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Law, Ethics & Fraud

MORE AMORIN INFLUENCE (MAI): The AI National Nominating Committee Design Is Being Attacked By FOJs

July 19, 2021 | 12:12 pm | Explainer |

To all members of the Appraisal Institute:

Before I start, I wanted to share what the Appraisal Institute’s MAI designation is referred to by many of its members. I learned these two from an MAI instructor years ago (pre-merger) who told our class (as if to motivate us?) that MAI stands for:

MORE ANNUAL INCOME
MADE AS INSTRUCTED

And now…

MORE AMORIN INFLUENCE

Over the last five years, I have frequently been writing about the corruption and self-dealing of the largest appraisal trade group in the U.S., whose membership has fallen by a third over the past decade. Since 1997, the leadership has been largely comprised of the same people moving in and out of leadership positions, enjoying lucrative teaching contracts, enjoying compensation as much as double the market rate, expense reimbursements not consistent with corporate and competing organizations, lots of first-class plane flights to Europe, Asia, and other locations with their spouses, all paid for by the hard-working membership who is not clear about what is happening in Chicago headquarters because they are not told.

There is currently another sham petition process underway to prevent Steven Stiloski, the thoroughly vetted choice of the NNC (the second year in a row this sham petition process was utilized), from becoming Vice President. Steven is representing the choice of the membership. Sandra Adomatis, who by entering the election, no matter what her intentions were, can not be blind to the political poison of this sham petition process and becomes an FOJ by default, no matter how qualified she or her backers say she is.

Remember that the sham petition process places the thoroughly vetted NNC candidate on EQUAL FOOTING with someone Jim Amorin puts into the sham petition process or even someone that self-nominates. Incredible.

Smartly, CEO Jim Amorin chose to limit the exposure to the membership by placing it at the end of the membership newsletter in June (I wrote about this several weeks ago in an earlier version of Appraiserville). And I’ve been told it also appeared in a membership email from the president on June 25th.

So I thought I’d explain one of the things that FOJs (Friends of Jim Amorin) are trying to dismantle because of their eagerness to serve at the pleasure of the current CEO, Jim Amorin.

Let me define what an FOJ (Friends of Jim Amorin) on the Board of Directors is in case the membership is not familiar with this term I coined:

  • FOJs are resume builders only, actively running the once-proud organization into the ground for their own personal enrichment.
  • The current FOJs on BOD have not filed a single motion – in other words, they do nothing but the bidding of the CEO Jim Amorin.
  • They don’t represent diversity, especially the actions of all the women who signed the sham petition process to push for Sandy because it will result in less diversity – remember that the CEO scuttled the diversity committee run by Bob Stevens in 2015 because it was a threat to his hold on power.
  • FOJs don’t bring any new ideas to the board or to leadership – they are only on the board to vote “no,” so they will get their committees and puff up their resumes.

Remember that Jim Amorin makes over $500k, and using comps of CEOs at reasonably similar organizations, his salary is nearly double the market rate – and membership is forced to pay that. And consider his FOJ enablers like past president Jeff Sherman, who whined in a board meeting against suggestions that the organization begins to stop paying travel expenses of spouses (which is NOT done by corporate America, incidentally). Finally, remember that FOJs need the CEO to remain in power to get their perks and, basically, to hell with the membership.

Jody (Super-Duper) Bishop gets to select the incoming open positions (about 50) and invite the membership to look at those he selects. Because if Jim Amorin wins this sham petition process and Jody selects all FOJs, then the Appraisal Institute will have zero diversity in the future, and both Bishop’s and Schley’s legacies will be tarnished for the remainder of their professional careers.

Significant diversity initiatives are coming from the new presidential administration, and social mores are shifting too. Current president Rodman Schley has been driving the AI’s presence in the discussion, which keeps AI relevant. All that is for nothing if the sham petition process succeeds in keeping the NNC vetted selection from being duly placed in leadership.

The NNC (National Nominating Committee) is comprised of one member from each of the ten regions. The chairman of the NNC is the immediate past president but has a non-voting role. If there is a tie, the executive committee gets to be the tiebreaker with three votes (Super-Duper Bishop, Craig Steinley, and selection after the sham election process is decided).

The NNC is one of the good governance things that happens in Chicago. This committee is Kryptonite to CEO Jim Amorin, and he has worked hard to weaken it but has failed so far. In the past, he has made the following attempts to weaken the NNC:

  • Narrow the number of leaders
  • Narrow the number of regions
  • Propose focus on other sources of future leaders

The beauty of the NNC structure is that members of the Board of Directors have to wait six years after they roll off the board before they can serve on the NNC. This has been problematic for Jim Amorin because he can’t get his FOJs onto the NNC easily (it takes too much time) to do what they do now on BOD and live a dishonest professional life of quid pro quo. Of course, in turn, for doing Jim’s bidding, they get lots of perks.

The practice of Jim doling out choice positions in return for an FOJ’s ethical soul – they’re not much different than a sociopath in my book – because FOJs have no moral compass and think that outsiders can’t see what they are doing. By definition, FOJs do not care about membership or the direction of the institution. It’s all about getting what they want because they are aligned with the person who does things to keep themselves in power at the membership’s expense. The CEO is very skilled at that.

And to the handful of FOJs that have reached out privately and given me crap about calling out this malpractice of the organization, don’t worry, I will always honor my agreement to keep your name out of this conversation as promised. I am a man of my word. But remember, every one of you is only doing it to preserve the benefits you get from keeping Jim Amorin in power. You have no moral ground beneath you in this debacle. FOJs have placed their self-interest above the membership and the future of the organization. And with that, many FOJs don’t seem to understand how the sausage is made, so they are even more vulnerable to manipulation by the CEO.

And this toxic hypocrisy has seeped into RNC (regional nominating committee) process too. Take Region V, for example. There was a bitterly close election on July 9th. The region selected an FOJ back in April to be in line to be considered for the NNC eventually. And then Jean Gannon, a non-FOJ, threw her hat in to compete with the FOJ candidate, much like the sham petition process I talked about. But this time, the shoe is on the opposite foot for FOJs. Because the Non-FOJ candidate was a threat to the FOJ candidate, two of the “Hateful 8” FOJs, Region V Chair Claire M. Aufrance, and Region V Vice Chair Heather Placer Mull, fought against the regional petition process because they said they believed in (paraphrased) “the sanctity of regional integrity.” LOL.

In other words, the leaders of Region V believed in the “integrity” of the regional nominating process but could care less about the national nominating process. Why? Because it was convenient (and essential) to their role as FOJs. Their hypocrisy should not be lost on you as it is clearly lost on them. They readily can push aside a non-FOJ candidate but then sign the sham petition process at the national level. These are two of the FOJs who play the game well – they do as they are told by the CEO and appear to be there purely as FOJs and not as leaders to move the organization forward.

The hypocrisy that Aufrance and Mull have shown begs the question: Is this the type of people that should be anywhere near a Board of Directors position or regional leadership?

Oh, and it gets worse.

Board of Directors member Trevor Hubbard has been working the room to get the Appraisal Institute to get rid of its residential members. No one I know has any idea why. I find his efforts consistent with the disrespect and lack of attention that residential membership has experienced since the Jim Amorin era began in 2007. After all, we’re still waiting for any feedback from the sham residential appraiser committee that Jim Amorin formed to help diffuse the anger of their 2016 money-grab to take all chapter funds.

