First American Quantrix = Appraiser Abuse? You decide.

By
Real Estate Appraiser with Kathleen Bryce, Inc.

I know many Appraisers blog, and whine, and whine then blog... This is just a blog, no whining as I am not currently a contractor with any First American AMC's.. And after today I suppose there is little chance I ever will be. :-) But there is just so much in their open content, Public News Releases and emails to Appraiser Vendors that it has become impossible to ignore.  To stay still...  To remain quiet.... I am thankful my business has been successful without having to work for vendors such as these.  So I write this blog to inform you.  My comments I hope will provide an Appraiser's perspective, without the whining.

This blog is set to three parts. The first are FirstAm job postings. I have not reblogged them the links are included. The second is for a press release which is located on their site. The last are two are back to back emails that FirstAm sent to their Appraiser vendors, which I have included in the blog.

Please take note of each one individually and then as a group.  The first will spell out how profit to First American is their first goal.  It goes downhill from there, at least for their Appraiser Vendors.  You decide for yourself.  But when you finish ask yourself if you see where FirstAm's vendors or clients are considered.

1) Quantrix Job Offers    

a) - Suggest Profit is their only motive in placing orders   Appraisal Coordinator Click for link   

b) - Offer for entry level person to value commercial real estate         http://jobs.firstam.com/jobs/208542-Associate-Commercial-Evaluation-Analyst.aspx  

2) National news     - New review process where by they use Appraisers to review BPO's.

February 4, 2010 FIRST AMERICAN VALUATION AND PROPERTY SOLUTIONS OFFERS NEW APPRAISER VALIDATED PRICE OPINION PRODUCT

Why is this bad?  It is more difficult to sue a Realtor for a BPO. Appraisers can be easily sued AND Appraisers have E&O insurance.  Why not use Appraisers in the first place.??.  Duh! Appraisers cost more, take more time and and are bound by HVCC. We HAVE to we have to follow USPAP!    We have to do our due diligence.  I have a REO in the area of which received a short sale offer of $84,500 Dec 13th, but the foreclosure auction took place Dec 14th.  What was the BPO? $45,000.  Nuff said.

3) Emails to Appraisers. There are two recent emails to Appraisers that should cause you concern.   

a) - Preset Appointments.  

TO:  Quantrix Valuation Chase Appraisers
FROM: Quantrix Valuation Panel Management
DATE: February 8, 2010
RE:  Automated Telephone Order Notification  

Starting Friday, February 12, 2010, Quantrix Valuation is providing a new opportunity to accept Chase orders via telephone.

 Appraiser Receives Phone Call from Quantrix Valuation

  • Auto Call will notify Appraiser that there is an order available and will provide

•o    Product

  •  
    • Property Address
    • Appraiser Fee
    • Appointment Date and Time
  • Auto Call will ask if Appraiser ACCEPTS or DECLINES the order
  • If the call is not answered or the call is dropped or disconnected, Auto Call will roll to next Appraiser - THERE WILL BE NO OPPORTUNITY TO RECOVER THE ORDER

  To ACCEPT order, Say "YES"

  • Borrower's First and Last Name is provided as well as spelled out
  • Order information is also included in the Assignment Notification email like all other orders
  • Appointment Date and Time is included in Auto Call and in the Special Instructions in the Quantrix Order form
  • Appraiser is transferred directly to the Borrower's phone to confirm Appointment Date and Time
  • If Borrower or voicemail do not pick up, the call will be dropped and Appraiser must follow up with borrower to confirm Appointment Date and Time
  • If the call is dropped or disconnects AFTER the order is Accepted, or if the automated system is unable to reach the Borrower, Order and Borrower information may be obtained at www.QuantrixVendorServices.com.

 To DECLINE order, Say "NO"

  • Auto Call disconnects
  • Order will be offered to next Appraiser
  • THERE WILL BE NO OPPORTUNITY TO RECOVER THE ORDER

  Please contact 866-284-2189, option 1, then option 2 and option 1 again if you have any questions.  

 *Calls may be recorded to help improve quality and service

 Are we Independent contractors or Employees (perhaps the IRS should be looking at this)? [<Sarcasm/>This should stop those pesky Appraisers from wanting more $$$ for complex assignments. Wait!! They won't even know if it is a complex assignment ,or one that they are competent to accept the order until they accept it!. Yup that's the ticket! Mu ha ha ha ha!!!! ]<End Sarcasm>  

So if the LOCAL Appraiser doesn't pick up the phone the next one is called, from where 150 miles away?

b) - Email to Appraisers 2: You must use ACI software.

Why you ask is this a problem? Because you must submit your report to them in its native format ACI whereby they may strip all data from it and sell it back to the Appraisers and Realtors of whom produced the work...  

