LiveValuation Magazine

the

The 1 YearAnniversary Issue

X D O N O T U S E / D N U / D O N O T U S E X D O N O T U S E / D N U / D O N O T U S E X D O N O T U S E / D N U / D O N O T U S E X D O N O T U S E / D N U / D O N O T U S E X


2 | LVM

ACI is a division of Verisk Analytics (NASDAQ: VRSK), a leading provider of risk assessment solutions to professionals in insurance, healthcare, mortgage lending, government, risk management, and human resources. Verisk Analytics includes the holdings of Insurance Services Office, Inc. (ISO) and its subsidiaries, which provide essential solutions to the insurance, mortgage lending, and healthcare markets. For more information, visit www.verisk.com.

Good work is dignified. Throughout our history, ACI has forged partnerships with valuation professionals across the nation.

Working with appraisers drives the passion behind the people and makes it easy to produce technol-ogy that is smarter, faster, and better. We look forward to the

road ahead in 2011 and in foster-ing the relationships that have made us who we are.

ACI - The Appraiser’s ChoiceTM

Save Time, Get SMART™

The SMART Market Analysis solution works with your MLS* system to Import Active, Expired, Pending, Withdrawn and Sold listings. SMART auto-populates the 1004MC.

*Call to verify MLS availability. MLS providers are continually updated.

Easily define shaded areas that represent your subject’s Market Area or Neighborhood.

Neighborhood Boundaries in MapPoint

• ChoiceCredits are the most flexible way to integrate with ACI’s Mapping and Data services.

• ChoiceCredits never expire and can be shared among computers.

• Try new services with ChoiceCredits and only pay for the services you use.

ACIChoiceCredits™

PDF Import Flood Insights Bing Maps

SMART AppraiserBASE Pictometry

ACI2010™$699* All Inclusive Package

Form100 01/10

t 800-234-8727 f 386-246-3811AppraisersChoice.com

THE APPRAISER’S CHOICE™


ACI2010™

ACI2010

™

800-234-8727

AppraisersC

hoice.co

m

Printed on Recycled Paper

›› Appraisal Forms Library

›› Order Tracking

›› Photo Management

›› Comps Database

›› ChoiceCredits™(500 to use for SMART™ Market Analysis Tool, Flood Maps, Location Maps, MLS Import Service, AppraiserBASE™, Long-Term Storage, File-Sync and more)

›› GPAR™ Forms Series

›› ACI Sketch™

›› Digital Signature (One)

›› Free PDF Creator

›› Premier eServices(One Year)

›› Concierge Service (Conversion Utility)

* Limited Time Offer

Innovative Technology - 30 Years and Counting - ACI has been a pioneer, providing innovative tools that save appraisers time and money. Look to ACI to provide the foremost solution as the industry embarks on new delivery requirements. Visit AppraisersChoice.com for UAD updates and information.

Beneficial Partnerships - ACI features solid integration with sketch tools, location maps, flood data, cost data, and market analysis tools that streamline the appraisal report writing process. It is through these partnerships that ACI appraisers have many options and why ACI is ”The Appraiser’s Choice.”

Premier Service - Toll-free technical support, LIVE chat operators, and over 140 online videos on AppraisersChoice.com provides ACI appraisers with multiple support channels.

Best Value - Hands-down, ACI offers the most comprehensive real estate appraisal software package available in the industry. We invite you to experience ACI’s industry-leading appraisal technology and top-notch service.

YOU›KNOW›VALUE...››››››››››››››ACI›ADDS›VALUE›

YOU ARE AN APPRAISER

APRIL 2011 * LIVEVALMAG.COM | 3

ACI is a division of Verisk Analytics (NASDAQ: VRSK), a leading provider of risk assessment solutions to professionals in insurance, healthcare, mortgage lending, government, risk management, and human resources. Verisk Analytics includes the holdings of Insurance Services Office, Inc. (ISO) and its subsidiaries, which provide essential solutions to the insurance, mortgage lending, and healthcare markets. For more information, visit www.verisk.com.

Good work is dignified. Throughout our history, ACI has forged partnerships with valuation professionals across the nation.

Working with appraisers drives the passion behind the people and makes it easy to produce technol-ogy that is smarter, faster, and better. We look forward to the

road ahead in 2011 and in foster-ing the relationships that have made us who we are.

ACI - The Appraiser’s ChoiceTM

Save Time, Get SMART™

The SMART Market Analysis solution works with your MLS* system to Import Active, Expired, Pending, Withdrawn and Sold listings. SMART auto-populates the 1004MC.

*Call to verify MLS availability. MLS providers are continually updated.

Easily define shaded areas that represent your subject’s Market Area or Neighborhood.

Neighborhood Boundaries in MapPoint

• ChoiceCredits are the most flexible way to integrate with ACI’s Mapping and Data services.

• ChoiceCredits never expire and can be shared among computers.

• Try new services with ChoiceCredits and only pay for the services you use.

ACIChoiceCredits™

PDF Import Flood Insights Bing Maps

SMART AppraiserBASE Pictometry

ACI2010™$699* All Inclusive Package

Form100 01/10

t 800-234-8727 f 386-246-3811AppraisersChoice.com



ACI2010™

ACI2010

™

800-234-8727

AppraisersC

hoice.co

m

Printed on Recycled Paper

›› Appraisal Forms Library

›› Order Tracking

›› Photo Management

›› Comps Database

›› ChoiceCredits™(500 to use for SMART™ Market Analysis Tool, Flood Maps, Location Maps, MLS Import Service, AppraiserBASE™, Long-Term Storage, File-Sync and more)

›› GPAR™ Forms Series

›› ACI Sketch™

›› Digital Signature (One)

›› Free PDF Creator

›› Premier eServices(One Year)

›› Concierge Service (Conversion Utility)

* Limited Time Offer

Innovative Technology - 30 Years and Counting - ACI has been a pioneer, providing innovative tools that save appraisers time and money. Look to ACI to provide the foremost solution as the industry embarks on new delivery requirements. Visit AppraisersChoice.com for UAD updates and information.

Beneficial Partnerships - ACI features solid integration with sketch tools, location maps, flood data, cost data, and market analysis tools that streamline the appraisal report writing process. It is through these partnerships that ACI appraisers have many options and why ACI is ”The Appraiser’s Choice.”

Premier Service - Toll-free technical support, LIVE chat operators, and over 140 online videos on AppraisersChoice.com provides ACI appraisers with multiple support channels.

Best Value - Hands-down, ACI offers the most comprehensive real estate appraisal software package available in the industry. We invite you to experience ACI’s industry-leading appraisal technology and top-notch service.

YOU›KNOW›VALUE...››››››››››››››ACI›ADDS›VALUE›

YOU ARE AN APPRAISER

4 | LVM

| contents |

&table of contents

contents

featureBlacklists: The Unchosen OnesThe exclusive list you don’t want to be a part of.

It is an emotional issue, for it reeks of the potential for severe damage to innocent independent fee appraisers, while at the same time being a useful tool to weed out dishonest and unethical appraisers among us.

31


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your monthlyvaluation publication

9

14

Best PracticesHow to write a service agreement.Mark Berger, MaI, Sra

18

Opposites attractMore than an ‘80s pop hit.roger STaIger I I I

22

The Hot Seat Featuring Tony Pistilli, Chief Appraiser US Bank.

24

Common GroundImproving communications in property valuations for mortgage lending.MISMO® PROPERty

& VALuAtIOn SERVICES

WORkGROuP

The Blacklisting Issue32

Lender PerspectiveanonyMouS chIef appraISer

of a naTIonal lender

36

appraiser Perspectivefrank gregoIre, Ifa, raa

39

aMC PerspectiveanTonIo lITTle

41

appraiser Perspectiveken VerreTT

6

Publisher’s Note

8

Contributors

10

Staiger on Stats

46

Voices of Valuation

49

Directory

50

For What It’s Worth

up front

14

departments

24

Blacklists: The Unchosen OnesThe exclusive list you don’t want to be a part of.

31 APRIL 2011

cover

Inside This Month

18

++

contents

6 | LVM

1. publisher | Ernie Durbin II, SRA, CRP

2. editor-in-chief | Emily Vannucci

3. copy editor | kersten Wehde

4. creative director | traci knight

printer | ovid Bell press

advertising Information | P : 858.832.8900 / E : [email protected]

Subscription and editorial | P : 858.217.5332

E : [email protected] / W : LiveValMag.com

© 2011 LiveValuation Magazine.

All rights reserved. LiveValuation Magazine is a California limited liability company and is the publisher of LiveValuation Magazine. Reproductions or distribution of any materials obtained in the publication without written permission is expressly prohibited. The views, claims and opinions expressed in article and advertisement herein are not necessarily those of LiveValuation Magazine, its employees, agents or directors. This publication and any references to products or services are provided “as is” without any expressed or implied warranty or term of any kind. While effort is made to ensure accuracy in the content of the information presented herein, LiveValuation Magazine is not responsible for any errors, misprints, or misinformation. Any legal information contained herein is not to be construed as legal advice and is provided for entertainment or educational purposes only. Postmaster : Please send address changes to LiveValuation Magazine, 16745 W. Bernardo Drive Suite 450 San Diego, CA 92127

It is part of human nature to want to be “set apart.” We all want to be acknowledged for our distinctiveness, what makes us unique, why we are worth being recognized. We take pride in being good at something and being renowned for our

achievement. From grade school on, no one wants to be the last person picked for the team. It’s part of being human to take pride in excellence.

Professionally, appraisers do the same thing. Many pursue difficult designations, not because they add much to the bottom line but rather for

the distinction they provide. Others join national organizations and become recognized authorities in the valuation field, again to set themselves apart from the pack. Not only is it profitable it also feels good to be known as an expert in the field of valuation, to be on the “A” list.

But there are other lists out there too; blacklists and “Do Not Use” lists. If you find yourself on one of these lists you are an “unchosen one.” Usually, this is not the distinction an appraiser is looking for. I say usually because sometimes appraisers end up on these lists because they won’t “play ball.” I know that there are some lenders out there that have excluded my firm in the past because we acknowledged oversupply and declining values in the neighborhood section or were “simply too conservative.” I would like to think we were dead on right but we ended up being dead in the water. Whatever the reason, ending up on a blacklist or DNU will negatively impact an appraiser. It is not the way you want to “set yourself apart.”

In this issue of LiveValuation we address the matter of blacklists and DNUs from three different perspectives; lenders, AMCs and appraisers. There are certainly some differences of opinion but also common ground on the impact of these lists on the valuation community. All of the participants are concerned about their misuse.

Blacklists are a hot topic among lenders, appraisers and AMCs. One of our authors is a chief appraiser for a national lender. This author engaged the topic with passion, clarity and insight. At the request of his employer (the national lender), this author will remain anonymous. His contribution is a cornerstone in the debate. We certainly wish we could acknowledge his name, but we understand the sensitivity of his employer.

Make sure you check out the new section in our magazine this month called “The Hot Seat.” We put Tony Pistilli on the spot with 20 questions of both a personal and professional nature. In upcoming issues we will provide our readers with a snapshot of some of the personalities within the valuation space. There is a lot more to people than just their title and that’s the purpose of this section. 6

| PubLIShER |ERnIE DuRbIn II, SRA, CRP

A Letter from the Publisher

THISWaYIN.....

1

2

3

4

meet the team

PUblIsHer’s note $


8 | LVM

con-tributors

50JOSePH PaLUMBO, Sra

Joseph Palumbo is currently the Director of Valuation at Weichert

Relocation Resources. Palumbo spent seven years at Washington Mutual Bank where he was a First Vice President. Palumbo holds an SRA designation, is AQB- certified and he is a state-certified residential appraiser licensed in New Jersey.

36FraNk GreGOIre, IFa, raa

Frank Gregoire is a former member and Chairman of the Florida Real Estate Appraisal

Board and the current Chairman of the NAR Appraisal Committee. He provides valuation, expert witness and consulting services for a wide variety of local and national clients. Articles by Gregoire have been published in the REALTOR® magazine and the Journal of Property Economics. In his quest to improve the profession and keep folks informed, he authors “Appraiser Active,” an appraisal- themed blog.

14Mark BerGer, MaI, Sra

Mark Berger is semi-retired with more than 30 years of professional experience in

real estate appraisal. He holds a BS in business from San Diego State University with an emphasis on marketing and also attended law school in San Diego. He has appraised over $1.5 billion in commercial and residential properties. He is an experienced expert witness and a member of Relocation Appraisers and Consultants. 619.225.2225 thebergercompany.com

contrIbUtors ?

