_Sounding Bored is my semi-regular column on the state of the appraisal profession. This week I address the issue of copyrights and how my written expression includes the objective data, not just commentary._
FNC posted piece on their forum by their Chief Legal Officer Neil Olson addressing the copyright issue of appraisal content in his article: [Appraisal Report Data: Not Intellectual Property, Not Protected By Copyright](http://www.collateralvision.com/open_forum.aspx?id=14).
Appraisers need to place a copyright on their reports and file them for protection with the US Copyright office. I’ve had issues in the past with appraisers copying my content word for word along with the the look and feel of the form report addenda we use and have threatened to sue them to make them stop. One of the copiers was involved in a mortgage fraud scheme and was eventually indicted so it looks like it won’t be a problem going forward with this individual.
>Copyright comes from the US constitution, which says “the Congress shall have power . . . to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” The courts have found that copyright requires originality, which stems from expression, selection and arrangement.
The idea presented in the article is that narratives are expressive presentations and therefore can be more readily copyprotected. Form appraisals are not because the physical details of a property are not _facts do not owe their origin to an act of authorship._ They are facts. The comments in the form are not.
_Here’s the flaw with this logic._
The physical characteristics of a property presented are not necessarily fact but rather require personal expression, selection and arrangement.
In other words, the square footage of a house may be in public record but what if its wrong? The appraiser changes it based on his expertise. Say he/she elects to recalculate the sq ft because it doesn’t include a new extension. I contend that no two appraisers would measure the exact same square footage result of the extension. The result is therefore not fact, rather its an expert generated opinion based on training and experience. Therefore this information, even if they are a number and not comments, are a _written expression_.
So I think the argument here is flawed.
AVM’s are here to stay and will evolve and eventually become reasonably accurate. I really don’t need to hear that appraisers will be involved in their implementation (other than provide free content for them). AVM’s have already replaced a human appraiser in many respects. We are being replaced, not because AVM’s are more accurate. Its because its easier not to use us if the client doesn’t have incentive to care about an accurate value.
As an appraiser, have you done an appraisal for a home equity loan lately? At this point, I believe AVM’s are nearly always inaccurate but since the results are not tested against reality by clients and they are a heck of a lot cheaper and faster, they have become a popular way to meet regulatory requirements – ie. paper in the file. FNC has some of the sharpest statistical minds working for them and have probably made the best case for data automation out there, just don’t tell me my opinion is confined to text.
Copyright Jonathan J. Miller 2006. All world wide rights reserved.
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What is it about appraisers and their disdain for AVM’s. Residential Appraisers exist largely, either because of regulatory requirements surrounding the Other Peoples Money Rule, ie; federally regulated or insured financial institutions are required to get them on loans over $250,000 on SFR’s and $1,000,000 on commercial properties.
Lending is a business engaged in by regulated and insured institutions and non regulated or insured companies, ie; the Mortgage Banking industry.
Desktop Underwriting standards at FNMA, a major secondary mortgage market player, allow the waiver of an appraisal completely on any loan that is 80% or less of the sales price. They allow loans to be made with as little as:
1} A list of Assessed Values in the area,
2} A list of Sales in the area,
3} An AVM,
4} A Drive By Appraisal,
5} A Drive By with Interior Photographs,
6] A URAR
As the equity and credit scores get lower, a higher level of valuation documentation is required by FNMA.
Wall Street, visa vi Bear Stearns, et al, and the like, may have different requirements. Mortgage Backed Securities are being generated by a multiplicity of originators from Countrywide, to Ameriquest, to Wells Fargo Mortgage.
All they care about is selling their loans. Only the HIGH RISK loans even require an appraisers involvement. {Think about this}.
Risk management differes from one operation to another, and differs with the market cycle. Booming markets foster liberal approaches to everything, including valuation issues.
Now we are in a Bust or Recession cycle and more scrutiny will be brought to bear on the valuation issue.
Loan Pools and MBS’s are sold in the secondary mortgage market based on their yields, and their risks. Many tell the investors “Don’t worry, all of the appraisers are insured”.
Instead of grousing about AVM’s, 1} appraisers should wake up to the fact that they are being used only on the high risk assignments and raise their fees to cover their liabilities. 2} Appraisers should increase their education, knowledge and skill-sets to get away from lender work as it is the highest risk. 75%+- of civil suits for professional liablilty come from Lender Work, essentially 100% of the criminal cases do too
Knock, knock, is anyone home, or is this a voice in the wilderness? ? ? ?