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B of A Goes Jumbo Just In Time, Hides Countrywide, Wants Identity (Mine)

March 24, 2009 | 12:05 am |

One of the biggest issues facing higher priced housing markets as of late, has been the absolute lack of jumbo mortgage financing. The TARP, TALF (and BARF – Bank Asset Relief Fund) only address mortgages within the parameters of Fannie Mae, ie conventional and jumbo conventional financing. In Manhattan that’s about $729k and with an average sales price just under $1.6M, a lot of homeowners are having great difficulty in obtaining mortgages with more than a 50% LTV.

This Bank of America announcement is great news for this sector of the housing market and may spark other interest in the sector.

Kenneth R. Harney’s must-read WaPo column “The Nation’s Housing” covers this announcement this week in his article: A Big Boost for Buyers Seeking Jumbo Loans:

Bank of America, the country’s largest mortgage lender, is rolling out a large program to finance jumbo loans between roughly $730,000 and $1.5 million, with fixed 30-year rates starting in the upper 5 percent range. The loans will be available through the bank’s retail network and also through its Countrywide Home Loans subsidiary. After April 27, Countrywide will be rebranded — shedding the name it has had since 1969 — and morph into Bank of America Home Loans. Bank of America acquired Countrywide, once one of the biggest subprime lenders, last year.

So Countrywide becomes Bank of America Home Loans.

Last week, Landsafe, the appraisal management company arm of Countrywide approached us to be approved as an appraiser. Their quality people have met with us many times but for some reason, the sales function didn’t allow our type of firm to connect because you had to rub elbows with loan reps at each of their offices. Crazy bad.

I believe that has all been changed or is being changed for the better.

However, although we are state certified and likely because of all their problems with appraisal quality, their efforts to right the wrongs effective screen out qualified appraisers. They wanted among other things:

  • our social security numbers
  • credit card numbers?
  • driver’s license #’s
  • date of birth
  • consumer reports containing illness records and medical information

Seemed pretty aggressive to us. What about identity theft concerns?

The irony of this sort of scrutiny is pretty powerful given past practices. Hopefully once things begin to run more smoothly and one hand knows what the other is doing, they’ll reconsider trying to attract qualified appraisers. We’ll wait patiently.

Good grief.

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Bailing Out Mets Fans, Appraising Opening Day At US Treasury Field

November 24, 2008 | 11:55 pm |


I’ve discussed the curse of stadium naming. The new Citi Field stadium name is in danger of going Enron on us. After all, the naming rights are only a paltry $400M and the Sunday’s Citi bailout was $326B.

For the past few years (for security reasons?) appraisers have been required to provide private financial information to Citi in order to consider whether the appraiser was solvent enough to work for them. Appraisers I know fought tooth and nail against this. In our case, we had been working for them for more than 20 years and now they want to know how much money we make? In other words, they wouldn’t want an appraiser to go under during the middle of a $400 appraisal assignment. It would be (apply sarcastic tone here) devastating to the entire financial system I would think.

The irony here is amazing given Citi’s need for a bailout.

Don’t get me wrong, we work for other areas of Citi which are sophisticated and professional. I am simply fed up with the “efficiency” theory of banking as it applies to backroom operations of large retail banks. They have lost their way. Incidentally, nothing has changed in this regard since the credit crunch began in the summer of 2007.

A few months ago, Citigroup’s retail banking appraisal group based in Missouri put my appraisal firm out to pasture (demoted to backup) in favor of appraisal management companies (those big national companies known for high speed, low costs and virtually zero quality (aka “army of form fillers”) aka AMCs and high volume appraisal shops/factories.

Of course, Citigroup gets a bailout.


Here’s a sampling of our former clients who are national banks that went with appraisal management company factories and ended up getting into financial trouble.

  • Citigroup – went with AMCs
  • Washington Mutual – Residential mortgage lending gone – went with AMCs – NY AG tried to sue them for collusion with eAppraisIT to pressure appraisers (an AMC)
  • Countrywide – absorbed by Bank of America – lots of litigation in the future
  • US Trust Company – went with AMCs – such a disaster they actually came back to their appraisers only to be purchased by Bank of America and then we were dumped again
  • Bank of America – went with AMCs – rumors that it was such a bad experience, returning to appraisers
  • Wachovia – created their own AMC, Bought by PNC.



Not really. Like the stadium naming deal, the shift to an AMC symbolizes the point when a mortgage lender goes too far and loses touch with it’s understanding of risk. The corporate culture loses the ability to understand the importance of assessing the value of the collateral to which they are lending. Common sense evaporates.

For the most part, the individual review appraisers that worked at these lenders were professional and competent and could see the issue at hand, but they just didn’t have the political weight, so to speak.

Hopefully those institutional politics will be crushed by the time we reach seventh inning stretch (at US Treasury Field).

This just in: Tiger Woods now needs to rustle up lunch money.

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[Blackmail & Hot Potato] Appraiser Edition

March 15, 2008 | 6:44 pm |

Here’s a great story on the plight of appraisers that aired yesterday on the CBS Evening News with Katie Couric. I have rarely watched this program because I am never home at that hour but I happened to be watching yesterday….karma???

I have followed with great interest the legal tactics applied by eAppraisIT (ironically, the appraisal management company being sued by NY Attorney General Cuomo) last summer after she posted information about them on her site Mortgage Fraud Watch List. I am sorry that Pamela Crowley lost her appraisal business as a result of the pressure she was placed under. She sounds like another one of the good people forced out of the business. It’s crazy.

