodology that you cite. When you get an opportunity, please comment further. Do you know about what year this announcement was made? Have you ever seen this in print? This could be important information to people like me.

The request I have is for your opinion of whether Dr. Stafford did his appraisal work correctly or incorrectly (performed in 1998) in regard to his method of depreciation? A URL summarizing the issue is included at the end of this post.

In the second paragraph, I italicized some text for your attention. As Steve read the complete transcripts, you can be very sure that he is aware of the type of assignment this was.

Thanks for your thoughts.

Regards,

David C. Johnson, Raleigh
NC State-Certified General R.E. Appraiser
appraisco@aol.com
_________________________

You write as follows by first quoting Steve Vertin (with my bolding for identifying original "authorship"):

[Vertin]

"Case in point, I read a transcript David Johnson sent me. The NCAB
was arguing a man used the wrong type of depreciation in the cost
approach. However, the guy used a cited cost manual, which has
recognized authority in the industry. This type crap, is inappropriate
behavior for Boards. Boards should not be able to fine, suspend, revoke,
license because they preferred one recognized method over an other.
This is abusive"

[Ellis]

I fully agree that a board should not be capricious in this way. What I
do not know from this case, and I'd suggest that you also do not know,
is what type of assignment this was. if it was a commercial property and
the appraiser used the depreciation chart in Marshall & Swift, that may
be the appropriate technique. However, if this was for a single family
assignment in which the client asked for a Fannie Mae compliant report,
then using the chart would NOT be correct. Fannie Mae requires the use
of the effective age/life method at a minimum and does not recognize the
chart.

[Ellis]

In the first instance, the board may be wrong. In the second the board
may be right, since the requirements of Fannie are supplemental standards.
Not going into whether or not the chart is right or wrong- only over what has
been publicly stated by Fannie...."
________________________

The following post is a pretty good summary of the Depreciation & Punishment Issue for the Stafford case as recently cited by Steve and as recited by you (the back button on your browser should bring you back here):

www.appraisersforum.com/bbs/index.cgi?read=20828

Thanks.</span>

 

[bradellis]

Austin,

If you really believe I keep making your points for you, then you should be quite happy.

Brad Ellis, IFA,RAA

 

[bradellis]

Steven,

I agree that all this is circular. We keep going around in circles on it. I'll just wait for your case ot be settled and look forward to hearing the outcome. And again, I wish you luck.

It does not mater what I believe in this regard. If you win, then you will clearly have made your case about the board being wrong in this particular instance, to say nothing of the financial benefit that would accrue.

Brad Ellis, IFA,RAA

 

[bradellis]

David,

Interesting. I checked the current selling guide and it is not in there, but I know for a fact that some years ago they made this pronouncement. It will be in print somewhere, and I'll try to find the time to get it for you. The current selling guide is very general and while it discusses depreciation in general it does not go into some of their specific guidlelines for any of the approaches to value.

While this appears to be slightly related to the case you posted the link to, it is not directly a part of it. The NCAB seemed to be arguing over how the appraiser derived it, but NOT utilizing Fannie's guideline as a supplemental standard. Therefore, the point is moot in this case. I will still try to get the written guideline for you. And yes, I do suggest you use the effective age/life method for them (at a minimum). They have no problem with the modified effective age/life method or anything that goes further.

And yes, your continuing saga of the NCAB is becoming pretty convincing that they have little idea of what they are doing. This is presumption on my part, but I am not arguing that point, nor have I ever done so. I have only argued that one cannot extend the NCAB's actions and shortcomings to other boards; it may be the case, but I have not yet seen it. I do know of a number of cases all over the country(anecdotally) in which boards incorrectly interpreted USPAP and that is why I am so vehement about federal licensing. Doing this at the federal level may not be perfect, but at least it will propect honest appraisers from improper board determinations.

I'll look for those references and will get back to you on it.

