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.

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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.

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'.