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Appraising

[Podcast] Masters In Business: Jonathan Miller on the Real Estate Industry

May 1, 2021 | 1:09 pm | Podcasts |

This is my fourth appearance with my friend Barry Ritholtz, a prolific columnist/blogger, radio show host/podcaster, and wealth management firm head on his Masters In Business show for Bloomberg Radio. He previously interviewed me in 2014, 2016 and 2020.

Barry also posted the interview on his essential Big Picture blog: MiB: Jonathan Miller, Appraiser Extraordinaire in addition to the Bloomberg Masters In Business landing page.

To say we talk a lot about housing and valuation in a crazy market wouldn’t do this fun conversation any justice. I am always thrilled to be in the company of his never-ending incredible lineup of guests.

To listen to the entire one hour and 49 minute show (sorry about that), you can go here:


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Epic Fail: The Appraisal Institute IRS 990s Show They Need To Do A 180

February 24, 2021 | 4:38 pm | Explainer |

As I’ve chronicled in the Appraiserville section of my Housing Notes newsletter since 2016, the scale of Appraisal Institute bureaucratic self-dealing of the executive committee and some members of the AI Board of Directors is breathtaking. Over the past decade or more, AI National has been able to keep a lid on the membership backlash by threatening to remove a member’s credentials for speaking out. Membership has been reluctant to risk losing something they worked hard for in both time and money that they have remained quiet – until the past few years. With the significant devaluation of the SRA designation and growing signs of the MAI designation’s devaluation, more are coming forward.

The FOJs (Friends of Jim Amorin) have been using that freedom from oversight to act with impunity. They are more openly corrupt now than ever because that’s the only institutional memory they possess. However, we are seeing some signs that more AI Board of Directors aren’t interested in rubber stamping FOJ efforts, as illustrated in the previous board meeting results.

The next board meeting is coming up tomorrow and Friday, and it is a seminal moment for the Appraisal Institute. It is where the BOD gets to vote on Jim Amorin’s new contract that the entire board has not seen. As a reminder to board members: your job is to represent your membership, not the executive committee. You can’t vote in favor in good conscience, if you haven’t seen it or been exposed to the key terms. Your role as a member of the AI Board of Directors is critical to the Appraisal Institute’s future and your responsibility is real.

The Appraisal Institute has an IRS nonprofit tax code designation: 501(c)(6) “Defined as Business leagues, chambers of commerce, real estate boards, etc., created for the improvement of business conditions.”

At this point, it is hard to see this organization as “created for the improvement of business conditions.” Given the long-time failure of organizational leadership as measured by the empirical data extracted from the 990s tax filings in public record shared below, this organization needs a complete makeover immediately. It starts with the current CEO.

I hope some in AI membership will use the information shared below to bring an inquiry to the U.S. Attorney’s Office for the Northern District of Illinois.

Over the past few days, a detailed analysis of the Appraisal Institute’s performance from 2006-2019 has gone viral within the industry. The anonymous author(s) analyzed AI National’s 990 tax filings in a series of charts and tables by “Concerned Members,” and you can download it here: The Appraisal Institute as Told by the 990s [click on each to expand].

The results should send an alarm to membership and the AI Board of Directors on the organization’s future. The FOJs have poisoned the leadership culture, which has damaged the value of the designation brands and the organization’s credibility to the business world. None of this would have been possible if designated members weren’t vulnerable to the threat of losing their designations if they chose to speak out. But with the perceived value of membership declining, the fear of the threats by the organization has been diminished.

Here is my favorite chart of the 990s presentation. Current CEO Jim Amorin was made president (for the second time) in 2017. Now, look at the chart.

The following pages are the same found in the full pdf document.

Here are what the numbers tell me, as an outsider to the organization:

  • To offset the steady long-term membership decline (-29.2% from 2008-2019), membership dues as a percentage of total revenue rose steadily over the same period. This action kept revenue coming in. With all that newfound revenue, the FOJ AI executives and AI Board of Directors viewed this as an opportunity to lavish high salaries on all.
  • The data table on page 10 shows that expenses are remarkably flat, yet membership has fallen sharply over the same period. If membership falls another 7,500 over the decade, will expenses continue to remain the same?
  • Jim Amorin has made $1,725,003 from 2007 to 2019, yet membership has fallen 22.7% over that period. Why would his compensation increase, and why is he paid about 50% more than his peers in other organizations? I’ve presented these numbers in past Housing Notes. So many questions.
  • Revenue emphasis is shifting to rely more on dues while education programs, once a promising and prestigious revenue stream (and a cash cow for a handful of instructors that were FOJs), are losing their importance because of virtual continuing education programs. Who has been in charge during this erosion in education revenue, once a key branding strength of the Appraisal Institute?
  • In 2016, I got quite upset with the proposed “taking” of chapter funds, and I became an activist, yet I’m not even a member of AI. Jim Amorin made it happen in 2017 when he became president. Now given all the big salaries and excessive travel, etc., where did all that money come from? I keep thinking about all the chapters who had saved money over decades to the tune of hundreds of thousands of dollars, even more. We should be asking AI National: Since the 2017 “taking,” how many times did AI National dip into chapter funds to plug the deficit? What is the current status of their reserves compared to before the taking? The AI Board of Directors must have the answers to these questions. Membership should demand it.

There has not been a publicly shared strategy to stem the decline in membership. Announcements of committees (like residential appraisers) were faked to quell the discord among residential members, and FOJs had no intention of taking action.

Marketing and branding have been the same old, same old, every year blah, blah, blah, which means that the organizational leadership has filtered out nearly everyone that is not a like-minded FOJ. Look at the last election debacle where the sham petition process was overtly used again by Jim Amorin to get his FOJ “Tank” installed instead of the duly nominated candidate Craig Steinley. Yet, membership pressure on the board stopped it. There is great danger to membership who are here for their designations within an organization with everyone in power being subservient to one person – a monarchy. Any new and creative thinking is not just discouraged; it is impossible.

