Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California
Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Thursday, August 19, 2021

Alleged discrimination in real estate appraisal 10222 Elmfield, Loveland, Ohio, Aaron and Erica Parker, by Mary Cummins

erica parker, 10222 elmfield, loveland, ohio, aaron parker, mary cummins, discrimination, racism, black, white, real estate appraisal, real estate appraiser, real estate, contract price, false, misleading, amy goodman
erica parker, 10222 elmfield, loveland, ohio, aaron parker, mary cummins, discrimination, racism, black, white, real estate appraisal, real estate appraiser, real estate, contract price, false, misleading, amy goodman, 



Here is another case of alleged discrimination in a real estate appraisal. The owners posted their full names, home location, appraisal values, list and sale prices so I will also share it. 

Aaron and Erica Parker owned a home located at 10222 Elmfield Dr, Loveland, Ohio 45140. They purchased it April 9, 2014 for $371,978. Per the MLS it was listed for sale April 13, 2021 for $525,000 by Amy Goodman of the Sibcy Cline real estate office MLS #1696320. Amy Goodman claims she is the "Fair Housing Officer" for Sibcy Cline real estate. She is not an Officer and not a Fair Housing Officer for the FHA or HUD but merely using that title most likely to promote her business. 

Allegedly Aaron and Erica Parker listed the home for $525,000 then instantly agreed to accept about $504,000 for the property. I assume they still paid the commission to Amy Goodman even though she didn't market or show the property. Erica stated after they got the instant offer she was "ecstatic" and “We were high-fiving each other,” “We were texting our Realtor, like, ‘Can you believe it?’”

Allegedly the first appraisal on May 5, 2021 came in at $465,000 which they said was $42,500 below the contract price. We can do math so contract was $507,500. At first their agent asked them if they would reduce the price. Parkers said no. Is this agent working for the Parkers or is she friends with the buyers giving them this pocket listing without any other bidders?

Per the article. "Goodman and the Parkers asked the appraiser and the buyers’ lender to correct the errors in the report. The appraiser refused, they said, saying he stood by his analysis. The lender had a staff member review the appraiser’s work and stood by the total, too." 

Based on my experience if someone submits a reconsideration of value i.e., an appraisal appeal, with similar higher priced comps and it has merit, the appraiser, AMC, lender will adjust the value. That didn't happen. I'm assuming there was no merit.

For no reason the sellers automatically assumed it was racism per the article. They decided to remove all traces of their skin color from the home and request another appraisal. The article states they "erased blackness from their home." Erica called it "white washing." May 20, 2021 the second appraisal came in at $557,000. They were happy. They assumed the higher appraisal was caused by their skin color washing. Then they sold their house June 11, 2021 for $507,500. 

First, some questions. If they thought it was worth $557,000, why the hell did they sell it for $507,500? That means they agreed to sell it for $50,000 less than it was allegedly worth. Was their real estate agent scamming them by listing it low and selling it as a pocket listing? They allowed a few people and two appraisers to view their home. Why not put it on the market and just not do open houses? No one is doing open houses today anyway. They could have sold it within a week in this market with a few private showings all in one day while they're out. There were photos from the last 2014 sale still online. 

As usual there is more to this story than the poorly researched and misleading media article trying to stoke the flames of racism. While I don't usually support robot appraisals I'm going to post some robot appraisal values for this home. This way no one can claim racism as the values are not from live people. They don't see the home, homeowners or anything because they're just a math formula. I am not appraising this property. Robots provided this value estimate. Below are the robot appraisal values for this home as of today, August 19, 2021. The home was appraised in May and sold in June over two months ago in a quickly appreciating market. Values range from $461,000 to $523,000, $497,000 mean/average, $502,000 median. 

Zillow $523,000
Realtor $504,000
Redfn $501,002
Trulia $507,500 
Remax $487,800
USDA Properties $502,800
Spokeo $461,000

Below is a chart from Redfn which tracks their estimates in the past for this home. Based on statistics average home in Ohio appreciated over 11% last year. That's about 1% a month. That means the original appraisal was in line with market value at the time. The second appraisal is clearly too high. At least Aaron and Erica Parker don't have to worry that they sold their home for less than it's real market value. 

erica parker, 10222 elmfield, loveland, ohio, aaron parker, mary cummins, discrimination, racism, black, white, real estate appraisal, real estate appraiser, real estate, contract price, false, misleading, amy goodman
erica parker, 10222 elmfield, loveland, ohio, aaron parker, mary cummins, discrimination, racism, black, white, real estate appraisal, real estate appraiser, real estate, contract price, false, misleading, amy goodman

Below is the listing history for the property. Aaron and Erica Parker had been trying to sell their home for a long time with no takers. They clearly listed it too high for the market each time. They even reduced the price twice. 

04/13/2021 $525,000 Pending Cincy MLS #1696320

04/13/2021 $525,000 Listed For Sale Cincy MLS #1696320

03/04/2020 $465,000 ListingRemoved Agent Provided

01/02/2020 $465,000 PriceChange Agent Provided

11/13/2019 $468,500 PriceChange Agent Provided

11/08/2019 $470,000 PriceChange Agent Provided

11/05/2019 $475,000 Listed For Sale Agent Provided

04/09/2014 $371,978 Sold

Here is my take on the situation. Real estate appraisers are limited by the highest recent similar sold home price. Perhaps a nearby similar home sold around $465,000 before May 5, 2021. While the home is on a cul-de-sac it backs up to a major road with a double line. Not good for families with children besides being a nuisance. 

It's possible that another similar home sold after May 5 but before May 27, 2021 for $557,000. Based on the sales I'm seeing that doesn't seem possible. I will bet that a home which was not similar sold for $557,000. The appraiser used a comp outside of the immediate area or it was larger, had more bedrooms, more full baths, more garages, more land and was fully upgraded. Erica Parker claims her home was upgraded. We don't know but the appraisal allegedly said it was not. Maintenance items such as new paint, new same style roof, replacement AC...are not upgrades. Upgrades would be adding a pool, an addition to the home... 

