Appraiser Income

by Isaac Peck, Associate Editor – WorkingRE.com

An alarming precedent has just been set for real estate appraisers in the bankruptcy case of Evaluation Solutions/ES Appraisal Services (ESA). Despite numerous objections from appraisers and agent/brokers alike, a Florida bankruptcy judge has ruled in favor of JPMorgan Chase in granting a Bar Order which absolves Chase of any liability on future claims from appraisers, agents, and brokers for unpaid fees for valuation services that were delivered to Chase through ESA. …continue reading the rest of this post: Bankruptcy Court Absolves Chase of All Liability

BofA Reportedly Sending Property Reviews to India

Bank of America reportedly opened a unit in India to review valuation reports in an effort to boost its share of the U.S. mortgage market at a lower cost, Bloomberg reported June 28.

Workers in the new Bangalore office use checklists to decide if appraisals are complete, according to people who talked to Bloomberg on the condition of anonymity. Bank of America also eliminated positions at its Plano, Texas-based LandSafe appraisal division, which made $78.8 billion in loans in 2012.

“One of the biggest problems in the mortgage business is all the paperwork involved, and how do you engineer it to reduce the bottlenecks,” Bert Ely, an independent banking consultant in Alexandria, Va., told Bloomberg. “With offshoring, the potential for problems is always there, but it’s hard to be critical for trying to minimize costs.”

Like many lenders, Bank of America needs to increase revenue and cut spending in order to compensate for sub-par loan growth and new government regulations. The bank spent in excess of $45 billion to settle disputes related to faulty mortgages and foreclosures and is among the most aggressive cost-cutters with Chief Executive Officer Brian T. Moynihan looking to save $8 billion per year, Bloomberg reported.

The bank was the fourth largest mortgage lender in 2012 — claiming roughly 4 percent of the market; in 2008 it made $315 billion and accounted for more than 20 percent of the market, Bloomberg reported.

According to LandSafe’s website, the company employs more than 2,000 U.S.-based associates. Along with appraisals for new home loans, the unit also conducts valuations of the bank’s portfolio of delinquent loans — 667,000 as of March 31. The lender eliminated nearly 5 percent of LandSafe employees February 25, saying they weren’t needed because the number of delinquent loans had dropped.

Bank of America spokesman Terry Francisco told Bloomberg that the lender’s program prevents paperwork errors from delaying loan applications and that the overseas completeness checks don’t replace in-depth reviews done by licensed U.S. staff.

“The overall consideration isn’t necessarily cost, although cost can be an element,” Francisco told Bloomberg. “What we’re looking for is if there are patterns in certain areas where it looks like the reviews aren’t necessarily needed anymore.”

The U.S.-based reviewers usually have at least five years of experience as appraisers and are required to verify accuracy by conducting independent reviews that align with industry standards, Bloomberg reported. The checklists in India cover a total of 17 items, including whether the appraiser signed the report and included photos.

Relying more heavily on checklists could increase the possibility that inaccurate reports will go unnoticed, according to Karen Mann, SRA, a Discovery Bay, Calif., appraiser who provided testimony in 2011 for the Financial Crisis Inquiry Commission’s report, which investigated the reasons behind the housing bubble and subsequent credit crunch.

“Experienced, licensed appraisers know the shortcuts people take, so those reviewers can be invaluable,” Mann testified, Bloomberg reported. “With the checkboxes, they’re looking for things that don’t really have anything to do with values.”

LandSafe workers complained last year about a reduction in review work and its impact on their compensation and job security, an individual with direct knowledge of the internal discussions told Bloomberg. At the time, LandSafe executive Tracy Sanderson said that management couldn’t expand the number of reviews due to cost; this time Sanderson didn’t return Bloomberg’s requests for comment.

If Chase is successful, it means lenders who contract with AMCs for appraisals, broker price opinions (BPOs) and other services, would have no financial responsibility to make good on fees owed to end contractors, such as apprasiers, by bankrupt or otherwise malfeasant AMCs.