39aNTONIO LITTLe

Antonio Little, Senior Vice President of Sales & Marketing, oversees business

development for Valocity, LLC, a nationwide provider of valuation solutions. Little has been with the organization since 2007. His 15 years of industry experience includes stints as VP of Business Development and Relationship Management for Finiti, as well as sales, operations, and management roles at high profile organizations such as Citi, LandAmerica, and Bank of America.


con-tributors

24THe MISMO PrOPerTY aND VaLUaTION SerVICeS WOrkGrOUPThe MISMO Property and Valuation Services Workgroup is a team of industry volunteers working together to advance the cause of open data standards to improve quality, consistency and accuracy in the reporting of appraisal results to the real estate lending industry. Join the conversation at wiki.mismo.org.

22TONY PISTILLI

Tony Pistilli is Chief Retail Appraiser and Vice President for Consumer

Banking Risk Management at US Bank in Minneapolis. Pistilli has been involved in the real estate appraising and lending industries for over 25 years and prior to joining US Bank he was President of Park Appraisal Service, had previously worked at the Department of Housing and Urban Development as well as several mortgage companies. Pistilli is a member of several organizations, including The Appraisal Foundation’s Industry Advisory Council, the American Bankers Association appraisal committee and he is also the Vice-Chair of the Minnesota Real Estate Appraiser Advisory Board.

| contributors |

10, 18rOGer STaIGer III

Roger Staiger III is Managing Director for Stage Capital, LLC. His areas of expertise

are commercial and residential real estate portfolio investing, corporate business; and strategic planning, forecasting, valuation, financial modeling, asset repositioning and risk mitigation through financial hedging for physical assets. He holds positions at Johns Hopkins, Georgetown, and Loyola universities. [email protected]

+

41keN VerreTT

Ken Verrett has owned Acorn Appraisal Associates, a midsized

appraisal firm in Houston, TX, for 25 years. Prior to starting Acorn he was the President and CEO of the Banking Division of a major regional financial services conglomerate, built a retail branch network statewide, and established a Commercial Lending Division. Verrett has been involved in several start- up ventures, the most current being Zone Data Systems, LLC (ZDS), where he is a member of the managing committee. Verrett holds a BA in economics from Texas A&M University, an MA in economics from the University of Houston, and is a graduate of Southwestern Graduate School of Banking, Southern Methodist University. [email protected]

10 | LVM

The year is 1789. The place: Paris, France. The economic times are uncertain with the populace suffering from hunger and rampant malnutrition. Inflation is omnipresent in society, with the cost of bread alone increasing more than 50 percent that very year. The nation is close to bankrupt due to the high debt levels amassed by the participation in the American Revolutionary War and the high cost of colonial possessions abroad. The financial system is both inefficient and ineffective for dealing with a crisis of this magnitude. Further exacerbating the issue is the perceived disconnect of Versailles from the rest of France. It was thought that Louis XVI’s rule was considered solid and untouchable by the

Parisians. It, after all, was a monarchy. However, there were derisive forces in Parliament, all of whom were hearing the Parisian cries for change.

Now the year is 2009 and a new president in the U.S. has taken the post; much as Louis XVI took the throne amidst the financial crisis in France. Fast forward two additional years and the year is 2011, the current year. An economic maelstrom of

STaIGer on STaTS

Industry’s latest stats

RogerStaiger III

stats


hunger and malnutrition is taking hold of the globe as inflation outpaces central bank targets. In the U.K., inflation has hit more than 4 percent, twice its target. In the European Union, inflation has outpaced its intended target of 2 percent. In emerging markets such as Brazil and China, inflation exceeds 5 percent. After fighting off a bout of deflation during QE2, the U.S. now has inflation slightly above 2 percent and rising. For the U.S., while unemployment remains high at the stated rate of 9 percent, total wages earned fourth quarter 2010 was an all-time annualized record of $8,100bn – the American workers as a whole have never earned as much. (Note: This further supports a polarization of the ”haves” and the “have-nots.”)

The U.S. is close to bankruptcy, running a historic deficit of almost $1,500bn during the current year and budget reductions that are more fantasy than reality. The U.S. is embattled in two ongoing wars, Afghanistan and Iraq, while maintaining colonies (i.e., bases) in foreign lands such as Korea and Guam. The current deficit since 2000 per tax-paying citizen in the U.S. is approximately $36,000. To put the $36,000 invoice in perspective, it represents 74 percent of the median household (not individual) income in the U.S. In summary, the U.S. is mired in debt!

Of further concern is the nation’s financial system and the ability to finance and eventually pay off this historically high total debt level. The last time the U.S. debt reached current levels was after WWII (actually the levels after WWII were even higher). It is important to note that a majority of the debt was repaid after WWII through the process of monetization, i.e., inflation. As

asset values rise through inflation and debt remains constant at a fixed level, the debt as a proportion of total asset level reduces “naturally” through inflation. the ability of the u.S. to monetize its debt after WWII was based on two realities:

No.1. The U.S. industrial facilities were intact and therefore able to rebuild Europe and the globe, thus creating economic prosperity; and

No.2. A large portion of U.S. debt was owned domestically.

Neither of these two realities exists in 2011, i.e., there is not historic rebuild on the scale of Europe and the globe for the U.S. and until December 2010 China was the largest holder of U.S. treasuries (Japan and China combined own the largest portion of single ownership today). Given the U.S.’s unwillingness to cut its deficit (it remains the single First World nation to not cut spending in 2011) and inability to monetize its debt due to the large portion of foreign ownership, current strategies will be inefficient and ineffective in addressing the financial crisis present today.

Finally, the U.S. capital, Washington D.C., much like Versailles in 1789, has become disconnected from the rest of the nation. The stimulus plans in the U.S. have largely

benefited the U.S.’s Versailles, i.e., DC-MSA. There is a quantifiable structure shift in housing performance between D.C. and the nation as measured by the Composite-10; D.C. has lost touch with the rest of the nation as measured by residential real estate performance. Stated more simply, D.C. is not feeling the pain of the nation, and is detached. >>

Given the U.s.’s

unwillingness to

cut its deficit (it

remains the single

first World nation to

not cut spending in

2011) and inability to

monetize its debt due

to the large portion

of foreign ownership,

current strategies

will be inefficient

and ineffective

in addressing the

financial crisis present

today.

$

12 | LVM

To quantify the broken relationship between the DC-MSA pricing and the rest of the U.S., the standard test for a structural shift in statistics, the Chow Test, was completed. Basically, the Chow Test measures the slopes of two relationships and quantifies if they are structurally similar or different according to an F-test. Prior to 2008, there was a high correlation

between the DC-MSA and the Composite-20. However, due to the stimulus and after 2008, the relationship broke and D.C. and the nation became structurally different. In the graphic above, the two nonparallel lines represent year-over-year returns for both the DC-MSA and Composite-20. As demonstrated by the lines not being parallel, they are

structurally different. This was not true for the period from 1988–2008, when the two markets were structurally similar as quantified by the Chow Test.

Further anecdotal evidence of the disconnect between D.C. and the rest of the nation is evident in the month-over-month performance from November 2010 to December

2010. The only MSA with a positive month-over-month was D.C., while the nation as a composite reduced close to 1 percent. When viewing the equivalent relationship on a year-over-year basis, the inequity is exacerbated, with the nation losing over 2 percent and DC gaining more than 4 percent, i.e., a 600bp swing in pricing.


The public opinion in the U.S., just like in Paris in 1790, is shifting. America’s Egypt, Wisconsin, is rallying behind the current state governor to limit collective bargaining by unions and reduce pension benefits for many of the state workers. When comparing the nation and D.C. to Wisconsin, using the Chicago MSA as a proxy, a chartist’s perspective easily concludes the need for reform in Wisconsin. The Chicago-MSA has underperformed the

nation by more than 50 percent and is forecast to continue underperformance through the end of 2012. Without significant reform, Wisconsin cannot hope to balance its budget and resolve its deficit. Given the significant loss of wealth in the area’s family homes (see spreadsheet), revenue increase (i.e., taxation) provides little assistance. The only alternate solution is an expense reduction and the most obvious place is the underfunded pension(s).

The double dip in real estate pricing is a reality. The destruction of an absolute monarchy in the U.S. is a reality, i.e., 2010 loss of House of Representatives by the ruling party. The financial crisis is a reality. The near-bankruptcy of this great nation due to over-extension for foreign wars and colonies, i.e., bases, is a reality. Rising prices due to inflation and a weakening currency are a reality. The disconnect between D.C. and the nation is a reality

as evidenced in real estate residential pricing. Given the eventual outcome for Louis XVI and the monarchy in France, the current leaders in America best take heed of history and listen to the people as the people will be heard! The question at present is how much different is today’s crisis than the crisis experienced in France in the late 18th century? 6

14 | LVM

Best PracticesHow to write a service agreement.Mark Berger, MaI, Sra

service agreement is a necessary part of every appraisal practice and will help limit liability. It needs to be available and used to clarify the rights and obligations

of all the parties to the assignment. It is the necessary document for collecting on your work from those that would take advantage of your professional expertise and training.

UP frontU

A

An appraisal assignment begins with the inquiry by the client. It is at this point the appraiser finds out the purpose and scope of the appraisal, and negotiates the cost and the delivery time. Many times the appraiser receives a request to appraise a house and begins the work with the understanding that he

will be paid upon completion.

This is most common in residential work with relationships that are formed

with lenders or AMCs and

works well when you have a familiar

client with an ongoing business relationship.

There are times at the beginning of an assignment when the scope of the work is unknown and there is no clear understanding of all the valuation tasks or even the amount of time that will be required. It is then that a contract is necessary to identify the rights and obligations of the parties for the variety of tasks that could be requested. This is particularly important with a client that tries to expand the assignment (via rebuttal letters, more comps, comparing or reviewing another report, etc.). These contracts typically take the form

of an engagement letter or a service agreement, which identifies details of the assignment such as billing, payment, and a request for information. This is necessary in every assignment that involves litigation or with a new client about whom you have payment concerns. If a client does not want to enter into such an agreement, then my recommendation is to tell them this is your business policy; if that is not acceptable, move on to another client.

The first element in the service agreement is a cover letter summarizing the service agreement, retainer request and requests for information.

The agreement is a following document and will indentify:a the client a property addressa nature of the report a scope of the work a fee for the service a any request for a

retainer a provisions for

delays in delivery

Additional contract provisions for late collections are necessary in the event the client does not pay their bill on time, in addition to cancellation provisions and references to addenda. Another

+


important provision is some kind of indemnification clause from the client, should there be a lawsuit with the exception of negligence or willful misconduct on the part of the appraiser. This is the heart of the service agreement and must spell out the nature of the agreement/assignment (partial interest appraisal, current or past date of value, easement value, leased fee, rent study, etc.). This section will reference another addendum that will be customized for the particular property and will include the appraiser’s CV, if requested.

The first addendum is the rate sheet. It is a good idea to have a place for a date on the top of this page and to refer to the date in the main body of the service agreement. This indicates to the client that it is a current schedule. The rate sheet will enumerate all the different billing rates for people in the office.

It enables the client to see the cost of the principal and associates, and indicates the billing rates for the different activities, such as: a conferences a research a standby for trial or

travel time a sworn testimony for

deposition or trial

These can also be shown as a percentage of the office billing rate and minimum times. It is important to have a billing rate to be named as an expert witness so the appraiser is compensated for the use of his/her reputation to settle a case, whether or not an appraisal is undertaken or completed. Usually this amount is used as a deposit for billing and if no work is required, the appraiser retains the naming fee. The rate sheet will also identify other costs that may occur with the assignment for exhibits, copies of reports, trial preparation, etc. It is also important to note the time increments on which the billing is based. For example, any portion of one hour is considered an entire hour. The page should note that billing for meetings or conferences is based on portal-to-portal time; the billing clock starts when the appraiser leaves the office and stops when he/she returns. Another important component is the notice that the client is not authorized to designate any member of the firm as an expert witness until the agreement is signed and returned with the indicated retainer.

The second addendum is a sheet that identifies all the information that will be needed. The requested data will be checked to customize the assignment and will vary depending on the nature of the work that is commonly done in your office.

If it is residential, the requested information may be plans for: a a new house a a floor plan a previous appraisals a a list of

improvements a dates of remodeling a information on any

listings a current purchase

agreement a title information a any structural

problems with the property

a copy of deed a title information

A commercial assignment will also include: a request for data

on income and expenses

a ADA conformance and survey

a leases and a rent roll a some of the items

from the residential list >>

there are times at

the beginning of an

assignment when

the scope of the

work is unknown

and there is no clear

understanding of all

the valuation tasks

or even the amount

of time that will

be required. It is

then that a contract

is necessary to

identify the rights

and obligations of

the parties for the

variety of tasks that

could be requested.

this is particularly

important with

a client that tries

to expand the

assignment (via

rebuttal letters, more

comps, comparing or

reviewing another

report, etc.).

