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McKissock Appraisal School Rev. 1-20-2013 Ken Guilfoyle Senior Certified National Instructor Ken Guilfoyle Senior Certified National Instructor McKissock.

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Presentation on theme: "McKissock Appraisal School Rev. 1-20-2013 Ken Guilfoyle Senior Certified National Instructor Ken Guilfoyle Senior Certified National Instructor McKissock."— Presentation transcript:

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2 McKissock Appraisal School Rev. 1-20-2013

3 Ken Guilfoyle Senior Certified National Instructor Ken Guilfoyle Senior Certified National Instructor McKissock L.P. P.O. Box 1673 Warren, PA 16365 - 3158 Phone:800-328-2008 Fax:814-723-7289 On the Web:www.mckissock.com E-Mail: ken@mckissock.com McKissock L.P. P.O. Box 1673 Warren, PA 16365 - 3158 Phone:800-328-2008 Fax:814-723-7289 On the Web:www.mckissock.com E-Mail: ken@mckissock.com

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5 You want Snacks? You’re lucky you got coffee!

6 I’d like the memory of me to be a happy one, I’d like to leave an afterglow of smiles when my life is done. I’d like to leave an echo whispering softly down the ways, of happy times and laughing times and bright and sunny days. I’d like the tears of those who grieve, to dry before the sun. Of happy memories that I leave when my life is done.

7 Are Appraisers Represented ? Who is working on our behalf to keep ethical standards in place? Who is working on our behalf to keep ethical standards in place? Many appraisal association representatives are involved with The Appraisal Foundation Advisory Council (TAFAC) Many appraisal association representatives are involved with The Appraisal Foundation Advisory Council (TAFAC) Appraisers serve on state appraisal boards and we are part of the Association of Appraisal Regulatory Officials (AARO) Appraisers serve on state appraisal boards and we are part of the Association of Appraisal Regulatory Officials (AARO)

8 Are Appraisers Represented ? Appraisers are or have been involved in writing the appraiser upgrade exams, reviewing texts for the Appraiser Qualifications Board (AQB) and being represented on the Joint Government Relations Committee Appraisers are or have been involved in writing the appraiser upgrade exams, reviewing texts for the Appraiser Qualifications Board (AQB) and being represented on the Joint Government Relations Committee Appraisers are working with the department of Housing and Urban Development (HUD), the Veterans Administration (VA), and other governmental bodies such as the Internal Revenue Service (IRS), the Department of the Interior, and the U.S. Army Corps of Engineers to make things better for the appraiser profession as a whole Appraisers are working with the department of Housing and Urban Development (HUD), the Veterans Administration (VA), and other governmental bodies such as the Internal Revenue Service (IRS), the Department of the Interior, and the U.S. Army Corps of Engineers to make things better for the appraiser profession as a whole

9 Are Appraisers Represented ? Appraisers from the Appraisal Institute, the American Society of Appraisers, the Association of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers are working together to present Appraisal Issues to the U.S. Congress and the Federal and State Governmental Agencies that have the authority to impact the Appraisal Profession. Appraisers from the Appraisal Institute, the American Society of Appraisers, the Association of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers are working together to present Appraisal Issues to the U.S. Congress and the Federal and State Governmental Agencies that have the authority to impact the Appraisal Profession.

10 Are Appraisers Represented ? Appraisers serve on The Appraisal Foundation’s Appraisal Standards Board (ASB), the Appraisal Qualifications Board (AQB), the Appraisal Practices Board (APB), and their various specialty sub-committees Appraisers serve on The Appraisal Foundation’s Appraisal Standards Board (ASB), the Appraisal Qualifications Board (AQB), the Appraisal Practices Board (APB), and their various specialty sub-committees Appraisers are working with the Appraisal Sub- Committee (ASC) which is a part of the Federal Financial Institutions Examination Council (FFIEC) Appraisers are working with the Appraisal Sub- Committee (ASC) which is a part of the Federal Financial Institutions Examination Council (FFIEC) Appraisers serve as instructors, moderators, mentors, and trainers, sharing their knowledge and experience, all for the betterment of the appraisal profession Appraisers serve as instructors, moderators, mentors, and trainers, sharing their knowledge and experience, all for the betterment of the appraisal profession

11 Consumer Financial Protection Bureau's New Hot-Line Newest and least-publicized source of federal help: the CFPB’s home-mortgage complaint and dispute-resolution hotline The complaint hotline is accessible by toll- free phone between 8 a.m. to 8 p.m. Eastern (855-411-CFPB) or online at: www.consumerfinance.gov ww.consumerfinance.gov

12 Our U.S. Presidents and where they came from. Arkansas- Clinton Arkansas- Clinton California- Nixon California- Nixon Connecticut- G. W. Bush Connecticut- G. W. Bush Georgia- Carter Georgia- Carter Hawaii- Obama Hawaii- Obama Illinois- Reagan Illinois- Reagan Iowa- Hoover Iowa- Hoover Missouri- Truman Missouri- Truman Nebraska- Ford Nebraska- Ford New Jersey- Cleveland New Jersey- Cleveland

13 Our U.S. Presidents and where they came from. New Hampshire- Pierce New Hampshire- Pierce Kentucky- Lincoln Kentucky- Lincoln Pennsylvania- Buchanan Pennsylvania- Buchanan South Carolina- Jackson South Carolina- Jackson North Carolina- Polk & Andrew Johnson North Carolina- Polk & Andrew Johnson Texas- Eisenhower & Texas- Eisenhower & Lynden Johnson Lynden Johnson Vermont- Arthur & Coolidge Vermont- Arthur & Coolidge New York- Van Buren, Fillmore, T. Roosevelt & F.D. Roosevelt New York- Van Buren, Fillmore, T. Roosevelt & F.D. Roosevelt

14 Our U.S. Presidents and where they came from. Massachusetts- J. Adams, J.Q. Adams, Kennedy & G. H. Bush Massachusetts- J. Adams, J.Q. Adams, Kennedy & G. H. Bush Ohio- Grant, Hayes, Garfield, B. Harrison, McKinley, Ohio- Grant, Hayes, Garfield, B. Harrison, McKinley, Harding & Taft Harding & Taft Virginia- Washington, Jefferson, Madison, Monroe, W.H. Harrison, Tyler, Taylor & Wilson Virginia- Washington, Jefferson, Madison, Monroe, W.H. Harrison, Tyler, Taylor & Wilson

15 USPAP “Scope of Work Rule” USPAP “Scope of Work Rule” Define the Problem. Define the Problem. Determine your Scope of Work. Determine your Scope of Work. Disclose the Scope of Work actually performed in your appraisal report. Disclose the Scope of Work actually performed in your appraisal report. We alone are responsible for our Scope of Work decision. We will be held accountable for our Scope of Work decision. If not right, we may incur the liability for our incompetence.

16 Useful WEB Sites www.HeartHub.org Warning signs for heart attack, stroke, sudden cardiac arrest www.HeartHub.org Warning signs for heart attack, stroke, sudden cardiac arrest www.HeartHub.org www.MayoClinic.com/health/fitness/SM00 086 Quick tests to measure fitness and track progress www.MayoClinic.com/health/fitness/SM00 086 Quick tests to measure fitness and track progress www.MayoClinic.com/health/fitness/SM00 086 www.MayoClinic.com/health/fitness/SM00 086 www.USA.gov/directory/federal/index.sht ml Contact info for hundreds of US agencies and departments www.USA.gov/directory/federal/index.sht ml Contact info for hundreds of US agencies and departments www.USA.gov/directory/federal/index.sht ml www.USA.gov/directory/federal/index.sht ml r eference: Bottom line newsletter, January 2013

17 Five Worst Gov. Web Sites Time.gov Time.gov Weather.gov Weather.gov USDA.gov USDA.gov SSA.gov SSA.gov USMINT.gov USMINT.gov Reference: Congressorg@capwiz.com, Reference: Congressorg@capwiz.com,Congressorg@capwiz.com

18 How Busy are Appraisers ? A survey by Appraisalport.com quotes: A survey by Appraisalport.com quotes: Up to 6 hours per day298 responses Up to 6 hours per day298 responses Up to 7 – 8 hours per day903 “ Up to 7 – 8 hours per day903 “ Up to 9 – 10 hours per day2195 “ Up to 9 – 10 hours per day2195 “ Up to 11 – 12 hours per day1576 “ Up to 11 – 12 hours per day1576 “ Up to 13 – 14 hours per day636 “ Up to 13 – 14 hours per day636 “ Up to 15 – 16 hours per day251 “ Up to 15 – 16 hours per day251 “ 16 or more hours per day184 “ 16 or more hours per day184 “ Reference: Appraisal Today Newsletter, 11-04-12

19 Appraisal-Port Survey turn times up Appraisal-Port Survey turn times up What is your average quoted residential appraisal turn time? -2 days 415 votes 7% - 3-4 days 1,196 votes 21% - 5-6 days 1,625 votes 29% - 7-8 days 1,088 votes 19% - 9 days or more 595 votes 11% Total Votes: 5,645 Reference: Appraisalport.com survey

20 States with the Highest Percentage of Jumbo Loans States that have the highest number of Jumbo Loans include: States that have the highest number of Jumbo Loans include: Hawaii43 % Hawaii43 % California 41 % California 41 % Dist. of Columbia30 % Dist. of Columbia30 % New York22 % New York22 % New Jersey10 % New Jersey10 %

21 Who owns the most private land in America ? According to www.finance.yahoo.com the top three landowners are: According to www.finance.yahoo.com the top three landowners are:www.finance.yahoo.com John Malone owns 2.2million acres stretching from Wyoming to Maine John Malone owns 2.2million acres stretching from Wyoming to Maine Ted Turner owns 2 million acres throughout the mid-West and New Mexico Ted Turner owns 2 million acres throughout the mid-West and New Mexico The Emmerson family holds1.9 million acres in the Pacific North West. The Emmerson family holds1.9 million acres in the Pacific North West.

22 FDIC is Still Very Busy ! The FDIC took over 92 banks in 2011. Total amount of assets was $57.6B. The FDIC took over 92 banks in 2011. Total amount of assets was $57.6B. There were 159 banks taken over by FDIC with $95.1B of assets in 2010 There were 159 banks taken over by FDIC with $95.1B of assets in 2010 139 institutions were seized in 2009 with $170.3B of assets. 139 institutions were seized in 2009 with $170.3B of assets. FDIC believes that bank failures peaked in 2010 FDIC believes that bank failures peaked in 2010 Reference: CRE News Update, 6-13-12 Reference: CRE News Update, 6-13-12

23 Senate Panel Report on WaMu Failure Highlights Appraisal Role The U.S. Senate Permanent Subcommittee on Investigations released a 650-page report April 13 th that included a case study on Washington Mutual's failure, highlighting the role of unsound appraisal practices in the bank's collapse. Reference: Appraiser News on-line

24 Who is Looking at Your Appraisal? Our Appraisals are being looked at more than ever by people who are not appraisers. According to data from the Appraisal Institute: There are about 13,000 +/- appraisal reviewers Approximately 1/3 are working with appraisal firms

25 Can You Support “Effective Age”? Go to: www.mckissock.com Go to: www.mckissock.com www.mckissock.com Click on: Click on:“Help” Then Click on: “Student Download” “Student Download” You will find it there

26 Let's say it's 6.15pm and you're driving home (alone of course) after an unusually hard day on the job. You're really tired, and frustrated……

27 YOU ARE REALLY STRESSED AND UPSET …. Suddenly you start experiencing severe pain in your chest that starts to radiate out into your arm and up into your jaw. You are several blocks from the nearest hospital. Unfortunately you don’t know if you will be able make it that far

28 WHAT TO DO ??? You have been trained in CPR, But the guy that conducted the course did not tell you how to perform it on yourself !!!!!

29 HOW TO SURVIVE A HEART ATTACK WHEN ALONE? SINCE MANY PEOPLE ARE ALONE WHEN THEY SUFFER A HEART ATTACK, WITHOUT HELP, THE PERSON WHOSE HEART IS BEATING IMPROPERLY AND WHO BEGINS TO FEEL FAINT, HAS ONLY ABOUT 10 SECONDS LEFT BEFORE LOSING CONSCIOUS WHAT TO DO ??

30 ANSWER: DO NOT PANIC, BUT START COUGHING REPEATEDLY AND VERY VIGOROUSLY. A DEEP BREATH SHOULD BE TAKEN BEFORE EACH COUGH, THE COUGH MUST BE DEEP AND PROLONGED, AS WHEN PRODUCING SPUTUM FROM DEEP INSIDE THE CHEST. A BREATH AND A COUGH MUST BE REPEATED ABOUT EVERY TWO SECONDS WITHOUT LET-UP UNTIL HELP ARRIVES, OR UNTIL THE HEART IS FELT TO BE BEATING NORMALLY AGAIN.

31 DEEP BREATHS GET OXYGEN INTO THE LUNGS AND COUGHING MOVEMENTS SQUEEZE THE HEART AND KEEP THE BLOOD CIRCULATING. THE SQUEEZING PRESSURE ON THE HEART ALSO HELPS IT REGAIN NORMAL RHYTHM. IN THIS WAY, HEART ATTACK VICTIMS CAN GET TO A HOSPITAL ARTICLE PUBLISHED ON N.º 240 OF JOURNAL OF GENERAL HOSPITAL ROCHESTER

32 TELL AS MANY OTHER PEOPLE AS POSSIBLE ABOUT THIS. IT COULD SAVE THEIR LIVES !!! DON'T EVER THINK THAT YOU ARE NOT PRONE TO A HEART ATTACK, EVEN IF YOUR AGE IS LESS THAN 25 OR 30. NOWADAYS DUE TO THE CHANGES IN LIFE STYLE, HEARTATTACKS ARE FOUND AMONG PEOPLE OF ALL AGE GROUPS.

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34 Top- Earning DEAD Celebrities According to Forbes’ Annual Celebrity list: According to Forbes’ Annual Celebrity list: Michael Jackson (2009)$275 Million Michael Jackson (2009)$275 Million Elvis Presley (1977)$ 60 Million Elvis Presley (1977)$ 60 Million J.R.R. Tolkien (1973)$ 50 Million J.R.R. Tolkien (1973)$ 50 Million Charles Schultz (2000)$ 33 Million Charles Schultz (2000)$ 33 Million John Lennon (1980)$ 17 Million John Lennon (1980)$ 17 Million Dr. Seuss (1991)$ 11 Million Dr. Seuss (1991)$ 11 Million Albert Einstein (1955) $ 10 Million Albert Einstein (1955) $ 10 Million George Steinbrenner (2010)$ 8 Million George Steinbrenner (2010)$ 8 Million

35 The Statue of Liberty Sits on her very own island in New York harbor and is recognized around the world as the symbol of freedom Sits on her very own island in New York harbor and is recognized around the world as the symbol of freedom Officially dedicated on October 28,1886 and titled as “Liberty Enlightening the World” Officially dedicated on October 28,1886 and titled as “Liberty Enlightening the World” The 25 windows represent the earth’s 25 minerals. The 7 spikes on her crown represent the 7 seas and the 7 continents The 25 windows represent the earth’s 25 minerals. The 7 spikes on her crown represent the 7 seas and the 7 continents She is more than 300 feet tall. Her sandal is 25 feet long and one must climb 22 stories to reach her crown. She is more than 300 feet tall. Her sandal is 25 feet long and one must climb 22 stories to reach her crown.

36 The Golden Gate Bridge Opened to the public on May 27, 1937 Opened to the public on May 27, 1937 Took 4.5 years to complete Took 4.5 years to complete Cost $35 million dollars to build Cost $35 million dollars to build Approximately 1.7 miles long Approximately 1.7 miles long Main span is 4,200 feet Main span is 4,200 feet 746 feet at tallest point 746 feet at tallest point 11 workers died during construction 11 workers died during construction

37 Finally, This appraisal is done!

38 “When the American people no longer believe that this country is a place where only their willingness to work hard will determine their success in life, we’ll have a whole bunch of people sitting on a couch waiting for their next government check” We will become a “paternalistic entitlement society” Reference: American Legion Magazine Reference: American Legion Magazine

39 A daily dose of laughter might just keep the doctor away. When you laugh, it: When you laugh, it: Stimulates circulation Stimulates circulation Tones muscles Tones muscles Energizes the lungs and respiratory system Energizes the lungs and respiratory system Stimulates the immune systems Stimulates the immune systems Provides aerobic exercise Provides aerobic exercise Reduces stress and depression Reduces stress and depression Heightens sense of well being and creativity Heightens sense of well being and creativity

40 A Humorous Disclaimer for you It has been suggested/implied that this office knows EVERYTHING. While we find this flattering/amusing, it must be disclosed that while we MAY have an answer for everything, these answers are frequently offered in a very random manner and may have nothing at all to do with the question asked. We realize this can be a problem and are diligently working on a solution.

