Sounding Bored is my semi-regular column on the state of the appraisal profession. This time I wonder what is in a name.
The other day, I was doing research about the appraisal profession in response to the WSJ article on Saturday that covered appraisal inflation. My post No Smoking Gun: Appraisal Inflation Is More Widespread Than You Think [Matrix] covered a lot of issues regarding the problems with the current state of the profession.
In the process of researching that post, I came across an appraisal firm I am not familiar with and have no firsthand knowledge of their quality and reputation.
I was only interested in the selection of their company name: Aggressive Appraisals -(scroll to bottom of their page).
One of the basic rules of USPAP is not to mislead the reader. I suspect that includes the name of an appraiser’s firm?
The term “Aggressive” suggests Of or relating to an investment philosophy that seeks to achieve above-average returns by accepting above-average risks. From the definition, the name could suggest that they take above average risks to benefit their client’s return.
Read the marketing copy on Aggressive Appraisals site:
- 24-Hour Turn Time! – How much research can be done in 24 hours considering that the inspection would likely be the day after the report would be ordered from the bank.
- Additional Bank Conditions Usually Done Same Day – They must get a lot of addenda requests since it is featured in their advertising so prominently. This also illustrates how the review function is now fairly mechanical and doesn;t have a lot to do with the overall quality of the report.
This is the direction the residential appraisal profession seems to be going in.
Tags: Soapbox Blog, Jonathan Miller
As a 20 year veteran of the real estate profession, I am continually amazed by the unscrupulous behavior of fellow appraisers and mortgage lenders. Twenty years ago, if a lender needed a higher value than provided on the appraisal, a discreet phone call was made to the senior appraiser asking for a reconsideratin of value. Today, loan officers, underwriters, and clerks all believe it is their god given right to harass and intimidate the appraiser until they receive the value needed. None of these mortgage professionals have any compunction about threatening to cut off future assignments if their “numbers” are not met. It would be great if we could place all the blame on the lenders, but the truth is that may appriasers fold like a cheap suit under lender pressure. Appraisers are complicate in this conspiracy and equally share the blame. I won’t pretend to know what the solution to this problem is, but a mortgage/appraisal fraud investigation by the Attorney General’s office might be a good start. Just call me disillusioned.
I would like to add failure to disclose negative attributes of the property or neighborhood to my list of gripes against bad appraisers. These guys not only “hit the number”, but never seem to mention that the subject is adjacent to a full service gas station or a car sales lot. The subject photos are ever so careful not to show a hint of commercial activity around the house. Those appraisers that practice willful and blatant omission should be strung up along side the number hitters.
Now about smoking guns: I recently received an FHA refi order from a loan processor with the FHA case number assigned to me. I was surprised to get an order from this lender since I refused numerous attempts from the loan officer to commit to a value before accepting the assignment. However, before I could inspect the property the loan processor called and told me that the loan officer already had an appraisal done last week and they were just going to have that appraiser slap the FHA case number on the report and reissue it.
Excuse me, but isn’t that an offense worthy of jail time? I called the borrower to get her side of the story since as far as I know I was still the assigned FHA appraiser for this case number. The borrower said that yes an appraiser, who happened to be our local “goto” gal, already did the appraisal and no she was not coming back for a re-inspection.
So where do I find the smoking gun in this scenario? Oh and by the way, if the appraiser hit the number they wanted, then the appraisal is 20% to 40% overvalue!!!