16 | LVM

The idea is to solicit as much information as possible from the client. This checklist gives the appraiser the means to require actions on the part of the client in order to complete the work according to the rest of the service agreement. The client cannot later come back for a breach of contract when they have not provided the date requested. If the second addendum is set up as a checklist, it is then easy to determine what is needed and then attached to the service agreement.

Finally, always send the service agreement unsigned; that way if any changes are to be made by the client (i.e., in effect a counteroffer) you have the choice to accept them and form a binding contract or continue negotiation. If you send out a signed agreement and the client makes changes and then signs it, you may not have a contract that is enforceable by either party; this conforms to basic contract law.

These elements will help you make an effective service agreement and provide a tool to eliminate disputes between the appraiser and the client. 6

It is also important

to note the time

increments on which

the billing is based.

for example, any

portion of one hour

is considered an

entire hour. the page

should note that

billing for meetings or

conferences is based

on portal-to-portal

time; the billing

clock starts when the

appraiser leaves the

office and stops when

he/she returns.

Tech Rep Rt

Product Spotlight

New tech products are appearing every day and we thought you might need help keeping track of them. Each month we will feature an emerging product just to make sure you

don’t miss out on something new.

Technology has moved in the direction of allowing us to access digital information regardless of where we are. Appraisers are now able to

appraise a property, fill out forms and take photos with the swipe of a few buttons.

PhoenixMobile is one of several up-and-coming smartphone applications that have this on-the-go capability all boxed up into a pocket-friendly device – yes, in this case, size does matter!

Featuring a simple-to-use program, PhoenixMobile is a star in our eyes for its easily

created floor plans, GPS-activated maps, camera with customizable tag-list and workflow organizer.

The time has come to go mobile, so keep your eye out for new products such as these to make

your life so much easier.phoenixsuite.com


Peace-of-mind is just one of the advantages we offer.In addition to our unsurpassed real estate appraiser E&O program, we offer coverage for:

n AMC Professional Liability (E&O) coverage, worded by LIA specifically for AMCs

n Bonds for appraiser client contracts and state regulatory AMC requirements – extremely competitively priced

n General Liability coverage for real estate appraisers including additional insured options required by HUD and other clients

n E&O insurance for high risk real estate appraisersn Health insurance for appraisers and their families through the

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18 | LVM

Opposites attractMore than an ‘80s pop hit.roger STaIger I I I

hat have we learned about personal relationships while reading LiveValuation Magazine? So far, we’ve learned how to price the engagement

ring of our betrothed and how to quantify/recognize love (efficiency) over lust. Another important aspect – perhaps the most important – of a personal relationship is selection of the partner that will make you, i.e., the two-asset

UP frontU

W

portfolio, the most efficient. In portfolio parlances this is asset selection. Fortunately Harry Markowitz and Paula abdul already solved this perplexing problem for us … opposites attract!

As a means of background, let us review the goal of a portfolio manager, i.e., person seeking a fulfilling, lifelong partner. The goal is not the maximization of return but rather the

achievement of an efficient relationship. Efficiency is risk/return and quantified with

the metric coefficient of variation (CV), e.g., CV = σ . The maximization of efficiency when measured by CV may be counterintuitive as the goal is to minimize the metric, i.e., have the smallest risk, σ, and the maximum return, μ.

The return for the relationship is the weighted average of happiness put forth by both individuals in a relationship. Quantitatively it is as follows:

Mu (happiness) = W1*H1 + W2 * H2 where W is the weight of happiness contributed by each person and H is the amount of

happiness, i.e., expected return of an asset. The quantification on an extreme scale (ability to have multiple partners) is as such:

E(μn) = expected happiness (return) of person (asset) n

The quantification of risk is not as straightforward for a portfolio. Modern portfolio theory recognizes that assets (people) that are not perfectly correlated will contribute to the risk (personality extremes) of the relationship (portfolio) differently. Basically, non-correlated assets actually reduce the overall risk of a portfolio. In a relationship this is similar to the happy partner cheering up the sad partner and/or the sad partner detracting from the happiness of the happy partner. It is a muting of risk of the overall portfolio (relationship).

While the return of a portfolio (happiness) is the weighted summation of happiness (returns), portfolio variance is not the weighted summation of personality extremes (risk). The following must be understood to understand portfolio theory:

E(μ) = Σ Wn E(μn)where:

Σ W = 1.00

t

n = 1

t

n = 1

E(σ) = Σ Wn E(σn)t

n = 1

+


The quantification of risk is not as

straightforward for a portfolio. Modern

portfolio theory recognizes that

assets (people) that are not perfectly correlated will

contribute to the risk (personality extremes)

of the relationship (portfolio) differently.

basically, non-correlated assets

actually reduce the overall risk of a

portfolio.

Portfolio theory and the quantification of risk (personality extremes) recognize that non-correlated assets will contribute to the overall risk of the portfolio differently, thus muting (reducing) overall portfolio risk. (Note: For perfectly correlated assets this is not the case.) Risk, as calculated using portfolio theory, is as follows:

Note: Covariance, like correlation coefficient (CC), is an alternative measure of linear association between two variables. Covariance and correlation coefficient are transformations of each other when incorporating the standard deviation of each asset (see equation).

Now that we understand how portfolio risk is calculated (portfolio risk is actually the positive square root of portfolio variance), we can look at the more simplified case of a relationship, i.e., two-

asset portfolio. This greatly simplifies the generic formula and will directly support why Paula Abdul was not just correct but profound in her ‘80s pop hit “Opposites Attract.”

Portfolio variance for a two-asset portfolio is as follows:

Portfolio variance for a two-asset portfolio of perfectly negatively correlated assets reduces as follows:

Notice the negative correlation between the two assets in the portfolio (relationship) reduces the overall risk, i.e., the “-2” factor.

Now that we understand the theory of why opposites attract, let us put it to real

numbers. We will use two examples: (1) A couple with high happiness (return) and low personality extremes (risk), who are very similar, i.e., “Similar”; and (2) the same couple, but both partners have bipolar disorder and by coincidence always seem to be at opposite poles, i.e., “Different.” Which couple is more efficient?

The two couples are similar in every aspect other than correlation (as described above). Further, it is assumed for this analysis that each partner in the relationship contributes 50 percent of the effort, i.e., equal weighting of partnership.

Please note that the return (happiness) for each pairing is exactly equal. It is simply the weighted return (happiness for each partner).>>

Σ Σ Χi Χ

iσ

ij

where:Χ

i : Weight of Asset i in Portfolio

E(Ri) : Expected Return of Asset i and j

σij = Covariance of Assets i and j

σij = ρij σi σj

ρij = Correlation Coefficient of Assets i and j

σi = Standard Deviation of Asset i

N

i = l

N

j = l

Portfoliovariance

x1 x1 σ11 x1 x2 σ12

x2 x1 σ21 x2 x2 σ22

Portfoliovariance

x1 x1 ρ11 σ1 σ1 x1 x2 ρ12 σ1 σ2

x2 x1 ρ21 σ2 σ1 x2 x2 ρ22 σ2 σ2

Portfoliovariance

x1 x1 ρ11σ1σ1 x1 x2 ρ12σ1σ2

x2 x1 ρ21σ2σ1 x2 x2ρ22σ2σ2

Portfoliovariance

x1 x1 σ1 σ1 x1 x2 (-1)σ1 σ2

x2 x1 (-1)σ2 σ1 x2 x2 σ2 σ2

Portfoliovariance

x1 2σ1

2 x2

2σ2 2

2x1x2σ1 σ2

E(RRelationship)=w1E(R1)+w2E(R2)=(0.5)(0.12)+(0.5)(0.18)=0.15 (Same for both)

RetuRnManWoman

RiskManWoman

CoRRelation

similaR DiffeRent

12%18%

7%4%

0.08

12%18%

7%4%

(1.00)

20 | LVM

The portfolio variance differs for each couple as the correlations are different. See below.

E(Varsimilar) = (0.5)(0.5)(1.0)(0.07)(0.07) + (0.5)(0.5)(0.8)(0.07)(0.04) + (0.5)(0.5)(0.8)(0.04)(0.07) + (0.5)(0.5)(1.0)(0.04) = 0.0006 + 0.0006 + 0.0004 = 0.0028

E(σsimilar) = E(Varsimilar) = 0.0028 = 0.0529 E(VarDifferent) = (0.5)(0.5)(1.0)(0.07)(0.07) + (0.5)(0.5)(-1.0)(0.07)(0.04) + (0.5)(0.5)(-1.0)(0.04)(0.07) + (0.5)(0.5)(0.1)(0.04)(0.04) = 0.0012 - 0.0007 - 0.0007 + 0.0004 = 0.002

E(σDifferent) = E(VarDifferent) = 0.0002 = 0.0141

Therefore, the efficiency for each couple is as follows:

Portfolio theory indicates efficiency is maximized when coefficient of variation (CV) is minimized. Therefore, the “Different” couple, i.e., bipolar opposites, is more efficient.

Now, let us extrapolate further and determine which couple has the best chance to succeed. Using the skills we learned from “Granny on Valuation” in the September 2010 issue, and understanding that humanistic data follows a bell curve, the probability of success can be quantified. (Hint: The negative reciprocal of CV is the z-score.)

Z - scoresimilar = - 1 = - 1 = -2.8353

Z - scoreDifferent = - 1 = - 1 = -10.6383

The area to the right of these values is the probability of success for the couple. There is a 99.8 percent chance that the “Similar” couple with the above characteristics will succeed. However, there is a 100 percent chance that the “Different” couple will succeed! Paula Abdul and Harry Markowitz agree: Opposites do attract! 6

cvsimilar = E(σsimilar) =

0.0529 = 0.3527

cvDifferent = E(σDifferent) =

0.0141 = 0.0940

E(R) 0.1500

E(R) 0.1500

cvsimilar

cvDifferent

0.3527

0.0940

+


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22 | LVM

UP frontU

20 questions - things you need to know or may have been wonderingAPRIL 2011

the hot seat

THeHOTSeaT

From the heartfelt advice that will never be forgotten to the toughest property he’s ever

appraised, we get the personal and professional facts from uS bank’s Chief Appraiser in

our monthly edition of the hot Seat.


Tony Pistilli

> You can’t always be right. > ten years from now I hope I am doing exactly what I am

doing now… but from a beachfront home somewhere in the Caribbean.

> When i was younger i wanted to be an attorney. > i can’t go without Diet Coke. > i’ll never forget my mom; I learned so much just by watching her live her life.> my parents taught me how to tell the difference between a need and a want. (I don’t always make the right choice!) > i’ve never been to Europe, Africa or Australia … all are places I would like to go before I die. > a good friend is always there when you need them the most. > my favorite time of the day is late at night when everyone else is sleeping. I get the remote all to myself, or I can just

sit and read or wander aimlessly through the Internet. > my favorite book is The Shack.

> The most difficult property I ever appraised was two properties on the same site on a lake. > the greatest setback for appraisers was appraiser licensing. > the biggest challenge to the appraisal/valuation community is to become more consistently professional. With all

that Dodd–Frank and the Interagency Appraisal Guidelines mandate, appraisers are going to have to step up to the plate and do what they are getting paid to do!

> Dodd–frank is ambiguous, complex, interesting, overdue, frustrating, fantastic, provocative, outstanding, imperfect, unfinished and ongoing.

> the biggest technological leap for appraisers was the first few years of emailing appraisals. > ten years from now the valuation industry will be completely different because technology will transform the

way appraisals are completed. > if i could change one thing about the valuation industry it would be the way appraisers enter the business. It

should be more similar to other professionals, like accountants, attorneys, nurses and teachers. Graduate, pass the tests and then practice. The 2,000 hours of experience requirement is impractical, unnecessary and extremely difficult to achieve.

> Before i entered the valuation industry i owned a landscaping/grounds maintenance company. > i entered the valuation industry because I needed a job after selling the landscaping company and there was an

opening in the Minneapolis FHA office in the valuation department…I had no idea! > Chief appraisers are undervalued and have great pride in ownership!

THe MOST DIFFICULT PrOPerTY I eVer aPPraISeD WaS TWO PrOPerTIeS ON

THe SaMe SITe ON a Lake.

CHIEF APPRAISER

US BaNkMINNEAPOLIS, MN

ten years from now I hope I am doing exactly what I am doing now… but from a beachfront

home somewhere in the caribbean.

