Florida Senate - Second Bill Introduced to Regulate Appraisal Management Companies

Back in November we were excited to announce Representative Matt Hudson's introduction of HB 303, Regulation of Real Estate Appraisers & Appraisal Management Companies. In the first week of February, we posted about S1552 - Appraisers & Appraisal Management Companies, filed by Senator Mike Fasano.

Today, we can report a SECOND bill to regulate Appraisal Management Companies has been filed in the Florida Senate!

On February 18, 2010, Senator Lee Constantine filed S2210 - Appraisers and Appraisal Management Companies.

Requires the Florida Real Estate Appraisal Board to adopt certain rules. Requires application, registration, and renewal fees for appraisal management companies. Requires such companies to register with the DBPR. Requires nonresident appraisal management companies to consent to commencement of actions in this state. Establishes additional acts for which appraisers are subject to disciplinary action, etc. EFFECTIVE DATE: 07/01/2010.

Read the whole thing.

How about sending an email or fax to Senator Constantine to let him know of your appreciation. Either that or give his office a phone call to let him know how important this bill is for the appraisal profession, the real estate market and consumer protection in Florida.

Senator Constantine has been a great friend of Florida Real Estate Appraisers. He sponsored both of the most recent bills to amend Chapter 475 Part II (2003 and 2006). Both were passed and signed into law.

Here's the contact information:

District Office:

378 Centerpointe Circle, Suite 1268
Altamonte Springs, FL 32701-3442
(407) 331-9675

Tallahassee Office:

418 Senate Office Building
404 South Monroe Street
Tallahassee, FL 32399-1100
Phone (850) 487-5050

Wells Fargo Visits Appraiser Active!

To tell the truth, Wells Fargo did not drop by my office, but folks from Wells Fargo have been visiting the Appraiser Active site.

There are a few tools used to help me determine the level of activity on Appraiser Active. In addition to lijit and Google Analytics, sitemeter provides quite a bit of information. Not only does it keep a running total of visits to the site and page views, it lets me know the service provider and what keywords are used by folks to get to this site.

Given all the interest in the Wells Fargo RVS Desktop Appraisal and their heavy handedness in dealing with questions about an appraiser's ability to comply with mandatory appraisal standards when accepting a Wells Fargo "opportunity" to participate in the exciting new program, it was amusing to learn what keywords are used when Wells Fargo employees land here on Appraiser Active.

Reactions to Wells Fargo RVS Desktop Appraisal Announcement

UPDATE!! - The North Carolina Appraisal Board Weighs In ON RVS Desktop Appraisal Announcement - Scroll to bottom for full text.

In response to the nasty-gram emailed to me by the fine folks at Wachovia, this email was sent their way:

Mr. Ramirez,

Thank you for your message and expression of concerns.

You may wish to know the post you found to be offensive has been modified. Instead of the Wachovia email, I reference an email from another person/entity with essentially the same information. That email DID NOT come from Wachovia.

Of concern is the fact you did not take issue with any of the points made in my post on Appraiser Active. Instead, your preference was to avoid disclosure, openness and discussion.

This “product” referenced in the email sent to appraisers from coast to coast has been discussed and debated extensively among appraisers, state regulators, AQB Certified USPAP Instructors, past members of the Appraisal Standards Board and users of appraisal services over the past few days. The consensus is that there are serious problems with the terms of the offering by Wachovia.

• It is undeniably a contingent fee arrangement.
• The contingent fee arrangement does not comply with USPAP.
• The contingent fee arrangement does not comply with Florida law.
• Appraisers may be in violation of the Scope of Work Rule by accepting the assignment conditions dictated by the Client.
  
  In the event you would like to discuss these issues or make a statement with respect to making corrections or modifications, I would certainly be interested. State regulatory agencies from Florida to Washington State would be interested as well.
  
  In the meantime, I wish you well.
  
  Respectfully,
  
  Frank
  Francois (Frank) K. Gregoire IFA RAA
  Gregoire & Gregoire, Inc.
  Realtor - Appraiser
  
  P.S. Several folks with an interest in the outcome have been blind copied on this email.

Among the "several folks with an interest in the outcome" were a selection of Administrators, Members and Attorneys representing State Appraiser Regulatory Agencies from one end of the country to the other. My email, along with links to the Appraiser Active and Matrix blog posts, were forwarded to others in their regulatory agency network. Needless to say, the Appraiser Regulatory Agency group is concerned.

Here are a few comments. The names and states have been redacted because these are not yet "official" positions.

