Monthly Archives: May 2016

Register Online For ICAP’s Springfield Summer Seminar

The agenda for ICAP’s 2016 Collinsville Seminar is as follows, register here.

Agenda:
8am-8:30am – Registration and Continental Breakfast
8:30am – 8:45am – Welcome & Introductions from 2016 ICAP President, Mike Morris, ARA, MAI
8:45am – 9:45am – Federal & State Legislative Update with Scott DiBiasio, Appraisal Institute Manager, State & Industry Affairs
9:45am-10am – Break
10am – 11am – Agricultural Land Trends, Paul Stoddard, ACE, University of Illinois
11am – 12pm – Putting the MLS to work for you with Dan Sale, CEO Capital Area REALTORS and
Cathy Wagner, Director of Capital Area REALTORS Multiple Listing Service
12pm – 1pm – Hot Lunch at the Hotel – salad, entrée, and dessert
1pm – 2pm – National Appraisal Issues & Updates from Dennis Badger with Farm Credit Mid-America
2pm – 3pm –  Lessons from Llano – a Review and Reflection on Mass Litigation in the Appraisal Industry from Craig Capilla with the Franklin Law Group
3pm – 3:15pm – Break with cookies
3:15pm – 4:15pm – Regulatory Update with Brian Weaver, Appraisal Coordinator & AMC Coordinator, Illinois Department of Professional & Financial Regulation
4:15pm –  4:30pm – Closing remarks

SPEAKERS:  
Craig Capilla
Daniel Sale and Cathy Wagner
Dennis Badger
Paul Stoddard
Scott DiBiasio

Register today

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ICAP Attended The 2016 AARO Spring Conference

On behalf of ICAP, Ken Mrozek, MAI, SRA attended the Appraiser Qualifications Board (AQB) Public Meeting and Association of Regulatory Officials (AARO) 2016 Spring Conference.  This year’s spring conference was held April 8-10 at the Hyatt Regency Downtown in Phoenix, Arizona. It was attended by representatives from the TAF, ASC, AQB, APB, ASB, ,OCC, several AMCs, AI, ASFMRA, NAIFA, State Coalitions (including Illinois, Ohio, Arizona) as well as many state regulator departments.

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Topics of discussion at the conference included:

  • Updates from TAF, ASC, AQB, APB and ASB
  • Definitions and Differences Between Appraisals and Evaluations
  • Background Checks – Update
  • Safety Tips for Those Dealing with Complaints
  • ASC Oversight and AMC Final Rules
  • Customary and Reasonable Fee Survey
  • AMC Appraiser Panel – The Inside Story of Appraiser Selection and More
  • Alternative Valuation Standards
  • AMC Legislation Discussion

Additionally, time was allocated to various Break Out Sessions, meetings included: AMCs & Professional Organizations, Board Members, Investigators, Administrators and Attorneys, and Industry Representatives. The following is a summary of the discussions as presented by the various presenters and discussion panels.

Appraiser Qualifications Board (AQB) Public Meeting

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Joseph C. Traynor, Chair of Appraisal Qualifications Board (AQB), AQB Public Meeting

The AQB held a public meeting prior to the start of the AARO Conference from 9:00 am to 12:00 pm (agenda). Reports were given from the various The Appraisal Foundation (TAF) boards, including TAF, ASB, APB, and ASC. The reports were shorter versions of the reports and discussions given during the AARO Conferences. And so, most information covered in this meeting is addressed later in this report. Information covered in the AQB Public Meeting which was not covered in AARO Conference Notes, includes:

  • Agenda (click here)
  • National Exam Statistics (Pass Rates)
    • AQB stated exam pas rates have remained stable since 2008 and are satisfied with the pass rates
  • Discussion on Shortage of Appraisers centered on article (click here) by David Bunton in Appraisal Buzz
  • There was a period of time allowed for public comment.