P E R S O N A L

P R O F E S S I O N A L

24 | LVM

IMproVIng coMMunIcaTIonS In properTy ValuaTIonS for MorTgage

lendIng:

| MIsMo® ProPerty anD valUatIon | servIces WorkGroUP


Do all these new terms and acronyms in the industry today

make your head

s p i n ?We all know that technology moves rapidly and with it comes an increased need to communicate effectively. The heightened focus on transparency and increased reporting requirements, including the use of data files in XML format (Extensible Markup Language), can leave some of us feeling overwhelmed. XML files are simply digital documents that are notated so that they can be read by a software program. That information, or tags, is used to identify the name of the item and what kind of information the item contains.

To understand the content of digital documents, data standards have evolved to create common ground for parties exchanging information. The Mortgage Industry Standards and Maintenance Organization (MISMO®) was created to promote and support the common business interests of the commercial and residential mortgage markets. Its mission is to benefit industry participants and consumers of mortgage and investment products and services by:

g Fostering an open process to develop, promote and maintain voluntary electronic commerce procedures and standards for the mortgage industry; and

g Enabling mortgage lenders, investors, servicers, vendors, borrowers and other parties to exchange real estate finance-related information and eMortgages more securely, efficiently and economically.

MISMO® has recently completed work on the latest version of its new guideline, Version 3.1 Reference Model. This is not a file format standard, but rather a reference model that is used to generate files. It is actually best described as a consolidated dictionary that is used to build files or XML messages. Therefore, it is referred to as a message model. Version 3.1 is pure schema from the ground up. A key advantage of XML schema is its ability to implement strong typing definitions. An XML schema can define the data type of certain elements, and even constrain it within specific lengths or values. This ability

ensures that the data stored in the XML document is accurate. A DTD lacks strong typing capabilities, and has no way of validating the content to data types. The receiving program must provide for any validation requirements. XML schema has a wealth of derived and built-in data types to validate content as well as uniform data types.

The power of MISMO® Version 3.1 is in the semantics or data definitions, which provide the common language for all constituents to share.

The previous versions of MISMO® (Version 2 series) were individual, transaction-specific, individual DTD formats that represented the spectrum (loan application, mortgage insurance, underwriting, valuation, closing, servicing and secondary marketing). So, you may be thinking, “What’s the difference?” As organizations implemented V2 structures, they were faced with a number of challenges:

g There were multiple conflicting definitions for the same object (e.g., 15 different definitions of ”borrower,” 17 different definitions of ”property”); and

g Reuse was almost nonexistent across the collection of individual transaction definitions, sometimes even within the transaction definitions from a single Workgroup.

System-to-system communications require that both systems have a shared understanding of the meaning of the data.

THE NEW MODEL

MISMO® Version 3 normalizes definitions across the entire mortgage continuum, from origination through servicing and secondary for a single, common source. The purpose of this effort is to unify and harmonize information about the loan or “deal” from every business sector aspect. Version 3.1 delivers many new areas including regulatory changes such as revised information for the Good Faith Estimate and RESPA requirements. It also provides the ability for in-depth collateral information to be >>

26 | LVM

incorporated into the loan record beyond the minimum that is carried forward today from the appraisal report. The impact of collateral assessment reporting at the loan level beyond the property address and minimal property characteristics (such as year built and financial details like loan-to-value ratio) are critical to the recovery of the housing markets. Robust characteristics about collateral means the ability for lenders, rating agencies and regulators to provide the potential for improved levels of transparency in risk assessment of the collateral underlying mortgage-backed securities.

MISMO® FOR PROPERTY AND VALUATION

The MISMO® Property and Valuation Services Workgroup (PaVS) is comprised of valuation industry volunteers working together to improve and expand the MISMO® Version 3.1 Reference Model. The team recently completed a 12-month initiative to review and refine definitions and to expand the breadth of property information available in the MISMO® Version 3.1 Reference Model.

In addition to custom types, the MISMO® Version 3.1 Reference Model can easily be applied to create a variety of known reporting formats popular in the industry.

One key is that Version 3.1 provides rich data content in the appraisal process. For example, the subset of details required by the URAR along with the UAD details

are available in the model and map across to the format published by the GSEs - MISMO® 2.6GSE.

The MISMO® Valuation Request/Response format Version 2.4, based on the GSE appraisal form, was originally published in 2005. It was then slightly amended and published as Version 2.6 in 2010 at the request of Fannie Mae in support of its Collateral Data Delivery (CDD) initiative. Fannie Mae and Freddie Mac then joined forces in the Uniform Collateral Data Portal in June 2010 and decided to continue to use Version 2.6 because of the initial planned launch schedule for UAD for September 2010. Using Version 2.6 as a base, the GSEs published their proprietary format, MISMO® 2.6GSE, in December 2010. This publication includes 48 new data points specific to GSE business requirements.

Also in 2010, the release of a groundbreaking new version, MISMO® Version 3.0, based on a common reference model supporting all facets of the mortgage industry, became available, and is now a candidate recommendation published for use. The PaVS has spent all of 2010 reviewing and refining the valuation and property sections of the new reference model and has put forward its changes in Version 3.1 (published as a Candidate Recommendation in March 2011). This latest version represents the most comprehensive, mortgage-centric data standard ever published. The significance of the new version relative to support of new regulations imposed on the mortgage industry introduced by the Dodd-Frank Act is tremendously important across the entire mortgage value chain.

Why do data standards matter? Given the current state of the industry, systemic changes under way in capital markets have increased demand for efficient

JULY 2006Valuation Response v2.4 is released (supports all current GSE standard forms).

MAY 2009Fannie Mae selects current MISMO® standards for loan delivery and electronic appraisals to be effective March 2010 (announcement 09-14).

OCTOBER 2009MISMO® publishes v3.0 Consolidated Reference Model.

NOVEMBER 2009Freddie Mac announces intent to align Loan Delivery to MISMO® 3.0.

JANUARY 2010PaVS Workgroup elects Elizabeth Green, work begins on v3.1.

MARCH 2010MISMO® Valuation Response v2.6 is released.

JUNE 2010uCDP replaces Fannie Mae’s Collateral Data Delivery (CDD) portal and Freddie Mac joins effort.

SEPTEMBER 2010MISMO® Valuation Response v2.6 Errata is released.

NOVEMBER 2010Freddie Mac selects MISMO® v3.0 for loan delivery.

MISMO® completes public comment period on v3.1 which adds Property and Valuation definitions (all current GSE forms plus hundreds of new valuation data points).

DECEMBER 2010Ginnie Mae selects MISMO® v3.0 for loan delivery.

uMPD announces uAD format based on MISMO® Valuation Response v2.6 Errata with extension of 49 new data fields and established new effective dates for ‘11/’12.

MISMO® sunsets V2 file formats—no further maintenance.

JANUARY 2011PaVS Workgroup completes reconciliation of UAD—20 updates identified.

MISMO® PaVS Timeline


data interchange and transparency. Lending decisions are becoming increasingly interdependent on data from both electronic and traditional sources; however, the formats of these data sources often are not compatible with one another. To resolve this dilemma, appraisers and their clients can embrace a common information guideline for collateral assessment. The primary mission of PaVS is to provide data definitions within the MISMO® framework that support improved processes for valuation reporting specific to the context of residential mortgage finance. In addition to verifying the mapping of the existing appraisal report forms commonly used in the industry today, the group has taken an important additional step to think beyond the limitations posed by a paper form template.

MISMO® Version 3.1 contains the full set of the definitions used on the current industry-standard appraisal forms including the newly released GSE Uniform Appraisal Dataset (UAD). Additionally, hundreds of new data points for improved, granular property and market analysis and reporting have been included. Compatible valuation and property data can now be seamlessly brought into context of the full mortgage loan details. This also means that collateral analysis, management and monitoring can now be managed efficiently and more fully at the loan level. These new levels ultimately enable improved methods

for true mark-to-market analysis on a life of loan basis. Moreover, better analysis and monitoring capabilities of collateral valuation performance over time helps to ensure transparency as to the current and future value of the home to both borrower and investor.

VALUATION PROCESS AND REPORTING BENEFITS

A significant improvement in MISMO® Version 3.1 is the ability to express more information in a concise, organized way that can be

immediately used and understood by the intended user. For example, a common cause of friction between appraisers and their clients is the justification in the selection of comparable properties. For example, we have introduced the ability to express a comparable property using the same data structures and data content available to the subject property beyond the limited items that can are expressed on the typical “comp grid.” This is technically done by providing an indicator at the property level to designate subject or comparable.

This means that every detail that can be described about a subject property is now available to the comparable property, breaking the contrasts of only having the sales comparison grid for this purpose. Condition and quality ratings, along with descriptions and adjustments, are now available at a data point level in addition to the aggregate rating at the property level. This new level of detail provides the ability to support that overall rating with the specific underlying details. This concept has been applied across the model, from construction details such as roof or windows to interior details at the room level, as well as more intricate details such as amenities. For example, rather than just indicating the presence of individual kitchen equipment such as “refrigerator,” Version 3.1 allows an appraiser to identify specific details (i.e., new, stainless steel, sub-zero, in good working order) and include them as reporting details, not just occasional commentary. High resolution of comparable detail dramatically improves appraisal quality. >>

attributes

ArchITecTurAl_desIgn

exTerIor_feATures

exTerIor_WAlls

foundATIons

InsulATIon

roof

sTrucTure_AnAlyses

sTrucTure_deTAIl

WIndoWs

exTensIon

sTrucTure

28 | LVM

ContaineR name teRm oR ContaineR name DefinitionrooMS rooM floor_coVerIng rooM rooM_deTaIl rooM rooM_feaTureS rooM eXTenSIon rooM rooM rooMS rooMS rooM rooMS eXTenSIon rooMS rooMS_eXT rooMS_eXT rooM_deTaIl rooM_deTaIl abovegradeIndicator Indicates the room is above grade and can be included in gla.rooM_deTaIl componentadjustmentamount The dollar amount (either positive or negative) adjustment being made for a

specific component of the property.ROOM_DETAIL ConditionRatingDescription A free form text field used to describe in detail the condition rating of the

identified component.ROOM_DETAIL ConditionRatingType A rating of the quality of the identified component.rooM_deTaIl lengthfeetnumber The length measured in linear feet.rooM_deTaIl lengthfeetnumber ROOM_DETAIL LevelType Specifies a particular level in the improvement of a property.ROOM_DETAIL LevelTypeOtherDescription A free-form text field used to describe the level if Other is selected as the

level Type.ROOM_DETAIL RoomType Specifies a type of room normally found in a living unit or residence .ROOM_DETAIL RoomTypeOtherDescription A free-form text field used to describe the room if Other is selected as the

room Type.ROOM_DETAIL RoomTypeSummaryCount Indicates the number of rooms of the type specified Room Type. (e.g. 2

dinning rooms, 3 bedrooms, etc. )ROOM_DETAIL SquareFeetNumber Identifies the total area measured in square feet.rooM_deTaIl Squarefeetnumber rooM_deTaIl Widthfeetnumber The width measures in linear feetrooM_deTaIl Widthfeetnumber rooM_deTaIl eXTenSIon rooM_deTaIl rooM_deTaIl_eXT rooM_deTaIl_eXT rooM_eXTenSIon rooM_eXTenSIon rooM_feaTure rooM_feaTure componentadjustmentamount The dollar amount (either positive or negative) adjustment being made for a

specific component of the property.ROOM_FEATURE ComponentClassificationType Specifies whether the component is considered real or personal property.ROOM_FEATURE ConditionRatingDescription A free form text field used to describe in detail the condition rating of the

identified component.ROOM_FEATURE ConditionRatingType A rating of the quality of the identified component.ROOM_FEATURE MaterialDescription A free form text field used to describe in detail the material used in the

identified component.ROOM_FEATURE QualityRatingDescription A free form text field used to describe in detail the quality rating of the

identified component.ROOM_FEATURE QualityRatingType A rating of the quality of the identified component type.ROOM_FEATURE RoomFeatureDescription A free form text field used to describe in detail the identified room feature.ROOM_FEATURE RoomFeatureType Specifies the features of the identified Room Type.ROOM_FEATURE RoomFeatureTypeOtherDescription A free form text field used to collect additional information when Other is

selected for room feature Type.rooM_feaTure eXTenSIon rooM_feaTure rooM_feaTure rooM_feaTureS rooM_feaTure rooM_feaTureS eXTenSIon rooM_feaTureS rooM_feaTureS_eXT rooM_feaTureS_eXT rooM_feaTure_eXT rooM_feaTure_eXT

room referenceexample


MISMO® PaVS IN ACTION

We had productive participation for the 2011 January Trimester meeting in Jacksonville, Florida. The PaVS Workgroup finalized review of some key areas in the model. To accomplish this task, the team split into small groups and analyzed the sections of the model relating to key areas of the valuation process that had been posted on the wall. Each group had at least one licensed/certified appraiser assigned to it. On the first day of the working sessions, the groups identified practical appraisal applications within relevant areas contained in the model and brainstormed features using information contained in the model.

