Re: AMC’s Filing Complaints Against Appraisers.

From ICAP - the Illinois Coalition of Appraisal Professionals

"Good afternoon ICAP’ers,

I am writing to our residential members regarding a growing problem that ICAP is concerned with regarding lenders and AMC’s filing complaints against appraisers.

THE SETUP: You receive a call from a lender or an AMC who wants to talk to you about an appraisal assignment you recently completed for them. The call usually comes from the QC Department at the post closing stage of the loan. They start questioning you on your line item adjustments. All the comparables are on smaller lots then the subject property and they feel your adjustment for lot sizes seems a bit high. You want to be a good little appraiser and not upset your client so you agree that pe rhaps they could have been a little lower. While they have you on the phone, they also ask you if you think your time adjustments were a little aggressive. Again, not wanted to upset a good client, you tell them that maybe you were a little aggressive (even though you really don’t think you were…you’re just trying to appease them), and you state that you will try to find another public data source in the future that is more conservative. Your client thanks you and even tells you to have a nice day. You hang up the phone thinking you handled that rather well. (The following is simply a hypothetical situation used to get a point across)

FAST FORWARD: A month later you receive a letter from the Department of Professional Regulation – Appraisal Division. Your great client filed a complaint against you stating that you openly admitted to them in a phone conversation that you falsely inflated the value of your appraisal by using inappropriate site adjustments. You also stated that you often use non-traditional data sources to intentionally report market trends that are lower than normal to arrive at higher value conclusions. YIKES!!!

THE REALITY OF THE SITUATION: This is really happening to appraisers and since the Dodd-Frank Act more and more lenders and AMC’s are sending in complaints on appraisers.

MORAL OF THE STORY: There is no question that the appraiser is getting slammed here for trying to be a “stand up” guy, attempting to clear up gray areas in their report. They’re engaging in what they perceive to be an honest dialogue with the QC department (long after the loan has been funded). Unfortunately, at the post-closing stage, the lender isn’t looking for you to have a change of heart on your final opinion of value. There are no changes that should be made, but now you have given the QC department ammo for a state complaint.

Also, you should never change parts of your appraisal because you think it will make your client happy. They don’t drive the process. Perhaps you don’t even realize that you are giving someone a reason to file a complaint against you when you agree to the slightest alteration or allow someone elses opinion to dictate how you will complete your assignment. In the meantime they are on the other end of the phone writing down everything you are saying as they prepare to turn you and your report into the state.

DISCLAIMER: I certainly am not telling you to ignore errors and omissions on your reports when I client discovers them and asks for corrections. Nor am I telling you to be unethical. But by trying to be accommodating you could be creating a problem for yourself where one never existed.

I can assure you that the state is receiving these types of complaints. I can’t tell you what lenders or AMC’s are filing these complaints. Also, I am not saying that all lenders and AMC’s support this type of practice.

It’s getting pretty scary out their folks. We don’t have to make it harder on ourselves by reverting to a submissive position every time an angry client calls. We are appraisers not pacifiers!"

ACOW Representative Election

Once again, it is time to elect ACOW representatives.

Ballots are available from:

Appraisers Coalition of Washington
6351 Seaview Avenue NW
Seattle, WA 98107-2664
p: 206.622.8425
f: 206.623.4474

info@acow-wa.org

NAIFA Chapter Xmas Meeting

Our annual Christmas lunch is at the Silverdale Beach Hotel on Wednesday, December 21st, at 12 Noon. Bring a white elephant gift or ornament to exchange.

Michael Imes, IFA

USPAP Update Class - Silverdale

2012-2013 USPAP UPDATE

When: Monday, February 10th, 2012
Time: 08:25 am – 04:25 pm
Where: Silverdale Beach Hotel
3073 NW Bucklin Hill Rd, Silverdale

Instructor: Gail Harmon, IFAS
Credit: 7 hrs. CE, WA State

One Day Class (1 - 7 hour class):
NAIFA Ntl. Member (designated) $120.00
NAIFA Ntl. Member (non-designated) $130.00
Non-Member $150.00
A.C.O.W. 2012 Dues (optional): $45.00

PRE-REGISTRATION BY 01/22/2012 IS REQUIRED DUE TO HAVING TO ORDER USPAP BOOKS.

