With over 40 years of experience attached to his appraisal resume, Greg Stephens has become a nationally recognized expert on many valuation-related topics ranging from compliance monitoring, consulting and training of staff appraisers, independent fee appraisers to matters dealing with underwriters and support staff for lenders, AMCs, credit unions and appraisal firms.
Recently, Stephens broadened his vast horizons by launching his own consulting firm GE Stephens Compliance Consulting and Training. It offers specific services such as vendor management consulting, forensic valuation/appraisal report audits, fair housing compliance consulting, USPAP instruction and compliance training, USPAP training for non-appraisers as well as expert witness / litigation consulting.
Stephens’ background includes ownership and management of a regional appraisal firm in Northern California, serving 10 years in financial institution valuation QC (quality control) and compliance monitoring, while serving as a USPAP instructor for over 25 years, chief appraiser of a national staff appraiser firm and chief compliance officer of an appraisal management company (AMC).
His professional affiliations and credentials seem to have no end, including from organizations such as the Appraisal Institute, The Appraisal Foundation, the Distance Education Accrediting Commission, National Association of Appraisers and the Society of Corporate Compliance and Ethics.
The industry veteran can also be found speaking at numerous conferences, lending his expertise to many attendees.
So, for the man with such a diverse background, we wanted to hear how he intends share his compliance experience and training with those involved in real property valuations, lending, and investing. We asked what was the driving force behind forming a company offering compliance consulting and training at this time?
“First, it’s great to be talking with Valuation Review again, and that is an excellent lead-off question,” Stephens said. “Compliance laws and regulations have not been diminishing over time, but instead, have been increasing at the state as well as federal agencies. This, in turn, has increased the compliance challenges for virtually everyone involved in mortgage lending and real property valuations, including appraisers, appraisal firms, appraisal management companies (AMC)s, mortgage lenders, credit unions, to name a few.
“Having worked with and provided training to many of these market participants for decades, I recognized a need for personalized compliance advice and training, especially at a time of market contraction and belt-tightening/budget cuts,” Stephens added.
As to the specific services Stephens will be providing to those seeking valuation assistance, he told us that as the firm name indicates, the focus is on providing compliance advice and training - to AMCs, appraisal firms, credit unions, mortgage lenders and to individual appraisers. There is a great deal of attention and concern right now around fair lending compliance, accusations of racial bias and potential reputational risk for non-compliance, the veteran appraiser noted.
He also told us he has been dealing with this issue for years in terms of having a breadth of knowledge and experience relating to a personal website that can be shared with appraisers, AMCs, mortgage lenders and credit unions to ensure compliance and mitigate reputational risk. Stephens’ services also include assisting in responding to complaints and allegations of non-compliance that he is seeing an increase in across numerous spectrums including social media.
“Compliance audits by state appraiser regulators are a concern for AMCs and lenders with appraiser panels,” Stephens said. “We can provide a review of policies and procedures to ensure compliance ahead of an audit. We can also assist state regulators and lenders with designing a comprehensive audit protocol if they do not have one in place or wish to update existing procedures.
“Initially, the responses have been extremely positive, validating my decision to move in this direction,” he added. “Appraisers are primarily concerned with USPAP compliance. One of our services is reviewing appraisal reports and workfiles, providing feedback on areas that could be of potential risk if audited by a state regulator, as well as improving work products in general to reduce ROVs or potential racial bias complaints and keeping current on the ever-changing lender guidelines.”
We also discussed current areas of valuation appraisers are seeking the most guidance on. Stephens acknowledged that what he is hearing at conferences and meetings are concerns around the recent ANSI requirements from Fannie Mae, expansion of desktop and hybrid appraisal products by the GSEs and contractions in mortgage lending volume. Stephens’ new services include guidance and training in each of these areas.
Recently, The Appraisal Foundation’s ASB (Appraisal Standards Board) came out with its Third Exposure Draft seeking comments about modifications made to the ETHICS RULE; in particular, the adding of a Nondiscrimination section. Stephens shared his thoughts on this matter, as well.
“I am actually on a task force of AQB (Appraiser Qualifications Board) certified USPAP instructors who have been providing feedback to The Appraisal Foundation ahead of the recommended changes to the Ethics Rule,” he said. “Appraisers will tell you USPAP already requires appraisers to be ethical and not be biased when providing services as an appraiser but there are instances of borrowers ‘white washing’ their home and receiving a higher value appraisal than they received prior to the white washing. That is problematic and a genuine concern to every appraiser I talk to and the public in general on the subject.
“The recommended addition to the Ethics Rule in the Third Exposure Draft does increase compliance awareness for appraisers,” Stephens added. “The Competency Rule requires appraisers to be aware of and comply with laws and regulations applicable to an assignment without naming any specific statue(s) or regulation(s), either at a local jurisdiction, state, or federal level. The Third Exposure Draft specifically references the federal Fair Housing Act and the federal Equal Credit Opportunity Act (ECOA) as antidiscrimination laws that an appraiser must be knowledgeable about and fully comply with. If any practicing appraiser has not reviewed and ensured compliance with these federal requirements in the past, it will be necessary if the current language in the Third Exposure Draft is adopted as written. This is a positive change, for appraisers and the public.”
Whether or not enough is being done in terms of drawing new people into the appraisal profession, Stephens told us that in reality, he does not see a “short-term change.”
The ability of the appraisal profession to successfully attract and credential new entrants into the profession to meet the market demand fluctuations, he went on to say, continues to be “ineffective” under the Supervisor/Trainee model. This was especially evident during the 2020 and 2021 surge in purchase and refinance volumes that stressed many markets with extended turn times and appraiser burnout.
Although PAREA (Practical Applications of Real Estate Appraisal) was adopted by The Appraisal Foundation in January 2021, to date no provider has completed the necessary approval process through the AQB with a program that aspiring future appraisers can utilize to complete the required experience hours to quality for their state credential, the chief appraiser added.
There is, though, some possible relief on the horizon.
“On Aug. 24, the Mississippi Appraisal Board, in collaboration with Mississippi appraiser and program developer Melissa Bond, conducted a graduation ceremony in Jackson, Miss., for 17 trainees who completed a nine-month training program approved and funded by the Appraisal Subcommittee,” Stephens said. “Jim Park, executive director of the ASC (Appraisal Subcommittee) was in attendance and has been very supportive. This is the first of its kind in the country and might well serve as a model for other states to adopt, which could certainly increase the number of trainees completing the required training but is still no short-term solution. Until most or all of the states have such a program, we remain reliant upon the current Supervisor/Trainee model.
“We are also experiencing some degree of short-term relief due to the market contraction impacting both purchase and refinance loans, expanded use of appraisal waivers, desktop and hybrid appraisals,” Stephens added.
Finally, we wanted to know if the industry providing enough education and training for those seeking entrance into the appraisal profession?
“Over time the industry has experienced a reduction in the number of education providers offering qualifying education courses,” Stephens said. “This has proven problematic for those individuals attempting to satisfy the required hours of qualifying education – 75 hours for trainee, 150 hours for state license credential, 200 hours for certified residential credential, (which can be accomplished by satisfying a combination of education requirements), and 300 hours of QE and a bachelor’s degree from an accredited university are still required for the certified general credential.
“I do not foresee an increase in demand for appraisal education that would attract additional providers entering the market, so I anticipate the market will continue to be serviced by the few providers in existence today,” he added. “However, the expansion of online / virtual classroom education has expanded the accessibility to some degree and will in all probability continue to increase over time. This is proving to be beneficial for appraisers and trainees located in rural / remote locations that otherwise have been constricted by distance to attend in-person courses.”