Thinking Outside the BoxOn the second day of the working sessions at Trimester, the findings from the Workgroup exercises were used to articulate business stories from which cases can be developed. Here is an example:

Mark-to-market AnalysisBusiness CaseAs an entity needing to analyze current market conditions in a population of properties/collateral to support mark-to-market analysis, I would like to compare key property and market data points using the MISMO® 3.1 standard to prepare a data set as input to analysis programs/processes.

IdenTIfy key InforMaTIon for The analySIS:

Property values, supply and demand, median and average prices, average days on market, foreclosure rate

Geographic Trends (by SMSA, by Neighborhood Boundaries (polygon coordinates), by ZIP code, by county)

Housing inventories, occupancy trends, price range, typical age and condition, economic indicators, typical financing, percentage built-up, new construction, etc.

>> cont. pg. 47

30 | LVM

the unchosen ones

aPPraISer

PerSPeCTIVef r a n k g r e g o I r e

I fa , r a a

LeNDer

PerSPeCTIVe

anonyMouS ch Ief

appra ISer of

a naT Ional

lender



the exclusive list you don’t want to be a part of | X D O N O T U S E

the unchosen onesaPPraISer

PerSPeCTIVe

k e n V e r r e T T

aMCPerSPeCTIVe

a n T o n I o l I T T l e


32 | LVM

a FeW WeekS aGO I reCeIVeD aN eMaIL aSkING IF I WOULD PrOVIDe LIVeVaLUaTION aN arTICLe ON BLaCkLISTING FrOM THe LeNDer’S POINT OF VIeW. My initial reaction was: “Wow, thanks a lot, Ernie and Emily – what’d I ever do to you?” You see, I knew from the moment this magazine debuted that the day would come when I would be requested to contribute an article. Honestly, I am flattered to offer my insight to this publication’s readers. However, I did hope that request would be for a topic a little less inflammatory than blacklisting. I know that some readers will dislike what I have to share about this topic just on principle. Blacklisting is an ugly topic to begin with and there isn’t a lot of good news

to share about it. Other readers will understand the subject and agree with what I’m sharing. I only hope you keep an open mind and don’t blame the messenger. Before I go any further I want to state that even though I know this subject well, I am not an advocate of blacklisting. I feel it is poor business practice that can do irreparable damage to an appraiser’s reputation, career and livelihood.

I’ve been an appraiser since the ’80s, having worked as an independent fee appraiser and a staff appraiser for more than one national lender. I’ve owned my own appraisal shop and have administered a fee panel for a national lender for more than five years now. I feel that level of industry experience qualifies me to author this article. The

next thing one needs to recognize and understand is that being blacklisted and being placed on a lender’s ineligible list are two totally different things. One is a necessary fee panel management tool and the other is a “shoot first, ask questions later” approach to risk mitigation.

LeNDerPerSPeCTIVea n o n y M o u S c h I e f

a p p r a I S e r o f

a n aT I o n a l

l e n d e r

BLaCkLISTS: a NeCeSSarY

eVIL?


+To help explain the difference between those two terms, I’m including excerpts from the definitions of “blacklist” and “ineligible” found on dictionary.com:

BlAcklIsT | ‘blak,list | – noun No.1. a list of persons under suspicion,

disfavor, censure, etc.No.2. a list privately exchanged among

employers, containing the names of persons to be barred from employment because of untrustworthiness or for holding opinions considered undesirable.

– verb (used with object) No.3. to put (a person, group, company,

etc.) on a blacklist.

– synonyms No.4. blackball, bar, debar, proscribe,

ban, shun, ostracize.

InelIgIBle | i-’ne-le-je-bel |No.1. not eligible; not permitted or

suitable. No.2. disqualified to function as a juror,

voter, witness, etc., or to become the recipient of a privilege.

– noun No.3. a person who is ineligible, as a

suitor or team member.

– synonymsNo.4. disqualified, unsuitable.

As you can see by these abridged definitions, blacklist and ineligible are quite different. Most industry participants (note: I intentionally

didn’t say lenders) have some sort of ineligible list that identifies appraisers that the entity does not wish to provide appraisal assignments to or accept appraisal services from. (By the way, an industry participant could be a bank, credit union, appraisal management company, government sponsored enterprise, private mortgage insurance company or any number of other users of appraisal services.) Anecdotally, there are untold numbers of reasons an appraiser could be placed on an industry participant’s ineligible list. However, the primary reason for placing an appraiser on an ineligible list is to protect the lender from future loss caused by the appraiser.

The main causes for an appraiser being placed on an ineligible list include:

• deception • incompetency • poor customer service

We know that with all lines of work, there are good practitioners and some not so good practitioners. Our industry is no different. Even though the vast majority of licensees are good people that are skilled and ethical professionals, we all know there are those among us who are not ethical and/or skilled. With that in mind, it is not unreasonable to recognize and understand that industry

participants have the right and due diligence to protect themselves, their stockholders, investors and their customers from those licensees that are less than ethical, are in possession of a limited skill set, or don’t care about customer service.

In the lender’s world, placing appraisers that have been recognized and confirmed as

being deceptive, incompetent, or providing poor customer service on an ineligible list is known as risk mitigation. A fee panel administrator placing a recognized “bad actor” on their ineligible list is no different than an appraiser choosing not to accept future assignments from a lender who failed to pay for prior assignments they ordered, or somebody choosing not to return to a restaurant after being exposed to lousy service and bad food, right? Placing unethical and unskilled licensees on an ineligible list is really the lender’s primary defense in limiting wasted resources (i.e., employee time and expense) and preventing potential future loss.

Speaking of loss, today the average loss to a lender on a loan that goes bad is between $100,000 and $150,000, which is why lenders take this issue so seriously. As a fee panel administrator, it can be very difficult to determine the difference between a deceptive appraiser and an incompetent appraiser. Regardless, both can be equally expensive to a lender. >>

bEFORE I GO Any FuRthER I WAnt tO

StAtE thAt EVEn thOuGh I knOW

thIS SubjECt WELL, I AM nOt

An ADVOCAtE OF bLACkLIStInG.

I feel it is poor business practice that can do irreparable damage

to an appraiser’s reputation, career, and

livelihood.

ChIEF SAyS

34 | LVM

An appraiser with poor customer service can cause a lender to lose more business in the long run than either of those types. Like it or not, every appraiser is a de facto representative of the lender/client involved in each assignment in the appraiser’s queue. Appraisers that are rude to the customer or lender/client’s staff, consistently late for or miss appointments, are poorly dressed, etc., reflect directly on the lender/client. Any of those examples of poor customer service by an appraiser can cost a lender future business that is worth much more than that one assignment the appraiser is involved with.

As stated earlier, an ineligible list is the lender’s defense mechanism intended to prevent loss and fraud, and help retain customers. When properly administered, ineligible lists are also good for the appraisal industry as a whole. Hold on! I know that was a big statement. Please, hear me out on it. Consider this: A properly administered ineligible list identifies the less desirable licensees among us, prevents them from providing appraisal services to the lender, reduces resource expenses, reduces loss for associated industry participants, and effectively directs more business to the skilled, ethical appraisers in the area. Nothing wrong with any of those things, is there? Like it or not, a properly administered

ineligible list is our industry’s example of natural selection (i.e., survival of the fittest, “may the best man win,” etc.).

OK, back on topic. What exactly is a blacklist? For this discussion, a blacklist isn’t really a thing. It is an action. Anecdotally, a blacklist is a compilation of various industry participants’ (note:

again, I intentionally didn’t say lenders) ineligible lists. Compiling a list of ineligible appraisers from various industry participants is not blacklisting. It is simply that: compiling a list. The problem for many appraisers is how a compiled list is used and by whom. For example, a service provider doing business with numerous industry participants compiles a list of their customer’s ineligible appraisers. For whatever reason, the compiled list is shared with or obtained by other industry participants. Those secondary users of the compiled list may conclude that if an appraiser on their fee panel is reflected on that compiled list any number of times, then that appraiser should be placed on their ineligible list as a risk mitigation effort. In that scenario the secondary user of the compiled list assumes the appraiser did something, or some things, egregious enough to be placed on the other industry participants’ ineligible lists, and that by putting the appraiser on their ineligible list before the appraiser

has the chance to do it to them is simply good business or risk mitigation. This is also an example of what is known as “the snowball effect.” Get put on one or two ineligible lists, and the next thing you know you’re on the ineligible lists of industry participants you’ve never heard of. It may not be fair, but it happens.

Good business or risk mitigation, call it what you like – using a combined list to remove appraisers from a fee panel without providing notice or the opportunity to resolve the issue is blacklisting, and it has been a real problem for many licensees.

Legitimately, I am not aware of any industry participants that have gotten together with the intent to create a combined list of appraisers to be blacklisted. I’ve never been contacted by a peer wanting to do that, either. The truth is we industry participants are pretty busy trying to compete with each other for business, and don’t

AS A FEE PAnEL ADMInIStRAtOR, It CAn bE VERy

DIFFICuLt tO DEtERMInE thE

DIFFEREnCE bEtWEEn A DECEPtIVE

APPRAISER AnD An InCOMPEtEnt

APPRAISER.

Regardless, both can be equally expensive

to a lender.

ChIEF SAyS


have the resources or time to schedule meetings with each other to pursue that activity even if we wanted to. Over the years I’ve stumbled across various lenders’ ineligible lists online, have been inadvertently included in their distribution lists, and have even had appraisers send them to me. If I can obtain other industry participants’ ineligible lists with little or no effort, anyone can. Again, gaining access to another industry participant’s ineligible list is not a real problem. Improperly using the information contained in that list can be.

In the past, lenders were not required to notify an appraiser when or why they had been placed on an ineligible list. An appraiser that was blacklisted may never be told of that action or provided the opportunity to defend themselves and resolve the issue. An appraiser that was blacklisted may only find out about the problem from another industry participant that informs the appraiser, “We can’t use your service because you are on Lender X’s ineligible list.” No doubt about it, being blacklisted stings the appraiser professionally, emotionally and financially. And it can continue to do that for years.

Remember though, this article is supposed to be from the lender’s point of view. At today’s rate of loss per loan (again, $100,000 to $150,000), lenders can’t afford to allow the use of recognized “bad actor” appraisers. Lenders have to use due diligence and protect themselves from that risk. There is no other way to do that than simply not allowing a recognized “bad actor” from providing services.

If that risk mitigation action eventually contributes to a “bad actor” appraiser being blacklisted by another industry participant, whose fault is that? It is the appraiser’s own fault, and something that the lender can’t control.

There is yet another problem affecting appraisers that probably hasn’t received the attention that it should: HVCC. I know, you’re probably thinking, “Huh?” Right? The problem is caused by what is commonly known as portability, which was included in HVCC for consumer protection. HVCC allowed an appraisal that was ordered in a compliant manner by Lender A to be ported over to Lender B if the borrower decided not to accept Lender A’s loan terms. The idea behind it was that the borrower should only have to pay for one appraisal and if their lender didn’t close their loan, the borrower could have their appraisal ported over to another lender; that second lender could then use the appraisal in their loan process. Portability was a well-intended idea that did work in the vast majority of cases, however, it didn’t work all the time.

The problem for appraisers began when it was recognized that the appraiser who provided the assignment for Lender A was on the ineligible list of Lender B, and Lender B wasn’t going

to port in or accept the appraisal. If the borrower wanted to proceed with the loan through Lender B, the borrower was required to obtain a new HVCC compliant appraisal using Lender B’s HVCC protocol, which was not contrary to HVCC. AMCs began receiving complaints from customers for using an appraiser who was ineligible with the lender they were trying to port the appraisal to; this resulted in an

appraisal that was paid for but could not longer be used. In an attempt to provide customer service, the AMCs provided free appraisals using an appraiser who was eligible to provide service to the second lender. Ultimately, the free appraisal policy wasn’t popular with the AMCs for obvious reasons and they quickly adopted a policy to prevent it from continuing to happen. The new policy was that if an appraiser was on any of their lending customer’s ineligible lists, then the AMC would not continue to assign that appraiser work for mortgage purposes (keep in mind that most national lenders have vendor relationships with multiple AMCs). If an appraiser is on a lender’s ineligible list the appraiser most likely is not being used by those AMCs for anything other than non-mortgage appraisal work. So in effect, HVCC, which was intended to promote consumer protection and >> cont. pg. 48

DODD–FRAnk AnD OthER LEGISLAtIOn

WILL PROhIbIt An InDuStRy PARtICIPAnt

FROM PLACInG An APPRAISER On An

InELIGIbLE LISt WIthOut WRIttEn

nOtIFICAtIOn of the action and

providing the appraiser with the specific reason why, then

giving the appraiser the opportunity to defend

themselves.

