NAR Comments on Proposed Changes to Appraisal Reconsideration Policy

 Back in November 2022, the National Association of REALTORS® Board of Directors adopted two public policy recommendations made by the Real Property Valuation Committee. One was to establish a policy to encourage the adoption of a consistent framework for the Reconsideration of Value process. The policy stresses a key component of the process is prioritization of appraiser competency over fee and turn time.

Below is a copy of the motion adopted by the Board of Directors.

Since then, the Department of Housing and Urban Development has published the draft of a proposed Mortgagee Letter, Borrower Request for Review of Appraisal Results. 

Using the new policy as a guide, NAR provided comment on the draft. HERE is the link to the announcement on the NAR site.

It's great to see NAR reference the new policy in their response to the U.S. Department of Housing and Urban Development draft a mortgagee letter to establish a process for Mortgagees when a Borrower requests a review of the appraisal results associated with their application for an FHA-insured mortgage.

National Association of REALTORS Appraiser Survey

Back in January of this year, the National Association of REALTORS emailed their REALTOR - Appraiser members. The survey was developed by the National Association of REALTORS Research Department and conducted with the assistance of The Olinger Group. Assistance with wording and development of questions and answers was provided by the NAR Real Property Valuation Committee. 

Survey results were released yesterday. Please take a look at the publication, Appraiser Trends Study, and let us know what you think.

HousingWire has a synopsis of the findings they find interesting. The quote provided by Bill Brown, NAR President, is encouraging. “The work of an appraiser is indispensable to our industry. Appraisers provide the credible, outside opinion on a property value that agents, lenders, and ultimately the consumer depend on to guide them through a transaction.” 

Appraisers and Regulators Give Congress an Earful

On June 28, 2012, two panels of witnesses appeared before the Insurance, Housing and Community Opportunity Subcommittee of the U.S. House Committee on Financial Services. The hearing, held in room 2128 of the Rayburn House Office Building, started at 10:00 A.M. and continued for two hours.

The topic of the hearing, "Appraisal Oversight: The Regulatory Impact on Consumers and Businesses" was addressed in written testimony, oral presentations, questions and answers. The panel members, and links to the written testimony, are listed below.

Panel I Mr. William B. Shear, Director, Financial Markets and Community Investment, Government Accountability Office Mr. Don Rodgers, President, Association of Appraiser Regulatory Officials Mr. James R. Park, Executive Director, Appraisal Subcommittee, Federal Financial Institutions Examination Council Panel II Mr. David Berenbaum, Chief Program Officer, National Community Reinvestment Coalition Mr. David Bunton, President, Appraisal Foundation Mr. Francois K. Gregoire, 2011 Chair, National Association of Realtors, Appraisal Committee Mr. Don Kelly, Executive Director, Real Estate Valuation Advocacy Association (REVAA), on behalf of REVAA and the Coalition to Facilitate Appraisal Integrity Reform  Ms. Karen J. Mann, President, Mann & Associates Appraisers, on behalf of the American Society of Appraisers Ms. Sara Stephens, President, Appraisal Institute   C-Span covered the hearing. The entire presentation is available below. Panel II starts about 50 minutes into the video.

Appraisals: What You Absolutely Need to Know

This morning, November 12, 2011, along with several other speakers, I will be participating in a panel discussion as part of the National Association of REALTORS Annual Conference and Expo. Given the number of headlines, news stories and blog posts about appraisals in today's market, the topic and title is appropriate: Appraisals: What You Absolutely Need to Know.

If you're here in Anaheim attending the Conference, please stop by. The program starts at 9:00 A.M and runs until 10:30. We'll be in the Anaheim Convention Center, Ballroom A.

They're bound to put a hook on me if I talk too long, but I plan to reference the Continuing Education Course I wrote for the Bert Rodgers School to help folks get a better understanding of the appraisal process. Follow the link to he free pdf of the Bert Rodgers book, and take a look at the course starting on page 79. For you non-appraisers, I hope it helps you understand why things are the way they are. If you have a Florida real estate license, you just might like to use this course for your continuing education.

Note: I do not get a royalty on the number of courses taken; I just believe it might be informative.

