Friday, October 28, 2011

Appraisal Independence Requirements

From Dave Towne:

It must be said very simply: the appraiser is the one who controls report content. But it’s also incumbent on appraisers to include relevant details and plenty of commentary to justify their opinions, and of course, the final opinion of value. I think this is where some appraisers hang themselves. But others do it well, and still get asked to make changes. That is not necessarily appropriate.

Despite negative comments about the Dodd-Frank law and some movement to repeal it, it has a section devoted to Appraisal Independence Requirements. ...I recommend that you read it, print it and keep it next to your computer, and also save it to your computer so that you can send it to entities who use inappropriate tactics against you.

Note that the wording of the AIR has this:

No one connected to the property in any way “shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner…”

Per the law, clients, etc., are allowed to request that the appraiser provide ‘additional comments’ about the information within a report, and to provide more explanation. They can also send you additional properties to consider, ...but many overlook the specific wording that states those ‘comps’ must be “APPROPRIATELY COMPARABLE.”

The mere fact that those properties magically have sale prices close to the desired appraisal value is no coincidence, but that fact alone does not make them ‘appropriately comparable.’

Your defense & preservation is knowledge of the law, writing good reports with enough CYA and other relevant comments, and crafting responses that define and demand your independence in the mortgage lending process when inappropriate requests are made.

Dave Towne

Thursday, October 27, 2011

Appraising Green Homes -- CE

From Chris Mayou:

We had a great response to our first Appraising Green Homes training in Kitsap County. Due to the high turnout at the first class, the agencies involved in funding this course think it's possible to train close to 100% of the appraisers who work in Kitsap County! So, another training date has been added.

This course is designed to build participants' knowledge of green building and will provide an introduction to all phases of green residential construction, from proper siting of a home to finish material selection. Participants will analyze valuation studies and cost data for green residential projects and will engage in appraising green homes through case studies.

Questions? Contact Chris Mayou at or 503.968.7160 x18

Date & Time: November 15 & 16, 2011 - 8:30a.m.- 4:30p.m.
Location: Silverdale Community Center- Evergreen Room 1
9729 Silverdale Way NW 1 Silverdale, WA 98311

Cost: $50 (Regular admission $349)
CEUs: 14 clock hours;
Washington approved provider: Watkins and Associates

Register NOW!

Tuesday, October 25, 2011

CA Appraiser Guilty in Mortgage Fraud Scam


"Lila Rizk was a licensed real estate appraiser based in Orange County, California. She did business with Mark Abrams, a mortgage broker, and his business partner Charles Elliott Fitzgerald, a real estate developer. Between July 2000 and January 2003, Abrams, Fitzgerald, and others associated with them initiated and carried out a scheme to defraud mortgage lenders.

Losses to these lenders in total exceeded $40 million."

The court opinion is here.

Tuesday, October 18, 2011

New IRS Voluntary Compliance Initiative

New IRS Voluntary Compliance Initiative for Misclassified Independent Contractors


On September 21, 2011, the IRS introduced an extremely favorable settlement program for those who have misclassified employees as independent contractors to reclassify them and eliminate the tax exposure.

This favorable program includes audit protection for prior years and abatement of interest and penalties.

Ann O'Rourke(Appraisal Today): Misclassifying appraisers as independent contractors, not employees, can be very, very expensive.


Friday, October 14, 2011

iAppraisal Advantage attempts to legitimize BPOs

From Dave Towne, the following emails:

Subject: iAppraisal Advantage-- We have work in WASHINGTON, ARE YOU SIGNED UP FOR THIS PRODUCT?

From: Stephanie Eckes
Sent: Wed, Oct 12, 2011 6:31 pm


We have a client who is ready to start placing orders for the new iAppraisal Advantage report in your area. Please let me know if you are interested in completing this product and what your fee will be.

Most of the vendors completing this product for us today are charging in the $20.00-$35.00 range. They have said that the first report takes approximately 45 minutes to complete but once you are familiar with the form and the process that each order takes approximately 20 to 30 minutes.

Stephanie Eckes

Sent: Thursday, October 13, 2011 10:11 AM
To: Stephanie Eckes

Let me see if I understand this correctly. This "new product" is a BPO sent to me an appraiser. I'm to review the BPO's opinion and data. Pull my own research, review my research against the BPO, then render an estimated market value as an Appraiser on the subject based on a desk review of a BPO and my verification of the BPO is that about right?


Sent: Thu, Oct 13, 2011 7:17 am
From: Stephanie Eckes

You got it.

Sent: Thursday, October 13, 2011
To: Stephanie Eckes

Good Morning Stephanie!!

Thought so. This will give total credibility to a broker's opinion of value. It will in the end legitimize Brokers to bankers/lenders of what their estimation of what market value is by establishing a track record and in the end, I cut my own throat. I hope every appraiser turns you down.

I shall not be part of it.


Saturday, October 8, 2011

Understanding State Board Enforcement

By Timothy C Andersen, MAI


"It is interesting to note that to violate a state's appraiser certification law is not a crime, per se. It is not illegal, either, which means it is not "breaking the law." It is unlawful, however, which means to do something in a manner the law does not authorize. Since violation of a state's appraiser certification law is not a crime, the protection of our Federal Constitution- "innocent until proven guilty," does not apply.

