Appraiser Active in Washington, D.C.

While browsing at Tampa International Airport, waiting to board my flight to Washington, D.C., I picked up a copy of the Tampa Bay Times. On the tarmac, waiting to take off, I noticed a familiar face looking at me from page 4B; the Business Section. 


The headline:


PINELLAS PROPERTY APPRAISER TO TESTIFY BEFORE HOUSE SUBCOMMITTEE


I'm pleased the writer, Elizabeth Behrman, decided to include these points:

"The bulk of my testimony has to do with ensuring appraiser independence, and the value and importance of appraiser independence," Gregoire said.

"Buyers don't expect the appraiser to just rubber stamp the sale price," he said. "They want a good, honest, objective appraisal by somebody that has the necessary qualifications to do a credible job."

As long as the appraiser can demonstrate that his data is supported and correct, the lender should just lay off," Gregoire said.

For those interested, the testimony I am offering on behalf of the National Association of REALTORS is at this LINK, along with that of the other panel members.


UPDATE: There is a link to the video of the entire hearing at the link above.

This is what the hearing room looked like, just prior to 10:00 A.M. That's subcommittee chair Biggert preparing to gavel the meeting to order.

Appraisal Industry Hearing - June 28, 2012 - UPDATE #1 6-22-2012 UPDATE #2 6-26-2012

In a release, Chairman Spencer Bachus of the U.S. House of Representatives Financial Services Committee, announced the committee and subcommittee schedule for the month of June, 2012.


There is one interesting among them:



Thursday, June 28:
The Insurance and Housing Community Opportunity Subcommittee will hold a hearing on the appraisal industry and regulations impacting the single-family mortgage market. The hearing will begin at 10 a.m. in room 2128 Rayburn.

As soon as more information is available, we will do our best to update this post.


UPDATE #1 - 6-22-2012: The hearing has been added to the calendar of The Committee on Financial Services and is posted online. The new title of the hearing is "Appraisal Oversight: The Regulatory Impact on Consumers and Businesses". We are waiting to see the makeup of the witness panel.


UPDATE #2 - 6-26-2012: The members of the hearing panels have been posted online. Two panels will be providing testimony. Yours truly is on Panel II, providing comments on behalf of the National Association of REALTORS®. The written testimony will be delivered to the committee today, and should be posted online.

AppraiserLoft Update

It might not be the largest scam pulled on appraisers, or even the latest, but it happens to be the one in the news today. According to Lily Leung at the San Diego Union Tribune:

AppraiserLoft, the company in question, has been at the center of several non-payment and late-payment claims from appraisers, former employees and other parties, before and after it shuttered suddenly in October, according to public records. 

In this bundle of cases, administrative law judge Diane Mihalsky found that the company failed to pay Arizona appraisers for completed work within the required 45 days set by Arizona state law -- 181 times. It appears AppraiserLoft either resolved or made attempts to resolve 10 of those cases, but appraisers in the remaining 171 cases say they haven't seen payments yet, court documents show. 

Mihalsky, in a June 6 order, recommended that the Arizona Board of Appraisal fine AppraiserLoft $5,000 for each of the 171 violations, totaling $855,000, and revoke the company's license as an appraisal management company.

AppraiserLoft joins Global Appraisal Solutions, Appraisal Mediation Solutions, (Larry Holzer affiliated companies), and Security One Valuation Services (a Todd Barfield enterprise), as the poster children of fly by night Appraisal Management Companies. The unpaid fees are in the hundreds of thousands of dollars.

Please be careful in extending credit to unknowns.

LiveValuation Magazine: Maintaining Your Workfile

UPDATE! Since the demise of LiveValuation Magazine, the links to the article are dead. The article is now posted on my SCRIBD page, and available after the jump

This topic is also addressed in the Appraiser Active MAYHEM post.

The September issue of LiveValuation Magazine has an article written by yours truly on the subject of workfile maintenance and retention. Maintaining Your Workfile was written to remind appraisers your first line of defense in the event of a suit or complaint is your workfile.

UPDATE:  Over on the Appraiser Law Blog, there is a new post with information about the statute of limitations for suing appraisers. It's worth reading, if only for this quote:

Because this is so frequently misunderstood by appraisers, let me say this first: the relevant time period for suing an appraiser or AMC about an allegedly bad appraisal has nothing to do with USPAP's minimum 5-year record keeping requirement.  (Don't throw those workfiles away!) 

