Thursday, January 5, 2012

A Word of Caution to My Fellow Appraisers!

I was shocked when I opened my most recent edition of Working RE and found the following advertisement.  I urge my professional peers to consider the following BEFORE using these types of  time saving "services".

  • The USPAP requirement for protecting client confidentiality
  • The form fields identified as being 'data fields' are also areas that the appraiser is required to analyze!
  • The subject section is more than data.  It is information that each and everyone of us are required to verify and consider in terms of its potential impact on the assignment we are undertaking.  When the subject is located in an unincorporated area that shares the nearby large incorporated city's mailing address, is the appraiser even going to be aware of it?  Will readers have the necessary explanations.  There are far more issues in this section than I can cover here.
  • Who is going to verify the exact nature of the actual ownership interest(s) that exist, versus an assumed fee interest?
  • Will this 'service' be providing neighborhood boundaries?  What training do they have in that area?  Do they know the difference between physical neighborhood bounds, and competitive market areas?  It is the appraisers job to analyze and report the neighborhood characteristics, NOT some "data recorders"!
  • Appraisers themselves have some demonstrated difficulty in understanding the meaning of so called land use zones as reported in commercial reporting services that report as follows: LC A1 (which really simply A1) or LA RE-15 (which is Residential Estate 15,000 SF minimum sites size); or will we continue to see idiotic entries such as RBR3 rather than the correct MDR for City of Redondo Beach Medium Density Residential uses?  Are these 'data fillers' going to explain the former is an unincorporated Los Angeles County zone, while the latter is a Los Angles City zone?  Are they simply going to record the stated zone per the commercial "public records" source (NDC, RealQuest, DataQuick, FARES, etc.), or are they actually going to look it up in the County or City land use zoning maps and correct / update the 'source' data?  That IS an appraisers responsibility.
The success of appraiser controlled and directed data entry programs (such as DataMaster) makes them legitimate time saving tools, provided  the appraiser understands the need to carefully review and override incorrect or inapplicable entries.

That is NOT the same thing as transmitting your file to an outside service!  If contract information is provided to such a service, the appraiser has specifically violated USPAP by disclosing non public information to third parties.

The very fact that a client or borrower is contemplating a transaction that requires an appraisal is no ones business other than that client or property owner!

I submit, that unless the appraiser has disclosed in advance that they transmit non public as well as public sourced borrowers personal information to third party service providers; AND obtained the clients & borrowers specific advance authorization to do so, that they are in violation of USPAP.

What guarantees do the appraisers, property owners and lender-clients have that the fact of a refinance or sale related appraisal, will not be sold as a lead-list to competitors?  Will appraisals performed for divorce or other litigation purposes be used to develop lead-lists for attorneys? 

Too ALL my peers, I remind you that YOU are held solely responsible for insuring the confidentiality of your privileged client and borrower information.  You alone are responsible for report contents, including verification of all data reported.

I would be very nervous to have my name used as a reference within this ad, or on the providers website. You could advertise just as easily that you "are too lazy to perform the work you have been contracted to perform yourself, and that you further do not fully understand the requirements of USPAP "

With the original introduction of HVCC into the appraisal profession, and prevalence of appraisal management companies interceding as third party appraiser processors for clients, there is already a breakdown in the integrity of the appraisal process, and degradation in appraisal report quality and reliability.

The recent lawsuits by the Federal Housing Finance Agency (FHFA) that oversees Government Sponsored Enterprises (GSEs) such as FNMA and Freddie Mac, involved poor to egregiously poor appraisals for 75% to 97% of the appraisals they reviewed.

Both lawsuits involved high volume, appraisal management, and or discount service providers (Lenders Services and CoreLogic).  The identified losses amounted to hundreds of millions of dollars.

Lenders Services subsidiary LSI has a nationwide reputation for low fees, and appraisers claiming to perform numerous appraisals each and every day.  Some actually think and claim these are USPAP compliant appraisals.  The only people that believe those claims are non appraisers, or rank amateurs!

Let me reiterate: Despite the periodic claims of USPAP-ignorant and or egotistical appraisers, it is not possible  to routinely perform even two complete appraisals per eight hour day from start to finish.  Claims of doing three to four a day are simply unintended admissions of grossly substandard work.  Even allowing for separate day preparation and appointment setting, and separate day field inspection and report writing, the total time will almost always exceed six to eight hours.  That is IF the appraiser has actually performed the required analyses; investigated market data and used it to derive adjustments and adjustment amounts, rather than using rote methods and amounts.

New appraisers: Your goal should be to become the best appraiser you can.  It should never be to claim the ability to do two or three appraisals a day.  THAT sets you up to become a failure, and advertises incompetence.  Insist on adequate turn around times.  Decline work that is required back in forty-eight hours.  It is not enough time to reliably know that you are going to be able to provide a good product.  Ignore the braggarts that routinely make unrealistic claims.

Experienced appraisers:  For years we have largely ignored those who make unrealistic claims in our profession.  We believed they would eventually be identified by the lenders, and weeded out.  That used to be true, but with AMCs there is increased willingness to accept substandard quality across the board.  Diminished quality is becoming the norm with substandard fees and too fast turn times.

It is time to start calling those out who make such false claims, as well as those 'services' that facilitate them!