When the state sends a letter it informs you that you are guilty of a violation of USPAP and/or state law. There are no hearings, no trial, no judge, no jury. You are guilty. You can defend yourself and the state may even drop some of the charges. However, you are guilty of something for no other reason than the state says you are."


Monday, October 3, 2011

Appraiser Goes to Jail


"John F. Hochrek, Jr., 50, Spring Grove, Illinois, was sentenced by United States District Judge Lynn S. Adelman to 6 months in prison for his role in a mortgage fraud scheme involving at least 44 residential properties and millions of dollars of loss."

"Hochrek participated in the scheme as a licensed appraiser (doing business as Tri-County Appraisals in Wisconsin and Illinois) and as a real estate agent. Hochrek provided inflated appraisals for approximately 37 properties and negotiated sales contracts for approximately 15 of the properties, knowing that their values would be falsely inflated."


[Ed.: Hmm. 37 appraisals at, let's say, $350 each... He traded his livelihood for a felony conviction and $12,950. I'll bet he was telling everyone, "Hey! [I] need money to feed [my] kids and [I'm] over a barrel!" Or something like that.]

Sunday, October 2, 2011

MERS Wins One

Electronic mortgage-registry firm wins in appeal

A three-judge panel rules the plaintiffs did not show that the alleged illegalities associated with the MERS system injured them or violated state law.

By Karen Gullo - Bloomberg News

Mortgage Electronic Registration Systems (MERS), the operator of an electronic registry of mortgages, and lenders won a U.S. appeals-court ruling upholding dismissal of claims by Arizona borrowers challenging their lending and foreclosure procedures.

The federal court in San Francisco ruled Wednesday that a district court properly threw out a lawsuit filed by three borrowers alleging conspiracy and fraud.

In addition to MERS, defendants included Bank of America and JPMorgan Chase.

"The plaintiffs' claims that focus on the operation of the MERS system ultimately fail because the plaintiffs have not shown that the alleged illegalities associated with the MERS system injured them or violated state law," the three-judge appeals panel said.

MERS, a unit of Reston, Va.-based Merscorp, bills itself as a provider of "support services to the mortgage industry," specifically tracking the servicing rights and ownership interests in mortgage loans.

The company lets banks electronically register their sales of home loans so they can avoid trudging down to the county records office.[Ed: Seriously? NOBODY trudges down to the Courthouse any more. Haven't these people heard of the "Internets?"]

The Arizona borrowers, who are Hispanic and didn't speak or read English, had executed deeds naming MERS as the "beneficiary" and "nominee" for the lender.

After the borrowers defaulted on the loans, MERS recorded documents assigning its interest in the deeds to a bank appointed by the lender as trustee to foreclose on the properties, which were sold at auction, the ruling says.

The borrowers sued, alleging that MERS members conspired to commit fraud by using the registry as a sham beneficiary, promoting predatory lending practices and making it impossible for borrowers or regulators to track when their loans changed hands.

The Arizona district court dismissed the case without giving the plaintiffs an opportunity to amend the suit to add wrongful foreclosure claims related to MERS' procedures.

"This is a very good opinion for MERS," said Janis Smith, a company spokeswoman.

"The court found that borrowers were in no way injured by any action taken by MERS," Smith said.

Robert Hager, a Reno, Nev.-based lawyer for the borrowers, said that while "these particular plaintiffs were denied relief because of the particular facts and because they're in Arizona, there's a great deal of good analysis and law about MERS and the recording system in general that will help" other plaintiffs in the San Francisco-based appeals court.

Dozens of lawsuits claiming MERS itself is a fraud have been consolidated for pretrial proceedings in federal court in Phoenix.


LiveValuation Publisher Resigns

From Ann O'Rourke, MAI, SRA (Appraisal Today):

San Diego, California- the Publisher of LiveValuation Magazine resigned on Tuesday, October 11, 2011 after last-minute negotiations to purchase the magazine failed. Ernest W. Durbin II was the publisher of the national monthly valuation magazine since its inception in May of 2009. The sole owner of the publication is Aman S. Makkar who recently closed his Appraisal Management Company AppraiserLoft. The magazine was a separate entity.

LiveValuation Magazine launched in May of 2009 featuring articles written by leaders in the residential real estate valuation industry. The magazine has been well received and is known for its creative design and thought-provoking content. Durbin attempted to purchase the assets of the magazine and continue publishing it with its current staff, when terms could not be negotiated; he resigned as publisher earlier this week.

Durbin states, "I have really enjoyed the publication space. Many of the authors and advertisers are my friends or have become my friends. I can't speak to the longevity of LiveValuation Magazine but as publisher I was surrounded by real thought leaders in valuation. I trust that the authors I worked with will find other avenues for their valuable insights."

Saturday, October 1, 2011

CNBC Video on "Too Big to Fail"

Another video for those of you who have not seen it, or would like to direct it to others.

"Has the too big to fail, bailout nation policies left us doomed to repeat the same old mistakes? Insight with Josh Rosner, Graham Fisher & Co. and Gretchen Morgenson, The New York Times."

Click here to view