SEND REGISTRATION TO:
Maureen Crawford
1894 SE Sedgwick Rd #104-142 Port Orchard, WA 98366
Email: Maureen dot nwappraisal at gmail dot com
or Fax: 253.857.6817

ACOW - Elections

Greetings ACOW members,

It is time to gear up for the ACOW 2012 elections. Election ballots will be sent out soon.

If you would like to elect or volunteer to become either an Organization Representative or an ACOW Board Member please notify us as soon as possible. Attached is a list of current Organization Representative. If you would like to fill the open positions or have knowledge that the current position is changing please let us know.

The following ACOW Board Positions are open:

* President

* Vice President

* Treasurer

* Four Director positions

* ACOW Individual Members’ Representative



Here is how the ACOW elections are conducted:

1. Organizations appoint their Representatives, except for the Individual Members’ Representative.
2. Only the representatives elect the ACOW Board members.
3. The Board then elects the President.

Please note: Ballots are accepted by fax, or by teleconference during the ACOW meeting. Email is not acceptable.

Thank you all for your participation


Appraisers Coalition of Washington
6351 Seaview Avenue NW
Seattle, WA 98107-2664
p: 206.622.8425
f: 206.623.4474
info@acow-wa.org

Prosecuting Wall Street, Countrywide Whistleblowers

Prosecuting Wall Street, 60 Minutes (CBS) videos

"Two high-ranking financial whistleblowers say they tried to warn their superiors about defective and even fraudulent mortgages. So why haven't the companies or their executives been prosecuted? Steve Kroft reports."

"Two whistleblowers offer a rare window into the root causes of the subprime mortgage meltdown. Eileen Foster, a former senior executive at Countrywide Financial, and Richard Bowen, a former vice president at Citigroup, tell Steve Kroft the companies ignored their repeated warnings about defective, even fraudulent mortgages. The result, experts say, was a cascading wave of mortgage defaults for which virtually no high-ranking Wall Street executives have been prosecuted."

There are also two links to videos (Part 1 & Part 2) of the 60 minutes presentation on this site.

Important news from ACOW

Dear Washington State Appraisers:

I would like to follow-up with everyone on our last request for additional donations to get through 2011; since I last wrote, we have collected approximately $2,300 in donations for retiring our 2011 lobbyist bill! We currently have an outstanding balance of less than $2,500 and I would like to remind all of those that have not had to the chance to do so, to please consider donating to ACOW now (www.acow-wa.org). And for those that have generously donated, many thanks to you for stepping up and supporting our profession.

In my last letter, we asked appraisers for $100 of which $45 would go towards 2012 ACOW dues and the other $55 would be a donation for 2011; we are extending this request again, now.

As we enter into December, the Washington State Legislature is scheduled to convene for a special session as the state looks to fill the $2B funding gap. Now, more than ever, having our lobbyist to make sure that the appraisers’ dedicated fund is not re-appropriated to the general fund is crucial! Having our lobbyist in Olympia is one way to ensure that our dedicated fund stays with the appraisers.

Additionally, last week I had a meeting with the Washington Environmental Council (www.wecprotects.org), a Washington State-based environmental group that wants to legislate energy‑efficiency amongst real estate professionals (appraisers, agents, and mortgage brokers/ loan originators) in Washington State; they are considering submitting legislation in January 2012 that would require mandatory education (again)!