CLICK to Read More

New Laws, New FREAB Members

The Florida Real Estate Appraisal Board held their regular meeting in Orlando April 2 and 3, 2012. This was the first meeting for newly appointed Certified Residential member Matthew Simmons. Matt is a REALTOR® and the Residential Manager for Fort Myers based Maxwell & Hendry Valuation Services, Inc.

The Governor made additional appointments to the FREAB just prior to the April meeting. The current Chair, Evalyn (Fran) Oreto, was appointed to fill one of the Appraisal Management Company positions, and Certified General Appraiser, Mike Rogers, was appointed to a second term. Although she did not attend the April meeting due to the late date of the announcement, Governor Scott also appointed Tamara Jones McKee to fill the vacant Consumer spot on the FREAB. These appointments fill all the vacant positions on the FREAB. 


For fans of Burn Notice, Tamara Jones McKee might be familiar!

The FREAB considered over 20 disciplinary cases. At least six involved a voluntary surrender of license for permanent revocation.

One of the most interesting discussions involved the board developing an answer to a question about out of state reviewers of appraisal reports; must they be licensed in Florida? Although the FREAB did not issue a formal declaratory statement, the consensus made it clear they believe providing appraisal services related to a property in Florida requires registration, license or certification in the Sunshine State.

In addition to making appointments to the Florida Real Estate Appraisal Board, the Governor signed two important bills into law. HB 887 and HB 517 were signed into law on April 8, 2012. HB 887 is effective October 1, 2012, and HB 517 is effective July 1, 2012. There are some important chances to Chapter 475, Part II in both. Most notably, HB 887 establishes discipline if an Appraisal Management Company:

(v) Has required or attempted to require an appraiser to sign any indemnification agreement that would require the appraiser to hold harmless the appraisal management company or its owners, agents, employees, or independent contractors from any liability, damage, loss, or claim arising from the services performed by the appraisal management company or its owners, agents, employees, or independent contractors and not the services performed by the appraiser.

FREAB Meeting - April 2 and 3, 2012

The Florida Real Estate Appraisal Board (FREAB) will be meeting in Orlando April 2 and 3, 2012. This will be the first meeting that includes two FREAB members that represent Appraisal Management Companies.


A couple of weeks ago, Governor Rick Scott appointed Evalyn F. (Fran) Oreto to the second AMC position.  At the same time, Governor Scott appointed Michael J. Rogers to a second term, filling one of the State-Certified General Appraiser positions. Fran Oreto had just completed a term as a State-Certified Residential Appraiser member. She served as Chair of the FREAB in 2011, and was elected as Chair for 2012 during the February, 2012 meeting. 


As another March, 2012 appointee, Matthew S. Simmons  will be attending his first meeting as a State-Certified Residential Appraiser member.


Since I will be attending the Probable Cause Panel meeting on Wednesday, April 4th as a past  member of FREAB, I had planned to attend the Monday and Tuesday sessions. Unfortunately, due to assignment deadlines and workload, I won't get a chance to get up to Orlando until Tuesday morning. We'll try to get some photos and an update posted later this week. It should be an interesting meeting. 

Remembering Jon

In honor of my nephew, Jon, this a repeat of a post from March 15, 2010. We think of you every day.

It's a sad day in the Appraiser Active family. My nephew, Jonathan Porto, a Marine, was killed yesterday in a non-combat accident in Afghanistan, near Marjah. My sister, Rachel, his mother, Jon's wife, Rachel Jewell Porto, and their two month old daughter, Ariana, could use your prayers. Jon was 26.




The Hillsborough County Sheriff's Office provided an escort for the motorcade from MacDill Air Force Base to St. Petersburg. The Tampa Bay Community showed their respect for Cpl Jonathan Porto.



Barbara Guzzon had produced the first segment of a tribute video.

Cpl. Jonathan D. Porto - "Bringing Him Home" from DiamondFilms on Vimeo.

Two Bills With Appraisal Implications: To Governor's Desk

The regular session of the 2012 Florida Legislature wound up on March 9th. Hundreds of bills were considered, but the papers and news sites spent their time watching the usual subjects. Appraiser Active watched several bills with important amendments to Chapter 475, Part II, and implications for Florida Appraisers. After winding their way through committee meetings, analysis by staff, negotiation and amendments, two bills with significant amendments to Chapter 475, Part II were passed by the Florida House and Senate; HB 517 and HB 887. Both are headed to Governor Scott for his signature.


Here are the highlights. 

Probably the most important is the amendment to 475.6245 Discipline of appraisal management companies. Included among the grounds for discipline is this language:

(v) Has required or attempted to require an appraiser to sign any indemnification agreement that would require the appraiser to hold harmless the appraisal management company or its owners, agents, employees, or independent contractors from any liability, damage, loss, or claim arising from the services performed by the appraisal management company or its owners, agents, employees, or independent contractors and not the services performed by the appraiser.

