FNMA Announcement 08-30: Use of supervisory appraisers

[Marco Ruiz]

Is it the general consesus among the cooler gang that this updated policy requires the supervisor to inspect every property and that a trainee cannot do an inspection on his own?

If that is true, do you think this is ultimately good for the industry, for supervisors who rely on trainees and for the trainees themselves?

[Cynthia]

Hi Marco

I had to read that section a couple of times. The part I am refering to is "This policy is updated to now require that if a supervisory appraiser signs the appraisal report as the appraiser, the supervisory appraiser must have performed the inspection of the subject property." Note the IF. I agree not clearly written. I read that if the supervisory appraiser is signing as reviewing they would not have to have done the inspections but if they are signing as THE APPRAISER then they do have to do the inspection. Clear as mud. Maybe someone else got a clear read on this.

[Marco Ruiz]

Hi Cynthia,

I read it the same way you do. But if you go to The Scoop and read Patrick Egger's article on it look at the comments at the end of the article. It seems that FNMA defines the "appraiser" as someone who is either licensed or certified and that FNMA has, at least since FIRREA, had required that all appraisals be completed by the "appraiser". This policy change therefore "closes a loop hole" created by state laws that allowed trainees to do inspections and complete appraisals without the supervisor inspecting the subject or the comps. Which means that now the supervisor will have to inspect every property appraised by a trainee. That's not the way I read it but it's evidently the it is being interpreted by some. I'd like to hear further discussion on this because could have a huge impact on a lot of trainees out there.

[Cynthia]

Hi Marco

Well I am sure my opinion will be unpopular with many but I think it would be a good thing. Too many trainees have no idea how to inspect a home or what to look for and have gotten very little training from the "supervising" appraiser. An appraiser with many trainees as in the past could not and did not do anyone a service, we ended up with untrained trainees that did not realize what they didn't know. Our industry does not need alot of trainees at this point so why have such lax standards? If we are to be a profession we should behave as professionals.

[Marco Ruiz]

Patrick Egger expressed similar feelings on The Scoop. I agree that trainees need to be trained and many tranees were never properly trained. That is a problem that needs to be addressed. I'm not sure this is the way to do it. When I got into the business I rode with my supervisor for about 3 months. I started off holding the dumb end of the tape and over time he taught me how to measure, take notes, choose and inspect comparables and so on. At some point though a trainee learns everything they can from their supervisor going with them on inspections. They have to be able to go out and do it on their own. Eventually I was completing the report from start to finish with my supervisor reviewing my work, though I still continued to be only a registered (trainee) appraiser. It took a little over two years for me meet the states requirements to qualify for certification. Had my supervisor had to go with me on those hundreds of inspections I did over that 2+ year period I'm sure he never would have hired me in the first place. When supervisors around the country learn that they will have to ride with their trainees on every inspection a lot of trainees are going to be out of work come January 1.

[Cynthia]

Hi Marco

Yes this is an interesting topic. The trainees I trained I went on all their inspections and after a few months I was the one "going along" and let them do it as if they were training me. Yes a hassel but I felt it was my license on the line signing on the reports and my responsibility to make sure they didn't miss things in the field. I'v been appraising for over 16 years and still run into things in the field I'v never seen before so how can we expect someone with a couple of months of training to know what to look for? And I'v heard as I am sure we all have of some folks that were luck if their "trainer" went out on any inspections with them, basicly told them what to do and sent them out in the field, yikes!

[Marco Ruiz]

Hi Cynthia,

Please take a look at the back-and-forth between Patrick and me in the comments following his article on The Scoop. Tell me what you think.

Thanks

[Cynthia]

Interesting. Times have changed alot for trainees. I was working this business when licencing came into effect, back then the individual lender decided if they took trainee work or not. I worked later for BofA and they had trainees on staff that did inspections on their own and the report but was reviewed by the manager. It looks like the appraiser will have to inspect all properties. The lenders I have been working with all have required that all along. I'm out here in Calif and have seen many appraisers have trainees and they sign their jobs as having inspected when there have never been to the property, think this will change their ways? There was an appraiser in Redding that had "trainees" all over Calif and he signed their jobs as having inspected the property - wow one busy guy. The rules are for the folks that play by them and the other folks seem like they have to be caught before they will change. Unfortunately if the rules we have were inforced much of the mess, HVCC etc would not have been necessary.