Editor’s Note: The bankruptcy earlier this year of the appraisal management company (AMC) ESA left millions in unpaid fees to appraisers, agents and brokers, who now are trying to collect from Chase, the bank who hired the AMC. What happens will have far-reaching effects on the appraiser-AMC relationship and the industry.

Chase Denies Responsibility for Bankrupt AMC Debt
by Isaac Peck, Associate Editor – WorkingRE

The bankruptcy of Evaluation Solutions/ES Appraisal Services (ESA) left $11 million in unpaid debts to its vendors and creditors, with a large portion owed to real estate appraisers and agents/brokers.

As WRE reported last month, (Stiffed Appraisers Go After Chase), the Florida court overseeing the ESA bankruptcy is considering granting a Bar Order that would absolve JPMorgan Chase, the principal client for all services performed, of all liability for fees due to real estate appraisers, agents, and brokers who performed millions of dollars of work on Chase loans. Much hangs in the balance: if Chase is successful, it means lenders who contract with AMCs for appraisals, broker price opinions (BPOs) and other services, would have no financial responsibility to make good on fees owed to the end contractors, such as appraisers, by bankrupt or otherwise malfeasant AMCs.

Chase Denies Responsibility
In its legal response to appraisers and agents who argue that Chase is liable for the unpaid work under federal laws such as Dodd-Frank, FIRREA, and OCC guidelines, Chase’s lawyers write: “Nothing further in FIRREA, or the Dodd-Frank Act amendments to FIRREA, the OCC regulations, or USPAP addresses payments to appraisers.”

Chase also seems to deny that it was the client for the appraisals and BPOs ordered (Chase is listed as the client on the appraisal reports), and also seems to question the notion that ESA was their agent. Chase’s lawyers write: “The appraiser’s client remains the party who, by employment or contract, engages the appraiser. Otherwise, there is nothing in federal law governing the payment of appraisers and nothing requiring a federally-regulated institution such as Chase to backstop or guarantee payment to appraisers engaged by an independent appraiser management company (“AMC”) such as Evaluation Solutions, even if that AMC is acting as the regulated institution’s agent for compliance with FIRREA and its implementing regulations.”

Chase’s lawyers insist that “Agent is nowhere defined in the OCC regulations.”

Due to this lack of definition, Chase’s lawyers define an agency relationship under Florida common law as the following: “An agency relationship may be established expressly or by estoppel (i.e. an apparent agency relationship). The standard for determining whether an agency relationship exists is whether the purported principal has control over the alleged agent.”

Using this definition of an agency relationship, Chase’s lawyers appear to deny that an agency relationship existed between Chase and ESA, even though Chase is listed as the client on all of the appraisals delivered to Chase and despite the fact that numerous federal regulations, including FIRREA, require Chase to engage appraisers in one of two ways only: either directly or through an agent such as an AMC.

The appraisers, agents, and brokers who are seeking to hold Chase responsible for their unpaid fees insist that Chase is liable precisely because ESA was their agent, and Chase must be held accountable for the actions of its agent.

Fighting Back
Sirima Chantalakwong is a BPO Agent in California whose company, ProValue, Inc., is owed $44,000 for BPOs performed over a six-month period. She is the principal claimant in the class action lawsuit filed on behalf of appraisers and agents/brokers across the country who are left unpaid by ESA.

Having requested to remain anonymous previously, Chantalakwong, referred to in earlier stories as Shelley Smith, and her husband Dan (Owner of the Evalonlinecomplaint Facebook page), have been crucial in organizing the opposition to Chase’s Bar Order and are the ones who initially hired lawyer Breck Milde, whose law firm appeared in the Florida Bankruptcy court to oppose the Bar Order.

After the initial hearing in Florida on June 4, 2013, where Milde opposed the Bar Order and urged the bankruptcy judge not to absolve Chase of its responsibilities to make good on the unpaid fees, both sides were given additional time to file proposed findings of fact and conclusions of law.

