Appraisals - McKissock

Report
McKissock Appraisal School
Rev. 1-20-2013
Ken Guilfoyle
Senior Certified National Instructor
McKissock L.P.
P.O. Box 1673
Warren, PA 16365 - 3158
Phone:
Fax:
800-328-2008
814-723-7289
On the Web: www.mckissock.com
E-Mail:
[email protected]
You want Snacks?
You’re lucky you got coffee!
I’d like the memory of me
to be a happy one,
I’d like to leave an afterglow
of smiles when my life is done.
I’d like to leave an echo
whispering softly down the ways,
of happy times and laughing
times and bright and sunny days.
I’d like the tears of those
who grieve, to dry before the sun.
Of happy memories that I leave
when my life is done.
Are Appraisers Represented ?

Who is working on our behalf to keep ethical
standards in place?
Many appraisal association representatives are
involved with The Appraisal Foundation
Advisory Council (TAFAC)
 Appraisers serve on state appraisal boards and
we are part of the Association of Appraisal
Regulatory Officials (AARO)

Are Appraisers Represented ?

Appraisers are or have been involved in writing the
appraiser upgrade exams, reviewing texts for the
Appraiser Qualifications Board (AQB) and being
represented on the Joint Government Relations
Committee

Appraisers are working with the department of Housing
and Urban Development (HUD), the Veterans
Administration (VA), and other governmental bodies
such as the Internal Revenue Service (IRS), the
Department of the Interior, and the U.S. Army Corps of
Engineers to make things better for the appraiser
profession as a whole
Are Appraisers Represented ?

Appraisers from the Appraisal Institute, the
American Society of Appraisers, the Association
of Farm Managers and Rural Appraisers, and the
National Association of Independent Fee
Appraisers are working together to present
Appraisal Issues to the U.S. Congress and the
Federal and State Governmental Agencies that
have the authority to impact the Appraisal
Profession.
Are Appraisers Represented ?



Appraisers serve on The Appraisal Foundation’s
Appraisal Standards Board (ASB), the Appraisal
Qualifications Board (AQB), the Appraisal
Practices Board (APB), and their various specialty
sub-committees
Appraisers are working with the Appraisal SubCommittee (ASC) which is a part of the Federal
Financial Institutions Examination Council
(FFIEC)
Appraisers serve as instructors, moderators,
mentors, and trainers, sharing their knowledge and
experience, all for the betterment of the appraisal
profession
Consumer Financial Protection
Bureau's New Hot-Line
Newest and least-publicized source of
federal help: the CFPB’s home-mortgage
complaint and dispute-resolution hotline
The complaint hotline is accessible by tollfree phone between 8 a.m. to 8 p.m.
Eastern (855-411-CFPB) or online at:
www.consumerfinance.gov
Our U.S. Presidents
and where they came from.










Arkansas
California
Connecticut
Georgia
Hawaii
Illinois
Iowa
Missouri
Nebraska
New Jersey
-
Clinton
Nixon
G. W. Bush
Carter
Obama
Reagan
Hoover
Truman
Ford
Cleveland
Our U.S. Presidents
and where they came from.




New Hampshire
Kentucky
Pennsylvania
South Carolina
-
Pierce
Lincoln
Buchanan
Jackson


North Carolina
Texas

Vermont
- Polk & Andrew Johnson
- Eisenhower &
Lynden Johnson
- Arthur & Coolidge

New York
- Van Buren, Fillmore,
T. Roosevelt & F.D. Roosevelt
Our U.S. Presidents
and where they came from.

Massachusetts
- J. Adams, J.Q. Adams,
Kennedy & G. H. Bush

Ohio
- Grant, Hayes, Garfield,
B. Harrison, McKinley,
Harding & Taft

Virginia
- Washington,
Jefferson, Madison,
Monroe, W.H. Harrison,
Tyler, Taylor & Wilson
USPAP “Scope of Work Rule”
Define the Problem.
 Determine your Scope of Work.
 Disclose the Scope of Work actually performed
in your appraisal report.

We alone are responsible for our Scope of Work
decision. We will be held accountable for our
Scope of Work decision. If not right, we may
incur the liability for our incompetence.
Useful WEB Sites
www.HeartHub.org Warning signs for
heart attack, stroke, sudden cardiac arrest
 www.MayoClinic.com/health/fitness/SM00
086 Quick tests to measure fitness and
track progress
 www.USA.gov/directory/federal/index.sht
ml Contact info for hundreds of US
agencies and departments
reference: Bottom line newsletter, January 2013

Five Worst Gov. Web Sites

Time.gov
Weather.gov
USDA.gov
SSA.gov
USMINT.gov

Reference: [email protected],

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How Busy are Appraisers ?

A survey by Appraisalport.com quotes:
 Up
to 6 hours per day
 Up to 7 – 8 hours per day
 Up to 9 – 10 hours per day
 Up to 11 – 12 hours per day
 Up to 13 – 14 hours per day
 Up to 15 – 16 hours per day
 16 or more hours per day
298 responses
903 “
2195 “
1576 “
636 “
251 “
184 “
Reference: Appraisal Today Newsletter, 11-04-12
Appraisal-Port Survey
turn times up
What is your average quoted
residential appraisal turn time?
-2 days 415 votes
7%
- 3-4 days 1,196 votes
21%
- 5-6 days 1,625 votes
29%
- 7-8 days 1,088 votes
19%
- 9 days or more 595 votes 11%
Total Votes: 5,645
Reference: Appraisalport.com survey
States with the Highest
Percentage of Jumbo Loans
States that have the highest number of
Jumbo Loans include:
 Hawaii
 California
 Dist.
of Columbia
 New York
 New Jersey
43
41
30
22
10
%
%
%
%
%
Who owns the most private land
in America ?
According to www.finance.yahoo.com the
top three landowners are:

John Malone owns 2.2million
acres stretching from Wyoming to Maine

Ted Turner owns 2 million acres
throughout the mid-West and New Mexico

The Emmerson family holds1.9
million acres in the Pacific North West.

FDIC is Still Very Busy !
The FDIC took over 92 banks in 2011.
Total amount of assets was $57.6B.
 There were 159 banks taken over by FDIC
with $95.1B of assets in 2010
 139 institutions were seized in 2009 with
$170.3B of assets.
 FDIC believes that bank failures peaked in
2010

Reference: CRE News Update, 6-13-12
Senate Panel Report on WaMu
Failure Highlights Appraisal Role
The U.S. Senate Permanent
Subcommittee on Investigations
released a 650-page report April 13th
that included a case study on
Washington Mutual's failure, highlighting
the role of unsound appraisal practices
in the bank's collapse.
Reference: Appraiser News on-line
Who is Looking at Your Appraisal?
Our Appraisals are being looked at more
than ever by people who are not
appraisers. According to data from the
Appraisal Institute:
There are about 13,000 +/- appraisal
reviewers
Approximately 1/3 are working with
appraisal firms
Can You Support “Effective Age”?
Go to:
www.mckissock.com
 Click on:
“Help”
Then Click on:
“Student Download”
You will find it there

Let's say it's 6.15pm and you're
driving home (alone of course) after
an unusually hard day on the job.
You're really tired, and
frustrated……
YOU ARE REALLY STRESSED AND
UPSET ….
Suddenly you start experiencing severe pain in
your chest that starts to radiate out into your
arm and up into your jaw. You are several blocks
from the nearest hospital. Unfortunately you
don’t know if you will be able make it that far
WHAT TO DO ???
You have been trained in CPR,
But the guy that conducted the
course did not tell you how to
perform it on yourself !!!!!
HOW TO SURVIVE A HEART ATTACK
WHEN ALONE?
SINCE MANY PEOPLE ARE ALONE WHEN THEY
SUFFER A HEART ATTACK, WITHOUT HELP, THE
PERSON WHOSE HEART IS BEATING
IMPROPERLY AND WHO BEGINS TO FEEL FAINT,
HAS ONLY ABOUT 10 SECONDS LEFT BEFORE
LOSING CONSCIOUS
WHAT TO DO ??
ANSWER:
DO NOT PANIC, BUT START COUGHING
REPEATEDLY AND VERY VIGOROUSLY.
A DEEP BREATH SHOULD BE TAKEN BEFORE EACH
COUGH, THE COUGH MUST BE DEEP AND
PROLONGED, AS WHEN PRODUCING SPUTUM
FROM DEEP INSIDE THE CHEST.
A BREATH AND A COUGH MUST BE REPEATED
ABOUT EVERY TWO SECONDS WITHOUT LET-UP
UNTIL HELP ARRIVES, OR UNTIL THE HEART IS
FELT TO BE BEATING NORMALLY AGAIN.
DEEP BREATHS GET OXYGEN INTO THE
LUNGS AND COUGHING MOVEMENTS
SQUEEZE THE HEART AND KEEP THE BLOOD
CIRCULATING. THE SQUEEZING PRESSURE
ON THE HEART ALSO HELPS IT REGAIN
NORMAL RHYTHM. IN THIS WAY, HEART
ATTACK VICTIMS CAN GET TO A HOSPITAL
ARTICLE PUBLISHED ON N.º 240 OF JOURNAL OF GENERAL
HOSPITAL ROCHESTER
TELL AS MANY OTHER PEOPLE AS POSSIBLE
ABOUT THIS.
IT COULD SAVE THEIR LIVES !!!
DON'T EVER THINK THAT YOU ARE NOT
PRONE TO A HEART ATTACK, EVEN IF YOUR
AGE IS LESS THAN 25 OR 30. NOWADAYS
DUE TO THE CHANGES IN LIFE STYLE,
HEARTATTACKS ARE FOUND AMONG PEOPLE
OF ALL AGE GROUPS.
Top- Earning DEAD Celebrities

According to Forbes’ Annual Celebrity list:
 Michael
Jackson (2009)
 Elvis Presley (1977)
 J.R.R. Tolkien (1973)
 Charles Schultz (2000)
 John Lennon (1980)
 Dr. Seuss (1991)
 Albert Einstein (1955)
 George Steinbrenner (2010)
$275 Million
$ 60 Million
$ 50 Million
$ 33 Million
$ 17 Million
$ 11 Million
$ 10 Million
$ 8 Million
The Statue of Liberty
Sits on her very own island in New York harbor
and is recognized around the world as the
symbol of freedom
 Officially dedicated on October 28,1886 and
titled as “Liberty Enlightening the World”
 The 25 windows represent the earth’s 25
minerals. The 7 spikes on her crown represent
the 7 seas and the 7 continents
 She is more than 300 feet tall. Her sandal is
25 feet long and one must climb 22 stories to
reach her crown.