Ironically, I’m told Trevor pushed Sandy, a residential appraiser candidate (even if she self-nominated) to offset the NNC vetted commercial appraiser candidate because her credentials checked the boxes that might not get the same pushback as a male commercial appraiser candidate. The hypocrisy here is that this Uber FOJ was so desperate to prevent the NNC vetted selection from being finalized that he had to use a residential appraiser to do it, despite his disdain for them – to get rid of them from the organization. This is Hubbard’s second time on the sham petition process rodeo. His actions show his extreme desperation to remain relevant in the Appraisal Institute. He was willing to be a hypocrite in the sham petition process to keep himself relevant and get rid of residential appraisers.

Trevor’s public anti-residential appraiser stance showed that he would happily do the bidding of Jim Amorin even if it meant using a residential appraiser to do it. There is a lot at stake here. Losing this sham petition process to Steve would jeopardize the position of all FOJs, including Trevor, whatever his beliefs about the residential versus the commercial future of the Appraisal Institute happen to be.

You can see why Trevor’s idea could have legs given the big fall-off in residential membership during the Amorin era and how much SRAs have been ignored and looked down on as second-class citizens. As of now, there are only about 3,000 SRAs out of the roughly 17,000 total members. Pathetic.

Bottom Line: The FOJ gravy train stops if Sandra (FOJ backed candidate) loses and Steve (NNC vetted choice) is confirmed – to FOJs, their actions indicate they care nothing about the dues-paying hard-working membership. The CEO gravy train is all FOJs care about.

Membership has to stop the FOJ gravy train by loudly speaking out against this sham petition process right now – loud and proud. Remember that Jim Amorin scrubbed the regional contact page of all phone numbers and emails for this very reason. He knows the scrubbing was done because he and the board reads every one of my posts about The Appraisal Institute. The AI tech people report to him directly and he has chosen not to return the contact information to the website, thus demonstrating the ethics of the operations leadership of AI is basically zero.

Remember that the complacency of AI membership in the past allowed FOJs to remain in power and get quite financially comfortable. Strong action by the membership today gets FOJs out of power and the organization on the road to recovery and back to relevancy.

The Appraisal Institute is in the hands of membership now – they need to choose the right path for the future of this once great organization. Please make this moment count – it’s your last chance to make yourself heard.


And here’s a quick shoutout to FOJ Jeff Harris who says my writing is garbage. What can I say? I’m an outsider. If you have an issue (I’m not stopping my efforts), feel free to let me know what I got wrong – happy to keep it in confidence if you wish. AI was once an important industry player and I’d love to see it return. The transgressions in recent years have been a distraction from the mission and it impacts appraisers outside the tent too. That’s what I take issue with.

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Epic Fail: The Appraisal Institute IRS 990s Show They Need To Do A 180

February 24, 2021 | 4:38 pm | Explainer |

As I’ve chronicled in the Appraiserville section of my Housing Notes newsletter since 2016, the scale of Appraisal Institute bureaucratic self-dealing of the executive committee and some members of the AI Board of Directors is breathtaking. Over the past decade or more, AI National has been able to keep a lid on the membership backlash by threatening to remove a member’s credentials for speaking out. Membership has been reluctant to risk losing something they worked hard for in both time and money that they have remained quiet – until the past few years. With the significant devaluation of the SRA designation and growing signs of the MAI designation’s devaluation, more are coming forward.

The FOJs (Friends of Jim Amorin) have been using that freedom from oversight to act with impunity. They are more openly corrupt now than ever because that’s the only institutional memory they possess. However, we are seeing some signs that more AI Board of Directors aren’t interested in rubber stamping FOJ efforts, as illustrated in the previous board meeting results.

The next board meeting is coming up tomorrow and Friday, and it is a seminal moment for the Appraisal Institute. It is where the BOD gets to vote on Jim Amorin’s new contract that the entire board has not seen. As a reminder to board members: your job is to represent your membership, not the executive committee. You can’t vote in favor in good conscience, if you haven’t seen it or been exposed to the key terms. Your role as a member of the AI Board of Directors is critical to the Appraisal Institute’s future and your responsibility is real.

The Appraisal Institute has an IRS nonprofit tax code designation: 501(c)(6) “Defined as Business leagues, chambers of commerce, real estate boards, etc., created for the improvement of business conditions.”

At this point, it is hard to see this organization as “created for the improvement of business conditions.” Given the long-time failure of organizational leadership as measured by the empirical data extracted from the 990s tax filings in public record shared below, this organization needs a complete makeover immediately. It starts with the current CEO.

I hope some in AI membership will use the information shared below to bring an inquiry to the U.S. Attorney’s Office for the Northern District of Illinois.

Over the past few days, a detailed analysis of the Appraisal Institute’s performance from 2006-2019 has gone viral within the industry. The anonymous author(s) analyzed AI National’s 990 tax filings in a series of charts and tables by “Concerned Members,” and you can download it here: The Appraisal Institute as Told by the 990s [click on each to expand].

The results should send an alarm to membership and the AI Board of Directors on the organization’s future. The FOJs have poisoned the leadership culture, which has damaged the value of the designation brands and the organization’s credibility to the business world. None of this would have been possible if designated members weren’t vulnerable to the threat of losing their designations if they chose to speak out. But with the perceived value of membership declining, the fear of the threats by the organization has been diminished.

Here is my favorite chart of the 990s presentation. Current CEO Jim Amorin was made president (for the second time) in 2017. Now, look at the chart.

The following pages are the same found in the full pdf document.

Here are what the numbers tell me, as an outsider to the organization:

  • To offset the steady long-term membership decline (-29.2% from 2008-2019), membership dues as a percentage of total revenue rose steadily over the same period. This action kept revenue coming in. With all that newfound revenue, the FOJ AI executives and AI Board of Directors viewed this as an opportunity to lavish high salaries on all.
  • The data table on page 10 shows that expenses are remarkably flat, yet membership has fallen sharply over the same period. If membership falls another 7,500 over the decade, will expenses continue to remain the same?
  • Jim Amorin has made $1,725,003 from 2007 to 2019, yet membership has fallen 22.7% over that period. Why would his compensation increase, and why is he paid about 50% more than his peers in other organizations? I’ve presented these numbers in past Housing Notes. So many questions.
  • Revenue emphasis is shifting to rely more on dues while education programs, once a promising and prestigious revenue stream (and a cash cow for a handful of instructors that were FOJs), are losing their importance because of virtual continuing education programs. Who has been in charge during this erosion in education revenue, once a key branding strength of the Appraisal Institute?
  • In 2016, I got quite upset with the proposed “taking” of chapter funds, and I became an activist, yet I’m not even a member of AI. Jim Amorin made it happen in 2017 when he became president. Now given all the big salaries and excessive travel, etc., where did all that money come from? I keep thinking about all the chapters who had saved money over decades to the tune of hundreds of thousands of dollars, even more. We should be asking AI National: Since the 2017 “taking,” how many times did AI National dip into chapter funds to plug the deficit? What is the current status of their reserves compared to before the taking? The AI Board of Directors must have the answers to these questions. Membership should demand it.

There has not been a publicly shared strategy to stem the decline in membership. Announcements of committees (like residential appraisers) were faked to quell the discord among residential members, and FOJs had no intention of taking action.

Marketing and branding have been the same old, same old, every year blah, blah, blah, which means that the organizational leadership has filtered out nearly everyone that is not a like-minded FOJ. Look at the last election debacle where the sham petition process was overtly used again by Jim Amorin to get his FOJ “Tank” installed instead of the duly nominated candidate Craig Steinley. Yet, membership pressure on the board stopped it. There is great danger to membership who are here for their designations within an organization with everyone in power being subservient to one person – a monarchy. Any new and creative thinking is not just discouraged; it is impossible.