I hope that ALL on the AI Board of Directors remember that their responsibility is to the membership and to sustain the organization’s future, not the FOJs. I can only assume there may be future legal action on this overt institutional taking, and each current and past board member is exposed. If you want the Appraisal Institute to pivot in the right direction and stop the executive committee’s self-dealing, please do the right thing and DO NOT extend Jim Amorin’s contract. It’s time to hire a CEO to lead the organization in the right direction, responsibly, ethically, and properly. If you do nothing as a board member, this will be your professional legacy as viewed your peers.

Here is a snapshot to memorialize the 2021 Appraisal Institute Board of Directors:

These are the individual pages of the full pdf document.

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Appraisal Institute Board of Directors Tried To Sneak Sham Bylaw Changes Past Membership

January 6, 2021 | 12:26 am | Investigative |

Back on December 4, 2020, I wrote about the sham bylaw change being floated by the Appraisal Institute to avoid the embarrassment of the recent sham election process: The Sham 45-Day Bylaw Modification Process To Keep Jim Amorin’s Sham Petition Process Explained

To rush this through, the Appraisal Institute Board of Directors meeting is being held Wednesday, January 6th with sketchy notice.

Don Boucher, SRA and Jennifer Marshall, SRA, AI-RRS came through for membership and forwarded notice of the meeting. – send Joan an email requesting the login as presented below

_________________________________________

Dear AI Professional,

We hope that 2021 will be a happy, healthy and prosperous year for you!

Sorry about the late notice but we wanted to make sure that you know about and request an invitation to the Special Board Meeting on January 6th at 3 EST. At the Meeting, the Board will be discussing and voting on changing the Bylaws based on the recommendations in 45-Day Notice on VP Election Process and memberships comments. To request the link to attend the meeting please contact the Board Secretary, Joan Barngrover, at jbarngrover@appraisalinstitute.org.

Thanks for continuing to be proactive and staying involved.

Regards,

Don Boucher, SRA and
Jennifer Marshall, SRA, AI-RRS

_________________________________________

Everyone who reads this post and who is a member of the Appraisal Institute should attend the virtual board meeting. As members, you have the right to log in to the meeting. Here’s how:

_________________________________________

Thank you for expressing your interest in attending the Special Board Call, January 6, 2:00 pm CT.

Following is the GoToMeeting connection information to observe this meeting. Please mute your phone when entering the event and please do not share your webcam. You will want to log on at least five minutes early as the meeting will begin right at 2:00 pm CT.

Please join my meeting from your computer, tablet or smartphone.
https://global.gotomeeting.com/join/876886637

You can also dial in using your phone.
United States: +1 (571) 317-3122
Access Code: 876-886-637

New to GoToMeeting? Get the app now and be ready when your first meeting starts:
https://global.gotomeeting.com/install/876886637.

_________________________________________

These changes being floated are so blatantly corrupt that it is beyond unethical. The purpose of these proposed bylaw edits to the existing bylaws will enable FOJs (Friends of Jim Amorin) to keep their own exclusive club paid for by the membership with salaries at 2x the market rate, first-class travel all over the world including wives and friends, and cornering control of lucrative teaching stipends as they have for the past 10+ years.

As a further sign of the lack of transparency, notification of the board meeting to vote on these sham maneuvers wasn’t adequate. Some members only received notice today (Tuesday) for a board meeting on Wednesday. The cynical me believes that this meeting was timed to occur at the moment there will be a massive global media circus in Washington, D.C. (Wednesday) to decide whether to confirm the state results in the federal election. In addition, it is three days into the New Year and they were clearly counting on rushing this under the radar before people wake up from their holiday grogginess. This is a strategic move pure and simple – to continue to wrestle control of the organization from membership and it marks the beginning of the end of the Appraisal Institute.

All eyes will be on the new AI President-Elect Rodman Schley, MAI, SRA at the Board of Directors meeting – who has created a favorable reputation with the membership as someone who believes in transparency and has showed signs of pushing back against the FOJ pillaging of this once-proud organization.

This is Rodman’s moment – if he allows for these sham changes without a fight and hides behind the use of “executive sessions,” he will be just another annual decorative rotation in the Presidential position – Jim Amorin’s posse gets to keep running AI National into the ground until it takes its last breath (in about 5 years).

Incidentally, I’ve been told a member has reached out to the Illinois State Attorney General for their interpretation of “executive sessions” as a tactic used by the Board of Directors to hide their actions – apparently it is not permissible because Illinois is an open session state.

At the end of the year, in the middle of the holidays, 76 Appraisal Institute members signed and sent a letter to their Board of Directors outlying what was wrong with the suggested bylaw changes in the 45-day notice letter. To wrangle 76 members in the middle of the holiday season in late December represents how upset these members were. All the signers are heroes as far as I’m concerned who care more about the future of the Appraisal Institute than its executives do.

Here it is:





Here are my thoughts on yet another sham election maneuver to ensure the continued corruption of The Appraisal Institute:

  • Any member of the Board of Directors who votes for these changes is corrupt and should be removed from their position immediately. They are in favor of self-dealing and not membership. The BOD should not be afraid to hide their votes.

  • The proposed changes are being made to enable CEO Jim Amorin to override the NNC after they thoroughly vet a candidate proposed from membership like they tried to do to Craig Steinley and failed because of the membership uproar. These bylaw edits are being made to tidy up the loopholes to make it happen next year.

  • The 6 year period to lockout executives after NNC membership should not be reduced to 4 years because it makes it easier for FOJ’s to self-deal.

  • To raise the 20% board member vote requirement to 30% is a pure sham. I believe most organizations require a supermajority to override. My goodness, the absolutely embarrassing procedure to insert FOJ Tankersly instead of the NNC’s Steinley thoroughly vetted nomination because Jim asked him to is unconscionable. Unconscionable that it was proposed and that Tankersly gladly accepted.

  • This bylaw edit more easily enables the Board of Directors and the executive team to publically smear and shame a vetted candidate who won. Guess what happens? Quality candidates won’t apply anymore. Only FOJs.

  • This bylaw edit is clearly an act of misconduct by the board. It is a blatant abuse of power and board members who vote for these edits could very well have legal exposure in the future.

  • “Executive sessions” or voting in secret is unethical – if you have to hide how you voted, then something is wrong with your motivations – you see yourself as answering to Jim Amorin and not the membership – you can’t have it both ways.

