Government always has a way of setting their sights on THE EASIEST TARGET
The unintended consequences of Federal mandates: independent appraisers get stung by abuses in the lending industry!
Many independent appraisers have spent years building a business, only to wake up and realize that they've been "regulated" out of a job.
Picture a huge government sponsored forum about the problems in the mortgage industry, in a room filled with government bureaucrats and/or wholesale lenders poised to cover their own rear ends. Now picture one lonely guy walking through the room in a shirt with a huge bull’s eye stenciled on the back. Guess who he is! That’s right, he is the appraiser.
Right after hundreds of savings and loans went belly up in 1989, the appraisal industry was put under the microscope, and justifiably so. After all, it was the only multi-million dollar industry in the United States that was unregulated at that time. In fact, anyone’s brother-in-law could do an appraisal on a 3 x 5 card at that time and it would fly. No one could argue against licensing and/or certification, and frankly I welcomed it in 1990- 1991. I had already been appraising over a year at that time, and I believed it would bring welcome changes and guidelines to the whole process. It did. Now, jump ahead nineteen years. Once again the mortgage industry is in trouble, and guess who the fall guy is again. Yep..you guessed it. But this time the target is on the wrong guy.
The government has stepped in and taken one of our fundamental (free enterprise) values away from all appraisers. They have initiated the “HVCC”, and put the ordering of appraisals in the hands of AMCs, or what I refer to as “The Devil’s Sorting Houses”. Why has this been done? Well of course, it is because of the “C” word (coercion). Yeah, believe that if you want to. It is all baloney pure and simple. Any appraiser that is falling prey to that type of situation will be out of business soon, if he isn’t already. I will admit when I first started appraising back in the day, lenders and brokers were a little more aggressive when it came to “asking for a value”. Fine. At that point there are only two paths one could take. One, succumb to the pressure and reach for values, or two, say no thanks and take the correct and high road as it pertained to the situation. I don’t consider myself some holier-than-thou bastion of virtue; the high road only seemed logical. Build a business on doing good quality work, and you will be successful. As soon as I realized this would be the case, I did and was (successful).
I was lucky to hitch my cart to lenders and brokers that had the same core values as myself. In the days of the “value check”, I would be given an address and asked for my opinion of the value. I could give a value range for the property, and whether they (my clients) liked the answer or not I didn’t have to worry about repercussions (in other words whether they would call me back again). They trusted my professional opinion, and that was that. Those days are gone, as the government decided it was better to underwrite a file completely first then hope the value was there at the very end. These clients of mine, by the way, are still in business and thriving twenty years later. This notwithstanding, licensing, certification, and USPAP was meant to thwart unprofessional appraisal practices, and I believe it did and does a good job of that. But what the heck do I know, I’m just an appraiser who is now out of business due to the government’s intervention in something they have no idea how to address. It was simply a matter of ready, shoot, aim, and then hope something was fixed. The 1004MC form should be in the Smithsonian as the foremost example of wasted government bureaucracy at its best. I have studied and studied it, and I would love to meet just one person who can tell me what value it has pertaining to an appraisal. It is worthless. It literally and virtually has no impact on finding a value on a property, but it certainly is a very official looking form with a lot of numbers on it.
Every independent fee appraiser in the United States should be as angry and upset as I am. But here is the hitch: Most appraisers are hard working average folk who love what they do and take pride in their work. The problem is there are very few wealthy appraisers who have the financial resources to sue the government and put an end to his not very funny debacle. All we can do is roll over and take this, and hope Home Depot is hiring soon.
G. Wolfsberger
BrokerScience.com confirms this troubling news in their article HVCC: How It May Negatively Affect and Change Real Estate as We Know It. Their conclusion contained the following foreboding prophecy for the appraisal industry, “…meaning independent appraisers are forced to join and AMC and give 40% or more of their income to the AMC. You read that correctly, this will deprive independent appraisers of nearly 50% of their income in most cases (this could likely mean many experienced appraisers will leave the industry altogether). AMC’s are not regulated, by the way.”
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