17th January 2017

Hearing entitled “Modernizing Appraisals: A Regulatory Review and the Future of the Industry”

Witness List

Archived Webcast

 

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6th October 2016

HUD Grants Appraisers a Reprieve

HUD Grants Appraisers a Reprieve

Home appraisers received a reprieve in the form of a clarification of a requirement issued earlier this year in HUD’s recentupdates to FHA’s Single-Family Housing Policy Handbook.

When published earlier this year, the handbook contained a new requirement for appraisers to physically observe and operate appliances in a home while an appraisal was being conducted. Subsequently, realtors and appraisers expressed concerns that this requirement effectively turned appraisers into inspectors and exceeded the previously understood appraiser duties—and that it would ultimately hurt the consumer, resulting in longer and more costly appraisals.

The new guidelines clarify the requirement; appraisers are now only required to make sure that certain appliances that contribute to a property’s market value are physically present, and appraisers are not required to operate those appliances.

“Appraisers have a lot on their plate, and their work is important to ensuring buyers, sellers, lenders and everyone else involved in a transaction has a credible source to turn to when determining the value of a property,” National Association of Realtors President Tom Salomone said. “Requiring appraisers to perform duties that are better left to a home inspector only slows the process while potentially adding unnecessary costs. FHA did appraisers and consumers a big favor by clarifying appraiser duties and specifically listing the appliances to which this new guidance applies. While there are still improvements to be made, FHA’s announcement provides our realtor members with additional certainty as they continue playing a critical role in the home buying and selling process.”

The update to the requirements alleviates other problems as well. In some cases, appraisers were being blamed when homeowners reported after the appraisals that appliances were either broken or malfunctioning.

“The greatest impact of the revision to the HUD Protocol requirements relating to operational verification of appliances and fixtures is the relief for FHA panel appraisers from concerns of testing a malfunctioning appliance or fixture or being blamed for having broken an appliance or fixture as a result of testing during the inspection of the property,” said Greg Stephens, Chief Appraiser/Compliance with Metro-West Appraisal Co. “To ensure compliance with the previous guideline, some lenders were actually requiring the FHA panel appraisers to provide photographs of the actual operation of each fixture and appliance within the property being appraised.”

…continue reading the rest of this post: HUD Grants Appraisers a Reprieve

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23rd June 2016

Sam Heskel: Appraisers Are Badly In Need Of A Raise

PERSON OF THE WEEK: Sam Heskel is CEO of Nadlan Valuation, a Brooklyn, N.Y.-based appraisal management company (AMC). MortgageOrb recently interviewed Heskel to discuss the most pressing issues and challenges facing the appraisal industry today.

Q: There’s been a lot written about an appraiser shortage. Does it really exist, and how serious is it?

Heskel: It’s definitely real. The vast majority of appraisers are nearing retirement age, and there aren’t enough new people coming into the industry to replace them. According to the Appraisal Institute, nearly two-thirds of appraisers are age 51 or older, 24% are between 36 and 50, and only 13% are 35 or younger. In addition, a lot of those who are working are simply getting burned out. Increased regulations are part of the problem.

Then there’s the problem of compensation. Regulations and guidelines enacted since the mortgage meltdown have added many additional requirements for appraisers, yet their fees have not gone up accordingly. So some experienced appraisers are fed up with the situation – they’re getting out or retiring. For the same reasons, it’s not an attractive field to get into for younger people. Becoming an appraiser today is a lot harder than it used to be. There’s more education and licensing required. As more appraisers retire or leave the business, not enough new people are coming in to replace them. Also, nowadays lenders won’t accept work from appraisal apprentices. If you want to become an appraiser, you need to put in two years as an apprentice. It has become more difficult to find a company willing to take on and train an apprentice for 24 months, especially when the appraisal reports cannot be submitted to a lender.

Q: What places are impacted most by the shortage?

