Unintended consequence of reviews

[alebrewer]

To that end, I spent a dozen years at the state taking actions against appraisers (and AMCs) for their shortcomings.

Really glad Texas made a paradigm shift several years ago to take action 'for' appraisers who struggled with different issues (as opposed to taking action 'against'). It's always been my opinion that ignorance can be mitigated, fraud can't. A few years ago Texas made the shift to work with appraisers who failed out of ignorance or laziness, and to only act 'against' appraisers who aren't capable of reform (fraudsters). As a TALCB mentor (and prior investigator), I applauded that shift.

 

[J Grant]

In a previous post you referred to "donkey" appraisers. Well guess what those "donkey" appraisers are? They are appraisers - appraisers who exhibit "unprofessional and shortcut practices" - and they are out there competing with the appraisers who do things correctly. And, more importantly, they are affecting the public perception of the value of appraisal practice.

Are those "donkey" appraisers just scapegoats? Or are they the real root of the problem for other appraisers?

Unprofessional conduct by others should indeed be called out. But the fact that their conduct is all too often facilitated by unprofessional conduct by an appraiser should not be ignored, as is often the case. There is plenty of blame to go around, but some in this community seems to only butter one side of the bread.

Why don't the GSEs help eliminate these bad appraisers? If you can identify certain appraisers as the donkeys, you can identify them to put on a do-not-use list. That would force lenders and AMCs to use more experienced and diligent appraisers, who you must be aware of by now, are often driven out of business by some of the policies enabled by the low AMC fees, and those low fee assignments often end up getting accepted by the donkeys.

The entities are not blameless in this. It is imo, disingenuous to blame it all on the other appraisers if one has a hand in enabling, or looking the other way about the conditions and lack of enforcement that sees the donkeys flourish.

 

[alebrewer]

If you can identify certain appraisers as the donkeys, you can identify them to put on a do-not-use list.

they already do. Well, not exactly the appraisers who are donkeys (I personally don't know any of those - and wouldn't a donkey experience a significant language barrier anyways?). Not to mention that they don't have opposable thumbs. How the heck are they gonna hold the tape measure?

 

[J Grant]

Really glad Texas made a paradigm shift several years ago to take action 'for' appraisers who struggled with different issues (as opposed to taking action 'against'). It's always been my opinion that ignorance can be mitigated, fraud can't. A few years ago Texas made the shift to work with appraisers who failed out of ignorance or laziness, and to only act 'against' appraisers who aren't capable of reform (fraudsters). As a TALCB mentor (and prior investigator), I applauded that shift.

While deliberate fraud is worse, wilful ignorance and caving in to client pressure is far more prevalent, so ultimately the two end up equally bad.

i performed hundreds of reviews of inflated value appraisals post-crash after the boom. I would not say most of them rose to the level of fraud. Most of them rose to the level of certain antics to push value, which were rather easy to spot - cherry-picked high price comps that were less similar to the subject used instead of more similar, lower price comps, and or adjustments massaged to make values come in. Is such an appraisal fraud? IDK, making that kind of judgment was beyond the SOW. However, the reviews clearly showed the values to be poorly supported. What actions the lenders or regulators took, if any, with the appraisers later is unknown to me.

Imo, any appraiser can at times under-value or over-value a property; however, if it is a persistent pattern that shows something other than being a bit off on occasion. The majority of this activity involves inflated values, though a deflated value might be used to enable an investor or other kind of purchase.

 

[John Hassler]

Really glad Texas made a paradigm shift several years ago to take action 'for' appraisers who struggled with different issues (as opposed to taking action 'against'). It's always been my opinion that ignorance can be mitigated, fraud can't. A few years ago Texas made the shift to work with appraisers who failed out of ignorance or laziness, and to only act 'against' appraisers who aren't capable of reform (fraudsters). As a TALCB mentor (and prior investigator), I applauded that shift.

It’s not an either or proposition. My staff and I gave many licensees a “tuneup” when warranted instead of an action.

Regarding the mentoring program in TX, I was really intrigued by it when I met your in-house attorney at an AARO or TAF meeting. I don’t recall his name but he passed away (young) circa 2015. I was so intrigued that I attempted to put a similar program in place in CA and spent hours communicating with TX staff about it who were extremely generous with their time. Seemed like a great approach and kudos to you for being a mentor!

 

[alebrewer]

i performed hundreds of reviews of inflated value appraisals post-crash after the boom.

Just can't help yourself with the straw men, can ya? If it weren't for straw men you'd have no men at all (isn't that how the song goes)? Can't speak for any other state, but Texas does not open investigations over over/under valuation. Texas opens investigations when the claims involve state reg or USPAP violations.

So... try to peel that mind away from everything being about how overvaluation hurts homeowners - those aren't the complaints that are investigated in TX.

 

[J Grant]

they already do. Well, not exactly the appraisers who are donkeys (I personally don't know any of those - and wouldn't a donkey experience a significant language barrier anyways?).

I am aware they have a do-not-use list, but it must be pretty light if they are aware of all these bad apparisers out there carrying on. Then again, if they expand their list maybe I will be put on it. That is a risk we can take - but if they are aware of a problem, just blaming it on the appraisers won't solve the problem, they are aware of the problems that result in reverse Darwinian selection of the appraisers left standing for residential mortgage work when the AMC's shape the fee landscape and selection in large part.

 

[J Grant]

Just can't help yourself with the straw men, can ya? If it weren't for straw men you'd have no men at all (isn't that how the song goes)? Can't speak for any other state, but Texas does not open investigations over over/under valuation. Texas opens investigations when the claims involve state reg or USPAP violations.

So... try to peel that mind away from everything being about how overvaluation hurts homeowners - those aren't the complaints that are investigated in TX.

What do you mean when you talk about a straw man? I am relaying my experience.
If the complaints are of another issue that you are investigating, so be it.
But there were tens of thousands of appraisals nationwide that were reviewed post crash (field reviewed, not a QC check ) and most of them involved overvaluation. I have also done additional reviews since then, and nearly all of them involve an overvalued property.
These requests usually come from a lender or investor in the loan, not from a homeowner.

 

[alebrewer]

My staff and I gave many licensees a “tuneup” when warranted instead of an action.

I'm sure it's just semantics, but even using the term 'tuneup' implies getting a visit from Guido. I just don't know why the boards (some of them) believe their job is primarily that of policeman and jailer. Most of the blunders made out there are just not out of uncomely intent - at least the ones I've been involved in. Seems like a much better approach to embrace reform - as opposed to penalty.

As a side note - and to the person, the folks I've had the privilege of mentoring over the years have said the mentorship piece is one of the 'money well spent' purchases. And I'm probably the least effective of the TALCB mentors.

 

[John Hassler]

I'm sure it's just semantics, but even using the term 'tuneup' implies getting a visit from Guido. I just don't know why the boards (some of them) believe their job is primarily that of policeman and jailer. Most of the blunders made out there are just not out of uncomely intent - at least the ones I've been involved in. Seems like a much better approach to embrace reform - as opposed to penalty.

As a side note - and to the person, the folks I've had the privilege of mentoring over the years have said the mentorship piece is one of the 'money well spent' purchases. And I'm probably the least effective of the TALCB mentors.

Semantics is probably all this is. Probably 20% of the complaints received ended up with an Investigator, a CA licensee, discussing non-ethical deficiencies and closing the case. It was super common to contact initial and upgrade license applicants on the work samples they submitted when the error was minor. I made hundreds of those calls.