  • The proposal to ban any input on a candidate is bizarre and reflects the AI’s drift towards irrelevance through self-isolation. Elected officials, competing trade groups, regulators, etc. should all be relevant to weigh in on the quality of a candidate. This proposed edit essentially dictates that a candidate has to get recommendations from FOJs for an application. Incredible.

  • Finally, this bylaw edit is not being done for the membership – it is being done for FOJs exclusively. Imagine Jim Amorin explaining his edits in a public meeting – membership would be booing and throwing beer cans at him for the basic audacity of it.

Over the last decade, the Appraisal Institute went from 27K members to 17K members. That’s a 37% drop, trailing basic U.S. credential trends over the same period. What’s AI National going to look like in another decade with only 7K members?

The membership needs to apply the heat to the Board of Directors NOW. I’m also waiting for a board member to step up and get state and federal law enforcement to look at the sham election maneuvers as evidence of corruption.

My goodness Board of Directors, are you there only to pad your resume, or are you there to uphold the responsibility of the position? If you do nothing but go along then you’re just as corrupt as the FOJs.

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With All That PPP And Without All That Travel, The Appraisal Foundation Doesn’t Need A Grant From ASC This Year

August 19, 2020 | 1:36 pm | Investigative |

This post previously appeared in the August 14, 2020 edition of Housing Notes. I’ve been writing these weekly summaries on housing topics for more than five years. To subscribe for free, you can sign up here. Then you can look forward to each issue every Friday at 2pm New York Time.

The TAF decline in credibility keeps on coming…

After the recent letter debacle where the Appraisal Foundation (TAF) opined falsely that Title XI did not permit the Appraisal Subcommittee (ASC) to provide oversight on TAF, we now have a letter from TAF essentially saying they are making so much money that they don’t need a grant this year from ASC. Who is writing all these letters? It can’t be Dave.

[click for full pdf]

In other words, because TAF saved so much money from not being able to fly around the country during the pandemic, they don’t need ASC Grant money this year. From this point, it’s only a hop skip and a jump to saying they don’t need the grant money so therefore they don’t need oversight. And grant money comes with “strings attached” – that the money used from a grant had to be accounted for to the ASC. And if TAF doesn’t need oversight this year, what is to stop them from raising USPAP related fees and stop collecting grant money forever? The conspiracy theorist in me is starting to worry about that aspect of this new more forceful tone out of TAF these days against any oversight.

No Grants = TAF + PPP

Why would the TAF turn down the annual grant process but still have the need to request PPP? What is the hardship they are declaring when they are saving hundreds of thousands in travel costs that are already questionable in their scale?

My appraisal firm in Manhattan applied for PPP because our business collapsed more than 90% almost immediately for two months. It enabled us to survive. I would think it would be obvious to TAF that their $626,000 annual travel expense would collapse. What other revenues would be sharply curtailed in the new online world?

That’s why Jeremy Bagott, MAI, AI-GRS, the Cosmic Cobra guy, issued this press release on July 6th:


* * * FOR IMMEDIATE RELEASE * * *


WITH MILLIONS IN CASH AND STOCKS, APPRAISAL FOUNDATION HAULS IN CARES ACT RELIEF

(LOS ANGELES, July 6, 2020) – Over the years, the tiny, publicly funded Appraisal Foundation has built up a large reserve in cash and publicly traded equities. Its war chest grew from $3.6 million in 2010 to $6.5 million in 2018, the most recent year its IRS Form 990 is available. Its Cause IQ peer nonprofits had nothing like it in their reserves. Despite this burgeoning pot, it has continued to receive public grant money each year from state-licensed appraisers via the mandatory National Registry Fee. In early July 2020, it was learned that, despite wielding this hefty reserve and its guarantee of annual public grant money, the nonprofit also applied for and received CARES Act relief through the Small Business Administration of between $150,000 and $350,000. This is money that could otherwise have gone to struggling mom-and-pop appraisers hurt by the pandemic.

From 2010 to 2018, the nation’s licensed appraisers paid the 14-employee organization more than $6 million through the mandatory National Registry Fee. The group then parlayed that subsidy into more than $27.6 million in publishing revenue extracted from the same captive appraisers during that time. It has copyrighted the publicly subsidized materials and granted exclusive online course rights.

In 2017, the foundation paid its top officer more than $760,000 in an internal retirement-plus-salary deal that effectively doubled his pay from the previous year. For 2018, trustees paid him $414,000 – less than the previous year’s haul but still more than twice the salary of the chairman of the Federal Reserve, who oversees 20,000 employees and the nation’s central bank.

These issues would be no one’s business were this organization not receiving guaranteed annual public grants, tax-exempt status and allowed to wield a government-authorized publishing franchise and contracts with the U.S. Department of the Interior and Department of Justice – and it is now receiving PPP money. A congressionally authorized federal contractor with guaranteed public grants is not what lawmakers had in mind when they passed the CARES Act, which includes the PPP program.

During this pandemic, expect to see licensed appraisers further weakened with fewer options and higher license upkeep costs. Expect the nonprofit to further leverage its copyrights – the development of which appraisers pay for. It is now receiving CARES Act relief. It has never let a good crisis go to waste.

If you’re frustrated, here’s something you can do right away:

Email Mark Abbott, Grants Director at the Appraisal Subcommittee, at Mark@asc.gov and James Park, its Executive Director, at Jim@asc.gov and tell them you want the Appraisal Foundation’s next grant to be reduced by whatever public funding the foundation has received from the CARES Act during the pandemic and its reserves of cash and publicly traded securities, which totaled $6.5 million as of its most recent IRS Form 990. The $40 National Registry Fee paid by appraisers each year ($80 at biennial license renewal) needs to be rolled back by a commensurate amount to provide relief to appraisers. The waste and abuse going on at this tiny nonprofit is being underwritten by the public and it needs to stop. Please cc Arthur Lindo at the Federal Reserve at arthur.lindo@frb.gov.