It's possible Erica was talking about "updates." That only has to do with the kitchen and bathrooms. They bought the home new in 2014. It shouldn't really need any updates in just seven years unless it was a poorly made cheap development. In the appraisal it's page one, "Improvement" section near the bottom. These forms are made for appraisers, lenders, underwriters and not lay people to read or understand. What the layperson does not see is the drop down menu which clearly shows it's only about kitchen, bathrooms updates. An "update" would be new or remodeled kitchen or baths. Below is an image which shows the form with the drop down menu exposed. All the viewer sees is the resultant text in the yellow highlighted box which generally says "no updates within the prior 15 years" or maybe "updated" "remodeled" "within 'x' to 'x' years." Complain to the government who made these forms. Click to see larger. 

real estate appraisal, how to read, updates, condition of improvements, upgrades, form, no updates, condition, property, mary cummins, real estate appraiser, complaint,
real estate appraisal, how to read, updates, condition of improvements, upgrades, updated, remodeled, form, no updates, condition, property, mary cummins, real estate appraiser, complaint, 


In another case a  black woman asked for a second appraisal when she didn't like the first one. She didn't remove any evidence of her skin color. The second appraisal still came in higher for other reasons namely the passage of time in a quickly appreciating market. Removing evidence of skin color is not what caused the increase in appraisal value here. I will bet the second appraiser used comps that were not similar but superior to the subject property. 

Another thing to note is that Erica Parker has a history of calling out people and businesses online. She complains on Twitter about businesses. Then she posts the freebies she gets from those businesses in response to her complaints on her Twitter account. The real estate agent Amy Goodman falsely claims she's a "Fair Housing Officer" because she attended a luncheon where someone spoke about housing discrimination. It appears Amy Goodman is promoting this story in order to drum up real estate business acting like she helped her black client deal with discrimination. She clearly didn't because she sold the home for $507,500 when it was "allegedly" worth $557,000. 

My biggest issue with this misleading article is the fake research they cite. Andre Perry, Michael Neal's research does not show that real estate appraisers appraise the homes of black people for less than the homes of white people regardless of all other factors. Andre Perry used Zillow estimates which were made by robots and homeowners guesstimates of value of their own homes. Michael Neal used the same. Neal stated that the robot appraisal values had the same amount of error variance for both white and black areas. No live person or real estate appraiser appraised any of the properties in the research. The only thing the data showed was that people of color generally make and have less money than white people. This is a fact based on real research. For this reason in general they buy and own homes in less expensive areas which they can afford. 

It's extremely reckless for the media to promote these false and misleading narratives and articles. The definition of racism is "prejudice, discrimination, or antagonism directed against a person or people on the basis of their membership in a particular racial or ethnic group." Assuming all white real estate appraisers are racist is actually racism. We use the same math formula to appraise homes as the robot appraisers which are clearly not racist because they aren't even people. 

In this quickly appreciating market some appraisals fall below contract price. Agents know this so they have added appraisal clauses. Here is an article about the current change in political climate which is causing people to call real estate appraisers "racist" when their appraisal doesn't match the contract price. It's not about racism but data and numbers. Actual racism is a horrible evil which should be banished from our communities. Making up false claims of racism when there is real racism out there to fight just divides and harms the community. 

Original article.

https://www.wcpo.com/news/our-community/this-black-familys-home-appraisal-grew-by-92-000-after-they-removed-all-signs-of-their-race

*I am not and did not appraise this property. I contacted the original author of the article and she never replied.

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin

Tuesday, August 10, 2021

In rising markets appraisers are called "deal killers." Today they're called "racists." by Mary Cummins

Real Estate Appraiser Deal Killer,


Back in 2013 we had a quick run up in prices similar to what's happening now. It was also caused by lack of inventory. Agents called appraisers "deal killers" but at least they didn't call them "racists." 

Today's political climate has clearly changed. "The country is in a time of racial reckoning, heightened by a summer of protests against systemic racism and police brutality following the death of George Floyd in police custody." Floyd's death "sparked the largest racial justice protests in the United States since the Civil Rights Movement." "According to data from various sources, the Black Lives Matter movement is now the largest movement in US history." While racism exists and must be banished from our nation the pendulum has now swung to the extreme side. In this new light anything and everything is automatically "racist" today before even looking at the facts.

Here's a 2013 article talking about appraisers "killing" deals with allegedly "low appraisals." Agents always say this in every quickly appreciating market. It's not racism but appraisers using sold and not listed comps to determine value. We have to use sold comps by law. Sold comps were sold in the past. It can sometimes take a month before the deed is recorded and shows up in the comp services. We must have the recorded deed number and can't just trust the agent on MLS. We can adjust for time but we still can't go over the highest unadjusted most similar comparable sale. 

https://www.marketwatch.com/story/how-appraisers-are-derailing-home-sales-2013-01-25

I could pull up a ton of articles during other runs ups which show people calling appraisers "deal killers" but not "racists." The racism claims are a new thing caused by the change in political climate. While I'm absolutely against racism I'm also against people falsely claiming racism when they don't get their way. One clear example of this is white New Yorker Amy Cooper who called 911 and falsely claimed a "black man" was threatening her when he wasn't. She was then fired from her job because of her criminal act of filing a false report to police. She's now suing for unlawful termination claiming, you guessed it, racism against her by her employer.

I'd like to think that some of these people just don't understand appraisal values. Maybe appraisers could do a better job of explaining things in the report. I'm thinking of adding a basic explanation of appraisal market value, process and regulations for potential non-professionals who are not the client or intended user but who may read the report for this reason. We make and write the report for the intended user which is the lender. It's listed at the top of the report. Potential buyers can receive and are sometimes provided with a copy of the report. They generally share the report with other lay people. Based on articles I've read they all misinterpret the reports and have no understanding of the appraisal value. 

Real estate appraisers are equal opportunity "deal killers" in these markets. We appraise homes based on the characteristics of the home and not the owner, seller or buyer. 

