Virgina REAB and Portal Petition

[23Degrees]

But isn't that the issue at hand, are the reports being changed AFTER appraiser transmission by the client in any fashion ??? Most people would consider that fraud.

That is a matter that can be viewed in the same manner that one would view the altering of a check that was already written and signed. It is fraud and should be pursued with vigor and punished.

But that in and of itself does not make it unique to this software type as the same thing can happen with a pdf. Maybe it can happen with more ease but any document is susceptible to this to one degree or another.

I have heard from individuals I have a great deal of respect for that this kind of fraud takes place regularly with the use of this software and I have heard from individuals I also have a great deal of respect for that this is baloney. What I am beginning to think is that while it might take place it is to a much lesser degree than thought primarily due to many erroneously believing that their version of the report on the original software is the one they are responsible for and not the conversion.

The non-compliant issue is relevant as it appears that there is much confusion on this issue and many of the users of this software are either unaware that changes are taking place in “report content” or are under the impression that none of these changes are taking place while they retain control of the process.

It would be interesting to hear more information from those who utilize the software and actually view and save the conversion that is the final form of the report sent to the client or intermediary. What types of changes are taking place? This, along with the level of effort it took to correct those changes that affected the compliance integrity or overall spirit of the report would be quite helpful.

 

[Workbox]

But isn't that the issue at hand, are the reports being changed AFTER appraiser transmission by the client in any fashion ??? Most people would consider that fraud....

So I do an appraisal, send pdf, sure that it gets changed to something else, later to find that my data is being used by a data mining company in a third world country, and in their data sheet it has all the data from my report. GLA, room/bed/bath count, condition, pool that is not part of the financing, but picked up from my comments, and added on-site improvements. So is this part of my appraisal? do I need to have that in my workfile? A data sheet that was data-mined and without my signature, am I responsible for that? After all is is strait from my appraisal.

 

[Oregon Doug]

...
go after appraisers doing it or require that all appraisers in that state cease doing business with companies that require it or force those companies to stop requiring the conversion as part of the conditions for employment.
...

Bingo! I tried, but that falls under restraint of trade (per our AG). The boards have no authority over the companies requiring it.

So, what's plan B?

Oregon Doug

 

[Joyce Potts]

Here is another question to this matter, who is the one converting the appraisal report?
Report is done on my computer, converted to PDF on my computer, then the report sent to a 3rd party conduit, the 3rd party computer program converts it to what ever, during, or after the report is sent. Since the report was in the format I sent it, at delivery, but was changed on their computer system, by their computer software, how can they argue the appraiser is responsible for the converted report? How can they argue that they are not fraudulently changing the report?

Now this post caught my attention. What a great query.

Is the appraiser responsibile for altering the report when he/she uploads it through a portal that he/she knows has the capability to change it? In fact, signed on giving permission, why wouldn't they be liable for any changes whether they were aware of the specifics or not?

Lets get back to basics. What in the hell is the purpose of uploading appraisal reports for Federally Related Transactions or otherwise through conduits for others to either data mine or alter?

Why has FannieMae, Freddie and other major lenders agreed to this, instead of putting the authenticity, credibility and truthfulness of the report in the forefront to protect the public at large?

Why is this being allowed to get to so complicated? Surely, Fannie and Freddie have consumer protection as a their primary concern. Or do they? And if not, why not?

And where the hell did spell check go on this thing?

 

[c w d]

Bingo! I tried, but that falls under restraint of trade (per our AG). The boards have no authority over the companies requiring it.

So, what's plan B?

Oregon Doug

Then the only recourse is to sue the state AB to recognize the USPAP violation, publish instructions to their appraisers not to use AIready conversions. And, the state would be required to discipline appraisers caught doing it.

Once the state is forced to "officially" recognize that the converted appraisals are not USPAP compliant that should have ripple effects up to the secondary market since they would be in effect basing their decisions to purchase loans which were based off of what essential amounts to something other than an appraisal. The reality is they can and do purchase loans without an appraisal attached to it. But, specific programs "require" an appraisal. And appraisals MUST be USPAP compliant. The secondary market would be compelled to recognize that particular state's statement concerning the validity of the converted appraisals. If and when the secondary market recognized the statement they could instruct lenders selling loans to them to stop using appraisals from appraisers in that state which were converted.....but, it could even have wider ripple effect since, how could the secondary market recognize the non-compliance for one state without applying that to the others.

