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Editor's Note: This article was first published in Working RE print, Volume 32. Click here for subscription details.
Appraisers are coining a new term for certain appraisal management company (AMC) staff - “Checkbox Chimps.” These are the personnel who are “reviewing” appraisals, and no matter how solid they may be, are instructing appraisers to change their reports. Are they really providing an “appraisal review” or are they just checking boxes on a form? Are these personnel allowed to issue instructions to appraisers? Are their demands crossing the line from standard requests for additional information to subtle attempts at illegal influence and improper intrusion into the process? Appraisers are being inundated by irrelevant requests like - instructions to re-label photographs, additional alternative street scenes or explaining the obvious – for instance, asking whether a porch is covered.
AMCs defend their quality control requests, arguing that if appraisers did their
jobs correctly the first time... but appraisers ask, what does a covered porch
have to do with quality control?
(story continues below) (story continues) What bothers many appraisers these days- even more
than low fees- is the constant and what seems like "unnecessary" challenges to
their reports by AMC staff, who in many instances, appear to be less than
qualified or competent than they are. Most appraisers know firsthand the
extent to which this bogs down the process and negatively affects their
efficiency and profitability. Not to mention delaying or killing deals. Few
understand that some of this behavior may be at odds with state and federal
regulation. Reviewing for “Completeness” According to Hagar, employees of an AMC are permitted to “review” a report for completeness. They can ask questions to verify all required information is included- photographs, sketches, maps, flood numbers, certifications, signatures, etc.: Is the address correct? The homeowner's name spelled correctly? AMC staff is allowed to ask for additional information and clarifications that help the client understand the report. They are also allowed, in limited circumstances, to ask the appraiser to consider additional information that might not have been considered in the original appraisal. However, as Hagar states, there are limits on what is considered “additional information.” “In most of the instances that I’ve reviewed, the original appraiser already considered the ‘additional information’ that the AMC is asking about,” said Hagar. “So it appears that the AMC did not read the entire report, or failed to comprehend what they read.” (story continues below)
(Story continues)
32-3601. Definitions
According to Hagar, it's not just state law, but
there are also clauses in Dodd-Frank, FIRREA, and the Inter-Agency Guidelines
that reinforce state laws and what they say about who can pass judgment on an
appraisal. He also cites language from the Truth in Lending Act (TILA) in
the webinar, which mandates appraisal reviews be completed by appraisers
certified and licensed in the state in which the subject property is located.
Related (recorded) Webinar:
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