Heskel: Rural areas seem to be affected more than the big cities. We’re already seeing a shortage in some areas. There are just not enough appraisers to go around, and they have a big area to cover. This will have a real impact on the mortgage and home buying industries. Closings will be delayed, maybe by several weeks, depending on the area. This problem is exacerbated during the spring and summer months because housing sales go up, so appraisers are busier.

Q: Why are appraisal fees increasing?

Heskel: Part of the reason is the appraiser shortage. Already, we’re seeing appraisers in some rural areas charging $800 for an appraisal, which is about double what lenders are usually willing to pay.

Secondly, appraisers are badly in need of a raise. It’s long overdue – and fully justified. Many haven’t gotten a raise in about 15 years, even though their workload, responsibilities and liabilities have grown. There’s a lot more regulation, too, and its resultant liability. The Dodd-Frank law and the Consumer Financial Protection Bureau are certainly beneficial, but ensuring compliance with them adds to appraisers’ costs because it takes longer to complete a compliant, quality report.

Let’s not forget that another party has been added to the process – namely AMCs – to manage the entire appraisal process. Appraisers do the actual, on-site property inspection and valuation, while AMCs, such as Nadlan, protect all parties to the deal – the lender, the buyer and the seller – by vetting each appraiser to ensure the appraisal is performed by the best-equipped professional for the particular property. We then review the quality and accuracy of the appraiser’s work, track and manage the data on the properties they appraise, and make sure they’re in compliance with all national and state regulations.

Because of our work, appraisal reports can be turned around faster and with more accuracy, which benefits both home buyers and lenders. We recognize the hard work that appraisers do, so we are considering a new payment policy for our appraisers. Appraisers who complete their appraisal reports within the agreed-upon time will be paid by Nadlan within seven to 10 days, following revisions and reviews.

Q: What are the biggest challenges you face with the mortgage lenders that hire you, and how do you resolve them?

Heskel: Lenders and borrowers hate surprises. The consumer is willing to pay $300,000 to buy a home, but the appraisal comes in at only $280,000. The buyer is naturally upset because he thinks it will cost him the deal, and of course the lender, our client, is also upset. This is where our approach makes a difference. If the property appraises short of the contract price, we communicate with all of the parties involved.

The same goes for refinances, which can often have even a bigger disconnect between home owner estimates and the actual appraised value because there isn’t a real estate agent involved. The borrower estimates his home is worth $700,000, and the appraisal comes in at $450,000. Borrowers can be unrealistic when it comes to estimating their homes’ value. They blame it on the appraiser and the lender.

I advise people to do some research to make sure they’re realistic. We try to educate lender clients on the rules of appraisals and the things we look for so the lender better understands them. We provide a checklist to lenders and mortgage brokers to share with their sales teams, real estate agents and borrowers. Ultimately, it results in less disappointment and aggravation on everyone’s part.

Q: What sets Nadlan apart from other AMCs and appraiser companies?

Heskel: It’s the simple human touch and our superior service. Clients can reach me at almost any time of the day.

Nadlan started out mainly working with small- to medium-size banks so we would be able to deliver personalized service. Today, we’ve expanded, and we’ve carried over with that same approach to the larger lenders. We provide the same personalized service, no matter what size the lender is.

Our appraisal reports are accurate. Everything starts with getting the right appraiser to look at the property, and we feel that we have the best appraisers in the industry. Each of our appraisers is pre-screened and certified in his or her region. Reports are then sent through the most up-to-date software to ensure they are compliant with all national and regional regulations. We then go one step farther and review the final report manually to make sure everything is completely accurate. Underwriters appreciate the time they save, knowing that an expert has already reviewed the report for accuracy and validity.

Lenders also appreciate that we turn around appraisal reports faster and with more scrutiny than most other AMCs. They like anything that will help expedite the transaction for their borrowers, and Nadlan does that. Ultimately, with our approach, our lender clients know that we care.

Q: What is your forecast for the housing market, especially in the New York tri-state area where you are located?

