The Florida Legislature passed a record low number of bills this past session. Like many states, their time was consumed with trying to balance a budget in tough economic times. The bill to regulate appraisal management companies (AMCs) was not considered. However, the team of appraisers, professional associations and the Florida Real Estate Appraisal Board is lining up support and legislators for the 2010 Legislative session.
Unlike some of my appraisal brethren, I believe AMCs provide a service and are legitimate businesses. AMCs existed long before the federally-mandated licensing, certification and regulation of real estate appraisers. Quite a few lenders opted to utilize the services of AMCs and a couple of AMCs offered quite a bit of assistance to get appraisers and appraisal firms up to speed with appraisal software and office management.
My own firm, Gregoire & Gregoire, Inc., received complimentary appraisal forms software from one of the early AMCs. Although my firm was already using computers for appraisal reporting and some analysis, the software enabled us to move from a mini-computer to personal computers and enabled us to update to revised forms more quickly. Gregoire & Gregoire, Inc. enjoyed a mutually beneficial relationship with that AMC for over a decade.
Thursday, May 28, 2009
Thursday, May 21, 2009
Now it's time to get to work and finish up some appraisal reports. I plan to update with my pick(s) later, but welcome your comments.
Wednesday, May 20, 2009
This morning, he has an interesting take on Appraisal Management Companies, the HVCC, Appraisal Regulation and more.
There's not much I can add, except to offer a different picture to illustrate his headline.
Tuesday, May 19, 2009
UPDATED - May 23, 2009 (scroll to bottom)
From the National Association of REALTORS Appraisal Insight blog:
On Saturday, May 16, 2009, the NAR Board of Directors adopted policy that supports the regulation of appraisal management companies, primarily through FIRREA and the existing appraisal regulatory infrastructure. NAR President Charles McMillan hinted at such a policy in March when he testified before the House Financial Services Subcommittee on appraiser independence.
NAR's Rationale: Appraisal management companies are not currently regulated at the federal level and regulation at the state level varies. Regulation would ensure that AMCs operate within the same basic guidelines and standards as independent appraisers. Further, this allows AMCs to be regulated within the existing appraisal regulatory structure, which avoids the need to create additional layers of government bureaucracy.
As a producing manager of a mortgage bank who is using an AMC...I could scream. I don't have issue with HVCC. For way too long loan officer and realtor alike have had too much influence over the process which have removed the value of a "disinterested" third party. Secondly appraisers have been allowed to be sloppy and lazy with there work and banks have accepted it with no recourse. I recently received a 1004 appraisal for a refinance that was done by the same appraisal company that did the purchase and the appraiser never even went to the house. They used the interior photos from the purchase. Guess what this is not and isolated case. I just happened to catch this one because I had been in the home the week before and I noticed the paint color wasn't right in the appraisal photos. We regularly get told the appraiser never showed up or was only here for 10 minutes
Look...I hate...HATE AMCs. As a lender I would rather see a black hole system for conventioal and FHA like we have been using for years with VA. At least the appraisers are getting paid and we know it works 95% of the time without issues.
Friday, May 15, 2009
By Susan Taylor Martin, Times Senior Correspondent
In Print: Sunday, May 17, 2009
Two years ago, Florida regulators permanently revoked the license of Clearwater appraiser Larry Holzer because he had approved a home appraisal that contained glaring errors:
It said the house was on an asphalt road when it was really on a dirt road. It said the house had public water and sewer when in fact it had a well and septic tank. It said the property was in an area 75 percent developed, not the actual 25 to 50 percent.
The license revocation barred Holzer from appraising property in Florida. But it hasn't kept him out of the appraisal business.
Last year, Holzer started Global Appraisal Solutions, one of a growing number of "appraisal management companies'' that hire appraisers to determine market values. Though the appraisers are licensed, the management companies are totally unregulated. And they are at the heart of a controversy over a new federal policy that critics say is costing borrowers more money and resulting in rushed, poor-quality appraisals that can thwart home sales as the market struggles to recover.
Critics say the problems with management companies are epitomized by firms like Global Appraisal Solutions and its founder, Holzer.
Holzer, 41, ran afoul of state regulators for inadequately supervising a trainee who had done a flawed appraisal in 2003 on a $250,000 Lake County house. Full of errors, the report didn't even have photos of the right house.