AMC Indemnification Clauses - Comments From Peter Christensen

Back in August, Appraiser Active posted about NAR President, Ron Phipps'  letter to the heads of the Department of Housing and Urban Development, Federal Financial Institutions Examination Council, Veteran's Administration and the Federal Housing Finance Agency encouraging the bar of indemnification clauses used by Appraisal Management Companies (AMCs).  Robert  Freedman provided some context in a later post on the Speaking of Real Estate blog.

Needless to say, the issue is has not yet been resolved. In the November issue of REALTOR Magazine, there is a piece written by Peter Christensen about indemnification clauses. Follow this link to his post on the Appraiser Law Blog. Peter links to the REALTOR Magazine article too.

Among many other things, indemnification clauses and appraiser independence are on the agenda for the NAR Appraisal Committee meeting next week during the NAR Annual Conference in Anaheim, California. The NAR Appraisal Committee meets Friday, November 11, 2011 from 2:00 - 4:00 P.M. at the Anaheim Marriott Hotel in Grand Ballroom F. See you there!

REALTOR®, Appraiser, or Both?

If I was paid a nickel for every time someone asks if they "can be frank with me", I would have a better computer. If a nickel was paid every time someone tells me, "you're not a REALTOR®, you're an appraiser", my house would be paid off.

Clearly, there is some confusion about the term "REALTOR®" and what it means. The common misconception is to equate the term REALTOR® with home seller, agent, or broker. The fact of the matter is the term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION of REALTORS® and subscribes to its strict Code of Ethics.

Membership in the NATIONAL ASSOCIATION of  REALTORS® is available to individuals engaged in the "real estate business." "Real estate business" as defined in the bylaws of the NATIONAL ASSOCIATION of REALTORS® includes real estate brokerage, management, appraising, land development or building. An Official Interpretation of the bylaws of the NATIONAL ASSOCIATION of REALTORS® states:

"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."

To be clear, the term REALTOR® may include individuals involved in real estate brokerage, but does not eliminate individuals involved in other specialties included in the definition of "real estate business."

As an appraiser, and member of the NATIONAL ASSOCIATION of REALTORS®, all the benefits of membership are available, including some of particular interest to my Appraisal specialty. These include:

• The NAR Appraisal Designation Program and Fast Track Program to Designation
• NAR involvement and participation in The Appraisal Foundation
• Representation on The Appraisal Foundation Board of Trustees (sponsor)
• Representation on The Appraisal Foundation Advisory Council (TAFAC)
• The NAR Library and Information Central
• Access to the Multiple Listing Service
• Networking opportunities with other real estate professionals
• Increased business (over half my assignments are referred to me by real estate brokers)
• Using brokerage contacts as source for market information, transaction specifics and confirmation
• Legislative and advocacy efforts

There are many reasons I belong to the NATIONAL ASSOCIATION of REALTORS®. Being confused with the good folks involved in real estate brokerage is not one of them.

Indemnification Clauses - UPDATE

A few days ago Appraiser Active posted about a from NAR President, Ron Phipps, to federal agency heads encouraging the bar of indemnification clauses used by Appraisal Management Companies (AMCs). Brian Davis, from Appraisal Scoop, was kind enough to spread the word, and many others read the letter on the NAR Appraisal Insight blog.

Now, Peter Christensen, from the Appraiser Law blog, has a very informative new post: "What's Wrong with Most Indemnification Clauses in AMC Contractor Agreements?"

Peter echos several points that were expressed as concerns in the NAR letter. For example:

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.

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.

 Head on over to the Appraiser Law blog to read the full post. Spread the word!

Appraisal Events - Florida Realtors® 2011 Convention

From August 24 - 28, 2011, Florida Realtors host their Annual Convention & Trade Expo in Orlando. The event will be held at the Rosen Shingle Creek, 9939 Universal Boulevard, Orlando, Florida.

In addition to the regular business meetings for committees and the Florida Realtors Board of Directors, a number of education sessions will be offered on a variety of topics. There are two specific offerings available for attendees:

On Friday, August 26, 2011, the Florida Appraisal Council will meet from 1:00 - 2:30 P.M. If you are an appraiser and belong to a local association of Realtors, you are welcome to attend. The new AMC Registration laws and rules will be discussed, along with the Fast Track Application for NAR Appraisal Designations. Educational opportunities to assist in completing 2012 Continuing Education will also be planned. Your thoughts, ideas and suggestions are welcomed.