While there is legislation that was introduced in the national Congress in the S.A.V.E. Act recently that deals with energy-efficiency, this group does not feel that this will happen fast enough and that energy-efficiency consideration in Washington State needs quicker attention. Having met with this group, I was surprised that they are not working with any other industry (akin to the building industry that attempted to legislate “green” education on appraisers in 2009); they simply want to make the environment better (this group is currently in litigation with the Washington State Department of Ecology and is suing them for not enforcing the state’s “Clean Air Act” strong enough with five state oil refineries).

In attempting to legislate this process, they want to dictate which classes Washington State appraisers take for qualifying and continuing education! While it does not appear that this pertains to other “green” movements, they feel that energy-efficiency needs to be considered in every appraisal (both commercial property and residential buildings) assignment. While they recognize the Appraisal Institute’s recently released “Energy-Efficiency Addendum” as a positive step in their quest, they do not believe that real estate professionals understand this concept, or at least are not considering it enough in the industry; they strongly believe that mandatory education will solve all of these problems.

Your ACOW board will be discussing actions to combat this in the coming days and try to offer alternatives to this group to legislation. At our meeting, I also proposed to them that they gather the stakeholders first, to see what is being done, and then if that is not good enough for them, to move ahead—expecting strong opposition from the appraisal profession.

This is where we need your help! As a volunteer organization, most of these legislative battles will be done by our lobbyist, with our input. But, we cannot employ our lobbyist without funding. So please, at this time, consider making a donation to ACOW for 2011 and renewing your membership for 2012. If you already donated to ACOW since my last letter, please consider urging a colleague to donate to the health of our profession.

To contribute to ACOW, use the payment link at www.acow-wa.org or mail a check to:

ACOW
6351 Seaview Ave. NW,
Seattle, WA 98107


Best Personal Regards,
Justin Slack, SRA
2011 President, ACOW Board of Directors
justin.slack@gmail.com

p.s. Annual ACOW elections are coming up so if you have an interest in serving on the board or want to volunteer in any capacity, please be sure to contact us.

Fraud in Real Estate - "Hide the Concessions"

This is a personal editorial based on my experience as an appraiser.

Here's an example of an illegal practice that still goes on after everything that has happened in the housing market.

This condo is listed for $579,000 in Millbrae, CA. There's a nice little video that tells you that if you (the borrower) sign a contract before November 30, 2011, you can get a $15,000 kickback from the "New Homebuyer Assistance Progam," a brand new Mercedes Benz C300 (approximate value: $38,000) and a 1 carat diamond (approximate value: $7,000)! Flowers are on the table, and soft music is playing. Come on down!

The expectation by everyone involved is that the appraiser will ignore the concessions and submit a signed report to the lender valuing the property approximately $60,000 higher than it is actually worth.

Unfortunately, borrowers are often dazzled by this type of offer, not realizing that they can be charged by their state Attorney General as a party to fraud (it is illegal to value non-real estate items as real estate in mortgage transactions), and that they are immediately under water (in this example by over 10%) in value. In the current declining market, it could take most of a decade to recover that loss, as the condo will only honestly appraise for approximately $515,000 to $520,000.

Put another way, if they have to bribe you with sixty grand to buy it, it is not worth the list price.

Of course, realtors, builders and loan officers will scream long and loud, accusing a resistant appraiser of "killing the deal," or "undervaluing" the property, or being "too conservative." Appraisers who refuse to go along risk being blacklisted. Sometimes this takes the passive aggressive form of simply not getting any more work from that client. Other appraisers have experienced blistering, hateful diatribes from abusive clients demanding capitulation. Some appraisers have even been threatened with physical harm to themselves or their families.

A great deal of press has been devoted to blaming appraisers for failed real estate deals, and comparitively speaking, almost nothing has been said about the role that realtors and lenders have played in coercing appraisers and perpetuating illegal practices.

GAO on Residential Appraisals

I scanned, but did not read this 60-page report. It appears to be a presentation of data gathered by the GAO, with no meaningful recommendations for actions, beyond telling various governmental agencies that they need to talk to each other about this topic.