TO:  Quantrix Appraisers
FROM: Quantrix Valuation 
DATE:  February 9, 2010 
RE: Appraiser Communication  

ACI Software Requirements 

As a reminder, Quantrix Valuation requires the use of ACI by all appraisers performing appraisal assignments for PNC Mortgage.  Effective February 19, 2010, in order to be eligible for future appraisal assignments, you must be utilizing ACI for submission to Quantrixand be current on all service agreements and updates. If you have allowed your subscription to lapse and/or will be upgrading your software to become EDI compliant, please contact Panel Management and notify in order to be eligible for appraisal assignments.          

 New Quantrix QC Process 

Quantrix is initiating a new QC procedure that will be implemented within the next few weeks. This QC process will help to insure that PNC underwriting requirements are addressed prior to delivering completed appraisal products to PNC.

 This new process will require all appraisers accepting appraisal assignments from PNC to have an updated version of ACI rules files. Once the ACI update is available, Quantrix will post a communication as well as instructions on our website notifying appraisers to update their rules through ACI.

 Once the new process is implemented, all appraisers will be requiredto run an ACI review master file named Quantrix PNC PAR Logic Rules on all PNC appraisals prior to uploading.   

FHA Requirements and Guideline Reminders

Quantrix requires that the appraiser abide by all FHA requirements based upon the 4150.2 FHA handbook, posted mortgagee letters and all other applicable FHA supplemental information.

  • Verify and state if the report is in compliance with FHA requirements set forth by the 4150.2 FHA handbook.
  • Confirm whether public water/sewer is available.  If so, comment on the feasibility of hook-up. Also please comment that HUD's minimum distance requirements for well/septic are met.
  • All completed FHA appraisals must include the lender provided FHA case number on all pages of the report before uploading.
  • Appraiser must state within the appraisal if all utilities including water were on and working at the time of inspection. FHA requires utilities to be on regardless of winterization for the appraisal to be completed.
  • Appraisers uploading FHA reports without the case number are in violation of FHA policy.
  • Subject photos must be taken of the front and rear at opposite angles to show
    all sides of the dwelling.
  • MLS photographs are unacceptable per FHA. Current and actual photographs must be provided within the report.

Additional photos are required for any improvements with contributory value that are not captured in either the front or rear photograph (Detached garages, Outbuildings) as well as any deferred maintenance. 

Thank you,

 

As you can see the Appraisers lack of cohesiveness has continued to cause a decline in their profession, incomes and talented members.  How long will the more talented continue to take this abuse? What will be left?  I hate to ask.

Is First Am best serving their clients needs when FirstAm's profit is their first goal? You decide.

Kathleen Bryce
Lee County Appraisals
St.Cert.Res REA RD4424
http://www.leecountyappraisals.com
appraiserkat@earthlink.net
239-940-2225
fax 239-275-4130
Associate Member of the Appraisal Institute

Comments (10)

Anonymous
Ray Miller

It is really sucking to be a residential appraiser in a rural area anymore.  The AMCs are killing the profession a little bit at a time.

 

You stand up to them and soon you have no business.

 

Yes it is time the feds and states take a hard look at what they are doing.  USPAP is USPOOP only the appraiser is bound by it.

Feb 10, 2010 01:43 AM
#1
Kathleen "Kat" Bryce
Kathleen Bryce, Inc. - Fort Myers, FL

Ray,

Forward my post to your Senators and Representatives..

The State as well as the IRS.

Kat

Feb 10, 2010 02:04 AM
Anonymous
Fred Holtsberry

Kat:

Thanks for the summation of Quantrix / First Am's latest requirements.  ACI / Outhouse format delivery, generally low fees, and accepting orders without any opportunity to complete preliminary research on the subject are both non-starters in my business.

It seems they have eliminated rouhgly 70% of Appraisers from consideration in their insistence on ACi / Outhouse format delivery and 100% of competent Appraisers in demanding blind on-the-fly acceptance of orders.

I wonder if their clients know how narrowly they have defined "eligible" Appraisers for their system.  Perhaps they simply do not care that First Am's desire to profit from Appraiser's data has trumped all other considerations in selecting their roster.

 

Feb 10, 2010 02:11 AM
#3
Anonymous
Michael Sharp

 

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The unfortunate problem here is that we  as a profession brought into this. In Ohio we are fighting this type of abuse and have established an Ohio Appraiser Coalition see www.ocapweb.org . We need to align together and fight back!!!! Reestablish our profession and bring professionalism back!!!

Feb 10, 2010 02:17 AM
#4
Kathleen "Kat" Bryce
Kathleen Bryce, Inc. - Fort Myers, FL

As you know First American is gearing up to do Appraiser Assisted BPO's.  They claim "this is not an appraisal"  An anonymous poster sent a copy of their press release to my DOL who then sent it to the Appraisal Foundation for their response.  