41 K I S S – “Keep it Simple --” Math – the infinities of our math system stem from 10 simple numbers. Math – the infinities of our math system stem from 10 simple numbers. Michelangelo used just 4 primary colors when he painted the Sistine Chapel. Michelangelo used just 4 primary colors when he painted the Sistine Chapel. Abraham Lincoln’s Gettysburg Address, one of the world’s most famous speeches was 278 words and 215 of those words were simple one syllable words. Abraham Lincoln’s Gettysburg Address, one of the world’s most famous speeches was 278 words and 215 of those words were simple one syllable words. Simple can be pretty powerful. Greatness can come from simple things. Reference: Business Review Newsletter Reference: Business Review Newsletter

42 Did You Ever Wonder Why--- To stop Windows, you need to click on “Start” ? To stop Windows, you need to click on “Start” ? Doctors call what they do “Practice” ? Doctors call what they do “Practice” ? Lemon juice is made with artificial flavor, dishwashing liquid made with real lemons ? Lemon juice is made with artificial flavor, dishwashing liquid made with real lemons ? You do not ever see the headline “Psychic Wins Lottery” ? You do not ever see the headline “Psychic Wins Lottery” ? “Abbreviated” is such a long word ? “Abbreviated” is such a long word ? They sterilize the needle for lethal injections ? They sterilize the needle for lethal injections ?

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44 Info. from the ASC Appraiser Registry. Active Appraiser Licenses: Active Appraiser Licenses: Licensed ---------------- 11,865 Licensed ---------------- 11,865 Certified Residential -- 52,568 Certified Residential -- 52,568 Certified General ----- 37,974 Certified General ----- 37,974 Transitional ------------ 7 Total --------- 102,414* Transitional ------------ 7 Total --------- 102,414* *The ASC indicates there are actually 89,000 (+/-) licensed and certified appraisers throughout the United States per their annual report to Congress Ref: ASC Federal Register Summary Report, 1-2013

45 Top 6 States -- Active Appraisers State # of Appraisers State # of Appraisers California11,661 California11,661 Florida 6,378 Florida 6,378 Texas 5,289 Texas 5,289 Illinois 4,205 Illinois 4,205 New York 4,140 New York 4,140 Georgia 3,850 Georgia 3,850 Reference: ASC National Registry, 1-2013 Reference: ASC National Registry, 1-2013

46 Additional Info. from the ASC Appraiser Registry. States that have retired or eliminated the “License” category for Appraisers: States that have retired or eliminated the “License” category for Appraisers: Alaska, Connecticut, Florida, Indiana, Illinois, Alaska, Connecticut, Florida, Indiana, Illinois, Iowa, Missouri, Louisiana, Mariana Islands, North Carolina, South Carolina, Pennsylvania, Tennessee, Wyoming, and the Virgin Islands

47 “Working Real Estate” Appraiser Survey “Working Real Estate” Appraiser Survey Number of years in the appraisal practice: Number of years in the appraisal practice: Years (#): Less than: 1 5 10 20 30+ Less than: 1 5 10 20 30+ Totals 1% 23% 27% 33% 16% Totals 1% 23% 27% 33% 16% Appraiser’s average age: (Overall = 52 years) Appraiser’s average age: (Overall = 52 years) Under 30 31-40 41-50 51-60 61-70 71+ Under 30 31-40 41-50 51-60 61-70 71+ Totals 4% 18% 29% 34% 13% 2% Totals 4% 18% 29% 34% 13% 2%

48 Top Residential Mortgage Providers As of October 2012, a Report by Inside Mortgage Finance: As of October 2012, a Report by Inside Mortgage Finance: Wells Fargo19.9 % Bank of America17.2 % Bank of America17.2 % Chase12.4 % Citi 6.2 % Ally Financial 3.4 % U.S. Bank-Home 2.0 % Reference: Appraiser Newsletter Reference: Appraiser Newsletter

49 Top Commercial Mortgage Servicers According to the Mortgage Banker’s Association, the top Commercial Mortgage Servicers in 2012 were: According to the Mortgage Banker’s Association, the top Commercial Mortgage Servicers in 2012 were: Wells Fargo PNC Real Estate/Midland Loan Services Berkadia Commercial Mortgage Bank of America Merrill Lynch Key Bank Real Estate Capital Reference: Appraiser Newsletter

50 AppraiserWorld.com Appraiser Survey Gender distribution of active appraisers: Gender distribution of active appraisers: Female – 26 % Female – 26 % Male – 74 % Male – 74 %

51 TAF Survey (The Appraisal Foundation) TAF Survey (The Appraisal Foundation) Have appraisers ever belonged to one of the TAF sponsoring Appraisal Associations? 60 % (+/-) of appraisers said “no”. Have appraisers ever belonged to any appraisal or valuation association? 85 % of appraisers said “no”.

52 “Working Real Estate” Survey Feb. 2012 “Working Real Estate” Survey Feb. 2012 What is the appraiser’s highest level of formal education completed? High School22 % Undergrad Degree25 % Graduate Degree45 % Post Grad Degree 8 %

53 TAF Survey TAF Survey What is the primary area of your appraisal practice? Residential69% Commercial16% Bus. Valuation 1% Agriculture 4% Mass Appraisal 3% Personal Property 1% All Other 6%

54 TAF Survey TAF Survey Employment Category: Employment Category: Owner operator60% Company / Partnership19% Government Agency 6% Mortgage Lending 5% Other10%

55 TAF Survey TAF Survey Reporting the appraisal: 71% of appraisers said that 75% of their reports are form type reports. 22% of appraisers said that less than 25% of their work was reported on a prepared form. Are appraisers willing to mentor a trainee? Only 25% of appraisers are willing to act as a mentor for a trainee.

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57 Appraisal Management Company (AMC) Participation 73 % of appraisers are currently working with AMCs. 73 % of appraisers are currently working with AMCs. 20 % of appraisers have worked with an AMC within the last 5 years, but not now. 20 % of appraisers have worked with an AMC within the last 5 years, but not now. 25 % of appraisers are not currently working with AMCs, and have not worked with an AMC in the past 5 years. 25 % of appraisers are not currently working with AMCs, and have not worked with an AMC in the past 5 years. Source: “Working Real Estate” Survey” Source: “Working Real Estate” Survey”

58 Valuation Review’s “Voice of the Appraiser Survey” According to the Valuation Review Survey of Appraisers: According to the Valuation Review Survey of Appraisers: Appraisal services provided by residential appraisers: Full Appraisal Services 99 % Drive-by Appraisals57 % Property Condition Reports 38 % Broker Price Opinions 7 %

59 Valuation Review’s “Voice of the Appraiser Survey” Residential Appraiser’s believe their Fees are: 12 % Unlivable 53 % too low for work required 53 % too low for work required 25 % Reasonable for work required 25 % Reasonable for work required 10 % Above the Average 10 % Above the Average AMCs believe Residential Appraiser’s Fees are: 8 % Unlivable 8 % Unlivable 13 % Fees too low for work required 13 % Fees too low for work required 62 % Reasonable for work required 62 % Reasonable for work required 17 % Above the Average 17 % Above the Average

60 More Poll Results from Appraisers (4,691 responses) What percent of your assignments result in requests for clarification from the client? What percent of your assignments result in requests for clarification from the client? 0% 10% of the time --- 45% 0% 10% of the time --- 45% 11%-20% of the time - 19 % 11%-20% of the time - 19 % 21%-30% of the time – 13% 21%-30% of the time – 13% 31%-40% of the time - 8% 31%-40% of the time - 8% 40% + of the time ---- 15% 40% + of the time ---- 15% Reference: www.Appraisalport.com Reference: www.Appraisalport.com

61 More Poll Results from Appraisers (5,632 Responses) How often does your client request information that is already in the original report? How often does your client request information that is already in the original report? “Often” 60% responded “Often” 60% responded “Almost always”12% responded “Almost always”12% responded “Rarely”27% responded “Rarely”27% responded “Never” 1% responded “Never” 1% responded Reference: www.Appraisalport.com Reference: www.Appraisalport.com

62 Taking Back your Profession! If you are receiving less than a customary and reasonable fee or working with an AMC who doesn’t seem to care about the quality of your appraisals or the competency of their staff, you’re working with the wrong company. If you are receiving less than a customary and reasonable fee or working with an AMC who doesn’t seem to care about the quality of your appraisals or the competency of their staff, you’re working with the wrong company. **Note** **Note** Customary and reasonable fees form the base and can be negotiated upward from there depending on complexity, etc. Customary and reasonable fees form the base and can be negotiated upward from there depending on complexity, etc.

63 Questioning AMC’s Policies If a loan fails to close, is it within the law to withhold your payment for the appraisal? NO. NO.

64 Questioning AMC’s Policies Is the person running an AVM required to have the requisite experience, which means be “licensed” as an appraiser? Yes, Yes, If the valuation is to be used by the bank for lending purposes.

65 Questioning AMC’s Policies Is it a good idea to “change” your report at the request of an AMC or Lender after submission? NO. NO. “Changing” your report will probably result in a complaint being filed with your state appraisal board by the AMC or Lender.

66 Questioning AMC’s Policies Is it legal for an AMC to choose an appraiser based solely on the lowest fee? NO. NO. Selecting an appraiser solely based on the lowest fee is prohibited by numerous federal regulations.

67 Questioning AMC’s Policies Is it okay for an appraiser to give a verbal” value estimate” over the phone just to verify whether there’s value? NO. NO. This is a prohibited practice if the verbal opinion is for a “lending purpose”.

68 Questioning AMC’s Policies Is it legal for an FHA appraisal to include a fee for management of the appraisal process? NO. NO.

69 Questioning AMC’s Policies Appraisers need to know much more than their USPAP rules today. Appraisers need to know much more than their USPAP rules today. Appraisers need to be familiar with the applicable Fannie Mae, Freddie Mac, FHA, and VA requirements, Interagency Guidelines, state and federal laws, and the Certifications that appraisers sign and include in every report. Appraisers need to be familiar with the applicable Fannie Mae, Freddie Mac, FHA, and VA requirements, Interagency Guidelines, state and federal laws, and the Certifications that appraisers sign and include in every report. Reference: This slide and the previous 7 slides taken from the OREP/Working RE webinar, Part 2

70 All McKissock Instructors are AQB Qualified USPAP Instructors

71 Time Time Time is absolutely the most precious gift we have. None of us know how much time we have or how long it will last. Time is absolutely the most precious gift we have. None of us know how much time we have or how long it will last. You can’t buy it. You can’t replace it. You can’t really give it to anyone. You can only use it. You can’t buy it. You can’t replace it. You can’t really give it to anyone. You can only use it. How you use your time is how you make yourself different from everyone else. How you use your time is how you make yourself different from everyone else.

72 Residential Appraisal Production Time Time (hours) Description Time (hours) Description 0.20Receive, setup, maintain files 0.20Receive, setup, maintain files 1.50Research, data, maps, file info 0.20Setting & confirming appointments 2.50Drive to & from appointments (includes comps. no shows and re-inspections) 1.35Average appraisal inspection time 5.00Writing report 0.50Review, edit, corrections 0.20Delivery, follow up confirmation 1.05Unproductive time amortized 12.50Average Appraisal Production Time 12.50Average Appraisal Production Time

73 “How Did You Get That Adjustment ?” When a reviewer or underwriter asks about your adjustment or says: When a reviewer or underwriter asks about your adjustment or says: “This adjustment is not right.” “This adjustment is not right.” You might want to respond with: You might want to respond with: “Show me that I am wrong.” “Show me that I am wrong.” This often works. But be sure that you can support your adjustment figure.

74 Square Footage & Public Records Local Assessors are quick to point out their data is a creation of mass appraisal data for specific use within the tax assessment process Local Assessors are quick to point out their data is a creation of mass appraisal data for specific use within the tax assessment process Experienced Assessor’s comment: “if any agent uses the square footage info we provide to figure out property values, someone’s in big trouble.” Experienced Assessor’s comment: “if any agent uses the square footage info we provide to figure out property values, someone’s in big trouble.” Where does that leave Appraisers? Where does that leave Appraisers? Reference: Kirchmeyer Klips Newsletter Reference: Kirchmeyer Klips Newsletter

75 Rebutting that “Blacklist” Letter How can you rebut that “We will no longer use you” letter you received from the bank or AMC with no explanation? How can you rebut that “We will no longer use you” letter you received from the bank or AMC with no explanation? The Office of Comptroller of Currency (OCC) has a Consumer Assistance Group and you can file a complaint online at: www.Helpwithmybank.gov. The Office of Comptroller of Currency (OCC) has a Consumer Assistance Group and you can file a complaint online at: www.Helpwithmybank.gov. A letter to your state appraisal board will trigger an inquiry for explanation from the AMC. A letter to your state appraisal board will trigger an inquiry for explanation from the AMC. Reference: Working RE, Summer 2012, Pg 12 Reference: Working RE, Summer 2012, Pg 12

76 Why do Appraiser’s Leave this Business ? According to an Appraisal-Port Poll of 6,200 Appraisers: According to an Appraisal-Port Poll of 6,200 Appraisers: AMC fee splits/ Lower fees3,530 Increased report scrutiny 829 Endless new legislation 621 Increased liability 406 Current market conditions 298 Getting old & tired 165 Wouldn’t leave for any reason 351

77 Did You Know ? 36 % of U.S. households (or 32.4 million) own at least one cat. 36 % of U.S. households (or 32.4 million) own at least one cat. 90 million cats are owned in the United States. 90 million cats are owned in the United States. 74.8 million dogs are owned in the United States. 74.8 million dogs are owned in the United States. 39 % of U.S. households (or 29.2 million) own at least one dog. 39 % of U.S. households (or 29.2 million) own at least one dog. Reference: American Pet Products Manufacturers Association

78 Did You Know ? 90 % of the continental United States is still open space or farm land. 90 % of the continental United States is still open space or farm land. On average, 40 % of all hotel rooms in the United States remain empty every night. On average, 40 % of all hotel rooms in the United States remain empty every night. If the Great Pyramid of Cheops were disassembled, you would get enough stones to encircle the earth with a brick wall 20 inches high. If the Great Pyramid of Cheops were disassembled, you would get enough stones to encircle the earth with a brick wall 20 inches high. The ostrich has the largest eyes of any other land creature. The ostrich has the largest eyes of any other land creature. Reference: Business Review Newsletter Reference: Business Review Newsletter

79 Did You Know? The 102 story Empire State Building has 6,000 windows The 102 story Empire State Building has 6,000 windows On a $100 dollar bill, the Independence Hall clock shows the time as 4:10 On a $100 dollar bill, the Independence Hall clock shows the time as 4:10 When Lifebuoy soap was introduced in 1897, it was called Life buddy soap. When Lifebuoy soap was introduced in 1897, it was called Life buddy soap. More arguments occur in the kitchen than in any other room of an American home. More arguments occur in the kitchen than in any other room of an American home. Reference: Business Review Newsletter Reference: Business Review Newsletter

80 Did You Know? West Virginia has the highest number of homeowners at 77 % West Virginia has the highest number of homeowners at 77 % New York State has the lowest number of homeowners at 55 % New York State has the lowest number of homeowners at 55 % 50 % to 70 % of home water use goes toward gardens and lawns 50 % to 70 % of home water use goes toward gardens and lawns 14 % is the portion of the water a homeowner pays for that is never used; it leaks down the drain. 14 % is the portion of the water a homeowner pays for that is never used; it leaks down the drain. Reference: Liberty Lines Newsletter Reference: Liberty Lines Newsletter

81 Did You Know ? Lightning strikes the United States 25 million times every year Lightning strikes the United States 25 million times every year There are 4 million miles of public roads throughout in the United States There are 4 million miles of public roads throughout in the United States The average thunderstorm lasts 30 minutes and has a diameter of 15 miles The average thunderstorm lasts 30 minutes and has a diameter of 15 miles In 2010, tornadoes accounted for more than $566 million in property damages In 2010, tornadoes accounted for more than $566 million in property damages Reference: Liberty Lines Newsletter Reference: Liberty Lines Newsletter

82 Did You Know ? Bugs Bunny was the first cartoon character to be on a U.S. postage stamp in 1997 Bugs Bunny was the first cartoon character to be on a U.S. postage stamp in 1997 About 30 million American adults do not own a cell phone About 30 million American adults do not own a cell phone 97 % of on-line pharmacies sell fake, expired, or contaminated products not approved by the FDA 97 % of on-line pharmacies sell fake, expired, or contaminated products not approved by the FDA Reference: Bottom Line newsletter, January 2013 Reference: Bottom Line newsletter, January 2013

83 Check for Exclusions in Your E&O Policy! If your policy has an FDIC exclusion (no coverage for claims initiated by the Federal Deposit Insurance Corporation) or a more general exclusion for claims arising from “the failure and/or insolvency of a financial institution,” your coverage and protection may be limited or none. If your policy has an FDIC exclusion (no coverage for claims initiated by the Federal Deposit Insurance Corporation) or a more general exclusion for claims arising from “the failure and/or insolvency of a financial institution,” your coverage and protection may be limited or none. Check with your E & O provider for an explanation of your insurance terms. Check with your E & O provider for an explanation of your insurance terms.