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin




Monday, August 9, 2021

Measuring, describing land using metes and bounds, PLSS, lot and block and parcel numbers by Mary Cummins

mary cummins, real estate, appraiser, los angeles, california, plss, metes and bounds, land, real estate, real property, public land survey system, tax assessor parcel number, apn, lot, block, map, plot, plat, subdivision, tract, prime meridian, base line, section, township, range, tax assessor, parcel, assessor, survey, measure, describe, book, page, how to read, los angeles county
mary cummins, real estate, appraiser, los angeles, california, plss, metes and bounds, land, real estate, real property, public land survey system, tax assessor parcel number, apn, lot, block, map, plot, plat, subdivision, tract, prime meridian, base line, section, township, range, tax assessor, parcel, assessor, survey, measure, describe, book, page, how to read, los angeles county


The original means of property descriptions and measurements in the US was the metes and bounds method. Metes and bounds was originally used in England for centuries then brought to the US with the first colonies. The "metes" are the length of the runs in a direction and the "bounds" are the boundaries. Below is an example of an older metes and bounds description of property one might find in a 17th century US land deed.

"Commencing at a corner at the intersection of two stone walls near an apple tree on the north side of Muddy Creek road one mile above the junction of Muddy and Indian Creeks, thence north for 150 rods to the end of the stone wall bordering the road, thence northwest along a line to a large standing rock on the corner of the property now or formerly belonging to John Smith, thence west 150 rods to the corner of a barn near a large oak tree, thence south to Muddy Creek road, thence down the side of the creek road to the point of commencement." 

Modern day property measurement and description use the government survey system or Public Land Survey System PLSS. The PLSS system is based on set principle meridian and base lines across the US based on exact locations using longitude and latitude. Using the base lines the land is divided into sections, townships and ranges, see image above.

A section is one-square-mile block of land. There are 36 sections in a survey township. A township is a square parcel of land of 36 square miles, or a measure of the distance north or south from a referenced baseline, in units of six miles. See image below.

mary cummins, real estate, appraiser, los angeles, california, plss, metes and bounds, land, real estate, real property, public land survey system, tax assessor parcel number, apn, lot, block, map, plot, plat, subdivision, tract, prime meridian, base line, section, township, range, tax assessor, parcel, assessor, survey, measure, describe, book, page, how to read, los angeles county
mary cummins, real estate, appraiser, los angeles, california, plss, metes and bounds, land, real estate, real property, public land survey system, tax assessor parcel number, apn, lot, block, map, plot, plat, subdivision, tract, prime meridian, base line, section, township, range, tax assessor, parcel, assessor, survey, measure, describe, book, page, how to read, los angeles county


An example of the PLSS description would be "the Northeast quarter of the Northeast quarter of Section 10, Township 3 South, Range 68 West of the 6th Principal Meridian, Arapahoe County, Colorado" or "NE/4 NE/4 of Section 10, T-3-S, R-68-W, 6th P.M., Arapahoe County, Colorado." 

In the city the most common type of legal property description and measurement is the subdivision tract, lot and block method. After describing land using PLSS it's further divided into smaller tracts of land which are then divided into lots and blocks via plat maps. A plat map, also known as a “plat,” shows you how a tract of land is divided into lots in your county. It is drawn to scale and records the land's size, boundary locations, nearby streets, flood zones, and any easements or rights of way. A plot map is a single plot or piece of land. Below is a description of real property using the subdivision and lot names and numbers. Subdivisions or tracts can have regular names such as "Highland Park" or use numbers. 

Lots 6, 7, and the South ½ of Lot 3, West 60 feet of South ½ of Lot 4, West 60 feet of Lot 5 and Lot 8, Block 20, OLD SURVEY, Leesville, Vernon Parish, Louisiana.

If it were just one full lot in a subdivision, the description could be just TRACT # 14386 LOT 286.  

We also use the Tax Assessor Parcel Number (APN) to describe property. The APN uses the Tax Assessor’s Book Number, Page Number and the individual Parcel Number. An example of a parcel number in Los Angeles county would be 4248-005-021 where the first four numbers are the book number, next three are the book page number and the last number is the parcel number. Below is an image which explains Los Angeles County plat maps. Click to see larger. 

mary cummins, real estate, appraiser, los angeles, california, plss, metes and bounds, land, real estate, real property, public land survey system, tax assessor parcel number, apn, lot, block, map, plot, plat, subdivision, tract, prime meridian, base line, section, township, range, tax assessor, parcel, assessor, survey, measure, describe, book, page, how to read, los angeles county
mary cummins, real estate, appraiser, los angeles, california, plss, metes and bounds, land, real estate, real property, public land survey system, tax assessor parcel number, apn, lot, block, map, plot, plat, subdivision, tract, prime meridian, base line, section, township, range, tax assessor, parcel, assessor, survey, measure, describe, book, page, how to read, los angeles county

Here's a specific example of a Los Angeles county legal description and APN. I'm using a property that includes parts of two lots to make it more complex. The legal description is "WESTMORELAND HEIGHTS TRACT S 41 FT OF LOT 43 AND N 20 FT OF LOT 44." This is an old tract so it has a name instead of a number. The Assessor's Parcel Number is 5074-019-004. The last number of the APN is in the pink circle, i.e. 4. The red arrow is pointing to the specific piece of land. It's the south 41 feet of lot 43 and the north 20 feet of lot 44. You can see the measurements on the lot lines, i.e. 20' x 41'. You see a lot tie or hook symbol in between lots 43 and 44 which shows the lots are tied together. It looks like a tall "Z" like this image and can be angled like an italic "Z." Click images to see larger. 





When you buy real estate you are actually buying only the land. Legally this entitles you to anything permanently affixed to the land. If you look at a real estate deed you will only see the legal description and the tax assessor parcel number. You don't see a description of the home or any other structures on the land. In the US the main types of land descriptions and measurements are the Public Land Survey System PLSS, lot & block description and tax assessor parcel map and numbers. 

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Sunday, August 8, 2021

We were one of the first real estate websites on the internet in 1998. Mary Cummins real estate appraiser Los Angeles, California

Mary Cummins real estate appraiser appraisal Los Angeles California first internet website, real estate

We had one of the first real estate websites on the Internet in 1998. It was the first to feature a real estate dictionary of common real estate words. We've been online 23 years so far and been in business since 1983. 38 years! 