Appraisal Foundation [who develops USPAP] response follows;

While it is not within our purview to determine whether any particular product or service complies with USPAP, we can tell you that, as far as USPAP is concerned, the product appears to qualify as an appraisal or an appraisal review assignment.  The press release states, in part:

 "While this is not an appraisal, a licensed appraiser confirms the specific set of values determined by a local Realtor® by looking at comparable sales and verifying accuracy. If discrepancies are found, the appraiser provides a new set of values, complete with an explanation of how they were determined."

If an appraiser is required to comply with USPAP (such as a licensed appraiser in a state that mandates such compliance), the above product would have to comply with STANDARDS 1 and 2, or STANDARD 3.

Best regards, 

John S. Brenan

Director of Research and Technical Issues
The Appraisal Foundation
www.appraisalfoundation.org
(202) 624-3044

So basically any Appraiser that meets their clients expectations may be in violation of USPAP and subject to discipline.

Feb 10, 2010 03:05 AM
Anonymous
Fred Conti

As a licensed appraiser I cannot understand why any appraiser that takes pride in his/her work would provide appraisal services for AMCs that do not value their expertise, experience, education and knowledge of the market. I decided that providing appraisals for less than professional fees insults me as a professional, licensed real estate appraiser, and I will not work for those AMCs. If you would only say no to those AMCs they will have no choice but to listen to you and treat you with the respect a professional deserves. Remember, there are a limited number of licensed appraisers in each community and state. If appraisers would stand up to the AMCs they would bring them to their knees. Show some backbone and refuse to provide your hard professional services for less than what you deserve or get a $10 per hour job without benefits, that doesn't require licensing, continuing education, E&O insurance, professionalism and experience.

Feb 10, 2010 11:20 PM
#6
Anonymous
Karnivore

Recently , I worked for a company (NOT First American Valuation) that has Certified Appraisers 'checking' BPOs. I will call them 'BOGUS BPOs'. There are several companies out there that compete for doing BPOs for very large banks. I am a Certified Residential Appraiser and I did this work for BOGUS BPOs for one week because I wanted to really understand this system. Some notes;

1) the brokers developing the BPOs are given no training, none

2) accordingly, the BPO quality is extremely poor, worthless mostly random data

3) accordingly, the BPO values are random and have no real market basis

4) the broker is paid $50-$75 per BPO, checks are mailed to brokers 4-6 weeks after submission. Comp data and photos can be from MLS but they must do a subject site visit and get exterior and street photos of the subject. The low rate paid to the broker gives then no incentive to do any quality work, but they are totally untrained anyway. BOGUS BPOs gives the broker a rigid online BPO submission 'form' that forces the broker to adhere to certain data requirements. So, the idea is that this form 'idiot proofs' the data entry, and BOGUS BPOs is constantly tweaking the data entry rules so that any idiot can work through it. And many idiots do.

5) the 'reviewer' (a Certified Residential Appraiser, that was me) checks certain BPO data fields and passes it along. Again, there is a rigid set of guidelines that the input 'form' will/will not allow. There are many problems with these guidelines that force certain data input (USPAP violations, unethical situations, illogical conclusions, and more). This process is supposed to refine the data but it only furthers a corrupt process.

6) the reviewer is paid $5 per successful BPO submission, nothing for any BPO that fails the system. So the reviewer is incented to pass anything, anyway you can. Reviewers work from home and may be in any part of the country. We were given a 45 minute online orientation but no training. A 'mentor' helped me work through some problems the first week on the phone. Total time spent talking to my mentor; less than 30 minutes.

7) Reviewers are told they should only need about 10 minutes per BPO report. I have done more than 50 in 7 hours. I am told some reviewers do over 100 per day. The scope of work is close to a typical appraisal and a final value conclusion is included by the broker, but may be altered by the reviewer (is this and appraisal?). Checks are sent to reviewers 4-6 weeks delayed. Reviewers are required to have current E&O insurance. To my knowlege, the reviewers name is not attached to the final BPO, but I have never seen a final BPO.

8) this review process has many illogical outcomes, unethical situations, and outright USPAP volations. A good example is that BOGUS BPOs tells reviewers to use Trulia to check certain data. There is a Trulia link right on the form. Trulia is not a valid source for reliable real estate information, I challenge anyone who says otherwise.

9) Additionally, the subject may be in any part of the country. I have reviewed BPOs from every state and from Puerto Rico (though I am only licensed in one state). I do notice more BPOs from California, Michigan, Ohio, Florida, and Arizona. Are you smelling another real estate bubble yet?

10) BOGUS BPOs processes THOUSANDS of BPOs per week (wonder where your appraisal business has gone?). Obviously, these BPO values (pure guesses masquerading as a real process) are rolled up into some bank's even more worthless estimate of the value of their REO portfolio. (As a result, I am convinced that this process is inflating another real estate bubble, there is just so much poor quality valuation that it has to explode).