I hope that ALL on the AI Board of Directors remember that their responsibility is to the membership and to sustain the organization’s future, not the FOJs. I can only assume there may be future legal action on this overt institutional taking, and each current and past board member is exposed. If you want the Appraisal Institute to pivot in the right direction and stop the executive committee’s self-dealing, please do the right thing and DO NOT extend Jim Amorin’s contract. It’s time to hire a CEO to lead the organization in the right direction, responsibly, ethically, and properly. If you do nothing as a board member, this will be your professional legacy as viewed your peers.

Here is a snapshot to memorialize the 2021 Appraisal Institute Board of Directors:

These are the individual pages of the full pdf document.

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Appraisal Institute Board of Directors Tried To Sneak Sham Bylaw Changes Past Membership

January 6, 2021 | 12:26 am | Investigative |

Back on December 4, 2020, I wrote about the sham bylaw change being floated by the Appraisal Institute to avoid the embarrassment of the recent sham election process: The Sham 45-Day Bylaw Modification Process To Keep Jim Amorin’s Sham Petition Process Explained

To rush this through, the Appraisal Institute Board of Directors meeting is being held Wednesday, January 6th with sketchy notice.

Don Boucher, SRA and Jennifer Marshall, SRA, AI-RRS came through for membership and forwarded notice of the meeting. – send Joan an email requesting the login as presented below

_________________________________________

Dear AI Professional,

We hope that 2021 will be a happy, healthy and prosperous year for you!

Sorry about the late notice but we wanted to make sure that you know about and request an invitation to the Special Board Meeting on January 6th at 3 EST. At the Meeting, the Board will be discussing and voting on changing the Bylaws based on the recommendations in 45-Day Notice on VP Election Process and memberships comments. To request the link to attend the meeting please contact the Board Secretary, Joan Barngrover, at jbarngrover@appraisalinstitute.org.

Thanks for continuing to be proactive and staying involved.

Regards,

Don Boucher, SRA and
Jennifer Marshall, SRA, AI-RRS

_________________________________________

Everyone who reads this post and who is a member of the Appraisal Institute should attend the virtual board meeting. As members, you have the right to log in to the meeting. Here’s how:

_________________________________________

Thank you for expressing your interest in attending the Special Board Call, January 6, 2:00 pm CT.

Following is the GoToMeeting connection information to observe this meeting. Please mute your phone when entering the event and please do not share your webcam. You will want to log on at least five minutes early as the meeting will begin right at 2:00 pm CT.

Please join my meeting from your computer, tablet or smartphone.
https://global.gotomeeting.com/join/876886637

You can also dial in using your phone.
United States: +1 (571) 317-3122
Access Code: 876-886-637

New to GoToMeeting? Get the app now and be ready when your first meeting starts:
https://global.gotomeeting.com/install/876886637.

_________________________________________

These changes being floated are so blatantly corrupt that it is beyond unethical. The purpose of these proposed bylaw edits to the existing bylaws will enable FOJs (Friends of Jim Amorin) to keep their own exclusive club paid for by the membership with salaries at 2x the market rate, first-class travel all over the world including wives and friends, and cornering control of lucrative teaching stipends as they have for the past 10+ years.

As a further sign of the lack of transparency, notification of the board meeting to vote on these sham maneuvers wasn’t adequate. Some members only received notice today (Tuesday) for a board meeting on Wednesday. The cynical me believes that this meeting was timed to occur at the moment there will be a massive global media circus in Washington, D.C. (Wednesday) to decide whether to confirm the state results in the federal election. In addition, it is three days into the New Year and they were clearly counting on rushing this under the radar before people wake up from their holiday grogginess. This is a strategic move pure and simple – to continue to wrestle control of the organization from membership and it marks the beginning of the end of the Appraisal Institute.

All eyes will be on the new AI President-Elect Rodman Schley, MAI, SRA at the Board of Directors meeting – who has created a favorable reputation with the membership as someone who believes in transparency and has showed signs of pushing back against the FOJ pillaging of this once-proud organization.

This is Rodman’s moment – if he allows for these sham changes without a fight and hides behind the use of “executive sessions,” he will be just another annual decorative rotation in the Presidential position – Jim Amorin’s posse gets to keep running AI National into the ground until it takes its last breath (in about 5 years).

Incidentally, I’ve been told a member has reached out to the Illinois State Attorney General for their interpretation of “executive sessions” as a tactic used by the Board of Directors to hide their actions – apparently it is not permissible because Illinois is an open session state.

At the end of the year, in the middle of the holidays, 76 Appraisal Institute members signed and sent a letter to their Board of Directors outlying what was wrong with the suggested bylaw changes in the 45-day notice letter. To wrangle 76 members in the middle of the holiday season in late December represents how upset these members were. All the signers are heroes as far as I’m concerned who care more about the future of the Appraisal Institute than its executives do.

Here it is:





Here are my thoughts on yet another sham election maneuver to ensure the continued corruption of The Appraisal Institute:

  • Any member of the Board of Directors who votes for these changes is corrupt and should be removed from their position immediately. They are in favor of self-dealing and not membership. The BOD should not be afraid to hide their votes.

  • The proposed changes are being made to enable CEO Jim Amorin to override the NNC after they thoroughly vet a candidate proposed from membership like they tried to do to Craig Steinley and failed because of the membership uproar. These bylaw edits are being made to tidy up the loopholes to make it happen next year.

  • The 6 year period to lockout executives after NNC membership should not be reduced to 4 years because it makes it easier for FOJ’s to self-deal.

  • To raise the 20% board member vote requirement to 30% is a pure sham. I believe most organizations require a supermajority to override. My goodness, the absolutely embarrassing procedure to insert FOJ Tankersly instead of the NNC’s Steinley thoroughly vetted nomination because Jim asked him to is unconscionable. Unconscionable that it was proposed and that Tankersly gladly accepted.

  • This bylaw edit more easily enables the Board of Directors and the executive team to publically smear and shame a vetted candidate who won. Guess what happens? Quality candidates won’t apply anymore. Only FOJs.

  • This bylaw edit is clearly an act of misconduct by the board. It is a blatant abuse of power and board members who vote for these edits could very well have legal exposure in the future.

  • “Executive sessions” or voting in secret is unethical – if you have to hide how you voted, then something is wrong with your motivations – you see yourself as answering to Jim Amorin and not the membership – you can’t have it both ways.

  • The proposal to ban any input on a candidate is bizarre and reflects the AI’s drift towards irrelevance through self-isolation. Elected officials, competing trade groups, regulators, etc. should all be relevant to weigh in on the quality of a candidate. This proposed edit essentially dictates that a candidate has to get recommendations from FOJs for an application. Incredible.

  • Finally, this bylaw edit is not being done for the membership – it is being done for FOJs exclusively. Imagine Jim Amorin explaining his edits in a public meeting – membership would be booing and throwing beer cans at him for the basic audacity of it.

Over the last decade, the Appraisal Institute went from 27K members to 17K members. That’s a 37% drop, trailing basic U.S. credential trends over the same period. What’s AI National going to look like in another decade with only 7K members?

The membership needs to apply the heat to the Board of Directors NOW. I’m also waiting for a board member to step up and get state and federal law enforcement to look at the sham election maneuvers as evidence of corruption.

My goodness Board of Directors, are you there only to pad your resume, or are you there to uphold the responsibility of the position? If you do nothing but go along then you’re just as corrupt as the FOJs.

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With All That PPP And Without All That Travel, The Appraisal Foundation Doesn’t Need A Grant From ASC This Year

August 19, 2020 | 1:36 pm | Investigative |

This post previously appeared in the August 14, 2020 edition of Housing Notes. I’ve been writing these weekly summaries on housing topics for more than five years. To subscribe for free, you can sign up here. Then you can look forward to each issue every Friday at 2pm New York Time.