What is most amazing to me, is the fact that there are still lenders, mortgage brokers and appraisers out there STILL practicing as they were in the past, in Florida of all places, one of the weakest real estate markets in the country. The appraiser in the pick up truck must have nearly had a heart attack. If he knew he was being honest, he would have stayed to do the appraisal (correction: fill out a form). Incredible.

Reporter Sharyl Attkisson’s blog post “Houses Of Cards And Hot Potatoes” on Couric & Co. lays it out pretty clearly.

Why did the lenders go along – even solicit the inflated appraisals – if they were going to get left holding the bag at the end of the day? Because there’s such a lucrative market in selling the mortgages. A lender that makes a risky loan with a bad appraisal and simply sells the mortgage (along with the undisclosed risk) on the secondary market before anyone figures it out. Who’s to know? It’s sort of like the old game of Hot Potato: If you can make your money and then get rid of the loan (by selling it to another bank) before it goes belly up, you’re in the clear. But a lot of the loans are all going belly up at the same time now, and the financial institutions holding the mortgage are the ones getting burned by the Hot Potato.

It all looks so obvious right now, but appraisers have been complaining about this for the past five years and no one seemed concerned and no one listened.

Attorney General Cuomo primed the pump to create awareness of the problem and now a growing number of news outlets seem to be catching on. Here’s a few of mine on the topic (Fox Business, CNN).

The recognition of the problem with the appraisal independence as it fits within the mortgage lending process is only a first step, but it is an essential first step. The solution has to insure independence so there will some faith restored in the investor community that buy mortgage paper. Because right now, its pretty much non-existent.

More Than Just Guidelines, OFHEO/Cuomo Agree On The Code

March 4, 2008 | 12:36 am | | Public |

…the title…imagine the voice of Captain Jack Sparrow’s first mate…arrr

OFHEO and NYS Attorney General Andrew Cuomo reached a deal today that may help create an environment for appraisers to be independent. Karen Freifeld and Sharon L. Lynch’s Bloomberg News article Fannie, Freddie to Overhaul Appraisals in Cuomo Deal says:

“The goal of the office is to find out what went wrong and how to fix the problem,” Cuomo said today at a news conference. “What we identified as the common denominator, if you will, was appraisal valuation.”

“We believe the appraisals were often fraudulent because there were conflicts of interest and pressure on the appraisers,” Cuomo said.

Cuomo strategy was to get the GSEs to agree and the other markets will follow.

And long time mortgage lending critic NY Senator Charles Shumer chimes in:

Accurate, independent appraisals are very important to ensuring the safety and soundness of Fannie Mae, Freddie Mac and the mortgage market,” Lockhart said in a statement. “The agreements should help restore confidence in the mortgage market by enhancing underwriting practices, reducing mortgage fraud and making home valuations more reliable.”

In James R. Hagerty and Amir Efrati’s WSJ article Fannie, Freddie Set Stricter Appraisal Rules quotes me:

“In my opinion, 70% to 80% of appraisals that were done during the housing boom are probably not worth the paper they’re written on because the appraisers…were rewarded with more volume,” said Jonathan J. Miller, a New York appraiser and longtime critic of industry practices. He estimates that home values are overvalued nationwide by at least 10% because of inflated appraisals.

My significant concerns over appraisal management companies aside, important element of this agreement are spelled out in the Home Valuation Code of Conduct.

The first part of the code was what interested me most:

No employee, director, officer, or agent of the lender, or any other third party acting as joint venture partner, independent contractor, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery, or in any other manner including but not limited to:

  1. withholding or threatening to withhold timely payment for an appraisal report;

  2. withholding or threatening to withhold future business for an appraiser, or demoting or terminating or threatening to demote or terminate an appraiser1;

  3. expressly or impliedly promising future business, promotions, or increased compensation for an appraiser;

  4. conditioning the ordering of an appraisal report or the payment of an appraisal fee or salary or bonus on the opinion, conclusion, or valuation to be reached, or on a preliminary estimate requested from an appraiser;

  5. requesting that an appraiser provide an estimated, predetermined, or desired valuation in an appraisal report, or provide estimated values or comparable sales at any time prior to the appraiser’s completion of an appraisal report;

  6. providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for purchase transactions may be provided;

  7. providing to an appraiser, appraisal management company, or any entity or person related to the appraiser or appraisal management company, stock or other financial or non-financial benefits;

  8. allowing the removal of an appraiser from a list of qualified appraisers used by any entity, without prior written notice to such appraiser, which notice shall include written evidence of the appraiser’s illegal conduct, a violation of the Uniform Standards of Professional Appraisal Practice (USPAP. or state licensing standards, substandard performance, or otherwise improper or unprofessional behavior;

  9. ordering, obtaining, using, or paying for a second or subsequent appraisal or automated valuation model in connection with a mortgage financing transaction unless there is a reasonable basis to believe that the initial appraisal was flawed or tainted and such basis is clearly and appropriately noted in the loan file, or unless such appraisal or automated valuation model is done pursuant to a bona fide pre- or post-funding appraisal review or quality control process; or

  10. any other act or practice that impairs or attempts to impair an appraiser’s independence, objectivity, or impartiality.

arrrrgh, matey (sorry – but I have been waiting for years for some progress on this).

