TAF's Industry Advisory Council

[JSmith43]

Calvin, that sounds like an ISP problem or a wiring issue. Do you have cable broadband? I had problems with cable broadband, primarily due to intermittent signal quality, I think. DSL solved it. When I went to Dish, my cable guy ripped out lots of the existing cable, splitters, etc that were 5+ years old & made me a believer that it was a signal strength problem, carrying broadband and Hi Def TV on the crappy cables.

George, I'll have to comment when I have the time to give your post the attention it deserves. You could probably guess what it will be, but I do it for other purposes, of course.

 

[George Hatch]

Calvin,

My initial invitation for exchanging dialogue was not offered in sarcasm or cynicism. I realize my tone ended up being a little more combative than I had intended and for that I apologize.

I am not a religious person but I did have a religious upbringing so I believe I can somewhat grasp the gist of your comparison. I'd like to point out a couple things in reference to your observations about the different attitudes appraisers have towards USPAP vs. the codes of conduct at their respective appraisal orgs:

1. From what I've seen from appraisers over the years, the same appraisers who respect the ethical codes espoused by their own orgs maintain a similar level of respect for USPAP. Those members who hold USPAP in contempt seem to do the same with their orgs' ethical codes (and I'm not referring to the leadership of the org) as well.

2. Only a fraction of the appraisers in the U.S. are members of a professional org.

3. The professional orgs don't have the ability to put a crooked appraiser out of business; and even if they did they don't exercise it.

4. Unlike membership in a professional org and adherence to its ethics - which is optional - the licensing programs are mandatory and they require adherence to USPAP. It's a condition for holding the license from the state.

5. The requirements for lenders to use licensed appraisers was foisted on them by federal mandate, not by The Appraisal Foundation.

6. Although the states are required by the feds to run licensing programs and adhere to standards and qualifications criteria developed by the ASB and the AQB, the only reason those requirements carry any weight at street level is because the feds and the states adopted them into law. If not for that then the efforts of the ASB and AQB really would amount to nothing more that well-intentioned advice; of no more concern to all appraisers than the codes of ethics are to all the members of the professional orgs, which is spotty at best.

Then there's the story about the activist attorney.

I've related a story in an earlier post of a Cleveland consumer activist attorney that attended an IAC meeting. His interest was in predatory lending. He came away from that meeting with a profound disgust for TAF. In other words, it had the opposite effect of that which was intended.

Firstly, your characterization of this individual as a consumer activist attorney does not strike me as being wholly irrelevant to the outcome of the story as you have described it. I'll go out on a limb here and posit a wild guess that this person had an agenda prior to entering that meeting. Maybe it was a "I paid for the appraisal therefore it's my appraisal"; or "protecting the consumer means that appraisals should be considered home price warranties." Regardless of what his agenda was, I can think of a dozen examples where someone in that role would be angling for appraisers to get more involved than our stated mission to "observe and report". Truth is, sometimes the consumer is wrong, and so is their attorney.

One of the themes that the instructional materials for USPAP dwells on is the subject of credibility. And what the ASB tells us about credibility is that it starts with identifying reasonable and realistic and relevant expectations. Unrealistic expectations often detract from credibility.

Now if an activist attorney were to attend an IAC meeting they might do so with certain expectations. If so, they might be surprised when they see the ASB and AQB members read a prepared statement, field a few questions with some bland generalizations and otherwise spend the rest of the time sitting there passively taking notes while the corporate geeks and the wannabe Trumps rant on about what they want. If this attorney was expecting them to be getting combative or condescending with the corporate geeks then I can well imagine him being disappointed.

And yet if I described that meeting to an appraiser who's been following what the ASB and AQB do the reaction would be quite different. Why? Because as appraisers we would expect these TAF members to behave the same way with these advocates as they would when appraising a property and being hounded by a curious and persistent borrower. I.e., to humor them enough to elicit the information we're looking for and keep our opinions and our body language to ourselves.

The difference comes down to having reasonable expectations for what these folks are going to do. We should be capable of recognizing that the members of TAFs ASB and AQB are tasked with geeking out about appraisal standards and appraiser qualifications, not to sit in judgement in cases involving allegations of appraiser misconduct or lobby Congress to pass a guaranteed employment plan for the appraisal profession. Those are different roles that we should be assigning to someone else other than the wonks at TAF.

Come to think of it, perhaps the reason TAFs credibility is coming under fire from appraisers is the result of them having unrealistic and unreasonable expectations about the role of the ASB and AQB. It's possibly something to consider.

 

[DWiley]

As to your challenge...So was the removal of Departure.

I was on the ASB from from inception to adoption of the SOW Project. I can tell you definitively that the removal of departure was not driven by lenders. Most lenders supported the concept, but they did not ask for it.

I have expressed crticism of TAF actions to many on this Forum. However, one of the great strengths of the Foundation is that it actively seeks input from ALL.