[Lucia Goheen]

Here in Oregon a trainee was doing inspections and reports by herself and the supervisor with an Oregon license was signing them while located in California. When the trainee called looking for another supervisor, I notified the OR licensure board about him. I concur, that some folks will do whatever they can get away with. However, discipline from this state board is only a slap on the wrist.

[Patrick Egger]

To all, you just cant read the 08-30 announcement, you must also read the Fannie Mae Guidelines it refers to, See my comments from The Appraisal Scoop below:

I think Fannie’s position was clouded by XI, 101.03: Use of Supervisory or Review Appraisers (12/17/02) as appraisers only read that section (Supervisory Appraisers).

Take a look at XI, 101.01: Licensing and Certification Requirements (06/30/02) which precedes section 101.03 and requires the following:

“When a new appraisal is required for a mortgage that a lender delivers to us, the lender warrants that the property has been appraised by a state-licensed or state-certified appraiser. Our appraisal report forms define the appraiser as the individual who personally inspected the property being appraised, inspected the exterior of the comparables, performed the analysis, and prepared and signed the appraisal report as the appraiser. This definition does not preclude an appraiser from relying on individuals who are not state-licensed or state-certified to provide significant professional assistance (such as an appraiser trainee or an employee of the appraiser doing market data research or data verification) in the development of the appraisal”.

From my read of both, Fannie has always required the “appraiser” (signing on the left) to be licensed and to inspect the subject, comparables, etc. It does not preclude trainees assisting, but it does preclude supervisors not inspecting if the appraiser was not licensed per FIRREA.

It is my read that Fannie recognized the confusion (as a result of many reviews, problems, etc.) and is now clarifying the position that they have held and that has been in their guidelines for some time. The “appraiser” must be licensed, must inspect the subject and comparables, prepare the report, etc.

Just my read on this ... thanks for the comments.

[Kevin P Malone]

Again we have a GSE (FNMA) writing federal regulation while they are under conservatorship. Actully the FNMA and Freddie never had the right to write regulations under Firrea. It is the job of Congress and HUD which still have to abide by the rules of the Administrative Procedure Act or (APA) and give notice of a pending regulation and have a 90 day comment period from all who are affected by said regulation. This part was cut short when HVCC came around. Thats not legal. The FNMA will eventually be broken up as it should have been years ago and sold off. Why in gods name is James B Lockhart the Third allowing any regulation to come into effect without the ok and investigation by the new incoming administration. A federal Judge should issue a cease and desist order to the (GSE's}. And let the dust settle.

[Cynthia]

Now is the time to be heard. We have a better opportunity to have the ear of our legislators now than ever before. Our industry is part of the "HOT BUTTON" of this economic meltdown/recession/nonrecession what ever you want to call it. If we all write our legislators with our concern about the AMC's, BPO's etc we can make a difference. This site is a fantastic opportunity for us to start a grass roots movement to make our industry better and stronger. Get together with your local appraisal organization and start writing letter that clearly state the concerns of what you are experiencing and seeing. We grip here so lets take it to the next step and make a positive move to make a difference. Why now? Our legislators and not sure what to do with this mess either and we have vital information they need who better to inform them?

[Ralph R Valencia III]

I am a firm believer in training our competition, but training them to be our replacements, not to increase wealth. If you train an appraiser well enough, he will have all the skills and knowledge to do the job in our succession. I was a trainee in the beginning and i was not trained properly by my first 2 mentors. I have seen a number of appraisers not trained properly in the same light and part of that led to the problems we face now with a surplus of appraisers and improperly trained ones. And they are the ones leading the pack and the bad face of appraising as they are still accepting hard work for little pay. They are the ones making harder for us to make a living.
I would say that i personally dont think its appropriate for most appraisers being trained by 'lender appraisers' in the residential side to go out on their own until they have received their license. At the same time, i dont think it fair to pay them so much for a lifetime of education on procedure and policy in appraisal. For those appraisers working with certified general appraisers, they have a bit longer time frame and may be, at the direction of the supervisor appraiser, go out on his own. Too many times have i seen though, where the trainee comes across those unique properties and the supervisor is too lazy or busy to go out and see for himself. And there are a lot more 'hard' appraisals to warrant the supervisor going out on every inspection. Some appraisers will not agree with me, but I have trained at least 10 appraisers, the first few as blind leading the blind. The last 3, I took them out on every inspection, and taught them, and continue to teach them eveyrthing i know. And they are completely loyal to me for it.

Any other thoughts?
-Ralph