On Saturday, August 27, 2011, Rick Baumgardner, Chairman of the Appraisal Foundation Appraiser Qualifications Board, will present "What's Happening With Appraiser Qualifications?" This will be a discussion of the 4th Exposure Draft of Proposed Revisions to the Real Property Appraiser Qualification Criteria. Among other things, Rick will discuss trainee and supervisor qualifications, background checks and education.

Take a ride over to Orlando and stop by!

NAR Encourages Bar of AMC Indemnification Clauses - UPDATED

UPDATED - August 15, 2011

In a letter to the heads of the Department of Housing and Urban Development, Federal Financial Institutions Examination Council, Veteran's Administration and the Federal Housing Finance Agency, NAR President, Ron Phipps, encourages the bar of indemnification clauses used by Appraisal Management Companies (AMCs).

Appraiser Active last mentioned indemnification clauses in a post about the LandSafe Appraisal Services Agreement. The folks over at the Appraiser Law Blog have written extensively about the danger to appraisers stemming from agreeing to indemnification.

A pdf of the full NAR letter is posted after the jump, but here's a preview:

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.

UPDATE - August 15, 2011: The Appraiser Law Blog has a review of the LSI Appraisal Independent Contractor Agreement. Here's an excerpt.

"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."

CLICK to Read More

U.S. House Committee on Financial Services - Hearing, July 13, 2011 - UPDATED

UPDATED - VIDEO LINK ADDED

Tomorrow, July 13, 2011, the U.S. House Committee on Financial Services, Subcommittee on Insurance, Housing and Community Opportunity, will hold a hearing at 2:00 PM in 2128 Rayburn House Office Building.

The get together, entitled “Mortgage Origination: The Impact of Recent Changes on Homeowners and Businesses” has two panels of "witnesses" representing a wide array of government agencies and interest groups. These include the Federal Reserve, HUD, the Appraisal Subcommittee on the side of the government.

Interest groups to be represented include appraisers, mortgage bankers, mortgage brokers, Realtors, appraisal management companies and Hispanics. As is the custom, most of the witnesses have submitted written testimony in advance of the hearing. Some of it is interesting, some thoughtful. Portions are pandering, and some will infuriate. Most likely, you don't have time to read it all, but here are a couple of interesting excerpts:

Sara W. Stephens, MAI, CRE, representing the Appraisal Institute, includes these thoughts about Reasonable and Customary Fees:

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.

National Association of Realtors representative, Steve Brown, has this to say about appraisals:

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).

There are significant benefits for both an appraiser and a lender when they work with an AMC......

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.

If there ever was a time to contact your member of Congress, this is it.

UPDATE - VIDEO LINK ADDED

It's a long hearing, almost 3 hours. To save time, check Marc Savitt at 1:35, Sarah Stephens at 1:40 and her discussion of appraisal fees at 1:42. Don Kelly talks at 1:46 and tries to justify the AMC support of unreasonable fees at 2:46.

NAR Statement on Appraiser Independence

Next week, the National Association of Realtors meets in Washington, D.C. for their Mid-Year governance meetings. The NAR Appraisal Committee will meet on Wednesday, May 11, 2011 at 8:00 A.M. We will meet in the Virginia Suite A and B in the Marriott Wardman Park Hotel.

The agenda is full, and it will be a challenge to cover it all in the 2 hours allotted, but we will do our best. One item, not on the agenda, but sure to be a topic of discussion, is the recently released Statement on Appraiser Independence.

NAR Statement on Appraiser Independence

April 2011

"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."

Much 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.

A New Spin on Short Sale Fraud

This is a couple of weeks old, but is certainly timely. The podcast is about 18 minutes long, but you can listen while you search the interwebs for the perfect comparable sales.

Courtesy of the National Association of REALTORS.

Freddie Mac Investigator Robert Hagberg in a podcast from NAR Legal Affairs discusses some of the recent short-sale payoff fraud schemes, such as "flopping," that he’s seeing. He also discusses the various ways—good and bad—that real estate professionals are involved.