84 Checklist for a Good Relationship Think “we” not “me” Think “we” not “me” Learn to listen Learn to listen Work as a team Work as a team Learn to negotiate Learn to negotiate Go on dates Go on dates Praise your partner Praise your partner

85 YOUR JOURNEY THRU LIFE Life is not a journey to the grave with the intention of arriving safely and pretty in a well preserved body. Life is not a journey to the grave with the intention of arriving safely and pretty in a well preserved body. but rather, it is to skid in broadside, thoroughly used up, totally worn out and loudly proclaiming but rather, it is to skid in broadside, thoroughly used up, totally worn out and loudly proclaiming “WOW – WHAT A RIDE !!!” “WOW – WHAT A RIDE !!!” From: Melissa@mckissock.com From: Melissa@mckissock.com

86 Leadership and You True leaders are not those who strive to be first but those who are first to strive, who have good attitudes and give their all for the good of their profession. True leaders are not those who strive to be first but those who are first to strive, who have good attitudes and give their all for the good of their profession. Our lives are not determined by what happens to us but how we react to what happens; not what life brings to us but by the attitude we bring to life ! Our lives are not determined by what happens to us but how we react to what happens; not what life brings to us but by the attitude we bring to life !

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88 Top 6 Languages of the World Mandarin Chinese, 1 Billion + Mandarin Chinese, 1 Billion + English,512 Million English,512 Million Hindi,501 Million Hindi,501 Million Spanish,399 Million Spanish,399 Million Russian,285 Million Russian,285 Million Arabic,265 Million Arabic,265 Million Reference: Business Review Newsletter Reference: Business Review Newsletter

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90 Largest Private Owned Home in U.S.A. The “Biltmore Estate” is a large private estate located in Asheville, North Carolina The “Biltmore Estate” is a large private estate located in Asheville, North Carolina It is still owned by the Vanderbilt’s descendants, with 250 rooms encompassing some 178,926 square feet of living area. Constructed 1889-1895 It is still owned by the Vanderbilt’s descendants, with 250 rooms encompassing some 178,926 square feet of living area. Constructed 1889-1895 www.romanticasheville.com/biltmore_hou se.htm www.romanticasheville.com/biltmore_hou se.htm www.romanticasheville.com/biltmore_hou se.htm www.romanticasheville.com/biltmore_hou se.htm

91 CONVERSION CHART INCH = DECIMAL INCH = DECIMAL INCH = DECIMAL INCH = DECIMAL 1”.083 7”.583 2”.1667 8”.667 3”.25 9”.75 4”.33 10”.833 5”.416 11”.916 6”.5 12” 1.00

92 MEASUREMENTS 7.92 inches=1 link 25 links=1 rod 16.5 feet=1 rod 4 rods=1 chain 320 rods=1 mile 5,280 feet=1 mile 43,560 sq ft=1 acre 640 acres=1 sq mile 640 acres=1 section 36 sections =1 township 27 cubic feet =1 cubic yard 1 stone = 14 pounds

93 Ethics & Integrity Always be ready to humble yourself and find a mentor along the way. No matter how successful we are there is always room for improvement when we open up our minds to others, otherwise, we will stagnate and fall by the wayside. Always be ready to humble yourself and find a mentor along the way. No matter how successful we are there is always room for improvement when we open up our minds to others, otherwise, we will stagnate and fall by the wayside.

94 Ethics & Integrity How far we go in life depends on your being tender with the young, compassionate with the aged, sympathetic with the striving, and tolerant with the weak and the strong. How far we go in life depends on your being tender with the young, compassionate with the aged, sympathetic with the striving, and tolerant with the weak and the strong. Because someday in life, you will have been all of these.

95 Observations Observations You can tell a lot about a person by the way he or she handles three things: 1. A rainy day 1. A rainy day 2. Sitting in traffic jams 2. Sitting in traffic jams 3. Tangled Christmas tree lights 3. Tangled Christmas tree lights

96 Additional Observations People will forget what you said ------ People will forget what you said ------ People will forget what you did ----- People will forget what you did ----- But people will never forget how you made them feel. But people will never forget how you made them feel. People remember people who remember them. People remember people who remember them.

97 The Perfect Husband A husband forgot his wife’s birthday… A husband forgot his wife’s birthday… His wife told him, “tomorrow there better be something in the driveway for me that will go from zero to 200 in 2 seconds flat”. His wife told him, “tomorrow there better be something in the driveway for me that will go from zero to 200 in 2 seconds flat”. The next morning the wife found a small package on the driveway…When she opened the package, she found a brand new bathroom scale. The next morning the wife found a small package on the driveway…When she opened the package, she found a brand new bathroom scale. Funeral arrangements for the husband have been set for Saturday…. Funeral arrangements for the husband have been set for Saturday….

98 WE IS FRIENDS ! Me and You is Friends… Me and You is Friends… You Smile, I Smile… You Smile, I Smile… You Hurt, I Hurt…. You Hurt, I Hurt…. You Cry, I Cry… You Cry, I Cry… You Jump off a Bridge… You Jump off a Bridge… I Gonna Miss You. I Gonna Miss You.

99 Did You Know.. The average American Has 31 blood tests. Has 31 blood tests. Eats 114,000 Tootsie Rolls. Eats 114,000 Tootsie Rolls. Buys 6 cameras. Buys 6 cameras. Makes 184,702 phone calls. Makes 184,702 phone calls. Eats 250 pounds of peanut butter. Eats 250 pounds of peanut butter. Spends 4 years traveling in automobiles. Spends 4 years traveling in automobiles. Reference: Business Review Newsletter Reference: Business Review Newsletter

100 Did You Know.. The average American Spends 2 years unsuccessfully returning phone calls Spends 2 years unsuccessfully returning phone calls Six months sitting at stop lights Six months sitting at stop lights Seven years waiting in lines Seven years waiting in lines Eight months opening junk mail and Eight months opening junk mail and Watches 1 year of TV commercials. Watches 1 year of TV commercials. Reference: Business Review Newsletter Reference: Business Review Newsletter

101 Additional Observations Population of U.S.A. =310 million (+/-) Population of U.S.A. =310 million (+/-) 50 million (+/-) lack enough info in their credit history for a reliable FICO score. 50 million (+/-) lack enough info in their credit history for a reliable FICO score. AVM estimates of Value: Approximately 80 % of the U.S.A. lacks enough data for a reliable estimate of value AVM estimates of Value: Approximately 80 % of the U.S.A. lacks enough data for a reliable estimate of value

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103 Appraiser’s License Information The FHFA has mandated that Fannie and Freddie collect the license/certification numbers of appraisers for the state in which a subject property is located The FHFA has mandated that Fannie and Freddie collect the license/certification numbers of appraisers for the state in which a subject property is located This information is being incorporated into Fannie and Freddie’s electronic delivery system. This information is being incorporated into Fannie and Freddie’s electronic delivery system.

104 No More “Exterior Only” Appraisals Fannie Mae has announced that they will no longer purchase mortgages with the 2055 Summary Report Form used for the mortgage finance transaction. Fannie Mae has announced that they will no longer purchase mortgages with the 2055 Summary Report Form used for the mortgage finance transaction. Reference: Appraisal Institute News letter, December,2012 Reference: Appraisal Institute News letter, December,2012

105 FHA still has their own HVCC FHA issued Mortgage letter # 2009- 28 to ensure that their appraisers are not subject to pressure from clients and that they are allowed to operate independently. FHA issued Mortgage letter # 2009- 28 to ensure that their appraisers are not subject to pressure from clients and that they are allowed to operate independently. FHA’s Mortgage Letter is very similar to the FHFA interim rules issued on 10-19-10 for Fannie And Freddie. FHA’s Mortgage Letter is very similar to the FHFA interim rules issued on 10-19-10 for Fannie And Freddie.

106 HUD has their own blog: “The HUDdle” More interactive - advanced sharing, embedding and multi-media with regular and guest bloggers, video blogs and special behind-the-scenes at HUD content. More interactive - advanced sharing, embedding and multi-media with regular and guest bloggers, video blogs and special behind-the-scenes at HUD content. Check it out at: Check it out at: http://hud-blog.omnitecinc.com http://hud-blog.omnitecinc.com http://hud-blog.omnitecinc.com Reference: OREP Newsletter Reference: OREP Newsletter

107 This is Not Good News ! According to the Federal Reserve Bank of New York and the New York University, more than 40 percent of the FHA loans originated from 2007 through 2009 will be delinquent within 5 years According to the Federal Reserve Bank of New York and the New York University, more than 40 percent of the FHA loans originated from 2007 through 2009 will be delinquent within 5 years The study goes on to say that the FHA has significantly underestimated that risk. The study goes on to say that the FHA has significantly underestimated that risk. Reference: The FHA Update, July 2, 2012 Reference: The FHA Update, July 2, 2012

108 Two Issues Facing HUD/FHA Two Issues Facing HUD/FHA The FHA has announced that it will implement substantial reforms to strengthen its single-family mortgage loan program. The program is apparently 16.3 billion dollars in the red. The FHA has announced that it will implement substantial reforms to strengthen its single-family mortgage loan program. The program is apparently 16.3 billion dollars in the red. The changes will limit borrowers with credit scores below 620 to a total debt-to- income ratio of 43 %. It has also been proposed that these borrowers have 10 % down payment for purchases The changes will limit borrowers with credit scores below 620 to a total debt-to- income ratio of 43 %. It has also been proposed that these borrowers have 10 % down payment for purchases

109 FHA also announced that it will discontinue its reverse mortgage program that permits elderly homeowners to take as much as 77% of appraised value out of the residence. This program has proved to be too costly for FHA. FHA will continue to offer an alternative program, which acts essentially the same as a home equity program which the homeowner may borrow against. Reference: eVIP Appraisal News

110 Quote of the Week “If you follow the rules that HUD has given to you to the extent that you can — you recognize that there may be a glitch here and there — as long as you are operating in good faith and trying to comply, HUD will help you get to full compliance rather than try to slam you for an immaterial oversight." - Jeff Arouh, partner, Holland & Knight, New York, Reference: RESPANEWS.com

111 GSEs Uniform Appraisal Dataset (UAD) Fannie Mae and Freddie Mac have standardized the language used in the residential appraisal reporting process. Fannie Mae and Freddie Mac have standardized the language used in the residential appraisal reporting process. The stated purpose is to improve and bring consistency to the quality of reporting data that is most material to the valuation of a property and/or critical to determining the loan’s eligibility for sale to the GSEs. The stated purpose is to improve and bring consistency to the quality of reporting data that is most material to the valuation of a property and/or critical to determining the loan’s eligibility for sale to the GSEs.

112 GSEs Uniform Appraisal Dataset (UAD) Conti. GSEs require appraisals be completed with standardized responses in certain appraisal report fields to include: GSEs require appraisals be completed with standardized responses in certain appraisal report fields to include: Standardized formats for fields that include dates, values, etc. Standardized formats for fields that include dates, values, etc. Allowable values from a list of choices provided Allowable values from a list of choices provided Standardized abbreviations Standardized abbreviations Standardized ratings and definitions for condition, quality, and updating/renovations of the property Standardized ratings and definitions for condition, quality, and updating/renovations of the property

113 Uniform Appraisal Dataset (UAD) The current version (Version 1.4, dated June 17,2012) of the UAD specifications and the 77 FAQs can be found on: The current version (Version 1.4, dated June 17,2012) of the UAD specifications and the 77 FAQs can be found on: www.efanniemae.com www.efanniemae.comwww.efanniemae.com click on “Appraisers” click on “Appraisers”

114 GSE’s Uniform Collateral Data Portal (UCDP) GSEs have developed the UCDP for the electronic delivery of appraisal report data, by lenders, to both Freddie Mac and Fannie Mae. GSEs have developed the UCDP for the electronic delivery of appraisal report data, by lenders, to both Freddie Mac and Fannie Mae. A PDF version of the appraisal report and additional appraiser information delivered using the UCDP prior to loan delivery for the four residential appraisal report forms is now in effect. A PDF version of the appraisal report and additional appraiser information delivered using the UCDP prior to loan delivery for the four residential appraisal report forms is now in effect.

115 The Fannie Mae Selling Guide has updated UAD Info Most appraiser requirements and appraisal information are located in: Part B, Sections 2 & 4. Most appraiser requirements and appraisal information are located in: Part B, Sections 2 & 4. Appraisers are cautioned to stay current, as the guide is constantly being updated. Appraisers are cautioned to stay current, as the guide is constantly being updated. The link is: https://www.efanniemae.com/sf/guides/ssg /sg/pdf/sel 072611.pdf The link is: https://www.efanniemae.com/sf/guides/ssg /sg/pdf/sel 072611.pdf https://www.efanniemae.com/sf/guides/ssg /sg/pdf/sel 072611.pdf https://www.efanniemae.com/sf/guides/ssg /sg/pdf/sel 072611.pdf

116 Reminder About the UAD Reminder About the UAD The so-called "hard-stops" or “rejects” kicked in on January 28th, and there are lot of problems. Just to play it safe, you should look at: The so-called "hard-stops" or “rejects” kicked in on January 28th, and there are lot of problems. Just to play it safe, you should look at: https://www.fanniemae.com/content/user _guide/ucdp-user-guide-fannie-mae- messaging.pdf https://www.fanniemae.com/content/user _guide/ucdp-user-guide-fannie-mae- messaging.pdf https://www.fanniemae.com/content/user _guide/ucdp-user-guide-fannie-mae- messaging.pdf https://www.fanniemae.com/content/user _guide/ucdp-user-guide-fannie-mae- messaging.pdf You might just go ahead and refresh on all the UAD guidelines, at www.efanniemae.com, click on "Appraisers." You might just go ahead and refresh on all the UAD guidelines, at www.efanniemae.com, click on "Appraisers." www.efanniemae.com

117 FHA Requires UAD From FHA's Appraiser Newsletter: From FHA's Appraiser Newsletter: "When performing appraisals reported on the URAR and the individual condominium unit report form, FHA Roster Appraisers are required to submit reports which are UAD compliant.” "When performing appraisals reported on the URAR and the individual condominium unit report form, FHA Roster Appraisers are required to submit reports which are UAD compliant.” FHA does not permit the use of either of the two “Exterior only (2055 & 1075) appraisal reporting forms." FHA does not permit the use of either of the two “Exterior only (2055 & 1075) appraisal reporting forms."

118 V A requires the UAD too.. The V A also requires the use of the UAD for the modified Fannie Mae 1004 and 1073 forms. The V A also requires the use of the UAD for the modified Fannie Mae 1004 and 1073 forms. Start date for UAD compliance by FHA and VA was January 1, 2012 Start date for UAD compliance by FHA and VA was January 1, 2012

119 The UAD and Appraisal-Port Poll Question Now that you are reporting appraisals using the new UAD format, do you find it any more effective or helpful with supporting your value? -- Yes (5.1%) 271 votes -- No, it actually makes it more difficult to explain and support my research. (66.1%) 3525 votes -- It's about the same as the previous format in that regard. (28.8%) 1539 votes Total Votes: 5335 Now that you are reporting appraisals using the new UAD format, do you find it any more effective or helpful with supporting your value? -- Yes (5.1%) 271 votes -- No, it actually makes it more difficult to explain and support my research. (66.1%) 3525 votes -- It's about the same as the previous format in that regard. (28.8%) 1539 votes Total Votes: 5335 Reference: Appraisal today Newsletter, Dec. 2012

120 Updated Requirements for Residential Appraisers. To be consistent with the Uniform Standards of Professional Appraisal Practice (USPAP), Fannie Mae is specifying that their lenders (Financial Institutions) must select appraisers with the knowledge and experience in appraising the property type in the market area and have access to all the applicable data sources To be consistent with the Uniform Standards of Professional Appraisal Practice (USPAP), Fannie Mae is specifying that their lenders (Financial Institutions) must select appraisers with the knowledge and experience in appraising the property type in the market area and have access to all the applicable data sources Reference: Fannie’s Selling Guide Update Reference: Fannie’s Selling Guide Update

121 Age of Housing Units in the United States Pre - 1920 8 % Pre - 1920 8 % 1920 - 1939 9 % 1920 - 1939 9 % 1940 – 195916 % 1940 – 195916 % 1960 – 197932 % 1960 – 197932 % 1980 – 199926 % 1980 – 199926 % 2000 – 2005 8 % 2000 – 2005 8 % 2006 – Present 1 % 2006 – Present 1 % Source: U.S. Housing Market Conditions, Source: U.S. Housing Market Conditions, Third Quarter, 2012 Third Quarter, 2012

122 Composition of Housing Stock Housing Type# of Units% Housing Type# of Units% Total Occupied: Owner Occupied: 75,665,000 59.0 Owner Occupied: 75,665,000 59.0 Renter Occupied: 35,954,000 27.3 Renter Occupied: 35,954,000 27.3 Vacant: 13,092,000 10.2 Seasonal: 4,392,000 3.4 All Housing: 129,103,000 100.0 All Housing: 129,103,000 100.0 Reference: U.S. Housing Market Condition, 3rd Qtr. 2012

123 How is your Appraisal Business? FannieMae Appraisals per business day = 9,000 (+/-) FannieMae Appraisals per business day = 9,000 (+/-) @ $300.00 (+/-) per appraisal. @ $300.00 (+/-) per appraisal. That is 2.7 million dollars paid out for appraisals every business day. That is 2.7 million dollars paid out for appraisals every business day.

