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IndyMac: What Goes Around Comes Around -
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The people in charge of hiring the appraiser should not be in charge of hiring the appraiser. Period. The system as it works today and has worked forever is no good, its bankrupt. Just as buyers should have some cash involved in the purchase of a home and should qualify for the loan amount on income vs. expense, some reasonable ratio. And don't forget the credit check. This is all common sense stuff. No rocket scientist's needed.
And anything that Andrew Cuomo is involved in should be looked at with a critical eye. When Cuomo was the head man at HUD his greatest accomplishment was to dismantle the only fair working procedure for assigning an appraiser in the entire real estate industry. B.C. (before Cuomo) FHA assigned the appraiser for all FHA loans. Not the Realtor and not the lender and not the buyer or seller. FHA had a "wheel" type system. And it was blind, just the way an honest system should work.
As an FHA I.D. number was assigned to a case the appraiser was assigned on the basis of their rotation location on the wheel. If I was assigned an appraisal today then I would go to the back of the line. And so on. The appraiser did not do any comp. searches for the lender which is really a bid to see which appraiser will come in at a figure that will make the deal work. He's the guy the lender is looking for. The lender, the realtor, the buyer and seller are all interested in seeing the deal work. The only person that should have no interest in whether or not the deal works is the appraiser.
Which gets us back to how the appraiser is chosen. If any of the above users of real estate appraisals is involved in the choosing of the appraiser the system will not work. See what's happening today. See what happened in the savings and loan industry in the 80s. All are tied to the same problem. The choosing of the appraiser. And that goes for lenders that have appraisers as employees. Same problem. The loan department needs to get out as many loans as they can because that's where the money is made. Pressure is put on them from the top and they in turn put pressure on the appraiser. My background is that I have been in the real estate since 1961. First as a salesman, then as a broker and now as a state certified appraiser. My greatest claim to fame is that I have been fired by just about every lender that has ever hired me to do appraisal work for them.
You see after they find out I am
"difficult to work with" and am not a "team player" they quit using my services.
No reason is usually given, I just find that I am not getting any assignments
from that lender/mortgage broker. Ask any appraiser and he will tell you the
same story. We have all had the same experiences. O.K. I've done my part now
what are you going to do?
- Vince Landolina,
Appraiser/Broker
>>>>
I too had the experience of being blacklisted from
TWO lenders---the first was WAMU----it wasn't recently---but when they first
opened in San Diego they had a type of appraisal oversight dept, I guess that's
what you would call it, and the head of this dept who approved appraisers for
their "list" was a black guy with a BIG attitude----for whatever reason, he
decided he was NOT going to approve me for their list----(I'm a white woman) and
I mean I can not describe the hell this guy put me through----well if you do
this, or get me a copy of this report, oh I'll think it over-----there was never
anything that was wrong with my reports----it was this guy with a power
play-----I finally got approved when this guy left---2 years later!!!!!!! And
the second was SCME-----actually I used to work for them in the late 80's when
they were just starting out---and I left amicably went on to other places, and
they continued to grow. when I got laid off from GMAC mort in 1994 I went on my
own and solicited many of my old loan officers, some of which were at SCME----so
I did work for several of their loan officers, but the work slowly tapered off
into nothing----when I went around to ask what was the deal----I could never get
a straight answer, it was always, well you need to talk to Rob (branch manager)
and I left numerous messages--would never call me back----I asked the people who
were brokering loans to them to find out----they could never get a straight
answer--and when pushed SCME would always approve my appraisals----there was
never really anything---they just had my name flagged so anytime an appraisal
came in with my name it would be a big production and they would tell the broker
it wouldn't be so if they didn't use me-------well, 5 years later I found out
that the branch manager had a hard on because I would not "overlook" issues on
FHA appraisals (I used to work for HUD), and I wouldn't push the values to make
his deals------I saw on the implode-o-meter, SCME was pretty much out of
business----oh darn----I'm not a vengeful person, but "what goes around. comes
around."
- Lynne Thorp
>>>>
I
have worked with Indy Mac Bank for ten years. I can honestly say that I can
count on one hand how many times values were even mentioned. I do not wish to
kick someone when they are down. Other lenders like Ameriquest who I chose not
to deal with were much worse.
