Merry Christmas - 2009

Wishing you all a Joy Filled Holiday Season

Real Estate Appraiser Threatens Cuomo!

UPDATE - BAIL REDUCED

Just to be clear, Appraiser Active is not recommending this as a course of action (especially during the Holiday Season)

From the Village Voice:

Latest Death Threat Against New York Official: Jack Geoghan vs. Andrew Cuomo

Just a few days back cops arrested a man who allegedly phoned death threats to Mayor Bloomberg and Ray Kelly. Now 45-year-old Jack Geoghan of Inter County Appraisers of Bayport, New York, is accused of leaving a message at the Attorney General's office promising, "If that fucker Andrew Cuomo is on the Long Island Expressway and his head is blown off with a 30.06, you'll know who did it." Police did not take this as a crimestoppers tip, and hauled Geoghan in. He is charged with terroristic threats and aggravated harassment.

The father also says that as a real-estate appraiser, Geoghan has been annoyed by Cuomo's attempts to regulate that industry, such as the establishment of a Home Valuation Code of Conduct, which requires appraisal fees be split between appraisers and appraisal management companies, which other critics have denounced, albeit less homicidally, as an undue financial hardship on appraisers.

There is much more to be said, but it's probably best to keep my mouth shut.

UPDATE - BAIL REDUCED

Dec. 17--A Bayport man charged with threatening to blow off State Attorney General Andrew Cuomo's head on the Long Island Expressway might have an easier time getting out of jail after a Central Islip judge reduced his bail Thursday.

Prosecutors said Jack Geoghan, 45, said he planned to "unleash the wrath of God" on Cuomo, vowing: "I am going to track him down and shoot him," court records show.

Geoghan's bail, originally set at $500 million at his arraignment Wednesday in First District Court in Central Islip, was reduced to $50,000 cash or $100,000 bond Thursday by State Supreme Court Judge Carol MacKenzie.

MacKenzie acted after Geoghan's attorney, Bryan E. Cameron of Sayville, petitioned for a bail hearing, arguing the original half-billion-dollar bail was "harsh and excessive."

Full Story

1 More Reason to Regulate Appraisal Management Companies

Wouldn't you know it. As soon as I publish "7 Reasons to Regulate Appraisal Management Companies in Florida", I realized the title should have been "8 Reasons". Rather than rewriting the post as ideas come to me and are suggested by others, it seems like a better idea to add posts to the blog.

It seems as though everyone and their brother is jumping on the AMC bandwagon. This company may have been in business since 1991 or since the world was an onion, but their promo demonstrates another reason AMCs must be regulated. Here is the page of interest. Among the "advantages" cited:

100% Loss Warranty - Protection from the liability of an appraisal coming back in the future that could result in a loss.

Will Match any Fee - We will insure competitive pricing and will match any quote provided in writing for any appraisal service.

How in the world can a company be an honest broker for an objective, unbiased, valuation service when the company has an interest in the outcome of the service? If the AMC warrants against loss, does it appear as though the company may have an interest in keeping the opinion of value on the low end? Might the AMC encourage the appraiser to keep the opinion of value close to the AVM estimate?

Is it curious that one of the main "advantages" cited is matching the fee quoted by their competitors? Does this imply a commitment to quality?

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'.

IVPI Promises = Vaporware

We're just counting the days. It's been 7 months (215 days) since the implementation of the Home Valuation Code of Conduct (minus the Independent Valuation Protection Institute) and 2 months (62 days) since Freddie Mac updated their Home Valuation Code of Conduct Q & A Page with the Home Valuation Code of Conduct Interim Complaint form and it's announcement the IVPI Website would be up and running in November. Today is December 1, 2009.

Check the LINK provided by Freddie Mac for the IVPI site. You didn't really expect anything, did you?

Well, if Freddie has not created the promised IVPI, what have they been up to?

There has been a claim by Freddie Mac the HVCC has improved appraisal quality. Of course, the claim is supported only by anecdotal evidence that 15% more appraisals have come acceptably close to the automated valuation model it runs as a check.

Freddie has hired a new CFO.

The government-controlled mortgage finance company is giving CFO Ross Kari compensation worth as much as $5.5 million. That includes an almost $2 million cash signing bonus and a generous salary that could top $2.3 million.