HERE is the LINK.

How About an NAR Update!

The National Association of REALTORS® met in New Orleans November 3 - 7, 2010 for their Annual Conference and Expo. As an active participant in the NAR Family, the Appraisal Committee met November 5th.

The agenda included reports from the NAR representative to The Appraisal Foundation Advisory Committee, Vic Knight, and an update about The Appraisal Foundation from the NAR representative to Board of Trustees. H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act was discussed, along with our participation in the rules-making process. The committee was briefed on the activity of the NAR HVCC Work Group, and the progress of the Realtor's Property Resource (RPR).

The Appraisal Committee learned that Joe Traynor, GAA, a past Chair of the Committee, has been selected as Chairman of The Appraisal Foundation Board of Trustees for 2011. Another past Chair of the Committee, Vic Knight, has been named as the NAR representative to the Board of Trustees. The Chair of The Appraisal Foundation's Appraiser Qualifications Board (AQB) is another past Chair of the NAR Appraisal Committee, Rick Baumgardner. Since one of the 2011 goals is to maintain NAR representation within The Appraisal Foundation, it's nice to see an early fulfillment of that aspiration. All three are good friends, and tolerate my kidding them about going over to the Dark Side.

In addition to the above accomplishments, the Committee discussed the upcoming meeting of the NAR Professional Standards Committee. Back in August, 2010, the Appraisal Committee submitted a letter to the Professional Standard Committee with several suggestions for amendments to the NAR Code of Ethics and Standards of Practice. The recommendations were considered by the Interpretations and Procedures Subcommittee, and their report would be considered by the full committee. Later, it would be considered by the NAR Executive Committee and Board of Directors.

Although not all of the Appraisal Committee recommendations were accepted, two important ones were, and approved by the Board of Directors.

Standard of Practice 3-7 was amended to recognize that appraisers do not typically "represent" a client. Realtor Appraisers, when seeking information about listed property, now must merely disclose the "relationship" with their client to the listing Realtor. Representation of the client is no longer required.

That's nice, but the Board of Directors also approved an amendment to Article 15, and Standard of Practice 15-3. An amendment to an Article of the Code of Ethics must be approved by the NAR Delegate Body. The Delegate Body will consider this amendment in Anaheim, California during their meeting on November 14, 2011. If approved, Article 15 will read:

REALTORS® shall not knowingly or recklessly make false or misleading statements about other real estate professionals, their businesses, or their business practices.

The amendment to Standard of Practice 15-3 will be effective if the change to Article 15 is adopted by the Delegate Body. It will read:

The obligation to refrain from making false of misleading statements about other real estate professionals, their businesses, and their business practices includes the duty to publish a clarification about or to remove statements made by others on electronic media the REALTOR® controls once the REALTOR® knows the statement is false or misleading.

Since many Realtor Appraisers have expressed their concern about the Quadrennial Ethics Training Course, we're in the process assembling a group of folks to make some recommendations for course content. It's unlikely that fulfilling this education requirement will ever be a favorite for appraisers, but we aim to make the content more appropriate for our niche of the real estate profession.

Well, that's part of what the Appraisal Committee has been up to. There's more and more updates to come. There are a few appraisals on my desk to complete.

“That NAR’s Appraisal Committee be asked to provide content applicable to appraisal practice and NAR’s Code of Ethics, and that such content be developed as a separate course or an optional component of the existing Quadrennial Ethics Training Course.”

Rationale: A separate ethics course, or course component, with content applicable to appraisal practice would make the Quadrennial Ethics Training requirement more meaningful to the appraisal practitioners as they satisfy their ethical duties of REALTOR® membership.

There was one additional recommendation considered by the Professional Standards Committee: Currently, the term "competitors" is used in place of "other real estate professionals".

Trying to Catch Up

It's been over a month since posting. Please do not take that as an indication nothing is going on; things are hopping! Over the past 30+ days, I've attended the meetings of the National Association of REALTORS® and NAR Appraisal Committee in New Orleans, finished up a big appraisal review assignment for a potential class action lawsuit, completed a few single family and condominium appraisals, and put a dent into examining 52 cases for the Florida Real Estate Appraisal Board's Probable Cause Panel.

