Florida Appraisers - Rule Amendment: Supervision and Training or Trainee Appraisers

For the past several meetings the Florida Real Estate Appraisal Board has been discussing amendments to rules, and language for new rules to implement the sections of Chapter 475, Part II relating to Appraisal Management Companies. The AMC rules are still in the works, but the FREAB has finalized their language for 61J1-4.010 Supervision and Training of Registered Trainee Appraisers. The new language has an effective date of June 3, 2013.

Some of the changes are significant, and Florida Appraisers involved in the supervision of Registered Trainee Appraisers should be aware of some new responsibilities.

1. Licensed Appraisers are no longer permitted to supervise Registered Trainee Appraisers. Only Certified Residential Appraisers and Certified General Appraisers may supervise.
2. Supervisory Appraisers must accept "full and complete" responsibility for "any research, data collection, development, analysis, or communication of any appraisal review or the appraisal report by signing and certifying the report is in compliance with USPAP."
3. The Supervisory Appraiser must personally inspect each appraised property with the trainee "for a minimum of the first twelve months of the registered trainee's initial registration, and thereafter" until the trainee is competent in accordance with the Competency Rule of USPAP.
4. A Registered Trainee Appraiser "may not sign an appraisal certification within the first twelve months of his or her registration as a trainee appraiser."
5. A Supervisory Appraiser must included the following statement in any report in which the registered trainee appraiser contributed to the development of the appraisal or the writing of the appraisal report:

I, the supervisory appraiser of a registered appraiser trainee who contributed to the development or communication of this appraisal, hereby accepts full and complete responsibility for any work performed by the registered appraise trainee named in this report as if it were my own work.

Many Supervisory Appraisers must make some drastic changes to their practice to assure compliance with the requirements of the rule. At the very least, each and every appraisal completed with the assistance of a Registered Trainee Appraiser must have the paragraph above to acknowledge responsibility for the work of the trainee.

By all means, take the time necessary to read, understand, and implement the rule.

Full version at this LINK.

AMC Independence Clipped in Florida - July, 2011

Despite the efforts of the Florida Legislature and Appraisal Management Companies, the regulation of Appraisal Management Companies became effective July 1, 2011. The Florida Real Estate Appraisal Board posted the following on their site:

Regulation of Appraisal Management Companies – Effective July 1, 2011

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.

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.

As of today online registration is not available. A printable application is available HERE.

There's bound to be some growing pains, but the regulation of AMCs is great for Florida consumers and real estate appraisers. Thanks to the Director of the Division of Real Estate, Juana Watkins, and her staff for putting in the extra hours to make sure the information and applications were available on the effective date of the law. Great Job!

HB 5007 -Delay in Florida AMC Regulation - DOWN IN FLAMES!!

Since the beginning of this years' Florida Legislative Session, Appraiser Active has posted about the disaster that was HB 5007, "Reducing and Streamlining Regulations".

Well, yesterday was the last day of the 2011 session. HB 5007 had passed the House. It's companion, SB 1824, had passed the Senate. Both, however, had been amended several times in their respective chambers, and several differences had developed. The differences were significant enough for a Conference Committee to be appointed to iron them out.

The Conference report was adopted by the House, but late last night, my email inbox received this message:

H 5007 (2011) - Reducing and Streamlining Regulations - SENATE - Failed to pass as amended by Conference Committee Report; YEAS 18 NAYS 21.

LINK!!

Time For Politics - Holly Benson for Florida Attorney General - UPDATED!

Although Appraiser Active enjoys readers from across the United States and has visits from each continent (except Antarctica), I am a Florida State-Certified Appraiser and interested in the future of the Sunshine State. Since I'm "On a Quest to Improve the Profession" it's important to be involved in the political process. We appraisers and real estate practitioners have a chance to help elect a candidate with firsthand knowledge of our professions as Florida Attorney General.

As a member of the Florida Real Estate Appraisal Board (FREAB) from 2000 until early 2008, I had the opportunity to work with 5 different individuals that served as Secretary of the Department of Business and Professional Regulation (DBPR). Not all of them were interested in real property appraisal and real estate brokerage. Holly Benson, appointed as Secretary of DBPR in late 2006, distinguished herself by taking an interest.

Although the DBPR is a huge state agency, responsible for licensing and regulating over 1,000,000 in the state of Florida, Holly made it a point to attend several meetings of the FREAB during her term as Secretary. Her attendance was not merely to update the members of the board on activities of the DBPR. She watched the board in action, listen to the discussion during rule making and the deliberation when disciplinary cases were considered. Holly Benson assisted the FREAB by assuring we were able to meet standards of performance required by the Appraisal Subcommittee. Our requests for action did not fall on deaf ears.

