For years, Kathy Coon would conclude one of her seminars for lenders and governments agencies on issues surrounding real estate appraisal, and she would hear the same question from attendees. Unfortunately, she never had an answer.
“People would come up to me, and say, ‘I want to find an appraiser who uses the principles you talked about. Where can I find one?’” says Coon, chief appraiser and director of appraisal quality control at Oxford-based FNC Inc. “They were asking for a referral, and I wasn’t in a position to do that.”
After several years of work and research, Coon has created a resource that lenders and public sector agencies can use to assist them in finding conscientious, quality appraisers. And she is currently promoting the new resource while at the same time raising awareness of some of the difficult issues found today in the mortgage industry.
Making a list
While mortgage fraud and questionable lending practices have been in the headlines a lot lately, Coon began her quest for a resource that listed quality appraisers well before this. Over the entire decade, she facilitated seminars offered by the Appraisal Institute, continually getting referral requests.
Tired of not having an answer, Coon began developing a program approximately three years ago. First, she created a new Appraisal Institute-sanctioned seminar —“Quality Assurance in Residential Appraisals: Risky Appraisals=Risky Loans.” The seminar is designed to explore some of the most common appraisal deficiencies and omissions.
Name and contact information of attendees is then listed and made available to lenders. Those who wish to receive the appraiser list can e-mail to firstname.lastname@example.org/. (Coon points out that the program has just launched, thus the few names currently on the list. While the attendees can opt out of the listing, Coon says she cannot imagine why one would do that.)
There is a cost to attend the Appraisal Institute’s seminar, but the FNC-offered listing is free.
Coon says, obviously, just because a person completes the seminar does not insure that he is a quality appraiser. But the list does show those appraisers who are at least conscientious and are trying to better themselves.
The Appraisal Institute conducts the seminars. For a schedule, visit www.appraisalinstitute.org/.
Fighting ignorance, greed
Coon says “Quality Assurance in Residential Appraisals: Risky Appraisals=Risky Loans” will make appraisers aware of trouble spots underwriters and reviewers typically encounter in appraisal reports. One of those trouble spots that will get special attention is seller concessions.
Seller concessions are those thrown in by the seller to “sweeten” the deal. These can take many forms, such as covering the buyer’s closing cost or repair or renovation of the property per the buyer’s request.
While these concessions are legal and viable, they can lead to real estate being overvalued if the concession costs are not accounted for properly. For instance, a buyer asks for and is granted a $5,000 concession on a $100,000 home. If the concession costs are included in the loan, the value of the property is overvalued by $5,000.
Coon says too often, appraisers are simply not aware of the concessions, and she feels there is a real need for full disclosure so appraisers do not operate in the dark. She admits that there are certainly some appraisers who are aware of the concessions, but give it a wink and a nod because they either do not know what to do with them or greed comes into play and they let ethics go by the board.
On a mission
At FNC, Coon consults and trains lenders in the detection of faulty or fraudulent appraisals. She also helped create rules included in FNC’s “Generally Accepted Appraisal Rules,” which provide an automated review of appraisals for both compliance and risk issues.
Coon has served the Appraisal Institute on its board of directors and executive committee as chair of education, and was twice elected to the Residential Appraisal Board. She is a national instructor for seminars, and is also a member of the Mortgage Banker Association’s Fraud and Ethics Subcommittee.
Coon gained note when she assisted the FBI in one of the largest flipping scams in the U.S., and she has served as an expert witness for mortgage lenders in mortgage fraud cases.
Contact MBJ staff writer Wally Northway at email@example.com.
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