HVCC, AMC’s and the Appraisal Industry; a view from the inside

Editor’s note – Last month we published an article about HVCC which drew quite a few comments and responses….one such response was from veteran appraiser Paul Collins in which he shares his frustration with the state of the industry and the impact of lenders and legislation on his industry. Our thanks to Paul for allowing us to publish his thoughts..

The good ole days of direct communication and the new day we are “living” both have the same problem. Appraisers are not a valued part of the process because there are no consequences for bad lending decisions. The last time a bank valued a competent appraiser was when the local bank kept the paper and was responsible for collecting and foreclosing if that loan went bad. A real and legitimate understanding of the actual value of a property played a part in a thoughtful consideration of the overall loan application. (It even included the capacity and willingness of the borrower to repay the loan! What a concept!)

Today the loan industry requires an appraiser to rubber stamp a deal so that they can fit things into a check-box for the underwriters and secondary market folks. If there are no REAL consequences for bad decisions on the part of a lender, why does anything beyond the officially licensed status of an appraiser make any difference? It doesn’t. This has lead to AMC’s, fee over competence decisions, “get the report in” over “is there data to support your conclusions” and other things that cause the ever shrinking population of appraisers who are competent to do something beyond fill out the form to leave the industry. (Retirement, death-we’re getting old as a group, good sense.) When is the last time that you had to develop a narrative report? How often do you actually walk through the 6 assignment conditions and make changes to the language in the report based on the results of your initial scope of work decisions? Or do you get an order, inspect the property, clone an old report, swap a few comps, pop in some new info, sign and submit?

A question for some of my fellow appraisers, how many times have you had reports kicked back because the adjustments failed to fit the 10%-15%-25% guideline? Did it matter to the “reviewer” that these adjustments were necessary to account for the differences in the actual marketing conditions related to the comparable sales? Wouldn’t it have been easier to just cave and reduce the adjustment? Would the fact that the new adjustment was inaccurate and lead to the generation of a misleading report have made any difference at all? How many “reviewers” at the clients-AMC or otherwise-actually know enough to understand the comments explaining the logic and math based analysis of market data you include in the addendum? How many of them READ the addendum? :)

What market based incentive is there to raise the bar in our profession when the clients have no incentive to care beyond license level? I think that without real, tangible consequences for bad decision leading to a market driven change in the value of appraisers in the process there will never be any meaningful changes made in the way appraisers and the entire loan industry functions-or doesn’t. Any change or fix that fails to address the consequences for people who drive the loan industry and impacts the demand for minimal licensure and mindless form filling is a band-aid approach and will not be successful in anything beyond further complicating an already beleaguered profession.

About the Author:

Paul Collins is an appraiser with McSkittle Appraisals, Inc. in Cary, North Carolina. His firm provides services in 128 counties across North Carolina, South Carolina, Georgia and Florida.

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