Update: Large lenders agree to new appraisal codes [UPI]

Update 2: In Deal With Cuomo, Mortgage Giants Accept Appraisal Standards [NYT]

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Appraiser Clearinghouse Concept Is Not A Clear Picture

March 2, 2008 | 4:35 pm |

In a recent post on Matrix, [Talking Points] The National Appraisal Clearinghouse I published the memo text in full for the first time in public domain (that I am aware of). I got a lot of calls and emails from appraisers, organizations as well as links from other sites with a slew of commentary.

The focus of the feedback seems to be on the “clearinghouse” concept in the talking points memo by Fannie Mae. The clearinghouse has the potential to be a huge morass of bureaucracy because it is presented as vague in purpose.

The common perception by most within the appraisal industry that I have spoken with or have provided commentary is that the clearinghouse will become:

  • a giant appraisal management company-like entity that will essentially prevent appraisers from establishing relationships with clients. The appraiser becomes a number in an automated system based on whether or not the appraiser holds a valid license and turns around the report in a required period of time (sounds like an appraisal management company).
  • appraisal management companies [AMC] would become enabled as a result of this talking points memo because lenders went to mortgage brokers and appraisal management companies to begin with to reduce overhead. By eliminating mortgage brokers from the appraisal ordering process, they would be forced to use appraisal management companies since they do not want to manage appraisal panels like they did before. They shifted mortgage origination to mortgage brokers to reduce overhead cost and risk and attempted to shift collateral risk to third parties in the process.

I’d say that both of these issues expressed by the appraisal industry are absolutely of significant concern if AMCs become enabled as a result of the implementation of this memo, it spells disaster for any sort of relevant solution to the problem of disconnect between the valuation of property and the mortgages that are lent against them.

Here’s the specific text from the memo on the clearinghouse and some thoughts on each point.

3. A CLEARINGHOUSE of appraiser information, conduct and activity will be established.

my comment: The purpose seems to either overlap or supersede the function outlined in FIRREA for the licensing of appraisers to be managed by each state. At the state level, budget constraints do not allow them to go much beyond managing license compliance. After all, it is not practical, fair or realistic for a state to tell an appraiser, “Gee, you overvalued this property by $12,000.” State agencies are not given adequate resources to be able to police all appraisers. It has been my experience, at least in New York, that the Department of State has been competent and fair, despite the lack of resources. The function for each state is to provide oversight to make sure appraisers are correctly licensed, their courses taken are approved and to answer complaints by consumers for shoddy appraisal practice. That means dealing with legitimate complaints as well as those from crackpots hoping to smear an appraiser because they were unhappy with a value conclusion. However, that does not address the quality problem with mortgage brokers and AMCs.

a. All lenders will be required to provide post-purchase copies of appraisal documents to the Clearinghouse.

my comment: Of course, with digital documents and scanning capabilities, this process is fairly simple (we’ll get to who pays for this later).

b. It will be an independent entity with an executive and board of directors (no Fannie Mae employee involved).

my comment: This point is important, and as an independent entity, it should include majority representation by appraisers and appraiser organizations as well as lender representation. No mortgage broker or appraisal management company representation since they are part of the reason for the need for this entity to begin with.

c. It will staff a hotline for industry and consumer complaints.

my comment: I see this as redundant to the state function and not able to serve much of a purpose that will prove effective in resolving problems. I think this should remain on the state level and the clearinghouse aggregates complaint data from the states as part of its reporting function. Remember that this organization is essentially one step removed from the state level and could really only refer complaints to each state to handle.

d. It will provide annual reporting publicly.

my comment: From the stand point of summarizing aggregate data, this is an effective tool to create awareness of progress with this serious problem with the mortgage industry. However, it should not be used to publish complaints about individual appraisers unless it can publish complaints about lending institutions, mortgage brokers and AMCs.


Appraisal management companies [AMC] should be pretty happy about their prospects if the talking points memo as presented, becomes standard practice, because they become essential to lenders if mortgage brokers are not allowed to order appraisals for lending purposes. The same quality problems with appraisals will remain, if not get worse.

In other words, the appraisal quality produced by AMC’s is just as bad as the work generated for mortgage brokers. I think it would be a disaster and a monumental waste of energy, given all the progress that New York State Cuomo has made in correctly identifying the real issues at hand if AMC’s become more relevant.

Ideas for consideration

  • If appraisal management companies [AMC] are contractually given incentives for handling a higher volume of appraisal orders by lenders, they are automatically ineligible to manage appraisals that are sold to Fannie Mae.
  • Cap the AMC participation to a nominal percentage (ie 10%) of mortgages accepted by Fannie Mae.
  • Create a national consortium of review appraisers who do not work for AMCs that would review AMC product. Perhaps this could be an offshoot Quality ratings could be established to determine whether the AMC product meets standards for Fannie Mae.

Other ideas or suggestions welcomed.

Aside: I would love to be officially part of the government clearinghouse effort because, as someone recently told me, “the devil is in the details” and I think it is important to have appraisers on the front line actively involved in fixing the disconnect problem.

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[Commercial Grade] Better Late Than Never

May 24, 2007 | 10:24 pm |

Commercial Grade is a weekly post by John Cicero, MAI who provides commentary on issues affecting real estate appraisers, with specific focus on commercial valuation. This week, John is crushed by the lack of a firewall in the commercial world of valuation.

Disclosure: John is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC and he is, on Thursdays on Fridays, one of the smartest guys I know. …Jonathan Miller

I am thrilled that appraiser pressure is now in the spotlight. Articles are everywhere. The Real Deal writes Appraiser pressure at pandemic proportions and Inflated Appraisals feed mortgage meltdown and the New York Times and Bloomberg News have been reporting about the recent subpoenas issued to residential appraisal firm MMJ, appraisal management company eAppraiseIt, as well as mortgage broker Manhattan Mortgage.

