Sounding Bored is my semi-regular column on the state of the appraisal profession. The more things change, the more they stay the same, mainly because no one outside our profession seems to understand what we do and their ramifications.
With all the credit upheaval, you would think that the relationship between the appraisal community and the mortgage brokerage community has changed (it will change on May 9th 2009).
Name one law, rule or regulation that has focused on appraisal pressure in place right now…
Nothing has changed. Perhaps the sharp drop in wholesale lending has had the effect of reducing the instances of it, but the pressure is still baked in. Here’s a recent experience:
One of my appraisers shared with me this phone call recap:
I just had a long conversation with a XXXXXX of XXXXX Mortgage. She has a client who owns an apartment at [omitted] who is interested in refinancing. He believes his apartment is worth around $XX million. I spoke to him yesterday and gave him some information about the appraisal process. His mortgage broker, XXXXXX, called today requesting a value range for the apartment. Our office politely indicated we could not give a range explaining that it is considered an appraisal. XXXXXX of XXXXX Mortgage would not accept this answer by XXXXX[our employee name] (after being on the phone with her for seven minutes) and she forwarded the call to me. I repeated our position and XXXXXX of XXXXX Mortgage still would not accept this answer. She needed a number from us before processing the order with her client. I tried to explain to her that this is unethical and that we can’t shoot for a value based on the loan application. She eventually threatened that we would not be receiving a number of other orders from the same building based on our not giving her a value. She also made a similar threat to XXXXX[our employee name]; basically saying we risk losing other work from XXXX Mortgage.
After receiving this information from my appraiser, I left a voicemail to XXXXXX of XXXXX Mortgage requesting a returned call and sent the mortgage broker an email with the following message:
I just received a disturbing recap of a conversation you just had with two of my staff.
Doesn’t it seem unprofessional to withhold work from an appraiser because they will not violate their license by issuing a pre-determined value? This is one of the reasons we are in a credit crunch.
Before I file a complaint with the New York State Banking Department, I would appreciate a call or contact from you for an explanation.
Perhaps you are having a bad day? Or perhaps this was simply a misunderstanding? Hopefully I hear from you no later than Friday.
To the mortgage broker’s credit, I got a call back in about 10 minutes To the effect of – complete misunderstanding. repeatedly extended apologies. Client was asking for a range. She had a horrible cold, maybe that was how she misunderstood. Has zero issues with us. Very, very sorry.
We got an appraisal assignment from them the next day. This firm gives us a few assignments per year. The assignment was cancelled 24 hours later.
I know this sounds like a heck of a way to interact with a “client”, but if we are pressured to break the law and/or be punished financially, whether or not the person is aware of what is going on now, then they can’t be my client.
It makes me wonder when things will actually change for our profession.
Tags: Soapbox Blog, Appraisal Pressure, Jonathan Miller, USPAP
Good for you Johnathan and your appraiser.
As we now clearly know mortgage broker PIAs are only the tip of the “number” iceberg and the loan originators are under tremendous pressure to please the secondary market moguls.
But they do perform a useful service to appraisers. Their demands on the appraiser are a red flag that they are working in a chain where ethics and honesty are joking matters.
Notwithstanding some practitioners ability to spin the meaning of predetermined value, most appraisers are now alerted to object when they are asked for a “number” or to hit one.
I am persuaded that it is time to emphasize that assignments to be done fast and cheap on a flimsy form is something appraisers should approach with extreme caution if not fear.