Screwed Twice

[Stephen J. Vertin MAI]

A couple months back I posted in title "Lost My Virginity" or something similar. It was about a client who told me to change the value or I would never work for them again. The day before the banker faxed over some bogus comps he wanted used in the report. When I told him, no, he said I would not be paid for the appraisal. Furthermore, he was taking me off the list. Then some time later in another post I told how I contacted AI. They gave me the names of the top dogs at the Federal Reserve and the FDIC who regulate situations similar to mine. I contacted both with a lengthy letter telling what happened.

Today I received a letter from the Federal Reserve and they said that they had completed their investigation and found no wrong doing on the banks part. Then at the end of his letter it was almost condescending. He stated, word for word:

"As a matter of course, it should be expected that a client might have questions of an appraiser after reviewing an appraisal report. In fact, the Federal Reserve expects a bank to have appropriate procedures in place to review an appraisal to ensure that the appraisal meets the requirements of the appraisal regulation and, more importantly, provides sufficient information to support the bank's decision to approve the loan. In your case, you indicated that the appraisal report was a summary report and that information supporting your analysis was retained in your files. This may be the reason that your client had questions about the comparable sales used in the appraisal.

For further information on appraisal assignments for a federally insured depository institution, you may wish to refer to Statement 10 or the Uniform Standards of Professional Appraisal Practices for appraising a property in a federally related transaction."

It seems appraisers have problems telling the difference between lenders pressures and legitimate questions concerning the report. Furthermore, we spend our time teeing off clients so we never work for them again. What a joke. The problem with dealing with lender pressure, is most occurs one on one. It is a he said she said situation. How can you ever regulate this? How can you prove it?

Steve Vertin

 

[David Mullen]

The top dogs are most likely political appointees. As such, they either just came from the industry or will go there when their terms expire.

I would think that the news medial would be more effective because they do not take bribes (also known as campaign contributions in some circles), have no vested interest in the lending industry, and have no reason to hide problems.

 

[David C. Johnson]

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

It was good that you report it. And also for you to report the results here on the forum. It tells us more about what is "happening" and why.

dcj</span>

 

[Anonymous]

Steve,

Lets see, the Federal Reserve is a big, um, BANK. Youe lender pressure came from a, um, BANK. You an lowly appraiser dared question a BANK. I wonder which side they would come down on?

Here is what I do now. When I get a call from a lender wanting bogus comps. I tell them to write it all out with the comps so it looks like a grid sheet. Write detailed instructions on how they want me to make my adjustments and what number theywant me to come in at, then fax it all to me.

So far, none have been willing to.

 

[jtrotta]

Steve;
so now that it's been clarified by the Federal Reserve, will you be questioning any Bankers soon :?: do you feel you waisted you time :?:

David;
what was good about reporting it :?: the results were known before he wrote the inquiry. What type of investigation do you think was conducted :?: My opinion, a phone call back & forth-if that.

Result; as an individual you have limited results, as an organized group there may be a slight possibility to improve the business we're in and "possibility" is a key word here.

8)

 

[Stephen J. Vertin MAI]

All:

In my original post, back a few months ago, I said it would be very hard to prove. As all of us know, who have been pressured, it is one on one conversation. For the life of me I can not figure out how you could stop this practice unless you enacted a lottery where the lender had no choice but to select appraisers from a federal pool in the area of the loan. Has anyone thought how this could be stopped? Even if lender pressure was made into law how could you enforce it without recording conversations?

I do not regrets turning the matter in. I am not finished. I will send a copy of this letter to Bill Garber at AI. The fact is the big dogs at the Federal Reserve turned it over to a little dog investigator. The investigator's response really read like a form letter. I am sure he has heard this story before. I think someone at the Reserve stated in the newspaper once that they are unaware of legitimate lender pressure on appraisers. Furthermore, Bill Garber said they had a case where the lender stated in writing, that he wanted a higher value, if the appraiser did not change said value he would not be paid and they would never hire him again. He told me even with this type evidence it was hard to get these guys to do anything.

I need to say I am very disappointed with the way government regulations has turned out. The system is worse than ever. If you were an MAI before regulation you could tell these guys to pound sand. There were always 5 to 10 other clients waiting to take their place. There was absolutely no reason to be bias. Now there are to many appraisers chasing to few assignments. When they lowered the bar it let to many appraisers into the game. Bankers can just go to someone who will hit the number.

In Illinois all you had to do over the last 8 years to be an appraiser was take two or three classes. After that, you could go out, with no experience or training, and appraise the Sears Tower. We had no limitations within a category call licensed appraiser. That is suppose to change this July and it is my understanding the ASB had to force the change.

At first I thought the classification was a joke. No one in their right minds would hire someone with this type training. However, I was wrong. This system is the biggest government failure since the Federal Housing Projects. I do not know if anyone or any group could repair, change or reform it as stands.

Steve Vertin

 

[Joe Birrell (NY)]

It's the fox guarding the chickens.

How do you think the lending industry is able to get away with what's going on ? The feds are the enablers of the bankers.

 

[David C. Johnson]

<span style='color:darkblue'>Bill-NC,

Nice!

Oh, yeah, don't forget to request that the document/grid be signed and dated!
_________

jtrotta,

The investigation may have gone something like this:

"This is Investigator Thursday calling for Banker I.M. Richer.
Is Mr. Richer in? No? Well, to whom am I speaking -- his secretary
maybe? No? Oh, the cleaning lady. I see. I forgot your state is on a
different time zone than us here. Anyway, you will do fine for our
purposes I am sure. Here goes, we recieved a nonsense complaint
against the place you are currently cleaning regarding lender
pressure. To your knowledge, the complaint is all BS, right?
You just asked:</span>Funny,
we said the exact same thing! Good. Good. That response will do fine!
Thank you very much. And don't for get to dust on the tops of the filing
cabnets! Thanks again. Bye, Bye, now."
__________

Joe,

I think you may have very nicely nailed it. Banking's influence in appraiser / appraising regulation is a stupid idea -- or a real smart idea depending on whether one is a banker or not, I guess.
__________

Steve,

I would suggest you consider speaking with or emailing Bill Sentner with the Appraisers Guild. He may have a file whereby the documentation for this situation could be housed for a while -- maybe as short a time period as five minutes. I believe it may have a higher probability of being retrieved from such a file, for good ends, quicker than for most other places it might be forwarded.

Regards,

dcj[/color]

 

[Pat Butler]

My local bank mistakenly let a check slip through that I had stopped payment on. It was a check that I paid to a painter who never showed up at one of my rental properties.

During the MONTHS that I had dealt with my bank on this issue, the painter filed for bankrupcty. So the bank's action of letting that check go through cost me $600. I had also started a lawsuit against the painter that I dropped after the bank told me that I could just stop payment.

I filed a complaint with the Federal Reserve and they sent me a form letter a month later that basically told me what little enforcement responsibilities they had over banks! At the conclusion of their investigation I got a letter from my bank saying that they indeed made a mistake but were only liable for the $20 stop payment fee that was charged to my account. They refused to even refund the $100 or so in service charges that I was charged during the months that they looked into it. I called the Fed Reserve and they said they couldn't do anything about it. The Fed Reserve is a usless pile of sh*t as far as gov't agencies go. I now filed a lawsuit against my bank, using their letter that admitted wrongdoing as evidence.

 

[Larry Lyke]

Stephen, I think they either sent you the wrong form letter or the secretary pushed the wrong keys on those automated letters.

The reason I oppose random selection of appraisers is it would treat all appraisers equal. That reinforces the idea some appraisals are better than others, i.e., the higher dollar amount the appraisal, the better.