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Posts Tagged ‘Appraisal Pressure’

[Sounding Bored] Appraisal Pressure, Blog Motivation, October Research

February 20, 2007 | 12:52 am | Columns |

Sounding Bored is my semi-regular column on the state of the appraisal profession. This week I revisit what got me into this blogging gig (hint: appraisal pressure).

Back in August of 2005, I was fed up with the pressure myself, my firm and my profession was under to make the number “or else.” So I launched Soapbox. It seemed that no one really cared about ethics or the risk placed on banking system. Appraisers were fast becoming the enablers to fraud and a whole lot of “gray areas” that I wanted no part of. Blogging became a way to vent my frustration with the industry which didn’t seem to have much political clout in Washington to change policies that placed us in between a rock and a hard place. At one point I was even contacted by the House Ways and Means Committee in Congress to testify about the problem with appraiser ethics on a specific issue, but they had already inferred what they wanted me to say.

The bottom line?

Those whose commissions depend on “hitting the number” have become the appraisal order givers and quality, as they say, Elvis, has left the building. Appraisal management companies gained favor with lenders who didn’t understand the disconnect between real collateral values and loan needs. AMC’s pushed fees below cost (without taking ethical shortcuts) and required completely impractical turn time requirements for even reasonable research time. Gradually, once were good banking clients, began to disappear from the good appraisers.

After a short while, I realized I could rant and rave all I wanted but it wouldn’t change a whole lot as quickly as I wanted it to. The change had to come from within (no, I didn’t sell my soul). I had to change my client base and perhaps someday the lending community would come around and feel true concern about the value of their collateral and the regulators would begin to see the problem.

In the meantime, I needed to reinvent my practice and basically stop placing so much emphasis on on retail bank appraisal work, a previous mainstay. Whats sad, is the lending industry has already lost a significant portion of its collective appraisal experience to rely on. In other words, many of the talented valuation experts have begun to focus on other clients. But hey, the lending industry has plenty of form-fillers that can bang out 10 reports in a day and make 24 hour turn time specs to make their customers happy.

October Research, publishers of a series of smart publications including Valuation Review, broke the news to the world with their definitive 2003 National Appraisal Survey. The survey has been updated in 2007 which showed that:

  • 90% of appraisers reported pressure to adjust property values, up from 64% in 2003.
  • 71% of appraiser clients, specifically mortgage brokers and real estate agents have provided pressure, up from 60% in 2003.

Note: If 90% are feeling pressure and 71% are from mortgage brokers, then wouldn’t it be logical that a significant portion of the remaining balance is from appraisal management companies and banks themselves?

As an appraiser, ask yourself this question regarding any type of mortgage appraisals: “Does the person ordering the appraisal have a direct financial incentive as to its outcome?

I would guess the answer is yes more than 90% of the time.

The National Association of Independent Fee Appraisers has used the results of this study to launch a legislative initiative to stop this silliness along with other appraisal organizations. On February 6, 2007, the results of the October Research Survey were presented to the Senate Banking and Housing Financial Services Committee:

This week, NAIFA, along with the Appraisal Institute, the American Society of Appraisers and the American Society of Farm Managers and Rural Appraisers delivered a letter to Congressional Committee on Financial Services about the pressures appraisers face. The action was based on the recent release of the study by October Research Corporation that found that 90% of appraisers are pressured by mortgage brokers, real estate agents and others to raise property valuation to assist in the consummation of deals. The study also noted that 75% of appraisers reported “negative ramifications,” if they did not cooperate, alter an appraisal and provide a higher valuation.

Sadly, the results of the survey mirror the concerns you as members have raised. To address these concerns and others, NAIFA is encouraging Congress to hold hearings on theses issues and approve legislation that protects home buyers and the real estate financing process. Reforms should also be considered to Title XI, which has several shortcomings that contribute to mortgage fraud.

