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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

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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

THE NEXT 20 MONTHS TOLD TODAY BY USING SOCIONOMICS

UPDATE August 23, 2019 – As I told a reader on Thursday, the odds have greatly increased that we are on the verge of a 3,000-4,000 point decline in the DOW 30.  Today’s 620 point decline helped those odds.  But, I still cannot rule out one more small rally before the decline of doom occurs.  However, we are oh so close the being able to say we are about to go over the Niagara Falls.  The news stories explaining why this is happening will be fun to laugh at.

Also, we are starting to see more of the Fake News Media say that a recession (obviously due to the stock market decline in their minds) is going to hurt Trump’s reelection chances.  Look down below at my original post predicting how the Fake News Media would do this.  So, so predictable.  And next year when the final leg of the Bull Market is roaring back to all-time new highs, the Fake News Media will just continue to harp on the recent bear market that occurred.  Knowing them, they will even say that Trump is rigging the stock market and economy to improve his chance of being reelected.  The 1st Amendment never said we should have to accept a Stupid and Fake News Media!  A total do-over of the press system is needed.

UPDATE August 5, 2019 – I hope I am not the only one enjoying the market carnage.  I live for bear markets.  Albeit, it is early in this one, and I still cannot quite 100% rule out one last rally to new highs.  But, those odds are very slim now.  As I suggested below, the Fake News Media would make up an excuse like the trade wars for the almost 2000 point decline in a week.  Too funny to know what will be said ahead of time and know how wrong the pundits are.

Gold is melting up like expected.  Finally we are seeing $20 and $40 moves.  That is what happens when gold forms a top.  Stocks get extreme at bottoms.  Gold gets extreme at tops.

No one has sent me any info on anyone else forecasting a 20%-25% decline.  I doubt there are any.  By the bottom everyone will be bearish.  Too bad I don’t get called by Fox Business to discuss my forecasts:)  But, at least, I know some friends followed my advice and are watching the carnage from the sidelines like me.

If the top is in place, the early range for the bottom can now be predicted – 20,300 to 21,400.  That will be tweaked as the move unfolds.  It is going to quite a scary time as we hit that range.  Things will look bleak.  And there is a chance that we will only be at the mid-point of a larger 50% bear market.  I will know a lot more at that time.  We have months and months to go with some nice countertrend rallies to deal with.  Patience my friends.

UPDATE July 13, 2019 – The Dow 30 hit 27,300 yesterday and thus entered the target range for a top to be put in place.  At this point the detonator has been activated and the clock is click down….we just can’t see the clock to know exactly what day the top will occur.  It appears that the stock market and gold will top out in the next month or so.  Then they will decline significantly in sync.  That should surprise the masses that believe the stock and gold markets move in opposite directions.  My belief is yesterday was not the final top.  As always, we shall see how this plays out…

The fun part for me is watching the Fake News Media come up with news stories that will be excused for the markets tanking.  The reality is the markets declining will cause the news stories!  I am sure the FNM will blame Trump’s trade wars (which obviously can’t be a reason as the market is at all-time highs after a few years of trade wars), something that Iran does (again we are at new highs after several Iran events recently), and other BS excuses.

Also, curious if any of you have seen anyone predicting a 20%+ Bear Market to occur.   Once we start to decline significantly, then all of a sudden all kinds of analysts will say they called for a top and 20%+ decline.  But, right now…today….is there anyone else out there calling for the Dow 30 to decline below 21,700?  Please email if you have seen such a forecast.  Thanks.  My email is GeorgeRMann@Aol.Com

UPDATE July 3, 2019 – The Dow 30 closed at an all-time high of 26,966.  A month has gone by since my original post below.  I can now update the range of the current top that is forming to be 27,200 to 28,300.  It is occurring sooner than I expected.  But, that is not an issue as long as the price range is met.  It can be met in a single day or may play out over several more weeks or months.  Once we get into the range, the downside target to look for to confirm that a 20%-25% bear market might be underway is 26,400 or such.  I will be updating this as the waves unfold.  So far, so good….

Most of the bad economic indicators for June have been reported.  Of course, everyone is worried that the economy is headed into a recession.  Based on the first six months being the biggest rally for some indices since 1938 or 1955, the economy should grow faster in the 3rd Quarter and even faster in the 4th Quarter.  The 2nd Quarter GDP growth should be the lowest of the year.

June 9, 2019 – As I mention now and then, I use Socionomics (not to be confused with Socio Economics) to do many things in my life.  All of my investments for the past almost 40 years have been based on this science – granted for the first 20 years it wasn’t an organized concept with that name).

Right now, the long-term picture has become clear.  This is a rarity.  But, when it happens, I take action.  And, I would like to put in writing what it is forecasting thru Inauguration Day 2021 (I don’t recall if a re-elected President has that again or not).

The Dow Jones Industrial Average (Dow 30) is the best reflection of social mood.  The current forecast is for it to move to new all-time highs this Summer or Fall.  The expected range is 27,000-28,000.  Depending on where we stand based on certain indicators in the theory, I will be liquidating all of my stock holdings and sitting on cash thru the forthcoming 20%-25% bear market.

What this upward move over the next 3-6 months is telling us is the public is expecting President Trump to be re-elected and the booming economy to continue.  That should be the mood at the end of the year and into the 1st Quarter of 2020.  Also, this suggests a very strong GDP in the 3rd and 4th Quarters of 2019 and 1st Quarter of 2020.  The growth should be significantly above the very slow rate we will see for the 2nd Quarter of 2019 that ends in 3 weeks (this was forecast by Socionomics when the Dow crumbled into its December 24th low).

Following the top this Summer/Fall, a bear market much larger than the one last Fall should occur.  As noted above, a 20%-25% decline to the 21,000 area on the Dow 30 is expected.  This should occur around the 1st Quarter/Spring of next year.  Obviously, the Presidential campaign will be officially underway at that time.  The mood should have totally changed and the public will now expect Trump to lose in November.  In fact, the Fake News Media, along with even some Republican strategists, will be talking constantly about how the Democrats will hold the House and even take over the Senate for complete control of the government.  Such an event would destroy our economy and the business world will be as pessimistic as it has been in probably 10+ years.

When examining the ‘waves’ that explain social mood, there is always an alternate scenario that is watched.  For the above, both the most likely and the alternate (i.e. less likely) wave patterns forecast the same events to occur.  However, it is at this junction next Spring that the two patterns provide polar opposite forecasts.

Most Likely Scenario – As of today, the expectation is that following a panic low around next Spring, the stock market will begin a large bull move back to all-time highs.  i.e. the Dow 30 should exceed the highs expected this Summer/Fall.  29,000 is an early target.

This bullish move means the public has determined who the likely Democratic Presidential Candidate is going to be and that person has no chance of defeating Trump.  So, for the remainder of 2020 and into early 2021, the stock market goes straight up (not literally) and Trump is re-elected and businesses are bullish on the economy going forward.

Alternate Scenario – Assuming the public thinks the Democratic Presidential Candidate is going to defeat Trump and the Democrats are going to control both parts of Congress, the stock market will be accelerating its downward spiral in Spring 2020 and drop thru the  20,000 level like a hot knife thru butter.  As this is the less likely scenario, I have not tried to determine how deep this bear market will be or how long it will last.  That will be easy to determine next Spring when this critical time juncture is occurring.

So, that is what Socionomics is forecasting for the next 20 or so months.  I am not giving my own opinion of the future.  The public does this for us.  It always has.  As time goes by and the waves unfold, it is possible to get more precise with price and time targets.

Since both scenarios above have the stock market topping this Summer/Fall, it only makes sense to me to get totally out of all stocks.  Whether or not I jump back in next Spring depends on how the waves unfold going into that timeframe.  One scenario (the most likely one) projects about a 35%-40% bull market.  The other scenario will be forecasting probably another 30%-40% bear market from the prices at that time.  Money is to be made either way.  In fact, the same amount of money can be made in either scenario.  I hope to be back here in about 9 months to explain what Socionomics is then projecting.  Do I go long….or do I go short.

I am sure almost no one makes a 2-year forecast of the future in some detail and puts it out in the public domain for all to see if it is accurate….or if they are wrong and a total fool for trying to predict the future..  But, I have spent my life doing this and not doing a bad job at it.  I put my savings and retirement on the line with the forecasts.  If I am wrong, I feel the pain.  If I am right (like I have been since Election Night 2016 re stocks and early 2000’s re gold), then it is very rewarding.

As an aside, I remember moving my wife’s retirement and my retirement to a new brokerage in 2004 when I took a new job.  We were 100% in gold investments.  Talk about ‘all in.’ :)  The new stock broker thought I was insane.  Where’s the diversification?  Gold was around $450.  We had got in below $300 a few years earlier.  By the time I left that job in 2008, gold had hit $1000.  He told me I had done better than anyone he knew.  You have to remember that by the Fall of 2008, Lehman Brothers went under and the stock market and real estate markets were crashing.  But, not gold.

In 2011, gold peaked near $1900.  I had gotten out a bit before the top admittedly.  But, was back in near the $1075 low in 2016.  Although, I think $1450 is the upside target, I just got back out last week as it hit new highs for the year.  I am not in the mood to wait around for the next $100 to the upside, as there is a good chance of a $100-$200 decline before this final top occurs.  I’ll sit and watch.  Can’t go broke sitting on the sidelines:)

Lastly, let me mention the Fed and interest rates.  Socionomics has shown that the Fed ALWAYS follows what the market tells it to do.  The public thinks the Fed raises rates and then the market reacts to it.  No!  That is the kind of junk the Fake News Media feeds people over and over.  Of course, the media is clueless about markets.

Factual data shows that when the Fed decides to raise or lower rates, the market has already made that move.  Right now, the markets are telling the Fed to lower rates 75bp thru the remainder of the year!  You don’t hear anyway talk about that, do you?  Some are calling for the Fed to lower rates (Trump included….like him or not, he reads what the markets are saying and thus knows the Fed should already be lowering rates.  He isn’t bullying them.  He isn’t trying to make some agenda come true.  He knows, like you now do, that the markets have already said the Fed needs to start lowering rates.), but most are just calling for 25bp.  That is how they will likely start.  But, if so, then it will take 3 of those reductions just to finally catch up with the market.

I’ll end it here.  As Paul Harvey would say, now you know the rest of the story…..

 

2 MORE STATES JOIN THE NON-USPAP EVALUATION WORLD!!!

June 6, 2019 – Most importantly, my thanks to all past and present Veterans on this 75th Anniversary of D-Day.  I visited Normandy and Omaha Beach last year.  So serene.  Humbling.  One of my wife’s uncles was in the second wave that landed at Omaha Beach.  He didn’t tell anyone that until a few months before he died in his 90’s.  The Greatest Generation rarely talked about the War.  But, they saved the World.  Literally.  We owe those young men everything.  God Bless them all and our Country.

Per the Appraisal Institute’s Appraiser News Online, 2 more states will allow licensed/certified appraisers to perform non-USPAP Evaluations.  As predicted, this is the year for this to finally take off across our country.

If you are an appraiser in adjacent states, you should start a campaign to get your state to pass a similar law.  Else, you are missing out on a ton of business!  I hope North and South Carolinas wake up and join the movement.  Soon, the entire Southeastern USA will allow appraisers to perform non-USPAP Evaluations.  Following is from the AI:

ALABAMA

Alabama enacted legislation, effective May 29, allowing state-licensed appraisers to perform evaluations for federally regulated financial institutions.
HB 304 states that appraisers “shall not be subject to any provision” of the state’s appraiser licensing law when performing an evaluation that includes a disclaimer stating it is not an appraisal, and the requirements for a licensed real estate appraiser to comply with the Uniform Standards of Professional Appraisal Practice do not apply.
Additionally, the law clarifies that evaluations are “governed by federal law and rules of the federal financial institution regulatory agencies, and not the board.”
LOUISIANA
Louisiana Gov. John Bel Edwards on May 30 signed HB 340, legislation that allows appraisers in the state to provide evaluations for federally insured depository institutions. The law takes effect Aug. 1.
The legislation states that appraisers are not prohibited by the state’s appraiser licensing law from providing evaluations to federally regulated institutions in accordance with “federal law, regulation or the guidance for evaluations established by the federal financial institutions regulatory agency of the depository institution.”