There are considerable changes being proposed for our industry... I do have a question I have not been able to solve for..... It is my understanding that appraisers will be required to join IVPI to receive orders in '09.
What does this mean for appraisal companies that have appraisers working for them? Will everyone be on their own under the new plan?
Your thoughts would be appreciated....
-Meg
Correct!
It is my understanding that each appraiser must apply individually. You will probably see an end to the larger appraisal shops since there will be less incentive for appraisers to stick with the companies when they can receive work on their own. There may still be a number of 3-5 appraiser shops but I guarantee there will be a change in the fee split structure.
This poses some issues for the registered trainees, especially here in GA, since by law, they can only solicit business in the name of their supervisor or supervisors company.
Keep in mind that for now it is just a proposal. There are still several details that need to be ironed out.
Nothing is set in stone
The IVPI as outlined in the HVCC is for oversight only.
The IVPI proposal I have posted is exactly that - a proposal.
We will find out after the end of the comment period (ends 4/30/08) and before HVCC kicks in (1/2009) what form it will actually take and whether appraisers will need to "join" IVPI.
Whats important now is that you voice your comments B4 4/30/08 to Fannie, Freddie, NY AG, Your AG etc. etc.
We as appraisers are at a crossroads - our voices may well shape the future of our industry.
There is much info here...
http://appraisalnewsonline.typepad.com/appraisal_news_for_real_e/2008/03/ivpi-proposal-1.html
Personally I have not problem with the IVPI proposal. I do have a question about the part that states:
"Successful completion of IVPI online GSEs Standards Course and Updates."
If implimented, does the course and updates cover the Fannie/Freddie updated requirements and expectations issued in 07, or will there be more to it? is there a test to pass and a certificate issued? what are the associated costs to the appraiser? and can the course be used as continuing education for license renewal?
Also there are some AMCs and larger appraisal companies, converting their appraisal business to become an AMC, who seem convinced that all appraisals WILL be ordered thru them (AMCs). And are actively recruiting appraisers to cover specific market areas. I personally have been contacted by 4 different business to sign on during the month of March.
Meg -
I am still cautiously optimistic, but I think (as stated by those that posted before me) it's wise if we all involve ourselves in this as much as possible so that we're not shocked later on.
And as to David's comment, I agree... I raise an eyebrow to yet another appraisal organization who has compentency class requirements. If this is to be the new standard, perhaps it should be wrapped up in USPAP ammendment statements (I assume USPAP will still be a mandatory class in the future). I would expect this also means that loan officers are to take mandatory classes on the changes as well?
... still so many questions to be answered.
What are your thoughts?
That's the $64,000 question & no one really knows with any certainty, at least in regard for work destined for the GSE's...
A few suggestions...
Read the proposals
Make your opinion count - voice it early & often.
Diversify - regardless of what the "appraisal" landscape might look like in January 2009, everyting other than appraisals for origination mortgage lending, particularly for the GSEs will largely be unaffected.
Meg, that is a very good question and one that really should be forwarded to George Dodd or Pamela Crowley since they are the ones trying to put this thing together. I do not know these two personally but have exchanged opinions with them on other forums. They both have long advocated for appraisers best interest so I am sure they will be open to questions or suggestions. They do have quite a challenge on their hands and there are many details that they have not addressed as of yet.
What I do know is that the proposal implies that only individual appraisers will be approved, not entire companies and only the approved appraiser can complete the assignment with the exception being a trainee under the direct supervision of the approved appraiser. Since the plan is for a rotational system, I would doubt that a single appraiser could get a larger amount of orders just because they are the owner of a large firm with many appraisers, unless those appraisers are also approved and then the orders will be sent in their name, not the company.
My prediction is that you will soon see the end of the larger appraisal shops since appraisers will no longer have to depend on the companies for work. Of course you may still see small appraisal companies with 3-5 appraisers thriving and that will most often consist of family or appraisers with no desire to run their own company.
Now also keep in mind this would only apply to loans which are planned or have the possibility to be sold to the GSEs in the secondary market. There are still many portfolio lenders out there and still plenty of non-lender work. After 01/2009, any of the larger shops you see will most likely be very well diversified and the appraisers will also be approved with the IVPI.
The uncertainty has already made me a little more conservative in my marketing. Cutting back how much time and money I put into it unless it is for non-lender work.
Benjamin. I want to personally thank you for the time to answer my question. Your answer was informative and I am certain that other readers will find equal value...
