Appraisers Fighting Back!
by David Brauner, Editor
The good news this issue is that there is plenty of good news to report on issues important to appraisers: curtailing mortgage fraud, limiting broker price opinions, putting the breaks on data mining of appraisal reports, understanding and combating blacklisting, supporting appraiser independence.
The common theme is that appraisers are “doing it for
themselves”; taking action and making a difference on a state and nation level.
Here’s what we are talking about.
Mortgage Fraud
The website
MortgageFraudWatchList.org is the result
of appraiser Pamela Crowley’s frustration with rampant mortgage fraud. Many
complain but one acted. The intention of the site is to curtail mortgage fraud
by providing a place for appraisers and others to report suspicious activity
anonymously. The site is beginning to produce results as it gains acceptance
among appraisers, lenders, GSEs- like Fannie Mae and Freddie Mac, regulators and
law enforcement.
Read more about the site.
Data Mining
For years appraisers have suspected that lenders and others mine data from
their appraisals without permission; some insist the purpose is to feed AVM
databases (automated appraisals). Lenders, AVM vendors and other insiders
steadfastly deny it, including in these pages (Mythbusters:
Are AVMs Stealing Your Data?).
In a federal class action, a small group of appraisers from across the country
has filed a complaint against FNC, Inc. for allegedly saying one thing but doing
another with their data. The complaint alleges false advertising,
misrepresentation, breach of implied contract and more. It asks $5 million in
damages.
Learn more about
the complaint.
Blacklisting
The blacklisting of appraisers by lenders- placing them on exclusionary
lists, is the latest tremor to rock the industry; as more loans default, more
shoddy and dishonest appraisals surface and more lenders, as a result, press to
root out and remove the bad apples. In a fairly clumsy process, however,
innocent appraisers are caught up in the nets along with the guilty and
incompetent. It is costing many innocent appraisers money, time and sleep.
In the story
Appraiser Blacklisting: Fighting Back
from last issue, we first reported on what now seems commonplace: an
appraiser tried, convicted and banished by a lender without the opportunity to
defend himself. As the subject of that story Michael Read says, “I was on the
Exclusionary List for over two years without knowing anything about it. I was
accused, convicted and punished without ever facing my accuser. What country am
I living in?”
Worse still for Read and others like him, is that the bad
report was circulated in the lending community, causing others to convict him
also. Read fought back and cleared his name. He reports, “Since the story, I
have heard from many appraisers with similar problems, each wanting me to assist
them in their battle. I'll do the best I can. What is more interesting is that
the lender has contacted me saying they are instituting new policies and
training to prevent the same thing from happening again. If you can take them at
their word, this is a good development.”
In response to the piece, we also heard many horror stories, including locating
the source of the bad report but not being able to gain access to it! (See
Readers Respond.) The name of one lender-supported information clearing
house that came up again and again is MARI. So we interviewed them to learn
their purpose and process and to shed light for appraisers trying to clear their
name.
Read
the interview to get some insight.
Appraiser Independence
In Ohio, the state’s Attorney General is suing a group of mortgage firms
under the state's new predatory lending law. In Colorado, legislators
have approved a measure that would make it a crime to
pressure an appraiser or falsify an appraisal (see
Industry News).
Getting it Done in Arkansas
Arkansas Appraiser Tom M. Ferstl, MAI, SRA, EAC wrote us in response
to last issue’s Cover Story,
AVM Tango! Man or Machine?
He sent us a copy of a 2007 bill that he authored which restricts Broker Price
Opinions (BPOs) from being “treated like appraisals” in his state. Act 540,
according to Ferstl, “Effectively bans the use of BPOs in Arkansas that contain
the words ‘appraisal’ or ‘market value,’ if the report is for a
federally-related transaction or sale of a loan via interstate commerce. If you
catch a real estate agent or appraiser using a BPO as a ‘cheapo’ appraisal, you
simply turn the appraisal into the Appraisal Board for prosecution as a Class
‘B’ Misdemeanor.”
Ferstl also was instrumental in passing Act 1035 in 1987 which allows appraisers
to file a lien against property that is the subject of an “unpaid” invoice for
appraisal services. “A very potent collection tool,” says Ferstl.
According to Ferstl, both pieces of legislation would not be possible without a
strong state appraiser group. In his state, it’s the Arkansas Appraisers
Association. “After licensing, we soon
realized that working appraisers needed a united voice to address
legislation and to confront out-of-control licensing boards.
An appraiser coalition, such as the
Arkansas Appraisers Association, seemed like the best way to involve all
appraisers, leaving no one out of the process.”
“As one of only two appraiser-attorneys in
Arkansas, it seemed logical that I would be the spokesperson for the rank and
file, given my familiarity with the law and with legislators, and that I was
comfortable getting up and presenting our position before the various
legislative committees,” he said.
The organization was formed as a voice for the
overall appraisal field, he says, and it now has several hundred members
representing over half the appraisers in Arkansas.
“It is
important for each state to have an active appraiser organization that crosses
the boundaries of the recognized professional appraiser groups,
as no one
group is strong enough to go it alone.
In
addition, an organization such as our Arkansas Appraisers Association
is
able to motivate the vast number of appraisers who do not belong to
professional groups, such as the Appraisal Institute, NAIFA, IAAO, etc.
We
have found that when an appraisal trade group tries to
pass
legislation by themselves, they tend to alienate members
of
competing groups and the appraisers who belong to no group,
thus condemning their efforts to
defeat.”
Read
Arkansas Acts 540 and 1035. For further
information, please visit
http://www.arkansasappraisersassociation.com/. If you have passed similar legislation in your state,
send the details along and we’ll share it with the nation’s appraisers.