The picture with this post shows what 52 cases looks like.

Every day, I wake up hoping to have some time to make a few comments here, and post some information. The time flys by. Although I'm still up to my eyeballs in files and have two appraisals due tomorrow before noon, I did some updating to the site by adding a few links to section on the left of this page.

Over there you will find a link to the Interagency Appraisal and Evaluation Guidelines released by the
Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (FRB); Federal Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, Treasury (OTS); and National Credit Union Administration (NCUA). I also added a link to Fannie and Freddie's Appraiser Independence Guidelines, and the "redlined" version of TITLE XI as amended by the Dodd - Frank Act.

For your reading pleasure, the ASC produced "red lined" version of Title XI is reproduced after the jump.

As soon as the FREAB Probable Cause Panel meeting is over, I hope to provide an update of some of the goings on during the NAR Appraisal Committee meeting and NAR Board of Directors. Some good things for appraiser members of NAR are coming up.

CLICK to Read More

Washington, D.C. Events: AARO, NAR - Valuation Summit

There are two major appraisal/valuation related events in Washington, D.C. this week. First, the Association of Appraiser Regulatory Officials (AARO), along with The Appraisal Foundation and the Appraisal Subcommittee, is holding a joint conference October 1 - 5, 2010. Their Agenda is full, and packed with interesting speakers and timely topics. AARO president, Bruce Fitzsimons, has invited me to attend. As a former regulator, and current Honorary Member of AARO, it will be great to see long time friends (and foes) from the appraisal regulator world.

Immediately following the AARO Joint Conference, the National Association of REALTORS® is hosting a Valuation Summit October 5 - 6, 2010. Several folks from the AARO Conference will be making appearances for panel discussions. Once again, it will be great to see long time friends and acquaintances like NAR President Vicki Cox Golder, NAR President-Elect Ron Phipps, Kentucky Real Estate Appraisers Board Executive Director Larry Disney, Steve Fritts from the FDIC, and Jacqueline Doty from Freddie Mac. Having crossed swords with him during the negotiations over the Florida AMC Regulation Bill during the 2010 Legislative session, it will be interesting to hear what former TAVMA President Don Blanchard has to say.

By far, the most entertaining portion of the day will be the last session. I've been asked to moderate the panel discussion among Dave Bunton, Jim Park and Bruce Fitzsimons. It would be great if we could arrange for a webcast!

Here's the agenda.

Valuation Summit Final Agenda

CRT Announces "Appraisal Dashboard"

On May 27, 2010, the Center for REALTOR® Technology announced "Appraisal Dashboard". Here's a portion of what their blog post has to say:

This project was made possible through a 6 month collaboration with RMLS of Minnesota, Live Valuation and the Center for REALTOR Technology. It was actually inspired by an appraiser getting the ear of Ed Newman from RMLS, who then got the ear of CRT who then got real jazzed up about this. This all coincided with some fortuitous events that led us to choose Live Valuation — who by the way, has one amazing programmer (Kannan), which you will soon agree to after you see the demo and the functionality, and the all out pure slick of this application.

So what the heck is the Appraisal Dashboard? Well, the basic summary is, it is a PHP web application that interfaces with live MLS data (MLS authentication and access required) and provides a visual search interface. The data can be exported (again, please refer to your particular MLS data rules/regs) into various formats that can be used with the Uniform Residential Appraisal Report and the MISMO format.

That's all I have for now. We have not yet tried the application, but should be able to find some time in the near future.

Cost? FREE for members of the National Association of REALTORS®. Yet another benefit of membership; this one specifically for Appraiser Members!

Rather than the link in the blog post, use THIS LINK for the video demos.

Appraiser Representation? Represent Yourself. Get Things Done!

One of the most common complaints heard from appraisers is their belief no association represents them or their interests in their state or in Washington, D.C. Of course, there is the Appraisal Institute, the National Association of Independent Fee Appraisers, and other Professional Appraiser Organizations. They do a great job, however these days, many appraisers cannot afford to pay dues to another organization.