Realtor.com has been online since late 1995 so we're not the first real estate website ever. We went online July 1998. Maybe we're the first real estate dictionary in 1998. 

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Friday, August 6, 2021

First Interagency Task Force Meeting on Property Appraisal and Valuation Equity (PAVE) - PROBLEMS, by Mary Cummins

pave task force, hud, mary cummins, real estate appraisal, bias, discrimination, value, valuation, loans, fha, joe biden, white house, marsha fudge, meeting
pave task force, hud, mary cummins, real estate appraisal, bias, discrimination, value, valuation, loans, fha, joe biden, white house, marsha fudge, meeting

The first White House Interagency Task Force Meeting on Property Appraisal and Valuation Equity (PAVE) was August 5, 2021. "Task Force members discussed how current appraisal practices are a significant contributor to the disparity in housing values. The practice of comparing properties within similar neighborhoods can be a proxy for racial demographics, which leads to the perpetuation and exacerbation of the legacy of segregation and redlining."

Racism exists. We should do everything we can to fight it. I fully support helping people of color  buy and maintain homes. I've studied segregation, redlining and their effects on community. That said doing away with the main valuation method of assets used around the world would be ridiculous and destroy the economy and our government.

Matched pairs analysis is how ALL assets in the world have been valued since the beginning of civilization. It's how all real and personal property are valued, traded, insured, assessed for taxation purposes, bought, sold, used for loan collateral, used as a basis to settle court disputes... The government is the one who mandated that real estate appraisers compare like to most similar like. It's also called the sales comparison approach. 

The purpose of the sales comparison approach using matched pairs analysis is to provide the "most accurate scientific measure of value." "The major supposition of the sales comparison approach is that market value of the subject is related to comparable property values within the same market area." This is how real estate agents and sellers determine a list price for a property. It's also how agents and buyers determine an offer price for the property. This is how the tax assessor assesses your property for taxation purposes. The sales comparison approach is the most accurate method to value homes for many purposes.

Based on what has been said by the Task Force members so far I am betting that they want appraisers to use only HIGHER sold comparables from areas with more valuable homes to appraise lower valued homes in areas with a higher percentage of POC. I am assuming this will only be for government and government insured appraisals, loans for POC but am not certain if it will be for everyone in certain areas of lower valued homes. Private banks and lenders would never go for this. Everyone knows the value of property is based on three main things, location, location, location. There are clearly major problems with this approach.

The actual value of property. "The fair market value is the price a home would sell for on the open market under normal conditions." Even if the government forces appraisers to use sold comparables from homes in Beverly Hills to appraise homes in East Los Angeles that will never fool home buyers or sellers. If you want to buy, can afford to buy a $100,000 home, you will look at homes for sale around that price range in an area you like. You buy the home with $10,000 down. It appraises at $100,000 which is market value determined by an appraiser. You get sick, lose your job, sell your home or lose it in foreclosure. It sells for $100,000 and the $90,000 loan is paid off. 

Let's say instead you offered $100,000 on a home with $10,000 down payment but the appraiser said it was actually worth only $50,000. If you buy it for $50,000, you're okay. Instead you demand another appraisal using sold comps in a more valuable area maybe a beach front property to appraise a tear down shack in Pacoima. The next appraisal is $100,000. You again get sick...You couldn't sell it for more than $50,000 or were foreclosed upon. The bank just lost $40,000 which you now owe to the bank even though you have no home. Many of these loans are backed by the government. The government aka the taxpayer loses that money. The banks and government are in trouble when this happens to many people like it did during the Great Recession of 2008. We are at a home price peak so this is a major concern.

I bring up this example because this would be mortgage fraud. The appraiser and lender would be complicit. This actually happened and people were criminally convicted of fraud. One such case was Victor Noval who defrauded the US Government HUD of $60,000,000 in this scheme. They used HUD money to buy property whose value was inflated by a con artist appraiser using higher sold comparables in other superior areas and other tricks. HUD Secretary Andrew Cuomo stated in response to this crime in 1997 per the Los Angeles Times "Any con artist who tries to rip off HUD and the American taxpayer will be caught and prosecuted to the full extent of the law." The taxpayer ends up paying for any loss in government backed loans. Any program to artificially inflate the value of homes to secure government insured funding would be bank fraud and fraud against the government.  For the government itself to suggest these federal crimes is ludicrous! 

Another thing to consider is that lenders make the loans then sell them so they can use that money to make more loans. No one would buy the loans if there is no market value appraisal. No one would know what they are worth except less than the loan amount. They'd sell at a huge discount if they could be sold at all. Investors also bundle these bank and government insured loans as mortgage backed securities and sell them in the secondary market to pension funds, investment funds... Again, what are they worth? We have no idea because there is no appraisal of its real market value. Generally investors look at market value of the property, loan to value ratios, loan balances, rates, equity, payment history, loan delinquency rate ... to determine value of the investment. No one would invest in these loans if they have no idea what they are worth. That's money lost for new home loans. Now new home buyers can't buy homes. You just shot yourself in the foot.

Let's say investors invest in these loans anyway and the economy flounders. People are foreclosed upon and lose their homes which sell for less than the loan balances. The banks and government lose money on the loans. Homeowners still owe the balance of the unpaid loans. The mortgage backed securities also sell on the stock market causing the stock market to dump. This happened in the Great Recession when all those loans went south. The banks and Wall Street had to be bailed out. Government then had to develop new regulations to make sure this wouldn't happen again. Here's an idea. How about not starting new programs which set homeowners, banks, investors, taxpayers and the government up for failure from the start. 

What if POC in areas with mainly POC get a higher appraisal and then a larger loan using this new appraisal method? Do you raise their tax assessment value and taxes? That would raise the property taxes of neighbors pushing out poor and elderly people. Because home value correlates with home rent it would also raise corresponding rent of non owners who would have to move. Can wealthy people use this same new appraisal method to lower the value of their property to pay less property tax, give their spouse less in a divorce settlement or give the government less in capital gains taxes? What happens when POC get a bigger loan because of the higher appraisal but they can't afford to make the payments and lose their home? That happened during the Great Recession when home values appreciated quickly for real. While members of the Task Force stated POC would take that new make believe home equity money and invest in college educations, new businesses, health care, home improvement or retirement accounts to improve their financial situation and the community they invested in personal items instead. Our nation is still recovering from the Great Recession. This new appraisal method would open up an economic Pandora's Box while home prices and real home equity are already increasing rapidly. 

