USPAP violations

[chad hampton]

Probably depends on which attorney you hire and how friendly they are with the board that will determine your level of USPAP violation.

Also probably depends on the state board's budget at the time, and if they need a few bucks to cover expenses.

 

[Terrel L. Shields]

The manner in which an administrative board chooses to enforce their regs is a completely separate issue

Totally disagree. USPAP is the basis for administrative sanction...the one and almost only basis. There are very few rules where you violate the state law yet remain compliant with USPAP. The only one I can think of is something like putting a stamp on the report or not....stating your license number correctly (a "big" deal, apparently) like CGA 10xxx vs 10xxx CG ...Oklahoma is strict about that and Arkansas requires you stamp the report with a seal.

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.

Since USPAP requires you adhere to the SOW and the "applicable standards" (a. k. a. formerly known as supplemental standards) you cannot violate these supplemental stipulations without being out of compliance with USPAP.

Probably depends on which attorney you hire

yes.

and how friendly they are with the board that will determine your level of USPAP violation.

no.

Also probably depends on the state board's budget at the time, and if they need a few bucks to cover expenses.

I would be surprised if a board reacts on the basis on dollars.

Most board members are serious. Most also get a real eye-opening experience. They claim to be independent, they claim to be passionate about being responsible and even-handed. But that is a very difficult barrier to hurdle. We all have our quirks. We all have our favorite ways of "doing it" and when it is contrary to what is presented to us, I aver it is impossible for a person to always be unbiased even when they are confident that, in fact, they are unbiased.

You have to go no further than watching what happens when a new investigator gets hired. Suddenly, the various charges of one is different (one way or another) from that of his/her predecessor.

One of our old forumites had a Realtor who complained and complained about him if he "killed her deal"...Investigator 1 went thru a report with him and had few issues, dismissed the charges. When she retired, the new guy got another similar complaint from this Realtor. He went the report and reamed him from one end to the other...found dozens of "issues" by his (MAI) standard.

I have seen this guy's work. I hired him to do 2 residential properties in Little Rock on an estate that I was valuing elsewhere. Even went with him. The report was solid and well supported as a form (summary) report should have been. I don't think there should have been too many issues and the investigator 1 apparently didn't see 'em either in the report she reviewed.

What did he do? Sent his license back and we've not seen him since on this forum. He works for HP in a high tech support. His wife remains an appraiser. Dropped off the fee work and returned to the assessor's office. I see her upon occasion. She said he is much happier. Scumbag skippy? Or over-regulated?

Another forumite, mainly lurking, was reamed over the adjustment for a finished basement. He was accused by this investigator of "lawyering up" to his face. Why? Because he was a law student working as an appraiser with his brother. He too said, "I had to turn my license in because I can't let anything prevent me from sitting for the bar." The last time I talked to him, he was giving me work as an intern for one of the largest law firms in Little Rock. Guess who I would call if a complaint came my way?

Most of the problems in "bad" sanctioning (which is pretty much uniform across the nation apparently) is the investigator creating these imaginary violations out of whole cloth and then have a judge tell them they are wrong. It is especially painful to see that in the states where the board has the final say and chooses to overrule the administrative hearing judge or other quasi-legal authority who have declared the person not guilty. How can you appeal over a body that is its own Supreme Court?

 

[George Hatch]

Terr, the fact that different boards behave differently when using the same standards is self evident. I really don't see how you can attribute that anything other than the various interpretations these boards use - some of them actually being in conflict with USPAP due to their incompetency with the material.

A speed limit is neither bad nor good, neither efficient nor inefficient. The abstract limitation is there and it's IRL effectiveness is based on the decisions the users make and the extent to which the authorities do or don't enforce it.

People getting publicly sanctioned over a basement adjustment doesn't happen just anywhere, you know. Moreover, I'd go so far as to suggest that was never the purpose of licensing in the first place. That's akin to a podunk town running a speedtrap under the letter of the law. It can happen due to stupidity at the local level but that's not an indictment on the state's speed laws in general.

 

[hastalavista]

The understandable concern underlying this discussion is, if a non-state regulator (a review appraiser) determines a report is not USPAP compliant in her/his review, what does that mean for the original appraiser?

Sometimes, it doesn't mean anything. Sometimes, the original appraiser isn't remotely connected to the intended use of the review.
Appraisal review assignments that include a reviewer's opinion of USPAP compliance are not used as a supplement to state appraiser boards and their regulatory oversight requirements (at least not the ones I've been connected with). They are used to test for compliance for the client's purposes.
Not all clients for this type of service are lenders.

 

[23Degrees]

It all comes down to hoping that the final arbiter and before that those who would send a report to a final arbiter act reasonably.

I have talked to a few appraisers who would not for their life take on any appraisal that looked the least bit complex or had any appearance of having any chance of being anywhere near 80% LTV never mind above it if they were privy to that information.

Why? Because they understood that a filing with the board for any small disagreement, legitimate or not, would put their report under the microscope and then anything was possible. A non relevant cost approach forced to be completed via assignment condition was now subject to full proctology exam. If every last comparable did not have concessions accounted for due to the information not being available in MLS and realtors not responding to multiple inquiries then that becomes grounds for a possible sanction. etc. etc. etc.

Granted those folks had other lines of incomes as it would be impossible to operate that defensively and do well in this business but that's their choice and I'm not one to go with a "smart" or a "paranoid" label on that - I hear things about sanction activity but I really don't know the full story in my state or any other.

 

[Terrel L. Shields]

Terr, the fact that different boards behave differently when using the same standards is self evident. I really don't see how you can attribute that anything other than the various interpretations these boards use - some of them actually being in conflict with USPAP due to their incompetency with the material.