The TAF decline in credibility keeps on coming…

After the recent letter debacle where the Appraisal Foundation (TAF) opined falsely that Title XI did not permit the Appraisal Subcommittee (ASC) to provide oversight on TAF, we now have a letter from TAF essentially saying they are making so much money that they don’t need a grant this year from ASC. Who is writing all these letters? It can’t be Dave.

[click for full pdf]

In other words, because TAF saved so much money from not being able to fly around the country during the pandemic, they don’t need ASC Grant money this year. From this point, it’s only a hop skip and a jump to saying they don’t need the grant money so therefore they don’t need oversight. And grant money comes with “strings attached” – that the money used from a grant had to be accounted for to the ASC. And if TAF doesn’t need oversight this year, what is to stop them from raising USPAP related fees and stop collecting grant money forever? The conspiracy theorist in me is starting to worry about that aspect of this new more forceful tone out of TAF these days against any oversight.

No Grants = TAF + PPP

Why would the TAF turn down the annual grant process but still have the need to request PPP? What is the hardship they are declaring when they are saving hundreds of thousands in travel costs that are already questionable in their scale?

My appraisal firm in Manhattan applied for PPP because our business collapsed more than 90% almost immediately for two months. It enabled us to survive. I would think it would be obvious to TAF that their $626,000 annual travel expense would collapse. What other revenues would be sharply curtailed in the new online world?

That’s why Jeremy Bagott, MAI, AI-GRS, the Cosmic Cobra guy, issued this press release on July 6th:


* * * FOR IMMEDIATE RELEASE * * *


WITH MILLIONS IN CASH AND STOCKS, APPRAISAL FOUNDATION HAULS IN CARES ACT RELIEF

(LOS ANGELES, July 6, 2020) – Over the years, the tiny, publicly funded Appraisal Foundation has built up a large reserve in cash and publicly traded equities. Its war chest grew from $3.6 million in 2010 to $6.5 million in 2018, the most recent year its IRS Form 990 is available. Its Cause IQ peer nonprofits had nothing like it in their reserves. Despite this burgeoning pot, it has continued to receive public grant money each year from state-licensed appraisers via the mandatory National Registry Fee. In early July 2020, it was learned that, despite wielding this hefty reserve and its guarantee of annual public grant money, the nonprofit also applied for and received CARES Act relief through the Small Business Administration of between $150,000 and $350,000. This is money that could otherwise have gone to struggling mom-and-pop appraisers hurt by the pandemic.

From 2010 to 2018, the nation’s licensed appraisers paid the 14-employee organization more than $6 million through the mandatory National Registry Fee. The group then parlayed that subsidy into more than $27.6 million in publishing revenue extracted from the same captive appraisers during that time. It has copyrighted the publicly subsidized materials and granted exclusive online course rights.

In 2017, the foundation paid its top officer more than $760,000 in an internal retirement-plus-salary deal that effectively doubled his pay from the previous year. For 2018, trustees paid him $414,000 – less than the previous year’s haul but still more than twice the salary of the chairman of the Federal Reserve, who oversees 20,000 employees and the nation’s central bank.

These issues would be no one’s business were this organization not receiving guaranteed annual public grants, tax-exempt status and allowed to wield a government-authorized publishing franchise and contracts with the U.S. Department of the Interior and Department of Justice – and it is now receiving PPP money. A congressionally authorized federal contractor with guaranteed public grants is not what lawmakers had in mind when they passed the CARES Act, which includes the PPP program.

During this pandemic, expect to see licensed appraisers further weakened with fewer options and higher license upkeep costs. Expect the nonprofit to further leverage its copyrights – the development of which appraisers pay for. It is now receiving CARES Act relief. It has never let a good crisis go to waste.

If you’re frustrated, here’s something you can do right away:

Email Mark Abbott, Grants Director at the Appraisal Subcommittee, at Mark@asc.gov and James Park, its Executive Director, at Jim@asc.gov and tell them you want the Appraisal Foundation’s next grant to be reduced by whatever public funding the foundation has received from the CARES Act during the pandemic and its reserves of cash and publicly traded securities, which totaled $6.5 million as of its most recent IRS Form 990. The $40 National Registry Fee paid by appraisers each year ($80 at biennial license renewal) needs to be rolled back by a commensurate amount to provide relief to appraisers. The waste and abuse going on at this tiny nonprofit is being underwritten by the public and it needs to stop. Please cc Arthur Lindo at the Federal Reserve at arthur.lindo@frb.gov.


    • *

About “Dispatches from the Cosmic Cobra Breeding Farm”: The culmination of two years of research, a new book illuminates over-the-top spending and questionable dealings at the familiar Beltway nonprofit. Published just before the pandemic, it chronicles international jet-setting by officers and trustees, conflicts of interest, lobbyist tie-ins, outsized cash reserves and swollen pay at the tiny nonprofit. The book is available at Amazon in paperback and Kindle versions. You can read more about it on the book’s Amazon page.

The Appraisal Foundation’s IRS Form 990 may be viewed online at Propublica’s Nonprofit Explorer. To find it, Google “Propublica Nonprofit Explorer” and type “Appraisal Foundation” into the search box and follow the links.


# #


Here is another email from appraiser Jeremy Bagott (The Cosmic Cobra guy). Bold my emphasis.


Dear Colleague,

Thanks to the Small Business Administration’s data release on July 6, a few news outlets are working doggedly to expose organizations that, with dubious need, have applied for and received federal PPP relief. Ryan Tracy of the Wall Street Journal recently wrote about double-dipping by state highway contractors in Florida who applied for and received PPP relief despite holding government contracts unaffected by Covid. You can read the story here (but you’ll have to get past the Journal’s paywall).

A rogues’ gallery of organizations that have applied for PPP relief include Harvard University (with its $39 billion endowment), the Los Angeles Lakers of the National Basketball Association (with its reported $3.7 billion valuation) and, yes, the congressionally authorized Appraisal Foundation. The former two were shamed into giving the money back once the matter was made public.

Unlike Harvard and the L.A. Lakers, survival of the Appraisal Foundation and its paid panels is literally guaranteed in a federal statute. The statute mandates its guaranteed annual government grants. The making of the grants is part of the Appraisal Subcommittee’s charter. According to its IRS Form 990 for 2018, the most recent available, the Appraisal Foundation spent $626,000 on travel that year. (If past years are any measure, some of it was on international junkets for top officers and favored trustees.) It no longer has that travel expenditure due to the pandemic. The foundation also had $6.5 million in cash and publicly traded equities, according to its 2018 tax form. Why did it apply for between $150,000 and $350,000 in PPP relief?

If you now google “Appraisal Foundation” and “PPP,” the top hit is a CNN Politics site that identifies the Appraisal Foundation as a nonprofit that has applied for and received PPP funding. You can see it here. The Wall Street Journal and CNN are doing God’s work in this respect.

If you’re frustrated, here’s something you can do right away:

Email Mark Abbott, Grants Director at the Appraisal Subcommittee, at Mark@asc.gov and James Park, its Executive Director, at Jim@asc.gov and tell them you want the Appraisal Foundation’s next grant to be reduced by whatever public funding the foundation has received from the CARES Act during the pandemic and its reserves of cash and publicly traded securities. The $40 National Registry Fee paid by appraisers each year ($80 at biennial license renewal) needs to be rolled back by a commensurate amount to provide relief to appraisers during the pandemic. The waste and abuse going on at this nonprofit is being underwritten by appraisers (who are also voters and taxpayers). It needs to stop. Please cc Arthur Lindo at the Federal Reserve at arthur.lindo@frb.gov.