A letter from XXXXX could be directed to the Comptroller's office describing how such practices are contrary to their need for ethical, competent appraisers to provide appraisals for collateral decisions. Wells Fargo wants to engage an appraiser, but they only pay for the appraisal is the appraiser is able to report certain predetermined results (e.g. at least two comps in the last 120 days, at least 2 comps within 1 mile, all comps must be listed in MLS, etc.). The problem, of course, is that such fee arrangements are prohibited by USPAP because they inspire unethical behavior by the appraiser.

Since we are all appraisal regulatory agencies, we are bound to process the complaints that inevitably will result from such a business practice. If the appraisers agree to those assignment conditions, they have already violated USPAP. Whether it was Wells Fargo's idea is a moot point as far as our Board. If your friend recommends you break the speed limit, and you do it, you are going to get the speeding ticket, not them.
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I do not think XXXX should take an advocacy position on behalf of real estate appraisers; however, an advisory letter to the Comptrollers office on the above USPAP requirement, wouldn't be overreaching our mission statement, I think.
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My opinion is what Wells Fargo is attempting to do with it's desktop program, requesting a "hit" or "no hit" is a blatant attempt for appraisers to accept assignments based on pre-determined results.
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As most of you know I don't "weigh in" on most things, I sit back and observe what others are saying and doing. This group has, over the past 10 years provided me with a tremendous amount of very good advice and "food for thought" and for that I am very grateful. We have seen both good and bad times in this industry. I realize that our industry is constantly changing and evolving, some change is good and some is bad.

This current issue is bad. I only have two questions for now; 1. What are we as a group going to do about it or can we even do anything about it? 2. When the complaints start coming in (and they will) do we just accept it or do we hand it back to Wells etal and tell them that we, "Can't cure stupid"?
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After 4 years of college, 3 years of experience and years of learning, we now have the opportunity to earn $25.50 per day that won't even cover most of the fees that are required to maintain the data services that are required to complete this "product." Is this a hoax? Did they leave off the first number? A BPO is better than this. No wonder the banks have needed bail outs. This is the most insulting and incredulous thing I've seen yet.
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What a mess! Hard to be it could reach such a low. Seems like they will not be happy until they can have the value before the appraisal is completed!
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You go Frank! We are meeting today to finalize our position on this product and hope to send an email blast to our licensees shortly.
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The XXXXX Board may issue an official advisory opinion regarding this product that will address the contingent fee arrangement and advise licensees of the board’s position.

Interestingly enough, there has been no response from the fine folks at Wachovia and no defense of their "product".

From the North Carolina Appraisal Board

GUIDANCE CONCERNING DESKTOP APPRAISAL ORDERS


A new desktop appraisal product was released in February 2010. The Appraisal Board has received numerous telephone calls and emails about this product and others that are similar. Although the Board does not approve or prohibit specific forms or software used to deliver appraisal results, the Board does have several concerns about this type of assignment.


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CLICK to Read More

WHAT ABOUT THAT WELLS FARGO RVS DESKTOP APPRAISAL?

UPDATE!! - APPRAISER ACTIVE receives NASTYGRAM from Wachovia!

UPDATE #2 - JONATHAN MILLER weighs in - Will Wachovia send a NASTYGRAM his way?

This post has been modified in response to the email received yesterday (February 15, 2010) from the friendly, helpful folks at Wachovia.

This is the message sent to me by Wachovia.

Greetings,

Recently the following posts were added to your forum, the links of which are included below:

http://appraiseractive.blogspot.com/2010/02/what-about-that-wells-fargo-rvs-desktop.html

The posts include information that is confidential, proprietary, and intended only for the use of the owner of the e-mail address listed as the recipient of the original message. The posts did not include the email disclaimer originally included and is shown below for your review:

The information contained in this electronic message is confidential, proprietary, and intended only for the use of the owner of the e-mail address listed as the recipient of this message. If you are not the intended recipient, or the employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, dissemination, distribution, copying of this communication, or unauthorized use is strictly prohibited and subject to prosecution to the fullest extent of the law. If you are not the intended recipient, please delete this electronic message and DO NOT ACT UPON, FORWARD, COPY OR OTHERWISE DISSEMINATE IT OR ITS CONTENTS.

Please remove any and all posts that include the information of this email in whole or in part, as this is a violation of its intended use.

Please advise me if legal recourse is necessary to have these posts removed from your website.

Thank you,

Jose J. Ramirez

Web Developer III

Residential Valuation Services

Telephone (210)543-5921

Fax (210)543-3128

Mail Code T7400-01E

Email jose.j.ramirez@wachovia.com

Well!