124 How is your Appraisal Business? FreddieMac Appraisals per business day = 7600 (+/-) FreddieMac Appraisals per business day = 7600 (+/-) @ $300.00 (+/-) per appraisal. @ $300.00 (+/-) per appraisal. That is 2.3 million dollars paid out for appraisals every business day. That is 2.3 million dollars paid out for appraisals every business day.

125 How is your Appraisal Business? FHA Appraisals per business day = 12,000 (+/-) FHA Appraisals per business day = 12,000 (+/-) @ $300.00 (+/-) per appraisal. @ $300.00 (+/-) per appraisal. That is 3.6 million dollars paid out for appraisals every business day. That is 3.6 million dollars paid out for appraisals every business day. Reference: Appraisal Today Newsletter Reference: Appraisal Today Newsletter

126 Want to Appraise for FHA? Here is the web address for application information and to apply on line. There is no test required. There is no cost to apply. Here is the web address for application information and to apply on line. There is no test required. There is no cost to apply. http://www.hud.gov/groups/appraisers. cfm http://www.hud.gov/groups/appraisers. cfm Reference: ICAP Bulletin, October, 2010

127 FHA FAQ Web Site http://faq.fha.gov/ is a 24/7 source for FHA information. Over 1,000 Q & A info items with the mortgage letter or handbook references. http://faq.fha.gov/ is a 24/7 source for FHA information. Over 1,000 Q & A info items with the mortgage letter or handbook references. http://faq.fha.gov/ FHA has deleted the requirement for second appraisal on refinance loans above $417,000. FHA has deleted the requirement for second appraisal on refinance loans above $417,000. FHA still requires a second appraisal for properties resold 91 to 180 days. Client to pay for the second appraisal. No second case number required. FHA still requires a second appraisal for properties resold 91 to 180 days. Client to pay for the second appraisal. No second case number required. Reference: FHA Mortgagee letter 09-48 Reference: FHA Mortgagee letter 09-48

128 FHA Questions? The new primary E-Mail address for FHA is effective as of August 15,2011: The new primary E-Mail address for FHA is effective as of August 15,2011: answers@hud.gov or answers@hud.gov oranswers@hud.gov www.HUD.GOV/answers www.HUD.GOV/answerswww.HUD.GOV/answers In addition, you may use the “Contact FHA” tab to submit questions directly to FHA. Reference: jerrold.h.mayer@HUD.GOV, e-mail, Aug.8, 2011 jerrold.h.mayer@HUD.GOV

129 V.A. continues to expand their Appraiser Roster through 2013 V.A. continues to expand their Appraiser Roster through 2013 Appraisers and Compliance Inspectors receive assignments on a rotational basis from the V.A. Appraisers and Compliance Inspectors receive assignments on a rotational basis from the V.A. For information, application forms, and V.A. requirements, go to the VA website at: For information, application forms, and V.A. requirements, go to the VA website at: www.benefits.va.gov/homeloans/appraisal.aspwww.benefits.va.gov/homeloans/appraisal.asp. www.benefits.va.gov/homeloans/appraisal.asp Click on “Fee Panel Application” Click on “Fee Panel Application” REF: Gerald Kifer, Chief VA Appraiser Program REF: Gerald Kifer, Chief VA Appraiser Program

130 Not a Good Sign !

131 Revised “Home Affordable Refinance Program (HARP 2.0)” Obama administration has announced a revised program to step up aid to homeowners and revive the housing market. President Obama had originally announced the “Making Homes Affordable Program” in 2009, setting a goal of 3 million to 4 million refinanced loans by the end of 2012. Obama administration has announced a revised program to step up aid to homeowners and revive the housing market. President Obama had originally announced the “Making Homes Affordable Program” in 2009, setting a goal of 3 million to 4 million refinanced loans by the end of 2012. Reference: Mortgage Bankers Newsletter

132 USPAP -- 17 th Century Version Whereas you are the chosen appraizers of such lands or goods as are now presented to you, you do heerby swear by the Living God, that all partialite, prejudice and other sinister respects layed aside, you shall appraize the same, and everie part thereof, according to the true and just value thereof at this present, by common account, by your best judgement and conscience. So help you God. Whereas you are the chosen appraizers of such lands or goods as are now presented to you, you do heerby swear by the Living God, that all partialite, prejudice and other sinister respects layed aside, you shall appraize the same, and everie part thereof, according to the true and just value thereof at this present, by common account, by your best judgement and conscience. So help you God. Appraisers Oath, Massachusetts Code, 1648 Appraisers Oath, Massachusetts Code, 1648

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134 Words by Teddy Roosevelt It is not the critic who counts, not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man in the arena, whose face is marred by dust and sweat and blood, who strives valiantly … who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause, It is not the critic who counts, not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man in the arena, whose face is marred by dust and sweat and blood, who strives valiantly … who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause,

135 Teddy Roosevelt, continued: Who at best knows in the end of triumph of high achievement, and who at the worst, if he fails, at least fails while doing greatly, so that his place shall never be with those cold and timid souls who have never known neither victory or defeat. Who at best knows in the end of triumph of high achievement, and who at the worst, if he fails, at least fails while doing greatly, so that his place shall never be with those cold and timid souls who have never known neither victory or defeat. Teddy Roosevelt was President of the United States, 1901 – 1909. Teddy Roosevelt was President of the United States, 1901 – 1909.

136 My Living Will Last night, my kids and I were sitting in the living room and I said to them, “I never want to live in a vegetative state, dependent on some machine and fluids from a bottle. If that ever happens, just pull the plug.” They got up, unplugged my computer and threw out my wine!! -- Smart Aleck Kids -- Smart Aleck Kids

137 Nice People Do Finish First !! People want to deal with people they like. People want to deal with people they like. People like people with whom they feel a connection. People like people with whom they feel a connection. Connections build trust between people. Connections build trust between people. People want to help people with whom they feel a connection. People want to help people with whom they feel a connection. People refer friends to people with whom they feel a connection. People refer friends to people with whom they feel a connection. People want to do repeat business with people they share a connection with. People want to do repeat business with people they share a connection with.

138 Appraisal “Myth” Busting Time Myth: “No taking comp or subject photos with people in them.” Myth: “No taking comp or subject photos with people in them.” There is NO such prohibition and never was. Even HUD has been stymied by the fact that so many in the lending profession really think it’s been a law since 1968. Fannie Mae has never had such a rule but they have heard this since the 1970’s. There is NO such prohibition and never was. Even HUD has been stymied by the fact that so many in the lending profession really think it’s been a law since 1968. Fannie Mae has never had such a rule but they have heard this since the 1970’s. Reference: Illinois Appraisal Newsletter, October 2009 Want more info? Brian.Weaver@illinois.gov

139 LEARNING PYRAMID Lecture Reading Audio-Visual Demonstration Discussion Practice by Doing Teaching Others

140 We Remember : 10 % of what we hear. 10 % of what we hear. 15 % of what we see. 15 % of what we see. 20 % of what we see and hear. 20 % of what we see and hear. 40 % of what we discuss with others. 40 % of what we discuss with others. 80 % of what we experience directly. 80 % of what we experience directly. 90 % of what we teach others. 90 % of what we teach others.

141 Lets Hear it for Doodling !! A recent study from the University of Plymouth in England found that people who doodled while listening to a tape had 29 % better recall than the other participants, on average. A recent study from the University of Plymouth in England found that people who doodled while listening to a tape had 29 % better recall than the other participants, on average. Researchers theorize that doodling can keep you from daydreaming while not distracting you from the main activity. Researchers theorize that doodling can keep you from daydreaming while not distracting you from the main activity. Reference: Bottom Line News, 1-15-11 Reference: Bottom Line News, 1-15-11

142 Appraisers Ranked # 8 in the “Top 10 Jobs” MONEY magazine has listed Real Estate Appraisers as # 8, among the top 10 jobs in the U.S.A. MONEY magazine has listed Real Estate Appraisers as # 8, among the top 10 jobs in the U.S.A. WHY? -- Valuations are needed whenever a property is sold, mortgaged, insured, taxed, or developed. Research isn’t the pain it used to be, thanks to the internet. WHY? -- Valuations are needed whenever a property is sold, mortgaged, insured, taxed, or developed. Research isn’t the pain it used to be, thanks to the internet. HOWEVER – There is still a lot of legwork and advancement is limited. HOWEVER – There is still a lot of legwork and advancement is limited. BUT – There is still going to be work, even when the market slows down. BUT – There is still going to be work, even when the market slows down.

143 Working Real Estate Survey 93 % of the appraisers surveyed stated that “appraising” was their primary source of income 93 % of the appraisers surveyed stated that “appraising” was their primary source of income 7 % of appraisers surveyed said that “appraising” was a secondary or supplemental source of income. 7 % of appraisers surveyed said that “appraising” was a secondary or supplemental source of income.

144 Appraisal-Port Survey 5,000 respondents as of: 3-25-12 2011 Appraiser Gross Income: 2011 Appraiser Gross Income: 8 % = $1 to $25 K 8 % = $1 to $25 K 17 % = $26 K to $50 K 17 % = $26 K to $50 K 19 % = $51 K to $75 K 19 % = $51 K to $75 K 18 % = $76 K to $100 K 18 % = $76 K to $100 K 11 % = $101 K to $125 K 11 % = $101 K to $125 K 7 % = $126 K to $150 K 7 % = $126 K to $150 K 11 % = $151 K + 11 % = $151 K + 9 % = Not Sure 9 % = Not Sure

145 Some of the Reasons why it is great be an Appraiser !! Dazzle your friends with your knowledge of external obsolescence Dazzle your friends with your knowledge of external obsolescence Enter that wonderful world of rats, bats, fleas, spiders, and snakes Enter that wonderful world of rats, bats, fleas, spiders, and snakes Be a part of the profession that is blamed for the collapse of the Savings & Loan industry Be a part of the profession that is blamed for the collapse of the Savings & Loan industry See places in people’s houses that usually require a search warrant See places in people’s houses that usually require a search warrant Arouse suspicion of an entire neighborhood when inspecting comparable sales Arouse suspicion of an entire neighborhood when inspecting comparable sales

146 More Reasons why it is great be an Appraiser !! Chance to really irritate annoying real estate sales people Chance to really irritate annoying real estate sales people Walk around holding a clipboard just like “Skip” down at the Jiffy Lube Walk around holding a clipboard just like “Skip” down at the Jiffy Lube Spend hours writing volumes of supporting documentation to justify the market value of a property you already decided on when you pulled into the driveway Spend hours writing volumes of supporting documentation to justify the market value of a property you already decided on when you pulled into the driveway

147 Remodeling Costs vs. Returns – as of: December 2012 Item $ Cost % Return Item $ Cost % Return Steel Entry Door Repl. $ 1,200. 102 % Steel Entry Door Repl. $ 1,200. 102 % Garage Door Replacement $ 1,200. 102 % Garage Door Replacement $ 1,200. 102 % Roof Replacement $14,200. 72 % Roof Replacement $14,200. 72 % Vinyl Windows Repl. $10,200. 73 % Vinyl Windows Repl. $10,200. 73 % New Exterior Siding $12,100. 80 % New Exterior Siding $12,100. 80 % Add Family Room $74,800. 72 % Add Family Room $74,800. 72 % Deck Addition $15,039. 73 % Deck Addition $15,039. 73 % Remodel Basement $64,000. 70 % Remodel Basement $64,000. 70 % Remodel Bathroom $40,590. 63 % Remodel Bathroom $40,590. 63 % Minor Kitchen Remodel $28,000. 76 % Minor Kitchen Remodel $28,000. 76 % Check out your specific area at: http://www.costvsvalue.com Check out your specific area at: http://www.costvsvalue.com

148 Replacement Time-lines Re: Consumer Reports, October 2012 Clothes Dryer6 years Clothes Dryer6 years Dishwashers5 years Dishwashers5 years Microwave ovens5 years Microwave ovens5 years Ranges (gas/electric)7 years Ranges (gas/electric)7 years Refrigerators: (side by side)7 years Refrigerators: (side by side)7 years Refrigerators: (Top Freezer)5 years Refrigerators: (Top Freezer)5 years Refrigerators: (Bottom Freezer)7 years Refrigerators: (Bottom Freezer)7 years Vacuum Cleaners (upright)4 years Vacuum Cleaners (upright)4 years Wash Machine (Front Load)7 years Wash Machine (Front Load)7 years Wash Machine (Top Load) 6 years Wash Machine (Top Load) 6 years Digital Cameras3 years Digital Cameras3 years Camcorders4 years Camcorders4 years Computers (desk and Laptop)3 years Computers (desk and Laptop)3 years The replacement timelines are a result of the high cost of repairing these items.

149 Competency What is the secret of your success? What is the secret of your success? “ good decisions.” “ good decisions.” How do you know how to make the right decisions? How do you know how to make the right decisions? “ Competency and Experience.” “ Competency and Experience.” How do you get this experience? How do you get this experience? “ Bad decisions.” “ Bad decisions.”

150 Typical Appraiser’s Excuses Typical Appraiser’s Excuses 1. I didn’t think. 1. I didn’t think. 2. I didn’t know. 2. I didn’t know. 3. I don’t care. 3. I don’t care. 4. I was too busy. 4. I was too busy. 5. I leave well enough alone. 5. I leave well enough alone. 6. I am not interested. 6. I am not interested. 7. I have no time to read and find out. 7. I have no time to read and find out.

151 5 Major Causes of Failure 1. Carelessness 1. Carelessness 2. Laziness 2. Laziness 3. Indifference 3. Indifference 4. Forgetfulness 4. Forgetfulness 5. Temptation 5. Temptation

152 Professionalism Thoughts- Become Words Thoughts- Become Words Words- Become Actions Words- Become Actions Actions- Become Habits Actions- Become Habits Habits- Become Character Habits- Become Character Character- Becomes Destiny Character- Becomes Destiny Destiny- Becomes Professional Destiny- Becomes Professional The appraiser’s professionalism was confirmed in FIRREA and further reinforced by the Dodd – Frank Act of 2010. The appraiser’s professionalism was confirmed in FIRREA and further reinforced by the Dodd – Frank Act of 2010.

153 FIRREA The Financial Institutions Reform Recovery Enforcement Act was 20 years old in 2009. Here is another definition of FIRREA ---- Finally, I’m a Rich Real Estate Appraiser. Well – Maybe not yet !!

154 Appraiser’s Role in Home Ownership The independent Real Property Appraiser may be, the only unbiased opinion that purchasers have to depend on for sound investments in real property housing. The independent Real Property Appraiser may be, the only unbiased opinion that purchasers have to depend on for sound investments in real property housing. The ability, for millions of people to reasonably obtain the American dream, is directly impacted by the appraiser’s role in the attainment of home ownership. The ability, for millions of people to reasonably obtain the American dream, is directly impacted by the appraiser’s role in the attainment of home ownership.

155 Can You Support “Effective Age”? Go to: www.mckissock.com Go to: www.mckissock.com www.mckissock.com Click on: Click on:“Help” Click on: “Student Download” “Student Download” You will find it there

156 Copyrighting your Appraisals Definition of terms: Definition of terms: Author – The creator of the original work. Author – The creator of the original work. Original work - Your opinions, analyses, and conclusions can be said to be original work by you. Original work - Your opinions, analyses, and conclusions can be said to be original work by you. Copyright mark – The copyright symbol, or the word copyright and the date. Note: A mark is not required to indicate copyright on a photograph. Copyright mark – The copyright symbol, or the word copyright and the date. Note: A mark is not required to indicate copyright on a photograph. Release – Written notification from the author granting permission to use or copy their original work. Release – Written notification from the author granting permission to use or copy their original work.

