What I am about to say here doesn’t just apply to Atlanta GA. These issues apply to every city, state and more, but I chose to do what right in my immediate area
After listening to the hearing today on racial bias in appraisals and the info presented, I decided to call Congresswoman Nikema Williams of Atlanta GA my home state. While I didn’t get to speak to her, I spoke to a gentleman that told me the process and what to do. So I did it. Below is the email I set to her people in DC and in Atlanta. Hopefully it will reach her and I can continue to present her with the lacking information that everyone else wont say, but I will…
I sent this to Congresswoman Mrs.Nikema Williams of Atlanta just a bit ago. I spoke to her reps in Atlanta and in DC and sent this to 4 people to hopefully have it passed along to her. We shall see. She was on the hearing today and asking questions.
My name is Mark Skapinetz, and I have been a Certified Real Estate Appraiser in the Atlanta Metro area since 2007. My license number is CR336437. I am also the current president of the American Guild of Appraisers (AGA) out of the Washington DC area, which represents independent appraisers across the country. We are a Guild under the OPEIU and AFL-CIO unions. Along with that honor, I also run a group of over 4000 independent appraisers and a group of over 2500 aspiring or current trainees.
My reason for writing is that I would like to get in touch with Congresswoman Nikema Williams to discuss the issue of appraisal bias in Real Estate Appraisals. I have been following the narrative and news and have attended every hearing on this issue. My goal here is not to dispute any of the claims but rather to provide much-needed information that is being left out and help improve the processes here in the Atlanta area, the State of GA and beyond.
As stated above, there is a tremendous amount of information being left out of the narrative by witnesses in each of these hearings. Still, to this day, no one has spoken to or included the actual boots on the ground appraisers that are out in the field performing appraisals and running small businesses every day. The government is NOT getting the total and absolute truths from these witnesses, such as The Appraisal Foundation, REVAA, The ASC, Mr. Jim Park, The Appraisal Institute, and the Pave Task Force. I would like to have my voice heard and present the issues with some brief information they are not talking about and later be able to elaborate on them.
Issues not being talked about:
*Appraisal Management Companies and how they operate and pay appraisers
*Lenders and their requirements
*Trainees and the real issues that are preventing them
Appraisal Management Companies. In 2009 overnight, Appraisers from across the country were stripped of every client they worked hard to obtain, maintain and have a relationship with. The reason was implementing the now-defunct HVCC (Home Valuation Code of Conduct Law) created by the then-Attorney General of NY. AMCs have been around before HVCC; however, this law made it so that there would be a third party in-between the Appraiser and lender. Appraisers could no longer solicit work from lenders or mortgage brokers. The role of the AMC was to manage the appraisal process, locate and assign appraisal orders for their lender clients. The law never stated how an AMC would be compensated or how the process should work. The only thing the laws did, were drive away hard working appraisers from the profession and create more issues than they were supposed to solve.
AMCs take a portion of the Appraiser’s fee to pay themselves. Overnight appraisers charging $500 for an appraisal were now subjected to offers from the AMCs to perform jobs at half that fee and sometimes even less. As time went on, Fees started to rise; however, to this day, the AMCs still broadcast orders out to many appraisers to find the cheapest and fastest Appraiser instead of the one that has the most experience. As stated, they take a portion of the Appraiser’s fee. If a borrower pays $600 for an appraisal, the AMC will take $125 – $300 of that fee. Many states still do not require an appraiser to state the fee split and here in GA, we only state what we were paid leaving the borrower to wonder where that other money went. We have seen and have proof of some AMCS charging $1000.00 for an appraisal and paying the appraiser Half that cost or even less. How can an appraiser take on a trainee and make it financially feasible for their business to succeed at such low fees and at the mercy of the AMCs? AMCs represent the lenders as an extension, yet the lenders do not pay them for their services; the appraisers are the ones having their fees taken from them.
When AMCs became the standard, many appraisers decided to leave the profession for better, greener pastures. With the current AMC system and practices, appraisers have to work much harder to make a living. On top of that, we created another issue. AMCs represent their lender clients. Like anyone with a client, you want to make sure they are always happy. So while AMCs claim they don’t pressure appraisers and remain neutral, this is just another false statement. AMCs will pressure appraisers to do things to make their clients happy; they will stop sending orders to appraisers if the lender is not pleased, and they will sometimes refuse payments. This is another area that needs to be looked into and reformed.
