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Sneaky Underwriting__No reviews: Lots of Fraud

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Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Reviews are bogus.

Appraisal fraud is minimal. Appraiser incompetence due to bad training and/or too little experience and education is all around us. Plus, mistakes do happen too.

An appraiser who is incompetent is just as incapable of doing a review as s/he is a full appraisal, and yet we are subject to their whims of miscalculation or time saving short cuts when our reports are under their scrutiny. Because of the typcial fee for a field review, they are typically the only appraisers willing to do them in bulk (though I know some highly qualified appraisers who do them often).

They should come up with a new state designation for review appraiser that requires no less than 10 years experience as a licensed and/or certified appraiser (trainee years do not count) and the passing of your state's certified general test, for which you can become a certified general for having passed it only after you show proof of the general education credits and the non-residential experience. Otherwise, you would strictly be a certified review appraiser.

A guy with your experience, Julio, should not be held accountable on a non-cookie cutter appraisal by a guy in the business for 1 or even 7 years. It is time to accept the fact that this profession has a steep learning curve.

Another opinion would be to have reviewers trained and licensed as an instructor and the reviews could then be instructive lessons to the appraiser who completes the original assignment. All reviews done on your work, in this scenario, would be sent to you so you can see how to better yourself as an appraiser. At least then experienced appraisers will be informing and help train less experienced appraisers, instead of mortgage brokers - which is all too common in the real world.
 
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DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
Reviews are bogus.



They should come up with a new state designation for review appraiser that requires no less than 10 years experience as a licensed and/or certified appraiser (trainee years do not count) and the passing of your state's certified general test, for which you can become a certified general for having passed it only after you show proof of the general education credits and the non-residential experience. Otherwise, you would strictly be a certified review appraiser.



I would even be willing to consider that reviewers having to be trained and licensed as an instructor and the reviews could then be instructive lessons to the appraiser who completes the assignment. All reviews done on your work, in this scenario, would be sent to you so you can see how to better yourself as an appraiser. At least then experienced appraisers will be informing and help train less experienced appraisers, instead of mortgage brokers - which is all too common in the real world.

Fuhgetaboutit, nobody will pay the $500-1,000 fee that this would demand. :unsure:
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
I don't think it would have to be that much. I think a good review can be done for a typical appraisal fee of between $300 to $400. And I am sure they can find a way to get the money through licensing fees to assist lenders in paying. My bet is the lender is already paying the management companies $250 or more. So the amount that would have to be supplemented is not too great.
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
I don't think it would have to be that much. I think a good review can be done for a typical appraisal fee of between $300 to $400. And I am sure they can find a way to get the money through licensing fees to assist lenders in paying. My bet is the lender is already paying the management companies $250 or more. So the amount that would have to be supplemented is not too great.

Let's see a raise of hands. Who, with the qualifications/requirements Jim listed, is willing to do these on a continuing basis for 3-400?
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Let's see a raise of hands. Who, with the qualifications/requirements Jim listed, is willing to do these on a continuing basis for 3-400?
Not me.

I have made a business decision not to accept any appraisal order that requires as much work for less than my standard fee on a cookie cutter 1004.

It goes with out saying that any appraisal order that requires more work, requires more fee.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
So then what is the solution? To have guys with strong experience and who are knowledgable be reviewed by those who don't know nearly as much?

I did an 8 acre parcel on a river a month or so ago. It was improved with a 2200sf house and a 2 car garage and workshop along with two docks. This is a very "Old Florida" area where sales are few. The river the house is on leads to the bay which leads to the gulf. The property has been in the family since the 1800s.

In order to determine land value there are really only two listings that can help. One is a 2.5 acre tract just down stream that shows as active in the MLS for $449,900 but per public record it sold for $400,000 in Oct. 2007; while the other is a 13.98 AC tract just upstream from the subject that is currently offered for sale for $200,000. I looked at both and found out the $200,000 listing had been a tax deed sale for $2,100 in 1996 and that it was not buildable and had been listed for $200,000 since May of 2005, straight through the height of the market when a regular lot off the river was selling for $250,000 to $300,000, yet it did not sell. I thought it was obvious this was not even comparable to the subject and so attached the MLS to my file and forgot about it. I got a couple of other sales, on lakes and with acreage, and determined a reasonable value for my lot was about $350,000 (the market declined since 10/07).

Well, the field review comes back and the appraiser coincidently states I have over appraised the property by $150,000 and there is no doubt in my mind he simply saw the $200,000 listing and thought, "That's the cap on value of the subject lot" and went with it.

Now me, personally, I called the agent involved, and I called the town to find out what can and cannot be done, I even called the HOA because there was some possibility that the lot could be improved with a stilt house, but the MLS stilt homes are not allowed and I wanted to confirm that with the HOA - which I did. In short I did everything an appraiser should do, what I know Randy would do, or anyone else with good experience would do. Yet I am being punished because I got a reviewer who doesn't know enough about land valuation.

The lender said the only recourse I have is to ask them to have another field review done. I asked to see the review in question so I can rebut it. They refused. So now I sit at the mercy of another reviewer who is hired as staff personnel, which is supposed to make me feel better as if that means he is more competent. But staff guys are generally those who are young and new and don't mind trading in a low salary for consistent work and the ability to discuss issues with other appraisers who share their experience level (the blind leading the blind). So I am stuck hoping that either this guy is real good and does the job right, or that he knows the market so well that he says "8 acres on the Alafia is worth at least $350,000". I can't have an inbetween guy who thinks he's good but doesn't get the nuance of land value; who does enough to find the $200,000 listing, but stops there and assumes it is a cap on value.

So, then, what are the solutions? The fact is 90% of reviews are bogus and unless we come up with solutions to check our work, we are going to continue to have no credibility.
 
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Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
So then what is the solution? To have guys with strong experience and who are knowledgable be reviewed by those who don't know nearly as much?

So, then, what are the solutions? The fact is 90% of reviews are bogus and unless we come up with solutions to check our work, we are going to continue to have no credibility.
Review is not what you should be barking about.

Lets talk a second appraisal. If you have two appraisals that don't agree then what should be done? Maybe get a third appraisal and let the majority rule?

It really becomes a lender problem and underwriting should make the decision on appraisal credibility along with risk management. Many times yoiu have non-appraisers review the appraisal. That is fine with me.
 

Kevin Mc

Elite Member
Joined
Jun 7, 2004
Professional Status
Certified Residential Appraiser
State
New York
Not me.

I have made a business decision not to accept any appraisal order that requires as much work for less than my standard fee on a cookie cutter 1004.

Ditto. At a minimum it is the same price as a 1004, and that is for clients I like....:icon_mrgreen:
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
I was in a CE class a couple of years ago for reviewers. The AI pro told us she would double the stand fee for an appraisal for a review. At that time fees were $350 for a standard appraisal so the $700 mark should have been correct.

Now with that said I guess if the AMC are paying $125 for an appraisal the fee of $200 to $250 would seem right. I think this sucks.
 
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