In response, here is the modified post:

Appraisers across the county found a communication in their email inbox from a firm affilliated in some way with Wachovia with an announcement for an exciting new opportunity.

YAY!!!!

What did the communication say?

It described the merger/acquisition of Wachovia by Wells Fargo and the resulting creation of two appraisal groups within Wachovia Settlement Services. These are Wachovia Settlement Services (WSS) and Residential Valuation Services (RVS). These two groups apparently share resources and will continue on that path.

The communication (which, by the way, DID NOT come to me from Wachovia) goes on to describe a new "product" to be used for loan servicing ad default appraisal needs for divisions of Wells Fargo.

The new "product" is the Wells Fargo RVS Desktop Appraisal. Included was a link to a PDF with instructions and guidance for:

• Compensation
• Appraisal Requirements
• Instructions for completing the "product"
• How to submit your name and be awarded contingent fee assignments for this exciting "product"

These folks also announce that appraisal requests would start on Saturday, February 13th. SATURDAY!! What's up with these folks?

Included in the correspondence was LINK to THIS "NIFTY" GUIDE.

---------------------------------------------------------

It's yours to decide if you would like to accept an assignment from an outfit that cannot spell "APPRAISER".

It's yours to decide if accepting assignments that pay $55.00 (net $51.00) is part of the business plan you have adopted.

It's yours to decide if you believe it's safe to upload a jpg of your signature to such a reputable company.

Compliance with USPAP, however, is not a choice for the appraiser.

For starters, let's take a look at just one small problem with this offer; it's a contingent fee arrangement.

Fees (Compensation), Charges, and Service Level Agreement (SLA)

1. The fee (compensation) paid for completing this product is $55.

2. There is an AppraisalPort charge to you of $4 for each assignment completed and returned with a value.

3. There will be no fee paid for a “No-Hit”, and no charge to you for returning a "No-Hit” through AppraisalPort. (Note: This product has a “No-Hit” component which means that either it is an ineligible property type or you were unable to develop a credible value. The compensation of $55 takes into consideration that you will from time to time have a “No-Hit”. For more on “No-Hits”, see the report instructions on page 6.)

4. There will be no additional charges to you for using Data Express provided that you are only accessing the RVS Desktop Form and Location Map features. Using any other features (plat map, comps search, etc.) will result in additional charges (refer to published pricing plan in Data Express). RVS and WSS are not responsible for any additional charges that you incur completing these assignments.

5. The Service Level Agreement (or turnaround time) is two (2) days.

6. All of these reports will be reviewed by the RVS Quality Control Department and reports returned to you for correction must be resubmitted within 24 hours.

For those of you certified in Florida, it might be wise to take a look at Chapter 475, Part II, particularly 475.624 (17):

(17) Has accepted an appraisal assignment if the employment itself is contingent upon the appraiser reporting a predetermined result, analysis, or opinion, or if the fee to be paid for the performance of the appraisal assignment is contingent upon the opinion, conclusion, or valuation reached upon the consequences resulting from the appraisal assignment.

That's it for now. If time permits, we might get around to noting some other problems with this offer. In the meantime, it's your decision.

Quantrix LLC (First American) - INSANITY

Only 4 days ago, Appraise Active posted about the priority of PROFIT as JOB 1 for Quantrix. Second on their priority list is turnaround time (TAT).

Today, February 8, 2010, Quantrix turns up the heat and demonstrates their complete lack of commitment to quality.

Here's an email sent to their panel appraisers:

TO: Quantrix Valuation Chase Appraisers
FROM: Quantrix Valuation Panel Management
DATE: February 8, 2010
RE: Automated Telephone Order Notification

Starting Friday, February 12, 2010, Quantrix Valuation is providing a new opportunity to accept Chase orders via telephone.

Appraiser Receives Phone Call from Quantrix Valuation

Auto Call will notify Appraiser that there is an order available and will provide:

• Product
• Property Address
• Appraiser Fee
• Appointment Date and Time

Auto Call will ask if Appraiser ACCEPTS or DECLINES the order

If the call is not answered or the call is dropped or disconnected, Auto Call will roll to next Appraiser – THERE WILL BE NO OPPORTUNITY TO RECOVER THE ORDER

To ACCEPT order, Say “YES”

Borrower’s First and Last Name is provided as well as spelled out Order information is also included in the Assignment Notification email like all other orders

Appointment Date and Time is included in Auto Call and in the Special Instructions in the Quantrix Order form Appraiser is transferred directly to the Borrower’s phone to confirm Appointment Date and Time If Borrower or voicemail do not pick up, the call will be dropped and Appraiser must follow up with borrower to confirm Appointment Date and Time

If the call is dropped or disconnects AFTER the order is Accepted, or if the automated system is unable to reach the Borrower, Order and Borrower information may be obtained at www.QuantrixVendorServices.com.

