Wishing you all the best for this Holiday Season from the Sunshine City in the Sunshine State.
61J1-7.0065 Signatures on Appraisal Report and Certification.It might be wise to keep this rule in mind and ready for quick reference when some folks (like those mentioned in THIS post) attempt to require you to upload a copy of your digital signature.
(1) Each appraiser signing a certification of an appraisal report must sign the certification with the name that the licensee has registered with the Department. A signature may be represented by a handwritten mark or a digitized image controlled by a personal identification number, password, or other security feature. A facsimile signature may be either affixed by hand or electronically by computer software. An appraiser shall at all times maintain direct control of the appraiser’s signature.
(2) An appraiser shall develop and maintain a written method by which his or her signature shall be affixed, for its security protection and the prohibition of practices that might discredit its use.
(3) An appraiser shall not grant blanket authority to another to affix the appraiser’s signature to an appraisal report or other work performed by the appraiser. Any grant of permission to another to affix an appraiser’s signature to an appraisal report or other work performed by the appraiser shall meet the following requirements:
(a) Be in writing;
(b) Extend only to one specific appraisal report; and
(c) Be maintained in the appraiser’s work file.
Rulemaking Authority 475.614 FS. Law Implemented 475.613(2), 475.614 FS. History–New 12-4-06, Amended 12-20-11.
"It is not an inequitable limitation on membership for a Board of REALTORS® to require that applicants for REALTOR® Membership who are principals in a real estate firm must maintain a real estate broker's or salesperson's license or must be licensed or certified by an appropriate state regulatory agency to engage in the appraisal of real property."
Over the past decade the global credit boom ultimately forced most experienced appraisers to choose between feeding their families or changing their business models and even their careers. The refrain “always hit the number” would get you more work. After the credit crunch, the refrain was modified to “occasionally hit the number” and you get more work. The sheer critical mass of the moral flexibility of many in our profession during the go-go credit era nurtured a whole new class of appraiser: the form filler that dominates the profession to this day. They work well with the gum-chewing 19-year-old appraisal processors who call every day on the status of an assignment, having no idea what an appraiser actually does and only cares when the report will be delivered.and...
Following the credit crunch, the valuation bias is now in the opposite direction. In fact many of the morally flexible appraisers that were biased toward higher valuations for mortgage brokers during the boom, are the same appraisers biased toward lower valuations for appraisal management companies the in post-boom world. These appraisers are rewarded for performing high-volume work at low fees and conservative values. And these values aren’t just low by a few percentage points. We have observed values from a nationally well-known appraisal management company as much as 50 percent below current market value for a property with multiple bidders, largely because the appraisers they use have no local market knowledge.and....
Since the beginning of my career, I’ve always held out hope that most of my clients actually wanted me to provide “the number” that represented market value. Some clearly did.Great work, Jonathan!
I’ve found the concept of neutral valuation to be intoxicating and powerful in my business. As a result of shifting our practice toward clients that actually want to know “the number,” we have remained at our most profitable level in our 25-year history.
Fire your retail banking clients and stop burning calories for clients that don’t want your expertise and will only pay for a form filler. If you don’t they are going to fire you eventually and your practice will die a slow death.
It is better to serve and expand on clients that actually want to know what “the number” really is. You’ll be surprised at how your quality of life improves and how much more business you are able to get.
When the final chapter on this housing crisis is written, I hope that I am still around to see those who were responsible for its cause and the feeble attempts to fix it held responsible.The author, Richard Booth, fails to point out the HVCC was negated by Dodd-Frank, but let's face it, the replacement has the same effect on appraisers and consumers.
One of the worst fixes is the Home Valuation Code of Conduct. Enacted in 2009, HVCC was spearheaded by then New York Attorney General Andrew Cuomo. His objective was to rein in appraisal abuses by the lenders sending loans to Fannie Mae or Freddie Mac.