Heskel: In New York City, the housing market is strong. There’s only so much available real estate, and that keeps prices high. In Manhattan and the other four boroughs, real estate will continue to be strong. The high-end luxury condo market in Manhattan has flattened slightly, but that market overall still remains very strong.

There’s an interesting story unfolding in the borough of Brooklyn, where some of the northern neighborhoods, including Williamsburg and Bushwick, have become very hot with rising rents and home prices. But that could change. The Metropolitan Transit Authority announced a few months ago that it is planning an 18-month to 24-month renovation on the L Train, the subway that transports Bushwick and Williamsburg residents into Manhattan and back home again. It may have a big impact on rental prices and, ultimately, home prices in that area.

Although work isn’t expected to begin until late 2018 or 2019, some real estate experts are even now bracing for the impact such a move would have on commercial, multifamily and residential housing, especially in hot spots such as Williamsburg and Bushwick. We’ll be watching the developments carefully.

 

repost from: http://www.mortgageorb.com/sam-heskel-appraisers-are-badly-in-need-of-a-raise

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24th April 2016

College Degree Requirement Misguided

by David Brauner, Publisher, http://workingre.com

I know about half of you disagree but the college degree requirement for Certification was a wrong turn for the industry. To its credit the Appraisal Foundation (TAF) is on the right track in trying to find a way out of the corner it has painted the profession into but it doesn’t look like it intends to go far enough in fixing the problem. As we all know by now, veteran appraisers as well as newbies can be licensed without a college degree but not Certified. Because so much of the business today depends on being Certified, not holding that license level can be a very limiting condition indeed: it disqualifies appraisers from most AMC and lender panels and excludes them from working for the FHA. A lack of opportunity has driven many good appraisers from the business and for the first time in a long time, there is a shortage of new appraisers entering the profession. This is not good news.

Without new vitality to innovate the profession, it will wither and die. Lenders will create alternative solutions that combine big data and low-fee “property inspections” for all but the most unique properties to replace appraisers. To the current “shortage” of appraisers you may be shouting “Hallelujah!” while you enjoy some long-overdue increases in your fees. But if you’re really honest with yourself you must agree that a college degree is no predictor of good work or good behavior (there are far too many examples from our profession and others that make that statement sadly ridiculous). Training, testing and time can separate the wheat from the chaff when combined with consistent enforcement. Effective oversight will identify repeat violators and patterns to reveal who won’t or can’t adopt accepted techniques or who refuse to play by the ethical rules. We all agree these types should be expunged from the ranks but a college degree does not guarantee competency or ethical behavior: so what is it about?

 
The college degree requirement seems more like a forced attempt at elevating the status of the profession by closing the club, and that strikes me as elitist. Not everyone has the opportunity, resources or aptitude to attend and/or flourish in college. Some very smart people just don’t learn via traditional education methods. And holding up the education requirements of other professions like attorneys, doctors and CPAs just does not hold water. An accountant is a more apt comparison and while a college degree is recommended, it is not required to become an accountant, nor is it to become an engineer, software developer, airline pilot or journalist for that matter. A recent letter from a reader points out that a degree is not even required to be President of the United States! The requirement is even more dubious when you consider that a degree in any subject passes muster for becoming a Certified Appraiser, no matter how unrelated (think French Literature for instance), while someone with the skills to flourish in this business would be shut out for all intents and purposes without a degree.

The folks at TAF tell WRE that they are looking into alternative paths to Certification for veteran appraisers with “a track record of professional (appraisal) experience.” That’s very good but not good enough. The college degree requirement for new appraisers ought to be replaced by some combination of education, coursework and testing so that a whole new generation of young, smart and tech-savvy entrepreneurs has a chance to contribute to the profession, whether they are cut out for college or not. Many young candidates will be your sons or daughters or grandchildren. Are they all destined to graduate college? Like you, they should be able to enjoy a profession that allows them to be their own boss while making an honest living and a valuable and rewarding contribution to their community. To dig in on this issue and leave the college degree requirement in place for prospective appraisers without any reasonable path to Certification risks the future of the profession and turns away many men and women who could add to its legacy.