The Task Force has 180 days to come up with a real plan. I hope someone who knows something about real estate appraisal, investments, loans and the economy speaks up before then. If not, it's the home buyers, home owners, banks, government and taxpayers who will be hurt by this mess of an idea. 

#pavetaskforce #hud #realestateappraisal #bias #discrimination #value #valuation #homeloans #loans #fha #joebiden #whitehouse #marciafudge #meeting #August52021   #PropertyAppraisalandValuationEquity #PAVE #segregation #redlining #racial #occ #ftc #fdic #cfpb #fhfa #asc #susanrice 

The rest of the press release is below. It's also linked.

"The group identified near- and long-term opportunities to advance equity in home appraisals that will help narrow the racial wealth gap and reinvest in communities that have been historically left behind. The Task Force Members will work together and consult with civil rights organizations, advocacy groups, industry, and philanthropic entities to drive change.

Additionally, Task Force members agreed that the scope of the Task Force will be to:

Ensure that government oversight and industry practice further valuation equity;

Combat valuation bias through educating the consumer and training the practitioner;

Ensure equity in valuation by making available high-quality data;

Create a comprehensive approach to combating valuation bias through enforcement and other efforts.

The Task Force is chaired by Secretary Fudge and Ambassador Rice, and includes cabinet-level leaders from executive departments and additional members from independent agencies. The Task Force will deliver a final action report within 180 days.

The Task Force membership is comprised of the following officials: (I added their names)

Secretary of Housing and Urban Development (co-chair) Marcia Fudge

Assistant to the President for Domestic Policy (co-chair) Susan Rice

Director of the National Economic Council Brian Deese

Attorney General of the United States Merrick Garland

Secretary of Agriculture Tom Vilsack

Secretary of Labor Marty Walsh

Secretary of Education Miguel Cardona

Secretary of Veterans Affairs Denis McDonough

Comptroller of the Currency (OCC) Michael Hsu

Chairman of the Board of Governors of the Federal Reserve Jerome Powell

Chairman of the Federal Trade Commission (FTC) Lina Khan

Chairman of the Federal Deposit Insurance Corporation (FDIC) Jelena McWilliams

Chairman of the National Credit Union Administration and the Federal Financial Institutions Examination Council Todd M Harper

Director of the Consumer Financial Protection Bureau (CFPB) Dave Uejio

Director of the Federal Housing Finance Agency (FHFA) Sandra L Thompson

Appraisal Subcommittee (ASC) James Park

https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/05/readout-of-the-first-interagency-task-force-meeting-on-property-appraisal-and-valuation-equity-pave

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Tuesday, August 3, 2021

Home Appraisal Bias Event - Consumer Finance Protection Bureau - Meeting - Real Estate Appraisal - by Mary Cummins

home appraisal bias event, consumer finance protection bureau, hud, mary cummins, fha, real estate appraisal, discrimination
home appraisal bias event, consumer finance protection bureau, hud, mary cummins, fha, real estate appraisal, discrimination

Today August 3, 2021 I just heard about this meeting. As a certified licensed real estate appraiser on the Federal approved real estate appraiser list I was not notified about the meeting which is why I didn't see it live. Stakeholders should be notified of these meetings. They should also have a real estate appraiser on the panel for many reasons. The people on the panel were missing key information and insight about the main issues. 

My notes are within the meeting agenda outline. I haven't watched the second half yet but I will. The second half has to do with civil rights issues. I've already seen part of that presentation from one speaker. Below is a link to the two hour video. My personal comments are in ( ). 

https://www.consumerfinance.gov/about-us/events/archive-past-events/virtual-home-appraisal-bias-event/

"We held a virtual event on Tuesday, June 15th, 2021 at 1:00 p.m. EDT for virtual discussions on home appraisal bias. Acting Director Dave Uejio hosted discussions with civil rights organizations, housing policy experts, and other federal agencies to explore how racial bias in housing appraisals and automated valuation models may occur."

01:00 PM – 01:06 PM Welcome, Federal Agency Panel and Acting Director Introductions Alicia Criado Hampshire, Public Engagement

01:07 PM – 01:10 PM Opening Remarks Acting Director Dave Uejio

Dave Uejio: The Appraisal Institute said it's a growing problem in the industry. San Francisco couple who got rid of black photos, items in their home received $500K higher appraisal. (That case had to do with other issues which were not discrimination, see here https://mary--cummins.blogspot.com/2021/02/alleged-discrimination-home-appraisal.html) Extreme example but underscores example of home appraisal bias. 

Appraisals are imprecise. A low appraisal makes comparable homes value lower. (Wrong. Low sales prices would do that, not appraisals). Biden said he'll take action. I am focusing on long standing inequities. (He read his entire report) We will have experts and federal agency partners and discussions with consumer rights leaders and consumer advocates. 

01:11 PM – 01:12 PM Research Presenter Introductions Alicia Criado Hampshire, Public Engagement

Introduces Michael Neal and Jim Park. 

01:13 PM – 01:23 PM Presentation on the Urban Institute’s research on Automated Valuation Models (AVMs) Michael Neal, Senior Research Associate, Housing Finance Policy Center, Urban Institute

Michael Neal: AVMs (Automated Valuation Methods). They disproportionately affect black neighborhoods. AVM as a substitution for and compliment to in person appraisals. Appraisers contributed to the 2008 real estate bust and great recession (FALSE. That was lenders giving loans to people regardless of their ability to pay them back) Appraisers have a role in perpetuating racial inequities and a role in perpetuating the pandemic. (Even the pandemic now? WTH?!) We can eliminate, reduce racial disparity by using AVMs. We looked at three ways to determine inaccuracy in avms. AVMs are far off the real value of homes (How do they know what is the "real value?"). We compared inaccuracy of black to white areas in three cities, Atlanta, Memphis and Washington DC.