11) Let's say BOGUS BPOs pays;

the broker $75 (high end) for a BPO

the reviewer $5

and sells the BPO to the bank for $150 (that is my guess so that they have room for profit and other overhead)

The final customer (BigBank) saves $150 versus getting a real, accurate appraisal for about $300 from a real, licensed appraiser. That $150 savings gets BigBank a completely worthless value to rely on.

12) I want to expose these corrupt jerks. I am perfectly willing to be the mole to do it. But how? Who governs this? Is it an appraisal or not? Regardless, these BPO valuations are worthless and are creating another real estate catastrophe.

I need help exposing these corrupt jerks.

Here's to better valuation!

KARNIVORE

Feb 11, 2010 12:29 AM
#7
Anonymous
Curtis Price, SRA

I agree with you.  AMC's are destroying the appraisal business and do not give the people the respect they deserve. I enjoyed the business for many years and felt I was a good appraiser with good clients. I am no longer appraising because of a new business venture.  I gave my self 6 months to decide if I was going to do appraisal work again, so far probably not. I am sure there are others getting out of the residential appraisal business because of this.

What the profession really needs is for appraisers to stand up and organize.  Until the thousands of appraisers negotiate with the AMC's under one voice the rules and fees will not change. E&O insurance, continuing education, license fees, data services all cost a lot of money.  What about First American being the major public records data provider adn competing with their customers.  Unions have done a lot of good over the years.  All the professional athletes are part of a union.  It will hurt the appraisers for a while until things change but unless all appraisers stand unified, nothing will improve.

Curtis Price, SRA

Feb 11, 2010 04:55 AM
#8
Charles E. Jack, IV
Charles E. Jack Appraisal & Consulting - Las Vegas, NV
MAI

I do very little lending work any more. Haven't done so for the last 7-8 years and I am very thankful I stopped.  The FDIC has actually refused to pay commercial appraisers their fees here in Las Vegas after some of the recent bank take overs.  (Thankfully I'm not one of those people since I do very little lending work anymore.)

The commercial appraisal business isn't nearly as ethically challenged as the residential side but with new job entries like that one above for the "Commercial Evaluation" specialist, I can only dream of what's in store.  I'm an MAI appraiser with a degree in real estate and in finance with over 20 years of experience and I don't know what the heck an IVR or EIVR is but I can only imagine it's an appraisal that won't be called an appraisal because they can't afford to pay a qualified experienced licensed professional to fulfill the position.

In the commercial business, I see the FDIC (through their contracted AMC providers) ordering what I call "shotgun" appraisals that will be used for every purpose under the sun.  I don't think the appraisers that are preparing these things know what they're getting into.  First American is the exact kind of firm (AMC) that the FDIC hires for this kind of stuff.  Independent appraisers need to be acutely aware of what they're getting into before working with these firms.

I've got a group of appraisals from appraisers I know and respect who still do bank work and they're being used by the FDIC for deficiency judgment litigation cases on personal guarantees these people sign.  I'm going to be calling up these appraisers and letting them know I'm going to be on the opposing side of the case and probably do about 3X as much work as they did to offer a solid appraisal to the defense on the other side.  I looked at the intended use of the report for the FDIC written by a contracting agency hired by the FDIC and the "shotgun" nature of the appraisals is shocking.  Basically they can use the appraisals for any use from internal valuation, portfolio review, lending, workouts, refinancing, civil litigation, new financing, packaging a loan, criminal litigation, eminent domain, holiday decorations, and a cure for diarrhea...

Anyhow, there's just too many differences in an appraisal report to cover all these bases.  For example, in my state, there is a specific definition of market value from case law applicable to deficiency judgment / foreclosures in the State of Nevada. Completely different from the standard FIRREA federal market value definition used for federally insured financial institutions.  Just too many differences between the intended use for a "one size fits all" appraisal.  My eminent domain appraisals look nothing like an appraisal I would prepare for a mortgage underwriting client contemplating a loan on a property.

My conclusion:  stay away from clients like the FDIC (typically their contracting AMC's) that want "shotgun" approach appraisal valuations.  Perhaps the FDIC doesn't know what's going on with their contracted vendors such as First American and others.  In any event, appraiser beware...

Sincerely,

 

 

Charles E. Jack IV, MAI

 

Feb 13, 2010 06:18 AM
Anonymous
Ossie W Johnson ASA WCGA

I agree with you 100%.  Been doing appraisal work since 1974, and NO WAY did or will I ever do a "quick and dirty".  I have done many field reviews, but some clients have stopped calling me as my comments are shoody workmanship are brutal. Of course I also inform them the origianl appraisers name will be turned in to the State Board.

 

Ossie

Feb 16, 2010 02:59 AM
#10