Today many of these AMCs are directly or partially owned by mortgage wholesalers and large national banks. They hide behind the firewall of an independent company, but if they own that company, either in whole or a piece, who are they kidding?
Imagine needing a medical doctor and having to go through an intermediary who will decide which doctor you may visit, and that doctor is chosen primarily on his fee charged, not expertise.
Consumers are paying more for residential appraisals. The appraisers who are doing the work are receiving a fraction of what they once earned. Unfortunately this structure has chased away many good appraisers who are unwilling to do more work for much less money
Since the HVCC was enacted I have seen a steady decline in the quality of residential appraisal reports. I have witnessed appraisers who are traveling from out-of-state and without any basic knowledge of the subject community. Understanding the area in which you have accepted an assignment is a basic rule of appraising.Appraisers are under pressure from their new bosses at the AMCs. An extremely knowledgeable appraiser confided in me that he is forced to produce more comparables within a specific time period, judge the future value of a home in a declining market and most recently provide aerial photographs for the subject property.
Read the entire article HERE.
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5. The clauses negatively affect the quality of an AMC's appraiser panel. All things being equal, a rational lender should have less interest in retaining an AMC that uses an unreasonable vendor agreement. I believe that unreasonable contract language results in an overall lowering of the quality of an AMC's appraiser panel because, on average, fewer appraisers who are better trained, economically stable, and careful about reading legal verbiage choose to work for AMCs with the worst agreements.Head on over to the Appraiser Law blog to read the full post. Spread the word!
7. The bottom line. Perhaps the bottom line is that a $200-$400 appraisal can't and shouldn’t be relied on to guaranty repayment of a $1 million loan if someone later deems the appraisal “faulty.” Every appraiser performing valuations will have appraisals that can be deemed "faulty." Good appraisers should be selected and used because they are trusted as competent, reliable and honest and render opinions of value that are on average accurate and reliable and within a range of acceptable errors. They should not be employed as financial guarantors of value -- unless AMCs or lenders are willing to pay for the price of shifting that risk.
Appraisers provide an independent and impartial analysis of the market, and acredible opinion of the value of real property. This analysis is a critical component of the mortgage transaction and, in recent months, has become thesubject of unnecessary pressure. The mounting use of indemnification clauses by AMCs may be interfering with the appraiser’s independence and objectivity. In many cases, appraisers are asked to sign contracts that include language to indemnify and hold harmless the AMC against any suit, threat, or claim on any work product or service provided as part of the contract agreement. In some instances, the appraiser is even required to indemnify the lender and the AMC for amounts equal to their costs in repurchasing a mortgage loan, regardless of any proof of culpability on the part of the appraiser.Let's see if these government agencies respond to the challenge.
"LSI’s agreement itself is only three pages and does not contain many of the unreasonable provisions found in other AMC contractor agreements. However, like most AMC agreements, it does contain an indemnification provision. While the indemnification clause is not as extreme as found in some other AMC agreements, the provision in LSI’s agreement is still. . ."
"Also, we do have concerns stemming from the FDIC’s civil complaint for negligence and breach contract against LSI Appraisal relating to appraisals performed for WaMu in 2006-2008. The FDIC has specifically alleged in that case that appraisals supplied by LSI from approximately 200 of its panel appraisers were deficient and has suggested that many additional appraisals beyond the ones specifically identified may become part of the lawsuit. We will update our appraisers here on readimember.org if we begin to see LSI attempt to shift liability to individual appraisers in that case."
In contrast with appraisals, BPOs do not have standard requirements and are generally not considered a credible valuation method for mortgage originations. According to some mortgage industry participants, a key disadvantage of BPOs is that real estate brokers and agents who perform them are not required to obtain training or professional credentials in property valuation, and the BPO industry lacks uniform standards. At least one industry group has developed standards of practice for BPOs, which are reportedly used by some BPO providers, but adherence to these standards is voluntary. Similarly, the industry has not adopted standardized BPO forms, resulting in differences in the content and quality of BPO reports, according to some mortgage industry participants. Additionally, BPOs provide somewhat different information than appraisals—a sales price or listing price rather than the property’s market value. The enterprises do not permit lenders to use BPOs for mortgage originations, and guidelines from federal banking regulators state that BPOs do not meet the standards for an evaluation and cannot be used as the primary basis for determining property values for mortgages originated by regulated institutions.