Many lenders and their AMCs do NOT allow Trainees to inspect properties independently. See, most lenders require only a Certified or Licensed appraiser to complete their assignments. What’s the purpose of training someone if they cannot at some point go out and perform inspections alone when adequately trained? If a trainee is to go out and perform any inspection, the Mentor/Supervisor must accompany the trainee to every job and guide them. Fannie Mae does not prohibit trainees from inspecting alone as long as the Supervising Appraiser follows the rules that have been set forth, reviews the work, and signs the report identifying any significant assistance from the trainee. This is another HUGE issue that keeps actual appraisers from taking on trainees as, once again, it doesn’t make financial sense for them. One of my suggestions is to look into the Lender practices and come up with a standard that any loan being sold to Fannie Mae or Freddie MAC be done by following their rules and not making up your own. We need more unified standards for lender practices.
Racial Bias and appraisals. We have all seen and read the news stories out there. We are all aware of the issue; however, one thing not being pointed out is transparency. Transparency is crucial, and still to this day, none of the reports have been released to the public or qualified individuals. In every case, the narrative has been that the first appraisal was low and the second high. I would like to make this point from the 2008 housing crash quickly. A February 2009 audit by the Treasury Inspector General on the implosion of IndyMac, a savings and loan, noted that the Office of Thrift Supervision, IndyMac’s primary regulator, identified problems with appraisals on the company’s loans in 2001 but took no formal action.
In one example from the audit report, an IndyMac file for a $1.5 million loan contained appraisals ranging from $639,000 to $1.5 million. “There was no support to show why the higher value appraisal was the appropriate one to use for approving the loan,” the report says. So based off this example,it was the lender that decided make the loan off the higher appraisal even though there had another couple that said different.. Whos’s right and who’s wrong here? Who gave the right opinion of value and who gave the wrong one? Here is the issue with this. AMCs are responsible for hiring the Appraiser. Since many experienced appraisers like myself do not work with all AMCS registered in the state due to the above issues, the pool of professional appraisers has dwindled. There are over 150 registered AMCs in GA. I work with 3 of them. What’s not being asked is the experience and location of the appraisers who performed the appraisals in question. AMCs are in control of hiring the appraisers, and in my opinion, it’s a failed model failing consumers every day. I’ll give an excellent example of what I mean here in Atlanta. I live in Marietta and do a lot of work in and around the city. I know the areas I work in very well. However, the AMCs aren’t looking for the most experienced in the area. They will bid out the order to whoever falls into those categories of fast and cheap. I have myself bid on an order for $400 in my immediate neighborhood only to have it declined by the AMC because they found an appraiser who was cheaper. How does this even make sense? I have seen appraisers come from Columbus Ga to the City of Atlanta to perform appraisals.
Even worse is an appraiser licensed in GA but lives in Missouri and travels in an RV to do mass appraisal inspections all over the entire state. How is that Possible and allowed? So a couple of questions here. Was the first Appraiser experienced in the area? What about the second Appraiser? What was the role of the Lender and AMC in all of this after a complaint was made? Did anyone release any information as to the issues that have been presented? I ask because I have had AMCs call me asking to quickly do an appraisal on a home. After all, the lender and borrower/owner weren’t happy with the first one. Side note: that request was for a home in Athens, GA, where I do not appraise or know the area. Shame.
One Last Point. Since these allegations and claims have come about, Appraisers are on edge. More so when they hear that HUD is calling appraisers that had had a complaint filed against them and immediately ask for a Monetary settlement before any investigation was conducted. This has happened in every case so far. One of my AGA members had a complaint filed against them for bias, and HUD immediately asked for a $100,0000 settlement before conducting an investigation. How does this solve anything? Aren’t we in the USA where you are innocent before proven guilty? This alone has made many appraisers stop taking work in certain areas, and they have that right. This narrative also has potential trainees and current ones not wanting to advance any further.
Creating a new federal agency is not going to solve the problems. Its only going to make it worse as did HVCC and Dodd-Frank. (Side note: If this bill passes, it may lead to the greatest mass exodus of a profession we have ever seen before) The problems of the past are the problems we need to fix before we go any further. Start by speaking to actual real estate appraisers and not these entities that have interests in memberships, education, and answer to their members who have a stake in the game. Speak to the actual appraisers who on the front lines, do the work and are actually independent appraisers.
So as you can see, there are many things not being told to Congress, The House, and more. In addition, there are many other minor issues here. However, those can be presented later, such as the requirements to become an appraiser, the barriers actual appraisers face, and the liabilities we as appraisers face.
I hope you read through all of this and will reach out for a meeting in person or by phone. I am available to provide examples and more on these abovementioned points. i want to help this profession as I am a huge advocate for it and fairness.
Lastly, I write a blog, and some of this information was taken from them. My information comes from my experience, my group of 4000 independent appraisers, and my role as President of the AGA. However, I am attaching a couple here that will better illustrate the issues actual Real Estate Appraisers face today. Please see below.
Thank you for your time, and I hope we can work together to improve the appraisal profession, share information and help our fellow Atlanta and GA consumers.