NJ Appraiser Act LegislationPresented to:

New Jersey Chapter of the National Association of Independent Fee Appraisers

April 11, 2014By

Dennis Scardilli, Esq., MAI, AQB Certified USPAP Instructor

Law Office of Dennis A. Scardilli, L.L.C.105 Woods Road, Absecon, NJ 08201

Office (609) 568-0432 Fax (609) 939-0277Dennis@ScardilliLaw.com www.ScardilliLaw.com

Once Upon A Time

There was an Appraiser Board

That issued an Advisory Opinion nixing BPOs & CMAs

That was technically correct (for the most part)

But that made a certain group of people VERY unhappy

And They Were VERY Unhappy

So, they went to the Legislature

And asked the Legislature to change the Appraiser Act to allow them to prepare BPOs & CMAs

S2551 (revising Appraiser Act to permit BPOs) was entered in February 2013

S2551 was approved by the NJ State Senate in March 2013

S2551 (February 7, 2013 Version)

9 As used in this subsection, “broker price opinion” and “comparative10 market analysis” mean an estimate prepared by a real estate broker,11 broker-salesperson or salesperson that details the probable selling12 price of a particular piece of real property and provides a varying13 level of detail about the property’s condition, market, and14 neighborhood, and information on comparable sales, but does not15 include an automated valuation model, as defined by Title XIV of16 Pub. L. 111-203 (12 U.S.C. s.3354 et seq.).

Dodd-Frank, Subtitle F, §1473

Added New Section 1126 to FIRREA*********

(b) For purposes of this section, the term 'broker price opinion' means an estimate prepared by a real estate broker, agent, or sales person that details the probable selling price of a particular piece of real estate property and provides a varying level of detail about the property's condition, market, and neighborhood, and information on comparable sales, but does not include an automated valuation model, as defined in section 1125(c).".

And Then Discussion Ensued

The Assembly approved S2551 BPO/CMA language in A3718Appraiser Organizations met separately with Legislators

Assembly changes to A3718:Disclosure Statement from REC Regs (not an appraisal)Prohibition against using BPO/CMA in Tax Appeals & Eminent

Domain (Statement: except for Judge’s Order)Senate Bill revised to reflect Assembly changes

Governor Christie Saved the Appraisers’ Bacon

“The bill seeks to distinguish both ’broker price opinions’ or ‘comparative market analyses’ from real estate appraisals.

***********Determining the precise value of real estate is a complex process, crucial to the sale of a residential home. This bill will unwisely introduce confusion into that process, with sellers struggling to determine when and why to use broker price opinions, comparative market analyses, or appraisals.”

That Made Some People Unhappy

In the “Lame Duck” Session – SAME BILLS / NEW NUMBERA4494S3058(Amended version vetoed with minor technical amendments)

Gov Christie “pocket vetoed” on January 21, 2014No explanation

REALLY Unhappy

A2387 was introduced February 6, 2014Provisions

Abolishes Appraiser BoardMoves FIRREA Appraiser Regulatory function to DOBI

Same as A3781/2012-13 SessionWhich never had Regulated Professions Committee hearing

A2387 Hearing March 13, 2014IFA rep’d by Bob Solotist, IFA; Dan Drelich

Approved Y-5, N-0, Not Voting-0, Abstain-2

Appraisal Subcommittee Policy

James Park, Executive Director of the Appraisal Subcommittee 3/3/14

“Numerous provisions within the proposed legislation raise significant concerns about compliance with Title XI.”

“ASC Policy Statement 1, which sets forth guidance to States for compliance with Title XI, provides that States should adopt and maintain an organizational structure for appraiser certification, licensing and supervision that avoids conflicts of interest or the appearance of such conflicts”.

NJ Appraiser Organizations

NJ Appraiser Organizations now coordinating effortsNJ IFA

Joe Ravitz, IFA, State Director (Policy Making Council)Bob Solotist, IFA, All Around Worker Bee

Southern NJ Chapter of the Appraisal InstituteJake Ramage, MAI, President (Policy Making Council)Lisa Weiss, Executive Director (Admin, Commo, Logistics)

Metro NJ Chapter of the Appraisal InstituteJoseph Baldoni, MAI, President (Policy Making Council)Debra Miller, Executive Director (Admin, Commo, Logistics)

Why we don't want the Appraiser Board going to DOBI

Singleton bill is a subterfuge to allow the Realtors to perform BPO's for purposes beyond FRT's (Federally Related Transactions).

The Appraiser Board Advisory indicating a BPO is an appraisal under

New Jersey law will likely be pulled if the Board goes to DOBI. The REC has been ultra stingy on giving continuing a credits to

attendees at Appraisal organization conferences.

Why we don't want the Appraiser Board going to DOBI (cont’d)

Board members now take disciplinary cases home to look at on the weekend.