Because so many appraiser disciplinary cases involved mortgage fraud, Holly learned of many of the schemes and heard of the losses and consequences suffered by lenders and the public due to illegal behavior by real estate insiders. If elected Attorney General, she is ready to use this experience to prosecute the wrongdoers.

Florida has just passed a bill to regulate Appraisal Management Companies. There will be some conflicts with H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act. It includes changes to the Appraisal Subcommittee, and calls for more responsibilities and power to be vested in the Appraisal Foundation. Florida Real Estate Appraisers will benefit if the Attorney General has firsthand knowledge of the federal influence on appraiser regulation.

As Secretary of DBPR, Holly Benson was instrumental in reducing bureaucratic red tape, enhancing customer (licensee and public) service, and streamlining procedures. We need a Pro-Business candidate as Florida's Attorney General.

There are plenty of reasons I'm supporting Holly Benson for Florida Attorney General, and working hard to assure she prevails in the August 24, 2010 Primary. I hope you take the time to visit her site, Holly Benson for Florida Attorney General, learn a bit more about her background and join me in casting a vote for her in the primary.

Although an army marches on its stomach, political campaigns run on cash. There's a CONTRIBUTE button on that site. Every bit helps. Don't be shy about $25.00, $50.00, or $100.00. It will be worth it to have a friend of appraisers as Attorney General of Florida. She will help in our quest to improve the profession.

UPDATE 8/15/2010 --

Earlier today we proudly represented Holly Benson during the Pinellas County GOP Victory Picnic. We had an opportunity to talk to the over 300 people attending about Holly's plan for Florida as the State Attorney General. Here's my wife, Fran Strayhorn, ready to talk about Holly.

NOTE:  This is NOT a Paid Political Advertisement. It has not been paid for or approved by any candidate.

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.

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

7 Reasons to Regulate Appraisal Management Companies in Florida

Thanks to Representative Matt Hudson, a bill has been introduced in the Florida House of Representatives to regulate Appraisal Management Companies (AMCs) in Florida. Representatives Peter Nehr and Ritch Workman have agreed to cosponsor the bill!

Since the introduction, some folks have been wondering why there is concern. Why is it necessary for more regulation? Shouldn't government just butt out and let the market sort things out?

For a start, here are 7 reasons to regulate AMCs in Florida:

• Appraisal Management Companies are not regulated in Florida


• Since May 1, 2009 and the implementation of the Home Valuation Code of Conduct (HVCC), a majority of Appraisal Assignments are placed through Appraisal Management Companies


• There is mounting evidence of Appraisal Management Company interference with Appraiser Independence including pressure to decrease or increase opinions of value, exclude or include specific comparable sales, and make specific adjustments to comparable sales


• There is mounting evidence of Appraisal Management Company alteration of Appraisal Reports and Appraisal Review Reports


• There is evidence of Appraisal Management Company ownership and management by individuals with Division of Real Estate disciplinary history or criminal records


• There is evidence of AMC use of unlicensed individuals for appraisal review


• There is a lack of transparency to the consumer with respect to appraisal fees and appraisal procedures and a need to protect the public from wrongdoing and disregard for appraiser independence

Let's take a look at the recent job posting for a "Quality Control Reviewer" by StreetLinks. This same job title was advertised back in August, 2009. The link is no longer live, but Appraiser Active discussed the job and StreetLinks in THIS post back then. It appears as though the duties and qualifications have not changed much. The only difference is now a college degree is "preferred" and candidates are Candidates are "required to take and pass the National USPAP Equivalency exam after 90 days of employment and continued education courses are required every 2 years or as the industry dictates."

Sounds GREAT eh? Here are a few more details about the position culled from a posting by a StreetLinks suit:

These are W-2, hourly positions at approx $17/hr plus insurance benefits and continuing education reimbursement. Opportunity for advancement into escalated reviews, appeals, and management.Involves performing an underwriter-style review of appraisal reports with an emphasis on evaluating the appraiser's approach to their value conclusion. StreetLinks' QC reviews take 35-40 minutes on average.

The post cited above is directed to "licensed appraisers". This was the first line:

StreetLinks National Appraisal Services is seeking an additional 30 licensed appraisers for our quality control department in southern Indianapolis.

Does it look to you they intend to use either licensed or unlicensed folks to review appraisals completed in all areas of the country? Does it appear to you these reviews will be done in Indianapolis, Indiana? Is there any license requirement listed in the qualifications? Which state?

Just in case the link disappears, here is the offering.

Quality Control Reviewer - Multiple Openings - Job - Street Links Jobs

Florida is not the only state interested in regulating AMCs. Take a look at a recent article from Oregon. The same reasons for regulation apply there, although the article concentrates on another aspect Appraiser Active has addressed previously; stiffing the appraiser on his fee. Here's a couple of excerpts:

Unlike appraisers and mortgage brokers, AMCs are not regulated in Oregon. Their wwners and employees are not required to undergo background checks. The companies are not required to be licensed, bonded or insured.

