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The Petition

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Steve Gish

Sophomore Member
Joined
Apr 28, 2003
The Petition

We request that action be taken to hold the lenders responsible for this type of violation and provide for a penalty on any person or business who engages in the practice of pressuring appraisers to do dishonest appraisals that do not provide for independent judgment. We believe that this practice has adverse effects on our local and national economies and that the potential for great financial loss exists. We also believe that many individuals have been adversely affected by the purchase of homes which have been over-valued.

Ok, I agree with the petition. Years ago, when I was a young pup in the military, I had a supervisor that told me "don't come to me with a problem unless you have a solution to suggest". This information taught me to be extremely self-reliant when it came to problem solving.

This petition… we're asking for help, but offering no real solutions in the text that I read on the website. No suggestions on how to go about holding people accountable for fraudulent requests. Who/how is this going to be monitored? Federally, state level, locally? We’re just asking someone to fix our problem.

"The ASC's mission is to ensure that real estate appraisers, who perform appraisals in real estate transactions that could expose the United States government to financial loss, are sufficiently trained and tested to assure competency and independent judgment according to uniform high professional standards and ethics."

This says the ASC is “charged” with a mission… to regulate appraisers and the appraisal industry, but do they really even have any legal influence over anybody except appraisers? Who regulates lenders and mortgage brokers? If the answer is nobody then how is the ASC supposed to fix this?

From their website…
”Title XI is the ASC's legal foundation. It authorizes the ASC to:
• Oversee State appraiser regulatory agencies;
• Grant funds to, and review the activities of, The Appraisal Foundation;
• Maintain a National Registry and collect Registry fees; and
• Report to Congress annually

My take on this is the ASC is governed by Title XI, I can’t see where this gives them any authorization to regulate banking or lending institutions.

Debt = profit in the banking industry. The bigger the loan the more profitable. The lenders around the world have established guidelines to provide benchmarks for loans, high grade, prime, sub-prime. As I understand it these loans are based more on the credit history and income potential of the property and the borrow than the quantity of monetary value involved. And other than the requirements put on them by the secondary money market, loans are pretty much unregulated.

“My” suggestion on a solution:

Should not the ASC be SPONSORING this petition, to be sent to the Head of the Federal Reserve System or someone charged with governing BANKING and LENDING regulations? Someone who has the authority to modify existing banking regulations and bring about PENLTY guidelines when proof of attempted fraudulent appraisal procurement has occurred. After something like this is part of a Federal Regulation, then and only then, WHO will enforce it? Not state appraisal boards, is there even a state banking authority. I don’t know the hierarchy of the banking industry well enough to pick a place for enforcement suggestion. I don’t think my local sheriff really cares.

I’m just trying to get a thought process started here. I can only imagine how hard it might be to prove in a court of law “attempted fraudulent appraisal procurement” when the only proof is a he said/she said phone conversation. No lender in their right mind will put on paper, “must meet x price or you will not get paid”. Implied is one thing, proving it is another. I hate government intervention and regulation as much as the next guy, but we’ve put USPAP upon ourselves at the prodding of the government (ie, do it yourselves or we’ll do it for you), albeit a good thing. Maybe the banking industry needs a “USPAP” like structure of guidelines to be governed at a state level with testing, apprentice training, licensing and enforcement authority.

Another suggestion on a solution:

Somewhere I read of a suggestion of a national clearing house for appraisal orders where EVERY certified appraiser is listed and the orders get passed out 1 per license number, where no lender knows who is going to do their appraisal. A system like this might work if it were broken down into areas. Like counties or major metropolitan areas, to be governed by state Appraiser Boards, now that might work. State boards establish areas of work based on standards that a particular state deems appropriate for their area. A private firm, licensed by the state, establishes a system of receiving orders from lenders and sending them to the next person on the list. The appraiser himself would have the option of accepting or declining the order (based on competency or by choice), then it would go to the next available appraiser. Individuals could be identified as qualified for commercial, rural, SFR or all of the above, which would help to sort sending commercial appraisal requests to unqualified persons. Today’s computers and software could make this viable reality.

I know this idea will just infuriate some appraisers, especially the “numbers-hitters” who are doing 3 appraisals a day. Some one may get a 2055 and the next guy gets a 1004, one gets a $150 order the next gets a $325 appraisal order. These are things to be thought through, as part of the process. Banks may attempt to hire their own appraisers and run their own shops, but I think that was tried back in the 80’s and look what happened there. There are a million questions to think through on this idea, but it’s an idea!

This is a long discussion with several different trains of though on several different subjects, yet they are all related to the original problem, requests for fraudulent appraisals, the Petition, and suggestions to actually fix the problem.

Anybody want to fill in the holes? Chop this idea apart? Thoughts or idea’s?
 

Non Sequitur

Elite Member
Supporting Member
Joined
Feb 14, 2002
Professional Status
Certified Residential Appraiser
State
Louisiana
Good for you Steve. I applaud your courage for pointing out the problems with the petition, given how some of the "regulars" here feel about it.

I haven't signed it because I believe that it more than exaggerates the problem. I personally haven't experienced the problems the petition implies are rampant in the industry, and I don't think more government regulation would be the answer if the premise were true. In my case until I started reading this board I had never heard that there was a problem on the scale that is posted about here.

