John Brenan, Director of Appraisal Issues for the Appraisal Foundation, will be speaking at Valuation Expo on the Keynote panel in Charleston, SC on March 20th, 2018. The Appraisal Buzz asked John to give us a few highlights on what he will be addressing.
Buzz: John, tell us about a few of the pressing issues that are keeping you busy these days.
TAF: As usual, quite a few things. First, the new edition of USPAP became effective today, January 1, 2018. As with all new editions of USPAP, we receive many questions about compliance with new or revised requirements.
Second, we have the 4th Exposure Draft of proposed changes to the Real Property Appraiser Qualification Criteria published by the Appraiser Qualifications Board (AQB). The AQB has been considering changes for the last two and a half years and is holding a public meeting in Washington on February 1, 2018, with the hope of adopting changes. This process has garnered the attention of many, many appraisers, with the AQB receiving about 1,500 written comments. Due to the wide interest, we are planning to live stream the public meeting, which is a first for The Appraisal Foundation. Those interested in watching the meeting can register by clicking here.
We are also looking at commenting on things like appraisal waiver requests, and issuing guidance on recent topics in the marketplace like hybrid appraisal assignments and alternative valuations.
Buzz: The blogosphere is rife with cautionary tales about what appraisers cannot do per USPAP. Can you help dispel some of the myths?
TAF: Unfortunately, there has been a lot of misinformation pertaining to what USPAP allows. The facts are simple: USPAP is a broad set of standards for ethical and competent practice that allows appraisers to perform a wide variety of assignments. We have tried to promote this by publishing a document titled “Yes, I Can Accept That Assignment! USPAP Flexibility at a Glance,” which can be downloaded by clicking here.
One specific area we seem to get many questions about is appraisers performing Evaluations. Some believe that laws or regulations need to be changed, but there is nothing in USPAP that would preclude an appraiser from performing an Evaluation. We recently addressed this in a webinar called Performing Evaluations in Compliance with USPAP, which can be viewed by clicking here.
Buzz: It seems as though we are poised for some giant leaps in technology – big data, artificial intelligence, platforms. How is USPAP able to keep up with such rapid transformation?
TAF: While there may be significant changes to how appraisals are developed, particularly in the residential mortgage sector, USPAP’s construct allows for such changes and permits appraisers to perform assignments competently and ethically.
In addition, our Appraisal Standards Board (which is made up of practicing appraisers just like those reading this article) attempts to develop guidance to assist in understanding what an appraiser’s obligations are under USPAP in using such new tools. A great example is a new Advisory Opinion in the 2018-19 edition of USPAP. Advisory Opinion 37 (AO-37), Computer Assisted Valuation Tools, was developed specifically to assist appraisers in complying with USPAP when utilizing new technology.
Buzz: Are some of the legacy debates still out there, like black listing?
TAF: Appraiser Independence policies appear to have helped in this area, but we still hear the occasional story of an appraiser being blacklisted for “sticking to his/her guns.” Some appraisers in the residential mortgage sector are often frustrated because they feel as though they are “second-guessed” by reviewers, AMCs, GSEs, and others.
Particularly frustrating for many appraisers is when they complete an appraisal, submit it to the client (or AMC), and are subsequently asked to consider additional sales that came from a database that they are not permitted to access. These appraisers ask, “Why can’t you share that data with me before I appraise the property?” Frankly, we think that is a very good question.
Buzz: Our Buzz surveys show appraiser independence violations are still occurring. Can you guide an appraiser on how they should respond if they believe they have experienced such a violation?
TAF: First, it is important to recognize what constitutes a violation of appraiser independence. We heard one story where a client contacted an appraiser to ask a question about a completed appraisal, and the appraiser responded by saying, “Do you know I can have you thrown in jail for that?” While we are ardent supporters of appraiser independence, we also understand that clients may have questions that an appraiser should be able to answer, without feeling pressured or intimidated in any way. This concept is consistent with the provisions of the Dodd-Frank Act of 2010, which prohibited inappropriate contact with an appraiser, but specifically identified the following as acceptable areas of communication:
- Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal.
- Provide further detail, substantiation, or explanation for the appraiser’s value conclusion.
- Correct errors in the appraisal report.
We believe that appraisers should be able to respond to such requests in a courteous, professional manner, without impairing appraiser independence in any way.
Having said that, it is also possible that appraisers may receive inappropriate communications. If that occurs, it is our belief that appraisers should promptly report such incidents. One complication, however, is there is no single entity that reviews allegations of appraiser independence violations. The Appraisal Subcommittee has established an Appraisal Complaint National Hotline, which does an outstanding job of identifying the various agencies involved and explaining who to contact based on the particular assignment. For appraisers unfamiliar with the hotline, we strongly recommend a thorough review.
Buzz: We look forward to seeing you in Charleston, SC on March 20th at Valuation Expo where appraisers will be prepared enthusiastically to ask questions.
TAF: I look forward to it as well. In the meantime, best wishes for Happy Holidays and a prosperous 2018.