Counter Suit
In a further development, the Trustee of ESA’s bankruptcy proceedings has filed a motion seeking sanctions against ProValue, Inc., arguing that ProValue is in violation of the automatic stay granted to ESA as terms of the bankruptcy. ProValue is ordered to appear in court on July 10, 2013 to defend its position. The Trustee is arguing that ProValue is liable for compensatory and punitive damages, as well as attorneys’ fees and costs for its attempt to block the Bar Order and prevent Chase from denying responsibility.

Appraisers, Agents Urged to Complain to Regulators
Chantalakwong is urging appraisers and agents to file complaints with Chase’s regulators and let them know about the position Chase is taking. She encourages appraisers and agent/brokers to cite the laws in the petition (found below) in their complaints and to urge regulators to require Chase to take responsibility for their agent, and enforce the federal regulations that require Chase to compensate appraisers with a customary and reasonable fee.

The question of whether lenders are responsible if the AMCs they use fail to pay contractors, such as appraisers, will have far-reaching and long-lasting effects on the industry, many insiders believe.

Complaint Form: Chantalakwong says appraisers and agents/brokers can use the following complaint form to contact regulators. She recommends using a personalized message and citing relevant laws (found in the petition): https://appsec.helpwithmybank.gov/olac_form/

Petition: Chantalakwong says appraisers and agents/brokers can use the following petition to ask Chase to take responsibility for their agent: http://www.change.org/petitions/jpmorgan-chase-take-responsibility-for-the-unpaid-fees-of-your-agent.

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CHICAGO, June 11, 2013 — /PRNewswire/ — The Appraisal Institute, the nation’s largest professional association of real estate appraisers, today advised homeowners to use discretion when deciding which home improvement projects to take on, saying that not all renovations positively impact property values.

“Projects that take a home significantly beyond community norms are often not worth the cost when the owner sells the home,” said Appraisal Institute President Richard L. Borges II, MAI, SRA. “If they don’t match what’s standard in a community, they’ll be considered excessive.”

According to Remodeling magazine’s most recent Cost vs. Value report, some of the projects with the highest expected return on investment are siding replacement, entry door replacement, attic bedroom addition, minor kitchen remodel and garage door replacement. Other renovations with high expected pay-offs include basement remodel, deck addition and window replacement.

Borges advised homeowners that it may be best to hold off on big renovations if a homeowner isn’t sure how long they will be in their home. The longer a homeowner stays in a property, the greater the opportunity for a return on investment, he said.

“Consumers should be aware that cost does not necessarily equal value,” he added.

For an unbiased analysis of what their home would be worth both before and after an improvement project, a homeowner can work with a professional real estate appraiser – such as a Designated member of the Appraisal Institute – to conduct a feasibility study.

During a feasibility study, the appraiser will analyze the homeowner’s property, weigh the cost of rehabilitation and provide an estimate of the property’s value before and after the improvement.

Some green and energy-efficient renovations, such as adding Energy Star appliances and extra insulation, are likely to pay the homeowner back in lowered utility bills relatively quickly. Lower utility costs also are a draw for potential homebuyers. When appraising a home, the appraiser evaluates local supply and demand for green and energy-efficient properties and features.

The Appraisal Institute offers a free, informative brochure titled “Remodeling & Rehabbing,” which provides consumers with valuable advice on home remodeling.
…continue reading the rest of this post: Some home improvements may add value to home

A sneak peek at the 2013 Appraisal Technology Report
By: Jason Morgan

On Monday, June 10, Valuation Review will release its anticipated follow-up to last year’s “App-raising Technology Special Report.” The 2013 Appraisal Technology Report will tackle the rise of appraisal technology, the growing adoption of mobile apps, predictive analytics, property identification, automated valuation models (AVMs) and beyond. This year’s report is for subscribers only. So make sure you’re a Valuation Review subscriber to get the full report delivered to you on Monday, June 10. You can subscribe by visiting the October Store. Here’s a preview of the content you can look forward to:

Talking about the evolution of technology is almost a cliché at this point. Smart phones and tablets are glued to our hands. Social media speak like “hash tags” and “liking” are already ingrained into our everyday vernacular. In the appraisal industry, emails and appraisal software are the standard, as mobile technology is on the verge of permeating the tech landscape (just check out our feature story on page 5). While new technology adoption comes at the chagrin of some old school appraisers, the industry shows no signs of technological regression. …continue reading the rest of this post: A sneak peek at the 2013 Appraisal Technology Report

ACI go Photo App Delivers Snap, Sync, and Send Technology – Appraisers snap photos, sync images to the cloud, and send photos directly to the appraisal report

PALM COAST, Fla. — June 4, 2013 — Today ACI announced ACI go™, a free iPhone app designed to simplify image capture and assignment by managing both of these tasks during property inspections. ACI go also enables appraisers to replace their digital camera with a smartphone and use the apps integration with ACI Report. ACI go is available for download through the App store.

ACI go and the iPhone work hand in hand to enable the appraiser to take pictures and tag photos with addresses, which are then posted to the cloud. Upon import, ACI go auto-populates the appraisal report with photos based on their tag. Other benefits of the app include automatically capturing GPS position of images and presenting them in map view.

“Appraisers are using smartphones at the same rate as people are in other industries,” stated George Opelka, senior vice president of ACI. “High-definition image quality is now standard for iOS devices, so utilizing this platform to streamline the photo capture process makes perfect sense.”

ACI plans to make an iPad version of ACI go available later this year.

About ACI
ACI, a pioneer in crafting technology solutions for the mortgage valuation community, has gained industrywide recognition and support from leaders in the field. ACI’s highly scalable appraisal solutions are tailored to the needs of the organizations ACI serves. The ACI client base features many of North America’s premier lenders, national appraisal companies, and real estate brokerage firms. From connecting appraisers nationwide to streamlining quality control, ACI enables organizations to process appraisals and manage exceptions in a consistent and efficient manner. Headquartered in Palm Coast, Florida, ACI (www.aciweb.com) is a Verisk Analytics (Nasdaq:VRSK) company.

# # #

Contact
George Opelka
Senior Vice President, ACI
1-800-234-8727
gopelka@aciweb.com

Stiffed Appraisers Go After Chase
by Isaac Peck, Associate Editor WorkingRE.com

In January, Evaluation Solutions/ES Appraisal Services (ESA) declared bankruptcy, leaving thousands of real estate appraisers, agents, and brokers with unpaid invoices for work performed. With close to nine million dollars in unpaid invoices for appraisals and broker price opinions (BPOs), it is the worst of a growing number of appraisal management company (AMC) failures that have left appraisers stiffed and steaming.

The fallout has been extensive. According to the bankruptcy documents filed by Stutsman, Thames and Markey P.A., the law firm handling the bankruptcy proceedings, over 10,000 individuals and firms are listed as debtors, making it the most devastating and farthest reaching AMC bankruptcy in recent history.

Since Working RE first reported on this in early 2013, the appraisers and agents affected have been pressuring Chase, the lender who hired ESA for most of work, to make good on the AMC’s unpaid debts. Many appraisers have filed complaints with the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB). So far, regulators have been indifferent to the problem.

Chase Tries to Settle …continue reading the rest of this post: Stiffed Appraisers Go After Chase

Reprinted for Appraisal News Online

New York Attorney General Eric Schneiderman announced May 6 that his office intends to sue Bank of America and Wells Fargo for purported violations of the 2012 national $25 billion mortgage settlement between the nation’s largest banks and 49 state attorneys general, The Wall Street Journal reported.

The attorney general’s office provided notice “pursuant to the settlement’s requirement” regarding its intent to sue both banks.

Schneiderman said the two banks have been delinquent in promptly responding to loan modification requests from borrowers. He said that his office has uncovered 339 violations of settlement service standards by Bank of America and Wells Fargo, the Journal reported.