Association of Appraiser Regulatory Officials (AARO) Conference

Suzy Gardner, Certified Fraud Examiner, FDIC spoke on Appraisals and Evaluations

  • Presentation (click here)Appraisals – FDIC Expectations
    • Written
    • USPA Compliant
    • Contains sufficient information
    • Analyze Deductions and Discounts for Construction Projects
    • Contains an estimate of market value
  • Evaluations – FDIC Expectations
    • Does not need to be USPAP Compliant
    • Must provide a credible value conclusion
    • Individual preparing evaluation must be competent
      • Possess RE training/experience
      • Independent of transaction
      • Provide support for determination of market value
    • An Evaluation per Agencies’ Guidelines provides an estimate of market value
  • FDIC does not prevent an Real Estate Appraiser from completing an Evaluation
    • An appraiser completing an Evaluation
      • It is an appraisal
      • It must comply with USPAP
  • FDIC only requires an appraisal for a small percentage of transactions (Federally Regulated Transactions – FRT)
    • Reported that in 1994 only 4% of all Real Estate Transaction required the services of a RE Appraiser (over $250,000).
    • Today only 12% of all Real Estate Transaction require the services of a RE Appraiser (over $250,000)
    • If the threshold is raised to $400,000, then only 6% would require a RE Appraiser
    • If the threshold is raised to $500,000, then only 4% would require a RE Appraiser
    • Noted the amount of transactions which have appraisals complete is significantly higher than what is required

David Bunton, President of The Appraisal Foundation (TAF) gave an overview on TAF Activities

  • Presentation (click here)
  • Appraiser Regulator Town Halls
  • On-line Courses for State Regulators
    • 4-Hour Online USPAP Course for state regulators is now available
  • Investigator Training (Levels I, II, & III): St. Louis, MO
  • Legislative Activity on Standards
  • 25th Anniversary, Appraiser Regulatory System

Jim Park, Executive Director of the Appraisal Subcommittee (ASC)

  • Presentation (click here)
  • ASC Oversight of State Appraisal & AMC Programs
    • Certification and Licensing of Appraisers
    • Registration and Supervision of AMC’s
    • 55 States & Territories Rated (10 Excellent, 31 Good, and 14 Needs Improvement)
  • ASC Monitoring & Review of Appraisal Foundation
  • What is an FRT? – Title XI FIRREA defines
  • ASC Maintains National Registries (Appraiser/AMC)
    • 97,500 credentials
      • 39,400 Certified General
      • 50,000 Certified Residential
      • 8,300 Licensed
    • Trainees
      • 9,000 to 10,000 (not tracked by ASC, estimated)
  • Unique Identification Number (for each appraiser)
    • Developed application and interface
    • Currently in State Testing
    • Roughly 6 – 12 months voluntary adoption period
    • Initiate rulemaking if needed in 2017
    • Number would only be used between state and ASC

Rick Baumgardener, Chair of Appraisal Practices Board (APB)

  • 6 Valuation Advisories Adopted
  • 5 Valuation Advisories Under Development
    • Collection and Verification of Residential Sales Data Used in the Sales Comparison Approach
    • Collection and Verification of Data Used in the Sales Comparison Approach for Non-Residential Properties
    • Valuation of Green & High Performance Property – 1 to 4 Unit Residential
    • Valuation of Green& High Performance Property – Commercial, Multifamily and Institutional
    • Valuation for Financial Reporting (VFR)
  • Investigating Potential Future Advisories
    • Discounted Cash Flow Analysis (DCF)
    • Retrospective Value Opinions
    • Prospective Value Opinions

Joe Traynor, Chair of Appraiser Qualifications Board (AQB)

  • Discussion Draft – Potential Areas of change in the Real Property Appraiser Qualification Criteria Areas of discussion include:
    • Alternative Track for Licensed Residential to Certified Residential
    • Enhanced Practicum Curriculum
    • Documenting Alternative Experience
    • “Trainee” Nomenclature
    • Three-Year Supervisory Residency Requirement
  • USPAP Q&A Updates
    • 1st Exposure Draft for 2018/2019 USPAP Expected to be out in April
      • Proposal to “Draft” Report concerns
        • Looking for feedback
        • Won’t be tied to completion of assignment
        • Will be tied to signed certification
        • Drafts must be clearly and conspicuously identified
        • If trying to send work results in draft, could be an ethics violation
        • Record keeping – record of all reports must be in work file
    • Clarifying Term “Assignment”
      • Valuation service the appraiser provides
      • Turnaround time is a contractual agreement, not a USPAP violation
      • Assignment guidelines like Fannie Mae Guidelines violations are USPAP violations
      • Assignment conditions that apply to scope of work are subject to USPAP compliance