The state can't have it both ways. They can't be responsible for enforcing USPAP and allow appraisers to transmit non-compliant reports. If they knowingly allowed it their official capacity to enforce USPAP would be in doubt. They would be in a dilemma that would force them to do something or admit they are unable to enforce USPAP. There's a term here I can't seem to remember. It's 4am, very early for me. It has to do with a government's purpose, ability, reason to govern....the legitimacy of their right to govern....and I can't think of it. But, the AB's authority would be in jeopardy if they were forced to recognize that the reports were non-compliant but were powerless to enforce USPAP. They'd be forced to do something, anything.

But, then all of this is predicated on whether or not the conversion renders the report non-compliant.

 

[c w d]

Now this post caught my attention. What a great query.

Is the appraiser responsibile for altering the report when he/she uploads it through a portal that he/she knows has the capability to change it? In fact, signed on giving permission, why wouldn't they be liable for any changes whether they were aware of the specifics or not?

The appraisal software has to be "AIready", doesn't it? So, something is happening on the appraiser's side.

I've read the warnings WinTotal has concerning it. And it appears that the appraiser MUST agree to allow the changes. If you hand your appraisal after you completed it to your trainee and he/she says "I'm going to make these changes." and you agree, who is responsible?

 

[robert higgins]

Thanks Joyce,

Now look at the specifics of Mr. Neil Olson argument;
1) What is an “electronic portal”? lets skip that for now.
2) Obligation of the “portal” or of the appraiser?
• Appraiser completes and signs the appraisal using the means provided by the software package.

• This version is not the actual appraisal, since it is not the one delivered to the client.

• Since few clients accept appraisals in electronic form in the original appraisal software package format, the appraiser then converts the final appraisal file into one of the most commonly accepted formats: typically PDF, AI Ready or Lighthouse.

• The “converted” version is the actual appraisal, since it is the one that the appraiser delivers to his or her client.

• Appraiser then transmits the appraisal in its converted form to the client using one of the means designated by the client, either e-mail or one of the electronic networks.

• At this stage, the appraiser’s obligation is complete, and the appraisal is now in the client’s hand.

It should be clear that there are really two stages to this process

• The process by which the appraiser prepares the appraisal in a form acceptable to his or her client, and

• The process of transmission itself.

This whole argument is moot, because if he states the only original copy of the appraisal is the one that is done in the appraisal software package, then I would argue that once the appraisal is saved it is automatically converted to binary code on the appraisers computer, also one can argue that if the appraisal is printed from the appraiser’s computer, it is also converted to temp file and print file. This will make anything other then the appraisal on the screen at the time it is signed a converted appraisal.

This would stop the appraisal process in a heart beat, as no one can deliver an USPAP compliant appraisal report. I guess Mr. Neil Olson did not think before hand his argument would put his company out of business, because the only way to do an USPAP compliant appraisal report is to hand deliver a hand written appraisal and have the client review it before the appraiser leaves with it.

3) The process by which appraisers prepare appraisals according to the requirements of their clients (and of course in compliance with USPAP) is entirely within the appraiser’s control. The appraiser decides which format to use (one acceptable to the client) and performs the conversion.


It is only when the appraiser has completed the conversion that the appraiser engages the delivery means, which involves a third party.

Mr. Neil Olson makes a big assumption on how appraiser prepares their reports, and what the appraiser deems is the original appraisal report. I for one write my appraisal in the appraisal software, convert it to PDF, review the report in the PDF format, if I deem it is completed, I print the PDF report and save it to my work file. This report is the finished report, the “true copy” of my appraisal report as it is the one I send to my client.

What happens after the fact is not in my control, and if a 3rd party hired by the client changes the report with out my authorization, and then it is the 3rd party is fraudulently changing the reports and not sending the original report that was sent by the appraiser. Now if my client gives the 3rd party the authorization to change the report, then it is the responsibility of the client to make sure they are in compliance with federal regulations.

Furthermore, if the client does not tell me the 3rd party, that they want me to send the report to, is not an agent of the client, then I have to assume the 3rd party does not have the authorization to change anything to my report.

 

[Oregon Doug]

... publish instructions to their appraisers not to use AIready conversions. And, the state would be required to discipline appraisers caught doing it.

That's restraint of trade - can not be done. Period. (The state can not tell you who you can/can't do business with nor can it tell you which software you can/can't use.) The board could publish a notice & warning to all appraisers that this activity is taking place to allow the appraiser to decide on his own. But such a warning could have no teeth.