The Golden Gate Bridge
 Opened
to the public on May 27, 1937
 Took 4.5 years to complete
 Cost $35 million dollars to build
 Approximately 1.7 miles long
 Main span is 4,200 feet
 746 feet at tallest point
 11 workers died during construction
Finally, This appraisal is done!
“When the American people no longer
believe that this country is a place where
only their willingness to work hard will
determine their success in life, we’ll have
a whole bunch of people sitting on a
couch waiting for their next government
check”
We will become a “paternalistic
entitlement society”
Reference: American Legion Magazine
A daily dose of laughter might just
keep the doctor away.
When you laugh, it:
 Stimulates
circulation
 Tones muscles
 Energizes the lungs and respiratory system
 Stimulates the immune systems
 Provides aerobic exercise
 Reduces stress and depression
 Heightens sense of well being and creativity
A Humorous Disclaimer for you
It has been suggested/implied that this office
knows EVERYTHING. While we find this
flattering/amusing, it must be disclosed
that while we MAY have an answer for
everything, these answers are frequently
offered in a very random manner and may
have nothing at all to do with the question
asked. We realize this can be a problem
and are diligently working on a solution.
K I S S – “Keep it Simple --”
Math – the infinities of our math system stem from 10
simple numbers.
 Michelangelo used just 4 primary colors when he painted
the Sistine Chapel.
 Abraham Lincoln’s Gettysburg Address, one of the
world’s most famous speeches was 278 words and 215
of those words were simple one syllable words.

Simple can be pretty powerful. Greatness can come
from simple things.
Reference: Business Review Newsletter
Did You Ever Wonder Why--To stop Windows, you need to click on “Start” ?
 Doctors call what they do “Practice” ?
 Lemon juice is made with artificial flavor,
dishwashing liquid made with real lemons ?
 You do not ever see the headline “Psychic Wins
Lottery” ?
 “Abbreviated” is such a long word ?
 They sterilize the needle for lethal injections ?

Info. from the ASC Appraiser
Registry.

Active Appraiser Licenses:
Licensed ---------------- 11,865
 Certified Residential -- 52,568
 Certified General ----- 37,974
 Transitional -----------7
Total --------- 102,414*

*The ASC indicates there are actually 89,000 (+/-)
licensed and certified appraisers throughout the
United States per their annual report to Congress
Ref: ASC Federal Register Summary Report , 1-2013
Top 6 States -- Active Appraisers
State
# of Appraisers
 California
11,661
6,378
5,289
4,205
4,140
3,850
 Florida
 Texas
 Illinois
 New
York
 Georgia
Reference: ASC National Registry, 1-2013
Additional Info. from the ASC
Appraiser Registry.

States that have retired or eliminated the
“License” category for Appraisers:
Alaska, Connecticut, Florida, Indiana, Illinois,
Iowa, Missouri, Louisiana, Mariana Islands,
North Carolina, South Carolina, Pennsylvania,
Tennessee, Wyoming, and the Virgin Islands
“Working Real Estate”
Appraiser Survey
Number of years in the appraisal practice:
Years (#):
Less than: 1
5
10
20
30+
Totals
1%
23%
27%
33% 16%


Appraiser’s average age: (Overall = 52 years)
Under 30 31-40 41-50 51-60 61-70 71+
Totals 4% 18% 29%
34% 13% 2%
Top Residential Mortgage
Providers

As of October 2012, a Report by Inside
Mortgage Finance:
Wells Fargo
Bank of America
Chase
Citi
Ally Financial
U.S. Bank-Home

19.9 %
17.2 %
12.4 %
6.2 %
3.4 %
2.0 %
Reference: Appraiser Newsletter
Top Commercial Mortgage
Servicers

According to the Mortgage Banker’s Association,
the top Commercial Mortgage Servicers in 2012
were:
Wells Fargo
PNC Real Estate/Midland Loan Services
Berkadia Commercial Mortgage
Bank of America Merrill Lynch
Key Bank Real Estate Capital
Reference: Appraiser Newsletter
AppraiserWorld.com
Appraiser Survey
Gender distribution of active appraisers:
Female – 26 %
Male – 74 %
TAF Survey
(The Appraisal Foundation)
Have appraisers ever belonged to one of the
TAF sponsoring Appraisal Associations?
60 % (+/-) of appraisers said “no”.
Have appraisers ever belonged to any
appraisal or valuation association?
85 % of appraisers said “no”.
“Working Real Estate” Survey
Feb. 2012
What is the appraiser’s highest level of
formal education completed?
High School
22 %
Undergrad Degree 25 %
Graduate Degree 45 %
Post Grad Degree
8%
TAF Survey
What is the primary area of your appraisal
practice?
Residential
Commercial
Bus. Valuation
Agriculture
Mass Appraisal
Personal Property
All Other
69%
16%
1%
4%
3%
1%
6%
TAF Survey
Employment Category:
Owner operator
Company / Partnership
Government Agency
Mortgage Lending
Other
60%
19%
6%
5%
10%
TAF Survey
Reporting the appraisal:
71% of appraisers said that 75% of
their reports are form type reports.
22% of appraisers said that less than
25% of their work was reported on a
prepared form.
Are appraisers willing to mentor a trainee?
Only 25% of appraisers are willing to
act as a mentor for a trainee.
Appraisal Management Company
(AMC) Participation

73 % of appraisers are currently working with
AMCs.

20 % of appraisers have worked with an AMC
within the last 5 years, but not now.

25 % of appraisers are not currently working
with AMCs, and have not worked with an AMC in
the past 5 years.

Source: “Working Real Estate” Survey”
Valuation Review’s “Voice of the
Appraiser Survey”

According to the Valuation Review Survey
of Appraisers:
Appraisal services provided by residential
appraisers:
Full Appraisal Services
99 %
Drive-by Appraisals
57 %
Property Condition Reports
38 %
Broker Price Opinions
7%
Valuation Review’s “Voice of the
Appraiser Survey”
Residential Appraiser’s believe their Fees
are: 12 % Unlivable
53 %
25 %
10 %
AMCs believe
8%
13 %
62 %
17 %
too low for work required
Reasonable for work required
Above the Average
Residential Appraiser’s Fees are:
Unlivable
Fees too low for work required
Reasonable for work required
Above the Average
More Poll Results from Appraisers
(4,691 responses)

What percent of your assignments result
in requests for clarification from the client?
 0%
10% of the time --- 45%
 11%-20% of the time - 19 %
 21%-30% of the time – 13%
 31%-40% of the time - 8%
 40% + of the time ---- 15%
Reference: www.Appraisalport.com
More Poll Results from Appraisers
(5,632 Responses)

How often does your client request
information that is already in the original
report?
 “Often”
 “Almost
 “Rarely”
 “Never”
always”
60% responded
12% responded
27% responded
1% responded
Reference: www.Appraisalport .com
Taking Back your Profession!

If you are receiving less than a customary
and reasonable fee or working with an
AMC who doesn’t seem to care about the
quality of your appraisals or the
competency of their staff, you’re working
with the wrong company.
**Note**
Customary and reasonable fees form
the base and can be negotiated
upward from there depending on
complexity, etc.
Questioning AMC’s Policies
If a loan fails to close, is it within the
law to withhold your payment for the
appraisal?
NO.
Questioning AMC’s Policies
Is the person running an AVM
required to have the requisite
experience, which means be
“licensed” as an appraiser?
Yes,
If the valuation is to be used by the
bank for lending purposes.
Questioning AMC’s Policies
Is it a good idea to “change” your
report at the request of an AMC or
Lender after submission?
NO.
“Changing” your report will probably
result in a complaint being filed with
your state appraisal board by the
AMC or Lender.
Questioning AMC’s Policies
Is it legal for an AMC to choose an
appraiser based solely on the lowest
fee?
NO.
Selecting an appraiser solely based on the
lowest fee is prohibited by numerous
federal regulations.
Questioning AMC’s Policies
Is it okay for an appraiser to give a
verbal” value estimate” over the
phone just to verify whether there’s
value?
NO.
This is a prohibited practice if the verbal
opinion is for a “lending purpose”.
Questioning AMC’s Policies
Is it legal for an FHA appraisal to
include a fee for management of the
appraisal process?
NO.
Questioning AMC’s Policies
Appraisers need to know much more
than their USPAP rules today.
 Appraisers need to be familiar with the
applicable Fannie Mae, Freddie Mac, FHA,
and VA requirements, Interagency
Guidelines, state and federal laws, and the
Certifications that appraisers sign and
include in every report.

Reference: This slide and the previous 7 slides taken from the
OREP/Working RE webinar, Part 2
All McKissock Instructors are
AQB Qualified USPAP Instructors
Time
Time is absolutely the most precious gift
we have. None of us know how much
time we have or how long it will last.
 You can’t buy it. You can’t replace it.
You can’t really give it to anyone. You can
only use it.

How you use your time is how you
make yourself different from
everyone else.
Residential Appraisal Production
Time

Time (hours)
0.20
1.50
0.20
2.50
1.35
5.00
0.50
0.20
1.05
12.50
Description
Receive, setup, maintain files
Research, data, maps, file info
Setting & confirming appointments
Drive to & from appointments (includes
comps. no shows and re-inspections)
Average appraisal inspection time
Writing report
Review, edit, corrections
Delivery, follow up confirmation
Unproductive time amortized
Average Appraisal Production Time
“How Did You Get That
Adjustment ?”
When a reviewer or underwriter asks about
your adjustment or says:
“This adjustment is not right.”
You might want to respond with:
“Show me that I am wrong.”
This often works. But be sure that you
can support your adjustment figure.
Square Footage & Public Records
Local Assessors are quick to point out
their data is a creation of mass appraisal
data for specific use within the tax
assessment process
 Experienced Assessor’s comment: “if any
agent uses the square footage info we
provide to figure out property values,
someone’s in big trouble.”
 Where does that leave Appraisers?


Reference: Kirchmeyer Klips Newsletter
Rebutting that “Blacklist” Letter
How can you rebut that “We will no longer
use you” letter you received from the bank or
AMC with no explanation?
 The Office of Comptroller of Currency (OCC) has
a Consumer Assistance Group and you can file a
complaint online at:
www.Helpwithmybank.gov .
 A letter to your state appraisal board will trigger
an inquiry for explanation from the AMC.