Best regards,



Jeremy Bagott, MAI, AI-GRS
jbagott@gmail.com


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Quid Pro Quo: The Right Candidate Got Elected And Corrupt Leadership Got To Keep Their Sham Election Maneuver

August 8, 2020 | 6:19 pm | Investigative |

Yesterday’s AI Public Airing Of The Sham Election Process was a dark day for the institution but a bright day for the good guys. The actual selection of Craig Steinley after he won the national nominating committees’ endorsement took literally thousands of members to apply pressure to the BoD. Thankfully it worked.

However, in order to enable the Board of Directors to do the right thing, they got to keep the sham petition process in place. Membership will have to go through this all over again next year and every year that Jim Amorin stays as CEO. Look for Tankersley to shame himself again next year.

The feedback I received from membership who watched this carnival was patently negative. The Board of Directors meeting came across as disorganized, tech-averse, and embarrassing. At the moment, they have shown they are clearly not our industry’s leader.

The presentations by Tankersley and Steinley couldn’t have been more different.

Tankersley

First, Tankersley’s bloviating about how tight he is with the board was really awful. I still can’t get over that someone with his credentials doesn’t appear to have any shame for agreeing to be a player in the sham petition process. It’s only purpose is to overrule the vetting by the NNC so that Amorin can get his lackey’s in. At no time in the five weeks, I’ve been chronicling this debacle has AI Leadership provided a specific reason for the need for this sham petition process.

Here were a few nuggets from this Amorin lackey.

“Times like this bring out the best in people or the worst in people” LOL

“Open your eyes to what the possibilities are for this organization” LOL

How embarrassing.

Tankersley emphasized he is a team builder which is obviously false for the fact he is a candidate in this sham election process. He wants to expand the education delivery yet that ship has sailed. He wants to examine the financial structure to which I ask, why? The whole purpose of this sham election is to keep the yes-men like him in the pipeline so they can travel first class with wives, friends, and family around the world. The lack of ethics here is absolutely unconscionable.

It should be noted that Tankersley criticized Steinley directly which revealed that he is not a teambuilder. The feedback has been that the Execs/BOD gave him pure softball questions so he could answer them and even with that, he was cringe-worthy.

Steinley

Why bother going into details? The man was relaxed and the consummate professional. His performance was clearly proof as to why he was selected by NNC over Tankersley. He is what the Appraisal Institute needs to finally get AI National moving in the right direction.

Steinley was announced as the winner by the Appraisal Institute yesterday:


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THE CON Episode 1 Debuted This Week And It Was Compelling Because Good Appraisers Lived That Hell Too

August 8, 2020 | 6:15 pm | TV, Videos |

Although I’ve shared the following CNBC clip before, it’s worth showing again given my 15-year ago hairstyle. In 2005, I was interviewed by CNBC in the midst of the Housing Bubble and said that 75% of the appraisals being done then weren’t worth the paper they were written on (hey it was 2005 and they were done on paper, not pdf). They found me because I had just started my Matrix Blog because no one seemed to be listening to appraisers. Incidentally as of this week, Matrix is 15 years old!!!

And the October Research stats presented indicating that 55% of appraisers felt pressure to hit the value rose to 90% in the next year! The outlook was dire.

When I was interviewed, I was trying to keep it together because I assumed my business and my livelihood would be gone by 2008 if things continued. Thoughts about supporting my family of 4 sons and making my mortgage payments loomed large, but I couldn’t be morally flexible unlike many of my local peers who thrived as a result. Most lenders and mortgage brokers didn’t care about valuation quality, just hitting the numbers to make the deal. The appraisal profession became seen as one of “deal enablers” instead of neutral valuation benchmark setters. My big competitors at the time (who were part of the 75%), told me essentially: “Aw Miller, You Don’t Get It.” No, I didn’t. All my “75% competitors” during that era lost their licenses and/or went out of business after Lehman collapsed in 2008.


This is why this new documentary “THE CON” means so much to me. It tells the story that “good appraisers” like me and my firm have never been able to tell. Instead, good appraisers have been lumped in with the bad appraisers who are long gone.

Watch for my appearance along with several of my colleagues around the country in this week’s episode 2!

Think too much risk was the reason for the 2008 financial crisis? Nope. Unmitigated greed and systematic fraud are the real issues — and no one’s discussing them…. Until now. @theconseries is now available on virtual cinema: thecon.tv/watch #TheCon

Beginning now, you can watch entire THE CON series, episodes 1-5 through a network of independent cinema outlets.

Watch Last week’s Episode 1


The Previous Victim Of The Appraisal Institute Sham Election Maneuver Shares What Happened

July 25, 2020 | 5:25 pm | Explainer |

This post previously appeared in the July 24, 2020 edition of Housing Notes. I’ve been writing these weekly summaries on housing topics for more than five years. To subscribe for free, you can sign up here. Then you can look forward to each issue every Friday at 2pm New York Time.


Here’s a shoutout to Jim Amorin and Leslie Sellers as you are reading this right now – – here’s a refresher on Appraisal Institute history…

Like Craig Steinley, the 2007 victim of the unethical petition process I’ve covered over the previous two weeks, Anne L. Johnson was selected by the nominating committee to be Vice President after being vetted against a number of candidates. This sham petition process was implemented to get Leslie Sellers (he voted for himself after not making the cut with the nominating committee) on track to later become President and then led AI to exit TAF without a legitimate explanation – it caused me to quit and accelerated the deterioration of the once-great organization, essentially screwing its own membership by fostering its growing irrelevance.

To be clear, I want the Appraisal Institute to either thrive or get out of the way of the appraisal industry. This corrupt behavior is going to continue and the operations executives will keep overruling the voice of the membership, so that leadership can keep enjoying high pay and expensive perks, inappropriate to an organization that has lost a third of its membership over the decade, a steeper decline than credentialed U.S. appraisers. There is one thing they are doing now that should be good for appraisers – more on that next week. But any good continues to be overshadowed by current behavior that is corrosive to organizational credibility.

Unless this petition process is removed from the bylaws, the deterioration in credibility will continue.

To current Board Members, please pick one:

Are you:

A. simply sheep that sit on the board to pad your resume and remain afraid to make any move that gets the operational executives mad? or
B. an industry leader who knows right from wrong and can see the corruption right in front of you and are willing to do something about it to rebuild long-term organization integrity?

But I digress again…

Anne L. Johnson lays the situation out in her July 21, 2020 note that was sent in support of Craig Steinley, the current (only legitimate) nominating committee choice. I’m sure all board members are aware of this dark moment in Appraisal Institute history more than a decade ago and now is the time to start asking questions and demonstrate integrity. Fingers crossed.


So I’ve made my case. Now here is how members of the Appraisal Institute can take action NOW.

A plan of action has been laid out professionally by the North Texas Chapter and is not being critical of the Board of Directors.

Clicking on the image will take you to the CALL TO ACTION web site.


[click on image to go to the CALL TO ACTION link]

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The Appraisal Institute Has Missed The Opportunity To Come Clean With Its Members

July 13, 2020 | 9:35 am | Investigative |

This post previously appeared in the July 10, 2020 edition of Housing Notes. I’ve been writing these weekly summaries on housing topics for more than five years. To subscribe for free, you can sign up here. Then you can look forward to each issue every Friday at 2pm New York Time.

______________________________________________________________

UPDATE JULY 13, 2020

The Appraisal Institute felt it was necessary to write a letter to respond to my original July 3rd post: The Appraisal Institute Ignores Its Membership For Third Time In Sham Election Maneuver. Their response letter was surprisingly amateur and showed how little they respect their membership. Read on.


UPDATE JULY 16, 2020

I have just been told that Michael Tankersley did NOT serve on this year’s Nominating Committee. He was a candidate for the Vice President position. The note below has been updated to reflect that.


Although Steinley was the – SOLE – duly vetted and selected candidate of the nominating committee, somehow the board had to go through a secret, 6-out-of-24 “process” to place Tankersley back onto the ballot after not being the selection of the nominating committee. Why?