In keeping with my Commercial Grade mantel, I wanted to give one commercial appraiser’s perspective. As professional appraisers, we essentially sell our opinions for a living. We don’t sell paper reports, or comps, but our expert opinion of market value. It may be an educated opinion, but it is an opinion nonetheless. And, just as in politics, sports and restaurants, there will always be some people that don’t agree with your opinion. You can have a spirited intellectual debate. That’s fine. When a client disagrees with my opinion I am open to discussion, provided that it centers around the valuation issues. If, for example, the client is able to give additional insight into the property and/or market that we may not have fully considered, then I may upon further consideration make a modification to my report. That is not appraisal pressure.

Appraisal pressure is every bit as real and sleazy as the articles make it out to be. And as my esteemed partner, Jonathan Miller said in his recent Matrix post it is a business and ethical decision whether you will work for those people. In the world of commercial lending, however, the sources of appraisal pressure are not necessarily the same as the residential appraisers. Yes, we have mortgage brokers who are clearly motivated to have the appraisal reflect a certain value, but we are not as impacted by the appraisal management companies. Actually, I think that the main source of appraisal pressure in the commercial appraisal world are the investment banks.

If I am not mistaken, the investment banks are the largest source of commercial loan origination in the country. They pool their loans and securitize then. The rating agencies rate the securities and then sell the various tranches to investors. No loans are held on the investment banks’ books.

There is no firewall between origination and appraisal at an investment bank, as required in commercial banks by FIRREA (which has proved to be ineffective, but that’s a topic for a different post!). To indulge in a stereotype, the appraisal is usually hired by a 22-year old MBA who has never seen a down cycle in real estate and needs to make the loan in order to make his 6-figure annual bonus. They are aggressive and they push hard.

I never really understood why it the investment banks need such optimistic appraisals. Nor do I understand why the rating agencies don’t see right through them when they review the appraisals that come with the loan documents. And since the investment banks require the appraisers to include reliance language in the appraisal saying that any investor of the security can rely on the appraisal, I don’t understand why so many appraisal firms are willing to be so ethically flexible.

Maybe once these securities start to default Andrew Cuomo will take a look here as well.

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[Sounding Bored] Managing To Give The Industry The Eye

May 23, 2007 | 5:07 pm | Columns |

Sounding Bored is my semi-regular column on the state of the appraisal profession. This week, the subpoena issued to eAppraiseIT generates some general thoughts about appraisal management companies.

New York State AG Cuomo has now added eAppraiseIT to the list. I thought it was curious that the president of eAppraiseIT was quoted saying: It’s a very good thing, what the attorney general is doing,” Merlo said. Cuomo’s office was focused on “who’s exerting the pressure” on appraisers, he said.

As an appraisal company, we made a “business” decision not to work for appraisal management firms like eAppraiseIT because their appraisal fees were roughly half that of market levels and the turnaround requirements were 2-3 times faster than the norms. It was a “business decision” on our part. I don’t see how appraisers who work for the majority of appraisal management companies don’t need to cut all corners to make it cost effective.

When Washington Mutual closed their in-house review function last year (the last national lender to do so), they went with eAppraiseIT and Lenders Service to manage the appraisal process. Unfortunately, Washington Mutual did not refer their approved appraisers to these two AMC firms and basically cleaned house after torturing all of us that were loyal to them for five years with an appraisal ordering system that did not work (remember OPTIS?). I had heard that they were having quality problems and sure enough, some of the formal panel members got calls from both firms. We didn’t bite.

US Trust Company, who is being purchased by Bank of America was a great client of ours for years. Two years ago, UST senior management decided to dump all the appraisers they worked with to save money and hired AMCO, an appraisal management company. Many firms like us, who had been working for them for 15 years since they entered the mortgage business, were talked into working for AMCO, because our same fees and turn time requirements were mandated by UST. However, AMCO eventually ignored the mandate and stopped paying our outstanding invoices. Recently, with the previous senior managers gone, UST dumped AMCO and we were eventually able to recover nearly all our accounts receivable and were back to direct ordering from UST. AMCO seems to be out of business and someone is reportedly shopping their assets. We will see if Bank of America plans to go with credible appraisers in the markets they cover. I believe they too were burned by the appraisal management company process and reverted back to in-house ordering.

With all the focus on appraisal pressure these days, I can only hope that something is done to correct the flaws in the lending system and someone actually wants an unbiased collateral assessment. Thats the goal here and hopefully the regulatory agencies won’t lose sight of that.

Until then, I’ll have to manage.

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[Sounding Bored] AMCO Opts To Partially Pay Some Very Old Debts

February 14, 2007 | 11:25 pm | Columns |

Sounding Bored is my semi-regular column on the state of the appraisal profession. I am still hung up on this AMCO thing, but I think I am getting close to the end of the final chapter.

Two weeks ago after I posted my last discussion about AMCO, I started to get nervious about our non-payment of $15,000+ in outstanding appraisal fees, the majority of them are more than 6 months overdue.

I had been promised by AMCO that a check was written for $10,000, but no check ever arrived. Thinking that they were not likely to ever pay us, I decided to involve my former client in my efforts since I wasn’t really sure if they understood that most of their appraisers were cut off from work once they moved their business to AMCO. Since I wasn’t getting satisfaction of my debt, I felt I had nothing to lose.