Reference: Working RE, Summer 2012, Pg 12
Why do Appraiser’s Leave this
Business ?
According to an Appraisal-Port Poll of
6,200 Appraisers:
AMC fee splits/ Lower fees
3,530
Increased report scrutiny
829
Endless new legislation
621
Increased liability
406
Current market conditions
298
Getting old & tired
165
Wouldn’t leave for any reason 351
Did You Know ?
36 % of U.S. households (or 32.4 million) own
at least one cat.
 90 million cats are owned in the United States.
 74.8 million dogs are owned in the United
States.
 39 % of U.S. households (or 29.2 million) own
at least one dog.

Reference: American Pet Products Manufacturers Association
Did You Know ?
90 % of the continental United States is still
open space or farm land.
 On average, 40 % of all hotel rooms in the
United States remain empty every night.
 If the Great Pyramid of Cheops were
disassembled, you would get enough stones to
encircle the earth with a brick wall 20 inches
high.
 The ostrich has the largest eyes of any other
land creature.

Reference: Business Review Newsletter
Did You Know?
The 102 story Empire State Building has
6,000 windows
 On a $100 dollar bill, the Independence
Hall clock shows the time as 4:10
 When Lifebuoy soap was introduced in
1897, it was called Life buddy soap.
 More arguments occur in the kitchen than
in any other room of an American home.

Reference: Business Review Newsletter
Did You Know?
West Virginia has the highest number of
homeowners at 77 %
 New York State has the lowest number of
homeowners at 55 %
 50 % to 70 % of home water use goes
toward gardens and lawns
 14 % is the portion of the water a
homeowner pays for that is never used; it
leaks down the drain.

Reference: Liberty Lines Newsletter
Did You Know ?
Lightning strikes the United States 25
million times every year
 There are 4 million miles of public roads
throughout in the United States
 The average thunderstorm lasts 30
minutes and has a diameter of 15 miles
 In 2010, tornadoes accounted for more
than $566 million in property damages

Reference: Liberty Lines Newsletter
Did You Know ?
Bugs Bunny was the first cartoon
character to be on a U.S. postage stamp
in 1997
 About 30 million American adults do not
own a cell phone
 97 % of on-line pharmacies sell fake,
expired, or contaminated products not
approved by the FDA

Reference: Bottom Line newsletter, January 2013
Check for Exclusions in Your
E&O Policy!
If your policy has an FDIC exclusion (no
coverage for claims initiated by the
Federal Deposit Insurance Corporation) or
a more general exclusion for claims arising
from “the failure and/or insolvency of a
financial institution,” your coverage and
protection may be limited or none.
 Check with your E & O provider for an
explanation of your insurance terms.

Checklist for a Good Relationship
Think “we” not “me”
 Learn to listen
 Work as a team
 Learn to negotiate
 Go on dates
 Praise your partner

YOUR JOURNEY THRU LIFE
Life is not a journey to the grave with the
intention of arriving safely and pretty in a well
preserved body.
 but rather, it is to skid in broadside, thoroughly
used up, totally worn out and loudly proclaiming

“WOW – WHAT A RIDE !!!”
From: [email protected]
Leadership and You
 True leaders are not those who strive to be first
but those who are first to strive, who have good
attitudes and give their all for the good of their
profession.
 Our lives are not determined by what happens
to us but how we react to what happens; not
what life brings to us but by the attitude we
bring to life !
Top 6 Languages of the World
Mandarin Chinese,
 English,
 Hindi,
 Spanish,
 Russian,
 Arabic,

1 Billion +
512 Million
501 Million
399 Million
285 Million
265 Million
Reference: Business Review Newsletter
Largest Private Owned Home in
U.S.A.
The “Biltmore Estate” is a large private
estate located in Asheville, North Carolina
 It is still owned by the Vanderbilt’s
descendants , with 250 rooms
encompassing some 178,926 square feet
of living area. Constructed 1889-1895
 www.romanticasheville.com/biltmore_hou
se.htm

CONVERSION CHART
INCH = DECIMAL
1”
2”
3”
4”
5”
6”
.083
.1667
.25
.33
.416
.5
INCH = DECIMAL
7”
8”
9”
10”
11”
12”
.583
.667
.75
.833
.916
1.00
MEASUREMENTS
7.92 inches
25 links
16.5 feet
4 rods
320 rods
5,280 feet
43,560 sq ft
640 acres
640 acres
36 sections
27 cubic feet
1 stone
=
=
=
=
=
=
=
=
=
=
=
=
1 link
1 rod
1 rod
1 chain
1 mile
1 mile
1 acre
1 sq mile
1 section
1 township
1 cubic yard
14 pounds
Ethics & Integrity
Always be ready to humble yourself
and find a mentor along the way.
No matter how successful we are
there is always room for
improvement when we open up our
minds to others, otherwise, we will
stagnate and fall by the wayside.
Ethics & Integrity
How far we go in life depends on your
being tender with the young,
compassionate with the aged, sympathetic
with the striving, and tolerant with the
weak and the strong.
Because someday in life, you will have been
all of these.
Observations
You can tell a lot about a person by the way
he or she handles three things:



1. A rainy day
2. Sitting in traffic jams
3. Tangled Christmas tree lights
Additional Observations
People will forget what you said ----- People will forget what you did ---- But people will never forget how you
made them feel.
 People remember people who
remember them.

The Perfect Husband
A husband forgot his wife’s birthday…
 His wife told him, “tomorrow there better be
something in the driveway for me that will go
from zero to 200 in 2 seconds flat”.
 The next morning the wife found a small
package on the driveway…When she opened the
package, she found a brand new bathroom
scale.
 Funeral arrangements for the husband have
been set for Saturday….

WE IS FRIENDS !






Me and You is Friends…
You Smile, I Smile…
You Hurt, I Hurt….
You Cry, I Cry…
You Jump off a Bridge…
I Gonna Miss You.
Did You Know..
The average American






Has 31 blood tests.
Eats 114,000 Tootsie Rolls.
Buys 6 cameras.
Makes 184,702 phone calls.
Eats 250 pounds of peanut butter.
Spends 4 years traveling in automobiles.
Reference: Business Review Newsletter
Did You Know..
The average American
Spends 2 years unsuccessfully returning
phone calls
 Six months sitting at stop lights
 Seven years waiting in lines
 Eight months opening junk mail and
 Watches 1 year of TV commercials.

Reference: Business Review Newsletter
Additional Observations

Population of U.S.A. =310 million (+/-)

50 million (+/-) lack enough info in their
credit history for a reliable FICO score.

AVM estimates of Value: Approximately
80 % of the U.S.A. lacks enough data for
a reliable estimate of value
Appraiser’s License Information

The FHFA has mandated that Fannie and
Freddie collect the license/certification
numbers of appraisers for the state in
which a subject property is located

This information is being incorporated into
Fannie and Freddie’s electronic delivery
system.
No More “Exterior Only”
Appraisals

Fannie Mae has announced that they will
no longer purchase mortgages with the
2055 Summary Report Form used for the
mortgage finance transaction.

Reference: Appraisal Institute News letter,
December,2012
FHA still has their own HVCC
 FHA
issued Mortgage letter # 200928 to ensure that their appraisers are
not subject to pressure from clients
and that they are allowed to operate
independently.
 FHA’s Mortgage Letter is very similar
to the FHFA interim rules issued on
10-19-10 for Fannie And Freddie.
HUD has their own blog:
“The HUDdle”
More interactive - advanced sharing,
embedding and multi-media with regular and
guest bloggers, video blogs and special
behind-the-scenes at HUD content.
 Check it out at:

http://hud-blog.omnitecinc.com
Reference: OREP Newsletter
This is Not Good News !
According to the Federal Reserve Bank of
New York and the New York University,
more than 40 percent of the FHA
loans originated from 2007 through 2009
will be delinquent within 5 years
 The study goes on to say that the FHA has
significantly underestimated that risk.


Reference: The FHA Update, July 2, 2012
Two Issues Facing HUD/FHA
The FHA has announced that it will
implement substantial reforms to
strengthen its single-family mortgage loan
program. The program is apparently 16.3
billion dollars in the red.
 The changes will limit borrowers with
credit scores below 620 to a total debt-toincome ratio of 43 %. It has also been
proposed that these borrowers have 10 %
down payment for purchases

FHA also announced that it will
discontinue its reverse mortgage program
that permits elderly homeowners to take as
much as 77% of appraised value out of the
residence. This program has proved to be
too costly for FHA.
FHA will continue to offer an
alternative program, which acts essentially
the same as a home equity program which
the homeowner may borrow against.
Reference: eVIP Appraisal News
Quote of the Week

“If you follow the rules that HUD has given to
you to the extent that you can — you recognize
that there may be a glitch here and there — as
long as you are operating in good faith and
trying to comply, HUD will help you get to full
compliance rather than try to slam you for an
immaterial oversight." - Jeff Arouh, partner,
Holland & Knight, New York,
Reference: RESPANEWS.com
GSEs Uniform Appraisal Dataset
(UAD)
Fannie Mae and Freddie Mac have
standardized the language used in the
residential appraisal reporting process.
 The stated purpose is to improve and
bring consistency to the quality of
reporting data that is most material to the
valuation of a property and/or critical to
determining the loan’s eligibility for sale to
the GSEs.

GSEs Uniform Appraisal Dataset
(UAD) Conti.

GSEs require appraisals be completed with
standardized responses in certain
appraisal report fields to include:
 Standardized
formats for fields that include dates,
values, etc.
 Allowable values from a list of choices provided
 Standardized abbreviations
 Standardized ratings and definitions for condition,
quality, and updating/renovations of the property
Uniform Appraisal Dataset (UAD)
The current version (Version 1.4, dated
June 17,2012) of the UAD specifications
and the 77 FAQs can be found on:
www.efanniemae.com
click on “Appraisers”
GSE’s Uniform Collateral Data
Portal (UCDP)
GSEs have developed the UCDP for the
electronic delivery of appraisal report
data, by lenders, to both Freddie Mac and
Fannie Mae.
 A PDF version of the appraisal report and
additional appraiser information delivered
using the UCDP prior to loan delivery for
the four residential appraisal report forms
is now in effect.

The Fannie Mae Selling Guide
has updated UAD Info
Most appraiser requirements and appraisal
information are located in: Part B, Sections
2 & 4.
 Appraisers are cautioned to stay current, as
the guide is constantly being updated.
 The link is:
https://www.efanniemae.com/sf/guides/ssg
/sg/pdf/sel 072611.pdf

Reminder About the UAD
The so-called "hard-stops" or “rejects”
kicked in on January 28th, and there are
lot of problems. Just to play it safe, you
should look at:
 https://www.fanniemae.com/content/user
_guide/ucdp-user-guide-fannie-maemessaging.pdf
 You might just go ahead and refresh on
all the UAD guidelines, at
www.efanniemae.com , click on
"Appraisers."