- Edward
Hadnott
>>>>
Thanks for
your article. The IndyMac blacklist was, in my opinion, a method of getting
their president's name in the paper. His niche for obtaining publicity was the
weeding out of "bad" appraisers, and his name showed up in the Wall Street
Journal on occasion. One of the appraisers in my office and I (I was supervisor
signature on report) were placed on a "don't use" list that was available for
view on a web site open to the public. The only time in 34 years of practice it
happened to me. No notification or opportunity to address the decision had been
provided to us. I found out from a client. After touting himself as a watchdog
for the industry it turns out he was a high roller with his depositors' money.
Now they're left standing in long lines, hoping for a chance to redeem their
savings. Maybe he should have applied his watchdog tactics to his own operation.
I'm sorry for all of those folks, but I have to confess to a degree of
satisfaction in seeing this one area of fair turnabout.
- Please keep me anonymous.
>>>>
I've been blacklisted recently without discussion and for bogus reasons. I believe this is a new way to get appraiser off their lists when they have issues on values.
I asked the lender to provide
me with the times and dates of these bogus complaints and also for the this
individuals superior. I have yet to hear from them. Is there a way to talk with
a regulator and/or get the senior management in on this? This lender was my best
client and I've been appraising for them for three years without a complaint. In
fact I was told I had a great turnaround time and no issues with compliance or
underwriting.
- Terri Selberg
>>>>
I enjoyed your article on Indymac and blacklisted appraisers. I also ran afoul of these guys. They arbitrarily blacklisted every appraiser in our town (Park City, UT) several years ago because they had a loan go bad here. They specified to our client, a local mortgage broker, which appraiser they could use and he was from a different county and about 40 miles away. The reasons they gave for blacklisting me were completely bogus and my strenuous, fully documented appeals were successful. Their main complaint was that I didn't use any sales from the subject subdivision as comps and that my sales were more than 1 mile away. The property under appraisal was the first house built there. There were no other houses, let alone sales, in the subdivision or within one mile! I gave a rousing cheer when I saw on the news that these dirt bags had gotten their just reward.
It was interesting to see from your article that I
was not alone.
- Walt Chudleigh
>>>>
For years appraisers have
been fighting the fee battle with management companies, so that the AMC's spread
to their clients can be as great as possible. When questioning fees, the typical
answer is that is the "market based pricing in your area." What that really
means is that there is always going to be some bottom feeders working out of
their bedroom with minimal overhead that is going to do their work. Real
appraisers with, commercial offices, staff support people and fee splits to
contract appraisers are not going to do discount work for the AMC's. One such
company is Landsafe which of course managed all of CountryWide's appraiser
vendors. Well guess what? Its just an age old adage you get what you pay for.
Imagine that.
- Name withheld
>>>> I continue to hear about fingers being pointed at appraisers for the melt down. I don't see any statistics. How many loans have gone bad because the appraisal was flawed? How many loans have gone bad because of a no/no and the borrower can't make the payments anymore (more than likely due to an adjustable). How many loans have gone bad because of AVMs?
Inquiring minds want to know. Or, is it, as Jack Nicholson said, "You can't handle the truth." (I don't mean you specifically of course.)
I have not yet read or heard a single news story that gives any detailed info. How can the media, a governor, attorney general, etc just point a finger and say things without backing it up? I cannot believe that a significant percent of foreclosures, or the drop in property values, can be linked to appraisals.
Laws required us to appraise value as of the date of the appraisal. Not the date the crystal ball we were issued with our license indicated. I think we should sue the manufacturers of our crystal balls. (OK, sarcasm. But, a picture is worth ----.)
Does anyone have statistics that show specifically why loans have failed? I cannot imagine NY, FNMAE, FHLMC, etc don't have this info in their investigations. I am assuming they conducted major investigations.
This info showing how many loans failed because a no/no loan borrower stopped (couldn't) make payments. Because a 125% loan borrower walked off on his now "100%" value house. Because an appraiser overvalue a home by 5%/10% (OK, so now I'm laughing).
Because an AVM was so absurd (like duh) a borrower walked off on a home that was then extremely overvalued and he took a chunk of cash and left the mold infested house to the bulldozers. (I have appraised a few of them. Homes that were so bad it actually made me angry that they would make their dogs share the home. The humans can take care of themselves and clean up. The poor dogs are captive.)
I am not sure if any of the
appraisal magazines/organizations are publishing information regarding this. I
have seen none. I think that publishing these statistics (strategically or
otherwise), would be very helpful to ensure competent appraisers are not driven
out of the business and that appraising doesn't fall to communism (doling out an
equal share of appraisals to each appraiser per city). We all know communism is
a perfect answer (OK, more sarcasm).
