Bifurcation is not “modernization” of the appraisal process. The bifurcated model has been in place since licensure and the implementation of FIRREA for appraisers to train and apprentice new up and coming valuation professionals. Those appraiser apprentice/trainees are registered and regulated by the state. The apprentice/training to become an appraiser is how appraisers replace their credentialed ranks, serve consumers and protect the public trust. Replacing the apprenticeship programs with lender/AMC owned bifurcation models not only undermines the appraisal process, it undermines the ability for up and coming new professionals to share in the full scope of training typical of credentials and licensure. We are unsure what the long-term effects will be but anticipate a loss in appraiser numbers throughout the state and country due to the bifurcated/non-licensed inspector model.
How did this happen? Lenders and AMCs took a fully functional apprentice and training program that’s worked for decades and scaled it to a fault for profit, to serve shareholders. It is apparent the goal is to break the appraisal process into smaller pieces to profit more from each piece. The end results will be less credible appraisals, higher cost to consumers, and no regulatory policies or consumer protection for so-called inspectors. The worst-case scenario is someone will be harmed or hurt. We believe this is inevitable with no training, regulation or accountability of said “inspectors.”
The irony of the model program from the top at the GSEs down to the local lender is that lender/AMCs forbid apprentice appraisers who are trained, regulated and accountable to regulators from performing the same processes. Yet, the lender/AMC model will allow untrained, unregulated, and unaccountable individuals to provide critical and pertinent information for the appraisal process. How is this even logical?
Diminishing growth potential and restraining trade from those who are licensed and registered professionals in our respective states to grow our businesses honorably, respectfully, and with accountability are the results of these AMC/lender bifurcated being pushed into the housing valuation process.
The bifurcated programs allow lender/AMCs to circumvent laws and control the valuation process that goes against the intent of FIRREA and Dodd-Frank and consumer protection. Lender/AMCs are not doing this to help consumers, they are doing this to increase profits because they can make more money off the consumer by breaking down each segment of the process.
Lender/AMCs stole billions from consumers with no accountability for decades because of the lender/AMC model. Unfortunately, consumers do not know better because full disclosure to consumers is not being met by regulators or the CFPB. We need strong agencies like Virginia to take a stand against change for the sake of change and keep consumer protection and the public trust the priority.
My personal experience with hybrids includes but are not limited to:
In closing, I respectfully hope the Virginia DPOR looks deep into what’s presented on the surface as talking points by AMC/lenders who are pushing the bifurcated model as a solution. We hope the long-term picture will defer any short-term decisions. It is imperative appraisers not be restrained from replacing our numbers and training the new valuation professionals of tomorrow as “independent”. Leaving the valuation process solely to banks, AMCs, and aggregators fueled the credit crash in 2008 because of conflicts of interest. The same leaders who took us down that devastating path are the same leaders pushing bifurcation.
We work diligently and honorably to avoid that same mistake from happening again. There is no appraiser shortage but there will be if the bifurcated model is allowed to go unchecked, unregulated with unlicensed inspectors and out of state appraisers. How does this protect the public?
The only solution is clients allow appraisers to manage their licensed and credentialed trainees to perform inspections and reports as the intent of the bifurcated process and model was designed to be used. Allow apprentice appraisers to participate and sign in the appraisal process. We do not understand why we are being restrained while non-licensed individuals are being allowed to proceed.