The Appraisal Institute at a crossroads. To all those who have nothing to hide, hide nothing. The sham petition process was hidden from the Appraisal Institute’s membership. In response to my initial call out of this sham election process last week, the Appraisal Institute attempted slip this by membership using a highly disrespectful “fogging” letter from the current president. It insultingly omits all the critical issues that have roiled membership while rambling on and on about process and assuming the membership isn’t very smart. No matter how much they try, AI leadership behavior in this sham election process is unethical and does not serve the membership whatsoever.

Here’s a reminder to the Board of Directors: you serve the membership, no matter who you pledged your allegiance to when you signed up for this gig. Please honor your commitment to them and your commitment to honor and integrity as leaders of the industry. For at least the last decade, this once-proud organization is a shadow of its past because of self-dealing from the same people we are witnessing now. It is up to you to do the right thing and act like the leaders you can be.

______________________________________________________________

Original Post

Today, all (I assume) members of the Appraisal Insitute received a letter from current AI president Jeff Sherman, with whom I’ve met and spoken with on several occasions during his tenure and liked him and what he represented. MAI members from around the country have forwarded it to me and expressed their profound disappointment in this organization that they used to love.

Here is the consensus feedback by members who received this letter.

It just makes me sad that this is the way it is. I think many of us are a bit dumbstruck by this.

I found the letter mind-boggling and a simply attempt to fog the issue at hand. I have to assume that this was written by AI counsel because it reads like a lawyer’s writing with a little softening from other parties. I will also assume this response was directed by the current CEO in an attempt to stop the viral membership backlash of the sham election process that has rattled the organization so he can continue to control who future presidents are. So I am very confused as to why Jeff signed off on this letter since its contents contradict what I have been told by past presidents, past board members, and current members. It hurt to read it.

For now, I am going to chalk this up to “fogging” so that the actual logic gets buried in the debris. This is how lawyers do this. By the way, has anyone ever considering sending the details of this action and the past ten years of self-dealing to federal prosecutors in the Northern District of Illinois? If this is how their executives run the organization, and all the perks I keep hearing about, it makes me wonder about the state of their finances. The handling of the FMC debacle comes to mind.

But I digress.

Here is my running commentary on the letter that is presented below:

  • This sham election maneuver has not been in place since 1991 – Ask the former president who made this happen (I have the name) under oath to get Sellers on the ladder in the first place and ruin the career of a star female nominee.
  • An 11 member nominating committee gets to vet candidates recommended by the membership to review and they are charged with picking the best one and then announce it. They vetted 3 this year and picked one. It’s literally that simple.
  • The winning candidate’s name was announced by the nominating committee.

And then magically…

  • The sham maneuver was made to get the CEO’s pick inserted which should never happen.
  • Tell the membership right now why there is a second candidate.
  • I’ve been told repeatedly that a board member can vote for themselves in the petition process and as of today, some current board members are fighting like hell to keep any such votes hidden from membership, presumably so potential self-dealing will not be exposed.
  • To repeat, one person was selected by the nominating committee and two weren’t. There is no disagreement on this. Why does the CEO get to pick a candidate that was not selected to run against the person who was selected?

Why are there suddenly two nominees without any transparency? This letter does not address this point at all yet it is the entire point. The rest of the letter is faux transparency. Give the membership the actual reason there are suddenly two candidates, one picked by the nominating committee and one picked by the CEO (and that CEO-blessed candidate should be ashamed of themselves).

  • As many as 3,000 members will get to watch the 10-minute presentations of two candidates – one vetted by the nominating committee and one hand-picked by Jim Amorin. The act of showing this on video isn’t transparency at all. It’s a charade. The most deceitful part of the petition process has already occurred before the camera was turned on. There is no explanation of how the second candidate was selected.

The fogging part that is most distasteful in this letter is that it is laden with process gobblygook but contains zero transparency, something the membership is demanding right now.

Here is the closing paragraph of the letter.

I now offer to you, and to each Board member, this is not about style or personality; it must be about the best interests of the Appraisal Institute. I have supreme confidence that the trust you have placed in your elected representatives will be confirmed, regardless of the person chosen.

The problem with this closing statement is this sham election process is not being done in the best interests of the membership, but rather it is being done in the best interests of the operational executives running the show.

This is truly a sad day for the Appraisal Institute. If the board does not fight for the rights of the membership and respect the selection process, then the organization as we know it is just a monarchy, largely like when it began to be a decade ago with the same cast of characters.

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The Appraisal Institute Ignores Its Membership For Third Time In Sham Election Maneuver

July 3, 2020 | 3:19 pm | Explainer |

This post is an excerpt from my July 3, 2020 Housing Note newsletter. You can signup for these weekly emails here.

_________________________________
July 4th UPDATE
When the Board of Directors convenes in August they need to:
– Discuss the current sham petition process and should either remove it from the bylaws altogether or modify it by raising the petition process requirement from 6 votes to a supermajority (2/3) of the Board of Directors. A simple 50% vote requirement to invoke the petition process would under-represent and undermine the efforts of the 11-person nominating committee who work hard to vet the candidates.
– Discuss the transparency of the petition process: Why do the board votes on the petition process get to be concealed? Given the self-dealing that has occurred three times due to the lack of transparency, the votes made for the petition process need to be 100% transparent to convey credibility to the membership that is absolutely required.
– Discuss the potential damage to the candidate’s reputation: The process of leaving a publicly announced and thoroughly vetted nominee to twist in the wind while this petitioning process is invoked is completely unethical and unprofessional. Why would a professional organization allow something like this to happen to its own members when it can damage and humiliate a candidate who is the best the organization has to offer? It is unconscionable to me that the organization has allowed the petition process to exist without significant protections to the determinations of the nominating committee and without ANY protections to the selected candidate? How will the organization be able to attract standout candidates in the future instead of self-serving political hacks who don’t care about the membership?
_________________________________

One of the most unethical actions against AI membership is about to take place (for a third time), and the uproar is just beginning. I’ve had many appraisers reach out to me over the past week, conveying how upset they were. I’m not even affiliated with the Appraisal Institute, and I’m furious because it brings down the entire industry in the eyes of others.

Back in 2016, I unleashed a flurry of commentary criticizing the Appraisal Institute executives who had a plan to take all chapter funds for no justifiable reason. The membership reacted by calling leadership to task, which is a challenging, scary thing when they are threatened by leadership and might lose their designations, which could impact their livelihood.

Now we are facing something much darker and maybe the final downfall of the Appraisal Industry as an organization.

Here is what someone said about this election sham:

“Why not next year instead of this year, why are you doing this when you know that in the middle of a pandemic and that it will tear the Institute apart from the top?”

A well-regarded and nationally-known appraiser and Appraisal Institute member, Craig Steinley, won the backing of the national nominating committee, and his name was submitted publicly because confirmation is essentially a rubber stamp. Craig was thought to be the best choice this year by the national nominating committee. The confirmation is supposed to take place in the first week of August (more details later on).

Here is a rough overview of how the nominating process works:

  • The ten regional areas of the Appraisal Institute provide recommendations of individuals that wish to be considered for the national chain of command, beginning with the Second Vice President, the Vice President, and then President, who serves one term. It is the track to become the national President. The national nominating committee vets the recommendations that are submitted by the membership and announce their recommendation, followed by a board confirmation.

Here is how the sham ‘petition process’ bylaw works:

The key to the petition process is to disregard the nominating committee recommendation. This was inspired by at least four former presidents more than a decade ago: there are only 6 national board member votes needed to override the nominating committee recommendation. With those 6 votes, Amorin, the current CEO, can control the future presidents and officers indefinitely. Doesn’t that seem to be against the interest of the membership? The Board of Directors needs to close this unethical loophole if there is any hope of the Appraisal Institute rising again to claw back the greatness it once possessed.

