NORTH DAKOTA REAL ESTATE APPRAISER QUALIFICATIONS AND ETHICS BOARD

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1 NORTH DAKOTA REAL ESTATE APPRAISER QUALIFICATIONS AND ETHICS BOARD April 10, 2012 Minutes Chairperson Ibach called the meeting to order. Roll call was taken. Board Members present: Chairperson Joseph Ibach Wade Iverson, Carolyn Corwin, Harvey Huber David Lanpher; Others Present: Bill Peterson, Legal Counsel Jodie Campbell, Staff David Campbell, Staff Timothy Terras Marla Seiler Doreen Reidman Kathy Berry was present online Minutes: Board members were provided and reviewed the Minutes of January 20 th and March 7th Wade Iverson moved to approve the minutes as written. Carolyn Corwin seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion. The vote was Approval of Applicants: Timothy Terras is making application for certified general. Review of Mr. Terras s application indicates he meets the education, examination and experience hours/points requirements for certification. Review of Mr. Terras s work product indicates the reports meet minimum standards of USPAP. Wade Iverson moved to approve Timothy Terras for certified general. Carolyn Corwin seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion. The vote was Ronald Ringquist made application for certified general via reciprocity with MN. Staff reviewed the application, found that Mr. Ringquist met the requirements for certification via reciprocity and issued Mr. Ringquist a certified general permit. Board members reviewed Mr. Ringquist s application and concurred that he meets the requirements for certified general. Carolyn Corwin moved to approve Ronald Ringquist for certified general. Harvey Huber seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion. The vote was Delmar Lee Mashburn, Jr. made application for certified general via reciprocity with AZ. Staff reviewed the application, found that Mr. Mashburn met the requirements for certification via reciprocity and issued Mr. Mashburn a certified general permit. Board members reviewed Mr. Mashburn s application and concurred that he meets the requirements for certified general. Wade Iverson moved to approve Delmar Lee Mashburn for certified general. Dave Lanpher seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion. The vote was unanimous. Michael P. Hooper made application for certified residential via reciprocity with MN. Staff reviewed the application, found that Mr. Hooper met the requirements for certification via reciprocity and issued Mr. Mashburn a certified residential permit. Board members reviewed Mr. Hooper s application and concurred that he meets the requirements for certified residential. Carolyn Corwin moved to approve Michael Hooper for certified residential. Harvey Huber seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion. The vote was Eric Oberg is making application for the apprentice level. Review of Mr. Oberg s application indicates he meets the education requirements for the apprentice level. The application fee has not been received. Wade Iverson moved to approve Eric Oberg for the apprentice level pending receipt of the application fee. Carolyn Corwin seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was

2 April 10, 2012 Minutes -Page Two Education: Carolyn Corwin moved to approve the following educational offerings as continuing education, all appraisal specific: Appraisal Institute: Online 7-hour National USPAP Update Equivalent Course (7 hours) Appraising the Appraisal: Appraisal Review Residential (7 hours) Appraisal University: hour Equivalent USPAP Update Course (7 hours) Appraising Historic Property (7 hours) Practical Application of the Cost Approach (4 hours) Practices and Pitfalls for the Residential Appraiser (9 hours) Retail Center Analysis for Financing (7 hours) Site Analysis and Valuation (7 hours) Kaplan: Toxic Appraisals (3.75 hours) Wade Iverson seconded the motion. Harvey Huber, Wade Iverson, Carolyn Corwin, Dave Lanpher and Joe Ibach all voted yes to the motion. The vote was Wade Iverson moved to approve the following educational offerings as qualifying education, all appraisal specific: Appraisal Institute: Online 15-hour National USPAP Equivalent Course (15 hours) ASFMRA: Cost Approach for General Appraisers: Online (30 hours) Career WebSctool d.b.a. Cengage Learning: hour Equivalent USPAP Course (15 hours) Harvey Huber seconded the motion. Harvey Huber, Wade Iverson, Carolyn Corwin, Dave Lanpher and Joe Ibach all voted yes to the motion. The vote was unanimous. Motion carried Finances: Board members were provided the 2011 Year-End financial report, a 2012 Proposed Budget and the current income and expense information. Discussion took place. Staff was asked to leave the room as the Board discussed Management salary. Staff returned. The Proposed Budget has been revised to increase Management s salary. Harvey Huber moved to approve the 2011 Year-End financial report, the current income and expense report and the 2012 Proposed Budget as amended. Carolyn Corwin seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was Aaron Abaurrea and David Aaland joined online. Mr. Aaland questioned whether a particular statement written into a contract was legal. Board members discussed the issue with Mr. Aaland and concurred that the Board can not regulate what it written in a contract. Mr. Aaland left the meeting. Inv : Board members reviewed the complaint and response. Timeliness and communication appear to be the main issues. The appraiser accepted an assignment and did not deliver it. Based upon the information provided the Board determined there was reasonable basis to believe that the appraiser violated (g) Failed or without good cause to exercise reasonable diligence in developing, preparing and appraiser report, or communicating an appraisal. Carolyn Corwin moved to initiate disciplinary action against the appraiser. Dave Lanpher seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was

