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  • Brian | | 11 May 2010, 10:06 AM Agree 0
    Benji,
    I have no doubt your intentions are good but you really should discover all the facts in order to understand the big picture, then determine if a specific 'fix' is appropriate, or even necessary. Obviously, being a trainee you weren't in the industry to witness the events that led us here so here are the facts you should know;
    In my capacity getting an appraisal out the door is not the end, but only one step in a complicated, many step process. Therefore I see first hand all the negative ways the current appraisal process is affecting consumers and the industry through the financing process. It creates inefficiencies, needless expense, and drains the resources of other areas of our industry. No doubt you are aware that roughly 40% of all mortgage applications are being denied. Not all of them for appraisal issues but a too conservative appraisal is just as bad as an inflated appraisal. This creates needless expense and stress for consumers (time, appraisals, inspections), real estate agents, mortgage originators, attorneys,
    and title companies. These increased costs are eventually paid by the consumer. All these areas of the industry are affected except the appraisal company which always get their fee ? and is collected for them by the mortgage originator.
    The big problem is making the case that unscrupulous appraisers throughout the nation either colluded, or all became
    unethical at the same time as to cause a national housing bubble and bust on a national scale. If you have any proof
    or link proving this I would be very interested in seeing it. I do not believe any evidence exists to support this premise. Therefore, an attempt to ?fix? this will do little to prevent a housing bubble and bust from happening again.
    The only possible cause, affecting every nook and cranny of every housing market in the United States was exceedingly low rates for an extended period of time. This caused the rush to housing, the bubble, and triggered the chain of events
    that came after it. As rate rose throughout 2005 the appreciated values corresponding to low interest rates could not be sustained as affordability is a function of sales price and rate, and the median buyer was no longer able to afford housing, hence the bust. Low rates also masked fundamental weakness in the economy that compounded the problem as rates rose, exacerbating the bust. Without that extended period of exceedingly low rates the housing bubble never would have happened. It wasn?t a few bad appraisers, mortgage originators, or real estate agents, (which of course there are always a few), no, it was something that had impact on a much broader scale, that could penetrate every market in the US, mortgage rates.
    Even the Dallas FED Chief admitted rates were at least .5% lower than they should have been in that time frame. Look up the definition of the FED and you will see it is nothing more than a cartel of banks. Here?s a brief definition from the web;

    Noun
    S: (n) Federal Reserve System, Federal Reserve, Fed, FRS (the central bank of the United States; incorporates 12 Federal Reserve branch banks and all national banks and state-chartered commercial banks and some trust companies) "the Fed seeks to control the United States economy by raising and lowering short-term interest rates and the money supply"
    You see it?s right there in the definition ?control the economy?. There is no other force that has the power to affect the entire economy to such an extent. This is where focus to prevent another bubble should be put. Anything else is just window dressing. Unfortunately big banks have an incredibly strong lobbying presence in Washington. And through the many mergers as of late, they have become even bigger, more consolidated, and stronger than ever, so changing this will take a Herculean effort from our legislators which I do not see happening. Therefore focus will be put on appraisers, originators, real estate agents and ?financial reform? (which may help), so legislators can say they fixed the problem.
    In 2004 Greenspan was asked if he was concerned with the housing bubble and he said ?No, the Fed is only concerned about inflation, which is in check at this time?.
    There was no secret about what was happening and even though the word housing bubble was a household word as early as 2002, it was business as usual for everyone that could have effected a change.
    This is the undeniable reason for the bubble and bust. A few bad appraisers did not have the power to affect the National Housing Market on such a scale, to claim so is ludicrous. The process in place to addresses this as a ?cause? is only hurting the industry and consumers.
    The current appraisal process:
    Costs the consumer too much.
    Discourages consumers from seeking financing.
    Limits consumer flexibility in seeking financing.
    Increases complexity and time frames for the completion of financing to the detriment of the consumer.
    Reduces careers of licensed, highly trained, skilled professionals to that of order takers.
    Eliminates the ability of appraisers to compete on price or service.
    Hurts the consumer by not allowing appraisers to compete for business.
    Lowers quality of appraisals.
    Lowers service levels.
    For these reasons and others the current process should be reversed. I believe overall that appraisers have the backbone to be ethical.
    If they don?t they are simply in the wrong business.
    In addition, the best and only way to identify poor appraisals is through better underwriting. Without better underwriting to identify bad appraisals bad mortgage decisions will still be made based on them, but this will take a commitment from the banks.
    These are my beliefs with supporting information which I hope you can adopt as your own.
  • BenjiBrossette | | 11 May 2010, 12:37 PM Agree 0
    Hi Brian, you're post is noted. I think we can both agree there appears to be centralized behavior. Interest rates play a supporting role in my opinion.

    Yes; I am a Trainee. It does not bother me - I handle it <em>as it goes</em>...(maybe I should write a lengthy bio)

    Brian, if I may ask, are you a Real Estate Appraiser?


