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Appraiser Certificate Really the Cat's Meow

October 14, 1990|H. W. MOSS | Moss is a San Francisco-based writer.

Toby the cat is free after more than two years of legal wrangling across three states that has cost his master, Rhode Island appraiser Roy Schaeffer, $70,000 in legal fees.

Schaeffer created a ruckus after a national organization granted Tobias F. Schaeffer, his neutered male cat, the special designation of Certified Real Estate Appraiser (CREA). The cat received the designation as a certified professional after Schaeffer sent a $75 application fee to the organization.

The organization, the National Assn. of Real Estate Appraisers (NAREA), sued Schaeffer, charging him with making disparaging remarks about the organization to members of Congress, other appraisers and the media.

"I feel good, though it's been expensive," Schaeffer said. "The judge agreed with me that the NAREA is nothing but a diploma mill. They issue memberships and certificates for the payment of a fee," he said.

Schaeffer also has the satisfaction of knowing Toby may be the last cat to be certified to appraise real property in this country. Regulation has finally come to the industry as part of the savings and loan bailout President Bush signed into law more than a year ago.

By July 1, 1991, all states must have a licensing and certification process in place if they are to continue receiving federally related loans. In California that includes virtually 90% of all real estate transactions, according to one industry analyst.

The story of Toby's day in court may be humorous, but his certification goes to the heart of a problem dogging the savings and loan industry.

"I feel I contributed something toward the drive for professionalism in the industry," said Schaeffer, who has not received any economic assistance for Toby's defense.

"As the judge said, the industry is very lax in its certification procedures. There was no consistent pattern, and such a wide, wide range of quality between appraisers. I think that will improve."

Schaeffer brought Toby's unearned credentials to the attention of Rep. Doug Barnard Jr., (D-Ga.) who at the time was formulating the savings and loan bailout bill.

Schaeffer has both the Member Appraisal Institute (MAI) designation, awarded by the American Institute of Real Estate Appraisers (AIREA), and the Senior Real Property Appraiser (SRPA) designation from the Society of Real Estate Appraisers (SREA). He earned these after meeting the groups' strict educational and testing standards.

Appraisers have never been licensed in California, but that will change in January because Gov. Deukmejian signed an appraiser licensing law on Aug. 10. The bill creates an office of real estate appraisers within the Business, Transportation and Housing Agency with a director to be appointed by the new governor.

"The new director will have to draft regulations to implement the program," said Ann Eowan, deputy secretary in that agency. "We're doing our best to assist the new governor's transition team, but the actual requirements won't be forthcoming until after January."

More than 40 states now have some appraisal regulations, according to Debbie Geary, legislative researcher for the SREA. A few states, like Pennsylvania, have bills on their governor's desks, she said, while Michigan, Massachusetts and Rhode Island legislators are still in session.

The federal deadline for implementing this legislation is July 1, 1991, which many believe is a tall order for the states to meet. States may apply for a six-month extension if they can show they have made substantial progress establishing a system that conforms with the provisions of Title XI of the Federal Institutions Recovery and Enforcement Act (FIRRA), also known as the Barnard Bill.

Appraisers play a crucial role in real estate deals. They inspect properties and use other techniques to determine value. Banks, thrifts and other lenders use the appraiser's professional opinion to help decide how much they will lend on the property.

Setting out to get appraisers licensed was not his goal, said Schaeffer, a principal with the appraisal firm of Schaeffer, Bates, McDonough Inc. He merely wanted to prove to his staff how easy it was to become a certified professional in the appraisal business.

In September, 1986, he filled out an application in his cat's name and mailed it with the fee to NAREA. Toby soon received his own CREA designation, a membership certificate suitable for framing, congratulatory letters from the owner, Robert G. Johnson, and managing director, Kenneth Twichell, along with the suggestion that Toby bone up on the appraisal business by taking courses offered by the NAREA.

Toby's certification by CREA, which is recognized by numerous lenders, was later withdrawn, however, when remarks his master made became public. Schaeffer referred to the Scottsdale, Ariz.-based organization "as a diploma or certification mill," which prompted Johnson's wrath.

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