Yes, this is old-ish news, as the report was published last July. I just stumbled across it and thought it might be useful to have posted here.

Excerpt:

“Other lenders and industry groups are having fee studies done in order to comply. Because these studies cannot include the fees AMCs pay to appraisers, some industry participants, including some AMC officials, expect them to demonstrate that appraiser fees should be higher than what AMCs are currently paying.

If that is the case, these lenders would require AMCs to increase the fees they pay to appraisers to a rate consistent with the findings of those studies. The expected result would be an increase in appraisal costs for consumers, as well as potential improvements in appraisal quality.

However, some lenders are evaluating the possibility of no longer using AMCs and managing their own panels of appraisers, which would eliminate the AMC administration fee from the appraisal fee that consumers pay.

Some regulatory officials and lenders told us that lenders can still recover the cost of managing the appraisal process from the consumer in other ways—for example, through higher application fees, origination fees, or interest rates.”


Residential Appraisals: Opportunities to Enhance Oversight of an Evolving Industry

Summary

Full Report (pdf)

'Middleman' appraisers spur concerns

In the wake of AppraiserLoft stiffing appraisers for tens of thousands of dollars, and CoreLogic announcing they are bailing out of AMC ownership, it is good to see AMCs described a little more accurately and thereby getting some of the scrutiny they have long deserved.

Nothing new to appraisers in this article, but consumers should have a more accurate accounting of what they are actually paying for, and more publicity is one way for that to happen:

'Middleman' appraisers spur concerns

Excerpt:

Once borrowers pay the appraisal fee, the lender sends the order to the middleman company that’s tasked to find an appraiser. What happens afterward could reveal a lot about the quality of the valuation, insiders say. Some companies release single proposals to individuals. But some also follow this format: A blast is sent out by email and text message to contact pools as large as 50, “depending on their database,” said Lowe, the appraiser from Carlsbad.

“...The appraiser would start the work, then it would be canceled because they found someone cheaper,” said Vidi, of the appraisers guild. “So the consumer is really not aware of the shenanigans involved.”

...More experienced appraisers are leaving the industry as appraisal fees trend lower. ...The departure of experienced appraisers from the field has made way for novices who are willing to travel longer distances to fulfill orders and likely cram more into their schedules to make up for lower rates, several appraisers have told the Union-Tribune.

American Guild of Appraisers Fights Federal Regulations

American Guild of Appraisers Fights to Overturn Federal Regulations that Dramatically Cut Fees and Threaten Profession


Excerpt

The American Guild of Appraisers (AGA), a national organization of real estate appraisers that is an affiliate of the AFL-CIO's Office and Professional Employees International Union (OPEIU), announced today it has retained a law firm as part of a broad-reaching effort to overturn recent federal regulations that dramatically cut the fees that appraisers are paid to perform appraisals, and threaten the viability of professional appraisal practice and the reliability of appraisals used in real estate transactions.

The full article is here.


ABOUT THE AMERICAN GUILD OF APPRAISERS/OPEIU GUILD 44

The American Guild of Appraisers/OPEIU Guild 44 seeks to represent the interests of appraisers, developing a strong presence before the U.S. Congress and each of the state legislatures. By working closely and exchanging dialog with other like-minded organizations, the AGA works to educate consumers about the appraisers' non bias, independent role in the value process, while ensuring the accountability of both the appraisal profession and the financial institutions with which the appraiser provides services.


Additional viewpoint from Appraiser Scoop

Important ACOW News for all Appraisers

Dear Washington State Appraisers:

As ACOW nears the end of the 2011 calendar year, I want to make sure that we appraisers do not forget that there is a special session starting up in the next few weeks and that we need to be cognizant of what can happen to WA State appraisers when politics are involved!

ACOW had to fight really hard this year for the continuance of REAC, getting the new AMC Law rules in place, as well as not increasing our license fees in successive years.