Brad Ellis, IFA,RAA

 

[Austin]

The more this thread runs, the more questions that arise. Brad in his last item of discussion raises another interesting issue. The issue is that FNMA has its own version of appraisal method and techniques in relation to the cost approach, all in addition and supplemental to USPAP and accepted appraisal method & theory. Well, if FNMA as a client can determine what appraisal methods and techniques to use, then why can’t all appraisal clients, especially federally related clients? For example, if a commercial banks hire me for an assignment and my instructions are, “use your own best discretion as to method and technique,” then on what basis can any regulatory authority question appraisal method and technique? Is FNMA some Royal entity above the law or is the legality of a client dictating method and theory a universally held client privilege?

 

[bradellis]

Austin,

Good question, but one in which the standard is fairly clear. It specifically allows for GSEs to set such supplemental standards. Used to be the way you described it, and I was one who raised the issue with them twice. I do not know if it was me who got it changed or someone else, or a combination of a number of us.

What really matters is that it is changed so that an individual client who does not meet the tests cannot set their own supplemental standards. They can, and do, make requirements over and above USPAP, but NOW you cannot be held to the higher standard under USPAP- only under your contractual obligations to the client, i.e. they can sue you, not pay you, etc. But a state board SHOULD not then be able to sanction you. (note I said SHOULD).

If you are ijnterested in the premise I gave the ASB for changing this let me know.

Brad Ellis, IFA,RAA

 

[Austin]

Brad: Finally we agree on something. I have attempted to make the point repeatedly that with this many conflicting old, new, revised, etc., versions of USPAP standards and rules relating to supplemental standards, privileged clients can make their own rules and another class of clients can’t make their own rules, etc., then any actions taken by a state appraisal board as it relates to method, theory, and practice is totally arbitrary and capricious. It comes down to you are guilty if you use that method for this client, but you are innocent if you used the same method for another client. If a client tells me which methods to use and I do as instructed, on what basis am I liable to anybody? We can basically write ourselves out of USPAP by negotiating USPAP out with our client's requested suppplemental standards.
My point is that no such action taken by a state board in these matters in the past will stand up in a court of law. This is a travesty of justice, David Johnson’s case specifically as an example. Take this thread as an example: Here we have a group of experienced appraisers discussing this very issue with a myriad scope of views and opinions and as of this moment I have no idea in hell what to do.
As I understand the rule as Brad explained it in his above post, in my particular practice I can basically use any appraisal method and technique I chose because I work mostly for a federally regulated commercial bank and my standing instructions are: We want your opinion and we don’t care how you come up with it. As long as I include all of the required items, on what basis does the state board have to question me about anything? Can somebody splain it to me?

 

[David C. Johnson]

<span style='color:darkblue'>Brad,

Thanks for taking a shot at authenticating your claim that FNMA officially disallows Marshall & Swift's Residential Depreciation Table. While it defies all common sense that they would, I have seen FNMA do similar stunts for years. For example:

* Disallowing Time of Sale Adjustments while aware it is very often required, and is in no way an "appraiser option";

* Cost approach blanks on their forms not having a space for "combined depreciation" thereby forcing appraisers -- and confusing the hell out of property owners in the process -- to arbitrarily pick one of the blanks to fill in which is generally the "Physical" depreciation blank, while they know -- I hope -- the depreciation method normally used -- and in fact which appears they are requiring, according to you -- is cumulative and comprehensive of all forms of depreciation;

* etcetera ad nausium

I have decided to contact Marshall & Swift and will pass on what they have to say via phone (1-800-526-2756) or by return email (support@marshallswift.com). Here is what I emailed just now:

Marshall & Swift:

Please pass this message on to someone there (who will preferably provide his/her name & job description title) who can provide a definitive judgment or comment regarding an alleged proclamation by Fannie Mae (FNMA) that your Residential Depreciation Table / Chart is not recognized by FNMA. I am attempting to verify the validity of the following text which is available to appraisers throughout the country. This text can be found in context at the following URL:

http://appraisersforum.com/forums/viewtopi...all+swift#13919

"If it was a commercial property and the appraiser used the depreciation
chart in Marshall & Swift, that may be the appropriate technique. However,
if this was for a single family assignment in which the client asked for a
Fannie Mae compliant report, then using the chart would NOT be correct.
Fannie Mae requires the use of the effective age/life method at a minimum
and does not recognize the chart."

Thank you.