3 April 10, 2012 Minutes Page 3 In lieu of moving forward with disciplinary action, Carolyn Corwin moved to resolve the matter by offering the appraiser a settlement agreement. The provisions of the agreement to include: 1) the appraiser pay a $1000 fine within 30 days and 2) a letter of reprimand. Harvey Huber seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was Addressed In the complaint was an inquiry as to the legal rights of the complainant relative to the loss income. The Board cannot provide legal remedies. Vince Salzer joined the meeting. Inv : Board members reviewed the complaint, response, reviews and the appraiser s response to the reviews. Discussion took place. The appraiser complained upon was present for discussion. The complainant appears to have an issue with value. The Reviewer noted deficiencies/inconsistencies and a general lack of discussion in the reports. However, after reviewing the appraiser s response and further discussion with the appraiser, the Board members concurred that the appraiser addressed the concerns outlined in the complaint and the reviews. The concerns did not appear to rise to the level of disciplinary action. Harvey Huber moved to dismiss the complaint. Wade Iverson seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was Marla Seiler left the meeting. Approval of Applicant: Vince Salzer is making application for licensure and is present for discussion. Review of Mr. Salzer s application indicates he meets the education, experience points, and examination requirements for the licensed level. The reviews completed on Mr. Salzer s work product indicate various concerns. Board members discussed the concerns noted in the reviews, as well as additional concerns found by Board members. Based upon the reports not meeting minimum standards, Carolyn Corwin moved to table Vince Salzer s application for licensure and request he submit a new experience log. The log should be at a minimum of 60 days from today s date. Two additional reports will be selected from the log for formal review. Wade Iverson seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion. The vote was Vince Salzer left the meeting. Investigations: Inv : Board members reviewed and discussed the complaint and response. The complainant appears to have issues with 1) the value (the appraiser valued the property less than the purchase price) and 2) the appraiser s lack of professionalism. The appraiser provided a written response and was present via teleconference call for discussion. There appears to be a difference of opinion between the two parties relative to value. The Board members concluded that cordial communication maybe a key to resolving issues of differing opinions. Based on the information received and reviewed, there appears to be no USPAP violations. Harvey Huber moved to dismiss the complaint. Carolyn Corwin seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was unanimous. Inv : This investigation involves four appraisals completed on two different properties. Two reports were completed by the appraiser in question and two reports were completed by two different appraisers. At the meeting of January 20, the Board moved to proceed with a field review on each of the four appraisals. Each report is to be considered as a separate investigation and has been numbered accordingly: A, B, and C & D. Inv

