All posts by admin

SOCIONOMICS FORECAST UPDATE – 23,377, THE NUMBER TO WATCH

November 29, 2019 – I hope everyone had a great Thanksgiving.

It has been a few months since I addressed what Socionomics was forecasting for 2020 and the Election.

The possible rally to a new high has occurred over the past few weeks.  Originally, this was expected to occur in September.  But, it was delayed until now.  As noted over the Summer, whether the stock market top occurred then or was to occur at a later date, the 20%-25% Bear Market was still expected to follow.  That should be what occurs over the first half of 2020.

The markets have forecast that the economy should do fine thru the 1st and 2nd Quarters of 2020.  It wasn’t too many months ago that everyone was talking about the recession that was starting.

If the Bear Market begins as forecast and takes us down to around 21,000 for the Dow 30, this would suggest a weak economy for the last half of 2020….and, a loss for President Trump.

The key number to watch is 23,377 for the Dow 30 – If it is above that figure next October 31st, then Trump will win re-election.  Below that figure and he should lose re-election.

A decline to 21,000 by next Summer followed by the start of a Bull Market that will take us above the current all-time high, will make the 23,377 figure interesting next October.  It would not surprise me to see us flirting with that level next October and making the forecast for the Election a toss-up til the very close of October 31st.  All elections in America now seem to be a toss-up going into the voting day.

As of this very moment, I interpret the markets to be expecting a Trump loss.  Right now, most of the articles I read expect him to win.  Many Democrats say Trump will win.  Most say it doesn’t matter who the Democratic candidate is.  Three to six months from now I can see a total reversal with most people, including Republicans, saying Trump has no chance.

I will update this as we get into 2020.

The Mann

GUEST POST FROM THE DEVELOPER OF VALUEXPOSE

OCTOBER 16, 2019 – The following is from Ray Dozier.  He has  developed the ValuExpose system.  The focus is on appraisal development.  Not appraisal reporting like all of the other products out there.  You might find this approach unique to anything else you have seen.

Some caveats….I am not financially involved with this product.  Just posting because I think appraisers will be interested in it.  Also, I have not edited anything Mr. Dozier wrote.  His thoughts are his own and I am not agreeing or disagreeing with anything he says.  Again, I just feel this is a product that appraisers might be interested in trying out….also clients might interested, too.

The Mann

==================================================

The traditional “old school” appraisal process is still

successful and relevant in reducing the risk of arriving at an
accurate current “as is” market value based on the collective
market’s most probable selling price. So what’s the paradox
of this “old school” process?
This answer is the “old school” appraisal process is valuing
properties in a vacuum. This means the process uses
comparable sales and data that are potentially “infected” with
the market’s irrational exuberance regarding forecasting. A
property’s current “as is” market value is the present value of
what the collective market is forecasting during the current
market cycle, including an ending sale price forecast. If these
forecasts have little probability of coming true and are
irrational, then comparable sale prices and data used in
comparison to an appraised property will “infect” the
appraised property’s “as is” market value with the same
irrational forecasts.
The frustration in the appraisal industry is that if appraisers
try to “adjust” the comp sales for the markets irrational
forecasts the resulting “as is” market value will be lower then
the probable selling price that can be expected by the
collective market participants.
On the other hand, if the appraiser accepts the market’s
irrational forecasts and resulting sale prices as comparison to
to the subject property, the “as is” market value opinion
could also be misleading and potentially detrimental to the
client and the public good if this value collapses in the near
future.
In the first case, if appraisers inject their bias into the
collective market’s forecasts they are “leading” the market
instead of “reflecting” the market’s pricing of properties. This
is considered a USPAP (Uniform Standards of Professional
Appraisal Practice) violation.
In the second case, if the appraiser reflects the actual
forecasts of the collective market for any given property as
required by USPAP standards, the resulting “as is” market
value might be misleading and a detriment to his client during
the current market cycle.
Herein lies the paradox and frustration between providers of
appraisal products and users of these products.
As a solution, the valuation industry’s response to this
paradox is to provide longer narrative appraisal reports,
faster report writing software, CRM’s for greater appraisal
management, black box non-transparent AVM’s, hybrid
appraisal development and faster delivery times. Notice that
none of these solutions are dealing with the paradox.
