USPAP violations

[hastalavista]

Denis, I often categorize deficient items in the original report under review as major and minor. I don't state them as violations. I state there impact on the purpose and intended use of the report. I also state whether or not they are a reporting requirement of USPAP. I am not the judge or jury. I am a expert witness! :icon_lol:

I have a rating system in my reviews which avoids me saying something like, "This is a violation of USPAP SR2-3".
But, when I'm doing a USPAP compliance review and anytime I have a question, I open up the USPAP, look at the relevant section(s), and then make a determination if a potential (I say "potential", because the only one who can determine an actual violation is my state regulator) violation has occurred. If it has, then I note it as a deficiency; if it is uncertain, I probably won't (tie goes to the runner); I may say I evaluated it but found it met the minimum requirements in my opinion.

And, for the typical Lender USPAP Compliance Review, I'm not looking for

Misspelling a word so bad that it changes the meaning of a sentence, leaving out a word, etc. is a "violation" of USPAP. There is no "minimum" ...all reports must be perfect.

All the reports do not have to be perfect; most are far from perfect and even some with issues can still be judged credible and sufficiently reliable to make the lending decision (and it is up to the client if they want the issues to be addressed or not).

While the circumstance may be few where I might, in my review function, call out specific USPAP violations as I see them, I certainly can envision a situation where the SOW would require that as part of the quality evaluation, and I would be very comfortable citing the violations as I interpret them.
It is my opinion; I can support it.
CAN's question was, is it possible for an appraiser to state there is a USPAP violation in another's report when doing a review?
I think the answer is definitely yes.
I think the circumstances in which I would accept such a SOW assignment are limited. Although limited, sometimes very appropriate, and likely it would be necessary given the client's intended use.

I do not think for pre-funding mortgage-review work, citing specific USPAP violations is necessary; overall credibility can be judged without citing a specific violation, and suggestions about what can be done to improve the quality of the report can be made, all without citing a USPAP violation:
"The original report does not have a signed certification and is unacceptable until a signed certification is included."
No USPAP violation cited in the above, but clearly the lack of a signed certification is a USPAP issue and the report is unacceptable until there is a signed certification (meaning the report is then USPAP compliant as far as SR2-3 goes).

We make USPAP judgments every time we act as an appraiser.
We should be qualified to form opinions of USPAP compliance when looking at the work/actions of another (some, more qualified than others).
Most of us have been asked by peers/collegues, or have provided our opinion in this forum, on topics that require us to say "USPAP Violation/No USPAP Violation." So we make the judgment without much hesitation.

Why is there any hesitancy, if necessary given the intended use and SOW of the review assignment, to put in writing what we have already concluded in our minds, are willing to discuss freely and openly in public, and post regularly about in this forum? :new_smile-l:

 

[Dan Umstead]

And what state would that be? A state that does not recognize USPAP would not be permitted to have any appraiser engage in the appraisal of a Federally Regulated Transaction. To confirm that go to [url]www.ASC.gov[/URL]

Which state might that be?

In Georgia, we have a law governing appraisers. While it has some aspects that are similar to USPAP, USPAP is not mentioned.

I didn't mean to be misleading, I was just offering that we are not found in violation of USPAP, in GA, is brought before the board.

 

[Mountain Man]

In California the way the regs read is that the requirements of USPAP represent the minimum level of conduct. There's a subtle distinction between that and actually adopting USPAP itself into the law.

Interesting, but still causes a problem under GA state law because it references the language from a non-profit agency.

 

[Mountain Man]

In Georgia, we have a law governing appraisers. While it has some aspects that are similar to USPAP, USPAP is not mentioned.

I didn't mean to be misleading, I was just offering that we are not found in violation of USPAP, in GA, is brought before the board.

That is true Dan, but most clients SOW require following USPAP. Under GA law, that is a voluntary contract between 2 parties. So while disciplinary action from the the state is under GA regulations, the client can sue for breach of contract. That can get a lot more interesting if faced with a flit-hit-the-shan situation.

 

[Terrel L. Shields]

Quote:
I'm not looking for

Misspelling a word so bad that it changes the meaning of a sentence, leaving out a word, etc. is a "violation" of USPAP. There is no "minimum" ...all reports must be perfect.