To DECLINE order, Say “NO” Auto Call disconnects Order will be offered to next Appraiser

THERE WILL BE NO OPPORTUNITY TO RECOVER THE ORDER

Please contact 866-284-2189, option 1, then option 2 and option 1 again if you have any questions.

*Calls may be recorded to help improve quality and service

I wonder if the 'order' includes a requirement to deliver a pizza too!

It's a good thing Appraiser Active and Gregoire & Gregoire, Inc. is not on that list. We might get the same folks knocking on our door as that fella in New York that threatened the AG!

I'm hoping those recorded calls will be retained for a long time and offered on a CD for entertainment purposes too.

FLORIDA - Regulate Appraisal Management Companies NOW

The Florida Real Estate Appraisal Board (FREAB) has been concerned for years about the influence of Appraisal Management Companies on Appraisers. In the interest of of protecting the public and ensuring pubic trust in the Real Estate Appraisal Profession, the FREAB has sought and supported legislation in 2003 and 2006 to assure the public the appraiser has the necessary knowledge and experience to perform the appraisal assignment competently. The efforts have avoided the regulation of companies and concentrated on enhancing the qualifications and abilities of individuals.

Because the world has changed, individuals within companies are gaming the system and influencing appraisers. Knowledge, experience, competency and quality are NOT a priority for these companies and individuals. Their priority is COST and Turnaround Time. There is plenty of evidence of potential and actual harm to the public. It's time to regulate Appraisal Management Companies. Remember, it was the unethical and illegal activity of an Appraisal Management Company that prompted the investigation and complaint by the Attorney General in New York.

Page 9, Paragraph 24. "Despite their claims of independence from their lender clients, First American and eAppraiseIT violate federal and state independence requirements with regard to appraisals performed for WaMu, and in doing so deceive borrowers and investors who rely on their proclaimed independence.

Page 11, Paragraph 29. "Almost immediately after WaMu retained eAppraiseIT to provide appraisals in early Summer 2006, WaMu’s loan production staff began complaining that the appraisal values provided by eAppraiseIT’s appraisers were too low. It was clear, and eAppraiseIT well understood, that WaMu’s dissatisfaction was largely due to the fact that eAppraiseIT’s staff and fee appraisers were not "hitting value,” that is, were appraising homes at a value too low to permit loans to close.

Page 13, Paragraph 37. "In February 2007, WaMu directed eAppraiseIT to stop using its usual panels of staff and fee appraisers to perform WaMu appraisals. Instead, WaMu’s loan origination staff demanded that eAppraiseIT use a Proven Panel of appraisers selected by the loan origination staff, who were chosen because they provided high values.

Appraiser Active has posted several times in the past year about the efforts to regulate Appraisal Management Companies.

January 26, 2009

February 25, 2009

April 13, 2009

May 15, 2009

May 19, 2009

October 8, 2009

November 4, 2009

January 17, 2010

February 2, 2010

Today, another story illustrating the danger to the public appears in the St. Petersburg Times. The poster child of Appraisal Management Company insanity makes another appearance.

Recent appraisal rules open door to shady middlemen

By Susan Taylor Martin, Times Senior Correspondent
In Print: Sunday, February 7, 2010

Last year, Global Appraisal Solutions of Clearwater hired appraiser John Viscusi to do property evaluations in the New York metro area.

But Viscusi says the company failed to pay him for 20 appraisals. And when he tried to contact the owner, Larry Holzer, he got no response.

Then Viscusi made an unsettling discovery. An Internet search for Global immediately linked him to another company, Appraisal Mediation Solutions. Its phone number: The same as Larry Holzer's. Its address: a UPS store in Clearwater close to Holzer's condo.

---

In 2007, Florida regulators permanently revoked Holzer's appraisal license because he had approved an error-filled appraisal done by a trainee under his supervision. The report didn't even have photos of the correct house.

The revocation barred Holzer himself from appraising property in Florida. But it didn't keep him from starting an appraisal management company, Global Appraisal Solutions, that could do business in Florida and every other state.

Read the whole thing.

Folks, there are bills in the Florida House and Senate to regulate Appraisal Management Companies that have been filed by Representative Matt Hudson and Senator Mike Fasano. Let these two know you support the effort and contact your State Senator or Representative and urge them to protect the public from unscrupulous individuals and companies.