Regards,

David C. Johnson, APPRAISCO Owner
North Carolina State-Certified Real Estate Appraiser

email: appraisco@aol.com
fax: 919-834-1134
phone: 919-834-8080</span>

 

[David C. Johnson]

<span style='color:darkblue'>Brad,

I appreciate your addressing my concern about the FNMA depreciation issue. However, I have noticed you appear to back up to your old tricks: attempting to disparage or discredit Steve Vertin. Rather than attempt to clarify questionable comments he asked you about in his last post, it appears you may have decided to do it again.

We'll do these most recent innuendoes of yours in the order they have occurred recently, while forgetting other unresolved previous ones which prompted my postings in this thread in the first place. I would rather ignore these too, but all the regulatory issues we are addressing and attempting to fix, are important, and so is Steve's participation in the process. Your continuously challenging his veracity, competence and/or motivations are not only unfair, they are a distraction.

I am going to split-up your quote immediately to follow to make some comments as it proceeds:

"So, the question is not whether or not the comps used in an
assignment are the best, it is over what level of research is
sufficiently diligent."

Should I remind you that we have heard no one but you opine that his work was not sufficiently diligent for the assignment? Austin Jones is on record saying he would have done the exact same thing. Now, I am too. Ironically, it is my best guess, Brad, that you would not be able to successfully work for Steve precisely because he is so exacting -- in fact, it appears that Karen, who was use to working for Steve, lied to him for just this reason.

In his postings, there is little question that he relies on facts -- and documentable facts at that. When asked for clarification, he provides it. When asked questions, he answers them. Any arguments, speculations or conclusions regarding potential deficiencies in others are always well supported by the facts (e.g., testimony and documents), and if anything, are understated (i.e., he gives "benefit of the doubt" whether it is deserved or probably is not).

You continue as follows whereby I have added some bolding to draw your attention to specific text. Brad, did you intend to add the bracketed "NOT" as I have inserted for you, or was this an intentional statement of yours? Are you saying you believe his normal output does not constitute credible apprasial work as you define "credible work"?

"And that is where we have a difference of opinion. For that type
of group assignments you say it was, I say it was not. But please
do not take this as a personal condemnation. I am well aware
of what it takes to produce credible appraisals and am sure that
this is [NOT] your normal output. NOT commenting upon the specific
appraisals in your case- only over methodology. And I am forced
to raise it because you claim I am out there making this all up.
I am not."

Brad, what is it you claim he claims you are out there making up?

In a subsequent post, you indicated he was too transparent? I have no idea what you are implying here either. Your most recent post appears below where I have bolded some new words of yours that could be misleading to a reader. What are you saying or implying here?:


"Steven,

I agree that all this is circular. We keep going around in circles on
it. I'll just wait for your case to be settled and look forward to hearing
the outcome. And again, I wish you luck.

It does not matter what I believe in this regard. If you win, then you
will clearly have made your case about the board being wrong in this
particular instance, to say nothing of the financial benefit that would
accrue.

Brad Ellis, IFA, RAA "

_________________________

Regards,

David C. Johnson, Raleigh</span>

 

[bradellis]

David,

1. I am still trying to get confirmation from Fannie on the depreciation mode. Marshall may not confirm this as it would not be in their best interest (I think). And, yes, they do some nutty things.

2. As to Steven, NO. I did not intend to have the "not" in there. My opinion of Steven, despite my concerns over this specific group of assignments, is that he appears to be a knowledgeable and competent fellow.

And I do not think I have been using innuendo at all. My statements and concerns have been pretty clear and I do not think I am being confusing or misleading. Steven and I have a difference of opinion on this. Clearly you and a few others believe him to be correct. No problem.

Professionals can, and often do, disagree- over procedure, and many other things. Many times they cannot come to an agreement. This is one of those cases and I do not believe that we get anywhere by belaboring it. Steven and I, it appears, have agreed to disagree. And I presume you and the other few folks in this string also happen to disagree with me. Also fine. I promise, it is not the first time.

But, please do not then conclude that I think less of him or question either his veracity or abilities. That was never my intent. This is all over interpretations of procedure and what USPAP requires. It is in no way personal.

Brad Ellis, IFA,RAA