Unintended consequence of reviews

[SEW24]

If you were running a shop and one of those reports had problems the first step would be to correct the problem appraisal. Not send the appraiser up to the state. If the problem continues then your next step is to cut the appraiser off so you won't have to deal with the same problem over and over.

Really, that's how the lenders should be handling appraisers. The appraiser is being paid to perform a service to specs. Until that service is performed to specs the fee has not been fully earned. If the appraiser WON'T clean up after repeated examples of the same problem then it's time to disengage.

It's when an appraiser gets to lying, cheating and stealing in an appraisal that we get to the point where the conduct is incurable - that's the time to send them to the electric chair. So to speak. Not for some trivial housekeeping detail that is of no effect on the value conclusion.

Regulatory enforcement is the last resort. Not the starting point.

I run an appraisal review department for commercial loans in a large community bank. We do both commercial and residential appraisal reviews, We are one of the few banks in the metro area that actually reads the report and reviews it for USPAP compliance and reasonableness. If we find something that is unclear, not supported or is an error, etc. we ask the appraiser to clarify, correct or revise. If the revisions do not satisfy our concerns, we communicate and discuss with the appraiser until we have reached an agreed upon solution. Only if the issue remains unresolved and we don't agree with the value conclusion do we consider ordering a second appraisal. One of the issues with ordering a second appraisal, at least in our little neck of the lending world, is once you order that second appraisal, the first one becomes null and void. There is no using the "best one". Federal, state and internal examiners tend to see that as "value shopping".

In my almost 9 years reviewing commercial and residential appraisals, we have only once considered reporting one to the state board. The situation was that the appraiser should not have appraised the property after finding out the vacant land was being used for crops (he was a licensed residential appraiser) and he even stated it in the report! In that situation we simply stopped using that appraiser and had the property properly appraised by a Certified General ag appraiser who's business specialized in crop land. FYI, we did not know there were crops on the land when we ordered the appraisal; the LO stated it was vacant pasture land.

And for those of you that think reviewers that work in banks or other lending institutions have no idea what USPAP is, you're probably right, but if the lender is a long time, respected and legitimate lending institution, they likely have their ducks in a row and have qualified, experienced and competent reviewers. I spent 20+ years as a licensed appraiser before transitioning to the banking side to do review work. I am well versed in USPAP (since I still hold my licenses), the Interagency Appraisal & Evaluation Guidelines and federal and state regulations pertaining to real estate lending and appraisals.

Appraisal is not a science, but an art and is a very subjective process although governed by things such as USPAP. Rant over, thank you!

 

[sputnam]

An appraisal is not just a personal opinion. It is a professionally developed opinion that has to meet certain standards.

Sadly, the low fees, overly tight turn times, lack of a true firewall, and dropping the college and then the JR college on the residential side, among other developments, have been eroding the reliability on the residential side.

In the context of and as defined by USPAP, you are correct. USPAP does not control how non appraisers use the word... or even appraisers when they are not acting as an appraiser.

 

[sputnam]

I don’t believe in an anonymous complaint. We have the right legally to face our accusers, or so I was told when I was a youngster. If you are compelled to file a complaint against me, then have the guts to face me about it or keep your mouth shut.

Too many cowards in the system.

You have the legal right to face your accuser when you are charged with a crime. Appraisal regulation is not criminal law.... it's administrative law. The rules aren't the same. The rights you have when accused are spelled out in your state's appraisal laws.

 

[alebrewer]

Texas will not accept anonymous complaints.

 

[chad hampton]

I don’t believe in anonymous complaints either, but the problem is traditionally the person filing the complaint had nothing to lose. You’re not going to have many complaints filed against AMC‘s, although there’s examples of them violating state laws on Facebook and LinkedIn damn near every day. There’s basically a handful of AMC‘s who control the system and any appraiser who files a complaint against one will be blackballed from them all. It’s a significant flaw in the complaint system.

I have always said there should be a charge, something basic like $100, for anyone filing a complaint. And if the complaint has merit that charge will be refunded. Too easy to file a complaint with no skin in the game. There’s a lot of people out there just looking to make life miserable for you.

 

[djd09]

the unethical stakeholders encourage borrowers to file complaints...the legal term when the complaint is retaliation for a low balled value is called frivolous but the state boards dont care since they get paid to investigate...so much for that client mumbo jumbo...how rigged