Other banks included in the original settlement are J.P. Morgan Chase, Citigroup and Ally Financial. Schneiderman has not ruled out actions against those institutions, but said Bank of America and Wells Fargo stand out as having the most violations of settlement standards.

Settlement monitor Joseph Smith noted in a report released in February that while the five banks had provided $45.8 billion in relief to borrowers between March and December 2012, the volume of customer complaints had increased in recent months.

Among the complaints filed by New York borrowers are that banks have required them to resubmit loan modification requests numerous times because they are taking so long to process them that homeowner information becomes out of date. Homeowners also reported difficulty in reaching by phone any points of contact at the banks.

“I intend to use the full breadth of my power under the settlement to hold the banks accountable,” Schneiderman told the Journal.

Iowa Attorney General Tom Miller said his office also has received a lot of homeowner complaints and is monitoring the situation to see what results from Schneiderman’s efforts.

In response, a Wells Fargo spokesperson said that the bank is fully committed to complying with settlement standards.

Bank of America, however, was more reactive.

In a letter made public May 13 by National Mortgage News, Bank of America said that Schneiderman has no right to take enforcement action against it over claims that it violated terms of a nationwide foreclosure settlement.

It noted that the settlement does permit enforcement actions but only after a bank has had an opportunity to “cure” the violation and has failed to comply with defined metrics. The bank said it has complied with “every applicable metric.”

“Your office has no right under the express terms of the national mortgage settlement to commence an enforcement action against Bank of America, and we respectfully request that your notice of intent to do so be publicly withdrawn,” attorneys for the bank stated in the letter, National Mortgage News reported.

Schneiderman’s office did not respond to National Mortgage News’s request for comment about the letter.

NEW YORK (CNNMoney)
Consider this one more sign that the housing market is heating up: Appraisers are putting higher values on homes again, allowing for more deals to go through.

During the housing bust, sales were often derailed by low-ball appraisals that fell far shy of a home’s selling price.

For example, if a home cost $500,000 and required a 20% down payment of $100,000, the buyer would need to finance $400,000. But if the appraiser valued the home at $450,000, the buyer would only be eligible for a $360,000 loan — making the home too costly for some buyers.

But now, as home prices climb and housing inventories shrink, appraisers are valuing homes at or above their selling prices, according to Lawrence Yun, chief economist for the National Association of Realtors.

Between 2008 and 2010, appraisals for more than a third of Seattle-based real estate agent Michael Ackerman’s sales came in below the selling price. So he had to get creative.

“I started pulling out the key boxes at the homes so the appraisers couldn’t get in,” said Ackerman. “They had to call me to let them see the home. I would bring a packet of comparables along and explain what I used to price the home.”

But now, with home prices posting such strong gains, those strategies may not be necessary anymore.

“I’ve closed 15 homes so far this year and none of the appraisals have come in below the selling price,” said Ackerman.

He was certain a recent deal in Wallingford, Wash. was going to fall through when the buyer agreed to pay $755,000 — well above the average $690,000 other homes in the area had sold for. When the appraisal came in at the full selling price “everybody’s jaws dropped,” he said.

And in some of the hottest markets, appraisals are coming in well above the selling price.

Agent Eric Tan said one appraiser did a “drive-by” of a West Covina, Calif., home he was selling in April.

“He didn’t ask for any comps, to see the inside of the house, or even schedule a time to meet with me. He wrote up the appraisal right at the purchase price,” he said. “I was able to sell the client’s home for about $40,000 more than I thought the appraiser would value it.”

In Jacksonville Beach, Fla., where prices have soared 15% over the past 12 months, agent Cara Ameer was “holding her breath” when it came time to get an appraisal on a two-bedroom townhouse she sold for $5,000 more than its $189,000 asking price.

“It was FHA financing and [the FHA is] typically much more strict,” she said. That appraisal too ended up coming in above the selling price.