By the way, the current Appraisal Institute national Board of Directors is comprised of 27 members, with 23 men but only 4 women. Twenty of the board members are the chair and vice-chairs of the ten AI regions. Only 6 board members are needed to vote in favor of the petition to insert a new Amorin lackey to enable lavish expense accounts and travel as I’ve previously written about, funded by hard-working appraiser members who have invested a considerable amount of time and money for their Appraisal Institute designations.

First Time Petition Process – created and implemented
Now there is uncertainty on Craig’s nomination because the petition process that was created back more than a decade ago when a female from Wyoming was publicly nominated like Craig and was replaced by a board choice through the petition maneuver, ignoring the nominating committee results.

Leslie Sellers was on the board then and was quite upset that he did not get the nomination but was able to vote for himself using this maneuver. Industry feedback suggests that AI Presidents from 2007 to 2010 seem to have been behind the petition process, inserting it in the bylaws to get Sellers into the ladder to ascend to the presidency two years later. I’d invite any of these former presidents, to refute this with credible, verifiable evidence to counter my own experiences and what many members have told me over the years.

Then 2010 president Leslie Sellers was the reason I disassociated with the Appraisal Institute in 2010 after he withdrew AI from the Appraisal Foundation for no stated reason that made sense. My tipping point was that he had posted a video saying to the effect that he was thrilled about the future opportunities that awaited the organization. Well, a subsequent 30% drop in membership, over the next decade, a steeper decline than licensed/certified appraisers in the national registry, and a collapse in credibility in Washington seems to refute that.

Second Time Petition Process – Was Implemented

Jim Amorin became the first two-time President in the Appraisal Institute’s history using the petition process election maneuver to bypass the nominating committee’s decision. There were other very worthy candidates who were not considered at all. He went on to somehow obtain his current CEO position without a real effort by the organization to look outside when the former CEO essentially left in the middle of the night – I knew one highly qualified CEO applicant that wasn’t seriously interviewed – when the Appraisal Institute was bleeding relevance and needed to bring in new blood.

Third Time Petition Process – Being Implemented

Craig Steinley earned the backing of the national nominating committee and his name was submitted publicly because confirmation is essentially a rubber stamp. Craig was thought to be the best choice this year by the national nominating committee.

AI CEO Jim Amorin ($450K/year) disagreed and used the petition process to make Michael Tankersley the Second Vice President and doesn’t have to give a reason. Mark Linne stepped away from being considered. In other words, the membership nomination process that is supposed to be separate from the executives running the organization is wildly compromised. I am not critical of Michael Tankersley as an appraiser because I know nothing other than his credentials, but I am certainly disappointed that someone with outstanding professional credentials would be willing to circumvent the membership-driven process for personal advancement.

The following text is the email that was sent by National to members about the election. Notice how they do not explain that the petition process occurred and how the TWO candidates came about? Shameful.

Greetings:

On August 6-7, 2020, the national Board of Directors will elect the 2021 Vice President of the Appraisal Institute from two nominees, Craig Steinley and Michael Tankersley. You submitted a communication to the National Nominating Committee regarding one or both of those nominees. The purpose of this email is to ask whether you would like us to provide a copy of your communication to the Board of Directors for consideration. The nominees, even though they serve on the Board, will not receive a copy of the communication if you choose to release it to the Board. Please respond to aielection@appraisalinstitute.org letting us know of your wishes by July 13, 2020.

We look forward to hearing from you.

Jeffrey E. Liskar, Esquire
General Counsel
Appraisal Institute


To recap this election petition process sham:

The national membership submits candidates to their regional heads for the three-year path to the presidency of the Appraisal Institute. The national nominating committee, which is supposed to be separate from the operations executives for ethics concerns, vets the nominations and selects the one they feel is best qualified and then announces the choice to the public. The petition process created and inserted by former AI presidents over a decade ago subverts the word of the membership by only requiring 6 board votes and can include board members who can vote for themself, to what can only be viewed as self-dealing, violating the separation between operations and annual appraisal executives as well as shaming nominated executives – the best and brightest the membership has to offer – for their own self-dealing.

This is the problem with the current AI leadership and something I have been writing about since 2016: The national leadership is not thinking about their members, and they need to be, or the organization will die faster than it already is. I hope this is a wake-up call to current board members to do something about this internal corruption.

I want nothing less than for the Appraisal Institute to return to its former glory or get out of the way to stop damaging the livelihoods of its members and the industry’s reputation.

How to do something about this
If you want to do something about that, please reach out to the regional heads who are also board members to voice your dissatisfaction and be heard. Either let your voice be heard about this sham election or agree to let this mark the end of what was the gold standard in property valuation organizations before the pivot circa 2007.

Since I am not a member I don’t have access to the ten regional chair contact info to voice your complaints but you can see them on the Board of Directors landing page. There truly are a lot of good people on this board and they need to hear your voice and stop this corruption of the election process.

Incidentally, here is the letter that went out to the Board of Directors. Note that 492 signed the letter, 392 AI people, 6 of the 10 NNC members, and Mark Linné (3rd Candidate).


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BREAKING The New York State AMC Law Is Now In Effect

April 27, 2019 | 10:38 pm | Milestones |

Back on April 19th, I wrote about the New York AMC law in my Housing Notes newsletter. After years of AMCs chipping away at the public trust, the New York AMC law was designed to protect the consumer.

The bill summary was:

Relates to the registration of real estate appraisal management companies or an individual or business entity that provides appraisal management services to creditors or to secondary mortgage market participants including affiliates by the department of state.

Yesterday Appraisersblogs ran it as a standalone post and I got a lot of feedback. To be clear, the bill was signed into law by Governor Andrew Cuomo at the end of last year and became effective 120 days later which is today.


Here is the NYS “AMC Law” as a PDF or in plain text on the landing page of the law.


The NY State Coalition of Appraisers (NYCAP), led by my friend and appraiser Becky Jones who along with other unnamed heroes worked hard to help make this possible, wants you to know that this law was not a last-second, fly by night effort as being characterized by The Real Estate Valuation Advocacy Association (REVAA) – the trade group that represents the bulk of the AMC industry in the U.S. – inferring this law was flimsy and easily overturnable.

No, it isn’t. Its been a long road and achieved unanimous consensus during the process.

When the draft of the bill was approved by the NYS Board of Real Estate Appraisal, Carol DiSanto who is the Vice Chair, walked it across the street to The New York State Association of REALTORS (NYSAR). In effect, REALTORS of New York State were made fully aware as the “draft” became part of NYSAR record at their next business meeting. Becky Jones sat on the Legislative steering committee at NYSAR and informed them about the bill. They had no objections to the bill before submission to the state legislature.

A similar proposal was introduced by the New York Department of State in 2015. Senate Bill S9080 was introduced two years ago during the 2017-2018 legislative session, signed into law on December 27, 2018 and became effective today. The voting was unanimous in favor by the rules committee of both houses and the body of both houses.

Here are the vote tallies (the same in both the NYS Senate and Assembly):

And here was the timeline:

A couple of AMCs we work with for some private banking groups sent emails to us yesterday:

Some thoughts

  • If you’re not an appraiser, then you want to read this. It is a 2011 take that still holds up on the AMC industry from American Banker’s Bankthink column (I’ve written a column there before on another subject): Appraisal Management Companies Create More Problems Than They Solve

  • When the realization sunk in that this was a new law, not a proposed bill, attendees began to text me from the joint committee meeting of The Appraisal Foundation. I got the play by play when the news was shared. It sent shockwaves through the AMC-types because, in my view, it effectively destroyed their ability to hide how much they are gouging the consumer and how little the appraiser gets from the actual “appraisal fee” (typically less than half). Seriously, the value-add provided by AMCs to the appraisal process in the delivery of actual appraisals might be 5%, but no chance in hell it is 75%. This is why we need consumer protection in the mortgage business.

