Brad:
I do not believe I have called you any names. I have simply pointed out where I believe you were wrong or intentionally or unintentionally tried to mislead. But I will take what you say at face value. Possibly you seek the truth. Possibly you are cautious and do not want to be conned. I can appreciate that. I do have to admit, as I have been saying along, I have been very busy and may not have answered your questions fully. However, as I have also said many of these answers were in achieves. I have not avoided them because I am embraced or believe we did something wrong. It has strictly been a matter of "so many hours in a day". I believe one of your final questions asked was "how many sales were used in the actual reports?". This is important and examples bad understanding by States concerning scopes of reports.
My case is a classic example of enforcement and investigators refusing to understand circumstances under which an appraisal has been developed and reported. It further examples how appraisals are not being judged within the context of their identified purpose, intended use and intended users as stated within reports. State's have been continually warned to stop this practice by ASC. ASC has told investigators and enforcement they should take extra care with these issues. However, these warnings go unheeded as State's persist with this practice because of limited education and experience. Since many of these Board's mainly consist of form fillers with few clients out side the scope of lending, most reports are judged in the context of FannieMae guide lines even if the client is not FannieMae.
Brad, you have never once asked about the purpose, intended use and intended users of these reports. Pretty important stuff if you are going to criticized the work product of others. Like you, OBRE, also thinks these details unimportant. They believe we should only produce one product, in one manner (FannieMae compliant) and hell with client needs. This is crazy and will result in the end of appraising in other areas where work is expanding not drying up like Fannie.
My client was FEMA. For those not familiar with this branch of government, I read once they were one of the largest silent segments of the US. The acronym stands for Federal Emergency Management Agency. Their mission is:
"to reduce loss of life and property and protect our nation's critical infrastructure from all types of hazards through a comprehensive, risk-based, emergency management program of mitigation, preparedness, response and recovery".
They handle disasters annually in various parts of the country. Every time the President declares an area a national disaster, FEMA is on the spot. Furthermore, they do extensive strategic planning for future emergencies under countless scenarios, i.e, nuclear war, acts of God, and now terrorism. They gather tons of data in order to form strategies under "what if" scenarios.
FEMA has special guidelines for completion of appraisals just as FannieMae, HUD, FHA, etc,. The reason they have said guide lines is the same as any form of organization. They need it in a format to fit special informational needs to estimate future events. FEMA has been ordering appraisals for some time. They have bought countless piece of real estate from numbers of disasters. These are highly sophisticated users. All reports were reviewed by an experience appraisers knowledgeable with requirements. In fact our reviewer had just taken the comprehensive towards his MAI. I heard he passed shortly after. He was not a green bean unfamiliar with appraisals or appraisal theory.
With this in mind, FEMA required all sales, used in the body of the report, to have occurred within a certain time frame and distance. They were so adamant about this guideline it was written into our contract along with other special requirements. Let me state here, none of these requirements were in violation of USPAP. In fact many exceeded USPAP requirements. Given our data, we had hours of conversations with our reviewers. I later heard the State scared the hell out our FEMA reviewer by threatening huge fines and possible suspension unless he signed a statement claiming he would not testify on our behave. I heard this directly from his employer. Therefore, I believe it to be true and correct.
Out of the 25 sales, we used, I believe we had 6 that fit into the time/locational requirements of our client. So with our client, we decided we would build a model, that was USPAP compliant and fit FEMA's needs. We took the 25 sales and extracted paired sales adjustments for every factor on the form. The work book containing the extracted paired sales adjustments was about 55 to 65 pages. Then we used 3 (what we termed primary sales) and 3 (secondary sales) within the actual body of the report and applied market extracted adjustments for all differences between the comparables and the subject. This method is totally theoretically correct.
OBRE kept acting like we were crazy for fulfilling our clients needs even when those needs were not in violation of USPAP. We kept asking them why they believed this wrong? No one ever answered. They just kept saying, well FannieMae says such and such and FannieMae says this and that. We were baffled as to why these guys were imposing FannieMae guidelines on FEMA. Later it hit us they did not know any better. They thought there was only one way to do an appraisal and all scopes, purposes, intended use and intended users were the same. After the project was completed our client, who had literally reviewed 1,000 of reports within this project said our reports were some of the best he had seen for the project. I conclude that three MAI's reviewed these reports under STD3, plus AI Standards Board, there were no Standards or theory errors. However, the State, with no witnesses or evidence or STD3 review concluded the whole project was incorrect? I do not think so Brad.
Steve Vertin