Achievements that ACOW accomplished this year have included:

• In January, I had the opportunity to offer comments at a House Committee hearing about the elimination of the Real Estate Appraiser Commission (REAC), this was the third year our commission was slated for elimination by the Governor’s office and the third year that ACOW has lobbied against the legislation. We quickly got the REAC removed from the bill, but along the way, it got renamed to the Real Estate Appraiser Advisory Committee (REAAC); something that ACOW fought for 16 years ago in changing the original advisory committee to a commission we have today. Along with this name change, the appointment process would be moving to the Director of Licensing rather than from the Governor. ACOW kept at it and with our lobbyist’s efforts, finally got a sponsor to keep the commission as is, but with the Director’s appointment, in the Special Session. I am happy to report that the Commission has been kept as is, with only the appointments coming from DOL. A new appointee recently has been accepted and will begin a term beginning in December 2011 meaning that there will now be six commissioners with the seventh appointment hopefully coming in December 2012.

• Additionally, in the midst of this year’s budget process, a 484-page document this session, our lobbyist recognized one line that was left over from the prior budget: the ability to raise appraiser license fees! From prior discussions with the Appraiser Program Director at DOL, this was something that caught us off guard. Calling the DOL frantically to find out whom asked and why this was to be included in the budget, their response was “we didn’t ask for any increase!” A day later, I received a callback indicating that this was merely a mistake, left over from the prior budget language in 2009 and that the budget writer was new(er) and it was only an oversight—though a potentially costly one to appraisers, especially given that are license fees increased 30% last year. Hearing that, ACOW took a two-pronged approach: One was to talk to the policy-makers and explain the problem; the other, have our members call our respective legislators and ask them to remove this from the bill. After a week of calls and conversations from and with several appraisers across the state, I am also happy to report that this language was recognized as a mistake and it too, was removed from the bill!

• Another item that has been in recent news is the rule making process for implementing our state’s new AMC law. As you may recall, in March 2010, Washington State became the ninth or tenth state in the country to pass an AMC law; this was several months prior to the Dodd-Frank Act and shows how successful our organization has been for appraisers. In late 2010, the REAC created a rule-making work group to help DOL write the rules for the AMC law; three ACOW board members were on the work group and the draft has been sent to DOL to work through the language. We only found out yesterday afternoon that the AMC Law rule making hearing is today, November 8th, in Olympia. Rest assured that ACOW will be down there at 10:00 am to make sure appraisers’ voices are represented.

ACOW still has an outstanding balance of $4,375 owed to TK Bentler, our lobbyist, due to the limited number of Washington state appraiser ACOW members. I am hopeful that we can raise enough over the next two weeks to retire our 2011 lobbying debts and assure that we can retain the services of our lobbyist in 2012…this is where you come in!

The Olympic Peninsula Chapter of NAIFA, with approximately 20 members, recently sent out a challenge: they mailed ACOW a $2,000 check to help with our lobbying expense; on a per capita basis, this amounted to roughly $100 per chapter member. They are hoping that other chapters or individuals will rise up and contribute an additional $100 for the 2011 campaign!

What ACOW is asking is that appraisers will make a $100 contribution with $55 going towards retiring the 2011 debt and the other $45 going towards your 2012 membership.

At "The Summit" in August, TK mentioned that the AMC’s now have a full-time lobbyist in Olympia looking out for their interests. With January 2012 shortly upon us and the beginning of Washington’s AMC registrations taking effect, we will want to pay special attention to what transpires. With situations like the recent Appraisal Loft debacle, we want to make sure the bond requirement that the AMC Law calls for remains intact and possibly look to strengthen the language to make sure that if any AMC that is licensed in Washington State does something similar to what Appraisal Loft did, that appraisers will have some recourse in collecting on their unpaid debts (For those that are not aware of what happened, Appraisal Loft recently shut its doors with a reported $3 million in outstanding appraisal fees due to appraisers that they have already collected from their clients).