    • *

About “Dispatches from the Cosmic Cobra Breeding Farm”: The culmination of two years of research, a new book illuminates over-the-top spending and questionable dealings at the familiar Beltway nonprofit. Published just before the pandemic, it chronicles international jet-setting by officers and trustees, conflicts of interest, lobbyist tie-ins, outsized cash reserves and swollen pay at the tiny nonprofit. The book is available at Amazon in paperback and Kindle versions. You can read more about it on the book’s Amazon page.

The Appraisal Foundation’s IRS Form 990 may be viewed online at Propublica’s Nonprofit Explorer. To find it, Google “Propublica Nonprofit Explorer” and type “Appraisal Foundation” into the search box and follow the links.


# #


Here is another email from appraiser Jeremy Bagott (The Cosmic Cobra guy). Bold my emphasis.


Dear Colleague,

Thanks to the Small Business Administration’s data release on July 6, a few news outlets are working doggedly to expose organizations that, with dubious need, have applied for and received federal PPP relief. Ryan Tracy of the Wall Street Journal recently wrote about double-dipping by state highway contractors in Florida who applied for and received PPP relief despite holding government contracts unaffected by Covid. You can read the story here (but you’ll have to get past the Journal’s paywall).

A rogues’ gallery of organizations that have applied for PPP relief include Harvard University (with its $39 billion endowment), the Los Angeles Lakers of the National Basketball Association (with its reported $3.7 billion valuation) and, yes, the congressionally authorized Appraisal Foundation. The former two were shamed into giving the money back once the matter was made public.

Unlike Harvard and the L.A. Lakers, survival of the Appraisal Foundation and its paid panels is literally guaranteed in a federal statute. The statute mandates its guaranteed annual government grants. The making of the grants is part of the Appraisal Subcommittee’s charter. According to its IRS Form 990 for 2018, the most recent available, the Appraisal Foundation spent $626,000 on travel that year. (If past years are any measure, some of it was on international junkets for top officers and favored trustees.) It no longer has that travel expenditure due to the pandemic. The foundation also had $6.5 million in cash and publicly traded equities, according to its 2018 tax form. Why did it apply for between $150,000 and $350,000 in PPP relief?

If you now google “Appraisal Foundation” and “PPP,” the top hit is a CNN Politics site that identifies the Appraisal Foundation as a nonprofit that has applied for and received PPP funding. You can see it here. The Wall Street Journal and CNN are doing God’s work in this respect.

If you’re frustrated, here’s something you can do right away:

Email Mark Abbott, Grants Director at the Appraisal Subcommittee, at Mark@asc.gov and James Park, its Executive Director, at Jim@asc.gov and tell them you want the Appraisal Foundation’s next grant to be reduced by whatever public funding the foundation has received from the CARES Act during the pandemic and its reserves of cash and publicly traded securities. The $40 National Registry Fee paid by appraisers each year ($80 at biennial license renewal) needs to be rolled back by a commensurate amount to provide relief to appraisers during the pandemic. The waste and abuse going on at this nonprofit is being underwritten by appraisers (who are also voters and taxpayers). It needs to stop. Please cc Arthur Lindo at the Federal Reserve at arthur.lindo@frb.gov.

Best regards,



Jeremy Bagott, MAI, AI-GRS
jbagott@gmail.com


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Quid Pro Quo: The Right Candidate Got Elected And Corrupt Leadership Got To Keep Their Sham Election Maneuver

August 8, 2020 | 6:19 pm | Investigative |

Yesterday’s AI Public Airing Of The Sham Election Process was a dark day for the institution but a bright day for the good guys. The actual selection of Craig Steinley after he won the national nominating committees’ endorsement took literally thousands of members to apply pressure to the BoD. Thankfully it worked.

However, in order to enable the Board of Directors to do the right thing, they got to keep the sham petition process in place. Membership will have to go through this all over again next year and every year that Jim Amorin stays as CEO. Look for Tankersley to shame himself again next year.

The feedback I received from membership who watched this carnival was patently negative. The Board of Directors meeting came across as disorganized, tech-averse, and embarrassing. At the moment, they have shown they are clearly not our industry’s leader.

The presentations by Tankersley and Steinley couldn’t have been more different.

Tankersley

First, Tankersley’s bloviating about how tight he is with the board was really awful. I still can’t get over that someone with his credentials doesn’t appear to have any shame for agreeing to be a player in the sham petition process. It’s only purpose is to overrule the vetting by the NNC so that Amorin can get his lackey’s in. At no time in the five weeks, I’ve been chronicling this debacle has AI Leadership provided a specific reason for the need for this sham petition process.

Here were a few nuggets from this Amorin lackey.

“Times like this bring out the best in people or the worst in people” LOL

“Open your eyes to what the possibilities are for this organization” LOL

How embarrassing.

Tankersley emphasized he is a team builder which is obviously false for the fact he is a candidate in this sham election process. He wants to expand the education delivery yet that ship has sailed. He wants to examine the financial structure to which I ask, why? The whole purpose of this sham election is to keep the yes-men like him in the pipeline so they can travel first class with wives, friends, and family around the world. The lack of ethics here is absolutely unconscionable.

It should be noted that Tankersley criticized Steinley directly which revealed that he is not a teambuilder. The feedback has been that the Execs/BOD gave him pure softball questions so he could answer them and even with that, he was cringe-worthy.

Steinley

Why bother going into details? The man was relaxed and the consummate professional. His performance was clearly proof as to why he was selected by NNC over Tankersley. He is what the Appraisal Institute needs to finally get AI National moving in the right direction.

Steinley was announced as the winner by the Appraisal Institute yesterday:


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THE CON Episode 1 Debuted This Week And It Was Compelling Because Good Appraisers Lived That Hell Too

August 8, 2020 | 6:15 pm | TV, Videos |

Although I’ve shared the following CNBC clip before, it’s worth showing again given my 15-year ago hairstyle. In 2005, I was interviewed by CNBC in the midst of the Housing Bubble and said that 75% of the appraisals being done then weren’t worth the paper they were written on (hey it was 2005 and they were done on paper, not pdf). They found me because I had just started my Matrix Blog because no one seemed to be listening to appraisers. Incidentally as of this week, Matrix is 15 years old!!!

