Trainee Inspections

[jkirton]

In light of FNMA recent changes to the selling guide allowing trainees, or non licensed, to inspect property, I have been considering making changes to my business model. Essentially, I am considering training someone to do inspections for me. This would be a person who takes the classes and is a designated trainee in my state. I see several potential issues: The certification on the FNMA 1004 states that appraiser personally inspected subject property. Obviously I would be in violation of USPAP if I signed that certification and didn't inspect. Knowing that the certifications are not to be deleted or modified, is there any way I can allow a trainee to inspect without me, when performing a 1004 for lending purposes? Does it change if trainee signs, and I sign as the supervisor?

 

[hastalavista]

First, let's look at the intent of the GSE's allowance of trainees performing appraisal tasks in the completion of assignments that conform to their requirements.
The intent behind this is the recognition that under supervision, a trainee (licensed as such if there are such licensing requirements in a particular state, unlicensed but going through the appraiser-training process in states that don't have a trainee-license designation) can become competent to perform such tasks and participate in the appraisal process for their licensing-experience (as well as training) purposes.
The intent is not to create a subset of inspectors that happen to meet whatever requirements the state might have to become an appraiser-trainee.
So, make sure that your business-model objective is aligned with the intent of allowing trainees to do certain tasks (such as inspection).
This is especially important if something goes south and your regulator decides to do an investigation. If they conclude that the entire purpose of this arrangement was to facilitate inspections by someone else and not train that person to become an appraiser, I'd hazard the guess that the supervisor's goose would be cooked.

A trainee (as far as I know) can complete the inspection component, if they are competent, on their own, subject to whatever state regulations apply to the inspection-component, but they must sign the appraisal on the left and the supervisor must sign on the right; if you didn't inspect, then as supervisor, you'd check the "did not inspect" box.
However, it is the client (lender) who will determine if they will accept that arrangement. Just because Fannie allows it doesn't mean a lender might agree.

My 2-cents.

 

[jkirton]

Right, so basically no lenders accept a trainee signature being on the report, all lenders require the assigned appraiser perform inspection. How then, is it possible to make hiring a trainee profitable? They won't be able to inspect on their own until they reach Certified Residential level, as per all of my clients who will not allow a licensed appraiser on a panel and again would still require supervisor inspection for licensed level appraiser.

 

[DWiley]

Right, so basically no lenders accept a trainee signature being on the report, all lenders require the assigned appraiser perform inspection. How then, is it possible to make hiring a trainee profitable? They won't be able to inspect on their own until they reach Certified Residential level, as per all of my clients who will not allow a licensed appraiser on a panel and again would still require supervisor inspection for licensed level appraiser.

To clarify, Fannie's announcement was not a change. That has long been their policy. It is the lenders that have driven the "must also inspect" requirement.

When I owned a firm we almost always had trainees, and we never let them inspect alone until they were certified. We could make that economically feasible because we have several appraisers that a trainee could rotate around with. In a smaller company with only one or two appraisers, the economics of training anyone are very tough. They always have been.

 

[TRESinc]

Right, so basically no lenders accept a trainee signature being on the report, all lenders require the assigned appraiser perform inspection. How then, is it possible to make hiring a trainee profitable? They won't be able to inspect on their own until they reach Certified Residential level, as per all of my clients who will not allow a licensed appraiser on a panel and again would still require supervisor inspection for licensed level appraiser.

you could not be more wrong. of the 4 remaining clients i do residential lending work for all but one will accept reports done by a trainee so long as the supervisory appraiser signs on the right. i am only familiar with one of their policies on trainee inspections, and they allow it (my mentor had them as a client when i was a trainee and allowed to do inspections alone once my mentor was satisfied i was capable, but that was 20+ years ago).

who ever said hiring a trainee was profitable? things are different now than they were 10+ years ago. one can no longer hire trainees with the expectation they will perform reports for a discounted fee and the supervising appraiser will have a new profit center.

as far as not accepting licensed level appraisers, that is a client-specific issue. if your current clients won't then you have 2 options:

1. find a client that will
2. have your trainee go right for CR and not bother with LR

i have to ask - if your clients won't accept work from a LR without a CR signing off on the report why are you even bothered with the LR level?

 

[jkirton]

20 years ago I did inspections without supervisor. I am a high volume 1 man shop, looking for way to increase efficiency. The way the business is now, the easiest thing to teach is the inspection. If I could get a trainee where I know they were reliable on inspections, and let them run with those while I did paper work, I could increase volume tremendously. I do primarily residential lending work, multiple clients, and a steady business. So far all of them I have talked to and read policies on will not allow trainee or LR level inspections without supervisor. So, since I have to eat, and stay busy, there is no way to drop these clients, find those that will allow it, then proceed with hiring. Confirms my thoughts that the residential appraisal industry is dying. FNMA's intent with that update/clarification is only to allow for hybrid appraisals. Once lenders are on board, they will just order those, stop 1004 work, and pay appraisers $60 per report. Already happening across the country.

 

[TRESinc]

20 years ago I did inspections without supervisor. I am a high volume 1 man shop, looking for way to increase efficiency. The way the business is now, the easiest thing to teach is the inspection. If I could get a trainee where I know they were reliable on inspections, and let them run with those while I did paper work, I could increase volume tremendously. I do primarily residential lending work, multiple clients, and a steady business. So far all of them I have talked to and read policies on will not allow trainee or LR level inspections without supervisor. So, since I have to eat, and stay busy, there is no way to drop these clients, find those that will allow it, then proceed with hiring. Confirms my thoughts that the residential appraisal industry is dying. FNMA's intent with that update/clarification is only to allow for hybrid appraisals. Once lenders are on board, they will just order those, stop 1004 work, and pay appraisers $60 per report. Already happening across the country.

20 years ago things were different, and you know this since you have been around that long. if your sole goal is to increase efficiency then hire an office assistant to handle things like processing new orders, phone calls and scheduling, pulling MLS/public records data, entering the basic subject data into your software, billing, etc. - all the jobs you do not need to personally do as the appraiser. i can almost guarantee your efficiency will increase. you don't need a trainee to do those functions.

if you want to increase your bottom line by using a trainee then find clients who will accept work from them.

 

[Elliott]

Let's say one 'trains' a state Registered Appraiser Assistant, 2,000 hours of work at 8 hours per appraisal, for 18 months, and they become a Certified Residential Appraiser, who can sign reports and inspect properties. How does one find lender clients who will put them on a panel to make the gap between 2000 hours of training to 5-years of experience, which in theory would take at least another 3-1/2 years or more!? It almost seems an impossible task to become an appraiser under the new rules, or a 7-year indentured servant program.

 

[hastalavista]

Let's say one 'trains' a state Registered Appraiser Assistant, 2,000 hours of work at 8 hours per appraisal, for 18 months, and they become a Certified Residential Appraiser, who can sign reports and inspect properties. How does one find lender clients who will put them on a panel to make the gap between 2000 hours of training to 5-years of experience, which in theory would take at least another 3-1/2 years? It almost seems impossible task to become an appraiser under the new rules.

Its tough.
That's why a newly minted license is not a guarantee for independent work (at least not for mortgage-lending work... residential or commercial).

 

[BRCJR]

We must have the Appraiser Trainee on our Approved List as well as their Supervisor. Virginia allows for "Unlicensed Trainees" but , we don't approve/use them.
We believe anyone that has passed the classes, thus obtaining their Trainee license, has shown a certain level of competency for our comfort level.
We know the work samples they provide are basically their Supervisor's work product.
We don't allow the blind use of a trainee as we don't let others select who will be engaging with our clients for us.