FHA Requires UAD
From FHA's Appraiser Newsletter:
 "When performing appraisals reported on
the URAR and the individual condominium
unit report form, FHA Roster Appraisers
are required to submit reports which are
UAD compliant.”
 FHA does not permit the use of either of
the two “Exterior only (2055 & 1075)
appraisal reporting forms."

V A requires the UAD too..

The V A also requires the use of the UAD
for the modified Fannie Mae 1004 and
1073 forms.

Start date for UAD compliance by FHA
and VA was January 1, 2012
The UAD and Appraisal-Port
Poll Question

Now that you are reporting appraisals using the
new UAD format, do you find it any more effective
or helpful with supporting your value?
-- Yes (5.1%) 271 votes
-- No, it actually makes it more difficult to
explain and support my research. (66.1%) 3525
votes
-- It's about the same as the previous format in that
regard. (28.8%) 1539 votes
Total Votes: 5335
Reference: Appraisal today Newsletter, Dec. 2012
Updated Requirements for
Residential Appraisers.
To be consistent with the Uniform
Standards of Professional Appraisal
Practice (USPAP), Fannie Mae is specifying
that their lenders (Financial Institutions)
must select appraisers with the knowledge
and experience in appraising the property
type in the market area and have access
to all the applicable data sources
Reference: Fannie’s Selling Guide Update
Age of Housing Units in the
United States







Pre
1920
1940
1960
1980
2000
2006
- 1920
- 1939
– 1959
– 1979
– 1999
– 2005
– Present
8%
9%
16 %
32 %
26 %
8%
1%
Source: U.S. Housing Market Conditions,
Third Quarter, 2012
Composition of Housing Stock
Housing Type
Total Occupied:
Owner Occupied:
Renter Occupied:
Vacant:
Seasonal:
 All Housing:

# of Units
%
75,665,000
59.0
35,954,000
27.3
13,092,000
10.2
4,392,000
3.4
129,103,000 100.0
Reference: U.S. Housing Market Condition, 3rd Qtr. 2012
How is your Appraisal Business?

FannieMae Appraisals per business day =
9,000 (+/-)

@ $300.00 (+/-) per appraisal.

That is 2.7 million dollars paid out for
appraisals every business day.
How is your Appraisal Business?

FreddieMac Appraisals per business
day = 7600 (+/-)

@ $300.00 (+/-) per appraisal.

That is 2.3 million dollars paid out
for appraisals every business day.
How is your Appraisal Business?

FHA Appraisals per business day = 12,000
(+/-)

@ $300.00 (+/-) per appraisal.

That is 3.6 million dollars paid out for
appraisals every business day.
Reference: Appraisal Today Newsletter
Want to Appraise for FHA?

Here is the web address for application
information and to apply on line. There is no
test required. There is no cost to apply.
http://www.hud.gov/groups/appraisers.
cfm
Reference: ICAP Bulletin , October, 2010
FHA FAQ Web Site
http://faq.fha.gov/ is a 24/7 source for FHA
information. Over 1,000 Q & A info items with
the mortgage letter or handbook references.
 FHA has deleted the requirement for second
appraisal on refinance loans above $417,000.
 FHA still requires a second appraisal for
properties resold 91 to 180 days. Client to pay
for the second appraisal. No second case
number required.


Reference: FHA Mortgagee letter 09-48
FHA Questions?

The new primary E-Mail address for FHA is
effective as of August 15,2011:
[email protected] or
www.HUD.GOV/answers
In addition, you may use the “Contact FHA”
tab to submit questions directly to FHA.
Reference: [email protected], e-mail, Aug.8, 2011
V.A. continues to expand their
Appraiser Roster through 2013

Appraisers and Compliance Inspectors receive
assignments on a rotational basis from the V.A.

For information, application forms, and V.A.
requirements, go to the VA website at:
www.benefits.va.gov/homeloans/appraisal.asp.
Click on “Fee Panel Application”

REF: Gerald Kifer, Chief VA Appraiser Program
Not a Good Sign !
Revised “Home Affordable
Refinance Program (HARP 2.0)”

Obama administration has announced a
revised program to step up aid to
homeowners and revive the housing
market. President Obama had originally
announced the “Making Homes Affordable
Program” in 2009, setting a goal of 3
million to 4 million refinanced loans by the
end of 2012.
Reference: Mortgage Bankers Newsletter
USPAP -- 17th Century Version
Whereas you are the chosen appraizers of
such lands or goods as are now presented
to you, you do heerby swear by the Living
God, that all partialite, prejudice and other
sinister respects layed aside, you shall
appraize the same, and everie part
thereof, according to the true and just
value thereof at this present, by common
account, by your best judgement and
conscience. So help you God.
Appraisers Oath, Massachusetts Code, 1648

Words by Teddy Roosevelt

It is not the critic who counts, not the man
who points out how the strong man
stumbles, or where the doer of deeds could
have done them better. The credit belongs
to the man in the arena, whose face is
marred by dust and sweat and blood, who
strives valiantly … who knows the great
enthusiasms, the great devotions, who
spends himself in a worthy cause,
Teddy Roosevelt, continued:
Who at best knows in the end of triumph
of high achievement, and who at the worst,
if he fails, at least fails while doing greatly,
so that his place shall never be with those
cold and timid souls who have never
known neither victory or defeat.
Teddy Roosevelt was President of the United
States, 1901 – 1909.
My Living Will
Last night, my kids and I were sitting in the
living room and I said to them,
“I never want to live in a vegetative state,
dependent on some machine and fluids from a
bottle. If that ever happens, just pull the plug.”
They got up, unplugged my computer and
threw out my wine!!
-- Smart Aleck Kids
Nice People Do Finish First !!






People want to deal with people they like.
People like people with whom they feel a
connection.
Connections build trust between people.
People want to help people with whom they feel
a connection.
People refer friends to people with whom they
feel a connection.
People want to do repeat business with
people they share a connection with.
Appraisal “Myth” Busting Time
Myth: “No taking comp or subject
photos with people in them.”
 There is NO such prohibition and never
was. Even HUD has been stymied by the
fact that so many in the lending profession
really think it’s been a law since 1968.
Fannie Mae has never had such a rule but
they have heard this since the 1970’s.

Reference: Illinois Appraisal Newsletter, October 2009
Want more info? [email protected]
LEARNING PYRAMID
Lecture
Reading
Audio-Visual
Demonstration
Discussion
Practice by Doing
Teaching Others
We Remember :
 10
 15
 20
 40
 80
 90
%
%
%
%
%
%
of
of
of
of
of
of
what
what
what
what
what
what
we
we
we
we
we
we
hear.
see.
see and hear.
discuss with others.
experience directly.
teach others.
Lets Hear it for Doodling !!
A recent study from the University of
Plymouth in England found that people
who doodled while listening to a tape had
29 % better recall than the other
participants, on average.
 Researchers theorize that doodling can
keep you from daydreaming while not
distracting you from the main activity.

Reference: Bottom Line News, 1-15-11
Appraisers Ranked # 8 in the
“Top 10 Jobs”
MONEY magazine has listed Real Estate
Appraisers as # 8, among the top 10 jobs in the
U.S.A.
 WHY? -- Valuations are needed whenever a
property is sold, mortgaged, insured, taxed, or
developed. Research isn’t the pain it used to be,
thanks to the internet.
 HOWEVER – There is still a lot of legwork and
advancement is limited.
 BUT – There is still going to be work, even when
the market slows down.

Working Real Estate Survey
93 % of the appraisers surveyed stated
that “appraising” was their primary source
of income
 7 % of appraisers surveyed said that
“appraising” was a secondary or
supplemental source of income.

Appraisal-Port Survey
5,000 respondents as of: 3-25-12

2011 Appraiser Gross Income:








8%=
17 % =
19 % =
18 % =
11 % =
7%=
11 % =
9% =
$1 to $25 K
$26 K to $50 K
$51 K to $75 K
$76 K to $100 K
$101 K to $125 K
$126 K to $150 K
$151 K +
Not Sure
Some of the Reasons why it is great
be an Appraiser !!
Dazzle your friends with your knowledge of
external obsolescence
Enter that wonderful world of rats, bats, fleas,
spiders, and snakes
Be a part of the profession that is blamed for the
collapse of the Savings & Loan industry
See places in people’s houses that usually require
a search warrant
Arouse suspicion of an entire neighborhood when
inspecting comparable sales
More Reasons why it is great be an
Appraiser !!
Chance to really irritate annoying real
estate sales people
Walk around holding a clipboard just like
“Skip” down at the Jiffy Lube
Spend hours writing volumes of supporting
documentation to justify the market value
of a property you already decided on
when you pulled into the driveway
Remodeling Costs vs. Returns –
as of: December 2012
Item
 Steel Entry Door Repl.
 Garage Door Replacement
 Roof Replacement
 Vinyl Windows Repl.
 New Exterior Siding
 Add Family Room
 Deck Addition
 Remodel Basement
 Remodel Bathroom
 Minor Kitchen Remodel
$ Cost
$ 1,200.
$ 1,200.
$14,200.
$10,200.
$12,100.
$74,800.
$15,039.
$64,000.
$40,590.
$28,000.
% Return
102 %
102 %
72 %
73 %
80 %
72 %
73 %
70 %
63 %
76 %
Check out your specific area at: http://www.costvsvalue.com
Replacement Time-lines
Re: Consumer Reports, October 2012













Clothes Dryer
Dishwashers
Microwave ovens
Ranges (gas/electric)
Refrigerators: (side by side)
Refrigerators: (Top Freezer)
Refrigerators: (Bottom Freezer)
Vacuum Cleaners (upright)
Wash Machine (Front Load)
Wash Machine (Top Load)
Digital Cameras
Camcorders
Computers (desk and Laptop)
6
5
5
7
7
5
7
4
7
6
3
4
3
years
years
years
years
years
years
years
years
years
years
years
years
years
The replacement timelines are a result of the high cost of repairing
these items.
Competency

What is the secret of your success?
“ good decisions.”

How do you know how to make the right
decisions?
“ Competency and Experience.”

How do you get this experience?
“ Bad decisions.”
Typical Appraiser’s Excuses
1.
 2.
 3.
 4.
 5.
 6.
 7.

