Confusing Language for USPAP Ethics Rule Addition
Folks, the following article is in the ABA Banking Journal e-newsletter, posted on Wednesday, February 15, 2023. I’m really glad this has been released. Hopefully the Appraisal Standards Board will closely examine the concerns of the regulators.
I read the USPAP 4th Exposure Draft. It contains so much new Ethics Rule “legaleze” language about conduct that it is, and can be, overwhelmingly confusing to a majority of appraisers. It’s written by lawyers in such a way that ensnaring appraisers in an alleged bias complaint with their state regulator is probable. Mounting an appropriate and successful defense can be difficult, and expensive.
The proposed, and final, language needs to be simplified.
This is the article:
Regulators take issue with discrimination definition in proposed appraisal standards
A proposed update of professional guidelines for property appraisals contains confusing language about what constitutes discrimination, and would even suggest appraisers could engage in “ethical” discrimination, regulators from across multiple federal agencies said Tuesday in a letter to the Appraisal Foundation’s Appraisal Standards Board.
The Appraisal Foundation is a nongovernmental, professional body with a congressional mandate to set appraisal standards and minimum real estate appraiser qualifications, which are adopted by states. The organization is currently in the process of updating its professional standards, the Uniform Standards of Professional Appraisal Practice.
Federal regulators had previously written to the foundation to urge it to include a detailed statement of federal prohibitions against discrimination in the standards. However, in their letter, regulators said the most recent proposed update tries to distinguish between unlawful discrimination and “unethical discrimination” — the latter a term not well established in current law or practice, they said.
“Accordingly, we believe the introduction of the term in USPAP, and the resulting need to distinguish between unethical discrimination and unlawful discrimination, would create confusion in the appraisal industry,” the regulators said.
They added that the inclusion of the term “unethical” suggests appraisers could engage in “ethical” discrimination, saying the draft further suggests such discrimination is a protected characteristic “essential to the assignment and necessary for credible assignment results.”
A ‘fifth’ is needed, in more ways than one! Exposure Draft to USPAP, that is.
After seeing the regulator’s response with concerns about how the 4th Exposure Draft anti-Bias and Discrimination addition to the Ethics Rule was being proposed, I had a suspicion that the Exposure Draft process would continue.
That was confirmed yesterday, February 16, 2023, in this news release from the Appraisal Standards Board: Appraisal Standards Board Responds to Public Feedback
The focus in USPAP has to be written more simply, and very directly as to what is expected. The previous drafts were far too complicated and confusing probably due to the high powered Washington D.C. attorneys hired to do the writing of the proposed new section in the Ethics Rule!
Watch for notice as to when the new Exposure Draft will be available for public comment. Then read it, and send in your response comments per the instructions therein.
Dave Towne on e-AppraisersDirectory.com
- Marcia Fudge leaving HUD! - March 12, 2024
- UAD Redesign Timeline - January 31, 2024
- Is the Iceberg Turning? - January 5, 2024
I don’t understand all of this. I’ve personally never showed racial bias in a report. The appraisal in fact is to be a non bias professional opinion of value. This has always been the case, so why add jargon to USPAP when the term “NON BIAS” kinda says it all? Am I just slow or did someone just hit the stupid button?
To pretend they are doing something about an issue that hasn’t been proven to be an issue. The issue is AMCS hiring bottom of the barrel ‘appraisers’ which will get you wildly different valuations when they are doing them for $25 with a 24 hour turn time.
That guy or gal doesn’t want more work so he will just take the highest sales s/he thinks they can get away with, and than the credible appraiser is charged with bias for being lower.
Yes, someone hit the stupid button.
They most likely do this to necessitate changing USPAP the next cycle to sell more books.
EJ …. the next version of USPAP won’t have an expiration date. It will be in effect until such time that significant modification is actually necessary. Therefore, TAF won’t have that cash cow of repeating USPAP sales to bank on. However, there will still be the requirement for appraisers to take an ‘Update’ class every two years. That means TAF/ASB will be writing new course material every couple of years and selling Student Manuals used in class and the actual class course content to providers. So TAF will still have an income stream.