157 Copyrighting Your Appraisals Copyrighting Your Appraisals It is not necessary to notify the U.S. Copyright Office to ensure copyright of your document. It is not necessary to notify the U.S. Copyright Office to ensure copyright of your document. Here is a sample copyright statement you may use in your appraisals: Here is a sample copyright statement you may use in your appraisals: “The analyses, opinions, and conclusions contained in this document are copyrighted and are the proprietary products of ------- Appraisal Company. Any unauthorized use, reproduction, or transfer of this document or any of its contents, in any medium, is strictly prohibited. Offenders will be prosecuted to the fullest extent allowed by copyright laws.” “The analyses, opinions, and conclusions contained in this document are copyrighted and are the proprietary products of ------- Appraisal Company. Any unauthorized use, reproduction, or transfer of this document or any of its contents, in any medium, is strictly prohibited. Offenders will be prosecuted to the fullest extent allowed by copyright laws.”

158 Copywriting? Be Careful! If you register the appraisal with the U.S. Copyright Office it includes public disclosure of the appraisal report. Such disclosure of the assignment results would constitute a breach of the Confidentiality section of the ETHICS RULE of USPAP, unless the appraiser had prior approval from the client for such registration. If you register the appraisal with the U.S. Copyright Office it includes public disclosure of the appraisal report. Such disclosure of the assignment results would constitute a breach of the Confidentiality section of the ETHICS RULE of USPAP, unless the appraiser had prior approval from the client for such registration. Reference: 2012/2013 USPAP, FAQ # 70 Reference: 2012/2013 USPAP, FAQ # 70

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160 Some days are like that! LOST DOG ---- NOTICE LOST DOG ---- NOTICE Dog has three legs, blind in left eye, missing right ear, tail broken, recently castrated…. Dog has three legs, blind in left eye, missing right ear, tail broken, recently castrated…. Answers to the name of “LUCKY” Answers to the name of “LUCKY”

161 Some Days are like that! I want to thank you, Almighty One, for being close to me, so far this day. With your help I haven’t been impatient, lost my temper, been grumpy, judgmental, or envious of anyone….. I want to thank you, Almighty One, for being close to me, so far this day. With your help I haven’t been impatient, lost my temper, been grumpy, judgmental, or envious of anyone….. BUT I WILL BE GETTING OUT OF BED IN A MINUTE, BUT I WILL BE GETTING OUT OF BED IN A MINUTE, And I think I will really need your help then. Amen And I think I will really need your help then. Amen

162 Some Days are like that! I was put on this Earth I was put on this Earth to accomplish a certain number of to accomplish a certain number of things. things. Right now, I am so far behind, Right now, I am so far behind, I will never die. I will never die.

163 It’s all in how you look at it.. My wife and I were sitting at a table at my high school reunion, and I kept staring at a drunken lady sitting at a nearby table swigging her drink. My wife and I were sitting at a table at my high school reunion, and I kept staring at a drunken lady sitting at a nearby table swigging her drink. My wife asked if I knew her and I replied “yes, she was my old girl friend and when we split up many years ago, she took to drinking and I hear she hasn’t been sober since.” My wife asked if I knew her and I replied “yes, she was my old girl friend and when we split up many years ago, she took to drinking and I hear she hasn’t been sober since.” “My God” my wife replied, “Who would think a person could go on celebrating that long.” “My God” my wife replied, “Who would think a person could go on celebrating that long.” I guess there are really two ways to look at everything.. I guess there are really two ways to look at everything..

164 Definition of an Appraiser Definition of an Appraiser An Appraiser is a person who passes as an exacting technical expert on the basis of being able to turnout, with prolific fortitude, infinite strings of incomprehensible estimates calculated with micrometric precision, from vague assumptions and debatable figures taken from inconclusive data, obtained with recording devices of problematical accuracy by uninformed persons of doubtful reliability and questionable mentality !! An Appraiser is a person who passes as an exacting technical expert on the basis of being able to turnout, with prolific fortitude, infinite strings of incomprehensible estimates calculated with micrometric precision, from vague assumptions and debatable figures taken from inconclusive data, obtained with recording devices of problematical accuracy by uninformed persons of doubtful reliability and questionable mentality !!

165 The Appraisal Process Define the Appraisal Problem Define the Appraisal Problem Determine the “Scope of Work” Determine the “Scope of Work” Collect and Analyze the Data Collect and Analyze the Data Determine “Highest and Best Use” Determine “Highest and Best Use” Value the Property using the Applicable Approaches to Value Value the Property using the Applicable Approaches to Value Reconcile the Value Indicators Reconcile the Value Indicators Prepare the Appraisal Report Prepare the Appraisal Report

166 Mysteries of life Why is it that when someone tells you there are over a billion stars in the universe, you believe them, but if they tell you there is wet paint somewhere, you have to touch it to make sure? Why is it that when someone tells you there are over a billion stars in the universe, you believe them, but if they tell you there is wet paint somewhere, you have to touch it to make sure? “Stressed” spelled backward is “Desserts.” “Stressed” spelled backward is “Desserts.” “Growing old is mandatory. Growing wise is optional.” “Growing old is mandatory. Growing wise is optional.” If a man is talking in the forest, and no woman is there to hear him, is he still wrong? If a man is talking in the forest, and no woman is there to hear him, is he still wrong? “HUD” spelled backwards is _______? “HUD” spelled backwards is _______?

167 Terrific Trivia Venus is the only planet that rotates clockwise. Venus is the only planet that rotates clockwise. 90 % of Canada’s population live within 100 miles of the U.S. border. 90 % of Canada’s population live within 100 miles of the U.S. border. The biggest dog on record was an Old English mastiff that weighed 343 pounds. He was 8 feet, 3 inches from nose to tail. The biggest dog on record was an Old English mastiff that weighed 343 pounds. He was 8 feet, 3 inches from nose to tail. In 1997, the fully restored USS Constitution (aka “Old Ironsides”) celebrated her 200 th birthday by setting sail for the first time in 116 years. In 1997, the fully restored USS Constitution (aka “Old Ironsides”) celebrated her 200 th birthday by setting sail for the first time in 116 years. The ZIP in ZIP code stands for: “Zoning Improvement Plan”. The ZIP in ZIP code stands for: “Zoning Improvement Plan”.

168 More Trivia Many years ago in Scotland, a new game was invented. It was ruled “Gentlemen Only …. Ladies Forbidden” Thus the word GOLF entered the English Language. Many years ago in Scotland, a new game was invented. It was ruled “Gentlemen Only …. Ladies Forbidden” Thus the word GOLF entered the English Language. The average number of people airborne over the U.S. in any given hour is 61,000. The average number of people airborne over the U.S. in any given hour is 61,000. Bulletproof vests, fire escapes, windshield wipers, and laser printers were all invented by women Bulletproof vests, fire escapes, windshield wipers, and laser printers were all invented by women

169 Sign of the times Do you want to speak to the “man” in charge, or to the “woman” who knows what’s going on ? Do you want to speak to the “man” in charge, or to the “woman” who knows what’s going on ? Arguing with an appraiser is like wrestling with a pig in the mud. After a while you realize that the pig enjoys it !! Arguing with an appraiser is like wrestling with a pig in the mud. After a while you realize that the pig enjoys it !!

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171 Some Dodd – Frank Act Requirements Mandates customary and reasonable fees for appraisers (Now assigned to the BCFP) Mandates customary and reasonable fees for appraisers (Now assigned to the BCFP) Designations can be a factor in deciding which appraiser gets the assignment Designations can be a factor in deciding which appraiser gets the assignment ASC will assume the duties of the IVPI (which never did materialize) to handle appraiser independence violations ASC will assume the duties of the IVPI (which never did materialize) to handle appraiser independence violations Federal Regulators update Appraiser Independence Standards for FRTs Federal Regulators update Appraiser Independence Standards for FRTs

172 Some Dodd – Frank Act Requirements Appraisers now pay $40 per year to support the ASC as of Jan. 2012 Appraisers now pay $40 per year to support the ASC as of Jan. 2012 ASC to give grants to State Appraisal Boards to assist in enforcement actions ASC to give grants to State Appraisal Boards to assist in enforcement actions Independent AMCs required to be registered in the state in which they operate Independent AMCs required to be registered in the state in which they operate Independent AMCs subject to peer review by State Appraisal Boards Independent AMCs subject to peer review by State Appraisal Boards

173 Some Dodd-Frank Act Requirements Lenders are not required to have Licensed or Certified Appraisers to review appraisals Lenders are not required to have Licensed or Certified Appraisers to review appraisals Lenders must send the appraisal reports to the state enforcement agency if there are significant errors or evidence of Ethics or other USPAP violations. Lenders must send the appraisal reports to the state enforcement agency if there are significant errors or evidence of Ethics or other USPAP violations.

174 Update : Customary and Reasonable Fees As of July 1, 2011, the Federal Reserve Board handed this issue to the Bureau of Consumer Financial Protection (BCFP). As of July 1, 2011, the Federal Reserve Board handed this issue to the Bureau of Consumer Financial Protection (BCFP). The authority for this new consumer protection bureau was part of the Dodd- Frank Bill. The authority for this new consumer protection bureau was part of the Dodd- Frank Bill. The BCFP officially began operations on June 21, 2011. The BCFP officially began operations on June 21, 2011.

175 Credit Card Theft? Report it, and request that a fraud alert be placed on your credit file. Report it, and request that a fraud alert be placed on your credit file. Experian888-397-3742 Experian888-397-3742 Equifax800-525-6285 Equifax800-525-6285 Trans Union800-680-7289 Trans Union800-680-7289

176 Want a Copy of your Credit Report? Federal law allows you to receive a free copy of your credit report once a year from the big three credit reporting companies. To order: Federal law allows you to receive a free copy of your credit report once a year from the big three credit reporting companies. To order: From Experian, Equifax, and Trans Union, call: 1-877-322-8228 From Experian, Equifax, and Trans Union, call: 1-877-322-8228 Internet site: www.annualcreditreport.com Internet site: www.annualcreditreport.comwww.annualcreditreport.com Mail address: Annual Credit Report Request Service, POB # 105283, Atlanta, GA 30348-5281 Mail address: Annual Credit Report Request Service, POB # 105283, Atlanta, GA 30348-5281

177 Someone using your Social Security Number ? Report the unauthorized use to the Social Security Administration’s Fraud Hot Line at: Report the unauthorized use to the Social Security Administration’s Fraud Hot Line at: 1-800-269-0271 1-800-269-0271

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179 Other Items of Interest “Don’t call me anymore” (for home and cell phones) “Don’t call me anymore” (for home and cell phones) Call: 1-888-382-1222 Call: 1-888-382-1222 Internet: www.donotcall.gov (good for 5 years) Internet: www.donotcall.gov (good for 5 years)www.donotcall.gov “Stop the credit card junk mail” “Stop the credit card junk mail” Call: 1-800-353-0809 Call: 1-800-353-0809 Call: 1-888-567-8688 (For all three credit bureaus) Call: 1-888-567-8688 (For all three credit bureaus) “Stop giving, sharing or selling my personal financial data” “Stop giving, sharing or selling my personal financial data” Inform the sender of your “OPT-OUT” decision. You only have to do this once. This is included with their privacy notice which you must receive annually. Inform the sender of your “OPT-OUT” decision. You only have to do this once. This is included with their privacy notice which you must receive annually.

180 Did You Know? The hottest air temperature ever recorded was in Africa (Libya) at +136.4 degrees Fahrenheit on September 13,1922. The hottest air temperature ever recorded was in Africa (Libya) at +136.4 degrees Fahrenheit on September 13,1922. The coldest temperature ever recorded was in Antarctica at -129.6 degrees Fahrenheit. The coldest temperature ever recorded was in Antarctica at -129.6 degrees Fahrenheit. Manholes are round so their covers can’t accidentally fall inside when tipped on their ends. Manholes are round so their covers can’t accidentally fall inside when tipped on their ends.

181 Did You Know? The Declaration of Independence has 25 signatures affixed to the document. The Declaration of Independence has 25 signatures affixed to the document. Chicago’s Sears Tower has its own zip code. Chicago’s Sears Tower has its own zip code. According to his business card, Al Capone bought and sold used furniture. According to his business card, Al Capone bought and sold used furniture. Mount Everest grows at a rate of 4 millimeters per year. Mount Everest grows at a rate of 4 millimeters per year. Our necessities never equal our wants. Our necessities never equal our wants.

182 Did You Know? The State of Michigan has more than 3,000 miles of shoreline, which is longer than the entire Eastern seaboard from Maine to Florida. The State of Michigan has more than 3,000 miles of shoreline, which is longer than the entire Eastern seaboard from Maine to Florida. “Uncle Tom’s Cabin” was the first American novel (published in 1852) to sell more than one million copies. “Uncle Tom’s Cabin” was the first American novel (published in 1852) to sell more than one million copies. The world’s smallest church is located in Oneida, New York. It is only 3 ½’ x 6’. The world’s smallest church is located in Oneida, New York. It is only 3 ½’ x 6’. Richard Nixon was the first U.S. president to visit China (February, 1972). Richard Nixon was the first U.S. president to visit China (February, 1972).

183 Did You Know? The sentence: “The quick brown fox jumps over the lazy dog” uses every letter of the alphabet. The sentence: “The quick brown fox jumps over the lazy dog” uses every letter of the alphabet. The words ”racecar”, “kayak”, and “level” are the same whether they are read left to right or right to left (palindromes). The words ”racecar”, “kayak”, and “level” are the same whether they are read left to right or right to left (palindromes). :Stewardesses” is the longest word typed with only the left hand and “lollipop” with your right hand. :Stewardesses” is the longest word typed with only the left hand and “lollipop” with your right hand. Maine is the only state whose name is just one syllable. Maine is the only state whose name is just one syllable.

184 And Finally, Did you Know? Henry Ford failed in business 5 times before he started the Ford Motor Company. Henry Ford failed in business 5 times before he started the Ford Motor Company. Michael Jordan was cut from his high school basket ball team. Michael Jordan was cut from his high school basket ball team. Warren Buffett failed to qualify for entrance to Harvard’s Business school. Warren Buffett failed to qualify for entrance to Harvard’s Business school. “Success is the process of becoming “Success is the process of becoming who you already are.” who you already are.”

185 There are NO Generic Appraisals!! Judgment phase of the Appraisal: Judgment phase of the Appraisal: Identify the problem Identify the problem Determine the appropriate Scope of Work that will produce credible assignment results for the intended use Determine the appropriate Scope of Work that will produce credible assignment results for the intended use Execution phase of the Appraisal: Execution phase of the Appraisal: Perform the Scope of Work Perform the Scope of Work Disclose the Scope of Work actually performed, in the Appraisal report, so the client and intended users are not mislead Disclose the Scope of Work actually performed, in the Appraisal report, so the client and intended users are not mislead Reference AO-22, Scope of Work -- Reference AO-22, Scope of Work --

186 Relevant Characteristics The Scope of Work requires the appraiser to identify the relevant characteristics of the property being appraised. The Scope of Work requires the appraiser to identify the relevant characteristics of the property being appraised. Relevant characteristics consist of: Relevant characteristics consist of: Legal Characteristics – i.e.: zoning, Leasehold and/or leased fee interests, etc. Legal Characteristics – i.e.: zoning, Leasehold and/or leased fee interests, etc. Economic Characteristics – i.e.: the market Economic Characteristics – i.e.: the market Physical Characteristics – i.e.: remodeling, renovations, stigmas, etc. Physical Characteristics – i.e.: remodeling, renovations, stigmas, etc. Reference AO-23, Relevant Characteristics -- Reference AO-23, Relevant Characteristics --

187 McKissock Appraisal School

188 You want Snacks? You’re lucky you got coffee!

189 Story with a Moral ! Charles Schwab was president of the worlds largest steel company. He died a pauper! Charles Schwab was president of the worlds largest steel company. He died a pauper! Edward Hobson was the president of the largest gas company. He went insane! Edward Hobson was the president of the largest gas company. He went insane! Richard Whitney was the president of the New York Stock Exchange. He was released from prison to die at home! Richard Whitney was the president of the New York Stock Exchange. He was released from prison to die at home!

190 Story with a Moral ! Arthur Cooger was the greatest wheat speculator. He died abroad, penniless! Arthur Cooger was the greatest wheat speculator. He died abroad, penniless! The president of the Bank of International Settlement committed suicide! The president of the Bank of International Settlement committed suicide! Gene Sarazen won the U.S. Open and was golf’s PGA champion. He played golf until he was 92, and died in 1995 at the age of 95. He was financially secure at the time of his death. Gene Sarazen won the U.S. Open and was golf’s PGA champion. He played golf until he was 92, and died in 1995 at the age of 95. He was financially secure at the time of his death. The Moral: Work less, Take the Time to Enjoy your life ! The Moral: Work less, Take the Time to Enjoy your life !