As a result, solutions the users of appraisal products have
enacted in response to the valuation industry’s failure in
solving the paradox is to raise the de minimus limits which is
eliminating the requirement for an appraisal altogether;
allowing lenders to petition for an appraisal exclusion in rural
areas; allowing non licensed appraisers to perform BPO and
Evaluations; and most recently allowing a shortened
Restricted Reports to lenders and multiple users of the report
according to the most receipt USPAP 2020 update.
All these “solutions” from the valuation industry and the users
of valuation products are not dealing the appraisal paradox or
providing practical solutions. Instead these “solutions” are
actually making matters worse in further endangering the
clients and the public trust.
What is a practical solution in solving the appraisal paradox?
Any solution needs to satisfy the concerns of both sides
within the context of better informing clients of all the risks
as well as better protecting the public good.
These solutions first need to modernize the “old school”
appraisal development and reporting process through
technology by:
• First, continuing to support the appraiser in
“reflecting” and not “dictating” the markets
forecasting and pricing of properties in the
marketplace.
• Create new methodologies that go beyond a singlepoint-
in-time “as is” market value opinion by
uncovering any hidden risks or opportunities
associated with an otherwise well supported market
value opinion
• Automation of the appraisal process will inform the
clients of all the collective market forecasts of the
otherwise well supported “as is” market value opinion.
This includes the ending sale price or reversion for
income producing properties that’s forecasted by the
collective market participants.
• Standardize the “old school” fragmented appraisal
process by automating and integrating all valuation
approaches and appraisal techniques that are
appropriate for each specific property.
• Automation of the appraisal process creates a
dynamic “live” development of the appraisal process
instead of the “old school” static development of the
appraisal which currently remains as a pile of papers
in the appraisers files.
• Dynamic “live” appraisal developments can be linked
to an automated value sustainability analysis that
further analyzes the otherwise well supported “as is”
market value. This type of methodology solves the
paradox between providers and users of appraisal
products.
• Dynamic “Live” and transparent appraisal
developments reduce the unnecessary need to
produce duplicative long narrative appraisal reports.
Traditionally, the purpose of the appraisal report was
simply to prove the appraiser properly developed the
appraisal.
• Dynamic “Live” appraisal developments can be
reviewed easier and are more collaborative due to real
time value changes as market forecasts change or
other input is changed.
• Dynamic technology increases the delivery speed to
the client of the completed developed appraisal other
than just emailing the finished report to the client. The
client will better be able to follow the appraisal
process to the appraiser’s concluded value.
• Technology increases the quality of the appraisal
development through standardization of the appraisal
process and linkage of appraisal methodologies and
processes (not to be confused with appraisal
reporting).
• For those clients that continue to want an “old school”
appraisal reporting, the dynamic “live” appraisal
development provides greater flexibility in reporting
appraisal product options. A variety of shorter
appraisal reports can be offered the client without the
risk the appraiser didn’t fully develop the appraisal.
• Dynamic “live” appraisal developments gives greater
flexibility in appraisal pricing based on the client’s
specific needs without sacrificing the interests of the
client and the public good.
Transforming the “old school” fragmented appraisal process
to a modern integrated and standardized process solves the
appraisal paradox. It also solves the clients demand for faster
deliveries, better appraisal development quality and offers a
variety of new reporting options that lowers the costs of
appraisal products depending on the clients needs.
These new reporting options also should not reduce the
appraisers profit margins or appraisal quality due to the
demand for increased speed, transparency of appraisal
development and shorter appraisal reporting options.
The U.S. is approaching the end of the current market cycle
that is the longest recovery in U.S. history. Typically, near the
end of a market cycle “stupid money” market participants will
infiltrate the collective market for many property types and in
selected markets. Don’t wait for a possible severe recession
in implementing these safeguards and best practices into
your appraisal practice.
This new appraisal technology is now available after years of
development. ValueXpose was created by designated
Appraisal Institute members with over 40 years commercial
appraisal domain experience.
Check out how you can use this newest technology to better
serve your clients and better protects the public good. Go to
www.valuexpose.com and request a demo on the websites
homepage.