In an affidavit, Holzer claimed it was an isolated incident that occurred at a time he was "impaired'' because of treatment for depression following a divorce. Nonetheless, he surrendered his license, which was permanently revoked in 2007. The trainee and other employees under Holzer's supervision also lost their licenses.
A veteran Illinois appraiser, Don Martin, says he refused an assignment from Global Appraisal Solutions because he felt Holzer was pressuring him to come up with a certain valuation on a house — something the new code of conduct was specifically designed to prevent.
"They asked me to call them if the value wasn't going to be there,'' said Martin, who spoke with Holzer by phone. "In my opinion he is shopping for an appraiser that will make his client happy. It's because of appraisers like he was that we now have the code of conduct.''
Anonymous from Tampa -
I am one of the trainees that worked for Larry between 2001-2003. During that tme he INSTRUCTED us how to be "shady" when we valued property. Fortunately, I was fully trained by a reputable firm in Seminole and continued on to start my firm.
New appraisal rules costing more for mortgages, refinancing
WASHINGTON — How about this scenario the next time you refinance or apply for a new mortgage: The real estate appraisal that used to cost $325 now costs $450, even though the appraiser doing the work is only getting $175 or $200.
Plus, your appraisal-related charges may now be subject to add-on fees you have never heard of: $50 to $100 in "no show" penalties if you get stuck in traffic and miss your appointment with the appraiser, or an extra $50 to $150 tacked on if the property is worth more than $500,000.
Worse yet, the person now conducting your appraisal may be new to the field — willing to work for a cut-rate fee — and may not be as familiar with local value trends and pricing adjustments as an appraiser with more experience. If your mortgage application is denied by one lender, you could be forced to pay for a second full appraisal since the new lender may not accept the first.
After signing up with one management company, he (an appraiser) says two consumers commented to him, "Wow, you really charge a lot."
They were each being hit with $550 appraisal fees, while Facchini was getting just $250 from the management company. As he sees it, that leaves $300 of "slush" somewhere in the process — some going to the management company, but the rest probably "flowing to the lender for doing absolutely nothing."
Lenders, instead of contacting appraisers directly, now must deal with nationally approved firms. Crowley says: "An appraisal was supposed to be done in Tampa. It was sent to a person in Panama City. We had an appraisal in Parrish and a Miami appraiser was assigned to that."
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and Miami is 246 miles from Parrish!
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Wednesday, May 13, 2009
Their meetings are open. The next is Friday, May 15, 2009 near the Orlando Airport. The cost is only $50.00 and that includes lunch. There is a great lineup of speakers and topics.
Friday, May 8, 2009
Wednesday, May 6, 2009
Today, there was a change:
Maybe we're just easily amused or suffering from HVCC overload.
I also meant to post a link to the Jonathan Miller podcast, Home Valuation Code of Conduct: Y2K of Appraising? It turns out that Jonathan is the source of the great quote at the bottom of this post.
They meant for the acronym HVCC to be pronounced "havoc" right?
Tuesday, May 5, 2009
Today is the official start of a new policy at Fannie Mae and Freddie Mac, to only buy loans that were appraised under the Home Valuation Code of Conduct. The HVCC was the outgrowth of a lawsuit filed by New York Sate Attorney General Andrew Cuomo against Washington Mutual and was designed to “improve the reliability of home appraisals,” according to FHFA, Fannie and Freddie’s regulator.
“Yesterday, Thursday, appraisers may have had 50 or 60 clients that they could deal with, so if they were getting undue pressure from somebody they could just tell that client no, I'm not doing any more work for you,” says Jim Amorin, of the Appraisal Institute. “Today the number of players in the field have been drastically reduced to generally these appraisal management companies, so the pressure that's going to be brought to bear on appraisers we fear is going to be as strong if not stronger than it was before, the whole thing the code of conduct was trying to address.”
But the biggest issue is something Dana, a mortgage broker, cites in a blast to the RealtyCheck:
Based on Attorney General Cuomo’s website, the appraisal fraud in the mortgage industry was due to the practices used by some of the country’s largest banks pressuring appraisers to artificially inflate the value of homes.
Why is it that some of the largest banks in the country are allowed to have partial ownership in the Appraisal Management Companies ?? Isn’t this once again the fox watching the hen house??
Read the entire ARTICLE