Looking into 2012, ACOW is taking a different approach than what we have done in recent years. ACOW will become a more "all volunteer organization" and limit our administrative costs paid out to Seattle Operating Support. We already have had several board members and other appraisers indicate that they will commit to more of the administrative work to cut costs and we will be looking for more volunteers in the weeks and months to come.

So please, consider contributing now to ACOW to help retire our 2011 debt and continue your membership in our state's coalition for 2012. With your help ACOW will continue to have a strong voice in Olympia for all Washington State Appraisers!

To contribute to ACOW, use the payment link at www.acow-wa.org or mail a check to:

ACOW
6351 Seaview Ave. NW,
Seattle, WA 98107

Best Personal Regards,
Justin Slack, SRA
2011 President, ACOW Board of Directors

P.S. Annual ACOW elections are coming up so if you have an interest in serving on the board or want to volunteer in any capacity, please be sure to contact us.

Corelogic Sells AMC Business

Excerpt:

"During the third quarter, CoreLogic sold five business units and reported them as discontinued, including its appraisal management business, several consumer credit units and its marketing services."

Source


Press release from CoreLogic

Seller Concession in Listings

Excerpted from an email by Dave Towne:

"Appraisers have [a] legal obligation to report any known Comparable Property seller sales concessions on the Fannie/Freddie forms.

However, the attorney for the Washington Association of Realtors has advised Realtor members that they have ‘no obligation to disclose’ concession information if an appraiser calls an Agent for that information. They are treating that as confidential information between seller and buyer as a way to protect the ‘selling price’ of the property. The attorney has also stated that individual Brokerages can establish their own disclosure policy if they so choose.

If an appraiser suspects that there might be a sales concession (to a comparable property), makes a call to the Agent, but the Agent refuses to disclose, the appraiser can include a statement in the report about this, to include the Agent name, Brokerage name, and phone number. This can even be done when the sale info is verified with the listing or sales Agent, even though it appears that no concession was used.

This is the only way I know of for how to protect ourselves. If Agents refuse to cooperate, we have the right to disclose who we talked with to try to obtain information to meet our legal obligation."

Board of Directors Meeting – Preliminary Agenda

Thursday, November 3, 2011, 6:00 p.m. – Please Plan to Begin Promptly

Lamb Hanson Lamb Office – Seattle
4025 Delridge Way SW, Suite 530
Seattle, WA 98106 (206.903.1500)

For the Lamb Hanson Lamb Office, the building elevators close at 5:30pm; for the Lamb Hanson Lamb offices at 5:30pm.

If attending and plan to arrive after this time, please call ahead of time to arrange for access

(For directions, go to: http://acow-wa.org/MtgDates.html)

To attend the meeting via phone conference: -dial 1.218.339.4300 -when prompted dial access code: 872158#

Board of Directors Meeting – Preliminary Agenda

Call to Order

1. Establish Quorum: Justin Slack, President
2. Approval of Agenda: Justin Slack, President
3. Approval of Prior Meeting Minutes: Justin Slack, President

Officer Reports
1. President’s Report: Justin Slack, President
2. Treasurer’s Report: Joe Creech, Treasurer
   a. Monthly and Current YTD Status

Committee Reports

Old Business:
1. Administrative Topics:
    a. TK’s remaining 2011 fee
    b. ACOW beyond 2011
          i.  George Nervick Research
          ii. TK discussions

New Business:
1. 2012 ACOW Elections planning/ discussions (Board Members/ President)

Announcements:
1. Next ACOW Meeting Date:

Adjournment: Justin Slack, President


Board of Directors

Justin Slack, President
Mark Noble, Vice President
Joe Creech, Treasurer
Michael Imes, Secretary
Jodi Standaert, Director
Barry Wilson, Director
George Nervik, Director

ACOW Administration
Appraisers Coalition of Washington
6351 Seaview Avenue NW
Seattle, WA 98107-2664
p: 206.622.8425
f: 206.623.4474

More on ACOW here.