 
TAF believes there is no opposition to the college degree requirement among appraisers. Whether you agree or not, you can share your opinion and feedback with Working RE’s new Future of Appraisers Survey. We will publish the results for all to see, whatever you decide.

repost from WorkingRE.com

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22nd April 2016

Photographer: Andrew Harrer/Bloomberg Lenders Are Getting Choosier When It Comes to Risky Real Estate Deals

Lenders are getting stingier when it comes to funding risky U.S. real estate developments, putting pressure on landlords in need of fresh funding to keep their projects afloat.

Banks are proceeding with caution as the specter of slowing economic growth rattles financial markets and shakes investor confidence in a six-year recovery that’s helped lift property values to records. Lenders are going to be more selective and discriminating as the year progresses, said Mark Myers, the head of the commercial real estate business at Wells Fargo & Co., the largest U.S. commercial-property lender.

“We’re getting late in the cycle,” Myers said in a phone interview. “If the economy continues to grow ever so slowly, demand for commercial real estate will continue to grow ever so slowly. To the extent that the economic climate goes in the wrong direction, it’s going to have an impact on demand for commercial real estate.” …continue reading the rest of this post: Photographer: Andrew Harrer/Bloomberg Lenders Are Getting Choosier When It Comes to Risky Real Estate Deals

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20th April 2016

Appraisers Win $36 Million Class Action

by Isaac Peck, Editor
On January 19, a federal judge in Orange County, CA approved a $36 million settlement between Landsafe Appraisal Services, Inc., a subsidiary of Bank of America (BoA), and 369 current and former appraiser employees. The award amounts to roughly $100,000 per appraiser, before attorney’s fees of 33 percent.

The lawsuit, originally filed in 2013 (See Appraisers Entitled to Overtime, Court Holds), alleges that BoA erroneously applied the “administrative” and “professional” exemptions to in-house staff appraisers and failed to pay them overtime.

A press release issued by employment and civil rights attorney Bryan Swartz, counsel for the plaintiffs, states that “In approving the settlement, at the hearing, the court noted that as a result of the lawsuit, the new owner of Landsafe – CoreLogic – has begun paying all appraisers overtime.”

Ethel Joann Parks of Manteca, California, one of four the named plaintiffs that is to receive an additional $25,000 for her time and effort in pursuing this litigation, says she frequently worked from 6 a.m. to 10 p.m. and decided to step forward because she felt that the bank failed to treat her and other appraisers “as human beings” with “family and personal needs that should be acknowledged.”

Parks says she feels vindicated by this lawsuit and the exceptional relief obtained on behalf of the class. “I hope it will force banks and appraisal management companies throughout the country to reconsider pressuring their staff appraisers to work long hours without paying overtime,” says Parks.

Swartz, lead counsel for the 369 appraiser class members, says the judgement not only provides meaningful compensation to hundreds of people, but he hopes it will lead to industry change for many thousands more.

One of the keys to success in this case, according to Swartz, was that the lead appraiser plaintiffs in the suit refused to quit. “First and foremost, our clients had the courage to step forward with their claims, and to stick with them for years. Next, we were able to avoid arbitration and stay in court with a thoughtful and fair-minded judge who had both the inclination and the ability to weigh the evidence carefully and make the right decision,” says Swartz.

In terms of the effect that the settlement will have on the appraisal industry, Swartz says he believes that AMCs with staff appraisers have significant exposure if they are not paying their appraisers and reviewers overtime and other required wages of non-exempt employees. “My firm hopes to find appraisers who – despite companies now clearly knowing the risk of liability – are denied appropriate overtime and other premiums, and ensure that they get paid what they are owed,” says Swartz.