If the Board goes to DOBI, it is unlikely that will continue.

Investigators will be hired and trained by the ASC, which hasn't turned out so well for Appraisers in other states.

Why we don't want the Appraiser Board going to DOBI (cont’d)

Legislative financial analysis for the 2013 Singleton Bill almost $800,000 surplus from Board to the General Fund.

AMC legislation = +$300,000$1 million+ surplus.

Investigators work for DOBI Historically not been friendly to Appraisers. Recent Commr said, “appraisers are speed bumps in the lending process”.

Why we don't want the Appraiser Board going to DOBI (cont’d)

The Appraiser Board has historically said they don't have the resources to prosecute the unauthorized practice of appraisal.

There is a statute on point.

ASC's most recent audit of the Appraiser Board has a negative finding in regard to adequate support to fulfill the state's obligations under FIRREA

Why we don't want the Appraiser Board going to DOBI (cont’d)

Assertion that there will be a savings by moving the Appraiser Board to DOBI does not withstand scrutiny.

The Board currently contributes a surplus to the general fund, the ASC has criticized the state for lack of support to the Board and merely moving the Board from one agency to another does not constitute a savings. It will cost money to move the Board.

The Board currently shares staff with other boards in the Division of Consumer Affairs = no savings

Cost to move.

Why we don't want the Appraiser Board going to DOBI (cont’d)

Four vacant seats on the Board (out of 9; one occupied seat is a government appraiser who understands the industry – but ready to retire)

Open seats could be filled with real estate agents who happen to hold an appraiser license or members of the financial community for the public seats (two) (as in Illinois).

When I defend an appraiser before the Board I know that I'm talking with Appraisers.

Why we don't want the Appraiser Board going to DOBI (cont’d)

Consumer Protection will not be the focus of DOBI DOBI's mission statement talks about Protecting the "growth,

financial stability and efficiency" of the "banking, insurance, and real estate industries”.

Conflict of interest with the Consumer Protection and Public Trust issues inherent in real estate appraiser regulation.

Conflict Cited in letters from Jim Park, Executive ASC Director, March 2013 & March 2014 Assemblymen Singleton & Weber

Why we don't want the Appraiser Board going to DOBI (cont’d)

Dodd-Frank requires Appraiser Board to enforce Appraiser Independence

Appraiser Independence provisions typically enforced by the state Attorney General's office.

Appraiser Board is now located in the New Jersey Attorney General's officeDAG in Consumer Div more likely to refer violations of Appraiser

Independence to than DAGs at DOBI

Why we don't want the Appraiser Board going to DOBI (cont’d)

A2387 is a smokescreen to permit real estate agents and brokers to perform BPO's on transactions that are not FRT’s

It is merely a continuation of the "BPO war" that took place last year.

Gov. Christie vetoed the Realtors BPO bill twice.In his absolute veto, he gave his reason as lack of Consumer

Protection. We agree with Gov. Christie’s conclusion.

What Can You Do? Participate!

NJ Appraiser Organizations Efforts to Educate Legislators

Mission – minimalize negative impact on New Jersey real estate appraisers caused by efforts to change the NJ Appraiser Board definition of BPO's as an appraisal …. (in particular to) move the Appraiser Board from the Division of Consumer Affairs to the New Jersey Department of Banking and Insurance ( DOBI).

NJ Appraiser Organizations

Volunteers Needed for:IT

Public web site Team site

Communication to appraisers on "general” portion of Team Site, if created

Write material for public (NOTE: requires compliance with Lobbying Law)

Call to Action

WHO’S WHO in “Abolish Bill” Primary Sponsor Assemblyman Troy Singleton (D-Mt Laurel) Primary Sponsor Assemblyman Jay Weber (R-Parsippany) Assemblywoman Amy Hanlin (R-Red Bank) Assemblyman Vincent Giblin, Regulated Professions Chair Assemblywoman Angelica Jimenez Reg Prof Vice Chair Assemblyman Patrick J. Diegnan, Jr. (D-Middlesex) Assembly Speaker Vincent Prieto (D-Hudson) Assembly Minority Leader Jon Bramnick (R-Sommerset)

NOTE: Not yet introduced in the Senate

NJ Appraiser Act - Consumer Protection Since 1991

HELP KEEP IT - CONTACT

NJ IFA: Bob Solotist, IFA

Appraisal InstituteNorth Jersey – Debra MillerSouth Jersey – Lisa Weiss

Thank you!

Dennis Scardilli, Esq., MAI, AQB Certified USPAP Instructor

Law Office of Dennis A. Scardilli, L.L.C.105 Woods Road, Absecon, NJ 08201

Office (609) 568-0432 Fax (609) 939-0277Dennis@ScardilliLaw.com www.ScardilliLaw.com