Background Checks Panel

  • Debra Rudd, Division Manager, Real Estate Appraisal Division
    • Arizona started Background Checks in 2007
      • Trouble understanding criminal terminology & equivalencies of “Rap Sheet”
      • Board wasn’t able to look at Rap Sheet, but had to approve or deny
      • Training of staff & board members difficult
        • Regular turnover
        • Confidentiality was troublesome
          • 1-2 people could open envelope
          • Kept in separate locked cabinet
        • Tried “clearance card”
          • FBI database not always updated
          • Some appraisers already approved of offense, but flagged on Rap Sheet
  • Kristen Worman, General Counsel, Texas Appraiser Licensing & Certification Board (TALCB)
    • TALCB Slide Set (click here)
    • Criminal History Checks in Texes (since 2007)
    • TALCB Working Group – Appointed in 2015
    • Recommendations & Lessons Learned
      • Fingerprint Background Checks on all existing and applicants
      • Fingerprints required only on the first background check
  • Tim Doyle, Senior VP, Conference of State Bank Supervisors discussed the NMLS System, slide set (click here). It is available to State Regulators as a method to track their Appraiser licensees. It tracks pertinent data, including licenses, education, and discipline. It is also compliant with 2017 background check requirement. Their systems are an approved channel for the FBI national database, required for proper background checks. Submitted background checks are received back in 2 to 12 hours.

Review of AMC Rule, Jim Park, Executive Director of ASC & Alice Ritter, ASC General Counsel

  • What is an AMC?
    • Within a given year, oversees a network or panel of
      • More than 15 certified or licensed appraisers in a state, or
      • 25 or more nationally
      • Recruit, select, and retain appraisers;
      • Contract with licensed or certified appraisers to perform appraisals;
      • Manage the process of having an appraisal performed, including providing administrative duties; or
      • Review and verify the work of appraisers.
  • Participating State Authority
    • Register and renew AMC registrations
    • Examine AMCs and require AMCs to submit relevant information to State
    • Verify appraisers on AMC appraiser panels hold valid State certifications or licenses
    • Conduct investigations of AMCs to assess for potential violations
    • Discipline AMCs
    • Report violations to ASC
  • AMC Ownership Limitations
  • AMC Registration Fee to be Collected by States for ASC
    • $25 multiplied by the number of appraisers working for or contracting with that AMC in such State during the previous year
    • AMC’s not in existence for a years, $25 multiplied by the number of appraisers working for or contracting with that AMC in such State since the AMC commenced doing business
  • AMC Final Rules 1st Draft should be out for 60-day comment period in April

Customary & Reasonable Fee Survey

  • Larry Disney, Executive Director of Kentucky Real Estate Appraisers Board
    • Kentucky conducted 1st survey in 2013, getting ready to update in 2016
    • SE Louisiana University completed survey
    • Considered by Report Type (1004, 1004 FHC, 1004C, 1025, 1073, & 2055)
  • Bruce Unangst, Executive Director of the Louisiana Real Estate Appraisers Board
    • Louisiana uses C&R Study as a tool to avoid problems
    • Kept the study simple, made it available to all stakeholders, updated annually
    • Louisiana did have an adjudication hearing for one AMC
      • Unanimous vote (including AMC Rep on the board) against AMC
      • $10,000 fine + around $13,000 costs of adjudication hearing
      • Currently up for appeal
  • Herb Holloway, Research Economist at Southeastern Louisiana University Business Research Center
    • 5 States have conducted studies (TX/LA/KY/VA/GA)
    • SE University fees for survey have run between $8,000 and $15,000
    • Survey all online and by email
    • Note: there has been no evidence to date for any correlation between years of experience and fees
    • Can be difficult interpreting C&R Fee Study

Alternative Valuation Standards

  • Scott Robinson, 2016 President of the Appraisal Institute
    • Presentation (click here)
    • Standards of Valuation Practice & Valuer’s Code of Professional Ethics
      • Adopted in 2014
      • Proposing as an “Additional” set of Standards for AI Members and Valuation Professionals
      • May be used where national/international standards are not required
    • Standards are:
      • An Additional set of standards
      • Principles-based
      • Focus on the core principle rather than on compliance with rules
    • Standards are not:
      • Not intended to supplant USPAP or other national standards
      • Not an alternative to USPA or IVS or other relevant standards
      • Not rules-based
      • Not dictate methodology

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  • David Bunton, President of The Appraisal Foundation
    • Presentation (click here)
    • Recognizing standards other than USPAP for non-federally regulated transactions would seriously erode public trust
    • Legislative Initiatives for Alternative Standards to USPAP – Texas, California, Montana, Tennessee, Florida, Virginia
    • Alternative Standards to USPAP Divisive, Expensive, and Opposed
    • Significant Impact
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