MY COMMENTS TO THE ASB ABOUT THEIR EVALUATIONS CONCEPT PAPER

October 9, 2019 – Since comments sent to the ASB are made public, I will share my comments here.  Below is what I sent.  I hope everyone will send comments by the October 11th deadline.  The Concept Paper can be found at:

https://appraisalfoundation.sharefile.com/share/view/s6db453b85544d3ea

==================================================

Thank you for the opportunity to respond to The Appraisal Foundation’s request for input on its “Concept Paper – Evaluation Standards for USPAP” dated September 3, 2019. I offer my perspective as a client, preparer of, and reviewer of Evaluations on a nationwide basis since 1992.  I have ordered and reviewed thousands of commercial and residential evaluations prepared by both licensed/certified appraisers and non-appraisers.  My comments are based on 27+ years of real-world experience with IAEG-compliant Evaluations and USPAP-compliant Restricted Appraisal Reports.
GENERAL COMMENTS
Before I respond to the questions asked on Page 5 of the Concept Paper, I want to comment on some statements on Pages 1 through 4 that I believe do not reflect the real-world.
On Page 1 are the statements “One change is the increase in the market’s demand for evaluations.” and “Beginning in 2010 the use of evaluations began to noticeably increase.”  These statements are not consistent with my nationwide experience since 1992, nor with exemptions to FIRREA since 1994.  My research along with some Chief Appraisers at various banks shows that there has always been the need for about 4 to 6 times as many Evaluations as Appraisals.  The need for Evaluations did not suddenly increase after 2010, nor at any period since the major changes to FIRREA that occurred in 1994.  Mathematically the percentage of loans needing Appraisals versus the percentage of loans needing Evaluations increased in favor of Appraisals (i.e. fewer Evaluations were needed) from 1994 to 2018/2019.  The simple reason is that the thresholds set in 1994 did not increase while real estate prices about doubled in that 25-year period.  The threshold exemptions in 2018/2019 either caught the dollar amounts up with price appreciation (e.g. the commercial increase from $250,000 to $500,000) or did not quite keep up with price appreciation (e.g. the residential increase to $400,000).  In fact, the most significant threshold for Evaluations has not increased since 1994 – i.e. the $1,000,000 Business Loan exemption.  Therefore, in relation to the need for Appraisals, the need for Evaluations declined between 1994 and 2019.  Also, this relationship will increase in favor of Appraisals every year that real estate prices appreciate and the thresholds are not increased.  Any decline in property values like occurred in 2006-2010 leads to appraisals being required almost 100% of the time.  Therefore, the trend for Evaluations will continue to be downward in relationship to the need for Appraisals.
As to the ‘controversy and confusion’ mentioned on Page 2, this can be directly attributable to The Appraisal Foundation.  The financial industry is not confused and never has been!  Since the first detailed discussion of Evaluations came out in 1992, banks and credit unions have known exactly when they can order Appraisals and when they can order Evaluations.  The thresholds are black and white.  Also, the content difference between the two products has been clear and known by all since 1992 and especially since 1994 when the Interagency Appraisal and Evaluation Guidelines (IAEG) detailed Evaluation requirements.  Any confusion on the part of appraisers occurred when the ASB started answering the question of whether appraisers could perform Evaluations with a ‘Yes.’  The answer has been ‘No’ in general with 10 States currently permitting licensed/certified appraisers to perform non-USPAP Evaluations.  Saying that appraisers can do Evaluations by preparing at least Restricted Appraisal Reports was always the wrong answer to promote and has resulted in any confusion on the part of appraisers.  But, financial institutions have never been confused about Evaluations.  Once again, The Appraisal Foundation has the opportunity to simply say that Evaluations as defined by the IAEG are outside the realm of TAF and are not Appraisals and thus users and Evaluators need to refer to the most recent IAEG.  That simple.  It has been that simple for almost 30 years now.  Appraisals and Evaluations have some things in common, but they have many differences, too.  They are simply two different products.
These statements that start on Page 3 are somewhat to entirely misleading:
“To complicate matters further, the Guidelines are written to provide guidance to federally regulated financial institutions and examiners – they are not written for appraisers or others completing evaluations. It is also important to note that recent rulings have determined that federal guidance, such as the Guidelines, is merely guidance and is therefore not enforceable. This underscores the fact that there are no true standards for the performance of evaluations. Furthermore, when evaluations are performed by individuals who are not credentialed (or are exempted from oversight by state laws), there is no publicly accountable entity to turn to if the evaluation is not completed competently, and if the results are called into question by the institution or by an institution’s customers.”
Saying that the IAEGs (which explain FIRREA) do not apply to appraisers is not logical.  That is like saying FIRREA itself is for financial institutions to follow, but not appraisers.  That is obviously 100% wrong.  FIRREA and the IAEGs are meant for financial institutions, appraisers, and evaluators.  All parties need to abide by both the law and the bulletins.  Yes, in a court of law, the IAEGs can be compared to the Advisory Opinions, Statements, and FAQs contained in the USPAP books.  However, in the real world when appraisers are required to do what their peers would do and what their clients expect to see, we know that clients and appraisers do what is said in the Advisory Opinions, Statements, and FAQs.  It is the same for IAEGs – all parties do exactly what they say.  Also, Evaluations have ONE set of guidelines.  Appraisals have numerous – IVS, SVP, UASFLA, USPAP, and others.  All clients and evaluators know they can go to a single document to know exactly what to do – i.e. the most recent IAEG.
COMMENTS ON SPECIFIC QUESTIONS
Q:  Should the ASB investigate whether it would help foster public trust in valuations if they set minimum standards for evaluations? None of the USPAP Rules or development and reporting standards currently exist for non-appraisers who perform evaluations, because the Guidelines provide only broad guidance. Would it be beneficial to give everyone performing an evaluation a clear set of standards to follow including, for example, rules related to ethics and competency?
COMMENT:  No, ASB’s involvement will only result in confusion.  It is misleading to say that the Guidelines ‘provide only broad guidance.’  The Guidelines provide specifics as to the development and reporting of Evaluation Reports.  Also, unlike USPAP which is not required in about a dozen states (!), Evaluation Guidelines apply nationwide.  Unlike Appraisals that have numerous sets of standards, Evaluations have one set of guidelines.  Also, Evaluation requirements apply to BOTH licensed/certified Appraisers and non-Appraisers!  Appraisal requirements only apply to licensed/certified Appraisers.

Q: What specific Rules or Standards Rules (in STANDARDS 1 and 2) would need to be modified or eliminated if the ASB were to develop specific standards for evaluations?
COMMENT:  I have nothing to say here as I recommend the ASB just keep to the ‘A’ that is in ASB and USPAP – Appraisals.  Evaluations are not Appraisals and should not be discussed at all (including the Advisory Opinions, Statements, and FAQs!) in the USPAP book.  Some  people believe the ASB should briefly address Evaluations in Standards 1 and/or 2 by simply referring to the IAEG for Evaluations guidelines.  This is unnecessary as all has been fine for 30 years and nothing is needed from USPAP in regard to Evaluations.  Also, this would lead to confusion since USPAP is not required by all States.

Q: If the ASB develops standards for evaluations, how would that impact Advisory Opinion 13, Performing Evaluations of Real Property Collateral to Conform with USPAP? If the ASB does not develop standards for evaluations, should the guidance in AO-13 be modified?
COMMENT:  Per above, ALL discussion of Evaluations needs to be removed from the ENTIRE USPAP book.  One straightforward FAQ answering whether appraisers can do Evaluations should simply say this is a topic outside of TAF and USPAP and the reader should refer to the IAEGs.