I sent several emails to AMCO, copying my client, demanding payment of my debt. I explained the over six month thing, the lack of returned calles from accounts payable and the $10,000 check that never came.

Low and behold, I got an email from AMCO saying a check was being paid to us for $13,000 and they even provided a check number as proof. I was pretty skeptical until I got an email from my original client saying that they had interceded and forced the issue. They also informed me that they would be taking control of the appraisal process and we would start getting work again.

Wake me up: am I dreaming?

On the same day, we got an order from AMCO on behalf of this client. We had not received an order since November 14th. Coincidence?

We said we would only agree to do the appraisal if we were paid the $2,225 balanced owed, since all of it was over 90 days. They refused saying we were no different than other vendors but asked us if we would accept this new assignment if they sent us the payment for the new assignment via FedEx that night. We still declined the assignment since we had vowed not to work for them until we were paid in full. Even after that point, I don’t think its worth the risk.

The feedback this particular lender who interceded for us, indicated that several other national lenders have grown tired of the appraisal management company concept considering the poor quality of work being completed and the weakening real estate environment.

I hope its not too late, but I must admit, I am pretty happy about that new development.

AMCO Gets Credit Line Renewed, Appraisers Hope Checks Are In The Mail

Is AMCO In Financial Trouble Or Managing The Float?

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[Sounding Bored] Is AMCO In Financial Trouble Or Managing The Float?

January 17, 2007 | 9:09 am | Columns |

Sounding Bored is my semi-regular column on the state of the appraisal profession. This week I break out in a cold sweat as AMCO delays paying their bills.

As a matter of ethics, our firm avoids working for appraisal management companies, because as a rule, they encourage poor quality by demanding below market fees and unrealistic turn times. As a results, AMC’s in many markets can attract individuals who do no real research and serve only to make the number for their clients.

The one appraisal management company we had worked for on a regular basis is AMCO because one of our long time clients, US Trust Company, moved their appraisal ordering process to AMCO because upper management wanted to save internal administration costs and benefit from one stop shopping. They likely saw the appraisal as a commodity, like a flood certification. (Note: Be careful what you wish for.)

AMCO tout themselves as The Nation’s Leading Independent Valuation Management Solutions Company and their rep was that they pay a fair fee in a reasonable period of time.

AMCO was told by UST to use us for our market because we had a 16 year relationship. They did for a while but slowly moved the work to their army of form-fillers. We continued to work for them because they accepted our normal fee and turn time requirements. We were mainly hired for complex, high end assignments. We figured it was a matter of time befefore we would no longer receive work from them, so we kept at it until that day came.

A little over a year ago, we noticed they were becoming eratic in paying their bills. They would pay some, but not all of them. Payment times expanded. We have invoices we have been calling on regularly since June and July. We would be directed to their accounts payable department who NEVER returned our calls. I repeat: NEVER.

They owe us over $15,000.

Yesterday we got the following email from one of their reps:

I apologize for the delay in payment. AMCO was expecting to have the funds from a line of credit in December but did not receive them and so that pushed back our payment. We are now expecting to have the funds in the next 2 weeks.

All unpaid invoices thru October will be paid at the end of January. November invoices in February and December invoices in March.

Thank you again for your patience and understanding.

Of course, if the appraisal is a day late, we get yelled at by someone fresh out of high school who doesn’t understand what an appraisal is (ok, so I am exaggerating a little bit, but it makes me feel better).

Here’s an excerpt from my response yesterday:

…Taking 7-8 months to pay bills by a large national coporation is not reasonable and we are seriously concerned that you are having financial troubles or simply managing the float for a greater return. We would not have charged the same fees if it was going to take more than 6 months to get paid on a substantial amount of work.

Are payments prioritized by those who have the most outstanding or simply by their age? One of the advantages and reasons we agreed to work with your firm, as an AMC, was your sterling reputation for being fair about payment which now that seems to be an outdated characterization…

Is anyone else having this problem with AMCO? Do we have any recourse before I hire a lawyer?

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[Sounding Bored] Providing Clients Name, Rank and Serial Number

October 25, 2006 | 8:11 am |

Sounding Bored is my semi-regular column on the state of the appraisal profession. This week I get annoyed as a client gets personal.

Over the last several weeks, I have been having a polite argument with a client of mine, a large national lender whom I have worked with for more than 20 years. As part of our annual renewal in which we provide our updated insurance and license information for their files, I was asked to provide my P & L.

We have never provided this information to anyone but the IRS and a lender that I set up my revolving credit line with. Its nobody’s business.

We have had a 20+ relationship with this client and I like all the people we deal with and get modest appraisal volume from them.

I have no idea how my P & L impacts whether I can do business with them. There is limited exposure on their part. If I was a national appraisal management company doing thousands of transactions a month for them and was publicly traded, then yes, I could see the need to understand their exposure.

At first they gave me a waiver but a higher up rescinded it and attributed it to company policy. Aren’t I protected to the same level of privacy that a customer for a lender is under Gramm-Leach-Bliley?

Its a matter of principle, and I want to opt out.

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First American Buys Majority Share Of CASS To Spend More Time With Family

December 5, 2005 | 12:01 am |

In other words, having an inhouse AMC is probably not working out for Citi.

First American acquires majority share of Citigroup’s Chesapeake Appraisal and Settlement Services [Valuation Review] Reportedly the split is 51/49.

CASS is an appraisal management company and the purchase of this interest will help First American stay competitive with Fidelity. Speaking from personal experience, First American has the worst customer service of all of our vendors, probably because of their monopoly of services in our market.