There are several appraisal reform bills at the top of the 110th Congress’ agenda, specifically, bills offered by Rep. Paul Kanjorski (D-PA) related to Title IV of H.R. 1295 and Sen. Barack Obama (D-IL) on S. 2080. These pieces of legislation would provide federal and state appraiser regulators more resources to conduct enforcement, ban inappropriate coercion, and promote professionalism of real estate appraisers among other things.

Appraisal survey teaser
To order the survey


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[Sounding Bored] Appraisers Are NOT Enablers

February 12, 2007 | 10:24 am | Columns |

Sounding Bored is my semi-regular column on the state of the appraisal profession. This week I refuse to paint and therefore am not enabled.

Like or not, when there is mortgage fraud involved, appraisers are somehow involved [Dayton Daily News]. The appraisal profession, whether appraisers like it or not, is the connection between the property and the mortgage fraud being conducted.

A lot of appraisers, including myself, have pointed fingers at many in the lending business, but not enough of a critical eye on ourselves. On one hand, the lending process has encouraged self-dealing and exagerating through financial incentive, but on the other hand, many in our profession don’t have the backbone to say no and work to switch their client base or specialty, otherwise it wouldn’t be so widespread.

Lender pressure and wholesale lending irregularities didn’t happen overnight. The appraisal industry has always been underreprepresented because it is too fragmented and emphasis has always been placed on the commercial sector, because the dollars (value) are so much bigger.

The loss of our professional identity happened at about the same pace as the paint fading on a house (assuming it doesn’t have aluminum siding). Form-fillers are merely coloring an asset to meet the needs of the parties involved (no offense to house painters).

Whenever you read about someone arrested or indicted for mortgage fraud, there is always an appraiser involved.

But let get one thing straight: using the professional label of an “appraiser” for those walking down the “perp” walk is clearly inaccurate, because they didn’t appraise the property.

Those individuals are merely painters in appraiser’s clothing.


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[Sounding Bored] Behind The 8 Ball: Weaker Market Requiring Stronger Appraisals

January 22, 2007 | 12:01 am | Columns |

[Sounding Bored is my semi-regular column on the state of the appraisal profession. This week I get woozy from getting beat up so much.]

Last month I was speaking in front of the loan officers of a local mortgage brokerage firm that we do some work for. We are not considered a favorite choice because of our reputation is less about the playing ball then it is about estimating a reasonable market value. We get very light, but regular volume of work from them and they are pleasant enough to deal with, but they clearly favor a competitor by giving them heavy volume because their orientation towards better “service.”

I remember a specific question by one of the mortgage reps posed to me at the meeting that sort of threw me for its brashness. It went something like:

Jonathan, assuming that there is a range of gray in valuation, how high in the range would you be willing to go to make the deal for us?

Although this is probably always in the back of every mortgage broker’s mind when ordering an appraisal, the audacity of being so blunt and open, made the room go quiet.

I didn’t have an answer, other than:

I understand what you are saying, but we can only provide what we feel to be a reasonable estimate of market value, supported by facts.

I ran into this loan officer a few weeks later at a holiday party and he chuckled as he recapped the situation and replied that he knew I gave the only proper ethical answer I could and he enjoyed seeing me try to answer it.

Apparently he didn’t understand how the question made him look in front of his peers. At the end of the day, I don’t need (or want) more work from someone like that and I resent the fact that our profession is placed in this position every day …play ball or die.

The irony here is that the profession is even more important now for assessing collateral as the market weakens. Perhaps there is a remote possibility that lenders will start to have a more critical eye in their need to understand what the real value of a property is. They just need to ask why appraisal reviews nearly always turn up inflated first appraisals [SCS] that were done for wholesale lenders (mortgage brokers).


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[Commercial Grade] Colorado AG Just Says No…To Appraiser Pressure

January 8, 2007 | 9:25 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. John looks forward to the day when appraisers are not seen as a nuisance, and its sooner than you think.

