Appraisal Articles

This year the Annual NCPAC conference was held September 13th –15th, 2007 in downtown Asheville, NC. Before the conference started, members were able to take advantage of a 7 hour continuing education class featuring “Scope of Work”. Also at this year’s conference was guest speaker Charles Fields, Jr., Director of Mortgage Division, for the North Carolina Commissioner of Banks.

Mr. Fields informed us that effective January 1, 2008, House Bill 1817 (NC GS 53-243-11(11), the Residential Mortgage Fraud Act, will be revised by removing the words “coercion, extortion, bribery” and is being replaced with the words “improperly influence”.

Revised Residential Mortgaged Fraud Act to read along the lines of:

“it is a prohibited activity to improperly influence the development, reporting, result, or review of a real estate appraisal sought in connection with a mortgage loan”.

In addition to informing us of rule changes, Mr. Fields took questions from the conference attendees. He even took under consideration Amanda Rivera’s suggestion that when appraisers were disciplined by the NCAB, that often education was part of the solution to correcting the issues. And that the Banking Commission should look into requiring brokers who have been found to not be in compliance with NCCOB regulations, that they be required to take continuing education concerning those issues.

Mr. Fields was also asked by another NCPAC member attending the conference if he considered it a form of influencing the appraiser when a mortgage broker includes an “estimated value” on the appraiser request form.

NCPAC President Doug Winner informed Mr. Fields that a real estate broker was looking into becoming an appraiser because she had done approximately 100 BPOs (Broker Price Opinions / CMAs) at $50 a report and was told that she could charge $100 per BPO if she were an appraiser. Doug reminded Charles that a real estate broker could only charge for a BPO in anticipation of a listing or for relocation and it was unlikely that this broker had 100 listings in a single month.

A solution to the above problem might be for the Banking Commission to have a meeting with the North Carolina Association of Realtors and the North Carolina Professional Appraiser’s Coalition to discuss these concerns and propose resolutions on how the three agencies can work together to protect the public’s best interest through better compliance via education.

Doug Winner also challenged Mr. Fields to take a serious look at the behind the scenes appraiser black lists which are routinely shared with other banks & lending institutions on which appraisers are not to be used for whatever reason. Doug stated that the problem this creates is that then the appraisers have no defense or due process whatsoever on bringing to fruition to solve issues or problems between appraisers & brokers/lenders.

Amanda Rivera started a discussion with Mr. Fields about banks selecting appraisers based on their fee only and no consideration or regard given to qualifications, such as being a member of NCPAC, an instructor, or holding a professional appraisal designation beyond being certified.

Another question was raised by Doug Winner regarding NCPAC’s position on some appraisers giving undisclosed discounts as the “procurement” of the assignment. One helpful suggestion was made that NCPAC help come up with an advisory opinion, since USPAP states in the Management section of the Ethics Rule, “competency, rather than financial incentives, should be the primary basis for awarding an assignment”.

Mel Black discussed that his position was that appraisers don’t have to have a base fee for their appraisal products. They can charge all their clients different fees without requiring any statements in the appraisal reports, but that the information might need to be in a client file.

Baldy Williams’ added that his position has been that the appraisers who discount their appraisal fee in exchange for business are required to disclose in the appraisal report that the procurement of the assignment was the result of the appraiser giving the client a discount (or something along those lines).

Regardless, the undercurrent in this discussion was that appraisers undercutting one another and being rewarded with appraisal assignments from clients is a common problem.