    Benji
  • Cory | | 13 May 2010, 08:16 AM Agree 0
    I'd say by the looks of it, he's a mortgage officer.

    Brian hit it right on the head. I apologize Benji, but I'm am going to go out on a limb and say you haven't seen the full spectrum. I'm sure all you've heard is how mortgage officers put pressure on appraiser's. Sure, they are some out there.What about the people that spent years building referral relationships and could portray to each other about their concerns about a property before spending a customer's money?

    I am sure to you, HVCC makes sense. You are probably gaining from getting trained by an AMC. Unfortunatley, AMC's hire the inexperienced appraisers in many cases because they will work cheap and want to bang out as many reports as possible. Unfortunatley that leaves the consumer with inferior work. I'm not trying to imply that you aren't any good, I have never seen your work. I also am not from Louisianna and I wouldn't have enough experience in lending there, just like you wouldn't know how to accuratley depict value in Wisconsin. There are differences in regions that require different approaches.

    In the end, you get paid anyway. I might add that your are getting much less than your AMC's are charging to "manage" you.

    If you saw the other side and positioned yourself with the right lenders I am sure you'd feel otherwise. You'd also see more business, but you have to have the experience to earn it. Not because it was handed to you. I understand the illusion of fairness is ideal, but that doesn't motivate anyone to go above and beyond and provide something that the others won't.
  • BenjiBrossette | | 13 May 2010, 10:34 AM Agree 0
    <em>"...I?d say by the looks of it, he?s a mortgage officer."</em>

    <strong>Ok?</strong>

    <em>"...Brian hit it right on the head. I apologize Benji, but I am going to go out on a limb and say you haven?t seen the full spectrum." </em>

    <strong>No need to apologize, but I appreciate the gesture. It is a nice gesture. </strong>


    <em>"...I?m sure all you?ve heard is how mortgage officers put pressure on appraiser?s. Sure, they are some out there." </em>

    <strong>My senses have leaned toward just hearing. We have to account for the social interest, as well as, the self interest. </strong>

    <em>"...What about the people that spent years building referral relationships and could portray to each other about their concerns about a property before spending a customer?s money?"</em>

    <strong>What about - which appears to be, what you are showcasing - comp. checking? Advocacy is not my problem. The health of the real estate market is my observance and scope of work. </strong>

    <em>"...I am sure to you, HVCC makes sense. You are probably gaining from getting trained by an AMC."</em>

    <strong>AMCs cannot train and manage themselves. What truly makes you think I am gaining from being trained by an AMC? The AMCs who read this blog and know of me, are fully aware that I am not trained by the AMC. I gained from Independent Real Estate Appraisers across the United States. A few are probably watching this blog. </strong>

    <em>"...Unfortunatley, AMC?s hire the inexperienced appraisers in many cases because they will work cheap and want to bang out as many reports as possible. Unfortunatley that leaves the consumer with inferior work." </em>

    <strong>They have been doing this for years, before the HVCC. This is why Independent Appraisers fought for zero percent ownership of that third party; supposed to be a firewall ? defined. </strong>

    <em>"...I?m not trying to imply that you aren?t any good, I have never seen your work. I also am not from Louisianna and I wouldn?t have enough experience in lending there, just like you wouldn?t know how to accuratley depict value in Wisconsin. There are differences in regions that require different approaches."</em>

    <strong>I know the concept of geographic competency, and I know when it used to make a point, pointless. </strong>

    <em>"...In the end, you get paid anyway." </em>

    <strong>They do? A real Estate Appraiser would have worded that differently.</strong>


    <em>"...I might add that your are getting much less than your AMC?s are charging to ?manage? you."</em>

    <strong>I do not need or want anyone to manage me across the fence. The definition (of market value) suggests a knowledgeable buyer and seller. It appears that the public is currently acting as though they have been unknowledgeable; which reflects upon the prior processes (MB and AMC select ? managing estimates and opinions attached, and God knows what else). Money is not as important as the knowledgeable buyer and seller. My profit can be maximized for mortgage purposes if the buyer and seller were due diligent in becoming knowledgeable and acting in their own self interest ? without any type or kind of management from the lending industry and its agents, who think they can provide it.</strong>

    <em>"...I understand the illusion of fairness is ideal, but that doesn?t motivate anyone to go above and beyond and provide something that the others won?t."</em>

    <strong>The lending Industry still has to face the future of Real Estate Appraiser Independence ? it?s on the table. </strong>