I
I
I
I
I
I
I
didn’t think.
didn’t know.
don’t care.
was too busy.
leave well enough alone.
am not interested.
have no time to read and find out.
5 Major Causes of Failure
1.
 2.
 3.
 4.
 5.

Carelessness
Laziness
Indifference
Forgetfulness
Temptation
Professionalism







Thoughts
Words
Actions
Habits
Character
Destiny
-
Become Words
Become Actions
Become Habits
Become Character
Becomes Destiny
Becomes Professional
The appraiser’s professionalism was
confirmed in FIRREA and further
reinforced by the Dodd – Frank Act of
2010.
FIRREA
The Financial Institutions Reform Recovery
Enforcement Act was 20 years old in 2009.
Here is another definition of FIRREA ----
Finally, I’m a Rich Real Estate Appraiser.
Well – Maybe not yet !!
Appraiser’s Role in Home Ownership
The independent Real Property
Appraiser may be, the only unbiased
opinion that purchasers have to depend
on for sound investments in real property
housing.
 The ability, for millions of people to
reasonably obtain the American dream, is
directly impacted by the appraiser’s role in
the attainment of home ownership.

Can You Support “Effective Age”?
Go to:
www.mckissock.com
 Click on:
“Help”
Click on:
“Student Download”
You will find it there

Copyrighting your Appraisals

Definition of terms:

Author – The creator of the original work.

Original work - Your opinions, analyses, and
conclusions can be said to be original work by you.

Copyright mark – The copyright symbol, or the word
copyright and the date. Note: A mark is not required
to indicate copyright on a photograph.

Release – Written notification from the author
granting permission to use or copy their original work.
Copyrighting Your Appraisals
It is not necessary to notify the U.S. Copyright
Office to ensure copyright of your document.
 Here is a sample copyright statement you may
use in your appraisals:


“The analyses, opinions, and conclusions contained in
this document are copyrighted and are the
proprietary products of ------- Appraisal Company.
Any unauthorized use, reproduction, or transfer of
this document or any of its contents, in any medium,
is strictly prohibited. Offenders will be prosecuted to
the fullest extent allowed by copyright laws.”
Copywriting? Be Careful!

If you register the appraisal with the U.S.
Copyright Office it includes public
disclosure of the appraisal report. Such
disclosure of the assignment results would
constitute a breach of the Confidentiality
section of the ETHICS RULE of USPAP,
unless the appraiser had prior approval
from the client for such registration.

Reference: 2012/2013 USPAP, FAQ # 70
Some days are like that!
LOST DOG ---- NOTICE
Dog has three legs, blind in left eye,
missing right ear, tail broken, recently
castrated….
Answers to the name of “LUCKY”
Some Days are like that!
I want to thank you, Almighty One,
for being close to me, so far this day.
With your help I haven’t been impatient,
lost my temper, been grumpy,
judgmental, or envious of anyone…..
 BUT I WILL BE GETTING OUT OF BED
IN A MINUTE,
 And I think I will really need your help
then. Amen

Some Days are like that!
I was put on this Earth
to accomplish a certain number of
things.
Right now, I am so far behind,
I will never die.
It’s all in how you look at it..
My wife and I were sitting at a table at my high
school reunion, and I kept staring at a drunken
lady sitting at a nearby table swigging her drink.
 My wife asked if I knew her and I replied “yes,
she was my old girl friend and when we split up
many years ago, she took to drinking and I hear
she hasn’t been sober since.”
 “My God” my wife replied, “Who would think a
person could go on celebrating that long.”


I guess there are really two ways to look at
everything..
 Definition of an Appraiser 
An Appraiser is a person who passes as an
exacting technical expert on the basis of being
able to turnout, with prolific fortitude, infinite
strings of incomprehensible estimates calculated
with micrometric precision, from vague
assumptions and debatable figures taken from
inconclusive data, obtained with recording
devices of problematical accuracy by uninformed
persons of doubtful reliability and questionable
mentality !! 
The Appraisal Process
Define the Appraisal Problem
 Determine the “Scope of Work”
 Collect and Analyze the Data
 Determine “Highest and Best Use”
 Value the Property using the Applicable
Approaches to Value
 Reconcile the Value Indicators
 Prepare the Appraisal Report

Mysteries of life





Why is it that when someone tells you there
are over a billion stars in the universe, you
believe them, but if they tell you there is wet
paint somewhere, you have to touch it to make
sure?
“Stressed” spelled backward is “Desserts.”
“Growing old is mandatory. Growing wise is
optional.”
If a man is talking in the forest, and no woman
is there to hear him, is he still wrong?
“HUD” spelled backwards is _______?
Terrific Trivia

Venus is the only planet that rotates clockwise.

90 % of Canada’s population live within 100 miles of the
U.S. border.

The biggest dog on record was an Old English mastiff
that weighed 343 pounds. He was 8 feet, 3 inches from
nose to tail.

In 1997, the fully restored USS Constitution (aka “Old
Ironsides”) celebrated her 200th birthday by setting sail
for the first time in 116 years.

The ZIP in ZIP code stands for: “Zoning Improvement
Plan”.
More Trivia
Many years ago in Scotland, a new game
was invented. It was ruled “Gentlemen
Only …. Ladies Forbidden” Thus the word
GOLF entered the English Language.
 The average number of people airborne
over the U.S. in any given hour is 61,000.
 Bulletproof vests, fire escapes, windshield
wipers, and laser printers were all
invented by women

Sign of the times

Do you want to speak to the “man” in
charge, or to the “woman” who knows
what’s going on ?

Arguing with an appraiser is like
wrestling with a pig in the mud. After a
while you realize that the pig enjoys it !!
Some Dodd – Frank Act
Requirements
Mandates customary and reasonable fees
for appraisers (Now assigned to the BCFP)
 Designations can be a factor in deciding
which appraiser gets the assignment
 ASC will assume the duties of the IVPI
(which never did materialize) to handle
appraiser independence violations
 Federal Regulators update Appraiser
Independence Standards for FRTs

Some Dodd – Frank Act
Requirements
Appraisers now pay $40 per year to
support the ASC as of Jan. 2012
 ASC to give grants to State Appraisal
Boards to assist in enforcement actions
 Independent AMCs required to be
registered in the state in which they
operate
 Independent AMCs subject to peer review
by State Appraisal Boards

Some Dodd-Frank Act
Requirements

Lenders are not required to have Licensed
or Certified Appraisers to review appraisals

Lenders must send the appraisal reports
to the state enforcement agency if there
are significant errors or evidence of Ethics
or other USPAP violations.
Update : Customary and
Reasonable Fees
As of July 1, 2011, the Federal Reserve
Board handed this issue to the Bureau of
Consumer Financial Protection (BCFP).
 The authority for this new consumer
protection bureau was part of the DoddFrank Bill.
 The BCFP officially began operations on
June 21, 2011.

Credit Card Theft?

Report it, and request that a fraud alert
be placed on your credit file.
Experian
 Equifax
 Trans Union

888-397-3742
800-525-6285
800-680-7289
Want a Copy of your Credit Report?

Federal law allows you to receive a free copy of
your credit report once a year from the big three
credit reporting companies. To order:

From Experian, Equifax, and Trans Union, call:
1-877-322-8228

Internet site: www.annualcreditreport.com

Mail address: Annual Credit Report Request
Service, POB # 105283, Atlanta, GA 30348-5281
Someone using your Social Security
Number ?

Report the unauthorized use to the Social
Security Administration’s Fraud Hot Line
at:
1-800-269-0271
Other Items of Interest

“Don’t call me anymore” (for home and cell
phones)



“Stop the credit card junk mail”



Call: 1-888-382-1222
Internet: www.donotcall.gov (good for 5 years)
Call: 1-800-353-0809
Call: 1-888-567-8688 (For all three credit bureaus)
“Stop giving, sharing or selling my
personal financial data”

Inform the sender of your “OPT-OUT” decision. You
only have to do this once. This is included with their
privacy notice which you must receive annually.
Did You Know?

The hottest air temperature ever recorded
was in Africa (Libya) at +136.4 degrees
Fahrenheit on September 13,1922.

The coldest temperature ever recorded was
in Antarctica at -129.6 degrees Fahrenheit.

Manholes are round so their covers can’t
accidentally fall inside when tipped on their
ends.
Did You Know?
The Declaration of Independence has 25
signatures affixed to the document.
 Chicago’s Sears Tower has its own zip
code.
 According to his business card, Al Capone
bought and sold used furniture.
 Mount Everest grows at a rate of 4
millimeters per year.
 Our necessities never equal our wants.

Did You Know?

The State of Michigan has more than 3,000 miles of
shoreline, which is longer than the entire Eastern
seaboard from Maine to Florida.

“Uncle Tom’s Cabin” was the first American novel
(published in 1852) to sell more than one million copies.

The world’s smallest church is located in Oneida, New
York. It is only 3 ½’ x 6’.

Richard Nixon was the first U.S. president to visit China
(February, 1972).
Did You Know?
The sentence: “The quick brown fox jumps over
the lazy dog” uses every letter of the alphabet.
 The words ”racecar”, “kayak”, and “level” are
the same whether they are read left to right or
right to left (palindromes).
 :Stewardesses” is the longest word typed with
only the left hand and “lollipop” with your right
hand.
 Maine is the only state whose name is just one
syllable.

And Finally, Did you Know?
Henry Ford failed in business 5 times before
he started the Ford Motor Company.
 Michael Jordan was cut from his high school
basket ball team.
 Warren Buffett failed to qualify for entrance
to Harvard’s Business school.

“Success is the process of becoming
who you already are.”
There are NO Generic Appraisals!!

Judgment phase of the Appraisal:
 Identify
the problem
 Determine the appropriate Scope of Work that will
produce credible assignment results for the
intended use

Execution phase of the Appraisal:
 Perform
the Scope of Work
 Disclose the Scope of Work actually performed, in
the Appraisal report, so the client and intended
users are not mislead
Reference AO-22, Scope of Work --
Relevant Characteristics

The Scope of Work requires the appraiser to
identify the relevant characteristics of the
property being appraised.

Relevant characteristics consist of:



Legal Characteristics – i.e.: zoning, Leasehold and/or
leased fee interests, etc.
Economic Characteristics – i.e.: the market
Physical Characteristics – i.e.: remodeling,
renovations, stigmas, etc.
Reference AO-23, Relevant Characteristics --
McKissock Appraisal School
You want Snacks?
You’re lucky you got coffee!
Story with a Moral !
Charles Schwab was president of the
worlds largest steel company. He died a
pauper!
 Edward Hobson was the president of the
largest gas company. He went insane!
 Richard Whitney was the president of the
New York Stock Exchange. He was
released from prison to die at home!