“Employers take grave risks by cutting corners, and not fairly compensating their employees in tune with state and federal law. My firm and many others, including my co-counsel, are working to end wage theft in the economy…quickly,” says Schwartz. Click here for the Settlement Order.

The case is Terry P. Boyd et al. v. Bank of America Corp. et al., case number8:13-cv-00561, in the U.S. District Court for the Central District of California.

Bryan Schwartz Law is co-counsel with Schonbrun Desimone, of Los Angeles, in the case. He can be reached at bryan@bryanschwartzlaw.com.

repost from http://WorkingRE.com

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15th April 2016

Interest Rate Hikes Could be Closer Than You Think

Federal Reserve Bank of Boston President Eric Rosengren said on Monday said that investors that believe the central bank would only raise rates one time or not at all this year could be wrong.

As the Federal Open Market Committee (FOMC) heads into its third meeting of the year without having fulfilled one of the expected federal funds rate increases, many in the industry are beginning to question if, when, and how many times they will make their move.

Rosengren stated in remarks prepared for a Fed economic and cybersecurity conference in Boston, “financial market expectations of only a very slow removal of monetary policy accommodation could… prove unduly pessimistic” …continue reading the rest of this post: Interest Rate Hikes Could be Closer Than You Think

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8th April 2016

Credit Suisse to pay $29 million in U.S. regulator’s mortgage case

Credit Suisse Group AG (CSGN.S) has agreed to pay more than $29 million to resolve a U.S. regulator’s claims that it sold toxic mortgage-backed securities to credit unions that later failed, according to court papers filed on Thursday.

The deal, disclosed in a filing in federal court in Manhattan, resolves one of several lawsuits by the National Credit Union Administration against banks over their sale of mortgage-backed securities before the 2008 financial crisis.

The deal boosts to more than $2.5 billion the amount the NCUA has recovered from banks through lawsuits it began filing in 2011, the U.S. regulator said. …continue reading the rest of this post: Credit Suisse to pay $29 million in U.S. regulator’s mortgage case

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6th April 2016

AI Recognizes Robert L. Mesner, MAI, AI-GRS, Region X (South Florida Chapter) and Edward Molinari, SRA, Region VI (Southern New Jersey Chapter) as ‘Volunteer of Distinction’ in April

The Appraisal Institute announced April 6 the recognition of two individuals as a “Volunteer of Distinction” for the month.

The individuals honored are Robert L. Mesner, MAI, AI-GRS, Region X (South Florida Chapter) and Edward Molinari, SRA, Region VI (Southern New Jersey Chapter).

Mesner serves the South Florida Chapter as chair of the Candidate Guidance Committee and as regional representative. He was a participant in the Leadership Development and Advisory Council conference in 2015 and will be again this year. He also served on the national Demonstration Appraisal Report Grading Panel; Experience Screening Panel, and as a facilitator for the Capstone Demonstration Appraisal Program. He is an advisor to four AI Candidates for Designation. Mesner joined a predecessor organization of the Appraisal Institute in 1975, and received his MAI and AI-GRS designations in 2014. …continue reading the rest of this post: AI Recognizes Robert L. Mesner, MAI, AI-GRS, Region X (South Florida Chapter) and Edward Molinari, SRA, Region VI (Southern New Jersey Chapter) as ‘Volunteer of Distinction’ in April

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6th April 2016

Lender Capital Is Pouring into Affordable Housing

Affordable housing developers often run a daunting gauntlet when it comes to cobbling together different financing sources to move projects forward. But the job of accessing capitalhas gotten a lot easier lately as lenders and agencies alike step up their focus on the sector. It is an “absolutely awesome” time to be a borrower on the affordable housing side, says Frank Lutz, a senior vice president at Berkadia Commercial Mortgage. Banks are incredibly aggressive and both Fannie Mae and Freddie Mac have increased their lending to affordable housing projects, he adds. …continue reading the rest of this post: Lender Capital Is Pouring into Affordable Housing

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