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


The new year started on the right note. On Monday, the Attorney General of Colorado, which has had the highest foreclosure rate in the nation for eight consecutive months, proposed legislation [Denver Bus Jrn] that would:

  • Prohibit mortgage brokers from coercing or intimidating an appraiser in order to obtain an artificially inflated appraisal
  • Prohibit anyone else involved in the process from improperly attempting to influence the appraiser
  • Prohibit the appraiser from knowingly submitting a false appraisal

Of course state licensing and ethics rules have never permitted the appraiser from knowingly submitting a false appraisal, though in reality there is little “teeth” in the enforcement.

The first conviction for appraiser coercion would be a misdemeanor, while a second conviction would result in a felony. Though I have no idea the mechanism the state intends on using to “prohibit” such coercion and intimidation, it’s a start, and it brings the issue front and center.

It is truly dj vu all over again. Nearly 20 years ago appraiser fraud was accused of almost single-handedly bringing down the S & L industry in the US. With foreclosure rates on the rise again, I expect to see more attention paid to the role of the appraiser this coming year.

Then maybe just maybe appraisers will be hired for their professional expertise, and not solely on the basis of the lowest fee and quickest turn time.

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[Hicks On Sticks] Comp Check Battles

November 27, 2006 | 11:32 am |

Butch Hicks is an appraisal veteran that hails from Northern Virginia. I first met him when he was the President of RAC (Relocation Appraisers & Consultants) and was struck by how he got straight to the point, and peppered it with a southern drawl. He is a leader in the appraisal industry and has an affinity for crunching housing market data like I do. In his first post for his Hicks on Sticks column in Soapbox, Butch deals with the ethics and practicality of doing comp checks (which in their pure form, completely violates USPAP). I am thrilled to have him contribute to Soapbox. …Jonathan Miller


“Bill Hicks my friend (if he was a friend, he would have called me Butch), how are you doing? My name is Slick E. Lender and I’m with AllQualify Mortgage. We have just begun an expensive ad campaign in Virginia and anticipate a lot of appraisal work for you as a result and I’d like to establish a relationship with you as the sole appraiser for our use there.”

And so begins yet another phone request for a comp check.

“Ok,” I respond, “what comp do you want me to check?” This, my ‘old’ response, usually resulted in a pained and questioning “huh” from the other end of the phone line. “You asked for a comp check,” I reply, “so which one do you wish me to check?”

These requests for comp checks, whether made by phone or fax, have increased dramatically with the advent of the internet, the slowing of the realty market and rising interest rates that have all but chocked off the refinancing deals of the recent past. Like all appraisers, I assume, I take a different attitude toward such requests from my regular clients as opposed to those like Slick E. but of late my patience has worn a bit thin on all of them.

I’m not going into a discussion here of how providing comp checks in order to lasso an appraisal request might place the appraiser in jeopardy as regards USPAP; I assume all appraisers are aware of such, though the evidence might indicate otherwise (on numerous occasions, I’ve been told by requestors that I’m the first to ever have bought that issue up). Also, I must admit, it’s a little difficult to get terribly angry with those making such requests because I recognize that a primary reason they are doing so is because so many of my fellow ‘professionals’ easily accommodate them.

Worse, to some degree, are those faxed requests that eat up otherwise clean paper. I’ve begun a collection of the worst offenders (another subject for later), you know, the ones with the Appraisal in Appraisal Request crossed out and replaced with a handwritten “Comp”. Lenders, having now caught on the fact that some appraisers (like myself) do not provide comp requests, have now resorted to blast faxing such to every appraiser in a given market. Experience tells them, I suppose, that someone will bite and the chase for ‘the number’ is on.

There was a time when I would respond for such requests by simply sending all sales in a subject neighborhood to the requestor and letting them decide at that point whether or not to proceed with a formal appraisal request. It’s not that difficult to do with my current MLS system but it does take a little time. Time is money however and for that reason I eventually halted even that process. But, what the heck, I’m in the appraisal business and I earn a living by collecting a fee for such, so my new view is to take advantage of a technology that is in some fashion, competing with me.