Story with a Moral !
Arthur Cooger was the greatest wheat
speculator. He died abroad, penniless!
 The president of the Bank of International
Settlement committed suicide!
 Gene Sarazen won the U.S. Open and was
golf’s PGA champion. He played golf until he
was 92, and died in 1995 at the age of 95. He
was financially secure at the time of his death.


The Moral: Work less, Take the Time to
Enjoy your life !
Your Success Motivators

Think about these things as you look into
the mirror every morning:
 You
were born to become the best that you
can be.
 You were born to achieve things that make a
real contribution to life and happiness—
including your own.
 You know your success potentials. Work with
them.
Your Success Motivators
 You
can create a new dynamic personality
through your own personal enrichment
program.
 You are a winner, not a loser.
 You can achieve your goals not by stepping
on other people but by using your own talents
to ensure success.
 Take one day at a time, but
 you need to get started today.
Avoiding Lawsuits

Do Not accept an assignment beyond your
experience. If you get into trouble with
the assignment, get help quickly.

Document everything you do and keep a
complete work file. Good records make
for a good defense if it comes to litigation.
Avoiding Lawsuits

Photograph all properties appraised. Take
pictures of any deficiencies noted. Take
additional pictures, for your files, to show
condition at time of appraisal.

Establish sound office procedures to
eliminate those clerical errors. Proof all
reports before they leave the office.
Avoiding Lawsuits

Never assume a structure’s defects will be
noted by other professionals. Note all
property deficiencies in your report and
their effect on value / marketability.

Use disclaimers if you find a situation
outside your area of expertise. Identify,
disclose, and disclaim.
Avoiding Lawsuits

Do not assume or take the client’s /
owner’s word on anything. You will be
held accountable. Remember, you are
supposed to be the expert. Verify and
document the extent of the verification.

Do not give casual advice or opinions.
You are the professional and you will be
held to that higher standard of care.
Avoiding Lawsuits

Plan the appraisal. Carefully determine
the appropriate SCOPE OF WORK to
satisfy the assignment with a credible
opinion of value.

Know who your client is. Know who the
intended users are. Know exactly what
the intended use is for your appraisal.
Avoiding Lawsuits

You hold yourself out to the public as an
appraiser. You are the expert! You will
be held to a higher degree of care and
competency by your peers, the public, and
the courts.

Do not criticize work accomplished by
another appraiser without having all of the
facts.
Avoiding Lawsuits

Stay “up-to-date” on current trends,
rules and regulations, and supplemental
standards.

Not being “up-to-date” is not an excuse.
It is a violation of the COMPETENCY
RULE, found in the Uniform Standards of
Professional Appraisal Practice (USPAP).
Who is Suing Appraisers?

Four of the parties that are suing the most
appraisers:
 LSF6
Mercury REO Investments
 Lehman Brothers Holdings, Inc
 Heritage Pacific Financial
 Federal Deposit Insurance Corporation
Note: The FDIC has also begun targeting
commercial appraisers with lawsuits and
subpoenas
Reference: Appraisal Management Liability Webinar
FDIC getting “Aggressive”

The FDIC has begun to get very
aggressive with appraisers that supplied
appraisals to banks that the FDIC has
closed, merged, or taken over in the past
4 years.

FDIC is suing the appraisers for monetary
damages in connection with discrepancies
found in their appraisal reports.
FDIC Sues More Appraisers
"In the two weeks leading up to Thanksgiving
Day, the FDIC sued 32 individual residential
appraisers and several mortgage
brokers/bankers in 12 separate lawsuits.
-- in the last three years, the FDIC has sued a
total of 151 appraisers and appraisal firms in AZ,
CA, GA, IL, MD, MI, MN, NV, NY, SC, and UT. In
addition, the FDIC has identified approximately
350 additional appraisers as having delivered
negligent appraisals to the two AMCs it has
sued.“
Reference: Appraisal Today Newsletter, Dec. 2012
FHFA Sues UBS to Recover
GSE Mortgage Losses
UBS Americas Inc., several of its
subsidiaries, and former executive officers
were sued on July 27, 2012 in U.S. District
court for the Southern District of New
York.
 The Federal Housing Finance Agency
(FHFA) brought suit charging violations of
securities laws in the sale of private label
residential mortgage-backed securities to
Freddie Mac and Fannie Mae.

* IRS Requires Qualified Appraisers *
(Part 1)
Congress has approved the Pension Reform Act.
 As part of this Act, the IRS requires that
appraisals for Estate Taxes and for non-cash
Charitable Contributions (conservation and
historical preservation easements) be performed
by qualified appraisers, such as those who have
earned a designation from a professional
appraisal organization (AI, NAIFA, ASA, etc.)
and who meet other requirements.

Ref: Appraisal News On Line, 10-3-07
* IRS Requires Qualified Appraisers *
(Part 2)

The I.R.S. is now requiring appraisals to be in
conformance with generally accepted appraisal
standards (USPAP) and the Federal Appraisal
Standards of Practice (better known as the
Yellow Book) when applicable.

They now have the authority to impose
accuracy-related penalties on taxpayers and
appraisers who provide substantial or gross
miscalculations.
Ref: Appraisal News On Line, 10-3-07
IRS: Tax Preparer Definition
Includes Appraisers

The Internal Revenue Service has issued a
memorandum reminding appraisers
engaged in the preparation of gift or estate
tax returns that they are subject to civil and
criminal penalties for conduct the Internal
Revenue Service considers problematic.
IRS & Appraisers, (conti.)


As stipulated in the Pension Protection Act
of 2006 under Internal Revenue Code
Section § 6695 (and the subsequently
added Section § 6695A), appraisers who
submit substantial or gross valuations are
subject to monetary penalties if they knew,
or reasonably should have known, that the
appraisal would be used in a tax return or
refund claim.
Reference: Appraiser News on-line, Appraisal Institute, 9-30-09
Bizarre Quotes

“As of tomorrow, employees will only be
able to access the building using individual
security cards. Photos will be taken next
Wednesday and employees will receive
their cards in two weeks” –Microsoft Corp.

“E-Mail should not be used to pass on
information or data. It should be used for
company business.” –Electric Boat Corp.
Bizarre Quotes

Memo from senior management saying:
“This is to inform you that a memo will be
issued today regarding the subject
mentioned above.” – Microsoft Corp.

Quote from a manager: “Teamwork is a
lot of people doing what I say.” –Citrix
Corp.
More Bizarre Quotes

The lawyer asked the witness: “ Now Doctor,
isn’t it true that when a person dies in his sleep,
he doesn’t know about it until the next
morning?”

In a divorce case the judge announced: “I have
decided to give your wife $775 a week.” The exhusband replied: “That sounds fair, your Honor.
I’ll try to send her a few bucks myself.”
More Bizarre Quotes

A church bulletin announcing an upcoming
marriage: “So ends a friendship that
began in their school days.”

A church bulletin announced their annual
tithing campaign with the slogan:
“I upped my pledge … up yours.”
Bizarre Quotes

“Doing it right is no excuse for not
meeting the schedule. No one will believe
you solved this problem in one day!
We’ve been working on it for months.
Now, go act busy for a few weeks and I’ll
let you know when its time tell them.” –
Mining & Manufacturing Div./3M Corp.
Bizarre Misprints

“Arthur Adams was seriously injured
Saturday afternoon when he came into
contact with a high voltage wife.”

“For Sale. Lovely rosewood piano. Owner
going abroad with beautiful twisted legs.”

“At the fair they will exhibiting a full range
of shoes for girls with low cut fancy
uppers.”
Bizarre Misprints

“Wrap poison bottles in sandpaper and
fasten with scotch tape or a rubber band.
If there are children in the house, lock
them in a small box.”

“A heavy pall of lust covered the upper
two-thirds of Texas last night and was
expected to drift south-east over the rest
of the state by morning.”
How About This!
The French customs inspector admonished
the elderly 83 year old man for not having his
passport ready for inspection saying that all
Americans have to show their passports upon
arrival in France.
The elderly American quietly replied “ When
I came ashore at Omaha Beach on D-Day in
1944 to help liberate this country, I couldn’t find
any Frenchmen to show it to.”
These comments were made in
1959
“I’ll tell you one thing, if things keep going the
way they are, it’s going to be impossible to buy
a week’s groceries for $20.”
 “If cigarettes keep going up in price, I’m going
to quit. A quarter a pack is ridiculous.”
 “Did you hear the post office is thinking about
charging a dime just to mail a letter.”
 “Have you seen the new cars coming out next
year? It won’t be long before $2,000 will only
buy a used one.”

How many types of Appraisals are
there?

There are still two types of Appraisals:


Good Appraisals
and
Bad Appraisals.
Definitions
Rural - Suburban - Urban
If you stand naked on the front porch and
the neighbors can’t see you …… it’s
Rural.
 If you stand naked on the front porch and
the neighbors call the cops on you….. it’s
Suburban.
 If you stand naked on the front porch and
the neighbors ignore you….. it’s Urban.

Only for those, who can relate.

1983:
Long hair
Hoping for a BMW
Going to a new, hip
joint.
Rolling Stones
Disco
Passing the driver’s
test.
KEG
Acid Rock
TODAY:
Longing for hair
Hoping for a BM
Receiving a new
hip joint.
Kidney Stones
Costco
Passing the Vision
test.
EKG
Acid Reflux
The Year was 1913 !!
Average life expectancy was 47 years.
 Only 14 percent of homes had bathtubs.
 Only 8 percent of homes had a telephone.
 The maximum speed limit in most cities
was 10 mph.
 There were only 8,000 cars and only 144
miles of paved roads.
 The average wage was 22 cents per hour.

Census Tract Info & Maps
For Census Tract information and statistics,
using the street address:
 http://www.ffiec.gov/geocode/default.htm

For Census Tract maps:
 http://ftp2.census.gov/plmap/pl-trt/ click on
state, then county.

Source: www.appraisersforum.com
Are You Being Sued?
Game Plan:
1) Send the summons and complaint to
your Insurance carrier immediately.
 2) Retain an attorney, if you do not have
E & O Insurance.
 3) Collect and organize your work file.
Make a copy and give to your attorney.
 4) Do not discuss the lawsuit with other
involved parties or their counsel.