ChIEF SAyS

36 | LVM

THe PaST COUPLe OF YearS HaVe BeeN TrYING FOr reaL eSTaTe aPPraISerS INVOLVeD IN THe SPeCIaLTY OF COMPLeTING aPPraISaL aSSIGNMeNTS FOr MOrTGaGe LOaN OrIGINaTION. THe VOLUMe OF aPPraISaL aSSIGNMeNTS IS DOWN, LeNDerS aND OTHer USerS are FILING MOre COMPLaINTS WITH STaTe reGULaTOrY aGeNCIeS, aND MaNY aPPraISerS are FINDING

themselves on the receiving end of lawsuits seeking damages for appraisals completed during the housing boom – allegedly for improperly developing and reporting real property appraisals.

To add another straw to the camel’s back, as a result of originators’ policies, the Home Valuation Code of Conduct, and the Dodd–Frank Wall Street Reform and Consumer Protection Act, the sources of an appraiser’s or firm’s assignments tend to be less diverse and more concentrated in a small group of dominant appraisal management companies. This last straw makes the use of the Do Not Use list and appraiser blacklists all the more troublesome for practitioners. Ineligibility is likely to expand and exclude the appraiser from receiving assignments from many of the

management company’s clients, and may endanger their position as a contractor on the fee panel.

Long before licensing and certification of appraisers became the law of the land, lenders, loan originators, mortgage loan insurers and guarantors maintained their own rosters of approved appraisers.

aPPraISer

PerSPeCTIVe

f r a n k g r e g o I r e

I fa , r a a

blacklists:BLaCkLISTS:FrOM SeNSIBLe

TO UNreaSONaBLe


FRAnk SAyS

Even the government-sponsored mortgage giant, Fannie Mae, had an approved appraiser program. FHA appraisers were accepted for approval and provided a CHUMS number only after their work was scrutinized. An appraiser’s clients were interested in the level of an appraiser’s education, the amount of experience, and professional designations. This attention changed in 1989 when Congress attempted to solve the appraisal-related problems alleged to have contributed to the collapse of the savings and loan industry by passing the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). The Act empowered The Appraisal Foundation, and recognized the Appraisal Standards Board as the source for appraisal standards and the Appraiser Qualifications Board as the authority for minimum qualifications of practitioners.

Reacting to the promise of the federal solution, most mortgage lending clients surrendered scrutiny of an appraiser’s background and experience to the state regulatory agency, and required only that the appraiser have the proper state-issued appraiser credential. The exceptions to this abdication of scrutiny are few: the Veteran’s Administration Fee Appraiser Roster, some credit unions and community banks. The credit unions and banks with approved appraiser lists tend to be smaller institutions, or portfolio lenders not involved in selling

loans in the secondary market.

Despite the federal and Appraisal Foundation promise of public trust in the real estate appraisal profession, lenders found work produced by some of the credentialed appraisers failed to meet professional standards, or the

appraiser did not represent the lender in a professional manner to one or more parties of the mortgage loan transaction. To protect their interests, the Do Not Use list was born. The names on the list usually included appraisers with a history of disciplinary problems with the state regulatory agency. Unfortunately, the rationale for placing an appraiser on such a list evolved from being sensible to unreasonable. During the housing and refinance boom, many appraisers found their names on such lists, not due to the quality of their work, but because of their resistance to loan originator pressure to ignore adverse conditions, or failure to “make the number.” In many instances, the lender neglected to inform the appraiser of the sanction or the alleged infraction. Only after a loan originator informed the appraiser an appraisal report had not been accepted due to their ineligibility did they learn their name was added to a mysterious list.

The Do Not Use list has evolved into the blacklist. Since most lenders are no longer involved in the selection

and retention of real estate appraisers, the task of assembling a panel of fee appraisers has been handed off to vendor managers or appraisal management companies. If an individual appraiser’s name happens to appear on a specific lender’s Do Not Use list it’s likely the appraisal management company will, in effect, blacklist the individual from any assignments to minimize the chance of offending one of their clients. This might be a reasonable and acceptable means of increasing the likelihood of ensuring lenders receive credible appraisal reports completed by qualified and experienced appraisers if the creators of the Do Not Use list provided some transparency to the process. Unfortunately, the reverse is often true.

If the appraiser is informed of their placement on the list, the explanation is often that their work has been reviewed, and the review alleged unacceptable practices. It’s not unusual for the appraiser to find the review was completed by a less qualified, less experienced appraiser. Curiously, many of these reviews fail to meet the minimums spelled out in Standard 3 of the Uniform Standards of Professional Appraisal Conduct. The appraiser may find that comparable sales or information unavailable as of the effective date of the appraisal was used by the reviewer to impeach or impugn the appraisal and the appraiser. In some cases, the review appraiser was not provided a complete copy of the original appraisal report and addenda.

The reasoning in support of an appraiser’s placement on a Do Not Use list or blacklist is likely to be more opaque if the >>

InELIGIbILIty IS LIkELy tO ExPAnD

AnD ExCLuDE thE APPRAISER

FROM RECEIVInG ASSIGnMEntS FROM MAny OF

thE MAnAGEMEnt COMPAny’S

CLIEntS, and may endanger their position as a contractor on the

fee panel.

+

38 | LVM

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®

Mortgage Asset Research Institute (MARI) is involved. MARI maintains the Mortgage Industry Data Exchange database (MIDEX-Complete). This is a compilation of information obtained by MARI and includes public sanctions, information from federal and state regulators, and non-public incidents of alleged fraud or material misrepresentation contributed to MARI by participating companies. MARI provides their interpretation of these allegations to

subscribers. The appraiser may obtain a copy of the incident report, but it will be cryptic, will not name the complainant, and will not include evidence to substantiate the accusation. Because of their prominence, name recognition and market position, the effect of being included in the MARI database may be devastating.

After examination of hundreds of complaints against appraisers and a nearly equal number of appraisers’

rebuttals, it is clear many appraisers are rightfully excluded from being involved in mortgage loan appraisals. Also clear is the fact that anonymous complaints, incompetently developed and reported reviews, and unfounded allegations are often cited as reasoning to exclude appraisers from some fee panels. Due process is often ignored by the users of the Do Not Use list and blacklist. Although a few appraisers have resorted to suits against lenders and appraisal management companies, their results are mixed. An appraiser’s best defense is attention to detail, a credible appraisal report, an ironclad workfile, and a prompt, well-developed and supported rebuttal to claims of wrongdoing. 6

FRAnk SAyS

DuRInG thE hOuSInG AnD

REFInAnCE bOOM, MAny APPRAISERS

FOunD thEIR nAMES On SuCh LIStS, nOt DuE tO thE

quALIty OF thEIR WORk, but because of their resistance to loan

originator pressure to ignore adverse

conditions, or failure to “make the number.”


WHeTHer YOU reFer TO It As A Do Not Use (DNU) LIST, aN exCLUSIONarY LIST Or a BLaCkLIST, THe FaCT reMaINS THaT THe PLaCING OF aPPraISerS ON LISTS THaT INDICaTe THeY are NOT TO Be eNGaGeD FOr CerTaIN aPPraISaL Or PrOPerTY TYPeS, Or THaT THeY are NOT TO Be eNGaGeD UNDer aNY CIrCUMSTaNCeS, HaS BeCOMe aN ONerOUS aND reVILeD NOrM IN THe LeNDING aND aPPraISaL INDUSTrIeS.

To their credit, these exclusionary lists have helped to marginalize many incompetent or dishonest appraisers. But they have also inadvertently caught many innocent and honest appraisers in their broadly cast nets.

domino effect

Obviously the individual appraiser has felt the most direct pain from the use of blacklists. But there have been many consequences for valuation companies as well.

Chief among them is the seemingly simple act of trying to gain access to the lists themselves, which is not-so-simple in many cases. Because there is no universal, centralized database of blacklisted appraisers other than the

Appraisal Sub-Committee’s national registry that identifies those whose licenses are no longer “compliant,” this discovery process is carried out on a lender-by-lender basis.

Wild goose…consider yourself chased

Another hurdle with which AMCs have to contend is obtaining official authorization to access the exclusionary lists. Often, an equal amount of time is spent working merely to ascertain who among the lender’s staff is responsible for providing the necessary clearance for release of the list to the AMC, than it takes the AMC, (once the list is received), to upload it, compare it against the appraiser panel, and then determine who should be flagged >>

+ aMCS aND THe

DO NOT USe

DILeMMa

aMCPerSPeCTIVea n T o n I o l I T T l e

40 | LVM

for exclusion for that client. And to add further complexity, exclusionary lists often vary between divisions of the same lender. An appraiser may be excluded from mortgage but not excluded from review appraisals or the default group.

The name Is the Thing

In some cases, when ordering an appraisal, lenders are either hesitant or simply forget to provide the investor’s name. Without knowing who the investor is, we have no idea which of the multitude of lists we need to scrub against our panel. Even when lenders are managing their own exclusionary lists, it can be extremely difficult to ensure that you always have the most up-to-date information. AMCs frequently report having vetted an appraiser against a client’s list, assigned the order to an appraiser, received the completed report and delivered it to a client, only then to find out that the appraiser had recently been put on that lender’s exclusionary list which was an updated version of that was never provided to the AMC. This can create a contentious relationship not only between the AMC and their client, but between the AMC and their panel appraiser, and between the appraiser and the lender. And it’s a situation that could have been avoided with a simple, routine distribution of the latest DNU list by the lender.

And the converse can be equally frustrating for all parties involved – especially appraisers. Often, even when regular updates to the list are provided by the lender or the investor,

it is not complete with a specific acknowledgement of when an appraiser is removed from the list. In fact, it is extremely rare for an AMC to be notified when an appraiser has been taken off the exclusionary list. More often than not, we hear this from the appraisers themselves. And of course, this requires confirmation from the lender, which can take time and cost them work.

The AMc and the dnu

Recognizing, as I do, the necessity of the exclusionary lists to keep the mortgage lending model safe from unprincipled loan officers, real estate agents and appraisers, there are things that could make the process more efficient and effective for AMCs and fairer for appraisers. This would help the whole industry maintain a completely independent appraisal process free from coercion, collusion, extortion, inducement or undue influence. Since the use of the blacklist is not likely to cease anytime soon, as an industry it is incumbent upon all of us to continue to take steps toward improving utilization.

These measures would include (but not be limited to) the creation and formalization of an adjudication process that requires written notice to appraisers (and AMCs) when an appraiser is placed on a DNU list, and a process for them to officially appeal their inclusion on any such list.

In fact, it is quite interesting to point out that the much-maligned and now defunct HVCC very explicitly outlined the procedure for adding appraisers to exclusionary lists. It stated that no appraiser could be added to an exclusionary list used by any entity without prompt written notice and evidence of: illegal conduct, USPAP violation, state licensing standards violation, substandard performance, or substandard/improper/unprofessional behavior or other substantive reason for removal.

The bottom line is that everyone—including appraisers, lenders and AMCs—wants the appraisal industry to be as robust as possible, and appraisals themselves to be as accurate and legitimate as they can be. Today, most in the industry would characterize DNU lists as a necessary evil of the risk management efforts that lenders are compelled to undertake. But with subtle changes to the way these lists are managed and utilized, perhaps they can be downgraded from a necessary evil to merely necessary. 6

AntOnIO SAyS

tO thEIR CREDIt, thESE ExCLuSIOnARy

LIStS hAVE hELPED tO MARGInALIzE

MAny InCOMPEtEnt OR DIShOnESt APPRAISERS.

but they have also inadvertently caught many innocent and honest appraisers in

their broadly cast nets.


BLaCkLISTING ISSUe

THe

BLaCkLISTING ISSUe

TIMe TO aDDreSS IT aGaIN?IT WaS FOUr YearS aGO THaT aPPraISaLSCOOP.COM PUBLISHeD a SerIeS UNDer THe “rUNT raNTS” COLUMN THaT aDDreSSeD THe BLaCkLISTING PrOBLeM.THe SerIeS DISCUSSeD BLaCkLISTS aND DO NOT USe LISTS, aND SOLICITeD exaMPLeS FrOM aPPraISerS OF INSTaNCeS WHere THe SYSTeM WaS aBUSeD aND THreaTeNeD THe LIVeLIHOOD OF HONeST, eTHICaL aPPraISerS.