Both HB 517 and HB 887 revise the definition of appraisal management company and appraisal management services.

(c) "Appraisal management company" means a person who performs appraisal management services regardless of the use of the term "appraisal management company," "appraiser cooperative," "appraiser portal," "mortgage technology company," or other term. (d) "Appraisal management services" means the coordination or management of appraisal services for compensation by: 1. Employing, contracting with, or otherwise retaining one or more licensed or certified appraisers to perform appraisal 370 services for a client; or 2. Acting as a broker or intermediary between a client and one or more licensed or certified appraisers to facilitate the client's employing, contracting with, or otherwise retaining the appraisers.

The term "subsidiary" is defined with respect to the relationship between appraisal management companies and banking entities.

(t) "Subsidiary" means an organization that is owned and controlled by a financial institution that is regulated by a federal financial institution regulatory agency.

To comply with the Dodd-Frank Act, an exemption was created for appraisal management companies owned and controlled by a federally regulated financial institution.

Additional amendments require the Florida Real Estate Appraisal Board to adopt standards of practice that "meet or exceed nationally recognized standards of appraisal practice, including standards adopted by the Appraisal Standards Board of the Appraisal Foundation.

Applicants for appraiser registration, certification, or registration as an appraisal management companies must sign a pledge indicating that upon becoming registered or certified, she or he will comply with the standards of professional practice established by rule of the board, including standards for the development or communication of a real estate appraisal.


If signed by the Governor, HB 517 has an effective date of July 1, 2012, and HB 887 will be effective October 1, 2012. Afterwards, the FREAB will certainly be busy working on rules to implement the new provisions.

Ken Harney Shines a Light on AMC Appraisal Fee Splits

Along with all the appraisal related mandates in the Dodd-Frank Act is the primary reason for the legislation; creation of the Consumer Financial Protection Bureau.


The CFPB and the individual recent appointed to head the agency have been in the news quite a bit recently. Without offering any opinion about the agency, the appointments, and the politics, it is important to be aware of the CFPB's massive rule making authority. 


This week, Ken Harney writes about the CFPB reviewing ways to bring more clarity and better disclosure to fees associated with Real Estate Transactions. The focus of the story is the failure to inform borrowers of the fact a significant part of the fee may be paid to an affiliate or subsidiary of the lender. The CFPB is considering rules to require disclosure of the portion of the appraisal fee retained by Appraisal Management Companies.

Ken writes:

One of the fees being scrutinized might surprise you: appraisal charges. Why do they need clarifying? Doesn’t just about everybody who applies for a mortgage, whether it’s to buy a house or refinance, have to pay $450 to $600 — sometimes more — to find out what the property is worth?

and

Say you’re charged $550. There is no hint that the appraiser may be getting $250, with the rest going to the management company and the lender. The CFPB is considering whether to shed light on this by mandating two disclosures: what the appraiser is paid and what the management company is taking.

Frank Gregoire, a past chairman of the Florida Real Estate Appraisal Board, which oversees and regulates the industry in that state, says that while appraiser independence is important, banks and their affiliated management firms are raising the costs of appraisals to consumers without improving services.

Defenders of management firms, such as Donald E. Kelly, executive director of the Real Estate Valuation Advocacy Association, strongly disagree. Kelly says management firms perform the “back office” functions — including reviews and quality control — “that in the past were done by lender staff and employees.” In other words, they earn the money they get. And there’s no pressing need for consumers to see additional disclosures. They just need to know the bottom line.

Read the article HERE.
On the floor, next to my desk, is a stack of appraisal reports. Borrowers, lenders, real estate agents, and other appraisers sent them my way as examples of shoddy work and lack of quality control by AMCs. How do appraisal reports pass through a quality control check when the appraiser cites ZILLOW or TRULIA as the source of his date of sale, time, or market conditions adjustment, and that it is based on data from a zip code, not a market area? >
Wondering.

Florida Realtors Mid-Winter Meetings - January 11 - 15, 2012

Florida Realtors meet in Orlando this week. There is an Appraisal Council meeting on Friday, January 13, 2012 at 1:00-2:30pm in the Captain room at the Buena Vista Palace. The agenda includes quite a bit of interesting topics for discussion.

If you are a Florida Realtor - Appraiser, it would be great to have you attend. You may register onsite. There is no registration fee for Realtor - Appraisers.