Are You Being Sued?
Game Plan:

5) Be prompt, be courteous, be thorough,
and be truthful with your insurance
representative or with your attorney.

6) Become a partner with your attorney.
The attorney works for you, not the other
way around.
Are You Being Sued?
Game Plan:

7) Provide the following in a timely
fashion:
 Provide
a detailed narrative including
everything about your role in the case.
 Insist on an early face-to–face meeting with
your attorney and have all pertinent
documents available.
 Actively participate in both the discovery and
settlement (if applicable) phases of the
litigation.
Are You Being Sued?
Game Plan:
Dealing with a lawsuit can be a very
stressful experience.
 The lawsuit will not simply disappear. It
must be resolved in some way.
 You must take some proactive steps
toward resolution.
 The successful resolution of the suit will
allow you to return to your productive
business as soon as possible

Ken Guilfoyle
Senior Certified National Instructor
McKissock L.P.
P.O.B 1673
Warren, PA 16365 - 3158
Phone:
Fax:
800-328-2008
814-723-7289
On the Web: www.mckissock.com
E-Mail:
[email protected]
Who Files Complaints Against
Appraisers ?
50% are initiated by lenders, lender
regulators, staff appraiser reviewers, etc.
20% are initiated by borrowers and
homeowners.
20% are initiated by other appraisers.
10% fall into the others category.
Who Sues Appraisers ?

50% to 70% of appraiser law suits are
from third parties – sellers, buyers,
borrowers, other party in a divorce, etc.

30% are from lenders trying to recover
monies from a mortgage in default.
Why do Appraisers get Sued?
Main reasons for lawsuits:
Appraiser’s failure to detect and disclose
obvious defects.
 Errors in Square Footage. Don’t rely on
public records or someone else’s appraisal.
 Over or under valuation of the property

When do Appraisers get Sued?
Average of 18 to 48 months after the
appraisal.
 If there is a buyer defect, within a couple
of months.
 As long as 10 years for lender claims.
 There is no statute of limitations for fraud.

Reference: Appraisal Today Newsletter
Why Are Appraisers Disciplined ?
1) Failing to inspect the subject property
and/or the comparable sales.
 2) Failure to seek the professional
assistance of another individual.
 3) Falsely claiming a personal inspection
of the subject property.
 4) Forgery of another appraiser’s
signature and/or license number.
 5) Use of an expired license.

Why Are Appraisers Disciplined ?





6) Failure to analyze prior sales, pending sales,
and/or listings of the subject property.
7) Use of a suspended license.
8) Falsified Appraisal Log for upgrade
certification.
9) Failure to adequately disclose the scope of
work performed in appraisal assignments.
10) Commission of errors in the sales
comparison approach to value.
Why Are Appraisers Disciplined ?





11) Appraiser lacked either geographical or
technical competency.
12) Misrepresentation of relevant property
characteristics, i.e. neighborhood factors, site,
improvements, stigmas, etc.
13) Commission of errors in the cost approach
and income approach to value.
14) Reliance on boiler-plate comments that are
not relevant to the assignment.
15) Omission of relevant information from the
appraisal report.
Do You need E&O Insurance?





An appraiser is being sued for not reporting that
insulation in a home was vermiculite and
contained asbestos.
Trial date is set. Estimated cost to defend the
appraiser is $35,000.
E&O Insurance cost is $1,400 (+/-) per year.
It you appraise long enough there is a good
chance that you will be sued.
Without E&O Insurance, you have no protection
at all.
10 Tips to Reduce Your
E & O Exposure
Keep good work files in anticipation of
litigation
 Establish sound office procedures to
reduce errors
 Do not accept assignments outside your
geographical area or your area of
expertise.
 Clarify your Scope of Work as effectively
as possible.

10 Tips to Reduce Your
E & O Exposure
Verify information given to you by others.
 Use specifically drafted additional
language to limit your liability and clarify
your Scope of Work.
 Take interior and exterior photographs of
all properties appraised.
 Limit the distribution of your report
whenever possible.

10 Tips to Reduce Your
E & O Exposure
Before hiring a new appraiser, employee
or independent contractor, thoroughly
investigate their qualifications and
experience.
 Affiliate with a nationally recognized
appraisal association and keep up to date
with new developments in your
profession.

REMEMBER WHEN--?
“2012/20013 USPAP”
Remember these 24 pages !







Pg 7: Ethics Rule
Pg 10: Record Keeping Rule
Pg 11: Competency Rule
Pg 13: Scope of Work Rule
Pg 15: Jurisdictional Exception Rule
Pg 16 thru 21: Standard 1, Developing a Real
Property Appraisal
Pg 22 thru 30: Standard 2, Reporting a Real
Property Appraisal
Sample Statements Required
by 2012-2013 USPAP


I have not provided any services in any
capacity to the subject property within the
past three years. (Ref: SR 2-3)
The exposure time for the subject
property is similar to the comparable or
competitive properties as identified in the
appraisal report. ( Ref: SR 2-2b(v)
Comment)
Exposure Time Sample (conti.)

The following statement is actually taken
from the pre-2005 Fannie/Freddie
certification pages (1004B):

"Unless noted otherwise in the
report, exposure time is the same as
the marketing time indicated in the
Neighborhood Section."

Keep in mind that exposure time is looking
back, while marketing time is looking
forward.
“2012/2013 USPAP-on-Line”
Looking to paste something from USPAP
into your report?
 Here is the link to “USPAP-on-Line” from
the Appraisal Foundation…

http://www.uspap.org/2012USPAP/eUSPA
P2012.htm
2014-2015 USPAP Courses
The Appraisal Foundation (TAF)
contracted with McKissock, L.P. to write
the 2014-2015 USPAP 7 Hour Update
and the 15 Hour USPAP “on-line”
courses, subject to oversight by TAF
 TAF will write both of the “in-class”
2014-2015 USPAP courses.

Appraising Vacant Land
Licensed or Certified Residential Real
Property Appraisers may appraise vacant
land that is zoned for residential 1 to 4 unit
use or the highest and best (HBU) is
residential 1 to 4 unit use.
 All other vacant land must be appraised by
a Certified General Real Property Appraiser

Reference: TAF’s “The Real Property Appraiser Qualification Criteria” booklet, effective
January 1, 2008
Can You Support “Effective Age”?
Go to:
www.mckissock.com
 Click on:
“Help”
Click on:
“Student Download”
You will find it there

How Do You Extract “Forecasting”
& “Quick Sale” Adjustments
Go to:
www.mckissock.com
 Click on:
“Help”
 Click on:
“Student Download”
You will find it there.

Fannie Mae, Freddie Mac, & FHA
Set Loan Limits for 2013

The Maximum Loan amounts for 2013
(announced 12-1-12) are $417,000. for one-unit
properties except for certain “permanent” highcost areas in the Northeast and Southern
California. Maximum loan amounts will be
reduced to $625,000.00 in those areas

Congress continued FHA’s Maximum Loan
amount for one unit properties to $417,000. for
most areas in the U.S. as of January 1,2013

Reference: Appraisal institute Newsletter, & www.efanniemae.com, Loan limits page
What is a Billion?





A billion seconds ago, it was 1974.
A billion minutes ago, Jesus was alive.
A billion hours ago, our ancestors were living in
the stone age.
A billion days ago, no one walked on the earth
on two feet.
A billion dollars ago, was only 6 hours and 20
minutes at the rate our government spends our
money.
What is a Trillion?



If you paid someone a dollar a second to reach
$1 Trillion, it would take 31,700 years.
If someone paid you $100 every second, you
would be a millionaire in one day with more
than $8.6 million. To amass $1 Trillion, you
would have to receive the money day and night
for 317 years.
$1 Trillion would be equal to a stack of $1,000
bills 67 miles high.
Reference: Washington Post article, “Thinking about the Unthinkable”
Is This Really True ?
What four positive numbers have a sum
that is equal to their product? Meaning:
a+b+c+d=axbxcxd
Reference: Parade magazine, March, 2008
Answer: 1, 1, 2, and 4.
What Do You Really See ?
What Do You Really see?
ATTENTION: FHA Appraisers

HUD has moved its HUDClips website for
notices, handbooks, mortgagee letters,
FAQs, federal register notices, Q & A
information, and other important
documents to:
http://www.hud.gov/offices/adm/hudclips/
index.cfm
What Do You Really See?
Do You Know This About
COMPETENCY ?
If you stay even – You loose !!
Continuing Education is a
MUST.
What Do You Really See?
Can You Recognize a
“STROKE” Victim?

Neurologists say they can reverse the effects of
a STROKE, if treated within three hours.

Bystanders can recognize a STROKE by asking
three simple questions:




Ask the individual to SMILE.
Ask him or her to RAISE BOTH ARMS.
Ask the person to SPEAK A SIMPLE SENTENCE
(coherently).
If he or she has trouble with any of these tasks,
call 9-1-1 immediately and describe the
symptoms to the dispatcher.
Stress Management Technique








Close your eyes. Picture yourself near a stream.
Birds are softly chirping in the cool air.
No one but you knows your secret place.
You are in total seclusion from the hectic pace
called the world.
The soothing sound of a gentle waterfall fills the
air with a cascade of serenity.
The water is crystal clear.
You can easily make out the face of the person
you’re holding underwater.
See! You’re smiling already.
Heard at Zoning Hearings
Interpretation
Do You
Understand
SAND
GROUND
Feet
Feet
Feet
Feet
Feet
Feet
__MIND__
MATTER
LE
VEL
__WEAR__
LONG
Dice
Dice
__MAN__
BOARD
R
R OAD
A
D
T
O
W
N
He’s / Himself
__STAND__
I
R / E/A/ D
CYCLE
CYCLE
CYCLE
____0____
BA
MBA
PHD
Sand Box
Man Overboard
I Understand
Six Feet Underground
Cross Roads
Read Between the Lines
Mind Over Matter
Long Underwear
Downtown
Tri Cycle
Un Level
Two Dice
He’s Beside Himself
3 Degrees Below Zero
__MIND__
MATTER
LE
VEL
Interpretation
SAND
GROUND
Feet
Feet
Feet
Feet
Feet
Feet
__WEAR__
LONG
Dice
Dice
__MAN__
BOARD
R
R OAD
A
D
T
O
W
N
He’s / Himself
__STAND__
I
R / E/A/ D
CYCLE
CYCLE
CYCLE
____0____
BA
MBA
PHD
Our Bundle of Rights
GUSHER
Use It
Sell It
Give It Away
Rights
In
Real Estate
Refuse to
Do anything
Hire It
Or
Lease It
Enter It
Or
Easement
All Possible Land
Uses
Physically
Possible
Legal
Financially
Feasible
Maximally
Productive
Highest and Best Use
Mortgage Loan Fraud
“Mortgage Fraud is rampant.
It’s a crisis in the making.”
This is according to the FBI.
Mortgage fraud is committed for
one of two reasons

To obtain a property

To gain a profit
What should you remember?