Read the following carefully, then review what you know to be required for each section of an appraisal and report.  Even assuming you could comply with USPAP doing this, is it time-effective, or is this adding yet another time consuming administrative step that takes longer than if you did did the work yourself?

Circulation 80,000 | Advertise | Subscribe
Published by OREP, E&O Insurance Experts | Jan. 5, 2012

Appraisal Report Data Entry Service
$14.99 Per Report
Don't spend your valuable time doing data entry. Just upload your files to us and we will put the data into the report to your exact specifications.
Overnight Response You save time and money while you sleep and we do your data entry. In the morning you can download your report file with the data entered. You will be notified by email when the report is complete
UAD Compliant Reports! We have all of the latest software versions and our staff is trained in UAD.
Report Areas we will fill in:
·         Subject section
·         Contract section
·         Neighborhood section
·         Site section or Project Site section (as applicable)
·         Improvements or Unit Improvements section (as applicable)
·         Project Information section (as applicable)
·         Comparable Sales Grid section
·         Prior Sales/Transfer information for Subject and Comparables section
·         PUD Information section (as applicable)
·         1004MC Form
·         Sketch!!! Register Now and get them for Free Forever! ($5 value)
Order Rating and 2 Way Messaging Communicate with your Data Entry Professional with the online messaging interface. Rate your completed orders for quality.
Online Dashboard for Order Management Your online dashboard allows you to manage your orders, profile, and update your standard instructions and data entry templates with a state-of-the-art web 2.0 interface.
Supported Formats:
·         WinTOTAL
·         ClickFORMS
·         ACI Software
Customer Quote:
"... I was dreading each day because I knew I got back to the office after a full day of inspections I still had an entire work day ahead of me... Appraiser Aide has been my salvation. Being able to focus on the field work and customer service while confident that the data entry would be completed accurately overnight has allowed me to go from struggling to meet turn-time demands to exceeding expectations."
- Trevor P, Real Value Appraisals
Additional Links:

Call us anytime at 1-888-665-1121
© 2011 Appraiser Aide™. All rights reserved.

   " (End Quote)
I hold Working RE in  very high regard.  They do not necessarily analyze the impact of every ad they run, for compliance within that profession (though they are affiliated with errors and omissions insurance providers).  My criticism is directed solely at the so called service provider offering to inject themselves into the appraisal process, where they have no business being involved.  That providers website FAQs are copied below:
New Quote:
" Frequently Asked Questions

    Do you perform UAD compliant data entry?
  • Yes, performs UAD compliant data entry. If UAD has slowed you down just let us do the job for you and you'll save even more time on UAD appraisals.
  • How much of the appraisal do you complete?
  • We complete all data entry that is provided to us.
  • What do I need to send you?
  • All information you would normally need to complete the appraisal is needed to enter the data. Any information that is not provided will not be included in the appraisal. Also we do require you send a template of the product type ensuring that we meet your standards.
  • Do I need to send a template with each order?
  • No, we will maintain a database of your templates to use for future appraisals.
  • What services do you provide?
  • We are able to complete data entry for all single family, condo, and drive-by appraisals.
  • What sections of the report will you fill in for me?
  • We will fill out these sections of the report as applicable.
    • Subject section
    • Contract section
    • Neighborhood section
    • Site section or Project Site section (as applicable)
    • Improvements or Unit Improvements section (as applicable)
    • Project Information section (as applicable)
    • Comparable Sales Grid section
    • Prior Sales/Transfer information for Subject and Comparables section
    • PUD Information section (as applicable)
    • 1004MC Form
  • How do I send the data?
  • When placing an order online you may upload all of the files that contain the data including pdf, jpg, xls, and txt files.
  • How do I use your service?
  • After registering, we ask that you log in and complete the "Instructions and Reports" area in your dashboard providing us with your general instructions and report examples, then you may order data entry for your appraisals with our online online form uploading a (zap, clk, or aci) file and your associated data files.
  • What is your turn time?
  • All orders received prior to Midnight (PST) (except Hi.) will be processed overnight. Orders placed on Saturday will be available for download on Monday morning.
    No Holidays! No sick days! 6 days a week!
  • How do I make payment?
  • At the end of each month you will receive an invoice for all completed reports for that month, you may send us a check or pay online for the amount due.
  • How will I receive the completed order?
  • You will receive an email the next morning indicating the order was completed. Just log in to your Appraiser Aide Dashboard and download the completed report.
  • Does this comply with USPAP?
  • Yes, we follow the all applicable USPAP guidelines.
  • Do you take Holidays?
  • Yes, the 2011 holiday schedule is Wednesday, Oct 5, Friday Oct 14, and Tuesday Oct 25. As we will have minimal staffing, please allow an extra day for processing for orders placed on these days. You may indicate "URGENT" in the Additional Notes field of the order form and we will try to fulfill it overnight."
" (End Quote)
I dispute the providers claim of USPAP compliance.  Not too long ago, another 'too good to be true' service was making claims of USPP compliance that were false.  Anyone remember ZAIO?

NOTE: No one named Trevor P. shows up in the California Office of Real Estate Appraisers online license search.  "Real value Appraisals" does show up with a different persons (female) name but has a disconnected telephone number listed.