-Meg
I have talked with Pam Crowley and have emailed this exact question to Mr Burns. His response was that the "education requirement was yet to be determined" and as far as AMC's goes his hope was that the last set of meanigfull regulations would be enforced (see FIRREA, Title XI0 particualarly 526.3 (I think) which in effect says that lenders cannot limit, discriminate or remoce appraisers from "approved lists" or availability of assignments if the appraisers are in good standing and are in compliance with USPASP. Lenders have already abused and ignored this law by having, maintaining and controlling AMC's that are exclusionary. Have you ever been told by an AMC we are not accepting any more appraisers for our rotating system even though you remain on the "approved list" for a particular bank or lender that uses them exclusively for appraisal assignments ? If so you have been discrimanted against. Are the assignments you are receiving from clients (AMC or not) dictating to you a condition of assignment (ie; must check a particular box, make a particualr statement, use only particular comps, wether this is true or not) if so this is an undue influence on the appraiser. The code hopes to remedy this behavior in this market as well as "pushing" for values in a better market. Do you have to pay a managment company for each assignment you receive ? Again abuse of the system. I encourage all appraisers to order the FNMA publications "Handbook for Appraisers" as well as "Principles of Sound Underwriting" (about $15 each). You will be surprised the flexibility that FNMA/FHLMC gives the appraiser in determination of the market value estimate. All these other things we are required to do are corporate bank policies over and above the reporting requirements mandated by FNMA/FHLMC. Look at your Statement of Limiting Conditions Declarations page. It is FNMA/FHLMC that detarmines the definition of market value and the way the appraisal report arrives at this conclusion. Interference by the lenders asking for very stringent (and some impossible) conditions of assignment is an abuse of the system.
Yesterday, 4/11/2008, the Originator Times reports that legal action is being considered by the NAMB and American Bankers and they have come out against some parts of the new regulation. I still have not seen NAR comment on this issue. In my opinion based on many years in the business, what is the problem with lenders and banks maintaining the quality of their valuations. Sure they should have staff appraisers for review purposes and maintaining the quality of the securities. They should also return to real live Underwriters rather automated software which can and was manipulated. They should also insist on quality appraisal reports and report any unethical or fraudulent acts. We would all be better off, the professionals, the regulators and most important the consumers. Unfortunately, this will probably not happen. This would involve increased overhead for the lending institutions affecting their bottom line, a slowing down of the loan process and the inability to maximize profit.
Too bad for Joe Six-Pak...But hey I think the bank will still give you a credit card with a $20,000 limit if you really need cash for, you know groceries and stuff. Its 0% for the first thirty days ! Of course that will have to increase to 29.9% after a while (Gosh the bankers have to make a living to !)
I remember being on the Appraisal Port call back in April or May 2008 and the one thing that Kathy Coon, SRA, brought up was that this HVCC or whatever the correct name of this proposal is, will apply mainly to "conventional" home appraising, not exactly to FHA appraising. I'm honestly not exactly sure about this answer or information from Ms. Coon. I'm not exactly sure if home appraisals insured by FHA are sold to Fannie Mae and if so, if FHA insured appraisals still require a third party vendor (since they are "insured").
I know that most of the local lenders in my area and national banks in my area have already made the move to third party appraisal ordering (using amcs)....and yes, the appraisal fees are already dropping. I recently saw the value partners ad on Ann O'Rourke's weekly email, so I started to apply to that amc. Their fees were so embarrassing low, that I halted the process....FHA appraisals for $240 is pathetic.
With so many of the lenders I work with already making the 3rd party ordering transition, I'm not sure there's a way to reverse this trend.
My question is this: The argument for years has been The Appraisal Institute SRA's versus just a common state certified home appraiser. They've generally earned the same fee in mortgage lending appraisals. Yes, AI SRA's have more education and credentials. How will the SRAS respond to amcs only paying $200 for Full FNMA 1004 appraisal orders? Remember, amcs will be ordering the bulk of appraisals after 1/1/2009. How will our industry respond? You say, "Yes, but I'm better at marketing and I will overcome this!" Oh really! It's been our local appraisers that have lowered their fees and lowered their fees, which is why amcs are paying such pitiful fees now. The cost of housing may have doubled since I entered the appraisal profession in 1991, yet the amcs will still be paying me $125 less per FNMA 1004 appraisal than I earned in 1991. Why are our industry appraisal fees in reverse instead of keeping up with inflation?
Food for thought!
The appraisal fees will keep dropping as long as the AMC's find fools, that will work for cheap. If everyone was like you and refused to work for peanuts, then the fees would go up. The AMC's don't care about quality, just how fast you can turn it around. Remember their not the one the appraisal board will go after for a bad report, so they don't care. Until the AMC's are held accountable, it will be the same old story.
This only applies to the mortgage industry. If you are diversified into other areas and have clients who aren't bankers or mortgage loan officers then you should be OK.
Hi Meg, Good reblog. How are you feeling about HVCC? I've been blogging on AR, trying to get people to contact their senators. There's an amendment in the Consumer Finance Act of 2009 that could kill HVCC, but we need people to contact their senators.
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