Our appraisal firm has received many requests by CASS to join their appraisal panel with their callers basically apologizing for their unreasonably low fees (about half of market rate fees, in our experience) and 2-3 day turn times (3x faster than the norm). To get quality appraisers on their lists in certain markets, they say they will pay market rate fees and accept normal turn times. We have remained skeptical and have opted not to join the fray.

We have had the pleasure of reviewing many reports completed by their approved vendors and found the quality of the appraisal reports to be awful (The reasons could fill up another post). With low fee and fast turn time, the reports must be viewed by CASS as compliance documents rather than a tool to assess collateral. A factory, as you will. Remember, CASS is the firm that outsourced appraisal reviews to India to save money [SF Chronicle].

Actually, I have always wondered how an AMC owned by a lender can actually provided unbiased service to competing lenders.

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November 26, 2021

Housing A Reversal In Direction

I hope all my dear Housing Notes readers had a wonderful Thanksgiving experience with family and friends. I definitely did and as a result, this week’s effort here was hampered by being groggy, despite understanding the myth of turkey tryptophan consumption.

But I gave it my all. Ok, back to the topic of housing, sort of.

It’s a lot tougher and slower to go backward, hence the saying “housing prices are sticky on the downside.”

But I digress…

Getting Paid To Eat Alone Isn’t All That Bad

I’ve shared this photo here before, but in the aftermath of excessive consumption of a Thanksgiving meal yesterday, I thought I’d share it again.

Just before the pandemic, I was engaged as an expert witness in a long-running litigation that required me to spend nearly seven full days on the witness stand. It was exhausting and stressful but I actually enjoyed it. My firm does a lot of this type of work. The attorneys I worked with were incredibly good at their jobs and really fun to be around. One of them reached out to me this summer to let me know that the judge’s decision was nearly in complete agreement with my results. Having that information was nearly as satisfying as the story behind this photo.

The judge would always warn both sides that they were not permitted to discuss the case with the experts during the recess for lunch. Our side took this point very seriously. So everyday we would walk from the courthouse to Little Italy in Manhattan and dine at an old Italian restaurant. I would sit on one end of the dining room and eat a big meal all by myself (paid for by counsel) and the three attorneys and the client would dine separately. It felt a little comical to do this but it was quite a heated case and the other side would also often eat in the same restaurant.

Appraising is always an adventure!

TV Thing 1: NY 1 – The Rising Cost of Housing, But Hope Remains For Millennials

I recently did an interview with NY1 on Millennials being priced out of the housing markets.

The two say it’s discouraging to see that you can buy a large home in another state that is the same price of a very small space here in the city but moving out of New York is not on the table for the couple.

[click on image to play clip and read article]

TV Thing 2: FOX 5 – Homeowners have a lot more equity than they did last year

Many homeowners have a lot more equity than they did last year, a byproduct of a housing boom largely driven by record-low rates. Always fun to speak with Dana Arschin of NYC TV Station Fox 5 who breaks it down for us.

Will Shag Carpet Ever Make A Comeback?

Good grief. Let’s hope not.

From Twitter account CrappyCheapoArchitecture:

And while we’re at it, I do like this high-tech 1960s? stove.

Inflation Has Been Driven By The Pandemic Surge In Goods Purchases

I’ve long hitched my inflation-supply-chain wagon to my friend Barry Ritholtz’s views on the topic, and this recent version has been one of my favorites because of its clarity: Structural or Transitory?

Key points:

the dominant price impetus the past three decades has been technology-induced Deflation. The more recent drivers of Inflation all look like pandemic/re-opening/supply chain driven, and therefore not structural.


What is occurring at the bottom of the wage scale is a massive unwind of decades of wages that were deflationary in nature. I expect these increases will be sticky, but the annualized gains will moderate. Hence, the best way to think of bottom half wages as part of a great reset.

And my favorite point made…

you purchased a physical good instead of using a service — and did so in quantities far outside of what is normally purchased. This is the opposite of the pre-pandemic trend. That the supply chain buckled under the load is not a surprise.

Spurious Housing Correlations: Per Capita Cheese Consumption versus Number of People Who Died By Becoming Tangled In Their Bedsheets.

[click for source: Tyler Vigen’s Book, “Spurious Correlations”]

Getting Graphic

My favorite charts of the week made by others

Len Kiefer‘s Chart Handiwork


(For earlier appraisal industry commentary, visit my old clunky REIC site.)

The value of the URL is in free fall

So I got this email, offering this domain for $499.

On Mon, Oct 25, 2021, 8:03 PM Tony Thomas wrote: Hello,

‌The web domain: is now available for sale on marketplace for a price of $499. has strong keywords that are relevant to your Appraisal Services in ‘New York’ and his surroundings. ‌ ‌Use the domain massive advantage over your competitors in ‘New York’ and re-direct it to your main site to capture more visitors from the domain and targeted customer.

‌Get the domain to the appropriate authority in your company as competitors may be considered. ‌ ‌Go to: for immediate acquisition.

This domain can also be purchased through GoDaddy or any registrar of your choice. ‌ ‌Do let me know if you have any questions or concerns. ‌ ‌Best Regards,
‌Tony Thomas,
‌Flex Domain.

And the price continued to drop in subsequent emails:

Oct 29, 2021: $399

Nov 4, 2021: $299

Nov 10, 2021: $250

Nov 16, 2021: $200

Nov 22, 2021: $150

Eventually, they may find a bidder, but I’m not very sophisticated with SEO and will continue to focus on my company’s branding at rather than this type of effort.

