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» VISIT US ONLINE @ DSNEWS.COM 71 COVER STORY INDUSTRY INSIGHT DATA & RESE ARCH MARKET PULSE First, consider the following examples of unintended consequences, or "pain" for appraisers: » An applicant receives a copy of his or her home appraisal that reflects a value conclusion lower than the applicant's personal opinion of value for his or her home. e applicant then takes a closer look at the appraisal and notices the appraiser's indicated gross living area didn't include the basement. Some homeowners are not aware an appraiser includes only above-grade finished living area in a home's gross living area measurement and addresses the basement size and level of finish elsewhere in the appraisal. Nonetheless, a complaint could still be filed, and while the appraiser would be able to defend against the charge, that appraiser will incur time and aggravation. » In another scenario, a homeowner notes an appraiser did reflect the cost he or she incurred in a recent renovation of the home in the adjustments to the non-renovated sales used in the appraisal and complained the adjustments applied by the appraiser for "condition" or "modernization" were lower than the incurred cost to renovate the home. In this example, the homeowner may not be aware that cost does not necessarily equal value, and that the adjustments applied reflect typical market reaction to the subject home's condition/level of renovation rather than the actual cost of the renovation. Again, this is a challenge an appraiser can easily address, but the time and aggravation are costly. » Other borrowers might file complaints that appraisers were in their homes for only 15 minutes and couldn't have adequately inspected their homes during that short time frame. In this example, the homeowner may not be aware that the appraiser will spend as much time as necessary to attain all the detail he or she requires and may have had occasion to appraise many other similar homes in the same market area and resultantly may not require as much time to become familiar with every component of the home's construction, features, or layout. » e applicant notes the appraiser lives/ works a considerable distance from the subject neighborhood and questions whether the appraiser truly "knows the market" or is competent as a result. A complaint is filed based solely on the applicant's concern that the appraiser may not be geographically competent, yet the appraiser may in fact be highly competent to appraise homes in the subject neighborhood despite living some distance from it. In this example, again, the appraiser must defend against a complaint that may not be legitimate. » A borrower notes the appraised value is less than what he or she paid for the home a number of years ago and files a complaint alleging the value was lowballed even though the appraiser adequately addressed the disparity between the current appraised value and the prior sale of the subject property. » A borrower, unhappy with the results of the appraisal might either fabricate a concern regarding the appraiser's conduct, such as stating the appraiser was rude or abrupt during the inspection and wouldn't listen to his or her comments regarding all of the home's many fine features; the appraiser was late for the appointment; the appraiser tracked mud throughout the house; etc. ese are all possible complaints, regardless of the new CFPB rule of course, but the frequency of such complaints could potentially increase. ese are examples of situations in which the appraiser has likely done nothing wrong, yet must take the time and deal with the aggravation of the complaint. Certainly, some of the examples may reflect more emotion than substance, or even just an innocent lack of strong understanding of the appraisal process. Also, these types of complaints can reasonably be expected to increase in instances in which the applicant feels the appraised value was lower than his or her own opinion of value for the home. While allowing a party with a vested interest in the outcome of an appraised value a chance to critique the appraisal can produce unintended consequences, there are viable benefits to the public as well: » Appraisal quality should improve as a result of appraisers recognizing individuals other than their clients or indicated intended users of their appraisals now have the opportunity and right to review and challenge their work product. » Applicants have a voice. Until this point in time, access to the appraisal and appraiser was more limited. » Legitimate challenges to appraisals that have been appropriately rectified can result in resolution that could allow a loan to be made if it is proven the appraised value was unreliable as a result of negligence. » Appraisers who have failed to adhere to applicable industry and regulatory requirements can be disciplined and potentially precluded from performing additional appraisal work. So how can a lender or servicer help ensure appraisal-related complaints to the CFPB are minimized? rough the utilization of the best performing and best qualified appraisers and appraisal management companies. Appraisal management companies (AMC) are charged with providing a host of services above and beyond just assigning appraisal orders. Specifically, an AMC performs the following services for its clients: » Acts in the capacity of a firewall between those involved in the origination of a loan and the ordering and reviewing of the appraisal, thereby helping ensure appraisal independence. » Selects the most qualified and best performing appraisers for each appraisal order through a viable vendor management and appraiser score carding process where, among other things, the appraiser selection includes verification that the appraiser possesses the appropriate level of licensure and the appropriate professional and geographic competency for the assignment. » Ensures the client's specific requirements

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