  • I’ve been told by several colleagues that they’ve heard one of the main AMC concerns is whether New York interpreted the original law correctly to arrive at this form of law regarding AMCs. From my perspective, it’s like not buying a house because one of the gutters is missing a few screws to hold it in place. The criticism seems like a weird attempt at fogging since this law is protective of USPAP and the public trust, something that has been forgotten in the attempt to “modernize” the appraisal industry. But I’m no lawyer so I’ll look for clarification on their logic. But consider this:

  • REVAA’s biggest concern about the law was specifically the disclosure to the consumer as to what part of the fee goes to the appraiser. Not only does the appraiser get to state the fee, but the AMC fee must also be disclosed. This was upsetting to REVAA director Mark Shiffman presumably because the consumer would finally see that most appraisers get half or less than half of the appraisal fee the consumer thinks they are paying for the appraiser. REVAA has fought hard to hide this from the consumer, pushing back on prior attempts to disclose the breakdown, and finally, New York State has effectively brought to light this predatory practice. Transparency is good for the consumer and for the appraiser. Should a consumer be aware that the check they wrote at the time of mortgage application specifically for an “Appraisal Fee” be used to pay the appraiser less than half of it with the remainder to a wildly inefficient third-party institutional middleman they know nothing about?

  • The NYC AMC law will likely damage the evaluation platform that the Appraisal Institute has been advocating so intensely in state legislatures without disclosure to their own members yet diminishes the meaning of an appraisal certification to the consumer. It is interesting to see that AI National hasn’t taken a position on this new groundbreaking law, like yesterday. They’ve been progressive in their quick denouncement of other important issues, like appraisal waivers, so the lack of denouncement against AMCs is curious.

  • This new law only applies to appraisals ordered through AMCs (which control an estimated 80% of U.S. mortgage appraisal volume) for properties in New York State. (note: this why the law is described as “AN ACT to amend the executive law, in relation to registration of real estate appraisal management companies by the department of state”) New York is one of the few “voluntary” licensing states. There is no mandatory licensing so agents and brokers can perform appraisals and BPOs all day long. This was a key point that REVAA was trying to convey to NYSAR (I hold the CRE designation and all CREs in New York are automatically members of NYSAR) a few weeks ago when REVAA was on a mission to stop the law going into effect. REVAA reached out to NYSAR to claim how bad the law was for their agents and brokers but NYSAR wasn’t buying it because they could still perform BPOs and evaluations for local banks – just not for AMCs. Becky Jones shared a story about this situation from one of the CE classes she teaches: I had an agent work the whole thing in her head out loud during the class and at the end…the agent deduced on her own that she will contact local banks for the BPO work and she was especially thrilled because she realized that she will probably get the listing and therefore an opportunity to make more income. She was so thrilled she “high-fived me during class.”

  • A concern shared with me by a friend and appraiser colleague in Virginia was that most of the large AMC platforms, such as CoreLogic, Appraisal Port and Xome, use a portal that strips the report and the appraiser’s invoice is one of the forms that does not get uploaded (because they don’t want the consumer (i.e. mortgage applicant) to see how much the actual cost goes to the person providing a value opinion of their home. If AMCs continue this practice in New York State and are caught, they will lose their ability to do business in the state. They can risk it, but the stakes are high. There is always a concern that oversight of this will be lost in the shuffle so it is imperative that appraisers keep the pressure on.

  • Another appraiser colleague and friend I know in Illinois said: “So if you are curious what is happening in Illinois, here’s how we must report our fees. When discussing this issue 10 years ago, we were of the opinion that the invoice could get lost, but pages in the appraisal report don’t get lost. That’s why it must be in the body of the report.” Here’s the Illinois AMC law.

And finally…

It is ironic that the New York Governor, who was the creator of HVCC when he was NYS Attorney General and was a board member of a former Ohio-based AMC owned by a friend that eventually collapsed, leaving many appraisers unpaid for their work, was the signer of this law. Despite the irony, his concern for the consumer is incredibly appreciated by the appraisal community who have been beaten up by the AMC industry since 2009 under the false narrative that they are embedded in the process to protect the system. In reality, AMCs gave the mortgage system an empty promise that left the consumer and the taxpayer exposed to excessive costs, bureaucracy and a systematic deletion of quality. Even worse, they stole the economic livelihood of the actual market valuation experts and replaced them with form-fillers.

It is nice to see a state pay more than lip service to consumers within the mortgage business.

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Remember liar loans of a decade ago? Those same people want to do away with appraisers.

November 30, 2018 | 10:12 am | Investigative |

My friend and appraisal colleague Ryan Lundquist and I authored a petition on change.org to point out the growing wreckless behavior that is enveloping the mortgage process.

There’s a proposal from the FDIC, Federal Reserve, and Treasury Department not to require appraisals for some mortgages under $400,000.

As we say in the petition, this change can impact several groups in particular: consumers, the taxpayers, the housing market and appraisers.

One group not explicitly mentioned in the petition but impacted down the road are real estate agents and brokers. Currently, 12% of mortgages that flow through the GSE (Fannie Mae and Freddie Mac account for 78% of residential mortgages right now) will have their appraisals waived. Those are “PiW” loans or have a “Property Inspection Waiver.” My good friend and appraiser colleague Phil Crawford says on his radio show “Voice of Appraisal” says the acronym stands for “Pissing In Wind” which is more accurate. If the buyer realizes they overpaid for the property, the agents are now the professionals with the bullseye on their back. Liability insurers are already talking about a new target when things go south.

Years ago and again this morning, I heard a real estate agent say – what do we need you (appraisers) for? “The seller and the buyer determined the market value by agreeing on the price.” The problem with this logic is the buyer may not be fully informed (i.e., from an out of market area) and will also mortgage fraud supercharged. Ever heard of straw buyers? Agents must remember that they perceived as biased even with the best intentions and the best ethics because they are paid only if the deal closes. When something goes wrong, they are completely exposed.

The direction that was taken by regulators relies heavily on AVMs (Think Zillow’s Zestimate which is not within 4.3% of the actual value 50% of the time) and “hybrid appraisers” (which removes the appraiser from the actual inspection of properties) to develop a value opinion. The inspection of the property, when done, will rely on non-licensed individuals to fill out a checklist and give an appraiser at a desk the information without any standardization, direct contact or assurance the inspector knows what they are doing. I’ve heard of fees as low as $8 to do the inspection and $78 for the appraiser. As far as I can tell, a full appraisal (inspection and analysis) cost can represent as little as a hundredth of a percent of a purchase transaction.

This petition is for everyone to sign, not just appraisers. Please sign and help bring attention to a pattern we just lived through in the financial crisis. It’s happening again.

Please make your voice known, read about and hopefully sign the petition below:

PETITION: Remember liar loans of a decade ago? Those same people want to do away with appraisers.

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[Media] Daniel Gershburg Podcast: Market Conditions, Valuation and Neutrality

February 12, 2018 | 12:43 pm | Podcasts |

I’ve been following Dan Gershburg‘s Twitter handle for quite a while and found it to be a great resource for pretty much everything. He’s a real estate attorney and we got to know each other a little bit over the ultraweb. Eventually he invited me to join him on his podcast. I got to talk with him about a few things outside my usual discourse: my concept of “neutrality” and how I got started (and who doesn’t want to wax on poetic about themselves for 45 minutes?) I enjoyed the discussion and I think you will too.

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