PAREA: Darn the torpedoes / 3 Sheets to the Wind

[Amy Perkins]

I got an email from the Appraisal Foundation updating PAREA. Digging a little deeper and found a few interesting trends. It seems AI has been selected as the PAREA provider. There will be 'mentors' who can teach a unlimited number of plebes in a class setting, though using advanced technology is encouraged (I'm thinking microchip implant or stem cell implants), but not necessary.


"The below Q&As were added on 4/8/2022

19. In the Criteria, it states the following:

Could our PAREA program be approved if we only require the participant to complete three reports?

Yes, a provider could be approved if only three reports are required. "


"Do Mentors need to be licensed in individual states?

No. There is not a geographical competency requirement within PAREA, so Mentors do not need to be licensed in the states where they are mentoring participants. "

And how many hours in class or over the internet is required?

View attachment 61823

So 200 hours to meet CR requirements, 3 reports, by a mentor who can teach large groups, nationwide. And 31 states have auto-signed up.

ShareFile

appraisalfoundation.sharefile.com

Every scheming real estate investor, broker and agent will get one of these then boom.... CORRUPTION!

 

[Lindseyw]

It's not the AMC's that don't allow trainees to inspect unsupervised. It's their clients...

Yes correct, the lenders.

So you guys aren't in the origination space, then? I'm on the bank/port side, where trainees are allowed to inspect without supervision. That's not the case in the origination/FHA world - which is why there are no economies to be gained by having a trainee. In the origination world, most lenders require the supervisory appraiser to sign as 'having inspected'... kudos to you and your supervisor, though. Seems like you have a truly mutually beneficial arrangement.

FHA maybe, there’s other loan types though. We have a huge influx of conventional loans down here, tons of all cash purchases (no appraisals for those) and lots of investors for vacation rentals. Gotta have cash for second homes or investment properties. Lots of northern money moving to our area! Lol I don’t think I ever seen an order for a second home FHA loan

 

[sputnam]

Pretty obvious really. AMCs and Lenders want lower appraisal fees. But wait, "there's an appraiser shortage" which tends to drive fees up. How can we alleviate the "appraiser shortage"? Oh... make it easier to become a certified appraiser. More appraisers = lower appraisal fees.

As for PAREA itself.... it's not a bad idea... but only if used in conjunction with real world mentoring... instead of a substitute. Maybe allow PAREA to account for 50% of the training needed to become certified.

 

[Non Sequitur]

I doubt most of the AMCs will have the resources to hire staff appraisers. The fixed costs for employees will continue to accrue regardless of the volumes. It only takes about 2-3 weeks for a reduced volume to trigger mgt considerations of how to cut costs. And a staff appraiser contingent will be the first to go.

Crab bucket competition among fee appraisers for a reduced volume of assignments is going to have a very predictable outcome. If the AMCs are going to be doing any hiring it probably won't be until the beginning of the next RE cycle and even then they'll be able to hire fully qualified appraisers (who will all have been starving) at very competitive rates that it will be a couple years after that before it becomes profitable for them to hire no-experience CRs.

I didn't write most, but I agree most do not have the resources and that isn't a good thing. The big AMCs (I admit loosely defined) who have staff now and will always have staff, handle large volumes of appraisals from cradle to grave. They love the idea of PAREA because they will be able to mint and train (and train the way they want them trained) appraisers at will, in essence controlling the one thing they have not been able to control.

As far as volume, there's a current thread in one of the FB groups so we don't have to wait until the next cycle. A staff appraiser (7 years) with one of the largest AMCs just jumped ship and is spilling the beans. He describes how he was able to cherry pick as many as he wanted to handle until recently, with the rest going to the fee panel. He got bent because he was expected to take anything to keep his volume up once volume overall volume decreased. I'm sure layoffs are coming, but they won't lay all off, it's the panel appraisers who will be ghosted. And several panel appraisers are confirming the lack of anything coming in from that AMC.

 

[Mejappz]

I didn't write most, but I agree most do not have the resources and that isn't a good thing. The big AMCs (I admit loosely defined) who have staff now and will always have staff, handle large volumes of appraisals from cradle to grave. They love the idea of PAREA because they will be able to mint and train (and train the way they want them trained) appraisers at will, in essence controlling the one thing they have not been able to control.