And the October Research stats presented indicating that 55% of appraisers felt pressure to hit the value rose to 90% in the next year! The outlook was dire.

When I was interviewed, I was trying to keep it together because I assumed my business and my livelihood would be gone by 2008 if things continued. Thoughts about supporting my family of 4 sons and making my mortgage payments loomed large, but I couldn’t be morally flexible unlike many of my local peers who thrived as a result. Most lenders and mortgage brokers didn’t care about valuation quality, just hitting the numbers to make the deal. The appraisal profession became seen as one of “deal enablers” instead of neutral valuation benchmark setters. My big competitors at the time (who were part of the 75%), told me essentially: “Aw Miller, You Don’t Get It.” No, I didn’t. All my “75% competitors” during that era lost their licenses and/or went out of business after Lehman collapsed in 2008.


This is why this new documentary “THE CON” means so much to me. It tells the story that “good appraisers” like me and my firm have never been able to tell. Instead, good appraisers have been lumped in with the bad appraisers who are long gone.

Watch for my appearance along with several of my colleagues around the country in this week’s episode 2!

Think too much risk was the reason for the 2008 financial crisis? Nope. Unmitigated greed and systematic fraud are the real issues — and no one’s discussing them…. Until now. @theconseries is now available on virtual cinema: thecon.tv/watch #TheCon

Beginning now, you can watch entire THE CON series, episodes 1-5 through a network of independent cinema outlets.

Watch Last week’s Episode 1


The Previous Victim Of The Appraisal Institute Sham Election Maneuver Shares What Happened

July 25, 2020 | 5:25 pm | Explainer |

This post previously appeared in the July 24, 2020 edition of Housing Notes. I’ve been writing these weekly summaries on housing topics for more than five years. To subscribe for free, you can sign up here. Then you can look forward to each issue every Friday at 2pm New York Time.


Here’s a shoutout to Jim Amorin and Leslie Sellers as you are reading this right now – – here’s a refresher on Appraisal Institute history…

Like Craig Steinley, the 2007 victim of the unethical petition process I’ve covered over the previous two weeks, Anne L. Johnson was selected by the nominating committee to be Vice President after being vetted against a number of candidates. This sham petition process was implemented to get Leslie Sellers (he voted for himself after not making the cut with the nominating committee) on track to later become President and then led AI to exit TAF without a legitimate explanation – it caused me to quit and accelerated the deterioration of the once-great organization, essentially screwing its own membership by fostering its growing irrelevance.

To be clear, I want the Appraisal Institute to either thrive or get out of the way of the appraisal industry. This corrupt behavior is going to continue and the operations executives will keep overruling the voice of the membership, so that leadership can keep enjoying high pay and expensive perks, inappropriate to an organization that has lost a third of its membership over the decade, a steeper decline than credentialed U.S. appraisers. There is one thing they are doing now that should be good for appraisers – more on that next week. But any good continues to be overshadowed by current behavior that is corrosive to organizational credibility.

Unless this petition process is removed from the bylaws, the deterioration in credibility will continue.

To current Board Members, please pick one:

Are you:

A. simply sheep that sit on the board to pad your resume and remain afraid to make any move that gets the operational executives mad? or
B. an industry leader who knows right from wrong and can see the corruption right in front of you and are willing to do something about it to rebuild long-term organization integrity?

But I digress again…

Anne L. Johnson lays the situation out in her July 21, 2020 note that was sent in support of Craig Steinley, the current (only legitimate) nominating committee choice. I’m sure all board members are aware of this dark moment in Appraisal Institute history more than a decade ago and now is the time to start asking questions and demonstrate integrity. Fingers crossed.


So I’ve made my case. Now here is how members of the Appraisal Institute can take action NOW.

A plan of action has been laid out professionally by the North Texas Chapter and is not being critical of the Board of Directors.

Clicking on the image will take you to the CALL TO ACTION web site.


[click on image to go to the CALL TO ACTION link]

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The Appraisal Institute Has Missed The Opportunity To Come Clean With Its Members

July 13, 2020 | 9:35 am | Investigative |

This post previously appeared in the July 10, 2020 edition of Housing Notes. I’ve been writing these weekly summaries on housing topics for more than five years. To subscribe for free, you can sign up here. Then you can look forward to each issue every Friday at 2pm New York Time.

______________________________________________________________

UPDATE JULY 13, 2020

The Appraisal Institute felt it was necessary to write a letter to respond to my original July 3rd post: The Appraisal Institute Ignores Its Membership For Third Time In Sham Election Maneuver. Their response letter was surprisingly amateur and showed how little they respect their membership. Read on.


UPDATE JULY 16, 2020

I have just been told that Michael Tankersley did NOT serve on this year’s Nominating Committee. He was a candidate for the Vice President position. The note below has been updated to reflect that.


Although Steinley was the – SOLE – duly vetted and selected candidate of the nominating committee, somehow the board had to go through a secret, 6-out-of-24 “process” to place Tankersley back onto the ballot after not being the selection of the nominating committee. Why?

The Appraisal Institute at a crossroads. To all those who have nothing to hide, hide nothing. The sham petition process was hidden from the Appraisal Institute’s membership. In response to my initial call out of this sham election process last week, the Appraisal Institute attempted slip this by membership using a highly disrespectful “fogging” letter from the current president. It insultingly omits all the critical issues that have roiled membership while rambling on and on about process and assuming the membership isn’t very smart. No matter how much they try, AI leadership behavior in this sham election process is unethical and does not serve the membership whatsoever.

Here’s a reminder to the Board of Directors: you serve the membership, no matter who you pledged your allegiance to when you signed up for this gig. Please honor your commitment to them and your commitment to honor and integrity as leaders of the industry. For at least the last decade, this once-proud organization is a shadow of its past because of self-dealing from the same people we are witnessing now. It is up to you to do the right thing and act like the leaders you can be.

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Original Post

Today, all (I assume) members of the Appraisal Insitute received a letter from current AI president Jeff Sherman, with whom I’ve met and spoken with on several occasions during his tenure and liked him and what he represented. MAI members from around the country have forwarded it to me and expressed their profound disappointment in this organization that they used to love.