191 Your Success Motivators Think about these things as you look into the mirror every morning: Think about these things as you look into the mirror every morning: You were born to become the best that you can be. You were born to become the best that you can be. You were born to achieve things that make a real contribution to life and happiness— including your own. You were born to achieve things that make a real contribution to life and happiness— including your own. You know your success potentials. Work with them. You know your success potentials. Work with them.

192 Your Success Motivators You can create a new dynamic personality through your own personal enrichment program. You can create a new dynamic personality through your own personal enrichment program. You are a winner, not a loser. You are a winner, not a loser. You can achieve your goals not by stepping on other people but by using your own talents to ensure success. You can achieve your goals not by stepping on other people but by using your own talents to ensure success. Take one day at a time, but Take one day at a time, but you need to get started today. you need to get started today.

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194 Avoiding Lawsuits Do Not accept an assignment beyond your experience. If you get into trouble with the assignment, get help quickly. Do Not accept an assignment beyond your experience. If you get into trouble with the assignment, get help quickly. Document everything you do and keep a complete work file. Good records make for a good defense if it comes to litigation. Document everything you do and keep a complete work file. Good records make for a good defense if it comes to litigation.

195 Avoiding Lawsuits Photograph all properties appraised. Take pictures of any deficiencies noted. Take additional pictures, for your files, to show condition at time of appraisal. Photograph all properties appraised. Take pictures of any deficiencies noted. Take additional pictures, for your files, to show condition at time of appraisal. Establish sound office procedures to eliminate those clerical errors. Proof all reports before they leave the office. Establish sound office procedures to eliminate those clerical errors. Proof all reports before they leave the office.

196 Avoiding Lawsuits Never assume a structure’s defects will be noted by other professionals. Note all property deficiencies in your report and their effect on value / marketability. Never assume a structure’s defects will be noted by other professionals. Note all property deficiencies in your report and their effect on value / marketability. Use disclaimers if you find a situation outside your area of expertise. Identify, disclose, and disclaim. Use disclaimers if you find a situation outside your area of expertise. Identify, disclose, and disclaim.

197 Avoiding Lawsuits Do not assume or take the client’s / owner’s word on anything. You will be held accountable. Remember, you are supposed to be the expert. Verify and document the extent of the verification. Do not assume or take the client’s / owner’s word on anything. You will be held accountable. Remember, you are supposed to be the expert. Verify and document the extent of the verification. Do not give casual advice or opinions. You are the professional and you will be held to that higher standard of care. Do not give casual advice or opinions. You are the professional and you will be held to that higher standard of care.

198 Avoiding Lawsuits Plan the appraisal. Carefully determine the appropriate SCOPE OF WORK to satisfy the assignment with a credible opinion of value. Plan the appraisal. Carefully determine the appropriate SCOPE OF WORK to satisfy the assignment with a credible opinion of value. Know who your client is. Know who the intended users are. Know exactly what the intended use is for your appraisal. Know who your client is. Know who the intended users are. Know exactly what the intended use is for your appraisal.

199 Avoiding Lawsuits You hold yourself out to the public as an appraiser. You are the expert! You will be held to a higher degree of care and competency by your peers, the public, and the courts. You hold yourself out to the public as an appraiser. You are the expert! You will be held to a higher degree of care and competency by your peers, the public, and the courts. Do not criticize work accomplished by another appraiser without having all of the facts. Do not criticize work accomplished by another appraiser without having all of the facts.

200 Avoiding Lawsuits Stay “up-to-date” on current trends, rules and regulations, and supplemental standards. Stay “up-to-date” on current trends, rules and regulations, and supplemental standards. Not being “up-to-date” is not an excuse. It is a violation of the COMPETENCY RULE, found in the Uniform Standards of Professional Appraisal Practice (USPAP). Not being “up-to-date” is not an excuse. It is a violation of the COMPETENCY RULE, found in the Uniform Standards of Professional Appraisal Practice (USPAP).

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202 Who is Suing Appraisers? Four of the parties that are suing the most appraisers: Four of the parties that are suing the most appraisers: LSF6 Mercury REO Investments LSF6 Mercury REO Investments Lehman Brothers Holdings, Inc Lehman Brothers Holdings, Inc Heritage Pacific Financial Heritage Pacific Financial Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation Note: The FDIC has also begun targeting commercial appraisers with lawsuits and subpoenas Reference: Appraisal Management Liability Webinar Reference: Appraisal Management Liability Webinar

203 FDIC getting “Aggressive” The FDIC has begun to get very aggressive with appraisers that supplied appraisals to banks that the FDIC has closed, merged, or taken over in the past 4 years. The FDIC has begun to get very aggressive with appraisers that supplied appraisals to banks that the FDIC has closed, merged, or taken over in the past 4 years. FDIC is suing the appraisers for monetary damages in connection with discrepancies found in their appraisal reports. FDIC is suing the appraisers for monetary damages in connection with discrepancies found in their appraisal reports.

204 FDIC Sues More Appraisers FDIC Sues More Appraisers " In the two weeks leading up to Thanksgiving Day, the FDIC sued 32 individual residential appraisers and several mortgage brokers/bankers in 12 separate lawsuits. " In the two weeks leading up to Thanksgiving Day, the FDIC sued 32 individual residential appraisers and several mortgage brokers/bankers in 12 separate lawsuits. -- in the last three years, the FDIC has sued a total of 151 appraisers and appraisal firms in AZ, CA, GA, IL, MD, MI, MN, NV, NY, SC, and UT. In addition, the FDIC has identified approximately 350 additional appraisers as having delivered negligent appraisals to the two AMCs it has sued.“ -- in the last three years, the FDIC has sued a total of 151 appraisers and appraisal firms in AZ, CA, GA, IL, MD, MI, MN, NV, NY, SC, and UT. In addition, the FDIC has identified approximately 350 additional appraisers as having delivered negligent appraisals to the two AMCs it has sued.“ Reference: Appraisal Today Newsletter, Dec. 2012

205 FHFA Sues UBS to Recover GSE Mortgage Losses FHFA Sues UBS to Recover GSE Mortgage Losses UBS Americas Inc., several of its subsidiaries, and former executive officers were sued on July 27, 2012 in U.S. District court for the Southern District of New York. UBS Americas Inc., several of its subsidiaries, and former executive officers were sued on July 27, 2012 in U.S. District court for the Southern District of New York. The Federal Housing Finance Agency (FHFA) brought suit charging violations of securities laws in the sale of private label residential mortgage-backed securities to Freddie Mac and Fannie Mae. The Federal Housing Finance Agency (FHFA) brought suit charging violations of securities laws in the sale of private label residential mortgage-backed securities to Freddie Mac and Fannie Mae.

206 * IRS Requires Qualified Appraisers * (Part 1) Congress has approved the Pension Reform Act. Congress has approved the Pension Reform Act. As part of this Act, the IRS requires that appraisals for Estate Taxes and for non-cash Charitable Contributions (conservation and historical preservation easements) be performed by qualified appraisers, such as those who have earned a designation from a professional appraisal organization (AI, NAIFA, ASA, etc.) and who meet other requirements. As part of this Act, the IRS requires that appraisals for Estate Taxes and for non-cash Charitable Contributions (conservation and historical preservation easements) be performed by qualified appraisers, such as those who have earned a designation from a professional appraisal organization (AI, NAIFA, ASA, etc.) and who meet other requirements. Ref: Appraisal News On Line, 10-3-07 Ref: Appraisal News On Line, 10-3-07

207 * IRS Requires Qualified Appraisers * (Part 2) The I.R.S. is now requiring appraisals to be in conformance with generally accepted appraisal standards (USPAP) and the Federal Appraisal Standards of Practice (better known as the Yellow Book) when applicable. The I.R.S. is now requiring appraisals to be in conformance with generally accepted appraisal standards (USPAP) and the Federal Appraisal Standards of Practice (better known as the Yellow Book) when applicable. They now have the authority to impose accuracy-related penalties on taxpayers and appraisers who provide substantial or gross miscalculations. They now have the authority to impose accuracy-related penalties on taxpayers and appraisers who provide substantial or gross miscalculations. Ref: Appraisal News On Line, 10-3-07 Ref: Appraisal News On Line, 10-3-07

208 IRS: Tax Preparer Definition Includes Appraisers The Internal Revenue Service has issued a memorandum reminding appraisers engaged in the preparation of gift or estate tax returns that they are subject to civil and criminal penalties for conduct the Internal Revenue Service considers problematic. The Internal Revenue Service has issued a memorandum reminding appraisers engaged in the preparation of gift or estate tax returns that they are subject to civil and criminal penalties for conduct the Internal Revenue Service considers problematic.

209 IRS & Appraisers, (conti.) As stipulated in the Pension Protection Act of 2006 under Internal Revenue Code Section § 6695 (and the subsequently added Section § 6695A), appraisers who submit substantial or gross valuations are subject to monetary penalties if they knew, or reasonably should have known, that the appraisal would be used in a tax return or refund claim. As stipulated in the Pension Protection Act of 2006 under Internal Revenue Code Section § 6695 (and the subsequently added Section § 6695A), appraisers who submit substantial or gross valuations are subject to monetary penalties if they knew, or reasonably should have known, that the appraisal would be used in a tax return or refund claim. Reference: Appraiser News on-line, Appraisal Institute, 9-30-09 Reference: Appraiser News on-line, Appraisal Institute, 9-30-09

210

211 Bizarre Quotes “As of tomorrow, employees will only be able to access the building using individual security cards. Photos will be taken next Wednesday and employees will receive their cards in two weeks” –Microsoft Corp. “As of tomorrow, employees will only be able to access the building using individual security cards. Photos will be taken next Wednesday and employees will receive their cards in two weeks” –Microsoft Corp. “E-Mail should not be used to pass on information or data. It should be used for company business.” –Electric Boat Corp. “E-Mail should not be used to pass on information or data. It should be used for company business.” –Electric Boat Corp.

212 Bizarre Quotes Memo from senior management saying: “This is to inform you that a memo will be issued today regarding the subject mentioned above.” – Microsoft Corp. Memo from senior management saying: “This is to inform you that a memo will be issued today regarding the subject mentioned above.” – Microsoft Corp. Quote from a manager: “Teamwork is a lot of people doing what I say.” –Citrix Corp. Quote from a manager: “Teamwork is a lot of people doing what I say.” –Citrix Corp.

213 More Bizarre Quotes The lawyer asked the witness: “ Now Doctor, isn’t it true that when a person dies in his sleep, he doesn’t know about it until the next morning?” The lawyer asked the witness: “ Now Doctor, isn’t it true that when a person dies in his sleep, he doesn’t know about it until the next morning?” In a divorce case the judge announced: “I have decided to give your wife $775 a week.” The ex- husband replied: “That sounds fair, your Honor. I’ll try to send her a few bucks myself.” In a divorce case the judge announced: “I have decided to give your wife $775 a week.” The ex- husband replied: “That sounds fair, your Honor. I’ll try to send her a few bucks myself.”

214 More Bizarre Quotes A church bulletin announcing an upcoming marriage: “So ends a friendship that began in their school days.” A church bulletin announcing an upcoming marriage: “So ends a friendship that began in their school days.” A church bulletin announced their annual tithing campaign with the slogan: A church bulletin announced their annual tithing campaign with the slogan: “I upped my pledge … up yours.” “I upped my pledge … up yours.”

215 Bizarre Quotes “Doing it right is no excuse for not meeting the schedule. No one will believe you solved this problem in one day! We’ve been working on it for months. Now, go act busy for a few weeks and I’ll let you know when its time tell them.” – Mining & Manufacturing Div./3M Corp. “Doing it right is no excuse for not meeting the schedule. No one will believe you solved this problem in one day! We’ve been working on it for months. Now, go act busy for a few weeks and I’ll let you know when its time tell them.” – Mining & Manufacturing Div./3M Corp.

216 Bizarre Misprints “Arthur Adams was seriously injured Saturday afternoon when he came into contact with a high voltage wife.” “Arthur Adams was seriously injured Saturday afternoon when he came into contact with a high voltage wife.” “For Sale. Lovely rosewood piano. Owner going abroad with beautiful twisted legs.” “For Sale. Lovely rosewood piano. Owner going abroad with beautiful twisted legs.” “At the fair they will exhibiting a full range of shoes for girls with low cut fancy uppers.” “At the fair they will exhibiting a full range of shoes for girls with low cut fancy uppers.”

217 Bizarre Misprints “Wrap poison bottles in sandpaper and fasten with scotch tape or a rubber band. If there are children in the house, lock them in a small box.” “Wrap poison bottles in sandpaper and fasten with scotch tape or a rubber band. If there are children in the house, lock them in a small box.” “A heavy pall of lust covered the upper two-thirds of Texas last night and was expected to drift south-east over the rest of the state by morning.” “A heavy pall of lust covered the upper two-thirds of Texas last night and was expected to drift south-east over the rest of the state by morning.”

218 How About This! The French customs inspector admonished the elderly 83 year old man for not having his passport ready for inspection saying that all Americans have to show their passports upon arrival in France. The elderly American quietly replied “ When I came ashore at Omaha Beach on D-Day in 1944 to help liberate this country, I couldn’t find any Frenchmen to show it to.”

219 These comments were made in 1959 “I’ll tell you one thing, if things keep going the way they are, it’s going to be impossible to buy a week’s groceries for $20.” “I’ll tell you one thing, if things keep going the way they are, it’s going to be impossible to buy a week’s groceries for $20.” “If cigarettes keep going up in price, I’m going to quit. A quarter a pack is ridiculous.” “If cigarettes keep going up in price, I’m going to quit. A quarter a pack is ridiculous.” “Did you hear the post office is thinking about charging a dime just to mail a letter.” “Did you hear the post office is thinking about charging a dime just to mail a letter.” “Have you seen the new cars coming out next year? It won’t be long before $2,000 will only buy a used one.” “Have you seen the new cars coming out next year? It won’t be long before $2,000 will only buy a used one.”

220

221 How many types of Appraisals are there? There are still two types of Appraisals: There are still two types of Appraisals: Good Appraisals Good Appraisals and and Bad Appraisals. Bad Appraisals.

222 Definitions Rural - Suburban - Urban If you stand naked on the front porch and the neighbors can’t see you …… it’s Rural. If you stand naked on the front porch and the neighbors can’t see you …… it’s Rural. If you stand naked on the front porch and the neighbors call the cops on you….. it’s Suburban. If you stand naked on the front porch and the neighbors call the cops on you….. it’s Suburban. If you stand naked on the front porch and the neighbors ignore you….. it’s Urban. If you stand naked on the front porch and the neighbors ignore you….. it’s Urban.

223 Only for those, who can relate. 1983: TODAY: 1983: TODAY: Long hairLonging for hair Long hairLonging for hair Hoping for a BMWHoping for a BM Hoping for a BMWHoping for a BM Going to a new, hipReceiving a new Going to a new, hipReceiving a new joint. hip joint. Rolling StonesKidney Stones Rolling StonesKidney Stones DiscoCostco DiscoCostco Passing the driver’sPassing the Vision Passing the driver’sPassing the Vision test. test. test. test. KEGEKG KEGEKG Acid RockAcid Reflux Acid RockAcid Reflux

224 The Year was 1913 !! Average life expectancy was 47 years. Average life expectancy was 47 years. Only 14 percent of homes had bathtubs. Only 14 percent of homes had bathtubs. Only 8 percent of homes had a telephone. Only 8 percent of homes had a telephone. The maximum speed limit in most cities was 10 mph. The maximum speed limit in most cities was 10 mph. There were only 8,000 cars and only 144 miles of paved roads. There were only 8,000 cars and only 144 miles of paved roads. The average wage was 22 cents per hour. The average wage was 22 cents per hour.

225 Census Tract Info & Maps For Census Tract information and statistics, using the street address: For Census Tract information and statistics, using the street address: http://www.ffiec.gov/geocode/default.htm http://www.ffiec.gov/geocode/default.htm http://www.ffiec.gov/geocode/default.htm For Census Tract maps: For Census Tract maps: http://ftp2.census.gov/plmap/pl-trt/ click on state, then county. http://ftp2.census.gov/plmap/pl-trt/ click on state, then county. http://ftp2.census.gov/plmap/pl-trt/ Source: www.appraisersforum.com www.appraisersforum.com

226

227 Are You Being Sued? Game Plan: 1) Send the summons and complaint to your Insurance carrier immediately. 1) Send the summons and complaint to your Insurance carrier immediately. 2) Retain an attorney, if you do not have E & O Insurance. 2) Retain an attorney, if you do not have E & O Insurance. 3) Collect and organize your work file. Make a copy and give to your attorney. 3) Collect and organize your work file. Make a copy and give to your attorney. 4) Do not discuss the lawsuit with other involved parties or their counsel. 4) Do not discuss the lawsuit with other involved parties or their counsel.