Q: Are USPAP Rules and Standards still the minimums required to protect public trust in the appraisal profession? If not, then are there any Rules or Standards Rules that should be considered for significant revision or elimination? Or, is USPAP a “safety code” that is best left in place despite pressure to reduce the requirements?
COMMENT: USPAP is fine for Appraisals.  The ASB addresses changing conditions in their bi-annual updates.  I see nothing that needs to be changed here – other than maybe only making changes every 5 years or such.  The major critique I hear from appraisers and clients is about USPAP changing every 2 years.  Questions are asked like are they admitting they got it wrong all along?

Q: Should the ASB modify the DEFINITION of appraisal to differentiate it from an evaluation? If evaluations were included as a separate category in USPAP, what would be the regulatory implications?
COMMENT: Probably no need to have a definition for Evaluation in an Appraisal document.  Again, they are just apples and oranges.

Q: How might the ASB help resolve the nomenclature issue so appraisers can prepare evaluation reports that comply with USPAP without the use of contradictory or confusing labels?
COMMENT: Again, appraisers in states that require them to follow USPAP cannot do Evaluations.  It is that simple.  The appraisers in those 40 States plus DC and the 5 Territories know they must meet USPAP for ALL assignments and thus perform an Appraisal.  This is known by all.  No confusion.  Telling appraisers in those areas they can do Evaluations is what causes confusion.  That needs to stop and the confusion will go away.
Q: How might USPAP reporting standards be changed and/or how might the ASB more effectively communicate the flexibility of USPAP to appraisers, regulators, clients, and policy makers?


o Veteran appraisers understand the SCOPE OF WORK RULE and think that USPAP reporting requirements provide all the flexibility that is needed for appraisers to write evaluations or offer other services. Indeed, one of the first lines of STANDARD 2: Real Property Appraisal, Reporting states: “STANDARD 2 does not dictate the form, format, or style of real property appraisal reports.”
o But not all understand or agree. For example, the Guidelines state: “Unlike an appraisal report that must be written in conformity with the requirements of USPAP, there is no standard format for documenting the information and analysis performed to reach a market value conclusion in an evaluation.” In March 2016, the Director of the Division of Banking Supervision and Regulation reiterated that there is no “standard format” for an evaluation “in contrast with the requirements of USPAP.”
COMMENT:  To clarify, and I believe TAF would agree, there is no “standard format” for appraisals either.  The ASB purposely keeps reporting format, valuation techniques, and some other items out of USPAP.  Like appraisal reports, evaluation reports must be written in conformity with the requirements of the IAEG.  Appraisal reports must meet the IAEG, which then requires compliance with USPAP, too.  Evaluations have the same requirements, except for the USPAP item.
Thanks for the time and consideration of the above.
Sincerely,
The Mann
George R. Mann, CRE, FRICS, MAI

EDUCATE YOURSELF ABOUT GUNS BEFORE TAKING A STAND

September 16, 2019 – Like many people, I accepted what the Fake News Media promoted about guns and the NRA throughout my life.  I thoughts guns were not needed and the NRA was a communist organization (whatever that means).  Then several years back I took the time to educate myself.

As a result, I became pro-2nd Amendment.  And I became a lifetime member of the NRA.

As I have become involved in the world, I am simply amazed at the incredible focus on safety.  Every gun person I have ever encountered is fanatical about gun safety.  No mass shooter has ever been an NRA member.  The NRA does all it can to promote safety….especially in our schools.

Enough on what I have learned.  Please take the time to educate yourself.  Question anything the Dems/Socialists and Fake News Media says.  Some of it might be true.  I am confident you will find almost all of it is false.

I will provide a few facts and leads….obviously research all of them for accuracy.

First, the general public has not been able to purchase an automatic weapon since the 1930’s.  Only the military (and maybe the police?  not sure about that off hand) has automatic weapons.  So, when you hear people say the public does not need to have military weapons blah blah blah.  Well, we haven’t had access to those for over 80 years!  Maybe some criminals have obtained these – probably smuggled in from Mexico (which wouldn’t be as easy to do if we had a total border wall…).  But, no way does the public have any of these.

Second, AR-15s and AK-47s are NOT assault riffles because they are not selective fire.  If they were, they would come under the 1934 firearms act — anything made after 1986 could not be legally sold in the US to civilians (non-police department).

Thus, once again, the public does NOT have access to assault rifles.

When you get down to it, we already have excessive gun laws.  Why shouldn’t a law-abiding citizen be able to own an assault rifle or automatic weapon?  Other than ‘because people just don’t need those’ there is no valid reason.  If you have a mob of people coming to invade your house and likely harm you and your family and friends, you need an automatic weapon or assault rifle to DEFEND yourself.

If you haven’t bought a gun, then you don’t know how difficult it is to purchase one (I hope you saw the video of the reporter that recently went to Walmart to buy a gun and was not able to….her agenda to show it is ‘easy’ to buy again backfired on her!).  I can tell you they ask so many questions….you have to have a perfect past to buy a gun!  It is insane the things that can disqualify you from buying a gun.  The one thing that continues to annoy me though is the question about being Hispanic or not.  Why in the world do they ask that question?  Why would it matter?

Lastly, I have to be an opponent of any gun registration system.  Being Jewish, no way could I ever approve of a system that helped to kill millions of Jews in the Holocaust.  Venezuelans can confirm the nightmare of such a registration.  They now get massacred with ease by their government/military as all of their guns were confiscated after a forced registration.  Americans learned their lesson in the 1700’s about the need to have guns to oppose an oppressive government.

Again, go do some research on your own.  Do not take anything at face value.  The link below provides some interesting stats.  But, do verify they are accurate on your own.  Do that with EVERYTHING the FNM tells you.

https://fee.org/articles/studies-find-no-evidence-that-assault-weapon-bans-reduce-homicide-rates/?utm_campaign=FEE%20Daily&utm_source=hs_email&utm_medium=email&utm_content=75797081&_hsenc=p2ANqtz-8RP_8RyseY6a_D9poem4LcBHEAn0_rCvAt93O5_BQMhtVq8_6U9tUIU9u25glYNkjm55QsTBfXPVYa1gOoqpT8ald7rw&_hsmi=75797081

And in the end, decide where you stand on this issue….same re abortion…..and other controversial issues.  Educate yourself.  Is your current opinion based on what you have heard over and over….or on substantial research you did on your own.

As an example of some research I recently did.  I looked up how many guns (approaching 400 million) and cars we have in America.  I then looked up how many people are killed annually by guns and cars.  I excluded suicides as not many people kill themselves using a car and if they didn’t have guns they could use pills or other means.  I found out that more people per 1,000,000 die in car accidents than by guns by over 2x.  Even if you included gun suicides, cars are still more deadly.  So, why isn’t there a cry to reduce the number of cars on the road by tens of millions.  Why don’t we raise the age to get a drivers license to 21?  If Walmart can raise the age to buy a gun to 21, why don’t we do that (driving and owning) with cars?  I am sure the number of deaths to car drivers under 21 years old is proportionally higher than those over 21.  The point is getting into the data on your own is quite revealing.  Mass shootings are a blip on the radar.  On the day of any mass shooting way more people die in car wrecks, die to opioid overdoses, die in abortions, die to medical malpractice, et al.  Those are the real causes of death we need to go after.

Enjoy researching….have fun….keep an open mind.

The Mann

ASB RELEASES CONCEPT PAPER ON EVALUATIONS

September 3, 2019 – As promised a month ago, The ASB has issued their concept paper with ample time for everyone to comment.  Also, there will be a webinar on September 10th and a public meeting on October 18th.

The concept paper can be found at:

https://www.appraisalfoundation.org/imis/TAF/Standards/Exposure_Discussion_Drafts/TAF/Exposure_Drafts.aspx?hkey=d6d47266-eca5-4178-8919-2d3e827a5f36&WebsiteKey=e12b6085-ff54-45c1-853e-b838ca4b9895

If this URL is too long, go to the Standards & Qualifications tab on TAF website.

After reading the document, I believe it is well explained and gives everyone a chance to opine.  I think a statement or two are slightly misleading, but they explain why they say what they say and that is just fine.  If I am up for it one day, I might add a post here listing out the items I disagree with.

My stance will never change.  Evaluations need to stay outside of TAF.  Just leave this product under the domain of federal regulators who actually do have the power to go after anyone who performs fraudulent evaluations.  The federal regulators have enforcement power that TAF and ASB do not have.

Please take the time to send them your comments.  They do read everything they receive.  Obviously, some meat to your stance will carry more weight.  Try to give some factual information.  Simply saying evaluations are more risky is factually wrong.  People like myself that have ordered and reviewed appraisals and evaluations on all property types, performed due diligence on dozens of good and bad banks, et al, know loans allowing evaluations are, and likely always will be, less risky than loans requiring appraisals.

Unlike our politics, it will help if you don’t say you are a Never-Evaluations person and leave it at that.  No need to call each other Appraisalphobic or Evaluationphobic lol

Give the ASB some real substance and they will give your comments significant weight.  Give them suggested wording and they will consider it.

Just saying ‘because’ is what a 5-year old says:)

Take advantage of your chance to comment…

The Mann

 

HEY ASB, STAY THE EXPLETIVE DELETED OUT OF THE EVALUATIONS WORLD!!!

August 1, 2019 – I was bombarded throughout the day with appraisers emailing me the ASB announcement that they are going to consider drafting standards for Evaluations.  Their announcement is full of blatant lies.  It is typical of what the Fake News Media puts out.  Therefore, I will list their lies and provide the actual truth below.  Too many people who have no to minimal experience with evaluations put out Fake News all of the time.  It is criminal.  I have ordered and performed evaluations since essentially the beginning of their existence in 1992.  The truth follows….

LIE #1 – “Currently, there are no uniform standards for appraisers to follow when conducting an evaluation, ” – THE TRUTH – Since October 1994, there have been uniform standards for appraisers to follow when conducting an evaluation.  These standards were updated in the December 2010 Interagency Appraisal and Evaluation Guidelines.  And get this, these requirements apply to not only appraisers, but NON-appraisers!!!  USPAP only applies to appraisers.

LIES #2 and #3 – “, which leads to greater risk to the safety and soundness of the real estate transaction and diminished protection for consumers….With the increased use of evaluations in the marketplace lenders and consumers are being exposed to an unnecessary level of risk not seen since the 1980s when national appraiser qualifications and appraisal standards had not yet been created….” – THE TRUTH FOR #2 – First, evaluations are only allowed in transactions that are lower risk than appraisals.  Therefore, they cannot possibly add risk to lending.  In my 27+ years of working for banks, I cannot recall a bad loan that originated with the use of an evaluation.  But, all the bad real estate loans I have seen did contain an appraisal.  Inflated appraised values alone do not make loans go bad.  That is not what I am insinuating.  But, I will confidently say that no bank has ever or will ever go under because of the use of evaluations.  However, many banks have gone and will go under with appraisals being a contributing factor.  THE TRUTH FOR #3 – ‘…diminished protection for consumers.’  Everyone loves to claim they are trying to help the consumer.  I guess we can call it using the ‘Consumer Card.’  The ‘consumer’ usually means the general public that buys houses.  The fact is FIRREA does not apply to 90%+ of residential loans.  Everything that Fannie Mae, Freddie Mac, the VA, HUD, and on and on are involved in is exempted from FIRREA.  (If you are honestly concerned about the consumer, it is Fannie Mae and Freddie Mac that must be stopped from loosening appraisals standards…and remember evaluations are not in their world, so don’t get the issues confused.)  The consumer BENEFITS from evaluations as they are cheaper and faster than appraisals.  It is a flat out, despicable lie to say that the ‘consumer’ is hurt by the use of evaluations.  Actual proof has been the real world since 1992.  Evaluation volume is estimated to be 4x-6x that of appraisals.  Has anyone ever said an evaluation caused a loan to go bad or a bank to go under?  NO!

LIE #4 – “This important development by the ASB shows how the Board has their ear to the ground, listening to the concerns of working appraisers in a rapidly evolving marketplace where there is an increasing demand for different valuation products,” said David Bunton, president of the Foundation.” – THE TRUTH – Ear to the ground?  What a ridiculous statement!  Evaluations were an option when the original FIRREA was placed into law in 1989.  30 YEARS AGO!!!  The ASB reminds me of the quote attributed to Mark Twain about one of my favorite cities, Cincinnati – “When the end of the world comes, I want to be in Cincinnati because it’s always twenty years behind the times.”  When it comes to evaluations, I want to be the ASB because they are 30 years behind the times:)  The demand for evaluations has existed mainly since 1992.  (Any of you remember BC-225:) )  Nothing has changed.  Except if The Appraisal Foundation will say the truth they are scared to death of a non-appraisal product.  They want to control their fiefdom.  Hey ASB, the first step is admitting what you are!

LIE #5 – “Currently, the Interagency Appraisal and Evaluation Guidelines for federally regulated financial institutions provide guidance on evaluations, but that guidance is directed at lenders, not appraisers.” – THE TRUTH – OMG, the misleading statements get more ridiculous.  This is like saying the 5 appraisal requirements in FIRREA are directed at lenders, but not appraisers.  Just not true.  Appraisers must provide Market Value ‘As Is’ per FIRREA, not USPAP.  That applies to both appraisals and evaluations, BTW.  Appraisals must be written per FIRREA, not per USPAP.  The IAEG requires the subject property be inspected for evaluations.  USPAP doesn’t even require an inspection for appraisals!  As a reminder, the IAEG requirements apply to BOTH appraisers and non-appraisers for evaluations.  Just imagine if USPAP applied to non-appraisers!  That idea is as ridiculous as the ASB trying to provide standards for evaluations.

LIE #6 – “Under federal regulations, evaluations may be performed by non-appraisers who have not demonstrated a level of expertise through education, training, and examination.” – THE TRUTH – Do you ever wonder why people tell a lie that can easily be proven wrong?  Here is what the IAEG says about who can complete an evaluation – “An institution should maintain documentation to demonstrate that the appraiser or person performing an evaluation is competent, independent, and has the relevant experience and knowledge for the market, location, and type of real property being valued. Further, the person who selects or oversees the selection of appraisers or persons providing evaluation services should be independent from the loan production area.”  The requirements are the exact same for appraisals and evaluations.  Shouldn’t the ASB be made to retract their lie?  Shouldn’t they have to issue a new announcement with truths, instead of lies?  How does a group of people look themselves in the mirror each morning knowing they published numerous lies to the public they love to claim they protect?  I have never understood how people live like that.

LIE #7 – “If appraisers are not completing an evaluation, there is no recourse for a lender or consumer to appeal a bad evaluation.” – THE TRUTH – Why not?  I have asked for evaluations to be revised.  I have rejected evaluations.  I have done both for appraisals, also.  There is no difference in how these products are treated in this regard.  Whoever did the evaluation can be sued as easily as one of us appraisers that did an appraisal.  And it is likely an evaluation doesn’t contain that funny limiting condition that many appraisers put in appraisals about their liability being limited to the appraisal fee:)  That one has always cracked me up.  I am sure lawyers have been stopped in their tracks when they see that clause, not!

Those are what I would label as bald-faced lies.  (I learn something every day….there are bald-faced and bold-faced lies and they are different….interesting.)  Below are just statements that are hyperbole or unsupported or such.

“Appraisers are valuation experts. When hiring a licensed or certified real property appraiser to develop and report market value, the client should expect the work to be performed in accordance with USPAP,” said Wayne Miller, chair of the Appraisal Standards Board” – COMMENT – No, they should not.  USPAP is not a law, as we all know.  USPAP has never been the only set of standards for valuation.  Many states do not require USPAP for all appraisals.  (Read my blog post of a few years ago where I contend that all ‘Mandatory’ laws are in violation of Federal Law.  I believe this issue was settled by a Federal Court ruling in 2004 in Pennsylvania.)   Many large clients do not either.  The Yellow Book (UASFLA as the word police are now wanting it to be referred to) is its own set of valuation standards.   USPAP says the following:

“USPAP does not establish who or which assignments must comply. Neither The Appraisal Foundation nor its Appraisal Standards Board is a government entity with the power to make, judge, or enforce law. An appraiser must comply with USPAP when either the service or the appraiser is required by law, regulation, or agreement with the client or intended user. Individuals may also choose to comply with USPAP any time that individual is performing the service as an appraiser.”

It is NOT needed for all assignments.  Appraisers do NOT need to comply if it is not necessary.  Clients do NOT need USPAP appraisals all of the time.

“The Board is eager to receive stakeholder feedback from the planned concept paper and public hearing on the impediments, if any, to appraisers completing evaluations in accordance with USPAP.” – COMMENT – This one is simple.  The lone impediment are the state laws that require licensed appraisers to meet USPAP for ALL appraisals, including those for financial institutions.  As I note above, I believe these laws are unconstitutional and have ignored them my whole career.  Federal law trumps state law.  My grass roots campaign since 1994 to get the Tennessee Law, as I refer to it, passed in all other states has gained traction in the past few years.  Numerous states now allow us licensed appraisers to perform non-USPAP Evaluations.  That is the solution.  Change the state laws, one by one.  And keep the ASB the heck out of the Evaluation world!  The banking agencies already set the standards for evaluations and they can enforce them.  Probably much better than the states have enforced USPAP!  People who violate FIRREA are subject to civil money penalties and jail time.  That applies not only to lenders or credit people or anyone else in a bank or credit union, but also to appraisers and evaluators!

In closing, let me point out the obvious….remember what the ‘A’ stands for in USPAP, TAF, ASB, et al.  Evaluations are NOT appraisals.  Appraisals are NOT evaluations.  They may coincidentally have some similarities, but they also have significant differences.  They each have more than adequate standards.

Some facts that I have had to share over and over for 25+ years….Evaluations have been around as long as appraisals in regard to FIRREA.  They are not something new.  They have not negatively affected the appraisal industry.  The volume of appraisal work has increased significantly over the past 25-30 years – evaluations have been done all along.  Mostly by non-appraisers.  Passing state laws like TN and GA and FL and LA and VA and others now have is all that is needed to open this world to appraisers.  Those who do not want to do them, don’t do them.  Your business decision.  But, don’t stop your peers from making a living that includes doing them.  That is selfish.

I am 100% positive that evaluations have not negatively affected the banking industry or our economy over the past 30 years.  They will not over the next 30 years.  If you understand the transactions they can be used on, you understand that almost always, if not always, evaluations are involved in lower risk loans than appraisals.  If you are concerned about the banking industry, the economy, the consumer, then figure out how to provide appraisals that are more accurate than the plus or minus 20% minimum range of accuracy that numerous studies have proven them to be!  How do you convince the public that a professional doing a valuation is adding something of value (no pun intended…or is it) when their appraisal on a $1,000,000 property is not more accurate than $800,000 to $1,200,000?  Do you not think that most of the public knows to a smaller range than that what their property is worth?

I am sworn to secrecy about a similar professional study on the accuracy of evaluations that showed the range to be plus or minus 5%.  Now, tell the world that there is more risk when using evaluations than appraisals.  See how that flies with people that know that plus or minus 5% is far superior to plus or minus 20%.

Folks, know what the facts are versus the Fake News about evaluations that is passed around by individuals and organizations with a bias.  I try not to have any bias as I have made my living off of both products in one way or another for 27+ years.  I have spent 25 of those years trying to help the appraisal industry see the light and get their state laws passed so they can access the non-USPAP Evaluation world.  That is what will help appraisers.

What will not help appraisers is the ASB putting out their own standards for evaluations.  Who is going to follow them anyway?  The banking/credit union world already have evaluation standards.  Why would they want to amend Federal Law to require that evaluations follow some new ASB standards?  Hopefully, the ABA, MBA, and others will be sure to squash that idea.  The Federal Agencies that have examined banks all along can factually say that although evaluation programs can be improved overall, they have not added any risk to banks or the economy or consumer.  They know the most.  If there was a concern, it would have been made public already.

What will not help appraisers is appraisers wanting to only provide the Black Model T Ford.  If you think evaluations will lower the quality of appraisals, you have been proven wrong for 30 years.  If you think evaluations will lower appraisal fees, you have been proven wrong for 30 years.  (The continuous decline in appraisal fees is due to many other factors, but I am certain it has nothing to do with evaluations.)  If you think evaluations will add risk to the financial industry, you have been wrong for 30 years.

If you think appraisers like yourself are the best people to provide non-USPAP Evaluations and have been missing out on a ton of revenue for 30 years and that clients would prefer to be using licensed appraiser to do non-USPAP evaluations, YOU ARE RIGHT…..

mic drop

The Mann

(Obviously feel free to share the above…it is out on the web, not like there is any taking it back lol  I will post something new if an error is pointed out or I hear lies about what I said or misinterpretations et al…so check back now and then….and be sure to let the ASB know what you think when they open this up to public comment.)

NCUA RAISED DE MINIMUS TO $1,000,000

July 19, 2019 – See the link below for more info about the NCUA’s decision to one up banks and raise the commercial appraisal threshold from $250,000 to $1,000,000.  Banks recently had their threshold for this loan category raised to $500,000.  The obvious question is will banks be able to get their regulators to follow what the NCUA did….we shall see.