Unfortunately, the Federal Reserve Board issued a rule that fails to implement the plain language and public policy intent of defining reasonable and customary fees as those not involving appraisal management companies – a retail fee, if you will. In our view, the reason Congress included this provision in the Dodd-Frank Act is to help ensure that appraisers receive adequate compensation for the education, experience, and time necessary to prepare credible appraisal reports. While the price of any service will always be a factor, quality and competency and transparency to the consumer should come first. Business models that helped fuel the fundamentally unsound run-up of the past decade placed far too much emphasis on pricing and bundling of services and focused scant attention on appraisal quality. Congress got it right; unfortunately, the Federal Reserve got it wrong.
REALTORS® support and encourage credible, independent appraisals and valuations of real property, which are critical to the health of the overall real estate industry. A trustworthy valuation of real property 1) ensures the real property value is sufficient to collateralize the mortgage, 2) protects the homebuyer, 3) allows secondary markets to have confidence in the mortgage products and mortgage backed securities, and 4) builds public trust in the real estate profession. Professionally developed valuations provide an independent, objective analysis of real property. Valuations that are not credible or not independent harm communities and result in unintended consequences. The purchase of a home is the largest investment most people make. A valuation that does not properly reflect the owner’s equity and may require the owner to pay increased fees or inject unneeded additional liquidity into a collateralized loan to meet higher lending requirements. Valuations of real property that are too high give a false sense of security to homeowners seeking access to the equity in their homes and to lenders making a determination as to the security of their loan. Valuations that are too low may create a downward cycle of economic deterioration for neighborhoods and communities and cause increased cash requirements on lenders.and, Don Kelly, speaking for both the Real Estate Valuation Advocacy Association (REVAA), on behalf of REVAA and the Coalition to Facilitate Appraisal Integrity Reform provides some views of the landscape from the perspective of AMCs:
Fair is a coalition of five of the nation's largest AMCs, which operate networks of individual appraisers and appraisal firms for the completion of appraisal reports (These five AMCs include: 1. LSI, a division of Lender Processing Services, Inc; 2. ServiceLink Valuation Solutions, LLC, a Fidelity Natioinal Financial, Inc. company; 3. Valuation Information Technology, LLC d/b/a Rels Valuation; 4. CoreLogic, Inc.; and 5. PCV/Murcor. Rels Valuation is an affiliate of CoreLogic, Inc. and Wells Fargo Bank).That's as much as I can take on that one. You'll have to follow the LINK to read the rest of Don's comments.
There are significant benefits for both an appraiser and a lender when they work with an AMC......
On July 21, 2010 President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act requires State regulatory agencies to regulate Appraisal Management Companies (AMC). Florida’s regulatory program for AMCs was created in 2010 when House Bill 303 was signed into law. It became Chapter 2010-84 and amends Section 475, Part II, Florida Statutes..The Department of Business and Professional Regulation has added information about the registration and regulation of Appraisal Management Companies to their FAQ site.
FS 475.6235 states in part, A person may not engage in appraisal management services for compensation in this state advertise or represent herself or himself as an appraisal management company, or use the titles appraisal management company, appraiser cooperative,appraiser portal, or mortgage technology company, or any abbreviation or words to that effect, unless the person is registered with the department as an appraisal management company under this section. However, an employee of an appraisal management company is not required to obtain a separate registration.Additional guidance answers the question: Should I close my business while waiting for my license to be issued?