Zillow.com is now my friend. Since appearing on the scene, I have taken to measuring its performance against mine on actual sale cases. How, you may ask, do I do that? Simple! Since I do a lot of relocation work, I have something to measure my own performance against. By capturing Zillows value, along with my own on every relocation assignment and tracking the history of the subject as it goes to settlement, I have concluded that in most cases, the Zillow value is in excess of my value estimate and the eventual sales price (in fact, of late, the Zillow value is generally higher than even the subjects initial list price).

Back to earning the fee part earlier noted (not to mention saving myself the aggravation), I have devised a new tactic. Now, when I get that call from Slick, I simply point him to the Zillow website. If, after obtaining a ‘value’ there, he wishes to proceed, fine, I can accept the assignment with no problem and a very clear conscience.

Coming in ‘low’ is not a problem; the value is what it is. I don’t worry about irate phone calls from anyone (borrower or lender) any longer; experienced appraisers learn to develop a thick skin.

Experienced appraisers also learn which battles to fight and ones involving comp checks are no longer a priority of mine.

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[The Hall Monitor] Market Value Definition Under Undue Duress

November 13, 2006 | 11:34 am |

Todd Huttunen began appraising more than 20 years ago with a few years off in between to pursue a career in cabinet making. He relegated that to hobby status and is currently an appraiser in an assessor’s office. His best friend dubbed him The Hall Monitor because of his rigidity and respect for rules. He offers Soapbox readers tongue-in-groove insight on appraisal issues. Today Todd probes the extreme, excessive, inordinate, or exorbitant definition of market value. …Jonathan Miller

There is more than one definition for Market Value but for our purposes today we will use the one listed first in The Appraisal of Real Estate, 12th Edition, which reads:

The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.


That definition works great, except, sometimes, for the last eight words, “and assuming that neither is under undue duress”. If you look up definitions for “undue” and “duress” you might put together the following phrases whose meanings are similar to “undue duress” “extreme coercion”, “excessive compulsion”, “inordinate constraint”, “exorbitant pressure”.

Since the definition does not read “neither is under duress”, we know that some degree of duress or coercion, compulsion, pressure, etc. is assumed, likely to be experienced by both buyer and seller to varying degrees depending on market trends. What then, constitutes “undue” duress as opposed to the “due” variety? That’s where these other words like extreme, excessive, inordinate and exorbitant become useful.

I believe that for most of the last seven years many buyers were “under undue duress” and, if the doomsayers are right, sellers will get their turn soon enough (note the future tense of that sentence – to be contrarian these days you have to be an optimist).

As someone who bought a co-op apartment in 2004, I feel qualified to speak on behalf of “buyers under undue duress” (BUUDhists). My broker and I had looked at more than 30 apartments and I had made offers on none of them (she was and still is my friend, believe it or not). As a result of so much looking however, almost before I even opened the door of the apartment I now live in, I knew this was the one.

This was a vacant, sponsor (developer) owned unit which had been on the market for about two months. I had seen enough to know that I should make a full price offer immediately, and I did. As it happens (as it used to happen), that full price offer was matched by “another buyer” the very same day. If I wanted this apartment (and I did) I would have to increase my offer in a sealed bid within one week, which I also did. I ended up paying almost 10% over the asking price.

Did the circumstances surrounding this sale cause me to pay more than “Market Value” for this apartment? In light of market conditions at the time, probably not. But mine is by no means an extreme, or even typical example of what many “BUUDhists” experienced during the boom years.