When appraisers go bad, they need to be
prosecuted.

Don’t send your problems
down the street.
From the FDIC !

The FDIC Vice-Chairperson recently
testified at a Congressional SubCommittee Hearing (March 2012):
 There
are 4,375 Mortgage Fraud
investigations now in process by the FDIC.
 The FDIC expects to open more than 9,000
investigations in the next 3 years.
 The investigations are targeting Mortgage
Brokers, Attorneys, Agents, Appraisers, Title
Companies, and Insurance Companies.
Reference: Appraisal Scoop News Letter
FDIC filing Lawsuits - The
FDIC is now filing MBS
complaints and lawsuits against
mortgage originators, banks, and
other MBS investors.
 FDIC now using retrospective AVM
models to claim that appraisals at
issue were flawed and failed to
comply with USPAP
Reference: Appraisal today news letter, April 10, 2012
We Saw This Coming !!
Financial institutions filed 19,934
suspicious activity reports involving
mortgage loan fraud in the three months
ended Sept. 30,2012, up from 16,567 in
the same period of 2011.
Nearly 62% of the filings in the quarter
involved suspicious appraisal activity that
began at least four years ago.
Reference: Financial Crimes Enforcement Network.
Appraiser’s Mortgage Fraud
Settled via Consent Orders
Two Real Property Appraisers have settled
their mortgage fraud claims with consent
orders issued by a U.S. District Judge.
 Both appraisers will pay $100,000 in
penalties and are barred from performing
appraisals for federally-insured loans.
 They were charged with conspiring to
commit mortgage fraud in connection with
the sale of residential properties.

Reference: Mortgage Fraud blog
From “Valuation Review”
Newsletter
The Property Valuation Fraud Index has
increased 46 % from the same period one
year ago.
 Analysts expect the Index to continue to
rise over the next three years as ARM
loans reset throughout 2012 & 2013.
 Comment: Do not let your E & O
Insurance lapse.


Reference: Valuation Review Newsletter, 11-09-12
Additional
Thoughts….??
• Rather fail with honor than succeed by fraud.
(by: Socrates)
• Crime pays or there would not be any crime.
(by: G. Gordon Liddy)
• The worst day at work is better than the best day
in prison.
(by: Unknown)
• I didn’t do it. Nobody saw me do it. Can’t prove
anything. (by: Bart Simpson)
Types of Fraud
Fraud for Property/Housing
Perpetrator is borrower
 Involves single loan:

 Income & property value may be altered
 Down payment may be borrowed
 Debt may be undisclosed
Borrower seeks housing and/or cash from
loan
 Borrower intends to repay
 Accounts for approx. 20% of all
Mortgage Fraud

Types of Fraud
Fraud for Profit
Often involves industry professionals
 Multiple loan transactions and/or
institutions
 Includes many (Gross) misrepresentations
 Participants frequently paid for participation
 Borrowers sometime unaware of scheme
 Accounts for approx. 80% of all
Mortgage Fraud

Typical Fraud
(For Profit) Schemes
Backward Application
 Air Loans
 Silent Second
 Nominee Loans
 Property “Flips”
 Inflated Appraisals
 Equity Skimming
 Foreclosure Schemes

Another Study about Mortgage Fraud
Base-Point Analytics has found that
misrepresentations on loan applications have
accounted for up to 70 % of mortgage early
payment defaults (EPDs)
 Analyses of more than 16,000 loans revealed
misrepresentations in the loan file that later led
to default.
 The misrepresentations included:





Income inflated by more than 500 %
Overvalued property appraisals by 100 % or more
Fictitious employers, and
falsified tax records
Reference: http://home.businesswire.com 2-16-12
Modified Loans Re-default at
High Rates
A report issued by the Office of the
Comptroller of the Currency and the Office
of Thrift Supervision has found that 55 %
of loans modified in the first quarter of
2011 were 30 or more days delinquent
after six months.
 The findings were based on loan-by-loan
data in a standardized format for 35
million first-lien mortgages.

Reference: Appraiser News
Mortgage Loan Fraud
COMMON MISREPRESENTATIONS
INCOME & EMPLOYMENT
1. Income is overstated.
2. Length of employment
is overstated.
3. Fictitious employment
is reported.
4. Employment is
backstopped by
co-conspirators.
OCCUPANCY
1. Borrower intends to use
property for rental
income.
2. Borrower is purchasing
property for another
party.
3. Appraisals almost
always list the property
as owner occupied.
Mortgage Loan Fraud
COMMON MISREPRESENTATIONS
ASSETS AND COLLATERAL
1. Assets are overstated.
2. Collateral is overstated.
3. Collateral is nonexistent
(forged promissory notes
and Land Contracts).
4. Collateral is stolen or
counterfeit (fraudulent
money orders).
DEBT & CREDIT
1. Borrower's debts are
not fully disclosed.
2. Borrower's credit history
is not fully disclosed or
is altered.
3. Borrower assumes the
SSAN# of another
person.
Mortgage Loan Fraud
COMMON MISREPRESENTATIONS
DOWN PAYMENT
1. Down Payment does
not exist.
2. Down Payment is
concealed in a nonexistent Land Contract.
3. Down Payment is
borrowed and
disguised with a
fraudulent gift letter.
PROPERTY VALUE
Property value is inflated to:
1. Increase the sales value to
make up for no down
payment..
2. Generate cash proceeds
in fraud for profit.
Money Lost to Mortgage Fraud?
 The
actual amount of money lost to
mortgage fraud each year is
unknown.
 No
central organization collects
mortgage fraud loss data.
Federal Bureau of Investigation
Supervisory Special Agent: Ronda Heilig,
Financial Institution Fraud Unit
Work Phone: (202) 324-8634
How to avoid getting snared in a
Fraud Scheme
Always check prior sales and prior listings
 Verify comps given to you by others –
especially if you are told that you don’t
need to do so
 If your research shows numerous sales of
similar properties in the same
neighborhood involving the same parties,
You may be dealing with a fraud scheme
 When you are the only one that can be
trusted with this assignment

How to avoid getting snared in a
Fraud Scheme, conti:
Don’t accept assignments outside your
geographic area of expertise
 Use caution when asked for that
assignment to be treated as a “rush” job
 Be most professional when working with
friends
 The con man is that individual that speaks
well, is so nice, exudes trust, and has your
confidence
 Most of all, be careful who you trust

Sound-bites from the
“Valuation Fraud Symposium”
Sponsored by The Appraisal
Foundation (TAF)
Sound-bites

“If you have never fired a client, you’re
probably not doing a very good job as an
appraiser”, --- Danny Wiley, Past ASB
board Chairperson
Sound-bites
“We (appraisers) are the most regulated
profession in the Real Estate Industry.
AMCs and Mortgage Brokers should have
the same level of regulation”, --- Ken
Guilfoyle, McKissock Appraisal School
Instructor
Sound-bites

“Fannie Mae refers unacceptable appraisal
reports to state licensing or regulatory
boards for any action they deem
appropriate”, ---Mark Simpson, Director of
Residential Property Standards for Freddie
Mac
Sound-bites

“Negligence and incompetence are a
slippery slope that put many appraisers at
risk for falling into fraudulent behavior”,
--- Rachel Dollar, Symposium panelist
Sound-bites

“Lenders look closely at the appraisal’s
transfer history, the use of less recent or
less proximate comparable sales, a sales
price that is higher than the listed price,
unreasonable adjustments, and the use of
all or multiple non-MLS sales as comps”,
--- Douglas Vincent, Bank of America
Sound-bites

“Appraisers need to be especially vigilant
against identity fraud, someone using your
signature without your knowledge”, --John Arterberry, Former Executive Deputy
Chief, U.S. Department of Justice
10 Ways to Differentiate your
Business: By Doug Smith, IFAS
Manners & Courtesy: These things
account for your repeat business or
referral business
 Constantly upgrade your knowledge about
the appraisal environment
 Appropriate training for you and your staff
 Always look your best. Look professional
with your business cards, stationary, etc.

10 Ways, continued:
Make service delivery a priority: Speed
does count in today’s market
 Zero Defects: Review the report for
mistakes and spelling before it leaves your
office
 Be a reliable provider: Make adjustments
to your schedule to satisfy your client

10 Ways, continued:
Build your identity: Remember that dress
and appearance really do count
 Project a community image: Participate in
community affairs
 Promote Feedback: Listen to what your
customers are saying about your company
and your services. Your reputation as a
professional is everything!

Some Good Advice !!
Before getting into your car, look around you
and look into your car.
 If you are parked next to a big van, enter your
car from the passenger side.
 As soon as you get into your car, lock the doors
and leave.
 Your elbow is the strongest point on your body.
If you are close enough to use it, DO SO !

Facts about Pittsburgh, PA

These are some of the things that were
first introduced in Pittsburgh:
 First
 First
 First
 First
 First
 First
 First
Ferris Wheel, 1892-1893
Banana Split, 1904
Baseball Stadium, 1909
BINGO Game, 1920’s
Polio Vaccine, 1953
Pull-Tab cans, 1962
Mr. Yuk Sticker, 1971
U.S. Facts and More
Harry S. Truman was the only president in
this century who didn’t have a college
education.
 The first gold rush in the United States
happened in Dahlonega, Georgia 1828.
 The only food that does not spoil is Honey
 General Ulysses S. Grant’s real name was
Hiram
 Maine is the only state in the lower 48
that touches only one other state.

FREE Information from WEB-SITES
www.census.gov All kinds of free information here
including population, housing, income, etc.
 www.zillow.com Individual property information and
trend analyses. Registration required but it is free.
 www.city-data.com Free information about individual
communities.
 www.neighborhoodscout.com Free information about
individual communities.
 www.USA.Kaspersky.com select “Free Antivirus Scan” at
the top of the page.
 www.building-cost.net Cost approach information,
Replacement Costs for residential improvements.
 www.Online-Home-Values.com Check home values, any
U.S. address

Continued Education?
I’d rather be --
If you think education is expensive ---- try ignorance !!
- Ken Guilfoyle

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