Here is the consensus feedback by members who received this letter.

It just makes me sad that this is the way it is. I think many of us are a bit dumbstruck by this.

I found the letter mind-boggling and a simply attempt to fog the issue at hand. I have to assume that this was written by AI counsel because it reads like a lawyer’s writing with a little softening from other parties. I will also assume this response was directed by the current CEO in an attempt to stop the viral membership backlash of the sham election process that has rattled the organization so he can continue to control who future presidents are. So I am very confused as to why Jeff signed off on this letter since its contents contradict what I have been told by past presidents, past board members, and current members. It hurt to read it.

For now, I am going to chalk this up to “fogging” so that the actual logic gets buried in the debris. This is how lawyers do this. By the way, has anyone ever considering sending the details of this action and the past ten years of self-dealing to federal prosecutors in the Northern District of Illinois? If this is how their executives run the organization, and all the perks I keep hearing about, it makes me wonder about the state of their finances. The handling of the FMC debacle comes to mind.

But I digress.

Here is my running commentary on the letter that is presented below:

  • This sham election maneuver has not been in place since 1991 – Ask the former president who made this happen (I have the name) under oath to get Sellers on the ladder in the first place and ruin the career of a star female nominee.
  • An 11 member nominating committee gets to vet candidates recommended by the membership to review and they are charged with picking the best one and then announce it. They vetted 3 this year and picked one. It’s literally that simple.
  • The winning candidate’s name was announced by the nominating committee.

And then magically…

  • The sham maneuver was made to get the CEO’s pick inserted which should never happen.
  • Tell the membership right now why there is a second candidate.
  • I’ve been told repeatedly that a board member can vote for themselves in the petition process and as of today, some current board members are fighting like hell to keep any such votes hidden from membership, presumably so potential self-dealing will not be exposed.
  • To repeat, one person was selected by the nominating committee and two weren’t. There is no disagreement on this. Why does the CEO get to pick a candidate that was not selected to run against the person who was selected?

Why are there suddenly two nominees without any transparency? This letter does not address this point at all yet it is the entire point. The rest of the letter is faux transparency. Give the membership the actual reason there are suddenly two candidates, one picked by the nominating committee and one picked by the CEO (and that CEO-blessed candidate should be ashamed of themselves).

  • As many as 3,000 members will get to watch the 10-minute presentations of two candidates – one vetted by the nominating committee and one hand-picked by Jim Amorin. The act of showing this on video isn’t transparency at all. It’s a charade. The most deceitful part of the petition process has already occurred before the camera was turned on. There is no explanation of how the second candidate was selected.

The fogging part that is most distasteful in this letter is that it is laden with process gobblygook but contains zero transparency, something the membership is demanding right now.

Here is the closing paragraph of the letter.

I now offer to you, and to each Board member, this is not about style or personality; it must be about the best interests of the Appraisal Institute. I have supreme confidence that the trust you have placed in your elected representatives will be confirmed, regardless of the person chosen.

The problem with this closing statement is this sham election process is not being done in the best interests of the membership, but rather it is being done in the best interests of the operational executives running the show.

This is truly a sad day for the Appraisal Institute. If the board does not fight for the rights of the membership and respect the selection process, then the organization as we know it is just a monarchy, largely like when it began to be a decade ago with the same cast of characters.

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The Appraisal Institute Ignores Its Membership For Third Time In Sham Election Maneuver

July 3, 2020 | 3:19 pm | Explainer |

This post is an excerpt from my July 3, 2020 Housing Note newsletter. You can signup for these weekly emails here.

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July 4th UPDATE
When the Board of Directors convenes in August they need to:
– Discuss the current sham petition process and should either remove it from the bylaws altogether or modify it by raising the petition process requirement from 6 votes to a supermajority (2/3) of the Board of Directors. A simple 50% vote requirement to invoke the petition process would under-represent and undermine the efforts of the 11-person nominating committee who work hard to vet the candidates.
– Discuss the transparency of the petition process: Why do the board votes on the petition process get to be concealed? Given the self-dealing that has occurred three times due to the lack of transparency, the votes made for the petition process need to be 100% transparent to convey credibility to the membership that is absolutely required.
– Discuss the potential damage to the candidate’s reputation: The process of leaving a publicly announced and thoroughly vetted nominee to twist in the wind while this petitioning process is invoked is completely unethical and unprofessional. Why would a professional organization allow something like this to happen to its own members when it can damage and humiliate a candidate who is the best the organization has to offer? It is unconscionable to me that the organization has allowed the petition process to exist without significant protections to the determinations of the nominating committee and without ANY protections to the selected candidate? How will the organization be able to attract standout candidates in the future instead of self-serving political hacks who don’t care about the membership?
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One of the most unethical actions against AI membership is about to take place (for a third time), and the uproar is just beginning. I’ve had many appraisers reach out to me over the past week, conveying how upset they were. I’m not even affiliated with the Appraisal Institute, and I’m furious because it brings down the entire industry in the eyes of others.

Back in 2016, I unleashed a flurry of commentary criticizing the Appraisal Institute executives who had a plan to take all chapter funds for no justifiable reason. The membership reacted by calling leadership to task, which is a challenging, scary thing when they are threatened by leadership and might lose their designations, which could impact their livelihood.

Now we are facing something much darker and maybe the final downfall of the Appraisal Industry as an organization.

Here is what someone said about this election sham:

“Why not next year instead of this year, why are you doing this when you know that in the middle of a pandemic and that it will tear the Institute apart from the top?”

A well-regarded and nationally-known appraiser and Appraisal Institute member, Craig Steinley, won the backing of the national nominating committee, and his name was submitted publicly because confirmation is essentially a rubber stamp. Craig was thought to be the best choice this year by the national nominating committee. The confirmation is supposed to take place in the first week of August (more details later on).

Here is a rough overview of how the nominating process works:

  • The ten regional areas of the Appraisal Institute provide recommendations of individuals that wish to be considered for the national chain of command, beginning with the Second Vice President, the Vice President, and then President, who serves one term. It is the track to become the national President. The national nominating committee vets the recommendations that are submitted by the membership and announce their recommendation, followed by a board confirmation.