We all have personality, Thank God, you know some spel with few capitols.
They are changing USPAP for one main purpose and that is to SUE the Appraisers when the homeowner (who has no clue about valuation) thinks the value is low and citing BIAS. Well I hope more Appraisers out there, like that one who recently counter sued for Defamation, take this kind of action. We do not need a convoluted definition in USPAP for discrimination or bias, the more complex the more loop holes there are and they would likely go against and not for the Appraiser. We are not stupid, we know what bias, discrimination and racism is, forget about unintentional or intentional. If you are biased and applying that in your work, you KNOW it. It is not unintentional. I don’t believe in unintentional bias. The Appraisal process is the same no matter what, has zero to do with the color of the skin of the Owner or the Appraiser. As someone here mentioned the bottom of the barrell Appraisers doing cheap work and OVER-Valuing homes are making the ethical/correct Appraisers look like the ones who are biased, just because their values are “lower” than the inflated report. I hate how everyone thinks that the highest value MUST be the correct one…It is not!
Lets pull down the “mirror” and reverse it upon the lenders and AMC’s by requiring that all lenders and AMC’s employ review appraisers and accept 100% liability for the accepted appraisal reports.
The highest price in terms of money, is used in some federal cases.
The appraiser should provide some explanation of highest price, and in terms of money.
The Appraiser should identify his client.
Thanks Dave!
I would like someone to answer why would an appraiser go through 2+ years of classes, 1000+ field hours, pay thousands of dollars to set up an office, pass an exam(s) to get licensed, to intentionally bring in an appraisal low? Seriously, there is no end game there.
I will give you the most intellectual response I have heard, if you can call it that…..”sounds about white.” People want to believe certain things and will rationize it in their head however they want to.
Its like you go to two different doctors, one gives you a clean bill of health, one says you have cancer. You don’t want to hear the one that says you have cancer so you call them racist. You go on TV shows calling them racist and people clamor about how racist doctors are and how the one that claims you have cancer should be fired. Others doctors have the question…well does he have cancer…and no one even cares about that. Clearly the one that gave the clean bill of health is correct because that is what they want to hear.
So then the unintended consequences come. Doctors don’t dare want to report their patients health accurately or be accused of racism.
Same will happen with appraisals, appraisers will be afraid to report accurately or be branded a racist.
I got into an argument recently in another social media platform. Man had his home in an urban area appraised. Per his conversation the black appraiser told him that one side of the town appraised higher than the other side and this was because of the demographic. I tried to no avail to tell him that utilizing sales outside the immediate development/neighborhood would be cherry picking to get either a higher or lower value and that even I who lives in a rural area would want comparables from my more immediate location. He just didn’t get it and felt justified because an appraiser had told him that using comparables from the immediate area (apparently in the low end of the range) was a racist thing to do. I gave up.
Look, just ask a simple logic challenge question; What exactly is wrong with low prices? Would you rather pay more or less on your monthly payment? Flip the tables because at this point it seems the minority block has been more effective at resisting higher taxation. Which is why these groups are currently targeted by the federal government and their partner progressive jukebox 501c agencies.
Or you could have quipped back, this home right here just bought for X amount which is X less than the other side of town. Let’s go ask them if they’d prefer to have an instantly higher payment amount, to accommodate your wish for completely even valuation regardless of location and regardless of the purchasing power. Additionally you should have acquired this appraisers name so you could have turned him into the state agency, for failing to uphold a peer standard, failing to even attempt to maintain public trust in the process. However at this point there are undoubtedly a thousand drooling social justice activists out there masquerading as appraisers online, supporting the current thing and all.
These mindless zombies, but if you put them in front of a purchase situation for themselves personally, all you’ll hear is complaints about high price and affordability. This cake is an obvious lie. These events are intelligence tests which most people are failing. Please try not to upset the internet, unless you’re willing to take it all the way to the finish line and actually win. Go back for round two and challenge that person to support such a hypothesis in a room full of appraisers, whom congregate in a different sort of social media setting which is more professional and better moderated; here.
