Letters to the Editor: April 2008

Steps Toward Solving the Problem

“Your Rights-Appraising Real Estate Appraisers and Appraisals”
rismedia.com
February 18, 2008

An Honest Effort

Curtis (Seltzer) has hit a few nails right on the head and yet ignored several that would clean up these problems in the lending industry as well as the appraisal industry. For quite some time, my dealings with loan officers showed very little respect for our profession. Loan officers, many of whom are fresh out of the fast-food business, have virtually no experience in the field that they have entered. Often, it has been my experience that the loan officers I deal with are being trained on the job by other loan officers who were trained likewise. Thus, attitudes and illegal activity dealing with appraisers is considered commonplace and the “right thing to do” to get the loan through the proper channels. They openly ask an appraiser to violate USPAP (Uniform Standards of Professional Appraisal Practice) standards, hit the numbers and threaten no additional business unless we make sure the value is there.

While I have no desire to further increase the intrusion into American business by state and federal government, it is a plain fact: loan officers need to be licensed and regulated. They need education in the same USPAP laws and lending rules that the appraisers operate by.

This article is one of many I have seen where the blame has been dumped on the appraisers. The fact of the matter is, I know numerous honest appraisers who work diligently to produce quality reports that greatly reduce the risk faced by the lending institutions. Of course, as it is with all professions, we only hear about the “bad” members and not the ones who work behind the scenes to report the actual FMV (fair market value).

With the recent huge jump in educational requirements and field-training requirements for appraisers nationwide, I suspect the “bad” appraisers are all going to end up prosecuted or out of business very shortly. The Appraisal Institute and other state and federal departments are working hard to uncover these dishonest appraisers, loan officers and lending institutions.

I have some additional (opinions regarding) real estate agents. During this tremendous downtime in the market, I have experienced numerous home purchases involving heavy pressure from the selling agent to “hit the numbers.” My response has been to tell them directly that hitting the numbers just to make the sale go through is a violation of federal and state appraisal laws. I add that what the buyer will receive is an honest report illustrating all the avenues our company explored in reaching our final value conclusion. Accordingly, our customers come back to us over and over for reports that keep the risk factor under control for their lenders.

Real estate agents have been some of our best sources for information on comparables and subject properties in this business. However, like the loan officers, real estate agents need education in the area of USPAP laws so that they can understand what they can and cannot ask an appraiser to do.

Mr. Seltzer is correct-lenders have no incentive to request an honest appraisal and all the incentive to make the deal happen because they will profit handsomely. There must be teeth to make sure their appraisal is above board and on the money for a final market value. There has to be fines and loss of licensure, even jail time, just as there is for appraisers.

The lawmakers must recognize that we need regulation and licensure that covers all steps in the process or the problem will never be solved.

Thomas G. Sadler
Dependable Appraisal, LLC
Dryden, Michigan