Here's an opportunity to participate as an appraiser member of an organization(s) you may already belong to. Think about volunteering to serve as a member of the National Association of REALTORS® Appraisal Committee or the Florida Appraisal Council.

The purpose of the NAR Appraisal Committee is:

To serve the specialized needs of those members with an interest in real estate appraisal by:

1) monitoring, reviewing, examining, and analyzing appraisal-related issues for NAR;

2) referring appraisal-related issues to appropriate NAR committees for their consideration; and

3) providing recommendations on appraisal-related issues to the Board of Directors.

If you are a member of a local association of REALTORS, you may recommend yourself to serve as a member of the Appraisal Committee. The committee meets in person twice a year. In 2011, we will meet in Washington, D.C. (sometime between May 9 - 14, 2011), and in Anaheim, California (sometime between November 9 - 14, 2011)

Follow this LINK to recommend yourself. You will need a login. If you do not have one, just follow the prompts. It might help if you have a copy of the mailing label from your REALTOR® Magazine.

The Florida REALTORS® have the Florida Appraisal Council. The Council makes recommendations directly to the President of the Association. As an example of their accomplishments, last year the Council worked with the Florida REALTORS® to get HB 303 introduced and passed into law. HB 303 requires the regulation of Appraisal Management Companies.

Use this LINK to volunteer for the Florida Appraisal Council. Again, you will need a login, but if you are a member of a local Association of REALTORS in Florida, just follow the prompts to get yourself a login and password.

The application period for both NAR and Florida REALTORS® Committees is May 24, 2010, so act soon! Both of these groups have a history of representation and getting things done.

NAR Legislative Meetings - Appraisal Committee

The National Association of REALTORS® meets in Washington, D.C. May 10 - 15. This is the 2010 edition of their Annual Legislative Meetings and Expo. The NAR Appraisal Committee will meet on Wednesday, May 12th. In addition, Appraisal Committee Leadership has a couple of extra meetings planned to advance the interests of appraisers within the NAR family.

Monday afternoon, Appraisal Committee Chairman Mack Strickland and I will meet with NAR 2010 President-Elect Ron Phipps. There are a number of issues we plan to discuss. Among them are REALTORS Property Resource and the REALTOR Valuation Model, NAR Legislative and Regulatory priorities with an effect on appraisers and valuation, and the NAR Appraisal Designation Program.

The Appraisal Committee has a full agenda. An overview of the agenda, along with that of all the NAR Public Policy Committees and Forums is available here. (See page 4).

In addition, on Wednesday afternoon, Mack Strickland and I will meet with the Leadership and other representatives of the NAR Professional Standards Committee. In addition to opening up a dialogue concerning Article 11 of the Code of Ethics and Standards of Practice of the NATIONAL ASSOCIATION OF REALTORS®, we will initiate an effort to more fully embrace appraisers in the wording of the Code. We will also propose that NAR develop a Quadrennial REALTOR® Ethics Training specifically for valuation professionals.

Both Mack and I will attend the Public Policy Coordinating Committee on Thursday, and will discuss legislation pending in Congress that affects the appraisal profession. I will be part of the NAR Board of Directors meeting on Saturday, in the event any appraisal related issue is to be decided.

There's much on our plate. I'll do my best to update you all when I return to the Sunshine City.

Claims Against Appraisers, the FBI and NAR Conference

It's early Wednesday morning, and I'm clearing up a few things in preparation for a flight across the country to attend the 2009 REALTORS Conference and Expo in San Diego. There was a last minute appraisal inspection today, along with an attempt to put one last assignment out the door. Efforts to clear my desk have kept me from posting, although I did update the H.R. 3044 page with the increased number of cosponsors.

Before heading out, though, I wanted to post links to two interesting posts on the Appraiser Legal Defense and Insurance Blog.

The first, Claims Against Residential Appraisers in 2009, describes the some of the major trends and issues seen in 2009:

1. Overvaluation Claims by Borrowers
2. Undervaluation Claims by Borrowers and Sellers
3. FDIC Claims
4. Claims Involving Trainees and Independent Contractors

There are some interesting observations and some good advice. It's worth a read.