Here is how the sham ‘petition process’ bylaw works:

The key to the petition process is to disregard the nominating committee recommendation. This was inspired by at least four former presidents more than a decade ago: there are only 6 national board member votes needed to override the nominating committee recommendation. With those 6 votes, Amorin, the current CEO, can control the future presidents and officers indefinitely. Doesn’t that seem to be against the interest of the membership? The Board of Directors needs to close this unethical loophole if there is any hope of the Appraisal Institute rising again to claw back the greatness it once possessed.

By the way, the current Appraisal Institute national Board of Directors is comprised of 27 members, with 23 men but only 4 women. Twenty of the board members are the chair and vice-chairs of the ten AI regions. Only 6 board members are needed to vote in favor of the petition to insert a new Amorin lackey to enable lavish expense accounts and travel as I’ve previously written about, funded by hard-working appraiser members who have invested a considerable amount of time and money for their Appraisal Institute designations.

First Time Petition Process – created and implemented
Now there is uncertainty on Craig’s nomination because the petition process that was created back more than a decade ago when a female from Wyoming was publicly nominated like Craig and was replaced by a board choice through the petition maneuver, ignoring the nominating committee results.

Leslie Sellers was on the board then and was quite upset that he did not get the nomination but was able to vote for himself using this maneuver. Industry feedback suggests that AI Presidents from 2007 to 2010 seem to have been behind the petition process, inserting it in the bylaws to get Sellers into the ladder to ascend to the presidency two years later. I’d invite any of these former presidents, to refute this with credible, verifiable evidence to counter my own experiences and what many members have told me over the years.

Then 2010 president Leslie Sellers was the reason I disassociated with the Appraisal Institute in 2010 after he withdrew AI from the Appraisal Foundation for no stated reason that made sense. My tipping point was that he had posted a video saying to the effect that he was thrilled about the future opportunities that awaited the organization. Well, a subsequent 30% drop in membership, over the next decade, a steeper decline than licensed/certified appraisers in the national registry, and a collapse in credibility in Washington seems to refute that.

Second Time Petition Process – Was Implemented

Jim Amorin became the first two-time President in the Appraisal Institute’s history using the petition process election maneuver to bypass the nominating committee’s decision. There were other very worthy candidates who were not considered at all. He went on to somehow obtain his current CEO position without a real effort by the organization to look outside when the former CEO essentially left in the middle of the night – I knew one highly qualified CEO applicant that wasn’t seriously interviewed – when the Appraisal Institute was bleeding relevance and needed to bring in new blood.

Third Time Petition Process – Being Implemented

Craig Steinley earned the backing of the national nominating committee and his name was submitted publicly because confirmation is essentially a rubber stamp. Craig was thought to be the best choice this year by the national nominating committee.

AI CEO Jim Amorin ($450K/year) disagreed and used the petition process to make Michael Tankersley the Second Vice President and doesn’t have to give a reason. Mark Linne stepped away from being considered. In other words, the membership nomination process that is supposed to be separate from the executives running the organization is wildly compromised. I am not critical of Michael Tankersley as an appraiser because I know nothing other than his credentials, but I am certainly disappointed that someone with outstanding professional credentials would be willing to circumvent the membership-driven process for personal advancement.

The following text is the email that was sent by National to members about the election. Notice how they do not explain that the petition process occurred and how the TWO candidates came about? Shameful.

Greetings:

On August 6-7, 2020, the national Board of Directors will elect the 2021 Vice President of the Appraisal Institute from two nominees, Craig Steinley and Michael Tankersley. You submitted a communication to the National Nominating Committee regarding one or both of those nominees. The purpose of this email is to ask whether you would like us to provide a copy of your communication to the Board of Directors for consideration. The nominees, even though they serve on the Board, will not receive a copy of the communication if you choose to release it to the Board. Please respond to aielection@appraisalinstitute.org letting us know of your wishes by July 13, 2020.

We look forward to hearing from you.

Jeffrey E. Liskar, Esquire
General Counsel
Appraisal Institute


To recap this election petition process sham:

The national membership submits candidates to their regional heads for the three-year path to the presidency of the Appraisal Institute. The national nominating committee, which is supposed to be separate from the operations executives for ethics concerns, vets the nominations and selects the one they feel is best qualified and then announces the choice to the public. The petition process created and inserted by former AI presidents over a decade ago subverts the word of the membership by only requiring 6 board votes and can include board members who can vote for themself, to what can only be viewed as self-dealing, violating the separation between operations and annual appraisal executives as well as shaming nominated executives – the best and brightest the membership has to offer – for their own self-dealing.

This is the problem with the current AI leadership and something I have been writing about since 2016: The national leadership is not thinking about their members, and they need to be, or the organization will die faster than it already is. I hope this is a wake-up call to current board members to do something about this internal corruption.

I want nothing less than for the Appraisal Institute to return to its former glory or get out of the way to stop damaging the livelihoods of its members and the industry’s reputation.

How to do something about this
If you want to do something about that, please reach out to the regional heads who are also board members to voice your dissatisfaction and be heard. Either let your voice be heard about this sham election or agree to let this mark the end of what was the gold standard in property valuation organizations before the pivot circa 2007.

Since I am not a member I don’t have access to the ten regional chair contact info to voice your complaints but you can see them on the Board of Directors landing page. There truly are a lot of good people on this board and they need to hear your voice and stop this corruption of the election process.

Incidentally, here is the letter that went out to the Board of Directors. Note that 492 signed the letter, 392 AI people, 6 of the 10 NNC members, and Mark Linné (3rd Candidate).


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Real estate appraisers are an essential business and here to protect the public trust

March 24, 2020 | 8:00 pm | Milestones |

I hope all my readers (and everyone else) are staying safe and healthy during this crisis – now let’s get to business.


With New York State on lockdown, real estate brokers/agents can’t sell real estate right now because they are not considered an essential business (yet they are in nearby Connecticut!) This declaration determines whether you can or cannot remain in business during a crisis like this.

Are real estate appraisers considered an essential business in New York? Yes. They are in New York State and they are stated as such in the federal Gramm-Leach-Bliley Act of 1999. But the fact that real estate appraisers are an “essential business” is not consistent in the federal language, especially now when many states are, or will be going on lockdown.