As of July 1, 2011, it is essential for an appraisal management company to immediately file an application to register with the Department; however, you can continue to operate while the Department and/or the board is considering your application for approval. Once approved, you will receive your license in the mail. An application that is denied must comply with the terms of the Final Order issued by the board.As of today online registration is not available. A printable application is available HERE.
The Department of Business and Professional Regulation, Division of Real Estate, and the Florida Real Estate Appraisal Board continue to develop the program to meet the needs of our customers. Please refer to the FAQs for AMCs and check back for more information weekly.
NOTE: This is a reposting from last year. My workload precluded a trip to this years 500, but Fran and I are celebrating our 1st Anniversary. We'll be watching the race at home. Video of the ceremony in Turn 3 at this LINK.
If there is one thing that captures my attention more than real estate valuation, it's racing. If it involves anything with four wheels and an internal combustion engine, I'm interested. Formula 1, American LeMans, NASCAR, NHRA, Grand-Am, Sports Car, Land Speed Record, you've got my attention.
April 2011Much more will be discussed. If you are a member of the National Association of Realtors, and happen to be attending the meetings, or are in the DC area, stop by. We encourage your participation.
"In recent months interference in the appraisal process has unnecessarily put at risk a sustainable housing recovery. Our member appraisers are dealing with changes in the real estate market due to economic conditions in the country, their long time business relationships with market participants have been destroyed and their business models have been shattered. The latest blow is their enduring the consequences of the implementation of aspects of the Dodd-Frank Act.
Appraisers are being asked to include distressed transactions as comparable sales, to complete the appraisal in an unreasonable and unrealistic short time span, and to comply with a scope of work not justified by the fee being offered. In some situations appraisers are required to provide as many as eight comparable sales and/or listings. NAR believes this is interference in appraiser independence, causing harm to the real estate recovery, and harmful to consumers.
This month, compliance with the Federal Reserve's interim final rule amending Regulation Z (Truth in Lending) became mandatory. Early reports indicate that some appraisal management companies may be misinterpreting the reasonable and customary fee requirements of the statute and the interim rule. Although NAR has not commented on the customary and reasonable fee language of the statute or the interim rule, we are concerned that unfair treatment of our member appraisers will further erode their businesses and impact the quality of appraisal reports, adding risk for consumers and lenders.
NAR 2010 President Ron Phipps said "asking for up to 10 comps, reducing turnaround times, and expanding the scope of the assignment without appropriately adjusting the fee is adding unnecessary risk to an already fragile mortgage market system. We must maintain an environment where our independent appraisers are treated fairly as they are the lynchpin of the mortgage transaction." NAR has long advocated for an independent appraisal process and enhanced education requirements to promote public trust in the appraisal profession. NAR wants to ensure the consumer is provided the service bargained for along with a well-supported, credible opinion of value."
13.11 One aspect of the determination of Appraiser compliance with LandSafe Security Requirements is a review of Appraiser Security Controls. As a condition precedent to performance under this Agreement, Appraiser agrees to satisfy the following validation requirements: (a) participation in LandSafe’s Appraiser assessment process including the completion of online or on-site assessment(s), as appropriate, and remediation of any findings; (b) periodic discussions between LandSafe personnel and Appraiser Information Technology security personnel to review Appraiser Security Controls; and (c) if requested delivery to LandSafe of network diagrams depicting Appraiser perimeter controls and security policies and processes relevant to the protection of Confidential Information. Examples of these policies include, but are not limited to, access control, physical security, patch management, password standards, encryption standards, and change control.
14.1 Appraiser shall indemnify, defend, and hold harmless LandSafe and its Representatives, successors and permitted assigns from and against any and all claims or legal actions of whatever kind or nature that are made or threatened by any third party and all related losses, expenses, damages, costs and liabilities, including reasonable attorneys' fees and expenses incurred in investigation, defense or settlement ("Damages"), which arise out of, are alleged to arise out of, or relate to the following: (a) any negligent act or omission or willful misconduct by Appraiser or its Representatives engaged by Appraiser in the performance of Appraiser’s obligations under this Agreement; or (b) any breach in a representation, covenant or obligation of Appraiser contained in this Agreement.