The second post, The FBI is on the Phone for You, is must read. Given the heightened interest in mortgage and valuation related fraud, and the stepped up enforcement efforts of the FBI and other investigative agencies, it's nice to see some advice about what should the good appraiser do when the FBI or any law enforcement officer calls. Appraisal Scoop posted the same story a couple of days ago.

Friday afternoon (Friday the 13th and I'm superstitious), I will be attending the meeting of the NAR Appraisal Committee. Here's what the agenda looks like:

I. Call to Order and Introductions – Penny Triplett

II. Approval of Minutes from Last Meeting – Penny Triplett

III. ReportsAppraisal Foundation Trustee Report – Joe Traynor

NAR Representation on Appraisal Foundation Boards - Penny Triplett

The Appraisal Foundation Advisory Council (TAFAC) – Vic KnightIV.

New Business

A. Tentative: FHFA & Freddie Mac Speaker & FHA Speaker – Thomas Strickland

B. Legislative/Regulatory - Jerry Nagy

1. HVCC

2. HR 1728

3. HR 2336

4. Consumer Protection Finance Agency

5. FHA Appraisal Rules

C. Report of Broker Price Opinions Work Group – Penny Triplett

V. Other Business

A. Update on Appraisal Education Workgroup – Penny Triplett

B. Breaking out Appraiser fees on HUD-1 – Thomas Strickland

C. Next Meeting: NAR MIDYEAR MEETINGS - Washington, DC

VI. Final Comments and Adjournment

Immediately following the meeting the NAR Appraisal Committee will celebrate the anniversary of the RAA/GAA designations.

It's likely there will some discussion of this, as well. It was a surprise to everyone.

More, when I return next week.

Congressional Hearings - HVCC Problems Exposed

Early this morning, we posted some information about a Congressional Hearing on "The Future of the Federal Housing Administration’s Capital Reserves: Assumptions, Predictions and Implications for Homebuyers", and mentioned at least one of the several witnesses will discuss the Home Valuation Code of Conduct (HVCC).

It turns out that one other witness at that hearing, Boyd Campbell, brought up changes to the FHA Appraisal process in his written testimony and HAVOC in verbal testimony.

FHA has also released mortgagee letters on appraiser independence, effective January 1, 2010. We support FHA’s language related to geographic competence, especially as it relates to the use of Appraisal Management Companies (AMCs). FHA does not require lenders to utilize AMCs, and reinforces the importance of geographic competence. Consumers and REALTORS® have encountered significant problems with appraisals when the appraiser is not familiar with the community in which the home is located. FHA’s mortgagee letter states that lenders and appraisers are both responsible for the quality and accuracy of the appraisal. FHA states that the lender is responsible for determining whether an appraiser’s qualifications are sufficient prior to assigning an appraisal. Appraisers are reminded that USPAP applies to all appraisals performed for properties that are security for FHA. In addition, FHA’s letter states that if the lender orders an appraisal through an AMC or another third party organization the lender must ensure that specific guidelines are followed to ensure the FHA appraiser is compensated appropriately and that the fee charged to the consumer for the appraisal report is consistent with the market rate for appraisals.

The letter also provides guidance on the subject of appraisal portability. NAR believes it is important for borrowers to have complete flexibility in choosing a lender, and should not be hampered by having to repeat an appraisal simply because they switched lenders. NAR feels strongly that consumers should not be required to pay excessive fees for appraisals, nor be subject to appraisals conducted by appraisers who are not familiar with their market. Mortgage brokers and lenders underwriting staff will be prohibited from ordering the appraisal. This will create a firewall between lending staff and the appraiser and enhance the independence of the appraisal process. To further support the independence of appraisers and to ensure uniformity in the real estate industry we have called on FHA to work with the GSEs to established a combined frequently asked questions (FAQ) document that will be codified in existing appraisal policies. In a recent meeting, FHA Commissioner David H. Stevens has asked his staff to begin discussions with the GSEs to further explore this recommendation. We support these changes by FHA.

In another room, the House Small Business Committee, held a hearing on “The State of the Nation’s Housing Sector: An Examination of the First Time Buyer’s Credit and Future Policies to Sustain a Recovery”.