Solitz, for his part, says he has a good example of the need for new rules: an AMC that appears to be the target of a criminal investigation, one in which Solitz is a complainant.

Solitz has been waiting two months to be paid by Valuation Logistics, a Portland-based AMC that does business with appraisers across the country.

According to an online appraisers forum, some are urging people to share information with Portland police based on reports of appraisers not being paid by the firm. Solitz is one of those cooperating with authorities, saying he has received two phone calls from a Portland police detective in recent days. The detective, Liz Cruthers, declined to comment.

The Better Business Bureau has rated Valuation Logistics with an “F,” or failing grade, citing four complaints involving billing or collection issues that the company either did not resolve or did not respond to.

Public records also show that staff of the agency that regulates Oregon appraisers, the Appraisal Certification and Licensure Board, has brought Valuation Logistics to the attention of the board’s appointed members. Of particular interest was that Olson co-founded the company with a Portland appraiser who has had several run-ins with the state board.

In April 2009, the board suspended that appraiser, Nathan Bernhardt, for six months based on nine violations of appraisal rules.

Asked about Valuation Logistics, Bernhardt said he is no longer involved in the firm but declined to otherwise comment. Other past business partners of Olson also declined to comment.

Public records show that Olson has been involved in other companies before going into the appraisal management business. He also has been under law enforcement scrutiny in the past, including an arrest in Clackamas County for contempt of court in 2007.

In 2005, in an unrelated matter, his participation in a Wilsonville manufacturing firm called Medium Build ended when his two partners accused him of embezzling more than $50,000 as well as transferring a company vehicle to a friend of Olson’s without permission, according to a Clackamas County Sheriff’s Office report.

Why do AMCs seem to attract the "best" in society? Just askin'.

It's time to Regulate Appraisal Management Companies - FLORIDA!

Quite a bit has transpired since the first "It's Time to Regulate Appraisal Management Companies" post here on Appraiser Active. Additional form are required for mortgage loan appraisals and, most notably, the Home Valuation Code of Conduct (HVCC) has been implemented.

However, some things don't change. Back in January, the Appraiser Active post noted that Appraisal Management Companies typically administer a network of certified and licensed appraisers to fulfill real estate appraisal assignments on behalf of mortgage lending institutions. They often recruit, qualify and verify licensure for their panel of appraisers.

We also mentioned a major problem with Appraisal Management Companies; they are completely outside the regulatory loop controlling real estate appraisers and protecting the public. No state or Federal agency is tasked with the regulation of Appraisal Management Companies. In fact, there is a documented case of a Florida Appraisal Management Company owned and operated by an individual that surrendered his Certified Residential Appraiser credential for permanent revocation to avoid prosecution for several complaints. That story was detailed by the St. Petersburg Times in May, 2009.

Well folks, it's time to gear up for the 2010 effort to REGULATE APPRAISAL MANAGEMENT COMPANIES IN FLORIDA!

Take a look at HB 303, filed in the Florida House of Representatives yesterday by Representative Matt Hudson. Matt is a REALTOR®, and well aware of the problems associated with Appraisal Management Companies.

Regulation of Real Estate Appraisers & Appraisal Management Companies:

Requires appraisal management companies to register with DBPR; provides exemptions; specifies application requirements & procedures; requires application, registration, & renewal fees for appraisal management companies; requires fingerprinting & criminal history records checks of, & provides qualifications for, certain persons who control appraisal management companies; 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; provides for discipline of appraisal management companies by Florida Real Estate Appraisal Board; provides penalties; revises requirements for retention of appraisal records; requires appraisal management companies to follow such requirements; requires DBPR & board to adopt certain rules.

Read the whole thing

Thanks, Matt!

Please let Rep. Hudson know of your appreciation, and how important this bill is for the appraisal profession, the real estate market and consumer protection in Florida.

Tallahassee Office - (850) 488-1028

Naples Office - (239) 417-6270

Pembrooke Pines Office - (954) 704-2990

email - matt.hudson@myfloridahouse.gov

Press Release - Majority Office

HVCC Certified, and a Blog Award

One of the most popular accoutrement's for Appraisal Management Companies these days is a SEAL to bolster their claims of compliance with the Home Valuation Code of Conduct (HVCC).

"Certification refers to the confirmation of certain characteristics of an object, person, or organization. This confirmation is often, but not always, provided by some form of external review, education, or assessment. One of the most common types of certification in modern society is professional certification, where a person is certified as being able to competently complete a job or task, usually by the passing of an examination." - Wikipedia

Interestingly enough, AMC's appear to be comfortable with "self-certification" and awarding themselves Seals and Certificates.

