Unintended consequence of reviews

[DWiley]

If reviews by non-appraisers and appraisers are both called Appraisal review in USPAP ...

The fact that YOU (continuously in this thread) and others use improper terminology is irrelevant to the assertions you are making about the USPAP verbiage. Perhaps you should read what USPAP actually says before you make such arguments.

 

[Dublin ohio]

Banks, by law, have long been required to REVIEW an appraisal. They do not merely throw them into a file without someone physically looking the report over for obvious errors. This is called ADMINISTRATIVE REVIEW in some circles. Reviews done under USPAP are called TECHNICAL REVIEW by some bankers.

And the majority of AMCs call theirs qc reviews

 

[sputnam]

USPAP controls who does what regarding appraisal practice, and what labels are used to differentiate.

That's incorrect. USPAP is only the mininum standards for appraisal practice.... and for real property, it only applies and is enforceable for credentialed appraisers. No one, that I can think of, has any direct control over how ordinary people use words. USPAP doesn't call reviews by just anyone 'Appraisal Reviews'. USPAP also doesn't control the sloppy use of language when people refer to the appraisal report as the appraisal... or use 'appraisal' in a different context. It doesn't control then people call any sales a comp. I'm sure you can think of other examples.

Many... maybe most... documents similar to USPAP in format... includings laws.... begin with definitions. Those definitions apply only in the context of that law or document.

 

[DWiley]

I assumed it was ordered by a homeowner ( at least in the bias high-profile suits I am thinking of ). Because normally a lender does not order a second appraisal just because the borrower is unhappy,

I do not know why you would assume that, given that most of the ones I have seen involve a suit being brought after the borrower was able to later refinance with a different lender. I have seen no stories that indicate that the second appraisal was done privately for the owner.

You are right in saying that a lender cannot order a second appraisal just because the owner is unhappy. But the owner can go to another lender who can use a more "cooperative" appraiser, no?

 

[J Grant]

I do not know why you would assume that, given that most of the ones I have seen involve a suit being brought after the borrower was able to later refinance with a different lender. I have seen no stories that indicate that the second appraisal was done privately for the owner.

You are right in saying that a lender cannot order a second appraisal just because the owner is unhappy. But the owner can go to another lender who can use a more "cooperative" appraiser, no?

It is called appraiser shopping. Since an owner is free to go to another lender and get a possibly higher appraisal, how were any of these owners damaged? Nobody who applies is guaranteed a loan. And they were all refinances, correct, not a purchase? If it was not a purchase, the price was not even market tested. It was about extorting money and should have been called as such.. Even if they did nothing wrong, a lender will settle a suit based on even a whiff of bias to avoid bad PR. Maybe less so now in the current climate..

Why didn't the GSEs stand up and educate about the process of market value in appraising? GSEs could have explained to the committees that an MV opinion can be higher or lower for a subject compared to a nearby comp or subdivision for many reasons and happens among all demographics. The buyers determine the prices, not the appraisers. An AVM relies on the same prices.

 

[DWiley]

It is called appraiser shopping. Since an owner is free to go to another lender and get a possibly higher appraisal, how were any of these owners damaged? Nobody who applies is guaranteed a loan. And they were all refinances, correct, not a purchase? If it was not a purchase, the price was not even market tested. It was about extorting money and should have been called as such.. Even if they did nothing wrong, a lender will settle a suit based on even a whiff of bias to avoid bad PR. Maybe less so now in the current climate..

Why didn't the GSEs stand up and educate about the process of market value in appraising? GSEs could have explained to the committees that an MV opinion can be higher or lower for a subject compared to a nearby comp or subdivision for many reasons and happens among all demographics. The buyers determine the prices, not the appraisers. An AVM relies on the same prices.

Do you see the irony in acknowledging that "appraiser shopping" is common enough that there is a term for it, yet at the same time trying to blame it on a party other than appraisers?

As to the second part of the post, other than what was said in public meetings, I don't think you have any idea what the GSEs did or did not say to any group.

 

[alebrewer]

How is that any different than 2nd opinions for a surgical procedure? If I, as a homeowner, don't like the opinion of the first appraiser (and it is just that - an opinion), why shouldn't I be able to solicit a 2nd opinion?

 

[DWiley]

How is that any different than 2nd opinions for a surgical procedure? If I, as a homeowner, don't like the opinion of the first appraiser (and it is just that - an opinion), why shouldn't I be able to solicit a 2nd opinion?

Individual homeowners may order as many appraisal reports as they desire, for any reason. Lenders, however, are likely subject to restrictions (to avoid what JG referred to as "appraiser shopping").

 

[J Grant]

How is that any different than 2nd opinions for a surgical procedure? If I, as a homeowner, don't like the opinion of the first appraiser (and it is just that - an opinion), why shouldn't I be able to solicit a 2nd opinion?

Totally different -

 

[J Grant]

Do you see the irony in acknowledging that "appraiser shopping" is common enough that there is a term for it, yet at the same time trying to blame it on a party other than appraisers?

As to the second part of the post, other than what was said in public meetings, I don't think you have any idea what the GSEs did or did not say to any group.

Did the GSEs explain to the groups that an appraisal MV opinon for an individual home can be lower than the prices of other nearby sales or subdivisions, for any number of reasons unrelated to bias?