It's my observation that few (if any) board members are even aware that this practice is going on. Who would require the state's enforcement?

Oregon Doug

 

[McPheeters]

Then the only recourse is to sue the state AB to recognize the USPAP violation, publish instructions to their appraisers not to use AIready conversions. And, the state would be required to discipline appraisers caught doing it.

Once the state is forced to "officially" recognize that the converted appraisals are not USPAP compliant that should have ripple effects up to the secondary market since they would be in effect basing their decisions to purchase loans which were based off of what essential amounts to something other than an appraisal. The reality is they can and do purchase loans without an appraisal attached to it. But, specific programs "require" an appraisal. And appraisals MUST be USPAP compliant. The secondary market would be compelled to recognize that particular state's statement concerning the validity of the converted appraisals. If and when the secondary market recognized the statement they could instruct lenders selling loans to them to stop using appraisals from appraisers in that state which were converted.....but, it could even have wider ripple effect since, how could the secondary market recognize the non-compliance for one state without applying that to the others.

The state can't have it both ways. They can't be responsible for enforcing USPAP and allow appraisers to transmit non-compliant reports. If they knowingly allowed it their official capacity to enforce USPAP would be in doubt. They would be in a dilemma that would force them to do something or admit they are unable to enforce USPAP. There's a term here I can't seem to remember. It's 4am, very early for me. It has to do with a government's purpose, ability, reason to govern....the legitimacy of their right to govern....and I can't think of it. But, the AB's authority would be in jeopardy if they were forced to recognize that the reports were non-compliant but were powerless to enforce USPAP. They'd be forced to do something, anything.

But, then all of this is predicated on whether or not the conversion renders the report non-compliant.

I come back from the weekend and find to my delight that this topic is getting some attention! The answer, as it applies to a state Board's action or inaction lies somewhere in my red of CWD's post; Thanks Doug for pointing out the restraint of trade element that I was not aware of....It will be up to the Boards to regulate the appraiser to the USPAP expectations. This should include knowingly transmitting appraisals that have had the signature removed/unsecured and the report altered (in any manner not compliant with USPAP) prior to/during transmission. All that is left is for the Boards to make a decision on weather or not they consider this type of activity on the part of the appraiser non-compliant.

 

[Marcia Langley]

Keep in mind that state boards can only discipline individual appraisers (not companies or systems) and only after a complaint has been filed.

Those complaints could be against independent fee appraisers who deliver a non-compliant appraisal or against appraisers who work for the lender, AMC, or third party system in their role as system/policy workers, etc.

In other words, if people want to see some board action, they need to file specific complaints regarding specific actions by specific appraisers.

Once a board has processed and found violations in a specific complaint, it will be seen by the other appraisers in that state as a warning only about that specific case scenario.

Appraisers who want to see some action by their state boards must produce evidence that can be incorporated into a specific compliance complaint.

In a specific case against an appraiser employed by the lender or third party company, the complaint will probably have to come from appraisers who actually use the system. It would be very hard for other appraisers to document the specifics. Understandably, such appraisers will want to be very sure of the exact proceedures they have engaged in for fear of incriminating themselves.

What I mean is, the complainant would have to be sure of exactly how the system in question worked on their front end before they could make a credible complaint.

On the flip side, appraisers who come into the possession of evidence that a fee appraiser has failed to assure his delivered report is compliant should file that complaint against the fee appraiser. This sounds tough but if people really want their state boards to address these issues, they have to file pertinent complaints. With such a specific complaint in hand, boards will be forced to make some distinctions on exactly where the appraiser's duty ends.

The outcome of such a complaint would be an eye opener for these companies and for fee appraisers even lacking any blanket pronouncements by the board.

Again, these complaints cannot be frivolous. They must be well thought out and specifically applicable to the conversion issue. The complainant must know what they are talking about.

Because, frankly, if there are large numbers of appraisers out there that are glossing over their responsibilities to deliver a USPAP compliant appraisal report for the reason that they can maximize their workload and/or profits through lack of due diligence, they need to be stopped. If appraisers are cornering the market on assignments through non-compliant lack of due diligence, it is not a level playing field and they should have complaints filed against them.



The conversation in this thread has fluctuated between the general case of all systems and the particular cases of certain individual systems.

I sure would like to hear some more discussion from people who actually use any specific system so I could learn a little more about them.

Thanks, TJ, for your specific contribution. I keep hoping to hear from others who actually use that system to answer some more of the questions I asked.