<span style='color:darkblue'>I read the "debate." My thanks to George and Frank for participating, and to David Brauner for hosting and posting it on his new website. I took some notes including from hyperlinks on the site, and have some comments based on them. I also have a suggestion of my own for some significant improvement which will be mentioned in this post, but more fully developed in future posts on AppraisersForum or elsewhere.
Charles Clark is Georgia's Real Estate Commissioner and is therefore also head of the state's appraisal board (I surmise). I reread a presentation he made regarding Georgia's recommendations for changes in the regulation of appraisers and appraising. While Georgia's initiative calling for the review of the efficacy of the current system is to be commended and may prove to be a positive, Mr. Clark simply did not have the luxury of being completely candid with the facts in order to successfully sell his point of view. The following statement is badly flawed:
"...All states now have regulatory bodies established consistent
with the requirements of Title XI, and those bodies are acting
to remedy or remove incompetent practitioners and to remove
the unscrupulous."
Had he said: "...and some, or even most of those bodies are acting to remedy or remove incompetent practitioners and to remove the unscrupulous," I would not have a problem with it -- but he would have. The addition of these accurately qualifying words would have been a fatal admission. It would have ruined his argument for the virtues of turning over all appraiser regulatory functions in the nation completely and individually to each states' politically appointed appraisal board members, and also for eliminating the Appraisal Subcommittee (ASC) and the Appraiser Qualifications Board (AQB). While there are others, the reason some of our state boards are not performing as intended is because some of the appointees themselves qualify as being "incompetent practitioners and the unscrupulous." This is a significant flaw in his analysis, and one that would be exacerbated by the elimination of, rather than the strengthening of a federal authority. There is little doubt that changes are needed; it is just that -- regardless of how well intentioned he and Georgia may be -- the changes actually required are nearly the opposite of what he has recommended, just as George has discussed.
Also, Title 11 and its subsequent regulatory structure were intended to apply specifically to federally related transactions, where the states obviously lack jurisdiction. But more significantly, each state's primary function is to look after itself, as opposed to the welfare of other states and the country as a whole. This, Georgia's proposal, is just such an example. Georgia's current board believes its suggestions are best for Georgia (and/or best for the current board members and staff), while being relatively unconcerned about other states where they must be aware their proposal could be a disaster (a national disaster). They must also be aware that their proposal could be bad for the profession as a whole -- but again, this is not their problem and is not their concern. Georgia's current board is right about a need for an amendment to Title 11, they're just suggesting the wrong changes where the best interests of the country and the profession are concerned. The multiple-kindom approach is not the way to go.
The ASC made a good move with the USPAP Instructor Certification. That was necessary and well advised. A Title 11 amendment should specifically and explicitly include the granting of this authority and more. As has been said before, an additional step must be to implement USPAP Enforcer Certification (i.e., the ASC USPAP certification of state appraisal board members, and prosecutors, and sometimes, investigators). This is because appraisers must always opt for adhering to the manner regulations are enforced as opposed to how they are taught. And has also been said before, the associated mandatory testing involved eliminates the successful appointment of an entire class of grossly inappropriate appointments which otherwise will continue in force in many states around the country. In engineering circles, such is known as an "elegant solution." It is such a solution.
However, the ASC itself needs significant reform -- specifically in its membership composition. The appraisal profession was intended to function as the taxpayer's regulator of the lending profession -- not the other way around. The Financial Institutions Reform, Recovery & Enforcement Act (FIRREA) is just what it sounds like. It was an enormous Act of Congress to correct and police the nation's errant financial institutions -- while they were being bailed out at one-half of a trillion dollars at taxpayer expense for foolish excesses and misjudgments on the part of some. ("Foolish" now only applies to the country and the taxpayer since hordes of those most responsible personally profited enormously while those they mentored, who are now in active control, took careful notes in anticipation of their turn to follow). FIRREA was in direct response to the outrage of Lending Debacle 1 in the late 80s, and its Title 11 provisions regarding the appraisal profession were intended to help postpone or eliminating Lending Debacle 2 tenatively scheduled for later this decade. However, as planned, the mentored of the lending profession now largely control their own regulators again, including perhaps the ASC which is conveniently force-funded by the police force they have helped to undermine -- the nation's real estate appraisers. This is nothing new since our country's regulators rarely if ever function as intended to protect the welfare of the citizens and the country, but rather function to enhance the regulated at the expense of the citizens and the country in return for promises and rewards for services rendered. Money talks. Loudly and convincingly. I believe the implementation of my suggestion (actually the suggestion and plea and demand of many for many years even when the stakes were not nearly so dire) found at the conclusion of this post, will greatly improve this situation. First, some quick thoughts on a couple of other current appraisal regulatory issues:
1. Online Learning for CE Requirements
Obviously an Excellent Idea
(no reasonable, honest argument exists against it)
2. Proposal for College Degrees or Equivalent for New Entries
Obviously an Excellent Idea
(no reasonable, honest argument exists against it)
Collective and individual human activities in a free enterprise capitalist system are motivated and modulated by greed and fear. The carrot and the stick. Our society depends on this combination for a healthy survival. The two compliment and counterbalance each other. The greed component of the mix has been allowed to greatly trump over the fear component for some time. Equilibrium must be reestablished or the system fails. For example, the stock market will not return to anywhere near previous levels for many decades until some minimum number of offenders are stripped of wealth and go to prison to reestablish the fear factor in others who are tempted to follow their lead, but instead will now be motivated to modulate their own behavior. Should offenders go unpunished, the greed quotient will further flourish unchecked on the part others in similar positions who will be greatly tempted and emboldened by what they see. Potential investors and reinvestors -- institutional and private -- existing in this country and around the world can see too. They will not participate in our markets because they are not fools. They have alternatives. Thus, the system fails in chaos. So do we.
The US Congress and the Office of the Presidency, regardless of new found vision or the soundest of current intentions, are greatly impaired in their abilities to respond responsibly because they are on the take -- with most or all of it being entirely legal. The single most imperative Key Ingredient for fixing problems in real estate appraising and lending, as well as all remaining problems in government and commerce including gross corporate excesses, our sabotaged stock market, and our compromised national security, among others, is Campaign Bribery Reform. If there is a root of all evil, this is it. More later.
Just my opinions,
David C. Johnson, Appraiser & Scientist</span>