Friday, May 15, 2009

It's time to Regulate Appraisal Management Companies - Part II

Back in January, 2009, Appraiser Active wrote about the need to regulate Appraisal Management Companies. The lack of regulation provides way too many opportunities for abuse of the system, scant protection for property owners, borrowers and lenders, and limited means to assure wrongdoers meet justice.

Little by little, this dark secret is coming to light; most recently by this article by Susan Taylor Martin, Senior Correspondent for the St. Petersburg Times.

Bad appraisals hurting sales and costing consumers

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.

Susan Martin observes....

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.
and describes Holzer's attempt to influence an appraiser...

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.''

There's PLENTY more. READ the Article.

UPDATE - From the comments on the St. Petersburg Times site:

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.


Jack said...

Hi Susan,

You have shared a really wonderful & useful post. Personally I am really impress with this post.


Anonymous said...

Sadly, it appears this guy is not paying his appraisers to. Stay clear of this clown and his company. See more at