As an aside, I find it a little ironic that a few posters who want the government to step in will in another thread claim that it was the government via state licensing ruined the profession.
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Steve & Cledet,

I support the basic premise of the petition. I am the first to admit that there may be some kinks in it but it is a start in the right direction for SOME unity. That is our fundamental problem. We are divided into tiny little groups with NO POWER. Mortgage bankers on the other hand have one large organization with tremendous political clout. Do you really think all the members of the MBA agree with one another?

Thanks to Bob Ipock(the first signatour of the petition) with the support of this petition and some help from a local politician, our state has recently inacted a BANKING LAW that specifically states Banks, mortgage bankers, brokers etc MUST pay for any appraisals they order regardless of loan outcome. Failure to do so places there licenses to operate in NC at risk. This has resulted in a tremendous collection rate of fees for all the appraisers in this state. No longer do we have to suck up to these leaches.

So think what you may, but I am for it.
 

Steve Gish

Sophomore Member
Joined
Apr 28, 2003
I started my whole speal by stateing my position, I agree with it. Thanks

I was not aware of the new law in North Carolina, your right that may be a start. I'll dig around and find a copy and send to my elected officials?

Ideas, Ideas, that's what I'm looking for here.
 

Ghost Rider

Senior Member
Joined
Apr 27, 2003
Professional Status
Banking/Mortgage Industry
State
Connecticut
Want to fix the problems we are having today - I just did this in another thread, but I'll do it again here.....

Take the decision of who does the appraisal out of the people who only care about their commission check. Right now, the LO or Broker will chose and appraisal based on who will get it to them quickly, and hit the numbers they need - I know, there are good LOs out there, and I'm making generalizations, but bear with me......

Give the control of the appraisal, and all other decisions to the secondary market, the people who's money is on the line. If they need the appraisal to make an informed decision, shouldn't the be deciding who's opinion of value they are looking at?? and I'm guessing they will demand higher quality appraisals than whats being turned out today, just a guess....

I know its not the total solution, but it will fix MUCH of the trouble we have now.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
MH

With great regret I inform you that the secondary market makes money off of the same process as the primary: making loans.

The marginal losses are still (to date) well within their built in tolerences.

Some of the losses are even insured - - by others...

Sad to say they don't want many of us inconvenient appraisers messing up their system.

Some goodly portion of the protests of need for professional competence are so much window dressing. What goes on behind the curtains woudl shock you to your innocent soul.

Wanna bet appraisers E&O goes out the ROOF in the next two years or so?

I buy, if they don't double in the next 24 months!

mouseprint disclaimer:This offer time limited to 24 momnths and the original correspondents (myself and MH), at a time and place of my chosing and maximum out of pocket expenses of $15.00
 
Joined
Jan 16, 2002
Steve:

While I admire you ambition and thoughts on the subject I have to say your not going to get much play on this topic becasue it has been debated to death already on this forum (even prior to the petition). Many solutions have been offered, however, the fundamental problem is that appraisers have no power as a group to make the changes needed. There are other major problems, such
as that exemplified by the first poster above, i.e. there is no problem. There also are many in this profession that like things exactly the way they are so that they can continue being number hitters and have the cash flow in. Make changes to remedy a corrupt system ? Not for them aleast, things are good the way they are. I for one am exhausted by the whole stinking mess and I'm sure I'm not alone. I've been fighting "windmills" for decades in this business and instead of improving it's got worse. At this point, I'm out of this business in a few years and just buying time. I firmly believe it will never change (which is why I havn't participated in this section of the forum for a couple of years already). I'll let the younger people deal with it, like I said I'm to old to fight a corrupt system any longer.

Good luck.

Ranting Joe
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
OK, if no one else wants to make suggestions here some that I am working on in a letter to my State Board and the banking commission. There just ideas but I think a few actually have some merit.

BTW Alabama enacted Broker Licensing and and they can loose their license for not paying an appraiser too.

· Require everyone who has any involvement in using, ordering receiving and appraisal have at least a basic understanding of the requirements of Uniform Standards of Appraisal Practice (USPAP)

· Require everyone who has any involvement in using, ordering or receiving an appraisal be bound by the Uniform Standards of Appraisal Practice (USPAP)

· Any one that stands to make a Commission based on a loan that has to have a Real Estate Appraiser involved should be removed from having any influence on choosing the Appraiser. As long as Loan Officers are allowed to choose the Appraiser there will always be what I see as a conflict of interests.

· If the Loan Officer is allowed to choose the Appraiser then he should be held responsible for the Appraisal as well as the Appraiser.

· Require Lenders to sign the Appraisal report saying they agree with the content for the Report and assume at least some liability. I believe that would make the unethical ones a little less likely to push Appraisers if they knew they had to answer for their actions.

· Require Lenders to pre-pay for Appraisals. This will eliminate the threat of non-payment when the Appraisal doesn’t meet their need.

· Stop direct contact between the Loan Officer/Broker and the Appraiser. The Appraiser is supposed to be the independent third party in the deal. Give us some independence from the pressures applied to us.

· Chose Appraisers off a rotating list such as VA does. This way the Loan Office is not able to pick the Appraiser and apply pressure to the Appraiser.
 

Steve Gish

Sophomore Member
Joined
Apr 28, 2003
Jeff,

I like these idea's, I like alot of these idea's. It's past my bed time :asleep: , I'm going to get into these tomorrow when I'm more away. :D
 
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