White and black areas both look the same with avms in terms of inaccuracy. The magnitude of inaccuracy is greater in white areas than black (Magnitude is error rate x value). We compared to underlying home value. The percent magnitude of inaccuracy is greater in black vs white areas. (It's not color but home value ranges. As Zillow representative responded in another meeting there is more inaccuracy on the tail end of the value ranges i.e. very low. Lower priced homes are also in poorer condition. They're generally older. There is less data in poor areas so not as accurate). We try to explain via regression analysis via four factors, property differences, neighborhood conditions, turnover rate and majority of black vs white. More turnover increases avm accuracy. (More turnovers, more data, makes sense!) The percent majority race of the neighborhood is statistically significant (because POC tend to own lower priced homes). AVMs shouldn't be aware of race but they are. (No. It's because POC tend to own lower priced homes. More error in lower priced homes due to condition, lack of data. Zillow stated this and I agree). 

Ways to invest in black communities. Black banks and improve home condition. Need more data to determine condition better. A too low estimate can threaten home purchase. Contact me. (His read his report) (Here is a link to the underlying paper His paper confirmed what I stated above. There is more error in low priced homes. "Majority-Black neighborhoods tend to have lower home values, more heterogeneous properties, higher shares of distressed home sales and gentrified neighborhoods, and lower household incomes. All these factors are associated with a greater magnitude of percentage error in AVM estimations." His paper confirmed that AVMs value white and black owned homes the same. They have the same amount of error. This is the opposite of what Andre Perry stated. Andre Perry also used AVMs. Neal and Perry are both black. The areas aren't 100% black. Poor whites, browns are also affected by AVM data.)

01:24 PM – 01:34 PM Overview of ASC’s role in appraisals and D&I efforts Jim Park, Executive Director, Appraisal Subcommittee, Federal Financial Institutions Examinations Council

Jim Park OSC: Bias is an important issue. Appraisal regulatory system. Three main components, states, federal and private sectors. Federal carries out licensing, discipline. Appraisal Foundation has two boards, ASB, AQB. They set USPAP and minimum requirements to be an appraiser. ASC is Federal government. Maintain national registry of appraisers and AMCs. 

ASC member agencies. Slides.




Diversity equity inclusion. I am concerned with  reports of alleged racial bias in appraisals and lack of diversity in the profession. Recent allegation of racial bias and lack of diversity. We must regain public trust. ASC has initiatives to review bias, review of USPAP and credentialing of appraisers. We will be hosting roundtables on bias. Appraisers and Assessors are 96% white, 70% men. I find it deeply disturbing (Jim Park is a white male, see pic above). 

Lack of new appraisers. In the past 10-12 years 20-25% decline in national registry. Aging population, declining numbers, and few new entrants while demand increases. One reason is supervisor trainee model which is the only way to become appraiser, by the apprenticeship model. Generally this is only family members. (My article about the problem with the program with solutions) This contributed to lack of diversity. We're working on an alternative but nothing yet. We are doing research to figure this out and find solutions. HR 2553 would establish inter agency task force to analysis federal underwriting standards and guidance to increase diversity in appraisers. Need study our entire industry. (He read his report).

01:35 PM – 02:05 PM Federal Agency Panel Discussion, acting director. 

Todd Harper. NCUA,  National Credit Union Administration. Appraisal bias is important to explore. Must close the wealth gap (for POC). Purchasing home is one of three major ways (other two are starting a business and retirement savings accounts). Dodd Frank Act 2010 reforms. I've been reading news accounts of bias. Existing statutes, the FHA need to address the problem. We need to enforce. Quality control standards for AVMs were supposed to have been made. Formulas can be garbage in, garbage out. Need good quality data going in to get good quality results. (AVMs use like kind appraisal method used for centuries all over the world choosing most similar sold homes for comparison. It's the main asset valuation method similar to Kelly Blue Book car value system. This is what appraisers use.)

Lender owns the appraisal though consumer pays for it. Consumer needs new appraisal to go to a different lender. Consumer should own so can shop appraisal and loan with another lender. (He read his report. Appraisals can currently be transferred from one lender to another with an appraisal transfer letter that references Home Valuation Code of Conduct (HVCC), Appraiser Independence Requirements (AIR) and FHA Guidelines  regarding appraiser independence (ML 09‐28) . Ask for the letter.) 

Michael Hsu, Office of the Comptroller of the Currency (OCC). We must remove structural obstacles. Need access to affordable housing. Lower appraisal value suppresses property tax and money to education. (Lower sales prices do that, not appraisals). It can negatively affect wealth for minorities. Homes in black neighborhoods are worth 1/2 homes in white neighborhoods (FALSE! He cited statistically flawed Andre Perry report. Even Perry said 23% even though it's zero). $156B loss in value nation wide per Brookings Institute (FALSE! Andre Perry's report is statistically flawed and therefore meaningless. He is not the institute but one person who wrote a paper that was not peer reviewed. There was no legitimate research involved but cherry picked numbers from flawed comparisons of two small very different groups chosen by one person. He did not compare similar homes in similar areas.)

We must hold banks accountable but need collective effort. I applaud civil rights leaders for holding us accountable. There is 11 trillion in mortgage loans in the US. 

McCargo, HUD Director for Marsha Fudge. On behalf of Fudge and HUD, thanks. Growing number of reports of bias in the media. Reports of discrimination have increased 10x since 2019. This includes lenders, lending requirements and the lack of diversity of appraisers. Over 85% are white, less than 2% black. Joe Biden told Fudge to lead the task force to address inequities for POC. It will include federal regulators and agencies. Will assess extent, causes, effect and recommend actions. We will engage stakeholders who have information (but not real estate appraisers or people in the actual industry for some reason). June is homeownership month. 

McCargo: News stories. There's a new one a week. There's a wealth and homeownership gap. 

Todd: This isn't a new issue. People fleeing Poconos from NY paid more than what homes were worth. The credit union must meet needs of all even poorer people. Need to help POC access and build wealth to overcome racism over time. We need to diversify appraisers and regulate AVMs. 