Everyone is incompetent on USPAP if a large percentage of appraisers cannot understand it identically. The speeding ticket I get for doing 40 mph in a 25 isn't dependent upon whether I saw the speed limit sign or not. And everyone sees the same sign. But if they give me a ticket for reckless driving for doing 40 mph on a deserted road because there is no sign, whether the court deemed that area within a 40 mph speed zone or not,.... OK. That is an issue.

if a non-state regulator (a review appraiser) determines a report is not USPAP compliant in her/his review, what does that mean for the original appraiser?

It should not mean anything and a reviewer should not be making that determination. But say the reviewer cannot dispute the value but finds 25 key misspelled words and a dangling participle so bad that the reviewer doesn't really understand the particular sentence or narrative, or it is badly misinterpreted...technically, these are violations under USPAP if the appraiser has committed a "substantial" error....

I honestly believe that appraisers are now being held to a very high, impossibly so, standard of reporting. The worst part of that may be that we are expected to anticipate a host of "issues" that may be brought up before us and were supposedly required to have addressed them already.

Why didn't you use this sale 20 miles away?
Why did you adjust for a pool on Comp 1 at a different value than Comp 2?
Why did you not explain that R-2 zoning, which is residential, also allows for churches, day cares, and elderly care units. (is that an issue? would it affect value? would disclosure influence a client?)
You can devolve down, down, down, this sewer pipe and sooner or later you have to address what is in your work file and why it is or isn't there.

Is it relevant? Probably not. But what YOU think does not matter. It is what SOMEONE else thinks (a reviewer, a regulator) and so how can you anticipate what they think? So can you prevent yourself being sanctioned? Because it is not by what YOU think is compliant but what someone else thinks that counts, and they have the arbitrary authority to literally take your living away from you without cause. It is punitive and it is far more common than anyone wants to believe. 1 case in 20 years would be 1 too many.

Why? Because they understood that a filing with the board for any small disagreement, legitimate or not, would put their report under the microscope and then anything was possible. A non relevant cost approach forced to be completed via assignment condition was now subject to full proctology exam. If every last comparable did not have concessions accounted for due to the information not being available in MLS and realtors not responding to multiple inquiries then that becomes grounds for a possible sanction. etc. etc. etc.

I have met a number of people who were sanctioned and not one admitted that they thought their report wasn't USPAP compliant at the time of the sanction and even after the sanction was applied. These sanctions open their eyes, not to the flaws in their report, but the punitive nature of the process.

 

[George Hatch]

You're still talking about how boards operate rather than what USPAP requires. If the people who are making these decisions about your license are acting unreasonably then you need to adjust your actions accordingly.

A board that thinks typos and basement adjustments are enough to levy serious discipline is not contributing to the public's legitimate interests. I mean, the comment that "perfection is impossible to attain and competence does not require perfection" is hardwired directly into SR1-1 and SR3-1, and absent written regs to the contrary not even a state board can say that USPAP requires otherwise.

If/when a reviewer or a regulator can't show you where their allegation is required in writing then that's one thing. But a reviewer or investigator who's got eh higher personal standard and is using that higher personal standard as the benchmark for everyone else's work is acting unethically. And incompetently WRT to the role of the regulator or the reviewer.

 

[George Hatch]

As for appraisers who think their work complies, I'll say this. Not even the worst donkeys in the business think their work is less than what other people do. I've never met an appraiser who didn't think they were just as good as anyone else.

What I have seen (a lot) are appraisers who have never given serious consideration to what those requirements actually say and whose understanding of the appraisal process in general is limited to filling out the lines in those damn GSE forms. IMO *those* people are playing with fire.

 

[hastalavista]

What does it mean if a reviewer determines a report under review is a USPAP violation?

It should not mean anything and a reviewer should not be making that determination.

I said:

if a non-state regulator (a review appraiser) determines a report is not USPAP compliant in her/his review, what does that mean for the original appraiser?
Sometimes, it doesn't mean anything. Sometimes, the original appraiser isn't remotely connected to the intended use of the review.

...

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."...
So, we can say it all day long, but when we do, its impact is limited.
If the state says it (and that finding isn't overturned), then it no longer is an "opinion" but becomes a fact; the regulator found act X to be a violation of the USPAP.
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.

To me, the argument that an appraisal review assignment cannot (or even should not) include a USPAP compliance analysis doesn't make much sense.
Accounting firms audit corporate accountants and their financial reporting processes to ensure that they meet GAAP standards all the time.
GAAP is the equivalent of USPAP for financial reporting.
Accounting firms are hired to verify that GAAP standards are followed; they issue reports to that affect and sign certifications to attest to that. In their written certifications, they always say it is "their opinion". They use similar language as we do in appraising (actually, our standards and TAF board set-up mirrors much of how FASB was set up).

- Can the system be abused? Of course.
- Is there a legitimate need for USPAP compliance reviews? Of course.
- Are all USPAP compliance reviews used as some kind of indictment tool against the original appraiser? No.
- Does the intended use of some USPAP compliance reviews have anything to do with the original appraiser? No. If the original appraiser had disappeared, it wouldn't matter to some clients given their intended use.

I can tell you this: If one of my reports were being reviewed for USPAP compliance, I'd prefer to have a licensed and competent appraiser do that work than someone who was not licensed even if competent.
But that's me.

 

[William K]

I look at different interpretations of USPAP by differing boards much like different courts interpret different precedent setting rulings, or laws under the Constitution.

The whole purpose of appraiser licensing is control, plain and simple.