If you have thoughts or suggestions on this topic, please share.

TAF: Free Trips for Texas Appraiser Licensing & Certification Board Workers

From the organization that gave us the bat-shit crazy letter…we now have this development in Texas.

[click to open pdf]

Appraisal Institute’s president Rodman Schley is addressing unconscious bias

When an organization is predominantly “white and male,” that’s unconscious bias at work. Rodman Schley of AI is been unusually outspoken on this topic during his presidency in 2021, and it is something AI needs to continue to address next year and beyond if it wants to continue to its leadership position in the industry.

Rodman lays out a clear position on the topic in his op-ed for Inman: ‘Bias has no place in appraisal’: Appraisal Institute president

In an appraisal profession that is 96.5% white per BLS, he has made the case that AI can be a leader in the effort. AI has been anything but that in recent years but I am hopeful this is a turnaround for the organization.

Representation is a leading force for equity and inclusion in every profession, and we recognize that recruiting for greater diversity will make us stronger and more representative of the communities in which we work and contribute to overall greater cultural awareness.

Bagott on TAF’s USPAP: “The continual change is the point, not the substance behind the changes. It’s the publisher’s business model.”

The power grab by Chairman Dean Dawson on the West Virginia Real Estate Board wasn’t initiated by him. Still, he has perpetuated the problem in West Virginia since it began in 2009. The lack of new appraiser licenses has been appalling and a key component of the grift.

Bagott writes…


(November 24, 2021) – The law is not a creature of the few or the many. That was made clear in a recent report issued by West Virginia’s Legislative Auditor on scofflaw activity by the West Virginia Board of Real Estate Appraisers.

During the spring of 2021, Legislative Auditor John Sylvia directed the West Virginia Legislative Performance Evaluation and Research Division, more commonly known as “PERD,” to investigate the occupational licensing board for possible noncompliance with West Virginia Code §30-38-17, which requires a state-prescribed public hearing or public comment period be held in order to adopt new editions of the copyrighted “Uniform Standards of Professional Appraisal Practice.”

A legal opinion sought by Sylvia determined that a state notice-and-comment process is required prior to the adoption of each amended version of the privately held code of conduct. It also found that public hearings on the standards were once held and that the board has not complied with West Virginia state law since 2009.

The fluid standards were first published in 1987. But the Washington, D.C.-based publisher that owns and sells them to licensees at monopoly pricing has a financial interest in continually changing the standards, able to sell each new version to about 80,000 captive licensees nationwide, along with a suite of related products and services. The publisher has changed the standards 23 times over three decades. The revenue has led to a system of spoils and patronage at the federal level. It has also led to public corruption at many state agencies.

The publisher’s federal patron is known by the tortuous name the Appraisal Subcommittee of the Federal Financial Institutions and Examination Council. The federal agency’s executive director is a former employee of the publisher.

In response to the West Virginia Legislative Auditor’s report, Patricia Rouse Pope, executive director of the West Virginia Board of Real Estate Appraisers, seemed to let herself off the hook for violating the statute: “…if [the board] were to fully adhere to West Virginia Code §30-38-17, the change may not be made in time to keep up with the current amended version of [the standards].”

“This is exactly the point,” contends author-appraiser Jeremy Bagott. “The continual change is the point, not the substance behind the changes. It’s the publisher’s business model.”

Records show Ms. Pope, while helping to muzzle residents of the Mountain State, who were denied their statutory right to participate in a state adoption process, received three all-expense-paid trips from the publisher from April to September 2019 with cash reimbursements and vouchers for free airfare, meals, lodging, course materials and other things of value totaling an estimated $6,554.

State workers in California and Texas were also found to have received tens of thousands of dollars in all-expense-paid trips funded with diverted grant money owed directly to the states from 2010 to 2019.

An earlier investigation by Bagott found that in 2008, realizing the West Virginia board had fallen behind and wasn’t lawfully enforcing the 2006 and 2008 editions of the private standards, the board repealed the 2005 edition in an emergency rulemaking and introduced, in its place, wording in an executive branch rule that subverts two statutes. This is no small thing, as the wording violates Article IV, Sec. 36, of the state’s constitution. The two statutes being violated are the West Virginia Real Estate Appraiser Licensing and Certification Act and the Administrative Procedures Act.

Bagott also found the board was in open violation of rule W. Va. Code R. § 153-6-7.

General Counsel Donald “Deak” Kersey at the West Virginia Secretary of State’s Office confirmed his agency had no record that the board had filed a copy of the “2020-2021 Uniform Standards of Professional Appraisal Practice” – or any past version of the standards – with the Secretary of State’s Office. Similarly, he could find no evidence that any past version had been uploaded to an eRules application as required by W. Va. Code R. § 153-6-7.

In 2017, it was discovered the board had hired unauthorized individuals as de facto board members. Board members were believed to have effectively delegated their duties to doppelgängers.

Wrote state Delegate Gary G. Howell, chair of the Joint Committee on Government Operations: “The West Virginia Real Estate Appraiser Licensing & Certification Board [has] violated the law by hiring persons specifically barred from being employed by the board, because it created a conflict of interest. It was suggested this violated the state constitution, as the governor is tasked with appointing board members with the approval of the Senate.”