During my time on the ASB my views were often influenced by people like George (and many others here) who took the time to provide input on proposals. That input was invaluable and highly appreciated.

I can also say that some of the loudest critics in this little community never sent one letter or email. If one wants his/her views known, one has to participate.

I would never say that politics and agenda don't play a role. No group is free from such things. However, having served on the inside, I can say that there are far more agenda and conspiracy theories espoused here than have ever even been thought of at the TAF.

 

[Restrain]

My thought is this: The goals are laudable. The results are laughable. Given that the appraisal industry is run like a Chicago ward (pay to play), we don't have a Ness to clean the mess up, especially as there is no impetus from anyone outside of the vocal minority to do so.

The result is a set of regulations equivalent to prohibition in the 20's. Lip service is given, and widely ignored by most.

That is why the TAF has such a low PR level in the trenches.

 

[JSmith43]

After a careful read, I don't intend to make a lengthy comment about the misuse of USPAP, since I can't think of a good suggestion that would vaccinate it from misuse or misapplication other than insisting on clear writing. Depending upon the topic, it's almost impossible.

As to the challenge question and the main point of the thread:

Let's see an example of a change to USPAP or the codes of conduct used by the professional orgs that preceded USPAP that favors the cause of any user to the exclusion of the public trust.

The only thing I can think of is the "estimate of value" vs "opinion of value" distinction that allegedly bolstered the development and use of AVM's allegedly for the benefit of a past chair of the ASB. Something like that.

I didn't pay much attention to the inside baseball at the time, still don't. But, that is the juiciest conspiracy theory I have heard brought forth. Most of the ones brought forth in here,....well, I can't think of any off the top of my head. So, they weren't all that memorable to me. I wish you would have left a few more bread crumbs.

 

[George Hatch]

The only thing I can think of is the "estimate of value" vs "opinion of value" distinction that allegedly bolstered the development and use of AVM's allegedly for the benefit of a past chair of the ASB. Something like that.

Yeah, I remember there being some appraisers (like Santora, for example) who thought the ASB went the wrong way on that one.

 

[Calvin the Airedale]

George,

I can speak to the attorney's agenda. He was concerned that several large lenders, including a few that no longer exist, were enforcing a concerted effort to put people in unsustainable credit arrangements soley to make a buck. These efforts included inflating valuations, and out and out mortgage fraud that were all downstreamed to Wall St and the GSEs.

This individual changed positions shortly after the IAC meeting and, when I met him, was working on reining in payday lenders in the State of Ohio. He was instrumental in reducing the annual rate of interest for payday loans from 394% to 36% in Ohio, in his efforts at lobbying the legislature. An act which the voters in this state recently affirmed.

My point in telling the story, again, is to illustrate the view of someone I actually know to be working for the public good. One, in fact, who has accomplished much in that effort.

 

[Calvin the Airedale]

I was on the ASB from from inception to adoption of the SOW Project. I can tell you definitively that the removal of departure was not driven by lenders. Most lenders supported the concept, but they did not ask for it.

I have expressed crticism of TAF actions to many on this Forum. However, one of the great strengths of the Foundation is that it actively seeks input from ALL.

During my time on the ASB my views were often influenced by people like George (and many others here) who took the time to provide input on proposals. That input was invaluable and highly appreciated.

I can also say that some of the loudest critics in this little community never sent one letter or email. If one wants his/her views known, one has to participate.

I would never say that politics and agenda don't play a role. No group is free from such things. However, having served on the inside, I can say that there are far more agenda and conspiracy theories espoused here than have ever even been thought of at the TAF.

I certainly hope I merit a pass on the long dark shadow cast upon the "critics" insofar as I have actually made a proposal to TAF and AQB.

Criticism is annoying, isn't it. One of its most annoying features is that it makes the target better at what he does. It would be so much easier to dismiss if that weren't the case.

As for the conspiracy and agenda theories, these are the natural by product of our age. They are more prevalent among those who feel disaffected, put-upon, and standing on the outside. Often they result from a lack of transparency.

It is the mark of leadership to have compassion and empathy, not just for those who are engaged in the process, but especially for those who struggle to make an ethical buck in a world and system that often seems stacked against them.

 

[Terrel L. Shields]

and it specifically mentions industry groups.

I think that "appraisal" is a far more catholic term than the bulk of us as "appraisers" think...

In fact, in post after post in this forum, a response shows that the responder is reflecting their niche. Clearly, the majority of appraisers (generic) are residential real estate appraisers.. And that term is more explicit. USPAP by trying to expand into other areas, business, personal property, etc. dilutes the impact that it could have. And by trying to cram all those other disciplines in the same "3 approaches and yer out" put-it-on-a-form....by its nature, it is exclusionary of entire profession classes.

I know I am a broken record..[skipped CD?, corrupted .mpg?] about mineral rights. "Resource" appraisal [minerals, water, timber, etc.] have methods unique to their nature even though they are an element of "real" property. It's hard to pound that Residential formula into a tree.