4 April 10, 2012 Minutes Page 4 INV A: Field reviews have been completed on the Inv A & Inv B reports. Discussion began on Inv A (effective date 12/9/11). Board members discussed and concurred with the deficiencies and inconsistencies noted in the review. Some of the concerns appear to relate to geographic competency. Based on the reports not meeting minimum standards, Wade Iverson moved to initiate an investigation and request a response to the field review. Harvey Huber seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was unanimous. Inv B: Discussion turned to Inv B (effective date 12/29/11). Board members discussed and concurred with the review in that the report does meet the minimum standards. Harvey Huber moved that no further action be taken. Carolyn Corwin seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was Field reviews on Inv C and Inv D have not been completed in time to be considered. Inv : At a previous meeting the Board moved to initiate an investigation and requested the appraiser submit additional work product for review. Review of the initial report that was the basis of the complaint as well review of current work product indicate the reports are deficient relative to report writing, (noncompliant with USPAP Standards Rule 2-2B). Therefore, Carolyn Corwin moved to initiate disciplinary action against the appraiser. Harvey Huber seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was unanimous. In lieu of moving forward with disciplinary action, Harvey Huber moved to resolve the matter by offering the appraiser a settlement agreement. The provisions of the agreement to include: 1) $1500 fine to be paid within six months of executed agreement and 2) successfully complete a general report writing course of at least 15 hours. Wade Iverson seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was unanimous. Motion carried. Inv B: At a previous meeting the Board determined further investigation was warranted on Inv B and requested the appraiser provide additional work product for review for compliance with USPAP. The appraiser submitted the requested reports, the reports were reviewed and the appraiser was given the opportunity to respond to the reviews. This information was then presented to the Appraiser Board for consideration. The Board considered all the information provided. The field review on the appraiser s 2010 appraisal noted areas of concern relative to compliance with USPAP. However, review of current work product requested by the Board indicated significant improvement. Based upon all the information received and reviewed the Board found no basis to more forward with the investigation. Accordingly, Carolyn Corwin moved to dismiss the complaint. Harvey Huber seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was unanimous. Motion carried. Inv A: At a previous meeting the Board determined further investigation was warranted on Inv A and requested the appraiser provide additional work product for review for compliance with USPAP. The appraiser submitted the requested reports, the reports were reviewed and the appraiser was given the opportunity to respond to the reviews. This information was then presented to the Appraiser Board for consideration. The Board considered all the information provided. The field review on the appraiser s 2006 appraisal noted areas of concern relative to compliance with USPAP. However, review of current work product requested by the Board indicated significant improvement. Based upon all the information received and reviewed the Board found no basis to more forward with the investigation. Accordingly, Carolyn Corwin moved to dismiss the complaint. Wade Iverson seconded the motion. Wade Iverson, Carolyn Corwin,

5 April 10, 2012 Minutes Page 5 Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was unanimous. Motion carried. Inv : Board members reviewed the complaint and response to the complaint. Discussion took place. The appraiser provided a verbal opinion of value, but did not present a written report. After review and discussion of the information provided, Board members determined further information was warranted. Staff was directed to request a true copy of the work file related to the appraiser s verbal appraisal. The Board will review the additional information and make a determination. Rules and Regulations: The Board received the following written comments relative to the proposed rules: Four individuals submitted comment regarding the increase in fees: The Board discussed each comment. Based on the following reasons: 1) The initial application fee, as well as renewal fees have not been raised for over 14 years; 2) The Board is an autonomous Board with all costs of operation spread among appraisers; 3) The Board has been running on a deficit over the past five years, significantly reducing savings reserves; 4) The Board provides (and this is not required) a copy of USPAP to all active credentialed renewing appraisers every two years. It is important to note that the ND Appraiser Board is one of few states that provide a copy of USPAP to all state active credentialed appraisers. If the Board did not provide USPAP, the cost to purchase a copy from the Appraisal Foundation would be $75; and 5) The Board has been sponsoring education to help offset operating costs. With the exception of the USPAP Update course, the supervisory/trainee course, and perhaps other specialized education, the Board would like to turn the sponsorship of continuing education in ND over to the ND appraiser associations; the Board chose not to amend the rules relative to fees. Harvey Huber moved to make no changes to the Rules relative to fees. Carolyn Corwin seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was The following comments were received from Mr. Jim Parks, Executive Director on behalf of the Appraisal Subcommittee: 1. N.D. Admin. Code , 6, 7 and allow a licensed level appraiser to supervise an apprentice. Please be advised that as of July 1, 2013, the ASC will begin monitoring State Programs for compliance with the Dodd-Frank Act requirement that any minimum qualification requirements established by a State for individuals in the position of trainee appraiser and supervisory appraiser must meet or exceed the minimum Appraiser Qualifications Board (AQB) Criteria. ASC staff will work with States to evaluate designations such as registered appraiser, apprentice appraiser, provisional appraiser, or any other similar designation to determine if, in fact, the designation should be trainee appraiser and therefore administered to comply with Title XI requirement. The Board determined that the rules do meet the minimum requirements as established by the Appraisal Qualifications Board and therefore, no further changes were required. 2. N.D. Admin. Code d. (5); , 5. g. (5); g. (5); and g. (5) do not require actual work hours for verification of experience credit claimed. AQB Criteria requires that verification of experience credit claimed by the number of actual work hours. The regulation could specify a not to exceed number of allowable hours for a particular appraisal assignment. The Board considered and further amended the rules to clarify that the Board will set a maximum number of hours an applicant can claim for each assignment. 3. N.D. Admin. Code requires issuing a reciprocal credential to an application who is credentialed in good standing by another State if the State s current requirements for credentialing are at least substantially equivalent to the current requirements imposed by North Dakota. Please be advised that effective July 1, 2013, States will be monitored for compliance with the amendment to Title XI concerning reciprocity. The reciprocity policy that States should have in place by July 1, 2013, will require, at the very least, that a State issue a reciprocal credential if: (1) the appraiser holds a valid credential from that State and the credentialing requirements of that State meet or exceed those of the reciprocal credentialing State. A State may not impose additional impediments to issuance of reciprocal credentials. A State may be more lenient in the issuance of reciprocal credentials (a more open door policy). Therefore, the rule as applied must not require more of an applicant than is allowed by the required policy. Other requirements in , such as grounds for denial under North Dakota Century Code section , or certification that disciplinary proceedings are not pending, or requiring work product if the