228 Are You Being Sued? Game Plan: 5) Be prompt, be courteous, be thorough, and be truthful with your insurance representative or with your attorney. 5) Be prompt, be courteous, be thorough, and be truthful with your insurance representative or with your attorney. 6) Become a partner with your attorney. The attorney works for you, not the other way around. 6) Become a partner with your attorney. The attorney works for you, not the other way around.

229 Are You Being Sued? Game Plan: Are You Being Sued? Game Plan: 7) Provide the following in a timely fashion: 7) Provide the following in a timely fashion: Provide a detailed narrative including everything about your role in the case. Provide a detailed narrative including everything about your role in the case. Insist on an early face-to–face meeting with your attorney and have all pertinent documents available. Insist on an early face-to–face meeting with your attorney and have all pertinent documents available. Actively participate in both the discovery and settlement (if applicable) phases of the litigation. Actively participate in both the discovery and settlement (if applicable) phases of the litigation.

230 Are You Being Sued? Game Plan: Are You Being Sued? Game Plan: Dealing with a lawsuit can be a very stressful experience. Dealing with a lawsuit can be a very stressful experience. The lawsuit will not simply disappear. It must be resolved in some way. The lawsuit will not simply disappear. It must be resolved in some way. You must take some proactive steps toward resolution. You must take some proactive steps toward resolution. The successful resolution of the suit will allow you to return to your productive business as soon as possible The successful resolution of the suit will allow you to return to your productive business as soon as possible

231 Ken Guilfoyle Senior Certified National Instructor Ken Guilfoyle Senior Certified National Instructor McKissock L.P. McKissock L.P. P.O.B 1673 Warren, PA 16365 - 3158 Phone:800-328-2008 Warren, PA 16365 - 3158 Phone:800-328-2008 Fax:814-723-7289 Fax:814-723-7289 On the Web:www.mckissock.com E-Mail: ken@mckissock.com E-Mail: ken@mckissock.com

232 Who Files Complaints Against Appraisers ? 50% are initiated by lenders, lender regulators, staff appraiser reviewers, etc. 50% are initiated by lenders, lender regulators, staff appraiser reviewers, etc. 20% are initiated by borrowers and homeowners. 20% are initiated by borrowers and homeowners. 20% are initiated by other appraisers. 20% are initiated by other appraisers. 10% fall into the others category. 10% fall into the others category.

233 Who Sues Appraisers ? 50% to 70% of appraiser law suits are from third parties – sellers, buyers, borrowers, other party in a divorce, etc. 50% to 70% of appraiser law suits are from third parties – sellers, buyers, borrowers, other party in a divorce, etc. 30% are from lenders trying to recover monies from a mortgage in default. 30% are from lenders trying to recover monies from a mortgage in default.

234 Why do Appraisers get Sued? Main reasons for lawsuits: Appraiser’s failure to detect and disclose obvious defects. Appraiser’s failure to detect and disclose obvious defects. Errors in Square Footage. Don’t rely on public records or someone else’s appraisal. Errors in Square Footage. Don’t rely on public records or someone else’s appraisal. Over or under valuation of the property Over or under valuation of the property

235 When do Appraisers get Sued? Average of 18 to 48 months after the appraisal. Average of 18 to 48 months after the appraisal. If there is a buyer defect, within a couple of months. If there is a buyer defect, within a couple of months. As long as 10 years for lender claims. As long as 10 years for lender claims. There is no statute of limitations for fraud. There is no statute of limitations for fraud. Reference: Appraisal Today Newsletter Reference: Appraisal Today Newsletter

236 Why Are Appraisers Disciplined ? 1) Failing to inspect the subject property and/or the comparable sales. 1) Failing to inspect the subject property and/or the comparable sales. 2) Failure to seek the professional assistance of another individual. 2) Failure to seek the professional assistance of another individual. 3) Falsely claiming a personal inspection of the subject property. 3) Falsely claiming a personal inspection of the subject property. 4) Forgery of another appraiser’s signature and/or license number. 4) Forgery of another appraiser’s signature and/or license number. 5) Use of an expired license. 5) Use of an expired license.

237 Why Are Appraisers Disciplined ? 6) Failure to analyze prior sales, pending sales, and/or listings of the subject property. 6) Failure to analyze prior sales, pending sales, and/or listings of the subject property. 7) Use of a suspended license. 7) Use of a suspended license. 8) Falsified Appraisal Log for upgrade certification. 8) Falsified Appraisal Log for upgrade certification. 9) Failure to adequately disclose the scope of work performed in appraisal assignments. 9) Failure to adequately disclose the scope of work performed in appraisal assignments. 10) Commission of errors in the sales comparison approach to value. 10) Commission of errors in the sales comparison approach to value.

238 Why Are Appraisers Disciplined ? 11) Appraiser lacked either geographical or technical competency. 11) Appraiser lacked either geographical or technical competency. 12) Misrepresentation of relevant property characteristics, i.e. neighborhood factors, site, improvements, stigmas, etc. 12) Misrepresentation of relevant property characteristics, i.e. neighborhood factors, site, improvements, stigmas, etc. 13) Commission of errors in the cost approach and income approach to value. 13) Commission of errors in the cost approach and income approach to value. 14) Reliance on boiler-plate comments that are not relevant to the assignment. 14) Reliance on boiler-plate comments that are not relevant to the assignment. 15) Omission of relevant information from the appraisal report. 15) Omission of relevant information from the appraisal report.

239 Do You need E&O Insurance? An appraiser is being sued for not reporting that insulation in a home was vermiculite and contained asbestos. An appraiser is being sued for not reporting that insulation in a home was vermiculite and contained asbestos. Trial date is set. Estimated cost to defend the appraiser is $35,000. Trial date is set. Estimated cost to defend the appraiser is $35,000. E&O Insurance cost is $1,400 (+/-) per year. E&O Insurance cost is $1,400 (+/-) per year. It you appraise long enough there is a good chance that you will be sued. It you appraise long enough there is a good chance that you will be sued. Without E&O Insurance, you have no protection at all. Without E&O Insurance, you have no protection at all.

240 10 Tips to Reduce Your E & O Exposure Keep good work files in anticipation of litigation Keep good work files in anticipation of litigation Establish sound office procedures to reduce errors Establish sound office procedures to reduce errors Do not accept assignments outside your geographical area or your area of expertise. Do not accept assignments outside your geographical area or your area of expertise. Clarify your Scope of Work as effectively as possible. Clarify your Scope of Work as effectively as possible.

241 10 Tips to Reduce Your E & O Exposure Verify information given to you by others. Verify information given to you by others. Use specifically drafted additional language to limit your liability and clarify your Scope of Work. Use specifically drafted additional language to limit your liability and clarify your Scope of Work. Take interior and exterior photographs of all properties appraised. Take interior and exterior photographs of all properties appraised. Limit the distribution of your report whenever possible. Limit the distribution of your report whenever possible.

242 10 Tips to Reduce Your E & O Exposure Before hiring a new appraiser, employee or independent contractor, thoroughly investigate their qualifications and experience. Before hiring a new appraiser, employee or independent contractor, thoroughly investigate their qualifications and experience. Affiliate with a nationally recognized appraisal association and keep up to date with new developments in your profession. Affiliate with a nationally recognized appraisal association and keep up to date with new developments in your profession.

243 REMEMBER WHEN--?

244 “2012/20013 USPAP” Remember these 24 pages ! Pg 7: Ethics Rule Pg 7: Ethics Rule Pg 10: Record Keeping Rule Pg 10: Record Keeping Rule Pg 11: Competency Rule Pg 11: Competency Rule Pg 13: Scope of Work Rule Pg 13: Scope of Work Rule Pg 15: Jurisdictional Exception Rule Pg 15: Jurisdictional Exception Rule Pg 16 thru 21: Standard 1, Developing a Real Property Appraisal Pg 16 thru 21: Standard 1, Developing a Real Property Appraisal Pg 22 thru 30: Standard 2, Reporting a Real Property Appraisal Pg 22 thru 30: Standard 2, Reporting a Real Property Appraisal

245 Sample Statements Required by 2012-2013 USPAP I have not provided any services in any capacity to the subject property within the past three years. (Ref: SR 2-3) I have not provided any services in any capacity to the subject property within the past three years. (Ref: SR 2-3) The exposure time for the subject property is similar to the comparable or competitive properties as identified in the appraisal report. ( Ref: SR 2-2b(v) Comment) The exposure time for the subject property is similar to the comparable or competitive properties as identified in the appraisal report. ( Ref: SR 2-2b(v) Comment)

246 Exposure Time Sample (conti.) The following statement is actually taken from the pre-2005 Fannie/Freddie certification pages (1004B): The following statement is actually taken from the pre-2005 Fannie/Freddie certification pages (1004B): "Unless noted otherwise in the report, exposure time is the same as the marketing time indicated in the Neighborhood Section." "Unless noted otherwise in the report, exposure time is the same as the marketing time indicated in the Neighborhood Section." Keep in mind that exposure time is looking back, while marketing time is looking forward. Keep in mind that exposure time is looking back, while marketing time is looking forward.

247 “2012/2013 USPAP-on-Line” Looking to paste something from USPAP into your report? Looking to paste something from USPAP into your report? Here is the link to “USPAP-on-Line” from the Appraisal Foundation… Here is the link to “USPAP-on-Line” from the Appraisal Foundation… http://www.uspap.org/2012USPAP/eUSPA P2012.htm http://www.uspap.org/2012USPAP/eUSPA P2012.htm

248 2014-2015 USPAP Courses The Appraisal Foundation (TAF) contracted with McKissock, L.P. to write the 2014-2015 USPAP 7 Hour Update and the 15 Hour USPAP “on-line” courses, subject to oversight by TAF The Appraisal Foundation (TAF) contracted with McKissock, L.P. to write the 2014-2015 USPAP 7 Hour Update and the 15 Hour USPAP “on-line” courses, subject to oversight by TAF TAF will write both of the “in-class” 2014-2015 USPAP courses. TAF will write both of the “in-class” 2014-2015 USPAP courses.

249 Appraising Vacant Land Licensed or Certified Residential Real Property Appraisers may appraise vacant land that is zoned for residential 1 to 4 unit use or the highest and best (HBU) is residential 1 to 4 unit use. Licensed or Certified Residential Real Property Appraisers may appraise vacant land that is zoned for residential 1 to 4 unit use or the highest and best (HBU) is residential 1 to 4 unit use. All other vacant land must be appraised by a Certified General Real Property Appraiser All other vacant land must be appraised by a Certified General Real Property Appraiser Reference: TAF’s “The Real Property Appraiser Qualification Criteria” booklet, effective January 1, 2008

250 Can You Support “Effective Age”? Go to: www.mckissock.com Go to: www.mckissock.com www.mckissock.com Click on: Click on:“Help” Click on: “Student Download” “Student Download” You will find it there

251 How Do You Extract “Forecasting” & “Quick Sale” Adjustments Go to: www.mckissock.com Go to: www.mckissock.com www.mckissock.com Click on: Click on:“Help” “Student Download” “Student Download” You will find it there. You will find it there.

252

253 Fannie Mae, Freddie Mac, & FHA Set Loan Limits for 2013 The Maximum Loan amounts for 2013 (announced 12-1-12) are $417,000. for one-unit properties except for certain “permanent” high- cost areas in the Northeast and Southern California. Maximum loan amounts will be reduced to $625,000.00 in those areas The Maximum Loan amounts for 2013 (announced 12-1-12) are $417,000. for one-unit properties except for certain “permanent” high- cost areas in the Northeast and Southern California. Maximum loan amounts will be reduced to $625,000.00 in those areas Congress continued FHA’s Maximum Loan amount for one unit properties to $417,000. for most areas in the U.S. as of January 1,2013 Congress continued FHA’s Maximum Loan amount for one unit properties to $417,000. for most areas in the U.S. as of January 1,2013 Reference: Appraisal institute Newsletter, & www.efanniemae.com, Loan limits page Reference: Appraisal institute Newsletter, & www.efanniemae.com, Loan limits page

254

255 What is a Billion? A billion seconds ago, it was 1974. A billion seconds ago, it was 1974. A billion minutes ago, Jesus was alive. A billion minutes ago, Jesus was alive. A billion hours ago, our ancestors were living in the stone age. A billion hours ago, our ancestors were living in the stone age. A billion days ago, no one walked on the earth on two feet. A billion days ago, no one walked on the earth on two feet. A billion dollars ago, was only 6 hours and 20 minutes at the rate our government spends our money. A billion dollars ago, was only 6 hours and 20 minutes at the rate our government spends our money.

256 What is a Trillion? If you paid someone a dollar a second to reach $1 Trillion, it would take 31,700 years. If you paid someone a dollar a second to reach $1 Trillion, it would take 31,700 years. If someone paid you $100 every second, you would be a millionaire in one day with more than $8.6 million. To amass $1 Trillion, you would have to receive the money day and night for 317 years. If someone paid you $100 every second, you would be a millionaire in one day with more than $8.6 million. To amass $1 Trillion, you would have to receive the money day and night for 317 years. $1 Trillion would be equal to a stack of $1,000 bills 67 miles high. $1 Trillion would be equal to a stack of $1,000 bills 67 miles high. Reference: Washington Post article, “Thinking about the Unthinkable” Reference: Washington Post article, “Thinking about the Unthinkable”

257 Is This Really True ? What four positive numbers have a sum that is equal to their product? Meaning: What four positive numbers have a sum that is equal to their product? Meaning: a + b + c + d = a x b x c x d a + b + c + d = a x b x c x d Reference: Parade magazine, March, 2008 Reference: Parade magazine, March, 2008 Answer: 1, 1, 2, and 4. Answer: 1, 1, 2, and 4.

258 What Do You Really See ?

259 What Do You Really see?

260 ATTENTION: FHA Appraisers HUD has moved its HUDClips website for notices, handbooks, mortgagee letters, FAQs, federal register notices, Q & A information, and other important documents to: http://www.hud.gov/offices/adm/hudclips/ index.cfm HUD has moved its HUDClips website for notices, handbooks, mortgagee letters, FAQs, federal register notices, Q & A information, and other important documents to: http://www.hud.gov/offices/adm/hudclips/ index.cfm http://www.hud.gov/offices/adm/hudclips/ index.cfm http://www.hud.gov/offices/adm/hudclips/ index.cfm

261 What Do You Really See?

262 Do You Know This About COMPETENCY ? COMPETENCY ? If you stay even – You loose !! Continuing Education is a MUST.

263 What Do You Really See?

264 Can You Recognize a “STROKE” Victim? Neurologists say they can reverse the effects of a STROKE, if treated within three hours. Neurologists say they can reverse the effects of a STROKE, if treated within three hours. Bystanders can recognize a STROKE by asking three simple questions: Bystanders can recognize a STROKE by asking three simple questions: Ask the individual to SMILE. Ask the individual to SMILE. Ask him or her to RAISE BOTH ARMS. Ask him or her to RAISE BOTH ARMS. Ask the person to SPEAK A SIMPLE SENTENCE (coherently). Ask the person to SPEAK A SIMPLE SENTENCE (coherently). If he or she has trouble with any of these tasks, call 9-1-1 immediately and describe the symptoms to the dispatcher. If he or she has trouble with any of these tasks, call 9-1-1 immediately and describe the symptoms to the dispatcher.

265

266 Stress Management Technique Close your eyes. Picture yourself near a stream. Close your eyes. Picture yourself near a stream. Birds are softly chirping in the cool air. Birds are softly chirping in the cool air. No one but you knows your secret place. No one but you knows your secret place. You are in total seclusion from the hectic pace called the world. You are in total seclusion from the hectic pace called the world. The soothing sound of a gentle waterfall fills the air with a cascade of serenity. The soothing sound of a gentle waterfall fills the air with a cascade of serenity. The water is crystal clear. The water is crystal clear. You can easily make out the face of the person you’re holding underwater. You can easily make out the face of the person you’re holding underwater. See! You’re smiling already. See! You’re smiling already.