- Raymond E. Willis
>>>>
Until last year I was one of the IndyMac Senior
Review Appraisers in New Jersey. Yes, they had an Exclusionary list and, to my
knowledge, each appraiser earned his or her way onto the list. The reviewers
such as myself could recommend to the supervisor placement on the list. The
supervisor then emailed the main office in CA with proof that this person earned
his or her way onto the list through serious misrepresentation or apparent
fraud.
- Anonymous
>>>>
Good article. Hopefully Indymac will only be one of
a few but I have a feeling there will be many more FDIC take-overs to come. I
think appraiser independence is a wonderful concept but as long as lenders are
more concerned with how quick and cheap they can get an appraisal, there will
always be some appraisers willing to violate USPAP to get them what they want.
For instance: many AMCs have gone to 24 hour turn times (it was 48 hours for
LandAmerica/Nationwide AMC) and in this declining market Pending sales and
Active listings are the best way to determine where the market is and where it
is going. So how can an appraiser verify the most recent closings and find out
about most recent sales (not yet posted in public records) and pending sales in
24 hours? Realtors do not always pick up the phone and it usually takes at least
2 days for them to respond to e-mail requests (e-mail is my preferred way since
I then have it in writing). Are these appraisers just overlooking some comps? Or
are they assuming that one data source is sufficient? Two data sources are
required. This makes AMCs also a source of appraiser coercion since they force
the appraiser to finish a report before all relative data has been verified. End
result is AMCs are providing the lenders with some unreliable appraisals and
unreliable lender loans. Isn't this what the HVCC was meant to prevent? Somehow
the HVCC has to remove AMCs and their coercive policies from the Lending
dynamics.
I no longer receive appraisals from LandAmerica/Nationwide since I was not
willing to send in a report prior to verifying all data. I wasn't able to meet
their 24 hour turn times on a consistent basis and was not willing to compromise
my reports.
Thank you for the continuous updates in the appraisal profession,
- Scott W. Armstrong, CA Certified Residential Appraiser
>>>>
I just read your article on line at Working RE Magazine and I chuckle to
myself. I have been silent for a long time like many other appraisers I am
sure. I too was blacklisted by a lender and never told why or for which file was
the offense. The funny thing about my issue is, I had never done an appraisal
for this lender to my knowledge. They somehow got one that must have been sold
to them. I don't know but same story, never had any warning or chance to
respond etc. I have been in the "banking" environment for over 15 years and have
never had so much as a slap on the hand so you can imagine this came as quite a
blow to me. But maybe this lender will be next???
Aside from this I have to say, since I am finally writing, that I am tired of the "Whose fault is it anyway?" stuff that keeps going around. Yes, I know there are some appraisers out there that should not be in business but please, put our numbers up against the mortgage industry as a whole and we are but a spec of dust in the market. Add the realtors and investors and we are even smaller. I am tired of reading how appraisers played a big part in what is happening. We receive orders to appraise houses and we do just that. Who is starting the transaction, it is the buyer or borrower and the mortgage lender. Yes, I too agree that there are some uneducated borrowers out there but again, let's be honest, they are a very small percentage of the problem too. With all the information out there today in books, magazines, TV and the web how can you say that people are uneducated and don't know what they are getting into. These people are doing what all of America is doing and that is over extending themselves to get what they want right now! Just like losing weight, no one wants to eat right and exercise they want a quick fix to be beautiful. People have forgotten or never learned how to do things the hard honest way. Working, saving, not overspending and paying your bills to keep your credit up.
Over the past few years since all this began I would do quite a bit of business for lenders who did a lot of "second homes". This is the biggest scam going. I would bet that 95% of the appraisals I did for "second homes" were not for buyers of second homes but of investment properties that buyers were intending to flip or rent and then flip. They were doing 100% financing. Now, I know for a fact the borrower signs papers at application and at closing stating this is a second home. The mortgage documents state over and over that you will occupy this property. These people sign the papers with absolutely no intention of this. Isn't that fraud? They are the ones who have nothing to lose but to walk away no money down yeah it may hurt their credit but are these the type of people who care about that? Of course the same is true for the no income loans. These loans are meant to not verify your income. Meant for self employed people who write off a lot on their taxes. (I know I used to be a mortgage lender.) But what these lenders are (were) doing was making up a number that would qualify the borrower and putting it on the application. And guess what, the borrower signed the application and said yes this is true, I do make this much money. Again, whose fault is that?? I could go on. But you see my point, appraisers don't do anything but appraise the property and I feel we should be kept out of this blame game for the most part.