6 April 10, 2012 Minutes Page 6 applicant has a history of disciplinary action may only be required of the applicant if those are requirements the State imposes on its own applicants for credentialing. The Board determined that the rules and Board policy are no more stringent for an applicant making application via reciprocity than that of a ND resident making full application. Therefore, the Board determined no changes were required. 4. N.D. Admin. Code m. states that three hours of continuing education credit, per continuing education cycle, may be granted for attendance at a face-to-face meeting with the board and that the attendee must attend the meeting in its entirety. To comply with the AQB Criteria, the rule must also require that the Board meeting be at least three hours in length. The Board agreed to further amend the rules to require Board meetings be at least 3 hours in length before an attendee can receive continuing education credit for attendance. Discussion concluded. Wade Iverson moved to amend the Rules to address #2 and #4 of Mr. Parks' comments; no changes will be made relative to #1 and #3 at this time. Carolyn Corwin seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was Mr. Dan Van Winkle of First Class Mortgage provided the following comment: Prior to HVCC and now AIR appraisals in our area ranged from $300 to $450. Since that May 1st, 2009 timeframe we've seen appraisals are now starting at the $450 range and we've seen them as high as $1500. When we've contacted the AMC's they say the appraisers are jacking up the prices but when we talk to the local appraisers they are stating the AMC's are inflating the prices so they can increase their fee income. After attending a seminar in Florida I was made aware of what the state of Illinois is now requiring of their appraisers. They require all appraisers to list on the appraisal what they were paid for a fee. The State of Illinois wanted to have the breakout of the fees on the HUD but they found that that process would take too long to get implemented. So, my suggestion for the board would be to consider amending their guidelines so it requires the appraisers to list the fees that they were paid for the appraisal. I think that benefits the customers by forcing the appraisers and AMC companies to come clean with what they are truly charging the customer. Everyone else in the mortgage process has to disclose their fees...mortgage lenders, title companies, and now is our opportunity to find out who is truly gouging the customers. The Board discussed the above comment received from Mr. Van Winkle and agreed to consider this issue when drafting legislation regarding Appraisal Management Companies (AMC s) to be introduced by the Board in the 2013 Legislative Session. Wade Iverson moved not to make any change to the Rules relative to Mr. Van Winkle s request for listing of fees. This issue will be considered as the AMC Legislation is drafting. Dave Lanpher moved to adopt the Rules as amended. Harvey Huber seconded the motion. Wade Iverson, Carolyn Corwin, Harvey Huber, Dave Lanpher and Joe Ibach all voted yes to the motion, the vote was Legal Counsel was directed to move forward with final stages in the rulemaking process. Chairperson Ibach called for adjournment. Respectfully submitted, Jodie R. Campbell, Executive Secretary

Vol. 4, No. 1 June 2012

Vol. 4, No. 1 June 2012 Appraiser Qualifications Board Q&A The Appraiser Qualifications Board (AQB) of The Appraisal Foundation establishes the minimum education, experience and examination requirements for real property appraisers