My good friend and appraiser/regulator Pete Fontana and I wrote a letter nicknamed: Fontana/Miller Essential Letter of March 24, 2020. This letter combines the scattered references to address this issue in very specific terms using key language in the public record that illustrates the fact that appraisers are an “essential business” now and going forward.

This letter is the first to address this important issue. It was just sent to Congress, state officials, trade groups, agencies, and other groups related to our industry today and went viral industrywide. The feedback from these groups has been immediate and overwhelmingly encouraging and positive.

Please share the Fontana/Miller Essential Letter of March 24, 2020 with your colleagues in the industry, trade groups, state governments, on forums, and with anyone or in any place you think is relevant to our industry.

Real estate appraisers are an essential business in our country, always have been.

Stay safe!

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Some Financial Institutions Care About The Safety Of Appraisers, While Most Do Not

March 18, 2020 | 10:08 pm | Investigative |


[Johns Hopkins University]

As co-owner of an appraisal firm for 34 years, while based in Manhattan, we generally don’t drive to appraisal inspections. Our staff relies on public transportation to get around including buses, subways, and commuter rail. I’d been following the coronavirus in the news since early this year, and became quite alarmed by mid-February and soon suggested my staff work remotely. By the time the first Fed rate cut was made in response to the coronavirus on March 3, we adopted a screening process for appraisal inspections. When our team made an appointment for the inspection, we inquired about the health of the occupant, and then on the day of the inspection, the appraiser called again to confirm that conditions had not changed.

Soon after we learned that we could be carriers of the virus without knowing and infect someone vulnerable, we stop performing interior inspections.

My appraiser colleagues around the country have become very concerned, if not plain scared.

Here are two scenarios shared by appraiser colleagues in another part of the country. Imagine if the appraiser was a carrier?

Scenario 1 Conversation
Sounds good 10 am is better
Kids are home
With no school
If your sic with a cold or similar please reset appointment

Scenario 2 Recap
Borrower is elderly and on a respirator
Says the appraiser can walk through the house by himself
And reminds the appraiser to keep their distance

Appraisers should not be placed in harm’s way or be in a position to be forced to unintentionally harm another.

So let’s look at some industry actions of the past few days:

HEROES

These lenders have shown how much they respect the appraiser’s role in the mortgage process and their concern for the appraiser’s health and welfare as well as the borrower.

First Republic Bank
I submitted a temporary driveby appraisal solution to First Republic Bank, a large CA/NYC+ lender we have worked with since 1999. I feared for the safety of our appraisal staff and didn’t want to risk infecting others. Plus we were starting to get pushback from homeowners who are getting uncomfortable. They embedded this solution within days. I challenge any appraiser to name any other bank that is more professional, more appraiser-centric than they are. Here is the note they sent out to their panel.


Citibank
We’ve been working for Citibank since 1986 and have enjoyed a great relationship. This policy treats appraisers as human beings. I’m not sure how closely this policy will be observed by the AMCs they engage to manage their appraisals orders (read-on).


ZEROES (AMCS, etc.)


To combat the COVID-19 outbreak in the appraisal industry, Appraisal Management Companies (third-party institutional middlemen that account for as much as 90% of residential assignments) have essentially provided a lethal magnanimous gesture by simply telling appraisers to wash their hands often and stay away from people that are sick and that they must go inside the property. While I anticipate that many AMCs would defend their position of placing appraisers in harm’s way because their bank clients require it, I say that indicates selective morality or incredible ignorance. They could push back and make a strong case for public safety.

We are in the early stages of a global pandemic that may infect 100 million Americans (1 out of 3, conservatively) with a 3% death rate (that’s 1 million people if you do the math). The appraiser population has an average age in the high-50s, and we have been told that the older populous is the most vulnerable.

In reality, these AMC policies show disdain not only to appraisers but to their own (bank client’s) borrowers by letting a fee appraiser, who is paid only for the assignments they accept, determine whether or not the appraisers themselves are carriers of this pandemic and whether they can assess the safety of the property they inspect. Here’s a key point.

NO ONE CAN TELL IF SOMEONE IS A CARRIER IF THEY HAVE NO SYMPTOMS.

The following AMCs opted to treat appraisers as a widget instead of a human being requiring them to physically inspect a property when they now know that it is not safe to do so. Today I was told that one federal agency lost 20% of their appraisers because they have refused to continue doing interior inspections. Different cities and states have different rates of infection. Because we don’t have full testing in place as a country, the number of infections might be significantly higher than we might anticipate. My particular location in Manhattan is highly problematic because of the reliance on public transportation – buses, subways, commuter rail, and just walking down a crowded street – no social-distancing here. And based on the comments the NYC Mayor made yesterday, it is possible that tomorrow could see NYC restricted to “shelter in place” like San Francisco.

If you’ll note in this pattern of negligent behavior, great efforts were made to plan for the safety of order staff, but no regard for the safety of the appraiser, who is providing the service – telling appraisers to wash their hands and practice social-distancing when they know that it is not enough. When you get right down to it, these companies sent similar silly instructions so they can check off a box to be compliant. Yet they must know that appraisers could be carriers, and occupants in the property could be carriers. This is not business as usual.

When we pushed back the appointment on a few of our AMC clients for safety concerns, they simply took away the assignment and rescheduled with another appraiser. No human contact to assess the risk. In good conscience, even if the new appraiser doesn’t have symptoms or doesn;t think the occupant does, that AMC or lender is placing the public at risk, going directly against CDC guidelines. This is what robots would do.


Here is a sampling of AMCs that provided COVID-19 instructions in the past few days shared by my appraisal colleagues – this is clear evidence that they see appraisers as widgets instead of human beings. To save you the trouble of reading all of these INSTRUCTIONS, here’s the translation: WASH YOUR HANDS A LOT

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[Podcast] The World of Real Estate with Frances Katzen – Jonathan Miller

January 15, 2020 | 3:55 pm | | Podcasts |

I had a great chat with my friend and Douglas Elliman power broker Frances Katzen.

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