It was among the most read of the “Runt Rants” series, and to this day still generates responses from appraisers who have suffered from the system that was rampant then and still exists today. It is an emotional issue, for it reeks of the potential for severe damage to innocent independent fee appraisers, while at the same time being a useful tool to weed out dishonest and unethical appraisers among us. In that series we attempted to define two approaches to the issue: Do Not Use lists and blacklists.

5 DO NOT USe LISTS A fair policy is created and enforced. The lender conducts reviews of appraisals by experienced, local experts. Those reports found seriously wanting are sent to the original appraiser and

a rebuttal is requested. The original review and the rebuttal are read by the lender’s special review panel and their decision is final. Those appraisers that are found seriously deficient are notified of the deficiencies and are placed on a Do Not Use list for that lender.

Do Not Use lists benefit the lenders and the appraisal profession. The dispute resolution process allows the honest appraiser to defend his report and his credibility. The dishonest appraiser fails the rebuttal opportunity and his business and damage is curtailed. That helps the lender, the public and the ethical appraiser profession. >>

aPPraISerPerSPeCTIVek e n V e r r e T T

+

42 | LVM

5 BLaCkLISTS The lender uses input from their line employees or agents to exclude appraisers from future use. Complaints include value conclusions that result in loans not being made. The complaints are not properly screened, and have no notification or recourse procedures, and the exclusions are often shared with other lenders, compounding the loss of business. The blacklisted appraiser often does not learn of the problem for months, if ever, as the lender discourages their staff from discussing the decision with the appraiser.

Blacklists are bad for the lenders and the appraisal profession. They encourage the banning of appraisers from future assignments simply for not remaining independent, or for reporting their independent opinion of value. In times of declining markets the instances of appraisal values coming in below expectations rise. Complaints from commissioned loan officers and mortgage brokers naturally rise.

Over time the lender who uses the blacklist approach culls out the independent appraisers who do not yield to value pressure in favor of those who “hit values.” That hurts the lender, the public, and the ethical appraiser profession.

The blacklist series asked readers to send real-world examples of blacklisting. We received scores of examples and published 26 of them. Each instance was disturbing. Clearly there existed a threat to the soundness of the lending process, and to the appraiser profession. The series concluded with three alternative courses of action that could be taken.

5 Blacklists violate due process. They clearly fall under the legal definition

of Tortuous Interference with Prospective Advantage. A suit

by individuals or by class action could be filed against

the lenders who use blacklists to violate due process and who engage in Tortuous Interference with Prospective Advantage.

5 Another alternative suggested was to bring industry focus on the issue, making the case that blacklists harm the good lending industry and the good appraiser profession by allowing abusive loan officers to eliminate appraiser

independence. We suggested that the blacklisting issue be put on the agendas of national and regional conferences of lenders and appraisers and appraisal regulators. Let both sides discuss and defend their practices and propose solutions.

open discussion helps

Class action suits have been filed since that blacklist series. I’m aware of three and there are likely more.

After the blacklist series I received a call from the New York Attorney General’s office. Mr. Cuomo was then head of that office and was conducting investigations into lender abuses. We discussed the blacklist problem and the abuses that had been chronicled. I put each of the appraisers whose cases were cited into touch with the New York Attorney General to discuss their situations further. The Attorney General investigations expanded into many fronts and ultimately resulted in the Home Valuation Code of Conduct (HVCC). The Mortgage Bankers Association had created a committee in 2007 that was charged with making recommendations to improve the policies and procedures that their members followed in the lending process. A member of that committee shared a draft of their final recommendations, which included many of the points that we had raised. He indicated that the committee had

It IS An EMOtIOnAL ISSuE, FOR It REEkS OF thE

POtEntIAL FOR SEVERE DAMAGE

tO InnOCEnt InDEPEnDEnt FEE APPRAISERS, while

at the same time being a useful tool to weed out dishonest

and unethical appraisers among us.

kEn SAyS


been aware of the Appraisal Scoop series and it had influenced their deliberations.

Those responses indicate that public discussion of the blacklist issue can yield positive results. Two of the most frequently mentioned lenders who used the blacklist approach are no longer in business today. Their portfolios were in severe distress and their practices were unveiled for all to see and judge. Their businesses subsequently merged into other institutions.

If not a conspiracy, Then What?!

Much has happened in and to the appraisal profession in the last four years. In my view there have been significant, insidious attacks upon the profession from various powerful groups.

5 The HVCC summarily shifted business from local, vastly ethical and productive relationships between lenders and appraisers. The beneficiary was the AMC, largely the AMC oligopoly. Many independent fee appraisers lost their businesses and the HVCC provided that opportunity. The HVCC was developed and driven by the New York Attorney General as well as Fannie and Freddie.

5 The AMC oligopoly began a process of hiring formerly independent fee appraisers as employees with the aim of controlling 30 to 70 percent of their appraisal assignments within their

own staff. (The AMC oligopoly controls 80 percent of the mortgage origination market in the USA.)

5 The National Association of Realtors (NAR) continued to promote Broker Price Opinions (BPOs) as an alternative to appraisals performed by independent fee appraisers. This push was aided by state regulators and local Realtor associations who continued to “look the other way” regarding enforcement of many state statutes forbidding BPO use for any purpose other than securing a listing.

5 DODD-FraNk Dodd-Frank was enacted last summer. It held hope for some relief to the beleaguered independent fee appraiser profession, including regulation of AMCs and reasonable and customary fees to the independent fee appraisers. Tables have quickly turned as the powerful lobbying groups have gone to work. Dodd-Frank left it to the regulators to create the details. We now see that “reasonable and customary” has not just been softened, but returned to the status quo. There will be little relief to the massive haircut business model controlled by the oligopoly. Relationships between the new regulators and the oligopoly have clearly been established, and the AMCs now continue their process of hiring formerly independent fee appraisers to staff positions to exert control over

the appraisal process. (Shouldn’t a new class of appraisers be identified for those working for lenders and AMCs, eliminating the word “independent” from their status?)Each of these noted developments represents an attack on the independent fee appraiser profession,

attacks that have clearly been successful. A cynical person could conclude that these are deliberate moves. Blacklists represent a back-room, “Black Op” approach to intimidate and even eliminate independent fee appraisers.

Four years after the series ran I still receive emails from individuals who suspect they have been the victim of a lender blacklist; the most recent being last month. Since 2007 we have experienced the latest credit crisis, one that brought our country and the world into a global recession. Residential real estate market values have declined significantly, and continue to decline. More emphasis is also being placed on the critical importance of the underlying value of the assets contained in mortgage-backed securities. More emphasis is being placed on the value of the independent fee appraiser in the lending process.

Isn’t it time to address the Blacklisting issue again? 6

FOuR yEARS AFtER thE SERIES RAn I StILL RECEIVE EMAILS FROM InDIVIDuALS

WhO SuSPECt thEy hAVE bEEn thE VICtIM OF A

LEnDER bLACkLISt; the most recent being

last month.

kEn SAyS

44 | LVM

L V M

Reducing the Risk of Legal Claims Peter Christensen pg 18

Beware of Borrower

1.2 5-2010.indd 1 5/5/10 11:01 AM

Connecting industry peers is critical if we are to improve our credibility and enhance our voice for the future

Coming Together and Reconnecting to Improve Our Industry

{ FEATURE }

1.3 copyOUTLINES.indd 1 6/15/10 11:27 AM

Re-Engineering The Appraisal Process

Are We Ready Yet?Leland Trice pg 16

1.1 4-2010 copyV3.indd 1 4/16/10 9:13 AM

FEATURE

1.7 November 2010.indd 1 10/29/10 11:58 AM

AMCs: The Good, the Bad &

the OligopolyKen Verrett, p24

Do YoU kNow who Is REVIEwINg

Y O U R AppRAIsALs? p32

Low AppRAIsALs:

the blaMe

GAME p14

ways to

INCREASEb u s i n e s sFrom the net p18

3

FINAL 1.8.indd 1 12/17/10 4:34 PM

| FEATURE |

1.6 October 2010.indd 1 10/12/10 2:22 PM

LeLaND TrICe, Sra, FrICSRe-Engineering the Appraisal Process Are we ready yet?

PeTer CHrISTeNSeNBeware of Borrower Reducing the risk of legal claims.

BraD STINSONZAIO... The Long andWinding Road The rise, fall, and reinvention of a valuation technology company.

TONY PISTILLIThe Dawn of a New Era in Appraising Appraisers who adapt to the transforming valuation space will have a bright future.

FeBr UarY Reading this article and the reviews gives me some hope that I am not the last man standing as it were! I am not the only one who thinks the underwriter most likely was selling shoes at Macy’s last week! Does anyone else get request such as: “you

inspected the property this morning, can we expect the verbal before 5:00pm today” (sound of self inflicted gunfire goes here!)

- r C COOke

SePTeMBer I’ve been appraising since 1991 when our company had just raised fees to $400 for a normal, typical everyday appraisal. I’ve seen AMC’s offer between $195 and $350 for the same product AnD rarely more for unique, rural or acreage properties. What other industry would accept a 12.5% to 51.25% pay cut after 20 years of experience? And the AMC’s wonder why we don’t return their calls when they contact us on the hour every hour for status updates. - OreGON aPPraISer

DeCeMBer/JaNUarY All I can say is the AMC process will be here indefinitely. but all we can do is push our congress to regulate AMC’s very harshly. I don’t know about anyone else but I am tired of competing against appraisers that live 2 hours away that have no business appraising in my rural area. - DMC

aPrIL MaY JUNe

OCTOBer NOVeMBer DeCeMBer/JaNUarY


Connecting industry peers is critical if we are to improve our credibility and enhance our voice for the future

Coming Together and Reconnecting to Improve Our Industry

{ FEATURE }

1.3 copyOUTLINES.indd 1 6/15/10 11:27 AM

AMCs: The Good, the Bad &

the OligopolyKen Verrett, p24

Do YoU kNow who Is REVIEwINg

Y O U R AppRAIsALs? p32

Low AppRAIsALs:

the blaMe

GAME p14

ways to

INCREASEb u s i n e s sFrom the net p18

3

FINAL 1.8.indd 1 12/17/10 4:34 PM

DeCeMBer/JaNUarY

{ FEATURE }

FINAL OUTLINES 1.5 September 2010.indd 1 9/3/10 11:08 AM

Something About a Forest

and TreesLELAND TRICE, p28

PRIOR ACTS: will your past

haunt YOU? p20

HAVE WE

OUTGROWN USPAP p34

LEAVE YOUR EGO BEHIND p40

?

1.9 Feb 2011.indd 1 1/14/11 9:09 AM

CHUCk MUreDDUComing Together and Reconnecting to Improve Our Industry Connecting industry peers is critical if we are to improve our credibility and enhance our voice in the future.

Mark CHaPINAppraising in the 21st Century Collateral is king again and appraisers are expected to work harder and smarter.

JOrDaN PeTkOVSkICustomary & Reasonable Fees Who decides what is “customary & reasonable”?

keN VerreTTAMCs: The Good, The Bad & The Oligopoly There are benefits of working with AMCs if you play the game right.

LeLaND TrICe, Sra, FrICSSomething About a Forest and Trees Scope Creep: What lax standards caused, unreasonable standards will not cure.

erNIe DUrBIN II, Sra, CrPBreaking the Paper Chain The freedom of an electronic office.

thank youI would like to extend a big thAnk yOu to all of our readers, authors

and advertisers of the magazine. you are the ones that make our jobs

here exciting, fascinating, mind-boggling (at times) and ever-changing.

We pour everything we have into each issue of LiveValuation

Magazine in hopes that it will be well received among the community

of our readers and hopefully we’ve lived up to that goal. this year has

flown by and has been nothing but fun! Happy anniversary,

LiveValuation Magazine – here’s to another great year to come.

e

from the editor

JULY/aUGUST SePTeMBer

FeBrUarY MarCH

things we’ve heardWhen you read parts or full copies of

articles in other publications, see quotes from the magazine, and hear other

appraisers discussing the articles, you know you have been a part of a good thing.

- STeVe PaPIN

In just 12 short months, LiveValuation Magazine has firmly established itself at the top of my monthly must-read list; presenting fresh and relevant analysis in a time of rapid

change, plus a sprinkling of unapologetic opinion, LiveValuation stands out head &

shoulders above its cohorts.- FreD HOLTSBerrY

Having been responsible for publishing magazines for trade associations, I appreciate

the effort that goes into a quality magazine like LiveValuation. Better still, it is refreshing to see

an industry pub that is objective and succeeds in giving coverage to all sides of an issue.