The witness list included Joseph Confora, Broker Owner of Century 21 Selmar Realty, on behalf of the National Association of Realtors®. His testimony touched on a number of subjects, and included quite a few comments and recommendations concerning the HVCC:

APPRAISAL: THE HOME VALUATION CODE OF CONDUCT

The tax credit is a good thing, but a major stumbling block for consumers and for practitioners is the current operation of the property appraisal process. In fact, current appraisal practices threaten to undermine the efficacy of the tax credit. NAR supports the independence of appraisers and the integrity of the appraisal process. We commend Attorney General Cuomo and both government sponsored enterprises (GSE), Fannie Mae and Freddie Mac, for their efforts to address appraisal fraud in the mortgage industry. We wish, however, to express concerns about the Home Valuation Code of Conduct (HVCC or the Code) they have issued. We support its intent to address appraisal fraud, but we have serious concerns about the implementation and adverse unintended consequences it has had on the real estate industry.

The HVCC has been in effect for five months. The Code is causing delays in closings and even canceled sales, which lead to artificially low existing home sales. While our monthly index of pending home sales shown steady growth in potential home sales for seven straight months, NAR’s Chief Economist, Lawrence Yun, notes that not all of these contracts are turning into closed sales. He notes that “The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules.

and

HVCC May be Increasing Costs to Consumers

The HVCC agreement reached between the Attorney General Cuomo and the GSEs, and approved by Director Lockhart, does not address the costs of the real estate transaction. Appraisers now must consider their obligations under the Uniform Standards of Professional Appraisal Practice (USPAP) and the Appraisal Foundation and the additional burden of complying with the HVCC. Higher costs may also be an issue for lenders. The creation of a new set of standards to follow and a new oversight organization may lead to increasing the cost of the real estate transaction. According to NAR survey data, the cost of the appraisal has increased by as much as $100 for consumers.

and

AMC Regulation Improving at State Level

Because the HVCC requires mortgage brokers to arrange for appraisals through third party organizations, AMCs now have an increased role in the real estate appraisal process. In fact, the number of our appraiser members obtaining more than half of their assignments from AMCs increased from 13 percent to 40 percent after May 1, 2009. These AMCs are giving appraisers assignments in areas where they lack geographic competency. For a variety of reasons, appraisers may feel compelled to take these assignments. More than 70 percent of Realtors responding to our June survey report appraisers lacking geographic competency for their assignments. Recently, Fannie Mae, Freddie Mac, the FHFA, and FHA have all reaffirmed the existing geographic competency rule found in the Uniform Standards of Professional Appraisal Practice (USPAP). While the geographic competence problem existed prior to the implementation of the HVCC, the problem is exacerbated by the increasing prominence of AMCs since May 1, 2009.

NAR believes there is a critical need for regulation at the state level. Aside from geographic competency, our survey found that appraisers have less time to complete an appraisal report and the quality of appraisals is deteriorating. Perhaps most importantly, both Realtors and appraisers report that overall fees to appraisers are declining, so the cost of an appraisal is increasing for the consumer.

and one of the best points!

Lender-Owned AMCs Cause Conflicts of Interest

The proposed HVCC would have barred lenders and affiliates of lenders from relying on an appraisal report obtained by, or through, an appraisal management company (AMC) that is more than 20 percent owned by the lender or affiliate of the lender. The final Code does not limit lender ownership of AMCs. We disagree with this result. NAR believes that lenders should be prohibited from using an appraisal report from an AMC where the lender or the lender’s affiliate maintains any ownership stake. Allowing lenders to obtain appraisal reports from AMCs where the lender has a stake in ownership does not meet the goal of the HVCC to assure the independence of the appraisal process.

There is much more in the written testimony. You can read it all right HERE.

In my view, there's quite a bit to like about this testimony from the NAR representatives. Nevertheless, there is room for improvement. After all, this hearing was before the Committee on Small Business. There should have been some discussion of the adverse impact of the Home Valuation Code of Conduct on thousands of small, independent appraisers and appraisal companies. Soon, the data will be available about the number of appraisers leaving the profession, primarily because of HAVOC.

Looks like Appraiser Active will have to get busy and compose some talking points for the next hearing.