Appraisers, on the other hand, must meet the Real Property Appraiser Qualification Criteria developed by the Appraiser Qualifications Board of the Appraisal Foundation and their state's licensing and certification laws to become Certified. For instance, here in Florida, appraisers must comply with Chapter 475, Part II of the Florida Statutes to become certified.

Section 475.615 Qualifications for registration or certification, among other things, requires the applicant to be competent and qualified to make real estate appraisals with safety to those with whom they may undertake a relationship of trust and confidence and the general public. The statute also requires a fingerprint card to be forwarded to the Division of Criminal Justice Information Systems within the Department of Law Enforcement and the Federal Bureau of Investigation for purposes of processing the fingerprint card to determine if the applicant has a criminal history record.

475.617 Education and experience requirements, specifies the minimum education and experience requirements to become certified. These mirror the AQB Real Property Appraiser Qualification Criteria. No self-certification here.

After all that, Section 475.616 Examination requirements states that an applicant for certification must demonstrate their knowledge of appraisal law, appraisal standards, an understanding of the principles of land economics, real estate appraisal processes, reliable sources of appraising data, and problems likely to be encountered in the gathering, interpreting, and processing of data in carrying out appraisal disciplines by passing a written examination.

After meeting the Character, Education, Experience and Examination requirements, the Certified Appraiser is subject to discipline by the Florida Real Estate Appraisal Board for misconduct, as specified in 475.624 Discipline.

The Florida Certified Appraiser is NOT awarded a seal. Sheesh!

Nevertheless, I found a blog award and I hereby bestow it upon Appraiser Active (h/t Iowahawk)

HVCC Update - NAR Survey Results and Flyer

As part of their Action Plan to deal with the Home Valuation Code of Conduct (HVCC), the National Association of Realtors Research section conducted a survey of Appraiser and Broker members. The purpose of the survey was to provide concrete data and information to bring to the regulators and the NY Attorney General’s office. Nearly 30,000 members participated in the survey.

Appraiser Active posted the preliminary analysis from NAR Research previously. Since then, NAR has prepared a two page flyer summarizing the effects of the HVCC.

NAR Survey Shows HVCC Impacting Housing Markets

An analysis by the National Association of REALTORS® (NAR) indicates that the implementation of the Home Valuation Code of Conduct (HVCC) appears to be having adverse impacts on the housing markets.

Here's the flyer

In other news, the National Association of REALTORS has initiated a targeted call to action in an effort to build Congressional support for H.R. 3044, the bill to mandate an 18 month moratorium on the HVCC. As of today, July 28, 2009, there are 46 co-sponsors of the legislation. If you are a Florida REALTOR, use THIS LINK to participate in the Call to Action. If you wish to participate and are in another state, surf on over to the NAR Action Center and check out the HVCC Links. Alternatively, contact your Member of Congress and ask them to co-sponsor H.r. 3044.

Keep in mind, Appraiser Active maintains links to the most recent HVCC related documents along the left side of this page.

Behind the Scenes - Appraiser Discipline

What are those boxes and stacks of papers?

The photo shows a portion of the 65+ cases that will be considered by the Florida Real Estate Appraisal Board Probable Cause Panel on Monday, July 6, 2009. The fourth box is on the other side of the room, out of the picture, in the "unread" corner.

Under the Florida Appraisal License and Certification Statute, Chapter 475, Part II, the Florida Real Estate Appraisal Board (FREAB) has the authority to grant and deny registrations and certifications. The FREAB is also tasked with the responsibility to discipline appraisers. The discipline imposed may include suspension (up to 10 years), revocation, fine (up to $5,000 for each offense), reprimand and probation. Like all regulatory boards in Florida, disciplinary procedures are conducted in compliance with applicable laws and rules. These include Chapter 455 and Chapter 120.

There's no reason to bore you with the details. The purpose of this post is to demonstrate that the complaints are real, the investigations are thorough, and the appraisers under scrutiny are really under scrutiny. Florida Appraisers that fail to comply with the law, rules of the FREAB and the Uniform Standards of Professional Appraisal Practice are disciplined by the FREAB.

As a past member of the Florida Real Estate Appraisal Board, yours truly has the opportunity to participate as a member of the FREAB Probable Cause Panel. The panel includes a current and past member of the FREAB that meet to consider complaints and cases and determine Probable Cause. If Probable Cause is found, an Administrative Complaint is filed against the licensee. The Probable Cause Panel meets once a month and July is my month!

Although I've made it through 3/4 of the stack, posting is likely to be light over the weekend! In addition to all the reading, I've got a race to watch and will be rooting for the Blue Oval Boys. It would be nice to see Carl Edwards or David Ragan in the winner's circle.