Way to go!- DON keLLY

liveValuation has proven to be a valuable and trusted resource for the professional appraisal community

in its first year of business. Both the print and online versions are high-quality publications and the Herbert H. Landy Insurance Agency is pleased to participate

with liveValuation as an advertiser and editorial contributor. - JOHN TOrVI

nice to see a magazine that actually tackles the tough issues related to our

ever-changing industry in such an open and honest way. there is not slant, just facts and these issues are discussed from

industry professionals having to practice in the real world!

- BraD DaVIS

LiveValuation is the one magazine that I open immediately upon receiving my hard

copy in the mail. The layout and look of this magazine is fresh and easy to read with fabulous graphics. The articles are always interesting and well written by people and appraisers that I admire in this industry.

Thank you for creating such a great magazine and congratulations on your

anniversary!- keLLY MCCLaIN

46 | LVM

2Is Mobility

a Myth?BEN GOHEENI can see where

being completely mobile is an advantage.

However, it seems to work best in warm

weather climates with little rain, not here in Minnesota.

Dropping a $600 iPad in 2’ of snow is enough to make

anyone nervous, where a $10

clipboard can easily be brushed off.

1Last month’s articles sparked a lot of

debate. Here are some responses from our readers.

do you have something to say? www.livevalmag.com8

VOICeS OF VaLUaTION

voIces of valUatIon 8LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVMLVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVMLVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVMLVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM LVM

7

MLS and AVM Mash-upsBBSGARDENThe MLS data can be just as bad or worse than public records. A knowledgeable Realtor and/or appraiser can do a far superior job than any AVM. Statistics that can be tweaked to anyone’s objective? I think we have seen how well that worked for the credit rating agencies.

GuESTAs both an appraiser and Realtor I am surprised at how incorrect the MLX data really is. Some realtors will list a single family home with illegal additions twice, once under “single family” and again under “duplex/income properties.” Some also include the illegal addition square footage in the MLX listing.Also, with so many people in default on their home loans and short sales becoming more common, to list a home for sale at a higher listing price to prolong the short sale is becoming common practice. There is no substitute for a “real” thinking appraiser.

We know you’ve been there – do stupid requests leave you pulling out your hair!? Well feel free to let loose on our Wall of Shame. Everyone remains nameless so no one gets hurt - it’s just a good ol’ venting session. Submit your Wall of Shame-worthy comments to [email protected]. We promise, you’ll feel better after you do!

I have a request from an underwriter to bracket my subject’s GLA with a comp that is smaller and a comp that is larger. Keep in mind that this is a condominium unit and the appraisal has five comps that are exactly the same GLA as the subject. Unf@*%#believable! I believe this is the stupidest request in a 20-year career.

Wall of

SHAMe Unf@*%#believable!


do you have something to say? www.livevalmag.com8

continued from page 29

MISMO® v3.1 Suggested Areas of Interest .... properTIeS/properTy/MarkeT/

MarkeT_InVenTorIeS/MarkeT_

InVenTory

.... properTIeS/properTy/MarkeT/

MarkeT_Trend

.... properTIeS/properTy/

neIghBorhood/houSIngS/

houSIng


neIghBorhood/

neIghBorhood_InfluenceS/

neIghBorhood_Influence


properTy_ValuaTIonS/

properTy_ValuaTIon

Coming SoonAt press time, Version 3.1 is scheduled for a vote to Candidate Recommendation status by MISMO® Architecture Committee in late March, 2011. This step will signal that the new version has been scrutinized by the MISMO® Workgroups and has completed a Public Review. It is now ready for publication to gain implementation experience. The final step will be Recommendation status after at least two organizations have successfully implemented it.

Version 3.1 Use Cases Under DevelopmentCompanies that implement MISMO® define how the standard will be used

in business transactions with their respective trading partners. MISMO®

structures can be extended using proper protocols to include proprietary data elements. In 2011, the MISMO® Property and Valuation Services (PaVS) Workgroup will be working to develop the implementation guidance for related topics using Version 3.1 Reference Model including the topics listed here from our January 2011 Trimester Meeting:

aPPraiserg Improve the productivity and

accuracy of the appraisal process resulting in better appraisals and appraisersBenefits – have the ability to analyze

large sets of data easilyBenefits – reduce exceptions and

stipulations and improve acceptance rate of reports

g Support for Macro and Micro market analysis (Market & Neighborhood)

Lenderg Engagement/Valuation requirements

and special instructions

aGGreGator (Warehouse lender to Investor

through to end-investor, etc.)

g Collateral risk assessment for speed-to-purchase

mortGaGe insurance comPanyg Underwrite a non-delegated collateral

package

ratinG aGency

g Pool level rating based on market condition of the underlying collateral

VaLuation serVices ProViders (AMCs, AVM

providers)

g Interoperability for appraisal audit automation, validation to lender requirements

the

MISMo®

fact sheet

MISMO® (Mortgage Industry Standards and Maintenance Organization) is an open data

standards group that:

g Promotes consistency among mortgage transaction participants by providing common definitions

g Reduces processing costsg Increases transparencyg Boosts investor confidence in

mortgages and real estate as asset classes

g Dedicates standards for the development, maintenance, and promotion of data standards for both the residential and commercial real estate finance industry

g Develops a comprehensive, consistent and repeatable framework of common data elements that facilitates innovation in services and technology

MISMO® Property and Valuation Services Workgroup volunteers are:g Seasoned appraisers (from both the

field, intermediaries and lenders) g Collateral Policy representatives from

lenders, investors and the GSEsg Technologists (appraisal software

providers, management platform providers, MLS organizations, etc.)

Open Standards Defined:

g The standard is governed by a formalized, not-for-profit organization

g The governance process provides stewardship and transparency, enabling trust in the data and facilitating interoperability between multiple constituents >>

48 | LVM

appraiser independence, effectively created additional costs for borrowers and prevented many appraisers from doing work through third-party vendors. I’m not 100 percent sure this is a true example of blacklisting, but I do know that it is an unintended consequence of HVCC.

Now that you understand the difference between the terms ineligible and blacklist, what should you do if you discover that you’ve been blacklisted or placed on an industry participant’s ineligible list? The first thing you need to do is contact the entity whose list you’re on, professionally request information as to the reason why, request the opportunity to resolve the issue, then work with the entity to resolve your problem. Unfortunately, it can be much more difficult than it sounds for many reasons, including an industry participant’s internal policy and confidentiality agreements, among others.

There is some good news for appraisers regarding this topic. Dodd–Frank and other legislation will prohibit an industry participant from placing an appraiser on an ineligible list without written notification of the action and providing the appraiser with the specific reason why, then giving the appraiser the opportunity to defend themselves. So going forward, blacklisting should be greatly reduced, if not eliminated, from our industry. I think that is a positive change for us appraisers and I welcome that change as a fee panel administrator. However, Dodd–Frank and other legislation regarding this topic are not retroactive.

If you are currently on an industry participant’s ineligible list, that entity is not required to revisit the issue, provide you notification, or give you the opportunity to defend yourself. It is your issue to resolve. Understand though that if you find yourself on an ineligible list in the future, or if you’re on one now, the lender probably has a darned good reason for it. You might just have to accept the fact that the industry participant acted appropriately, was within their rights, and you’re being treated reasonably for something you were responsible for. Being on an ineligible list, in most cases, is no one’s fault but the appraiser’s. 6

continued from page 35

g Strict antitrust and intellectual property policies are in place to ensure it is not encumbered by IP claims

g There are no fees associated with the use of the standard

g Discussion and participation is open to all via MISMO® Workgroup list serves and meetings (over 2500 listserv individual participants)

MISMO® PaVS Statistics:g v2.6 Errata Valuation Response

contains the data points on the GSE appraisal forms as of 2005

g V3.1 was created from all the data in version v2.6 plus the contributions of the Workgroup and contains hundreds of new and improved data points related to valuation and property information

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of MBA, MERS or the MISMO® organization or any members or sponsors. The MISMO® Property and Valuation Services Workgroup is an all volunteer effort. 6

thinGSappraisers see

From an aircraft parked on the front lawn to a run-in with a bear, appraisers come across many photo-worthy sights on a day-to-day basis. We are bringing back the section Things Appraisers See to feature your personal bear and aircraft moments.

So shoot us your photos at [email protected] or simply log on to our website to upload them under Things Appraisers See and look for them in an upcoming issue.


PRIDE. PASSION.

PROFESSIONALISM.

Relocation Appraisers & Consultants

RAC is a nationwide organization of Independent Appraisers who are trained professionals in relocation appraising.

What distinguishes RAC from all other appraisal organizations l Our exclusive focus on relocation

appraising and consulting.

l The majority of our organizational activities are devoted to education, research, and client outreach.

l Each of our select group of members is considered the relocation appraisal experts in their respective markets.

For more information visit our web site at:

www.RAC.net

ACI800.234.8727aciweb.com

Acorn Appraisal713.681.8878

acornappraisal.com

The Berger Company619.225.2225

thebergercompany.com

Buildfax877.600.2329buildfax.com

Gregoire & Gregoire727.344.3393

fl.living.net/realtor/gregoire

Global DMS877.866.2747

globaldms.com

Intercorp800.640.7601

intercorpinc.net

LANDY800.336.5422landy.com

LIA Administrators & Insurance Services

800.334.0652liability.com

MISMO800.646.6377mismo.org

SFREP800.523.0872

sfrep.com

Stage Capital, LLC202.640.8912

[email protected]

Relocation Appraisers and Consultants

972.658.9216rac.net

TSI Appraisal877.762.5342

tsiappraisal.com

US Bank612.973.2559usbank.com

Weichert Relocation Resources877.882.1290

wrri.com

Valocity, LLC612.235.5600valocity.com

DIreCTOrY

DIrectory 2

50 | LVM

Last week I had a toothache and went to the dentist. I have been there countless times over the years and he has always fixed me up. I knew the minute I called for the appointment that it would be like any other visit; my confidence in his abilities has never wavered and the start of the visit was status quo. As he poked and prodded at my teeth, he described with certainty what he saw, what it was and what could be done to cure it. “See,” he said, “you have a whatchamacallit on the left side of your mouth. I’ve read and heard about them and I have been wondering when I would see one.” “Great,” I said. ”You can get rid of it then. Good thing I called you.” “Well, not exactly,” the dentist said. That’s when the mood and my feelings changed. “You see, there’s a new tool that I need to be able to work around the sensitive gum area. I also don’t have the right equipment for the extraction I need to do after I work with the new tool. Sorry, I do specialize in this stuff; I just put off the purchase of the new equipment because I didn’t have a promise of steady patients who need the procedure. You understand, right?” he asked, “Ahh... yeah,” I replied. “I thought you could help.”

As I left the dentist’s office with a wad of cotton in my mouth, my cell phone rang. It was my plumber, who was sitting in my driveway. I had called him earlier in the day about my leaky sink. I raced home to let him in and he diligently started working on the pipes as the small talk flew back and forth. Then came the news: “Ah, I see the problem. You need a clamp here and bypass there.” “Great,” I replied. “How long will it take and how much will it cost?” I asked. “Well,” he said, “the bad pipe is rusted and the clamps I have are the old ones. They will fit but they may leak a bit.” I led him out to his truck and pondered my next move, wet rag in

hand, cotton in mouth. Not a good day, I thought. I am a disappointed customer twice today.

The Worldwide Employee Relocation Council came out with a new Summary Appraisal Form in late 2010 for use in 2011. Like the FNMA form, the changes in the market warranted a better way to report the analysis. The form was revised from an earlier version, and the revisions where done via user group interfaces with a task force of subject matter experts. The form is not all things to all people but it is this: a new industry tool. Users (clients) of appraisal services see and hear about these tools. By logical extension users expect the latest and would rather not hear that you “know what you are doing.”

Having the latest and greatest tool says something about you as a professional. There are a lot of things forced on appraisers that are negative and outside their control; this is not one of them.

Just for the record, it should be noted that it is the appraisal (development) that makes the appraisal, not the form. The point is that every professional should have the right tools at the right time. We do all we can when we update a resume to make ourselves attractive from a business perspective. In an industry that has a large share of unintended and misinformed users, image is critical. When you look in that toolbox, no one really cares about why you don’t have the right tools, they just know you don’t have them. 6

JosephPalumbo,

SRA

The Right Tools at the Right Time

FOr WHaTIT’S WOrTH

for WHat It’s WortH }

}


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• Workflow Management

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CompLawsBleed.qxp 2/11/2011 3:51 PM Page 1

ACI and its products are trademarks or registered trademarks of ACI. | Copyright © 2010 ACI | Other brand and product names are trademarks or registered trademarks of their respective owners.

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