TAF and USPAP - great analysis

[Joe Flacco]

Not necessarily disagreeing with you on the face of it (because I'm not sure what you're referring to). But give me an example of policies or changes to USPAP that have favored non-bank lenders or AMCs

The moment that sticks in my mind is when they began rolling back residential qualifications with the issues at that time being appraisal fees in the pot states.

I was very critical of TAF at that time.

 

[Mejappz]

Over the past 15 years I have seen many examples of situations like that. It has been my experience that the root cause is not the underlying methodology. Rather it is most often due to the failure of one, or both, to execute the methodology cited or claimed.

What I'm suggesting is that if two appraisers use the same or similar data, they would typically arrive at similar results. Even if one appraiser rates the property as 'Good condition' and another as 'Average' or 'C3 to C4', the difference in value would be minimal compared to the current practice. It would be literally impossible to have a significant value difference unless one of the appraisers fabricates the data in which case it would be easy to prove. That is simply impossible to do with the current system. Many appraisers are flying by the seat of their pants and literally adjusting for variables that don’t even affect value. while not adjusting for the variables that do.

 

[Dublin ohio]

The moment that sticks in my mind is when they began rolling back residential qualifications with the issues at that time being appraisal fees in the pot states.

I was very critical of TAF at that time.

How did that favor non bank lenders or AMCs

 

[Joe Flacco]

How did that favor non bank lenders or AMCs

TAF is very accommodating to the mortgage industry desire to keep appraisal fees low.

 

[Joe Flacco]

Appraisal Institute exerts fair amount of influence on behalf of commercial appraisers. That's about it. AI speaks for commercial appraisal issues and non-banks and appraisal management companies drive residential appraisal issues.

 

[George Hatch]

The moment that sticks in my mind is when they began rolling back residential qualifications with the issues at that time being appraisal fees in the pot states.

I was very critical of TAF at that time.

Okay, but in counterpoint I was criteria of the previous increase in some of these qualifications in the first place without any evidence that "unqualified" was causing any significant problems WRT appraisal quality. I don't believe "unqualified" has ever been the reason for appraisals not meeting SR1/SR2.

If someone was trained - and tested - on how to develop and apply market conditions adjustments during the shake-n-bake Appraisal 101 course, but they later "forgot" how to do that via disuse that is not an example of unqualified being the reason for the failure. It happened because the individual didn't work to their own previously-demonstrated competency .

The thing about minimum standards is that they have to be set at a point that we can reasonably expect everyone to meet all or almost all the time and under almost all valuation scenarios relative to the scope of practice at a particular licensing level. For example, we can't make Berts' plan the universal minimum requirement for all SFR work unless/until we can expect that app to work virtually all the time. AND unless our users will have that level of confidence in its credibility, sufficient to continue using appraisers.
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I agree that the AQBs actions with PAREA will serve to keep the lenders oversupplied with appraisers but there were other parties besides the lenders and AMCs who have been talking about running out of appraisers. The Appraisal Institute being among them. That discussion has been going on for years.

 

[Fernando]

What I'm suggesting is that if two appraisers use the same or similar data, they would typically arrive at similar results. Even if one appraiser rates the property as 'Good condition' and another as 'Average' or 'C3 to C4', the difference in value would be minimal compared to the current practice. It would be literally impossible to have a significant value difference unless one of the appraisers fabricates the data in which case it would be easy to prove. That is simply impossible to do with the current system. Many appraisers are flying by the seat of their pants and literally adjusting for variables that don’t even affect value. while not adjusting for the variables that do.

Unimportant adjustments to fireplace, heating system, and such do not affect value.
Main variables to consider are condition, location, and even appeal in adjusting in 1004.
Most importantly choosing similar comps in neighborhood with fewest adjustments.

 

[Joe Flacco]

Okay, but in counterpoint I was criteria of the previous increase in some of these qualifications in the first place without any evidence that "unqualified" was causing any significant problems WRT appraisal quality. I don't believe "unqualified" has ever been the reason for appraisals not meeting SR1/SR2.

If someone was trained - and tested - on how to develop and apply market conditions adjustments during the shake-n-bake Appraisal 101 course, but they later "forgot" how to do that via disuse that is not an example of unqualified being the reason for the failure. It happened because the individual didn't work to their own previously-demonstrated competency .

The thing about minimum standards is that they have to be set at a point that we can reasonably expect everyone to meet all or almost all the time and under almost all valuation scenarios relative to the scope of practice at a particular licensing level. For example, we can't make Berts' plan the universal minimum requirement for all SFR work unless/until we can expect that app to work virtually all the time. AND unless our users will have that level of confidence in its credibility, sufficient to continue using appraisers.

Yeah, yeah. We have discussed this at great lengths in the past. Especially during that time when it was going down.

I don't really care about TAF.

 

[Mejappz]

I don't need to look at any of that. Policy changes over the years and the issues at the time of those changes speak for itself.

Check out TAFs IAC partners.

 

[George Hatch]

​

Yeah, yeah. We have discussed this at great lengths in the past. Especially during that time when it was going down.

I don't really care about TAF.

I don't think most appraisers care.

The question none of the critics have an answer for is what comes next after the retirement of TAF and USPAP? Because the fundamentals of our professional standards precede both by 60 years. The foundational principles in appraising of the ETHICS RULE and the COMPETENCY RULE go way back, and almost everything else in USPAP is an extension and elaboration of those two principles. They were a thing in our profession before USPAP and they will continue to be foundational in appraisal practice after USPAP is gone.

Meanwhile and for the critics, I invite them to consider how they would go about answering every single one of the following:

What coda will take the place of USPAP​

How will it be developed​

Who will develop/promulgate it​

How will it gain acceptance and applicability across the nation (in the interests of interstate commerce)​

By what process will it adapt to any changes in the market or at societal or governmentals levels​

How will all this occur on the human-free basis so as to avoid the perils of human frailty​

How will these standards be enforced, and by whom.​

Will that enforcement be limited to the users (only) or will govt get involved as a form of consumer protection​

and...​

How will that alternative not enrage the same critics, on the same basis and for the same reasons, as what already exists.​

​

Whatever comes next, the critics will hate the new boss just as much as they hate the old boss. They still won't make the effort to understand why each of those requirements exist or how they actually work in furtherance of the appraisers' own legitimate interests, and they will still call anyone who's competent with the material a shill and a bootlicker for the sin of correcting their misinterpretations. They'll still call these requirements vague and inscrutable and claim it's impossible for anyone to comply, ever.

Appraisers can be depended upon to act like....appraisers.