ASC: Black homeowners thinking they must "de black" their home is heartbreaking. The idea the tactics work is frustrating. (They don't work. See articles on three main incidents of alleged racism in real estate appraisals which showed the original appraisal values were correct. Two of them didn't "de black" the home. Article 1. Article 2. Article 3. ) The heart of appraisal is objectivity and independence. The (color of the) owner has nothing to do with opinion of value. People must report any perceived discrimination by appraisers to state departments. If they are discriminating, they are violating USPAP and should be disciplined. 

Todd: ASC hotline? 

ASC: Hotline refers users to proper department. 

Hsu: Not a new problem just more awareness from media articles. This puts an urgency on the issue. It's great all agencies are working together on this. 

Dave Uejio: Difficult for consumers to discern discrimination. (Consumers think any appraisal which is lower than what they personally want is "discrimination.") What is contributing to this problem is impacting valuation in communities. 

McCargo: Real estate is local. We should focus on state and local levels. How diverse can we get the industry. 

Jim ASC: Fed and states set requirements. States can exceed federal levels. Need more diversity on state appraisal boards. Needs more minorities. Only Alabama requires it. Appraisals result in a one point value. Not how the market works. (Yes, it is. A buyer only pays one price for a property. That is "market value." Our appraisal actually includes a range of values if someone on the panel had ever seen one) Market reflects a range. (As a whole but not for the specific property which will be secured by a loan backed by the federal government and resold as an investment). Maybe appraisers should do that. It might help lending process. (Lenders would refuse as the loans could not be guaranteed or resold as investments). We should provide more data such as GSEs (Government Sponsored Enterprise  is a quasi-governmental entity established to enhance the flow of credit to specific sectors of the American economy. Created by acts of Congress, these agencies–although they are privately-held–provide public financial services. Fannie Mae, Freddie Mac). If more data made available to appraisers, consumers, might work as check and balance. Make it more difficult to allow intentional and unintentional bias to creep in. (Might be invasion of privacy to share what someone's home appraisal especially if it includes the appraisal which shows interior photos. Public records do show new loans.).

Dave Uejio: What do you think the bureau should be doing about this? 

McCargo: Awareness has gone a long way. Increase in complaints last couple of years (caused by the rising market and not necessarily discrimination). People are learning what it is. Better data collection to better inform. GSEs have lots of data. Need to make it more visible. 

(? speaker): AVMs are playing a huge role today. GSEs use them for appraisal waivers. Not a panacea but based on historic data and unresolved issues. We should promote research on AVMs  to determine risk, error. (There are risk and error scores posted with values, value ranges with most AVMs. Some like CoreLogic won't post an AVM if they feel risk, error too high due to lack of data). Need certification for AVMs. Maybe make publicly available the algorithm so all can use. (Any appraiser can tell you the algorithm. It's not a secret. See below*)

Mike Todd: Need to work on AVMs and consumer education. Federal appraisal law and oversight of private lending. Look at some states' laws on bias to get the best ideas for federal standards and regulations. Federal transaction levels are $400,000. In 1989 it was $10,000. Higher threshold doesn't protect people who buy cheaper homes as well.

Hsu: Office of the Currency. Stories are anecdotal but need research to back it up. (YES! The media stories are not only anecdotal but the three main ones are FALSE. The government should do independent research on alleged bias. Mike Neal already did and he said there's no difference in appraising based on AVM values between white and black neighborhoods. Andre Perry's report is based on the same AVM values). 

I'll post notes from the civil rights discussion later.

*The appraisal value algorithm. Appraisers use matched pairs analysis to value homes. We compare the subject property to the most similar recently sold nearby homes with the same amenities which sold on the open market in armslength transactions. We give more weight to the more similar home sales. We don't use averages, means or median prices. While we include properties which are listed and not sold we don't give them as much weight. We actually do give a value range via the comps we use. We are generally limited by the unadjusted highest most recent similar sold price. We must use sold comparables that bracket the most important features which are size, bed/bath count. 

The appraiser searches properties which are +/- 15% difference in gross living area within a half a mile radius which sold on the open market within the last three months. We go wider if there aren't enough comparables. We need at least three sold comps, one pending and one listed. We then choose the most similar recent comparables to the subject.

Next we adjust for differences between the subject and the comparables. If one has three beds and another has two, we figure out the value of the third bedroom via regression analysis. We basically search sold homes which are similar in every way except the bed count. The difference in the three bed verses two bed home sales should be the value of the extra bedroom. 

After we make the adjustments for all differences we have a range of adjusted and unadjusted values for all the comparables. The home sales that are the most similar carry the most weight. If we were appraising average newer tract homes which are identical there should be very little variation in values. Appraisers are extremely happy when we don't have to make any or at least not many adjustments. This generally only happens to me with newer average sized identical condos. 

That's the home value formula the AVMs use though it's not in the form of a mathematical equation. I've written real estate value math equations for my HP12C. Maybe I'll write a simple one and post it here. I've mainly written appreciation, leveraged value, return on value...equations. 

#homeappraisalbiasevent #consumerfinanceprotectionbureau #realestateappraisal #discrimination #marycummins #cfpb #daveuejio #aliciacriado #michaelneal #jimpark #toddharper #alannamccargo #michaelhsu #asc #asb #aqb #uspap #avm #losangeles #california #realestateappraiser #hud #fha #officeofthecurrency #nationalcreditunionadministration #ncua

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Sunday, August 1, 2021

Who oversees, regulates Real Estate Appraisers in the US? The Federal and State governments. by Mary Cummins

real estate appraiser, regulation, firrea, mary cummins, los angeles, california, real estate appraisal, hud, fha, appraisal foundation
real estate appraiser, regulation, firrea, mary cummins, los angeles, california, real estate appraisal, hud, fha, appraisal foundation

Some people seem to be under the misconception that real estate appraisers govern themselves via the Appraisal Institute. The Appraisal Institute is a private organizations for a few real estate appraisers. It's very expensive so there aren't that many members compared to total number of appraisers in the US. (There are 78,000 real estate appraisers with licenses as of 2018 in the US. Allegedly AI has 25,000 members in the world. They include retired and life time members. Because it's expensive to join I find it hard to believe they have 25,000 members). It has nothing to do with the government, licenses or regulations though they do sometimes publicly comment on issues which affect appraisers. 

