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In part two of our Q&A with Jacquie Doty, vice president of Collateral Solutions for CoreLogic, we talk appraisal review, quality assurance and the ever-changing landscape of appraisal regulation. 

Valuation Review: Many of the UAD errors are first seen by the lender or appraisal management companies. How do you see this impacting appraisers?

Doty: Appraisers will now have to take even greater strides to avoid making UAD errors in the first place, since fatal errors on an appraisal report could slow down the lender’s ability to sell and transfer a loan to the GSEs and could potentially cost the appraiser future assignments from a lender or AMC. It is possible that lenders will begin to track instances in which appraisers did not comply with UAD requirements and the loan sale was delayed. Ultimately, this could result in a shift in the amount of work to appraisers who have shown they consistently produce UAD-compliant appraisals. Of course, it’s in appraisers’ best interests to produce a UAD-compliant appraisal, as re-work is also costly for the appraiser. Appraisers can research companies that can provide tools to assist them in completing UAD-compliant reports, perhaps by alerting the appraiser when UAD fields are out of compliance.

Appraisers have a lot to keep up with. The valuation industry is an evolving landscape of rules, regulations, new technology and changing business models. And then there are the government-sponsored enterprises Fannie Mae and Freddie Mac, who have their own rules, regulations and technology. The government-sponsored enterprises’ (GSE) mortgage putback rules are complicated and consequential. Many might think repurchase requests based on the appraisal are due to under or overvaluation, when in reality they are primarily due to the comps selected. Valuation Review reached out to Jacquie Doty, vice president of Collateral Solutions for CoreLogic, on the impact of the GSE mortgage put-back rules to find out how increased appraisal transparency might help the issue.

In the first part of our interview with Christopher Cash, senior operations manager at Envoy Mortgage, a mortgage bank based in Texas that has branches across the country, we talked about the consolidation of appraisal management companies (AMCs) and the relationship with appraisers. In this part we tackle customary and reasonable appraiser fees and appraisal report quality assurance.

The most common way appraisers can limit their personal liability is through the purchase of “errors and omissions” (“E&O”) insurance.

Generally speaking, an E&O policy will cover a claim asserted by a lender where the appraiser fails to comply with the standard of care in rendering the opinion of value. Additionally, in states that allow claims directly by a property owner, an E&O policy typically insures those claims as well. The indemnity provision however, may create a hurdle where a property owner sues the bank and the bank, in turn, sues the appraiser. A common provision in E&O policies excludes claims arising out of a contract. A relatively common exclusion provides that the policy will not cover claims: [b]ased on or arising out of liability assumed by the named insured under any contract or agreement, unless such liability would have attached to the named insured even in the absence of such contract or agreement. 

Location, location, location near public transportation may be the new real-estate mantra according to a new study released  by the American Public Transportation Association (APTA) and the National Association of Realtors (NAR). Data in the study reveals that during the last recession, residential property values performed 42 percent better on average if they were located near public transportation with high-frequency service. 

Housing performance in February continued to steadily improve as it has in prior months with an increase in home prices and a decrease in foreclosures, despite a decrease in sales, according to a monthly Property Intelligence Report (PIR) from DataQuick, a provider of advanced real estate information solutions powered by data, analytics and decisioning. The PIR noted that housing markets hit hardest by the market downturn — Arizona, California, Florida and Nevada — have experienced a rebound in home prices that has not yet been experienced in the rest of the country. Home price growth in those states exceeded 10 percent over the last year, while remaining market rates hovered around 2.5 percent. 

The Appraisal Standards Board (ASB) has adopted its proposed revisions to Advisory Opinion 13 (AO-13), Performing Evaluations of Real Property Collateral to Conform with USPAP, The Appraisal Foundation reported. The updated AO-13 became effective upon adoption on March 27, since it applies to the 2012-13 edition of the Uniform Standards of Professional Appraisal Practice (USPAP).

CoreLogic released its National Foreclosure Report for February that provides data on completed U.S. foreclosures and the overall foreclosure inventory. According to CoreLogic, there were 54,000 completed foreclosures in the U.S. in February 2013, down from 67,000 in February 2012, a year-over-year decrease of 19 percent. On a month-over-month basis, completed foreclosures fell from 58,000* in January 2013 to the February level of 54,000, a decrease of 7 percent. 

The Consumer Financial Protection Bureau (CFPB) released several important rules in January, including a pair of appraisal-related rules setting forth some new obligations for lenders. John Redding, a partner with Buckley Sandler LLP, discussed key aspects of the new rules during the recent Independent Community Bankers of America Convention and Techworld in Las Vegas.

The CFPB released issued two final appraisal rules on Jan. 18, 2013. One of the rules implements Dodd-Frank amendments to the Equal Credit Opportunity Act (ECOA) and Regulation B, while the other sets forth new appraisal requirements for high-priced mortgage loans under the Truth in Lending Act and Regulation Z. The latter rule was issued jointly by the CFPB, Federal Reserve, Federal Deposit Insurance Corp., Federal Housing Finance Agency, National Credit Union Administration and the Office of the Comptroller of the Currency  

Redding noted that both rules will take effect on Jan. 18, 2014. 