There was a story in The New York Times, June 9, 2002, (I kept the article) “Seller’s Market Continues for Homes in the County”, recounting the experience of a real estate broker who was himself looking to buy in Westchester and had been outbid on several houses before finally, in desperation, showing up at one house with his infant daughter in tow, hoping to gain the sympathy of the sellers. It worked and he got the house. “My advice to prospective buyers,” he said, “is to make a good impression on the seller. Wear a tie, comb your hair and look like you really want that house.” (I realize we were in a much different market in 2002, a sellers market, but that still sounds to me less like how to get a house and more like how to get girls.)

But seriously, can that kind of “duress” be described as anything but “undue”, extreme, excessive, inordinate, or exorbitant? When market conditions so greatly favor either buyers or sellers, the last eight words of the definition of Market Value need some adjustment. And who better to make adjustments than appraisers? When there is stability in the market (when is that?) the textbook definition applies. At other more turbulent times, how about a multiple choice: ” and assuming that seller/buyer is under undue duress” (circle whichever is appropriate).

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[Sounding Bored] Ney Irony: Political Corruption Downs Appraiser White Night

September 20, 2006 | 6:58 am | Columns |

Sounding Bored is my semi-regular column on the state of the appraisal profession. This week I say “I told you so” when the author of what was hailed as critical appraisal protection legislation resigned under a cloud of ethics problems.

Representative Bob Ney, Republican of Ohio, has agreed to plead guilty to federal criminal charges related to his dealings with the corrupt lobbyist Jack Abramoff, lawyers and others with knowledge of the investigation said Thursday.

The bill that he backed was supposed to protect appraisers from corruption of the appraisal ordering process and structure of the current lending industry plead guilty. This irony could be viewed as humorous if it were not for the fact that appraisers are still left twisting in the wind.

Responsible Lending Defeated By Irresponsible Lobbying As Congressman Ney Steps Down [Soapbox]
Trying To Sway Some Action On A Stalled HR 1295, Says A Lot [Soapbox]


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[Commercial Grade] Schmoozin’

September 7, 2006 | 11:13 am |

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. Today John tries to comp some tickets.

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


HUD announced yesterday that it settled a case against a property appraisal firm for paying kickbacks to a mortgage company for referrals. “Kickbacks” for settlement services are illegal for obvious reasons. While the headline suggests some sleazy backroom dealings, the facts (as presented) are that Grasso Appraisal Services of Burlington, MA sent restaurant gift certificates to East-West Mortgage Services over a three year period, totaling $4,000..

We’ve spoken frequently on Soapbox about the problems with mortgage brokers and appraisers who, with a nod and a wink, make the deals “work.” There is no such allegation made here, though. Nowhere in HUD’s release does it suggest any improper appraisal work was done and, in fact, the settlement agreement between HUD and Grasso specifies that the parties acknowledge no admission of any wrongdoing. The only allegation is that a “kickback” was made.

Don’t get me wrongI don’t condone kickbacks. When, though, does a “kickback” differ from “schmoozing?” (For the record, I don’t do either.) It is not uncommon for an appraiser to take a group of clients to an exclusive private golf course, followed by dinner and drinks. The tab for one day could be $4,000! Some appraisers have turned schmoozing into a full-time job. (Marketing, they call it.) Do golf outings and four-star dinners lead to a better client-appraiser relationship and, ultimately, more work. I suppose so, otherwise they wouldn’t do it. How about a couple of tickets to a Yankees game? Is “comping” a couple of ball-game tickets different from restaurant certificates?

The real difference, I guess, it that a kickback implicitly suggests a quid pro quo, whereas basic business schmoozing is, well, schmoozing.


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[Sounding Bored] Appraisal Fees Are Low But (Their) Values Are High

August 11, 2006 | 1:33 pm | Columns |

Sounding Bored is my semi-regular column on the state of the appraisal profession. This week I get annoyed about the cost/value relationship of our services.

