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Comment on Financial Reform Implementation
August 17, 2010
To whom it may concern,
As an appraiser with 18 years of my life invested in this industry, I have never been more disillusioned with my chosen profession. One that I love, by the way. This is certainly out of the box thinking, but just have an open mind and ponder it.
I propose that the government let the borrowers engage their own appraiser. This will address the following issues:
- Coersion.....Who would be more apt to bend to pressure......the appraiser who relies on 25% or more of their income to one entity....or a homeowner who has already paid $300 for the delivered report? Like doctors, lawyers and politicians there will always be those morally inept, but the proposed regulation will weed them out. Read further.
- Locational competence......Homeowners would most certainly want to choose a local appraiser vs. one traveling 60 miles away!
- Portability.........Homeowners/clients own all rights to the unbias appraisal and can send them to any lender nationwide. Mandate that lenders must accept appraisals from any State Certified Appraiser for all federally related transactions. This will solve the blacklisting/poor review problems (see #4).
- Peer review panel.....Create a peer review panel (voluntary or State mandated) of 5 peers where clients/lenders can file formal complaints. This will solve the bad review/blacklist issue that is happening throughout the industry and help with prosecution of bad appraisers. Remember, most, if not all, lender appraisal reports have an AVM. If there is a 10% discrepancy in value, forward the appraisal for a desk/field review. If found to be fraudulent, forward file to State board. This panel also would not be cost prohibitive to the State as it is voluntary!
- Regulate.......Create significant fines/loss of license/mandatory education/jail time for appraisers who are found guilty in peer review. A fraudulent appraisal can typically be detected within minutes of review of all files presented (original appraisal, AVM, rebuttal, and review appraisal). Bad appraisers currently are placed on various "do not use lists", but continue to fly under the radar for many other lenders. Very few get prosecuted by State licensing authorities as they simply do not have the resources.
- Promote healthy industry growth.......This will allow appraisers/business owners to create business plans which will result in more individuals being trained. There will be a shortage of appraisers in the near future as it is currently not feasible to train. The current model does not allow a business owner to have much control over volume and/or clients.
- Costs.....Right now the only entities thriving from the new model are big banks and Appraisal Management Companies (known as AMC's and are often owned by big banks). The borrower is paying more and the appraiser is making less.
I realize that Wall Street (AKA big bank lobby) would never go for this common sense model, but I ask why? Present me with solid reasons. We could start a grass roots campaign to sharpen and promote the above mentioned idea. EVERY appraiser and homeowner I have spoken with agreed 100% with this idea. I would anticipate tens of thousands of individuals would sign a well written petition.
We choose our own accountants for taxes, doctors for health, financial planners for finances, autobody repairman when we get into accidents. Why not choose our own professional for the largest purchase we will EVER make? Remember when consumers had to choose from the INSURANCE COMPANIES REPAIR LIST and inherent problems with that model which is exactly how we conduct our lender business now. Consumers fought the big insurance companies and won!
James Dusty, President
Gordon Appraisal Company, LLC
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