Lender Processing Services Inc., provider of integrated technology, data and analytics to the mortgage and real estate industries, reported the following first look at February 2013 month-end mortgage performance statistics derived from its loan-level database representing approximately 70 percent of the overall market.

CoreLogic reported that the overall shadow inventory is down 28 percent from its peak in January 2010, when it reached 3 million homes. Current residential shadow inventory as of January 2013 was at 2.2 million units, representing a supply of nine months. This figure represents an 18-percent drop from January 2012*, when shadow inventory stood at 2.6 million units. 

Bradford Technologies Inc., developer of interactive valuation analytics for appraisers, launched CompCruncher 3, the third generation of the technology that introduced statistical analysis into collateral valuations with the highly acclaimed valuation product, Collateral Valuation Report (CVR). CompCruncher 3 introduces several industry-first innovations, including seamlessly incorporating statistical support into traditional appraisal products and auto-generating appraisal reports, such as the 1004, with a single click. CompCruncher 3 is the industry’s first computer-aided appraising technology. 

Veros’ future home price index (HPI) forecast continues to show significant strengthening and improvement. The HPI indicates that, on average for the top 100 metro areas, Veros expects 2.2 percent appreciation over the next 12 months. This is the third consecutive quarter where the index has shown forecast appreciation. As of this forecast update, 75 percent of U.S. markets are expected to see appreciation, while 25 percent of the markets are expected to experience declining home prices. 

Earlier this week, Accurity Valuation announced that it had spun off appraisal management company (AMC) IRR-Residential to form a new franchise of appraisal firms. To find out more about this move, Valuation Review reached out to Tom Munizzo, former IRR-Residential chief appraiser and compliance officer and now president of Accurity Valuation.

Valuation Review: Thanks for taking the time to talk to us, Tom. This is an exciting move. What prompted the decision to move to a staff-appraiser/appraisal firm model from an AMC model?

Munizzo: Maybe I should clarify what’s happening ...

VRM Mortgage Services, a real estate solution provider focused on helping financial institutions adapt and excel in a changing marketplace, announced the creation of its locally-sourced property preservation panel. Launching in seven cities with discounted certification events, local companies will be asked to provide comprehensive initial and ongoing preservation and maintenance services in the marketplaces they currently serve. The initiative will launch in Jacksonville, Fla., on March 23 with additional certification events during April and May in Raleigh, N.C.; Carrollton, Texas; Detroit, Mich.; Tucson, Ariz.; Hampton, Va. and Atlanta, Ga.

The Appraiser Qualification Board issued the Second Exposure Draft of Proposed Interpretation and Revision to the Real Property Appraiser Qualification Criteria with the goal to promote and maintain a high level of public trust in appraisal practice by establishing minimum education, experience and examination requirements for real property appraisers.

Lee & Associates Valuation and Consulting Services, a new service line of commercial real estate firm Lee & Associates, has announced the opening of its Chicago office. The office is headed by Christopher Myers, MAI, with Nicholas Cipriano, both well-known and respected veterans within the appraisal industry.

When the National Association of Home Builders (NAHB) released a white paper that determined “serious problems in the residential appraisal process must be addressed in order to restore confidence in the residential real estate market and to establish a foundation for sustainable growth of the U.S. economy,” it didn’t take long for appraisers to speak out against that opinion. It was the latest assault on appraisers who have seen their fair share of blame and potshots. Still a month after the release, the conversation continues. Valuation Review talked to Alice Sorenson, chief investment officer of LRES, an appraisal management company based in Orange, Calif., about the NAHB slant, what’s really going on in the appraisal industry and how we can work together to solve the problems we actually have. 

“Everyone seems to think that appraisers have a magic wand that’s going to fix the industry. It’s been going on for quite a long time,” Sorenson said. “This white paper is really a persuasive paper. The NAHB is busy trying to convince someone of their position. They’re only presenting their version of their side of it. The paper alleges that there are serious problem within the appraisal and housing industries. I think this is an industry problem. It’s not just restricted to the appraisal industry.”

IRR-Residential, a national leader in real estate appraisal services for lenders and attorneys with franchise offices nationwide, has spun off from Integra Realty Resources and changed its name to Accurity Valuation. The company, which operates as a franchisor, will continue to render its services to customers through an expanding nationwide network of franchise and member appraisers, thereby giving experienced valuation professionals an alternative to working for an appraisal management company (AMC).

Homeowners who are considering property tax appeals should be prepared with all the necessary information, said the nation’s largest professional association of real estate appraisers. As many U.S. homeowners begin receiving their local property tax bills, the Appraisal Institute offered suggestions to make the appeal process easier, particularly in working with assessors.