Freddie announced on November 6th, it had posted a $5,000,000,000 loss.

Freddie Mac, the second largest provider of U.S. residential mortgage funding, on Friday posted a loss of $5 billion in the third quarter and predicted it would need more government support amid a "prolonged deterioration" in housing.

In more "good" news, Freddie warned their losses related to the bankruptcy of lender Taylor, Bean & Whitaker may increase.

The claim could add to the fallout from the Taylor Bean bankruptcy, which came after the government suspended its relationship with the firm. Freddie Mac has previously said its exposure to Taylor Bean's obligations to repurchase loans was about $500 million as of Sept. 30.

While total exposures to Taylor Bean are unknown, "the amount of additional losses related to such exposures could be significant," the McLean, Virginia-based company said in a filing with the Securities and Exchange Commission.

If you were inclined to give Freddie Mac (and Fannie Mae) the benefit of the doubt, our suggestion is to avoid holding your breath waiting for the IVPI. Why don't these folks come clean and admit wishful thinking will not make it happen?

Veterans Day - 2009

Please fly your U.S. flag today and express your appreciation to veterans. We have a lot to be thankful for, and veterans need a little more appreciation today.

History of Veterans Day

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.

Another Class Action Suit Filed - AMC Related

Well, well, well. Isn't this appropriate? On the same day a bill is introduced in the Florida House of Representatives to regulate Appraisal Management Companies, Hagens Berman Sobol Shapiro, LLP, files a class action suit against KB Home, Countrywide and LandSafe alleging a widespread and complicated inflation scheme. One of the major players in the alleged scheme is LandSafe, an unregulated Appraisal Management Company, owned by Countrywide.

From the Press Release:

ORLANDO, FL - A Central Florida homeowner forced into foreclosure filed a class-action lawsuit last week against KB Home (NYSE: KBH), Countrywide Financial and LandSafe Appraisal Services, claiming the three conspired to rig housing prices in Florida, South Carolina and North Carolina, costing home purchasers millions of dollars, and fueling the collapse of the region's housing market.

The suit, filed in U.S. District Court in Orlando, Fla. on Friday, October 30, claims the three companies employed a well-planned scheme to control the typically independent appraisal process, jacking up home values, which, in turn, were used to determine the value of other homes sold by KB, affecting thousands of homeowners.
--
According to the 94-page complaint, Countrywide funneled all its KB customers' home appraisals to a single person at LandSafe, an appraisal subsidiary of Countrywide, who in turn would deliver an appraisal value at whatever KB and Countrywide ordered.

The complaint is 94 pages. For the appraisers reading this, the allegations made against the parties are nothing new. We have been watching this going on all around us, sounding the alarm and clamoring for someone, some entity, some regulator, to reign these bastages in.

Read it all RIGHT HERE

Appraiser Active mentioned another HBSS suit HERE. That one makes allegations against Wells Fargo and its appraisal subsidiary Rels Valuation. Isn't it interesting how the banks and their AMCs can game the system and dig deep into consumer's pockets and wallets?

UPDATE - Mary Shanklin of the Orlando Sentinel offers some additional details and statements from KB Homes.

Local suit accuses builder of inflating home appraisals

"It was common practice for builders and subdivision developers to have pet appraisers," Gregoire said. "That was true not only for subdivisions but also for builders within a subdivision or development — and, in particular, for condo converters."

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

Security One Valuation Services - November 2nd UPDATE from Todd Barfield

It's been about a month since the last post with an update from Todd Barfield about the checks issued by Security One Valuation Services, LLC. Although the number of comments has tailed off, plenty of folks continue to email me with questions.

In response to an email sent to Todd over the weekend, this response was received today:

Email from FDIC to SecurityOne October 15, 2009

I can only answer your question on the release of funds: investigations should be completing the review of this account by the end of next week. If it turns out that the FDIC has no claim against this account, the funds will be released immediately.

From FDIC to SecurityOne October 23, 2009

Investigations is in the process of releasing holds. Yours has not been cleared yet. Thank you

There has been no further correspondence from the FDIC

That's all I have right now. If there is anything new, I'll let you know.

Sorry for the light posting and lack of updates. We have been swamped with a bunch of interesting assignments. When time permits, there is some news to post.