Today thousands of Landmen and petroleum engineers appraise mineral rights who have never heard of USPAP. In some states, they may do so in violation of "appraisal" laws. Next month, my article in Landman magazine will explain to petroleum Landmen the error of their ways.... so if he hear about a fat boy being lynched off the pump jack of a old well...you'll know why I didn't post that day.

USPAP has had unintended consequences. It needs to 'back off'. It was meant for bank financed real estate. It ought be limited to that. States are making exceptions to appraisal laws anyway, and they usually 'look the other way' when it comes to Realtors appraising property (BPOs, Zillows, AVMs, etc.)

BTW - DWiley was the only one I knew who acted upon my argument that mineral rights did not belong under "intangibles" but was "real" property rights and so recognized in 49 states - the Cajun French had to be different...

In other words, appraisers who license are screwed. They cannot compete with the 75% of the business that is being done by non-appraisers because no one forces those groups to comply with the law (wink wink, we'll ignore you for now) and on the other hand, AQB, ASB, and licensing is a net net drag on the appraisal of items that ought be exempt from regulation.

Calls are frequently made on this forum for appraisers to have a degree in RE and be required to be full time appraisers. What Real estate school is going to teach a future appraiser timber cruising and forestry? What RE school will teach geology and engineering, petroleum basics, so that the RE appraiser can accurately appraise mineral rights? Do you understand the desperate need for appraisers who have special knowledge?

If "appraising" and licensing is going to include every Tom, Dick, and Harry who values [all, generic] property then the rules need to be broader not more specific. The industry needs to embrace all disciplines where economic issues are part of their profession - Jewelers, geologists, engineers, architects, foresters, land resource managers. OR. It needs to narrow the scope of what should or should not be included in "appraising".

"Residential and Commercial Real Estate Appraisal" in my opinion, should be just that and it alone should be regulated. But with that regulation should come the explicit requirement that no lender, no bank, no one who ever got a dime of bail out money, should be allowed to use anything but a certified or licensed real estate appraiser. No BPOs, no CMAs, no AVMs. none. nada.

And that is not going to happen because too many AMCs and AVMs are making too much money that rightfully should be spent on a human examination of a property. We are rapidly approaching the stage where everything that can be automated and integrated is. And done so at very little cost. We appraisers are being displaced by computer technologies which today are about 50% accurate. In the future, they will get better and better at vetting a property. Eventually, there will be no place for a "real" human appraiser except in a court of law and likely only then to explain the appraisal model...

So it looks like to me that the appraiser of the future will either be a very narrow specialist or an expert in statistics and hedonic modeling. Visiting a house and expressing an opinion is passe`. And USPAP is lagging even further behind the times.

 

[JSmith43]

I'm with you, Terrell. Not much conspiracy going on, so I say we jack this thread and put this well intentioned USPAP genie back in the bottle.:icon_mrgreen:

SOW, not a bad baby step. But, we do need almost the whole thing back in the bottle, unless it is limited to FRT. We need general principles, not numbered lines, like so much computer code, that can be used and abused by those that would read the lines like they came from tablets of stone, carried down from a mountaintop.

As a whole, I think USPAP has evolved favorably from it's political birth, but I really believe it should no longer hold the exclusive franchise outside of the FRT for promulgating uniform appraisal standards. Competition is good for the soul. And the appraisal of real property interests still has a way to evolve.

Just check out the EI thread in the Commercial forum. A legitimate range of views, being hashed out, even though some of the participants don't really agree on the fundamental merits of the Cost Approach. Heck, there is a better example on a competing forum, that clearly illustrates a structural problem with USPAP for an appraiser stuck with an assignment covering a blend of real and personal property, offered as a package.

The preamble:.......no, lets start with the name. Uniform Standards of Professional Appraisal Practice. I suggest a competitor should be hatched that might be called Best Appraisal Practices. The emphasis on being uniform gives me clone wars nightmares.

UL listed, NECA, Good Housekeeping seal. ANSI? Who wants a crack at it? It's pretty hard for a profession based upon economic theory to evolve if it is based upon Uniform Standards and committee creation. I keep thinking of IPCC for some reason. Never mind that.

To the loyal soldiers that have toiled heavily on this thankless, mandated task of creating appraisal standards, I don't mean to post in confrontation to you. I realize you have a mandate, a structure to work within, a box.

The AF was probably the closest deal that could be cut to salvage some sort of academic basis for the politically inspired regulation that was rolled out the door, that I lovingly refer to as the risky T-11 regulatory scheme.

This will have to be solved at the political level, with letters to politicians, not the ASB. It seems like a rather small problem at this point in time. Maybe we should all write Treasury Secretary Paulson a letter instead. A little bail out money thrown at the issue and who knows? Maybe I'll like the result (sarcasm).