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Comment on Financial Reform Implementation
August 23, 2010
Hello. In regards to the new Appraisal Independence laws that were implemented into the Financial Reform, it does not appear to me (and other appraisers that I've heard from) that this law will be much of an improvement from the old Home Valuation Code of Conduct (HVCC). Since the implementation of the new law, I have seen a sharp decline in my income income of approximately 75-80% due to a lack of word of mouth business and local customers being unable to order from me directly and due to a decline in fees that I have been able to collect from the management companies who now supply about 95% of my business. Last year, prior to the implementation of the new law, I signed up with around 250 management companies. All of which have my license, name, coverage areas, and possibly an old appraisal report with my signature on it. So far I've worked with less than 10 of these management companies who send me, on an average, 7 appraisals per month and who generally pay me (2-3 months later) about 75-85% of what I would make in a typical market. I fear that if the values don't come in, that these companies, who many times advocate for their own banks/mortgage lenders, will either pay even later (which I've experienced) or won't pay at all (which I've also experienced). I also fear that there are criminals out there who have been requesting appraiser's information so that they can create and sign appraisals for their own banks (which I've also experienced). The other day I had a woman ask me to send them a copy of my driver's license to recieve new business. Please see below:
The sad part is some desperate appraiser is going to send them their info. Even if the person noted above has good intentions, my thoughts are: why is my appraisal license not sufficient enough, what is the purpose of them having my driver's license since they can't see my face anyways or be working with me directly to prove that its me? And why aren't their standard practices already in place for management companies to approve appraisers so that we aren't subject to so many off-the-wall inquiries like these?
My intent here is not to complain. I just wanted to give you a breif overview of what appraisers experience on a regular basis now (the fear of fraud along with decrease in clients, income, local business relationships, increase in need for more insurance, and lack of protection from government). I have been unable to get the management companies to pay me reasonable fees which mine is $300 minimum. I have been unable to get them to pay me within a reasonable 30 day time frame. 45-75 days has been pretty standard and you can't argue with them because they will no longer send you business. I have experienced this. And I have had no one to complain to but a lawyer who will charge me money that I don't have.
In regards to the management companies, I feel there should be a standard 10-15 day time frame for any management company or lender to pay appraisers since the playing field is so uneven. I feel this should be written into law and this should not be our responsiblity to enforce them to pay us because we will lose their business. We should also be able to send our invoice directly to the lender to prevent document changes and disagreements with the management companies due to fear conflicts for being ethical. Also, if it is standard practice for us to receive payment at the door, the managment company and lender should have to honor this. I also don't see a reason why it is standard practice for appraisers to remove their receipts from their appraisals prior to sending them to the management company. There should be no more secrets here. The banks/lenders should know what we are getting paid and what they are paying the mangement companies and this information should not just be based on management company statements but also appraiser's statements/invoices. We should also have to include a comment in our appraisal report stating the costumary and reasonable fee that is typical for us to receive in our area (which should not include fees paid by management companies since management companies are the reason for our decreased fees. Not to mention that they stand to benefit from stating lower fees). The banks/mortgage lenders also should not be allowed to use their own management companies and should have to outsource a certain (reasonable) percentage of their business to small business owners which includes independent appraisers. It is my personal belief that with the implementation of licensure for loan officers, there is added help to eliminate the pressure on appraisers to hit target numbers. Therefore it is not necessary to keep loan officers from ordering appraisal reports. It is also not necessary to keep home owners, buyers, and sellers from being able to hire and consult with an appraiser regarding their transaction as long as it doesn't violate USPAP laws. It also should not be allowed for a lender or management company to state, as part of their standard practice, that they will not accept an appraisal that was completed with the assistance of a limited licensed appraiser. It is part of USPAP laws that states that in order to become fully licensed, a limited licensed appraiser must work under fully licensed appraiser. If this standard practice is not eliminated, there will be no new appraisers coming into the industry to preserve the profession. You may want to check into the amount of appraisers who have left the industry due to the new "Appraisal Independence" laws over the past year. There have been a few who contained a wealth of knowledge and were in the business for 20+ years. Many of them were not able to pass their knowledge and expertise on to newly licensed appraisers so you definately don't want to start keeping others out. There are some appraisers like myself who have been in the business for around 10 years but I don't plan on sticking around long enough to train an appraiser (but this may not be true for other appraisers). The work has been very inconsistant, the income has become ridiculously low, the hours are longer, and the liability is higher. I hope this helps.
|Last Updated 9/14/2010||FinReformComments@fdic.gov|