As far as volume, there's a current thread in one of the FB groups so we don't have to wait until the next cycle. A staff appraiser (7 years) with one of the largest AMCs just jumped ship and is spilling the beans. He describes how he was able to cherry pick as many as he wanted to handle until recently, with the rest going to the fee panel. He got bent because he was expected to take anything to keep his volume up once volume overall volume decreased. I'm sure layoffs are coming, but they won't lay all off, it's the panel appraisers who will be ghosted. And several panel appraisers are confirming the lack of anything coming in from that AMC.

That is common knowledge. The problem is these staff "appraisers" are so dumb they can't complete the cherry-picked ones right. Great system we have, isn't it.

 

[glenn walker]

That is common knowledge. The problem is these staff "appraisers" are so dumb they can't complete the cherry-picked ones right. Great system we have, isn't it.

Covid-19 exposed just how fragmented the self employed fee appraiser vendor business model is and many lenders had been held hostage in some areas both on fees and turn times. This resulted in the GSE'S- Money Center Banks and other agencies realizing they could never allow this to happen again. This also speed-ed up the use of more waivers and desk-tops and hybrids. My guess is a more "vertical " Approach is being developed so they will have control over the entire process from beginning to end. The Current Old Fee Appraisers are like Black Smiths and early Pre-Industral tradesmen. Speed of production and eliminating as much man power as possible is the future. The older guys-gals will be able to ride it out for another five or six years how much beyond that is anyone's guess. ** I can see current Appraisal regulations being modified to eliminate the word or term appraisals and make them Evaluations which would eliminate USPAP and the need of Individual State Boards. Kinda like how Realtors can do CMA'S and BPO'S they are not called appraisals.

 

[chad hampton]

Aren’t AMCs middle men? They have staff appraisers going to homes for appraisals? How’s that any different than the old system?

 

[glenn walker]

Aren’t AMCs middle men? They have staff appraisers going to homes for appraisals? How’s that any different than the old system?

The old system was never dismantled just re-arranged: )

 

[George Hatch]

Aren’t AMCs middle men? They have staff appraisers going to homes for appraisals? How’s that any different than the old system?

The difference is that the AMCs are acting as the agent for the lender in lieu of the lender operating their own in-house appraisal department. The AMCs only handle appraisals and related. That's all they do.

What the AMCs are not are loan originators whose primary function is to originate loans , or who only get paid if the deal closes. That's the difference. It's big difference, too.

The much closer parallel to AMCs are the in-house appraisal depts that are operated by the (actual) lenders, those departments being completely isolated by banking regulations from the loan origination departments. Which is exactly opposite of what happens in the appraiser/MB relationship.

As outside loan originators, your old MB clients had no legitimate business in even touching those appraisals, let alone controlling the engagement and payment for those appraisals. They shouldn't have even been allowed to contact the appraisers directly, except indirectly via their contacts at the lender.

It's an inherent conflict of interest for the loan originators to control any aspect of the lender's due diligence requirements.

 

[TerryRohrer]

The difference is that the AMCs are acting as the agent for the lender in lieu of the lender operating their own in-house appraisal department. The AMCs only handle appraisals and related. That's all they do.

What the AMCs are not are loan originators whose primary function is to originate loans , or who only get paid if the deal closes. That's the difference. It's big difference, too.

The much closer parallel to AMCs are the in-house appraisal depts that are operated by the (actual) lenders, those departments being completely isolated by banking regulations from the loan origination departments. Which is exactly opposite of what happens in the appraiser/MB relationship.

As outside loan originators, your old MB clients had no legitimate business in even touching those appraisals, let alone controlling the engagement and payment for those appraisals. They shouldn't have even been allowed to contact the appraisers directly, except indirectly via their contacts at the lender.

It's an inherent conflict of interest for the loan originators to control any aspect of the lender's due diligence requirements.

But there is little actual difference in the case where the lender owns the AMC. The "firewall" is paper-thin and highly flammable.