We’re just around the corner from Maoist-style struggle sessions, aren’t we.
Oh my, I said I’d quit blogging, the struggle sessions never end in this industry. Obviously people are confused as to the differences between discernment, competent judgment, and discrimination. The brainwashing appears nearly complete, to the point people are referring to competent decisions as ethical discrimination? Who’s sailing this ship?
“Uniform Standards” that are subject to POLITICAL CHANGE, are not “STANDARDS”. Every industry in this country has been systematically destroyed. The Real Estate Industry is the heart and wealth of this country. How do you destroy the buying, selling, building (and all the subcontractors employed) housing industry? You destroy the appraisal profession, the vanguards of America’s actual wealth. What’s left?
They want to run housing like the stock market, be in total control of algorithms, stay ahead of the game with the insider trading circles. Central planners tend to disagree with independent voices.
My take on this is they are trying to intimidate and put the fear of God into appraisers hoping appraiser’s will be looking over their shoulder and basing their appraisals on a fabricated high value estimate so they don’t end up in jail or worse, Which, if found out, they will end up in jail or worse. Hmmm, smells a lot like intimidation and undue influence if you ask me. Stick to your principles and don’t let this happen. We need to fight the good fight and respond to everything that is thrown at us.
It might help to have a qualified licensed appraiser in charge of this organization…
Lots of appraisers use (The highest price in terms of Money, some use the most LIKELEY price on terms generally available). they ain’t he same, we’ve changed, justified for some CONTRACTS, not for others. Knowledgeable appraisers know the difference, and many more definitions and use them.
Some appraisers use the 1004 improperly.
We can be sued for almost anything, our contracts, writing style and a goood personality, MAY have something to do with it?
How long can the traditional definition of ‘market value’ hold up, with such continued streams of subsidized programs, parity pricing schemes, and special privileges granted to one group but not the other, effecting their relative cost to the buyer? If you thought historical analysis relative to the lending rate at the time was complex, just wait until equitable appraisals hit. The invisible hand is writing in a locked box like something out of Adams Family. There is no such thing as free lunch.
The Cities, the counties, the state and the federal government are all contributing (GIVING) money to encourage SFR ownership. There has to be some recognition of these subsidies by the Appraiser, because no one else will.
I had to explain a 1031 exchange in an SFR appraisal. What an awkward situation, because the aftersale was substantially lower, the TAX Boot was the reason for the trade.
This from the people who felt the need to clarify in the USPAP publication that Bold letters were added for emphasis. Who knew? We all thought they had a surplus of black ink.
I just read an article about one of those “racial bias” appraiser lawsuits going on out there. The appraiser being accused turned around and is suing his accusers for racism against him saying that they are doing the same thing they are accusing him of doing. That’s exactly what I’ve thinking all along since this whole nonsense started. Racism creating racism.
https://appraisersblogs.com/appraiser-countersuing-black-homeowners-4-defamation
Joe, same story or different? If you need timely valuation industry news, come here first.
Yup, that’s the one.
The quickening is near. On that thread there were several other appraisers whom claimed same thing currently happening to them, less the counter suit.
Where do errors and omissions insurers come into this? Why would appraisers need additional help, when these groups are explicitly in place to help appraisers with claims.
FYI some of the contested uspap language supposedly is written by the same lawyers suing appraisers. With trade group representatives like that, who would need enemies? I’ve quit trying to keep up with the corruption in this industry, there appears to be more appraisers and companies whom work with appraisers whom prefer unethical corrupted approaches, outnumbering honest interests these days. Your tax dollars, hard at work.
Fat Tuesday is tomorrow, at least some celebration will proceed this which craft event.
MARS or NESTLY?
Face book xcluded me for a year for relating a color story about Wm of Orange and Ann from green Ireland and starting a 100-year war?
Maybe we can get some Advisory Opinion scenarios from USPAP to clearly give us direction with appraisal bias.