Real estate appraisers are regulated by the federal and state governments. In 1989 the FIRREA Act (aka Savings & Loan bailout) established the Appraisal Foundation and the  Appraisal Subcommittee (ASC). The Appraisal Foundation is authorized by Congress as the source of appraisal standards and appraiser qualifications. The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council monitors and reviews the work of The Foundation. The Committee also maintains oversight authority over the states to ensure the minimum qualifying criteria to license and certify real estate appraisers are implemented and that appraisers are held to a professional set of ethical standards.  

The  Foundation’s Appraiser Qualifications Board (AQB) sets the minimum Real Property Appraiser Qualification Criteria and the Appraisal Standards Board (ASB) develops the generally accepted standards of practice for the appraisal profession which is the Uniform Standards of Professional Appraisal Practice. These are reviewed every two years. Everyone can comment while they're being updated.

Each US state or territory has a real estate appraiser regulatory agency that is responsible for licensing and certifying real estate appraisers and supervising their appraisal-related activities, as required by Federal law. Here is a list of all the state regulatory agencies for real estate appraisers

Here in California we didn't need a license until 1994 after FIRREA passed. Real estate appraisers had nothing to do with the Savings & Loan crisis but as usual they were falsely blamed and later more heavily regulated. I fully support all real estate appraisers being licensed. It should have happened when they licensed real estate agents. I was both a real estate agent/broker and appraiser at the same time. I was first licensed as a real estate appraiser in 1994. I was licensed as a real estate agent in 1983 and broker in 1986. 

After the great recession the Dodd Frank Act was passed in 2010 which added even more regulations for banks, lenders and real estate appraisers. Again, real estate appraisers were blamed for the crisis. Real estate appraisers only report value based on past sales. We don't drive sales or affect the market. The problem was lenders giving loans to people regardless of their ability to pay them back. When the bubble burst many people who couldn't make their payments lost their homes. 

The Dodd Frank Act set up a system of Appraisal Management Companies (AMCs) via the Home Valuation Code of Conduct (HVCC). "The Home Valuation Code of Conduct (HVCC) is a set of federal guidelines designed to make the home appraisal process more reliable. The HVCC prohibits mortgage brokers and real estate agents from selecting or paying appraisers. Instead, lenders or third-party companies selected by the lenders are the only parties allowed to contact, retain, and compensate appraisers. This adds a buffer between the appraiser and the interested parties trying to close the deal. Conventional conforming loans backed by Fannie Mae and Freddie Mac must comply with the HVCC. FHA loans and VA loans are excluded from compliance with the HVCC." Instead of having the mortgage broker or real estate agent assign an appraiser the lender now hires the AMC who hires the appraisers. The AMC is the new middleman. The purpose was so the lender wouldn't be able to pressure the appraiser to hit an appraisal price. 

The concept of AMCs did not work. The appraiser still must contact the owner, borrower to inspect the property. The owner, borrower sometimes says "Here are some comparable sales from the lender and my real estate agent. I need a value over $500,000." Not only that but after the appraisal is submitted to the AMC who gives it to the lender the owner, borrower, lender, AMC can request a reconsideration of value, an appraisal appeal. They can request that certain other comparable sales and factors be considered. The lender can also make requests in underwriting. 

The real estate appraiser does not have to make the requested changes unless they are legitimate. Obviously if you refuse legitimate changes you won't be hired again. The owner, borrower, lender can also order another appraisal. There are some agents, lenders who refuse to use certain appraisers because they didn't hit their price points in the past. The only thing AMCs did add is an extra middleman fee paid by the owner, borrower. If you are paying $650 for an appraisal, $300 goes to the AMC and $350 goes to the appraiser. If you want a review, it can cost even more. 

If you have a problem with an appraisal, request a reconsideration of value. Here's an article I wrote about how to do that. You can also call the appraiser. If you leave a ranting voicemail, they probably won't return your call. Their client is the AMC. The appraiser doesn't have to speak to you after the appraisal is completed. We only have to speak to the owner in order to inspect the home. 

If you have a problem with an appraiser that is beyond a reconsideration of value, you can file a complaint with the state where they are licensed. You can also file a complaint with the federal government depending upon the nature of the complaint. HUD handles discrimination complaints. Below describes the process for HUD housing discrimination complaints. 

https://www.hud.gov/program_offices/fair_housing_equal_opp/complaint-process

Below is a chart showing the outcome of HUD discrimination complaints for 2019. Most complaints are for disability discrimination and not skin color or race. Only 2% of the HUD housing discrimination complaints had cause. This is for 2019. 37% had no reasonable cause, 7% withdrawn, 36% conciliated, 14% administrative closure, 4% DOJ referral. This sounds about right. I've seen a few friends claim discrimination about a transaction. I ask them what happened. So far almost all of the time it wasn't discrimination that caused the issue. Now when it comes to every day events I see discrimination all the time especially as it relates to skin color, gender, race. 


Right now August 2021 some buyers, borrowers feel they are being low-balled because some homes are under contract for more than they are appraised. Appraisals are coming in under purchase price. The problem is the skyrocketing market and limited supply which is causing people to bid over list price and over market value. Appraisers used sold comparables to support the value. That means we're 1-3 months behind the market at times. If there isn't a recent sale of a similar home we have to use older comps. We also can't appraise over the highest unadjusted sold comparable home even though we can time adjust. This is not our fault as we are following the law and regulations. It's happening to everyone regardless of color. Just because your appraisal came in low does not mean the appraiser was racist and discriminated against you. Appraising is a math formula based on home location, size, condition, amenities. Racism and discrimination exist. That doesn't mean every appraisal that is lower than what someone would like is the result of racism. The most common cause of loan denial is actually the creditworthiness of the borrower. 

More information below about real estate appraisal regulation. 

https://www.appraisalfoundation.org/imis/TAF/About_Us/Appraiser_Regulatory_System/TAF/Regulatory_Structure.aspx

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Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


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