Jeremy Bagott, a licensed appraiser and former newspaperman, sends up a warning flare in his 2019 book “Dispatches from the Cosmic Cobra Breeding Farm.” He takes the reader deep inside a tiny Washington, D.C., foundation that has managed to have its copyrighted code of conduct enshrined in federal and state law. All 50 states, even the U.S. territories of Guam and the Northern Mariana Islands, now enforce it. The nonprofit, known as the Appraisal Foundation, has parlayed the arrangement into a lucrative publishing cartel. In his journey, the author uncovers a troubling trend deep in the plumbing of government.


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Dave Towne Takes Down The GSE “Made As Instructed” Research Paper

If we’ve learned anything as appraisers is that many institutions in Washington, D.C. fund white papers to support their positions and give the appearance of credibility at first glance. Dave Towne, who continues to look out for the interests of appraisers on the ground, applies critical thinking to the GSE-funded white paper “Racial and Ethnic Valuation Gaps in Home Purchase Appraisals.”

And be sure to review the “Spurious Correlations” post above for proper context.


This is not an easy essay to write. It is my critical analysis of an academic study put out by a GSE, which I have read.

In September 2021, FreddieMac’s Modeling, Econometrics, Data Science & Analytics; Single Family Risk Management; and Economic & Housing Research groups released a white paper (Economic & Housing Research Note) named “Racial and Ethnic Valuation Gaps in Home Purchase Appraisals.”

The paper uses the term ‘appraisal gap.’ The paper’s definition of the ‘gap’ is: the percentage difference between minority and White groups in the share of properties or applicants receiving “appraisal value lower than contract price.”

The people who produced this paper concentrated on two primary aspects relating to ‘race’ and value opinions in appraisals of new home purchases, oriented toward Black vs White racial differences. It spanned years 1993 through 2020, and used the 2010 census for the racial profiling done.

After this paper was released to the media and stakeholder groups, some reporting about it used the term ‘groundbreaking’ to describe it. I don’t share that opinion. Breaking is mostly about breaking the morale of appraisers, who for the majority of reports, do their work appropriately per the USPAP mandates and GSE (and other agency) guidelines and lender assignment overlays we deal with, based on how appraisers understand those criteria.

The first consideration in the paper was appraised value vs the Contract Price. The groups utilized a third party study done in 2017 by Calem, Lambie-Hanson, and Nakamura to basically imply that appraisers are deficient in their work if the appraised value is LESS than the Contract Price in minority Census Tracts. More about ‘tracts’ below.

Yet in a footnote to the paper, the groups say “We acknowledge that the sale price is not always equal to market value, and we expect that in all areas some appraisals will report values lower than the contract price. However, research data indicate that a high percentage of appraisals are at or above the purchase price.”

So let’s see here….some appraisals have values lower than the contract price, while a ‘high percentage’ are at or above that metric. It also implies that some appraisals are AT the contract price. But the paper goes on at great length about appraisals in minority tracts which report an opinion less than the contract price. Seems to me that the contradictory statement in their own paper refutes their conclusion that appraisers are wrongly reporting values in predominately minority occupied areas.

There, of course, was no discussion of any type of report reviews or calls with the appraiser to analyze the comparables used against the subject properties in order to properly evaluate the report conclusions.

The second consideration used for their analytics is Census Tracts vs the population racial component of area residents – and only 4 races were considered – in those Tracts. The US Census office keeps detailed records about the racial components across communities.

It should be noted that the Census Tract number has been inserted onto the GSE report forms since 1986, when GSE’s took over appraisal report form production. The tract number relates to the subject’s street address.

The tract number is used for compliance review tracking by the lender and regulatory agencies who can cross check purchases in communities based on locations in a Census Tract.

This tract number is not something that most appraisers pay any attention to. I have asked many on a particular forum I frequent. Their responses were as I stated. Appraisers don’t check Census maps to determine where tract boundaries are relative to where the subject and comps are located. And appraisers certainly don’t consciously evaluate the racial mix of residents in tracts to determine which homes they might or might not use for comps in a particular assignment. (If they do, then they need to be removed from this profession.)

This paper also says that a Census Tract (which is a count of people) is the same as what we call a Neighborhood in reports. Really? The Dictionary of Real Estate Appraisal, 4th Edition, defines Neighborhood as “A group of complimentary land uses; a congruous grouping of inhabitants, buildings, or business enterprises.” (In my Webster’s Dictionary, ‘congruous’ means “Harmoniously related or combined; Appropriate, consistent.”)

USPAP, Federal Laws, and the GSE guidelines prohibit the use of ‘race’ by appraisers in determining which properties will be in a report.

Yet this FrMac research paper over many pages of written explanations, exhibits, dummy variables, models and high level math statistics concentrates on racial components in Census Tracts to try to make the case that appraisers are deficient in how appraisals are done…..particularly toward Black people.

The folks who have said this paper is ‘groundbreaking’ probably have not thoroughly digested it, read the footnotes, and may not even have a true understanding of the current appraisal process. But it’s been thrown up on the ‘you’re the bad guys wall’ hoping it will stick along with the already debunked Dr. Perry Brookings Institution diatribe.

At the end, this paper actually admits that the group really doesn’t have a complete understand of the ‘gap’ that they so critically discuss. It says the “….potential appraisal gap is worthy of considerable research.” And “….our analysis has not yet determined the full root cause of the gap…..”

And it’s conclusion makes this statement: “We are testing whether alternatives to traditional appraisals offer a more objective analysis of property value.”

I wonder how many of the “alternatives” will allow as much ‘racial profiling’ as this paper does?

Dave Towne

OFT (One Final Thought)

Who said that cool music couldn’t be found on the Lawrence Welk show?

But no one was cooler than Carl Perkins.

Brilliant Idea #1

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See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

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