17.1 Appraiser shall maintain at no additional cost to LandSafe, in a reasonably accessible location, all Records pertaining to its Services provided to LandSafe under this Agreement for a period of ten (10) years, and if such Records are used in a judicial (or other dispute resolution) proceeding related to an Appraisal Order(s), Appraiser shall retain them for ten (10) years following the disposition of the proceeding. Such Appraiser Records referenced above may be inspected, audited and copied by LandSafe, its Representatives or by federal or state agencies having jurisdiction over LandSafe, during normal business hours and at such reasonable times as LandSafe and Appraiser may determine. Records available for review shall exclude any records pertaining to Appraiser’s other customers deemed proprietary and confidential and Appraiser confidential and proprietary records not associated with the Services provided under the Agreement. Appraiser will give prior notice to LandSafe of requests by federal or state authorities to examine Appraiser’s LandSafe Records. At LandSafe’s written request, Appraiser shall reasonably cooperate with LandSafe in seeking a protective order with respect to such Records.
17.2 During regular business hours but no more frequently than once a year, LandSafe may, at its sole expense, perform a confidential audit of Appraiser’s operations as they pertain to the Services provided under this Agreement. Such audits shall be conducted on a mutually agreed upon date (which shall be no more than ten (10) Business Days after LandSafe’s written notice of time, location and duration), subject to reasonable postponement by Appraiser upon Appraiser’s reasonable request, provided, however, that no such postponement shall exceed twenty (20) Business Days. LandSafe will provide Appraiser a summary of the findings from each report prepared in connection with any such audit and discuss results, including any remediation plans. If audit results find Appraiser is not in substantial compliance with the requirements of this Agreement, then LandSafe shall be entitled, at Appraiser’s expense, to perform up to two (2) additional such audits in that year in accordance with the procedure set forth in this Section. Appraiser agrees to promptly take action at its expense to correct those matters or items identified in any such audit that require correction. Failure to correct such matters shall be considered a material breach of this Agreement.
Section 58. (1) Effective upon this act becoming a law, section 10 of chapter 2010-84, Laws of Florida, is amended to read:
Section 10. This act shall take effect July 1, 20142011.
(2) If this act becomes a law after June 30, 2011, this section shall operate retroactively to June 30, 2011.
Appraiser Active has already posted about CS/HB 5007. The bill is making its way through the legislative committee process. The bill, originally with the title, "Reducing and Streamlining Regulations" includes amendments to statutes regulating several professions. Among them are real estate brokers and real estate appraisers. Two sections related to real estate with the potential to weaken consumer protection.Section 19. Section 475.628, Florida Statutes, is amended to read:Please join me, and let your representatives know that the Appraiser Qualifications Board of the Appraisal Foundation does NOT adopt standards of appraisal practice. That would be the Appraisal Standards Board of the Appraisal Foundation.
475.628 Professional standards for appraisers registered, licensed, or certified under this part. The board shall adopt rules establishing standards of professional practice that meet or exceed nationally recognized standards of appraisal practice, including those standards adopted by the Appraiser Qualifications Board of the Appraisal Foundation. Each appraiser registered, licensed, or certified under this part mustshallcomply with the rulesUniform Standards of Professional Appraisal Practice. Statements on appraisal standards which may be issued for the purpose of clarification, interpretation, explanation, or elaboration through the Appraisal Foundation shall also be binding on any appraiser registered, licensed, or certified under this part.
As if there are not enough negative vibes surrounding the appraisal profession, the Florida Legislature seems to be hell bent on weakening consumer protections in Florida's real estate and appraiser licensing laws, and delaying implementation of Appraisal Management Company registration and regulation.
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