267 Heard at Zoning Hearings

268 R / E / A / D __MAN__BOARD__MAN__BOARD CYCLECYCLE CYCLE CYCLECYCLECYCLE He’s / Himself Do You Understand __WEAR__LONG__WEAR__LONG TOWNTOWN SANDSAND __STAND__I__STAND__I GROUNDFeetFeetFeetFeetFeetFeetGROUNDFeetFeetFeetFeetFeetFeet DiceDiceDiceDice LE VEL VELLE R R O A D R O A DADR AD ____0____BAMBA PHD PHD____0____BAMBA __MIND__MATTER__MIND__MATTER Interpretation

269 R / E / A / D __MAN__BOARD__MAN__BOARD CYCLECYCLE CYCLE CYCLECYCLECYCLE He’s / Himself Sand Box Man Overboard I Understand Six Feet Underground Cross Roads Read Between the Lines Mind Over Matter Long Underwear Downtown Tri Cycle Un Level Two Dice He’s Beside Himself 3 Degrees Below Zero Sand Box Man Overboard I Understand Six Feet Underground Cross Roads Read Between the Lines Mind Over Matter Long Underwear Downtown Tri Cycle Un Level Two Dice He’s Beside Himself 3 Degrees Below Zero __WEAR__LONG__WEAR__LONG TOWNTOWN SANDSAND __STAND__I__STAND__I GROUNDFeetFeetFeetFeetFeetFeetGROUNDFeetFeetFeetFeetFeetFeet DiceDiceDiceDiceLE VEL VELLE R R O A D R O A DADR AD ____0____BAMBA PHD PHD____0____BAMBA __MIND__MATTER__MIND__MATTER Interpretation

270 Hire It Or Lease It Hire It Or Lease It Use It Enter It Or Easement Easement Enter It Or Easement Easement Sell It Rights In Real Estate GUSHERGUSHER Refuse to Do anything Refuse to Do anything Give It Away Our Bundle of Rights

271 Physically Possible Legal Financially Feasible Maximally Productive All Possible Land Uses Highest and Best Use

272 Mortgage Loan Fraud “Mortgage Fraud is rampant. It’s a crisis in the making.” This is according to the FBI.

273

274 Mortgage fraud is committed for one of two reasons To obtain a property To obtain a property To gain a profit To gain a profit

275 What should you remember? When appraisers go bad, they need to be prosecuted. When appraisers go bad, they need to be prosecuted. Don’t send your problems Don’t send your problems down the street. down the street.

276 From the FDIC ! The FDIC Vice-Chairperson recently testified at a Congressional Sub- Committee Hearing (March 2012): The FDIC Vice-Chairperson recently testified at a Congressional Sub- Committee Hearing (March 2012): There are 4,375 Mortgage Fraud investigations now in process by the FDIC. There are 4,375 Mortgage Fraud investigations now in process by the FDIC. The FDIC expects to open more than 9,000 investigations in the next 3 years. The FDIC expects to open more than 9,000 investigations in the next 3 years. The investigations are targeting Mortgage Brokers, Attorneys, Agents, Appraisers, Title Companies, and Insurance Companies. The investigations are targeting Mortgage Brokers, Attorneys, Agents, Appraisers, Title Companies, and Insurance Companies. Reference: Appraisal Scoop News Letter Reference: Appraisal Scoop News Letter

277 FDIC filing Lawsuits -- The FDIC is now filing MBS complaints and lawsuits against mortgage originators, banks, and other MBS investors. The FDIC is now filing MBS complaints and lawsuits against mortgage originators, banks, and other MBS investors. FDIC now using retrospective AVM models to claim that appraisals at issue were flawed and failed to comply with USPAP FDIC now using retrospective AVM models to claim that appraisals at issue were flawed and failed to comply with USPAP Reference: Appraisal today news letter, April 10, 2012 Reference: Appraisal today news letter, April 10, 2012

278 We Saw This Coming !! Financial institutions filed 19,934 suspicious activity reports involving mortgage loan fraud in the three months ended Sept. 30,2012, up from 16,567 in the same period of 2011. Nearly 62% of the filings in the quarter involved suspicious appraisal activity that began at least four years ago. Reference: Financial Crimes Enforcement Network. Reference: Financial Crimes Enforcement Network.

279 Appraiser’s Mortgage Fraud Settled via Consent Orders Two Real Property Appraisers have settled their mortgage fraud claims with consent orders issued by a U.S. District Judge. Two Real Property Appraisers have settled their mortgage fraud claims with consent orders issued by a U.S. District Judge. Both appraisers will pay $100,000 in penalties and are barred from performing appraisals for federally-insured loans. Both appraisers will pay $100,000 in penalties and are barred from performing appraisals for federally-insured loans. They were charged with conspiring to commit mortgage fraud in connection with the sale of residential properties. They were charged with conspiring to commit mortgage fraud in connection with the sale of residential properties. Reference: Mortgage Fraud blog Reference: Mortgage Fraud blog

280 From “Valuation Review” Newsletter The Property Valuation Fraud Index has increased 46 % from the same period one year ago. The Property Valuation Fraud Index has increased 46 % from the same period one year ago. Analysts expect the Index to continue to rise over the next three years as ARM loans reset throughout 2012 & 2013. Analysts expect the Index to continue to rise over the next three years as ARM loans reset throughout 2012 & 2013. Comment: Do not let your E & O Insurance lapse. Comment: Do not let your E & O Insurance lapse. Reference: Valuation Review Newsletter, 11-09-12 Reference: Valuation Review Newsletter, 11-09-12

281 Additional Thoughts….?? Rather fail with honor than succeed by fraud. (by: Socrates) Crime pays or there would not be any crime. (by: G. Gordon Liddy) The worst day at work is better than the best day in prison. (by: Unknown) I didn’t do it. Nobody saw me do it. Can’t prove anything. (by: Bart Simpson)

282 Types of Fraud Fraud for Property/Housing Perpetrator is borrower Perpetrator is borrower Involves single loan: Involves single loan: Income & property value may be altered Income & property value may be altered Down payment may be borrowed Down payment may be borrowed Debt may be undisclosed Debt may be undisclosed Borrower seeks housing and/or cash from loan Borrower seeks housing and/or cash from loan Borrower intends to repay Borrower intends to repay Accounts for approx. 20% of all Mortgage Fraud Accounts for approx. 20% of all Mortgage Fraud

283 Types of Fraud Fraud for Profit Often involves industry professionals Often involves industry professionals Multiple loan transactions and/or institutions Multiple loan transactions and/or institutions Includes many (Gross) misrepresentations Includes many (Gross) misrepresentations Participants frequently paid for participation Participants frequently paid for participation Borrowers sometime unaware of scheme Borrowers sometime unaware of scheme Accounts for approx. 80% of all Mortgage Fraud Accounts for approx. 80% of all Mortgage Fraud

284 Typical Fraud (For Profit) Schemes Backward Application Backward Application Air Loans Air Loans Silent Second Silent Second Nominee Loans Nominee Loans Property “Flips” Property “Flips” Inflated Appraisals Inflated Appraisals Equity Skimming Equity Skimming Foreclosure Schemes Foreclosure Schemes

285 Another Study about Mortgage Fraud Base-Point Analytics has found that misrepresentations on loan applications have accounted for up to 70 % of mortgage early payment defaults (EPDs) Base-Point Analytics has found that misrepresentations on loan applications have accounted for up to 70 % of mortgage early payment defaults (EPDs) Analyses of more than 16,000 loans revealed misrepresentations in the loan file that later led to default. Analyses of more than 16,000 loans revealed misrepresentations in the loan file that later led to default. The misrepresentations included: The misrepresentations included: Income inflated by more than 500 % Income inflated by more than 500 % Overvalued property appraisals by 100 % or more Overvalued property appraisals by 100 % or more Fictitious employers, and Fictitious employers, and falsified tax records falsified tax records Reference: http://home.businesswire.com 2-16-12 Reference: http://home.businesswire.com 2-16-12http://home.businesswire.com

286 Modified Loans Re-default at High Rates A report issued by the Office of the Comptroller of the Currency and the Office of Thrift Supervision has found that 55 % of loans modified in the first quarter of 2011 were 30 or more days delinquent after six months. A report issued by the Office of the Comptroller of the Currency and the Office of Thrift Supervision has found that 55 % of loans modified in the first quarter of 2011 were 30 or more days delinquent after six months. The findings were based on loan-by-loan data in a standardized format for 35 million first-lien mortgages. The findings were based on loan-by-loan data in a standardized format for 35 million first-lien mortgages. Reference: Appraiser News

287 Mortgage Loan Fraud COMMON MISREPRESENTATIONS INCOME & EMPLOYMENT 1. Income is overstated. 2. Length of employment is overstated. 3. Fictitious employment is reported. 4. Employment is backstopped by co-conspirators. OCCUPANCY 1. Borrower intends to use property for rental income. 2. Borrower is purchasing property for another party. 3. Appraisals almost always list the property as owner occupied.

288 Mortgage Loan Fraud COMMON MISREPRESENTATIONS ASSETS AND COLLATERAL 1. Assets are overstated. 2. Collateral is overstated. 3. Collateral is nonexistent (forged promissory notes and Land Contracts). 4. Collateral is stolen or counterfeit (fraudulent money orders). DEBT & CREDIT 1. Borrower's debts are not fully disclosed. 2. Borrower's credit history is not fully disclosed or is altered. 3. Borrower assumes the SSAN# of another person.

289 Mortgage Loan Fraud COMMON MISREPRESENTATIONS DOWN PAYMENT 1. Down Payment does not exist. 2. Down Payment is concealed in a non- existent Land Contract. 3. Down Payment is borrowed and disguised with a fraudulent gift letter. PROPERTY VALUE Property value is inflated to: 1. Increase the sales value to make up for no down payment.. 2. Generate cash proceeds in fraud for profit.

290 Money Lost to Mortgage Fraud? The actual amount of money lost to mortgage fraud each year is unknown. The actual amount of money lost to mortgage fraud each year is unknown. No central organization collects mortgage fraud loss data. No central organization collects mortgage fraud loss data.

291 Federal Bureau of Investigation Supervisory Special Agent: Ronda Heilig, Supervisory Special Agent: Ronda Heilig, Financial Institution Fraud Unit Financial Institution Fraud Unit Work Phone: (202) 324-8634 Work Phone: (202) 324-8634

292 How to avoid getting snared in a Fraud Scheme Always check prior sales and prior listings Always check prior sales and prior listings Verify comps given to you by others – especially if you are told that you don’t need to do so Verify comps given to you by others – especially if you are told that you don’t need to do so If your research shows numerous sales of similar properties in the same neighborhood involving the same parties, You may be dealing with a fraud scheme If your research shows numerous sales of similar properties in the same neighborhood involving the same parties, You may be dealing with a fraud scheme When you are the only one that can be trusted with this assignment When you are the only one that can be trusted with this assignment

293 How to avoid getting snared in a Fraud Scheme, conti: Don’t accept assignments outside your geographic area of expertise Don’t accept assignments outside your geographic area of expertise Use caution when asked for that assignment to be treated as a “rush” job Use caution when asked for that assignment to be treated as a “rush” job Be most professional when working with friends Be most professional when working with friends The con man is that individual that speaks well, is so nice, exudes trust, and has your confidence The con man is that individual that speaks well, is so nice, exudes trust, and has your confidence Most of all, be careful who you trust Most of all, be careful who you trust

294 Sound-bites from the “Valuation Fraud Symposium” Sponsored by The Appraisal Foundation (TAF)

295 Sound-bites “If you have never fired a client, you’re probably not doing a very good job as an appraiser”, --- Danny Wiley, Past ASB board Chairperson “If you have never fired a client, you’re probably not doing a very good job as an appraiser”, --- Danny Wiley, Past ASB board Chairperson

296 Sound-bites “We (appraisers) are the most regulated profession in the Real Estate Industry. AMCs and Mortgage Brokers should have the same level of regulation”, --- Ken Guilfoyle, McKissock Appraisal School Instructor

297 Sound-bites “Fannie Mae refers unacceptable appraisal reports to state licensing or regulatory boards for any action they deem appropriate”, ---Mark Simpson, Director of Residential Property Standards for Freddie Mac “Fannie Mae refers unacceptable appraisal reports to state licensing or regulatory boards for any action they deem appropriate”, ---Mark Simpson, Director of Residential Property Standards for Freddie Mac

298 Sound-bites “Negligence and incompetence are a slippery slope that put many appraisers at risk for falling into fraudulent behavior”, --- Rachel Dollar, Symposium panelist “Negligence and incompetence are a slippery slope that put many appraisers at risk for falling into fraudulent behavior”, --- Rachel Dollar, Symposium panelist

299 Sound-bites “Lenders look closely at the appraisal’s transfer history, the use of less recent or less proximate comparable sales, a sales price that is higher than the listed price, unreasonable adjustments, and the use of all or multiple non-MLS sales as comps”, --- Douglas Vincent, Bank of America “Lenders look closely at the appraisal’s transfer history, the use of less recent or less proximate comparable sales, a sales price that is higher than the listed price, unreasonable adjustments, and the use of all or multiple non-MLS sales as comps”, --- Douglas Vincent, Bank of America

300 Sound-bites “Appraisers need to be especially vigilant against identity fraud, someone using your signature without your knowledge”, --- John Arterberry, Former Executive Deputy Chief, U.S. Department of Justice “Appraisers need to be especially vigilant against identity fraud, someone using your signature without your knowledge”, --- John Arterberry, Former Executive Deputy Chief, U.S. Department of Justice

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302 10 Ways to Differentiate your Business: By Doug Smith, IFAS Manners & Courtesy: These things account for your repeat business or referral business Manners & Courtesy: These things account for your repeat business or referral business Constantly upgrade your knowledge about the appraisal environment Constantly upgrade your knowledge about the appraisal environment Appropriate training for you and your staff Appropriate training for you and your staff Always look your best. Look professional with your business cards, stationary, etc. Always look your best. Look professional with your business cards, stationary, etc.

303 10 Ways, continued: Make service delivery a priority: Speed does count in today’s market Make service delivery a priority: Speed does count in today’s market Zero Defects: Review the report for mistakes and spelling before it leaves your office Zero Defects: Review the report for mistakes and spelling before it leaves your office Be a reliable provider: Make adjustments to your schedule to satisfy your client Be a reliable provider: Make adjustments to your schedule to satisfy your client

304 10 Ways, continued: Build your identity: Remember that dress and appearance really do count Build your identity: Remember that dress and appearance really do count Project a community image: Participate in community affairs Project a community image: Participate in community affairs Promote Feedback: Listen to what your customers are saying about your company and your services. Your reputation as a professional is everything! Promote Feedback: Listen to what your customers are saying about your company and your services. Your reputation as a professional is everything!

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306 Some Good Advice !! Some Good Advice !! Before getting into your car, look around you and look into your car. Before getting into your car, look around you and look into your car. If you are parked next to a big van, enter your car from the passenger side. If you are parked next to a big van, enter your car from the passenger side. As soon as you get into your car, lock the doors and leave. As soon as you get into your car, lock the doors and leave. Your elbow is the strongest point on your body. If you are close enough to use it, DO SO ! Your elbow is the strongest point on your body. If you are close enough to use it, DO SO !

307 Facts about Pittsburgh, PA These are some of the things that were first introduced in Pittsburgh: These are some of the things that were first introduced in Pittsburgh: First Ferris Wheel, 1892-1893 First Ferris Wheel, 1892-1893 First Banana Split, 1904 First Banana Split, 1904 First Baseball Stadium, 1909 First Baseball Stadium, 1909 First BINGO Game, 1920’s First BINGO Game, 1920’s First Polio Vaccine, 1953 First Polio Vaccine, 1953 First Pull-Tab cans, 1962 First Pull-Tab cans, 1962 First Mr. Yuk Sticker, 1971 First Mr. Yuk Sticker, 1971

308 U.S. Facts and More Harry S. Truman was the only president in this century who didn’t have a college education. Harry S. Truman was the only president in this century who didn’t have a college education. The first gold rush in the United States happened in Dahlonega, Georgia 1828. The first gold rush in the United States happened in Dahlonega, Georgia 1828. The only food that does not spoil is Honey The only food that does not spoil is Honey General Ulysses S. Grant’s real name was Hiram General Ulysses S. Grant’s real name was Hiram Maine is the only state in the lower 48 that touches only one other state. Maine is the only state in the lower 48 that touches only one other state.

309 FREE Information from WEB-SITES FREE Information from WEB-SITES www.census.gov All kinds of free information here including population, housing, income, etc. www.census.gov All kinds of free information here including population, housing, income, etc. www.census.gov www.zillow.com Individual property information and trend analyses. Registration required but it is free. www.zillow.com Individual property information and trend analyses. Registration required but it is free. www.zillow.com www.city-data.com Free information about individual communities. www.city-data.com Free information about individual communities. www.city-data.com www.neighborhoodscout.com Free information about individual communities. www.neighborhoodscout.com Free information about individual communities. www.neighborhoodscout.com www.USA.Kaspersky.com select “Free Antivirus Scan” at the top of the page. www.USA.Kaspersky.com select “Free Antivirus Scan” at the top of the page. www.USA.Kaspersky.com www.building-cost.net Cost approach information, Replacement Costs for residential improvements. www.building-cost.net Cost approach information, Replacement Costs for residential improvements. www.building-cost.net www.Online-Home-Values.com Check home values, any U.S. address www.Online-Home-Values.com Check home values, any U.S. address www.Online-Home-Values.com

310 Continued Education? I’d rather be -- If you think education is expensive ---- try ignorance !! - Ken Guilfoyle - Ken Guilfoyle


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