Bankrate.com performed a national survey on closing costs and ranked them by state. In the article covering the survey. The title of the article is what grabbed my attention. I have always found it curious how little understanding there is about what the appraisal provides in the lending and home purchase process. It allows the lender to understand the value of the asset and assess the amount of risk they can take on the loan. It tells the buyer whether they are over paying (if they look at the appraisal at closing).

It seems to me that the nominal cost of the appraisal relative to the size of the deal would make it seem like a no-brainer. $300 to $500 to see if the $1,000,000 property is worth a $1,000,000 seems very cheap to me.

If prices have gone up 100% during the housing boom for example, why have appraisal fees gone down for generic retail lenders? Our licensing does not permit the appraisal fee to be contingent on the value, yet the appraisal is done to protect the lender (whether they want to hear the bad news or not). As appraisal services for national lenders are moved to appraisal management companies, appraisers have to cut corners a lot to be able to afford their fees. Case in point:

When eAppraise-it took over the WAMU appraisal function, along with Lender’s Service their quoted appraisal fees for co-op appraisals in New York were $240 yet WAMU paid $450 for a co-op report. Even at $450, it was basically a loss leader for most appraisers. The cost of living in NYC is one of the highest in the country, yet now the fee is cut in half?

Do you think the eAppraise-it co-op reports are going to be worth the paper they are written on? I highly doubt it. I haven’t heard of any local appraisers that will be working for them. I suspect e-Appraise-it is scrambling for appraisers in this market right now. Lender’s Service has done the same thing in years past. I have been called by them on a number of occasions simply trying to get appraisers here to work for them, basically for free.

Incidentally, WAMU never referred its appraiser panel to the appraisal management companies. On the surface, its very sleezy. Actually, its pretty sleezy on all levels. On second thought, they did us all a favor since I suspect that no one on their panels will work for these firms for half their previous rate.

You can argue about greater efficiencies through technology and public record all day long, but with those enhancements have come greater pressure for faster turn around times, allowing less time for consideration of the value. In other words, quality has left the building.

Lets be honest, then. Does anyone really care about the value of doing an appraisal?

You want how much for an appraisal? [Star Bulletin]


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[Sounding Bored] Lessons From Cuomo: Don’t Dust Off (Or Add) Regulations, Build A Wall

August 11, 2006 | 1:03 pm | Columns |

Sounding Bored is my semi-regular column on the state of the appraisal profession. This week go apolitical (briefly) about the lack of understanding over what appraisers are supposed to do.

Well, not literally.

I heard Andrew Cuomo speak many years ago at an Appraisal Institute chapter meeting in New York 10-15 years ago where he was discussing his innovative HELP Homes project, a nonprofit development company, Housing Enterprise for the Less Privileged where he built subsidized housing and had met with great success. His father was governor and Andrew had an impressive presence. I thought to myself, this guy is going places – he’s sharp. This was confirmed when he was appointed Assistant, then Secretary at HUD.

But it would seem to be all downhill after that. Here’s the perspective of conservatives which is not too flattering.

While he was in office, he created the Appraiser Watch Initiative which tied mortgage defaults to appraisers, as if appraisers were responsible for whether a borrower makes their mortgage payment or not. While I understand what he was trying to accomplish, (getting rid of appraisers in collusion with property owners and developers), the reality is that appraisers do not look at the credit history of the borrower as part of their valuation expertise. The initiative angered many in the appraisal profession. The disconnect between reality and government in this example was no less than amazing.

At the same time, HUD seemed to be trying to make appraisers into home inspectors.. Even more amazing.

Fast forward

Cuomo was the keynote speaker at a recent appraisal convention and seemed to say all the right things. There is a certain irony here.

I remember ranting about this HUD stuff to quite a few of my colleagues at the time as a typical example of the disconnect that exists between the purpose of the appraisal function and the constraints appraisers have to work within.

Cuomo’s handling of HUD as it relates to appraisers and the rampant fraud that came with the lack of oversight on his watch has become a campaign issue in the New York’s governor’s race. The article Integrity and Reforms v Fiasco and Embarrassment [NYO] summarizes the politcal battle nicely.