Final thought, yes I could write a book on all this. Just this week, I did an appraisal for a purchase, FHA financing. The buyer is putting no money down, not one cent. They are getting down payment assistance from a community project of some kind. The sellers are pay 8% in closing costs and prepaids! Have they not learned anything yet? Apparently not. I read how all the lenders have changed their ways and gotten tougher and again I have to laugh and say yeah right!
Sorry for being long winded, I just realized I needed this. Thank you.
>>>>
As I read the latest articles regarding the recreation of morality and ethics, the demise and fall of those institutions that ruled the appraisal world for so many years, I cannot help but think that nothing will change: in the short run, perhaps, as it did in the early 1980's. As people's memories dim, there will always be predators in the lending jungle. As an appraiser who was around from the early 80's, watching the demise of Lincoln Savings and American Savings, if not others even more culpable of questionable practices, I watched the field hopefully change with the onset of licensing, thinking that might weed out the incompetent or the unethical: no, wrong again. Combined with unregulated mortgage agents, unethical appraisers have again participated in a massive fraud, the end of which is still not in sight.
I personally have decided it
is time to leave the field and distance myself from a career that went from
something I was proud of to one of being ashamed of. One either has ethics or
you do not: you cannot teach it or test for it.
- Michael Sherer
>>>>
I have always been amazed at the appraisal industry regarding how appraisers believe it is their God given right to be on a bank's approved list.
None of us would include every plumber or roofer or such in our search to hire someone to do work. Why is it expected that a bank would include every appraiser on their approved list? Why just because an appraiser wants to do work for a particular bank should that bank have to even consider them? Why doesn't the bank have the freedom to use who they want, not use who they want, stop using someone for any reason they want, et al?
There's a lot more than the appraisal report itself that determines whether an appraiser is used or not. Appraisal quality is only one of many issues.
To clarify the above I obviously would condemn any exclusion of an appraiser based solely on sex or race or religion or any of the normally listed items that cannot be considered for jobs, selecting tenants, et al. I am talking above about the simple freedom to decide what vendors you want to work with - a bank should not have to work with someone just because that someone wants to do work for them.
Lastly, appraisers would help
themselves greatly if they actively fired clients. There are a lot of appraisal
users that appraisers should avoid like the plague. Fire those clients that are
intolerable and your life will improve greatly.
- George Mann
>>>>
I read you articles and magazine on a regular basis…I both enjoy reading them and learn something all the time from some of the articles…as a review appraiser (I mean review "appraiser" because I also continue to work in the industry as well as manage the portfolio for the institution that I am employed by)…I see the term "blacklisting" used a lot, but you know, there is always two sides to every story…I maintain an approved appraiser list for our institution and complete random reviews each year…when someone's work is weak, I will sometimes perform special reviews to look at a higher percentage of appraisals submitted….there are times that an appraisers work just does not measure up (comps that aren't comparable, not researching the property adequately, inadequately describing the property) leaving a reviewer with little confidence in the appraiser's work….to keep the financial institutions portfolio safeguarded, appraiser's sometimes need to be removed from the approved list…it shouldn't be identified as blacklisting but as a reviewer protecting the interest of his organization….
I writing just to point out
that there are always circumstances that get missed sometimes when we read about
things like blacklisting….any reviewer/underwriter who removes appraisers for
not "hitting" the number should be punished just like the appraiser is
misleads….again, I truly enjoy reading Working RE, keep up the good work...
- Kim D. Heisler, ARA,
Kawkawlin,
MI
>>>>
Why isn't ANYONE
talking about...REMOVING Mtg Loan Commissions?
Loan Commissions are NOT necessary today. With current technology and the internet the banks can reach ANYONE even in towns with 250 people, ANYWHERE!
There is not a single reason to pay a BROKER a COMMISSION to 'assist' homeowners/buyers in the transaction. The broker rarely even lives in those tiny towns where the improvement is....are we getting the point....the broker from 4 states away got in the deal BECAUSE OF THE INTERNET!
REMOVING THE COMMISSIONED
PARTIES FROM THE TRANSACTION WILL RESOLVE 85% OF THE APPRAISAL/MTG PROBLEMS,
aside from the issue of these companies that are 'datamining' the nations
improvements with poor outdated info.
- Travis Charlton