All the reports do not have to be perfect; most are far from perfect and even some with issues can still be judged credible and sufficiently reliable to make the lending decision (and it is up to the client if they want the issues

But you, as a reviewer are not the final arbitrator of that. It is still a technical violation. If the board or investigator chooses to overlook it, then USPAP is punitive at best because you can rest assured that if the decision of the investigator is that the report falls short, they will certainly go to the effort to nitpick every last detailed failure of the appraiser.

I had the "fun" of sitting in on just one such investigation. The investigator picked out every misspelling, syntax error, even argued that an income multiplier method was not adequate as a method of the income approach, etc. USPAP said something to the effect perfection is unobtainable, but obviously you will be held to that "perfect" standard when it suits the board. Otherwise, compliant or not in the opinion of the investigator, they would not be pointing out spelling errors, misstatements, etc.

 

[George Hatch]

The manner in which an administrative board chooses to enforce their regs is a completely separate issue from the appraisal standards or the content of the laws that are predicated on those standards.

If you've got a board overreacting and yanking licenses for garden variety errors or omissions then that's a problem at the board level, not with the standards that identify the minimum requirements. I'm still curious about Don's story of the appraiser who got their license pulled over a USPAP violation. Unless they were telling some significant lies in their appraisal what else (appraisal-wise) could they have done in an appraisal assignment to warrant revocation?

What happens in our state is that only the very worst of the worst get revoked. You have to be an outright criminal to get your license pulled. The worst that could happen over an honest error or omission is a public censure letter for being a true incompetent and not knowing what you're doing. And even they get the opportunity to come back.

 

[hastalavista]

But you, as a reviewer are not the final arbitrator of that.

You are correct, and I made that point in post #18 when I said...

There is a difference between:
"I (Denis, the appraiser) think if you do X, you will violate the USPAP."
and
"The Great State of California finds Appraiser Joe in violation of the following USPAP Standards."...

We say it: an opinion, limited impact; limited by the context we are opining within.
The state says it and is not challenged (or is upheld): A fact, big impact in regards to potential mandatory consequences. I can lose my license. I can be forced to pay a fine. I can be forced to take another class. A client cannot force me to do that. The state can.

I never said I was the final arbiter. I said I can (as can you) form an opinion about another's work vis-à-vis its compliance or lack of with the USPAP.
It is an opinion; best be prepared to back-it-up. It is only important in the context of the assignment in which it is given.

 

[gregb]

You are correct, and I made that point in post #18 when I said...


I never said I was the final arbiter. I said I can (as can you) form an opinion about another's work vis-à-vis its compliance or lack of with the USPAP.
It is an opinion; best be prepared to back-it-up. It is only important in the context of the assignment in which it is given.

Scope of work and assignment conditions for all review work I have undertaken have never included USPAP compliance policing of the original appraiser. Clients have always been interested in whether the appraisal under review is credible and completed in compliance with accepted appraisal procedures.

 

[Terrel L. Shields]

completed in compliance with accepted appraisal procedures.

That implies a disconnect between USPAP and "accepted appraisal procedures", doesn't it?

Obviously, an appraiser and a reviewer in theory could arrive at significantly different conclusions. In theory, each could have complied with USPAP. In theory, each could have developed a "credible" report that violates USPAP...in theory, if I could flap my arm's fast enough, I could fly around the building.

The difference between compliance and non compliance is a soft wide gray line and any attempt at a clear delineation is a fool's errand. I don't know where violation begins and "mistakes" ends. I honestly don't believe anyone does. And therefore, USPAP is punitive. I have less faith today that I "comply" with USPAP than I did in 1992.

 

[hastalavista]

Scope of work and assignment conditions for all review work I have undertaken have never included USPAP compliance policing of the original appraiser. Clients have always been interested in whether the appraisal under review is credible and completed in compliance with accepted appraisal procedures.

I don't look at this as policing of the original appraiser. :new_smile-l:
I look at it as providing the client an opinion of the report's USPAP compliance.

AO-20 has this language (when it gives an example of verbiage to use when forming an opinion of the quality of another's work without providing an opinion of value):

“the value opinion stated in the report under review was (or was not) developed in compliance with applicable standards and requirements”

Compliance with the "applicable standards" can certainly be the USPAP. And, for some clients, the USPAP is the benchmark they use; so stating "the USPAP" rather than "applicable standards" is just being specific.
:new_smile-l: