1. G. HERBERT PRITCHETT, MAI, SRPA, CCIM APPRAISER BOARD MEMBER, KENTUCKY REAL ESTATE APPRAISERS BOARD A State Regulatory Board Member’s Perspective AI Connect - August 5, 2014

2. Lobbying Strategies- Relationships Are All Important Relationships many times determine the outcome of votes Relationships are many times more important than the issues Members from differing backgrounds vote based upon their background – not necessarily upon the issues in front of them AI Connect - August 5, 2014

3. Lobbying Strategies - Cultivate the Relationships With the Board staff With individual Board members With the key members on the legislative committees who will vote on changes to the law and regulations With whomever appoints the members to the Appraiser Board. AI Connect - August 5, 2014

4. Lobbying Strategies -Engaging in the Political Process It is not an option –it is mandatory Remember Edmund Burke’s admonition, “All that is necessary for the triumph of evil is that good men do nothing.” The political rule making and regulatory process is not what you learned in civics class – it is gritty, and to many, distasteful – but it is absolutely necessary AI Connect - August 5, 2014

5. Lobbying Strategies - Engaging in the Political Process It is based upon relationships, previous political legwork, and political contributions If your state chapter does not have a political arm and PAC, you are at a tremendous disadvantage in influencing policy in your state Each chapter should have a database showing what members have a relationship with key political figures and an active governmental affairs board. AI Connect - August 5, 2014

6. Lobbying Strategies - Engaging in the Political Process AI Connect - August 5, 2014 You cannot wait until an issues surfaces - the relationships and contributions have to be in place before the issue becomes “hot” Do not make the assumption that people in politics will always do what is “right” Instead assume as did Andrew Carnegie with much success, that people will almost always act in their own self-interest

7. Lobbying Strategies - Engaging in the Political Process That includes politicians and regulators So always approach political issues keeping in mind everyone’s self interest The more coalitions you can build with real estate related organizations, the more your numbers and the stronger and more influential your chapter. AI Connect - August 5, 2014

8. Lobbying Strategies - Engaging in the Political Process AI Connect - August 5, 2014 Realize that a Board member who is also an AI member cannot openly lobby AI’s position in Board meetings as to do so would be contrary to FIREEA and bring possible sanctions from the ASC AI non-Board members have to provide the advocacy

9. Review Appraiser Issues AI Connect - August 5, 2014 Some states mandate review appraisers be certified in the state where the property is located Hearing some pushback on this requirement Pros  If I appraise something in a state, I have to be certified in that state,  I have to have geographic competency,  State Board has jurisdiction over me Cons – it is expensive and burdensome for multi- state AMC’s and banks

10. Guilt, Innocence & Punishment Does the appraiser know what he/she is doing? Does the appraiser use words like “based upon my experience” or “based upon the market” when using significant unsupported adjustments? Is the report language obvious boilerplate that does not relate to the appraisal problem? Is the report consistent – for instance a depreciated RCN for building area of $75/sf and a building area adjustment in the sales comparison approach of $25/sf, with no explanation of the difference? AI Connect - August 5, 2014

11. Guilt, Innocence & Punishment Are there prior offenses? Are there careless factual errors in the appraisal brought on probably by a low fee and the need to be hasty? I am easier on appraisers who admit their mistakes than those who try and pull the wool over my eyes I can tell by reading the report and 5minutes of a mediation interview, whether the appraiser knows his/her stuff or is trying to bluff his/her way through AI Connect - August 5, 2014

12. Guilt, Innocence & Punishment Those who admit they screwed up on that appraisal and tell me they know how to do things, I am much easier on because “There but for the grace of God go I” Those who try and buffalo their way through get harsher punishment Those who really don’t know any better get a fine and continuing ed (with successful test completion) Judging your peers and meting out punishment is much harder than I ever thought it would be. AI Connect - August 5, 2014

13. The Appraisal Subcommittee The ASC is the most important Federal agency relating to appraisal regulation. They are the “police” that monitor FIREEA, Title XI adherence by state regulatory bodies. Every Board is audited by the ASC every 1 or 2 years for FIRREA Title XI compliance The ASC’s role has recently been strengthened significantly by Dodd-Frank This offers a new, significant role for state appraisers to influence Board enforcement AI Connect - August 5, 2014

14. The Appraisal Subcommittee Prior to Dodd-Frank, the ASC had only one option – decertification of a state Board Since the 1989 passage of FIRREA, no Board has ever been decertified Now it has many more options, including fines and other interim sanctions. It has the authority to ascertain whether or not a Board is adequately funded AI Connect - August 5, 2014

15. The Appraisal Subcommittee Has now codified the standard for state reciprocity ASC can now monitor regulatory agencies’ appraiser independence investigations ASC can now make grants to state regulatory agencies ASC regulations give the state regulatory agencies the mandate to review the operations and activities of AMCs. AI Connect - August 5, 2014

16. ASC Policy Statements There are 10 of them plus an appendix Temporary license must be granted within 5 days. Allows denial of reciprocal certification or license if granting state’s standards exceed the state’s standards being used for reciprocal application. Person analyzing the complaint must be knowledgeable. AI Connect - August 5, 2014

17. ASC Policy Statements Enforcement punishments must be consistent. Tightens the 1 year enforcement mandate by tightening the definition of special documented circumstance. Appendix, introduces new grades for state regulatory agencies If you believe your Board is lax and not enforcing the policy statements, complain to the ASC AI Connect - August 5, 2014

18. Other Appraiser – Board Issues If your Board is not made up of a majority of appraisers, it needs to be. If your Board is not a separate Board with real power, having a separate staff, it needs to be. If your Board investigators are not experienced appraisers, they need to be. These may increase license fees, but it provides for a much better Board. AI Connect - August 5, 2014

19. Other Appraiser – Board Issues Have at least 1 AI member at each Board meeting to provide input and comment Board minutes are generally not available until after they are approved at the next meeting Within 72 hours of the meeting end publish a synopsis of the meeting and email it to all appraisers in the state, with your chapter’s “take” on the votes. AI Connect - August 5, 2014

20. Other Appraiser- Board Issues Communicate to all appraisers in the state, AI’s position on issues affecting appraisers Communicate to all appraisers in the state your chapter’s efforts on behalf of appraisers and consumers This is excellent chapter outreach to non AI affiliated appraisers AI Connect - August 5, 2014

21. Chapter Outreach Realize AI members are a minority of appraisers Only 15 to 20% of appraisers are affiliated with a credible professional organization. Before non-affiliated appraisers will join your chapter, they must perceive it is worth becoming an AI affiliated member So become the most recognized advocate for appraisers in your state AI Connect - August 5, 2014

22. Chapter Outreach If your chapter does not have a periodic email newsletter going out to every appraiser in its jurisdiction, especially after every state regulatory Board meeting, it needs to do so. AI Connect - August 5, 2014

23. Other Appraiser – Board Issues Mandatory “bad” appraisal reporting as called for in Dodd- Frank is anything but mandatory It applies ONLY to  Single family residential appraisals in which  There are “material and significant” mistakes Hence it is not mandatory for a bank to report a “bad” appraisal on ANY non-residential property. In SFR appraisals, banks can also claim mistakes are not “material and significant” and not turn them in AI Connect - August 5, 2014

24. Anonymous Complaints I have turned in appraisals/appraisers via signed complaints and have suffered a loss in business and a loss in friendships I have also turned in people anonymously and not suffered With these dual experiences I am very much in favor of anonymous complaints AI Connect - August 5, 2014

25. Other Appraiser – Board Issues AI Connect - August 5, 2014

26. Other Observations Appraisal quality is worse than I thought but it is getting better due mainly to the AQB higher criteria 98% of the appraisal activity is residential AI Connect - August 5, 2014