For those who are jumping on my Evaluation bandwagon after 25+ years, this only means more work for you.  If your State does not allow licensed/certified appraisers to perform non-USPAP Evaluations, you need to get them moving on this.  Can you hear me North and South Carolina:)

The Mann

https://www.ncua.gov/newsroom/press-release/2019/appraisal-rule-will-help-boost-economic-activity-job-creation-communities

INCOME ACHIEVEMENT IS MORE LIKE IT

July 15, 2019 – The article at this link was just too good to not pass along.  It is always good to debunk the Fake News Media and the PC junk they promote.  Enjoy the truth, supported by facts.

https://mises.org/wire/debunking-income-inequality-research?utm_source=Mises+Institute+Subscriptions&utm_campaign=3987532102-EMAIL_CAMPAIGN_9_21_2018_9_59_COPY_01&utm_medium=email&utm_term=0_8b52b2e1c0-3987532102-228262361

The Mann

IT’S HUMAN NATURE – THE SUBURBS WILL ALWAYS RULE

July 3, 2019 – First off, Happy Birthday to our great republic.  I hope everyone had a safe and enjoyable 4th.

The following article is just one more tidbit of data that proves that the younger generations NEVER moved into the CBDs at any rate greater than prior generations.  Since 2000, the percentage of the population in CBDs has not changed!

As I continue to tell any city planner I see speak at a conference, you best be spending 99% of your money on infrastructure in the suburbs.  It is a waste of money to spend fortunes on downtown parking garages, apartment buildings, trains, etc.  The cost is extremely high and the population using it is insignificant.

City planners simply mislead the public as it is all ABOUT THE MONEY.

Environmentalists mislead the public because it is all ABOUT THE MONEY (e.g. The USA has 17 coal plants….1600 coal plants are under construction and planned in 62 countries…the FNM tells you the use of coal is declining, when in fact it will increase 43% with just these new plants, much less new ones after these).

And vegans make it sound like plant-based food is catching on and is the future for the world.   Again, they are simply AFTER THE MONEY!  Between now and 2050, worldwide meat consumption will increase from 330 million tons to 560 million tons!  Someone please tell PETA to stop wasting all of that donation money they get on trying to make people stop eating meat.

It is sad to see how the masses get used by the Fake News Media that promotes these money-grabbing agendas.  But, as I have always said, thankfully the masses are predictable in this way and that makes it easy for everyone to profit off of them.  I guess that includes me, albeit I am not an unethical, greedy corporation.

You cannot save this planet.  Whatever you do as an individual (not eat meat, walk or bike instead of using your car when possible, buying an electric car [thanx for increasing the need for more coal plants to provide electric for all of these electric cars!], recycle, et al) is not going to help.  Nor is a multitude of Americans and Europeans doing the same thing.  China and India alone will offset any benefits provided by the climate change believers 10-fold over.  My dad had a saying for your efforts, but it is a bit vulgar so I won’t write it out.  Just shake my head about the futile efforts and how legislation continues to price the poor out of housing and automobiles.

In the end, only Mother Earth can save herself.  And she will!  She always has.  Mass extinctions.  Bubonic Plague.  Man might help with World War III and the use of nukes.  But, I believe Mother Earth will unleash a disease that will kill billions before mankind figures out how to stop it.  I won’t be around to see if that happens.  Neither will anyone reading this.  But, down the road our over success as a species will have to be corrected….or we do as I have always proposed as an option – move to Mars:)

Enjoy the suburbs, life is so much more beautiful and relaxing there.

The Mann

https://www.foxbusiness.com/features/millennials-leaving-cities-rising-costs

 

IMHO, THE BEST SOURCE OF HOUSING DATA IS THE AEI

June 20, 2019 – I have watched the American Enterprise Institute (AEI) develop their housing research over the past decade.  Major organizations provide them with all of the data that is out there and AEI simply analyzes and reports what it says.  Unlike NAR, no bias in the research and reporting.  The AEI is 100% transparent in how they arrive at their indices and use the data.  I encourage everyone to start using this as their definitive source for information on the housing market.  The following is directly from AEI (as the links might not work in me cutting and pasting their announcement, you can go to their website at www.AEI.org):

AEI Housing Center analyzes housing markets in the 60 largest US metropolitan areas

Housing markets are inherently local, making them notoriously difficult to analyze due to the lack of reliable data at the local level. The second quarterly release of a new dataset from the AEI Housing Center aims to fill this void by analyzing housing market data for the 60 largest US metropolitan areas, as well as for the nation as a whole. The current dataset looks at housing data through 2019:Q1.

AEI Housing Center Codirector Edward Pinto and Senior Research Analyst Tobias Peter explain “Our goal is to provide the public, media, and decision makers with accurate and reliable metrics to assess the state of their local housing market in near-real time. A well-informed market place and its participants will aid in promoting sustainable homeownership.

Among the national Housing Market Indicators for 2019:Q1:
  • Rate of house price appreciation (HPA): 3.8%
  • Mortgage risk index: 12.1%
  • Share of buyers of entry level homes: 57%
  • Average sale price for entry level homes: $194,000
  • Share of new construction sales (compared to all home sales): 10.5%
The Housing Market Indicators for the 60 largest US metropolitan areas, along with all associated data, are available on an interactive website here.

This was made possible by AEI’s new merged property and mortgage financing national dataset, which consists of nearly 35 million home purchase transactions.

The data are updated quarterly. The next release of Housing Market Indicators, which will analyze housing data for 2019:Q2, is scheduled for September.
Edward J. Pinto
Codirector, AEI Housing Center
240-423-2848