Its reminds me of the advent of appraiser licensing. It was a noble attempt to clean up the profession but a dismal failure. Everyone wants to control and regulate the appraiser.

Controlling appraisers doesn’t solve the fundamental problem.

You need to protect appraisers from the lending industry they work for and depend on. Create a wall of independence so the public is protected, by keeping the appraiser’s judgement influenced by being pressured to survive.

If you don’t keep the appraisal process pure and keep the pressure away from the appraiser, they are unable to deliver an unbiased report. Its against human nature.

The good appraisers are disappearing fast and there’s no way to regulate that.


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[on Matrix] Appraisal Inflation Is More Widespread Than You Think

July 25, 2006 | 12:01 am |

Here is an appraisal-related post on our other blog Matrix: Appraisal Inflation Is More Widespread Than You Think that discusses the issue of appraiser inflation and how many institutions are actually in on it.


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[Soapbox Cleaning] Readers Get Worked Up About AMC’s, Wamu Layoffs

July 17, 2006 | 8:29 am |

Soapbox readers provided commentary about last week’s decision to close the in-house residential appraisal department at Wamu signified the end of an era. AMC’s won because when you get right down to it, its all about short-term costs in upper management, not about long-term exposure and risk. Soapbox would like to thank today’s B-Schools for this.

Soapbox readers write:

  • I am saddened by the shift to AMC’s. It is nothing short of catastrophic that these “efficiency’ mills win because of greed and impatience. We will all pay for it in the long run.
  • Optis was there homegrown loan Origination System that they completely blew up. I believe they dumped over $1B into this system that never worked. There appraisal management system is Optis Value, not Optis. This system functions fine and actually enabled WAMU to benefit from enormous increases in processing efficiencies and staff reductions on their operations side. This fact was reiterated by WAMU executive as recently as yesterday. There is nothing wrong with there Appraisal Management System, this was purely a senior management decision to move from an in house Appraisal Department to a VMC model.
  • May its time the appraiser took a stance against the AMC’s. You know full good and well that the fees that have been paid will be cut in half or better. The AMC are acting more like an employer every day. Maybe they should be made to toe the line like an employer and the appraiser gets additional benifits. Looks like the ranch is looking better and better every day now.
  • Yes, as an independent fee appraiser I have seen most potential review assignments go to the same low price fast turn-around incompetent form fillers who write the garbage reports that are up for review. They all must have been gone the week of the 4th, because I picked up a few review assignments, with my standard fee and turn times, and I can not believe the crap some appraisers are trying to get away with now days. All three sales from another county when there are three good comparables within a few blocks of the subject; 20% to 50% price inflation instead of the 5% to 10% that we are all used to seeing; and reports without ANY comments!

We even had someone who felt AMC’s were the only way to order a USPAP compliant appraisal because it eliminates the everyday pressures applied by mortgage brokers. You gotta think the reader’s heart was in the right place.

  • AMC’S are the only entities that contract out for unbiased appraisals – in other words they are the only entities that order USPAP compliant appraisals. Our office has a swinging door for standard mortgage companies that order appraisals because they only order until the first one does not hit value, then they go somewhere else. In my review work, only about half reflects good work, the rest are just trying to keep their clients. I hate AMC’s, but it is the price I pay for being honest.
  • You make an interesting point and I think your heart is in the right place but I disagree with the intentions of AMC’s. AMC’s don’t order appraisals based on making the deal like the mortgage brokers are often accused of. However, the fees are so low, that for the most part, and no offense, but their appraisal panels are the bottom of the barrel. Does the lender get a better understanding of the collateral? No. AMC appraisers quite often rely on all their comps from the broker involved in the sale who has a vested interest in the outcome. In other words, the order AMC process may be not as biased toward the outcome, but the mechanics of the appraisal certainly are and the outcome is the same.


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