    Benji
  • BenjiBrossette | | 15 May 2010, 01:24 PM Agree 0
    <em>...Therefore I see first hand all the negative ways the current appraisal process is affecting consumers and the industry through the financing process. It creates inefficiencies, needless expense, and drains the resources of other areas of our industry. No doubt you are aware that roughly 40% of all mortgage applications are being denied. Not all of them for appraisal issues but a too conservative appraisal is just as bad as an inflated appraisal. This creates needless expense and stress for consumers (time, appraisals, inspections), real estate agents, mortgage originators, attorneys, and title companies. These increased costs are eventually paid by the consumer. All these areas of the industry are affected except the appraisal company which always get their fee ? and is collected for them by the mortgage originator.</em>

    <strong>Yeah. I feel you on the fee. The AMC system is horrific. We needed a firewall. The originator would not have to do some things that is aggravating. </strong>

    <em>...The big problem is making the case that unscrupulous appraisers throughout the nation either colluded, or all became unethical at the same time as to cause a national housing bubble and bust on a national scale. If you have any proofor link proving this I would be very interested in seeing it. I do not believe any evidence exists to support this premise. Therefore, an attempt to ?fix? this will do little to prevent a housing bubble and bust from happening again.</em>

    <strong>I disagree. An attempt was made to prevent a housing bubble and bust - and, there is much that can be done to prevent another bust of this scale. Independent Real Estate Appraisers have studied, what you are calling the, "big problem." </strong>

    <em>...The only possible cause, affecting every nook and cranny of every housing market in the United States was exceedingly low rates for an extended period of time. This caused the rush to housing, the bubble, and triggered the chain of events that came after it. As rate rose throughout 2005 the appreciated values corresponding to low interest rates could not be sustained as affordability is a function of sales price and rate, and the median buyer was no longer able to afford housing, hence the bust. Low rates also masked fundamental weakness in the economy that compounded the problem as rates rose, exacerbating the bust. Without that extended period of exceedingly low rates the housing bubble never would have happened.</em>

    <strong>Controlling market behavior via interest rates is dated with regard to the mortgage - It's not the leading role, it's a supporting role. The interest rate can be wrong with artificial values, too.</strong>

    <em>...Therefore focus will be put on appraisers, originators, real estate agents and ?financial reform? (which may help), so legislators can say they fixed the problem.
    In 2004 Greenspan was asked if he was concerned with the housing bubble and he said ?No, the Fed is only concerned about inflation, which is in check at this time?.</em>

    <strong>You forgot AMCs; where they consolidated their inner power. Greenspan also used to talk about a more complex economy coming. I think the originators/MBs/LOs should be concerned more about AMCs and not worry about needing to chose their own Appraiser. AMCs are chop shops. I heard that NAMB is getting on the gravy train, no? There is a spot light and the government is even getting it wrong.</strong>

    <em>...There was no secret about what was happening and even though the word housing bubble was a household word as early as 2002, it was business as usual for everyone that could have effected a change. This is the undeniable reason for the bubble and bust. A few bad appraisers did not have the power to affect the National Housing Market on such a scale, to claim so is ludicrous. The process in place to addresses this as a ?cause? is only hurting the industry and consumers.</em>

    <strong>The housing bubble was a house hold name for Independent Appraisers before the year 2002. The De Minimis is a disease; slow death. Plus, the buyer/seller are not knowledgeable - as market value suggests. Sure, a few bad appraisers colluding with a few commissioned and profit driven folks will not do it. There must be many and there must be a pattern showing different trends. </strong>

    <em>...The current appraisal process:
    Costs the consumer too much.
    Discourages consumers from seeking financing.
    Limits consumer flexibility in seeking financing.
    Increases complexity and time frames for the completion of financing to the detriment of the consumer.
    Reduces careers of licensed, highly trained, skilled professionals to that of order takers.
    Eliminates the ability of appraisers to compete on price or service.
    Hurts the consumer by not allowing appraisers to compete for business.
    Lowers quality of appraisals.
    Lowers service levels.

    ...For these reasons and others the current process should be reversed. I believe overall that appraisers have the backbone to be ethical.</em>

    <strong>I agree with the problems that the current process does to the market. But, not reversed. It should be Independent throughout and the biggest changes should come from within the Real Estate Appraisal Profession. Therefore, others may follow. I believe Appraisers have the backbone to be ethical, too. However, there has been too much pressure and the market reflects such. The market is no better than it was, overall. </strong>

    <em>...In addition, the best and only way to identify poor appraisals is through better underwriting. Without better underwriting to identify bad appraisals bad mortgage decisions will still be made based on them, but this will take a commitment from the banks.</em>

    <strong>lol - underwriting does suck! There is no incentive for Independent Appraiser/Appraisal reviews? Underwriting is a consolidation. The De Minimis is a menace to the market. And, data mining for AVM purposes is the monster I would like for you to consider, in addition to the interest rate. Independent Appraisers proposed a review process - it was ignored - but not all was ignored. </strong>

    <em>...These are my beliefs with supporting information which I hope you can adopt as your own.</em>

    <strong>Well, like I said before, it's noted. I appreciate the feedback. Anytime...</strong>


    <strong>Benji</strong>
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