Quantrix LLC (First American) - Quality is Priority 3?

According to a pdf flyer, "Quantrix LLC was founded by First American and JPMorgan Chase Bank in 2000 as a privately-owned joint venture. JPMorgan Chase is the largest financial institution by deposit base in the US and First American is the nation’s largest real estate data provider." Although it appears to be a promotional piece for valuation services, the main selling point appears to be this closing statement:

Quantrix provides world class customer service and will deliver your appraisals with turn times consistently higher than the competition.

Hmmm.....

Well, that's just a flyer, and it doesn't disclose much about the company, their motivations, or their priorities. Maybe, if we take a look at a recent job posting, we can make a determination about their prioritization related to providing valuation services. How do they rank quality, price, turn around time? Is it true, as stated in a guest post on Jonathan Miller's Matrix that "AMC’s shop around for the lowest appraisal fees that frequently end up on the desks of appraisers who are geographically distant from the subject property’s market, are not fully familiar with the local market and thus present sales that are not directly relevant", or do they present different priorities in practice?

Read the job posting for an Appraisal Coordinator. The priorities are clear in thse excerpts.

Processing Analysts are responsible for the timely and accurate placement of all Conventional and FHA orders within 24 hours of their receipt. Proper placement is ensured by the PA’s analysis of the appraisers available and selection of one that meets the company standard turnaround time, profitability requirements, and quality standards. Complete and concise documentation, as well as clear communication to all parties, is required on all files.

ESSENTIAL FUNCTIONS:

• Placing orders. Focusing on rushes, orders on Hold, Finals and orders over 48 hours old first. Order Placement standards are as follows: Conventional - Placed with in 2 hours of activation, FHA – Placed with in 4 business hours, Declines – Reassigned same day, and Holds – Followed up on daily until resolved. The goal is to have 92% of all orders placed with in 24 hours. Each PA will be responsible for calling on any non accepted orders within their area along with placement of new orders.

• Assuring vendor acceptance of the Quantrix Valuation standard turn around time of 5 business days.

• If an appraiser requests a higher fee or longer tat, the PA is expected to get a minimum of 2 other quotes (for a total of 3) in order to determine the best appraiser option for each order

• After eliminating all reasonable options in VOM (by checking previous orders in the subject area and checking the vendor coverage detail report) a One Time Vendor can be used, check http://www.yahoo.com/ or the other web-sites given.

• Shorten turn around times by establishing a good flow of communication with our appraisers, keeping in contact with both the appraiser and lender to accomplish this goal.

• Holds – When the reason a hold was requested is out of the appraiser’s control, place the order on hold and contact the client to update them and-or request needed information.

• Fees – Products have a standard flat fee regardless of what state the property is located in on all properties up to 1 million dollar or 1.5 million dollars dependent on nusiness line. For this reason it is important for PAs to attempt to place the order to an appraiser with the lowest fee to maintain our profitability. On orders over 1 million dollars the PA is to obtain 3 fee quotes from 3 different offices before assigning the order. In situations where we must use a one time vendor or fee appraiser the PA will need to check as many options as possible to obtain the lowest fee.

Quality? It's priority 3!

Florida Senate - Bill Introduced to Regulate Appraisal Management Companies

Back in November we were excited to announce Representative Matt Hudson's introduction of HB 303, Regulation of Real Estate Appraisers & Appraisal Management Companies.

Today we can report a companion, S1552 - Appraisers & Appraisal Management Companies, has been filed by Senator Mike Fasano.

Appraisers & Appraisal Management Companies; Requires the Florida Real Estate Appraisal Board to adopt certain rules. Requires application, registration, and renewal fees for appraisal management companies. Requires such companies to register with the DBPR. Requires the fingerprinting and criminal history records checks of, and provides qualifications for, certain persons who control appraisal management companies, etc. EFFECTIVE DATE: 07/01/2010.

Read the whole thing.

How about sending an email or fax to Senator Fasano to show your appreciation. Either that or give his office a phone call to let him know how important this bill is for the appraisal profession, the real estate market and consumer protection in Florida.

Here's the contact information:

District Office

8217 Massachusetts Avenue

New Port Richey, FL 34653-3111

Phone (727) 848-5885

(727) 841-4453

Tallahassee Office

404 Senate Office Building

404 South Monroe Street

Tallahassee, FL 32399-1100

Phone (850) 487-5062

fasano.mike.web@flsenate.gov