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BPOs for Home Equities- Read your history!

By Richard Glesser

Real Estate Appraiser with North Country Appraisal Services

March 20, 2010 06:57 AM

Over 20 years ago, the S & L Industry collapsed at a tremendous expense to the taxpayers. The result was new regulation and licensing of appraisers who were made out to be the scapegoats. Over the past several years, the subprime and then the entire real estate market collapsed with the taxpayer once again bearing the burden and the appraisers once again heavily blamed for the mess. The result was HVCC which has effectively cut appraisers' fees and making AMCs flourish with the final effect being poor quality appraisals and many good appraisers leaving the business.

Now comes the new directive out of the White House allowing BPOs for Home Equity loans and real estate loans of lower values. Does this not turn the clock backward and effectively begin to disassemble appraiser licensing when having credible valuations are essential to prevent further lender losses? I am not opposed to BPOs when applied to the proper uses which is to price real estate for sale. But they are not intended to provide value for real estate loans and should not be used as such.

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Brian Pierce

TrueCompass Lending Corp - Rocklin, CA

My only comment is that I agree. The HVCC law has been a disaster. I am not sure that the BPO issue will disassemble the appraiser licensing but it can't help a market segment that is already struggling.

Mar 20, 2010 09:31 AM

Craig Chapman

Call Realty / Access Appraisals - Mesa, AZ

The Value Guy

I'm with you on this issue. BPOs have their place, but not as a viable, credible, reliable source of valuation for loan purposes. I do believe that appraisers should be developing quicker types of products that can be ordered by lenders who are looking at a low risk type loan & feel they really don't need a full 1004 or even a 2055 drive by. I see no reason that appraisers couldn't do a very brief limited report, much shorter than a 2055, maybe like the old 704 with a photo of the front of the subj. for a lower fee that might bring back to appraisers, some of the BPO business.

I think what we are seeing is on one side the government says you have to have an appraisal lic. to receive fees for valuing a property, but at the same time they give into the lenders who say they want cheap fast BPOs by allowing real estate agents to collect fees for valuing properties. No matter what you call it, appraisal or BPO, it is a valuation of a property for a fee.

I also think that many agents don't really do the BPOs just for the fee. They are led to believe by unethical BPO servicing companies that it is the way to break into the lucrative REO listing field. The reality is that a small percentage of BPOs are used for pre-loss mitigation purposes. There are some large BPO ordering companies that do not have any potential listings in their system. It seems as if they have created an under class of work for cheap, unlic. appraisers, who are not suffieciently trained.

Mar 27, 2010 08:29 AM

Aspen Mathew

Northville, MI

Yes , i agree......nice info

Regards,

Outdoor Living Store

Apr 01, 2010 09:18 PM

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