Featured news — posted April 12, 2005

In a perfect world, where appraisers and mortgage brokers skipped down the street together handing daisies out to passers by, collections wouldn't be an issue. "Collections" would in fact mean stamps, or Beanie Babies, or maybe your prized full catalog of James Taylor LPs.

But collections are a problem in any business, especially in yours. You're an independent contractor in a world of many such vendors, almost none of whom can derail a loan and get the person who's supposed to be paying upset enough to sit on an invoice.

This week of all weeks, get out all your unpaid invoices, and put the ones that are lost causes into a pile. Consult with your tax professional and figure out if some of them can be written off as losses. You may get a bigger refund.

For the ones that aren't yet dead, develop a strategy. Take the ones that aren't dead in the water but that you have stopped collections on. (Ask your tax adviser if even these might be worth more to you as tax writeoffs — that is, if they should go in your first pile.) Call them. Yes, call, don't write, don't e-mail. Follow up the phone call with a letter and a new invoice, adding accrued interest. You do this so that when you eventually agree to take a lower amount, you hopefully haven't lost anything.

You've probably stopped contacting them because you're too busy. Fair enough. Task someone in your office with making the calls. Offer to share a percentage of whatever they collect. Collection agencies are good ideas for some businesses, but do tend to charge more than you'll get away with offering that support person in your office. Collection agencies tend to pick the low hanging fruit, too. Also, they won't be able to promptly and authoritatively answer questions (stalling tactics, maybe), especially of a technical nature that someone in your office will.

The point is they're not going to ever pay if they haven't yet and you've stopped asking or telling them to.

Among your unpaid invoices there will also be a number that aren't quite so overdue that you've given up. Call and make sure the right person has the invoice. Send a new one, getting a name, if they say they don't. Ask if a discount will get the bill paid more quickly, say within 10 days. (Don't go overboard and offer half off!) Keep records of all this correspondence and conversation.

Two things that can make collections ten times easier are XSellerate and Enterprise level XSites with credit card processing. XSellerate offers pre-written collection letters, and the ability to automatically schedule them. If you said "I don't have anyone else in the office but me!" when we suggested hiring someone in your office to help you with collections legwork above, you should particularly look into XSellerate.

Enterprise level XSite owners already have XSellerate bundled in. If you haven't broken it out yet, while you're thinking about outstanding invoices and collections is a great time to do so.

Credit card processing from your XSite is a great collections tool. For XSites, we partnered with a bank we have known for years, Kirkpatrick Bank, to provide merchant account services to our customers and streamlined the application process between you and the bank. We pay the $50 application fee to get you a merchant account and seamlessly integrate the application process into your XSite. Just fill out the form and DirectFax it back. This is a real plus, because anywhere else you would have to go to the bank to apply for the merchant account and go to a third party vendor for the shopping cart integration. We do it all in one place — for free.

Your cost to accept credit cards through your XSite is limited to a 3.3 percent "discount fee" — that is, 3.3 percent of each transaction — and $5.85 a month to for account maintenance, both costs paid directly to the bank. (You don't pay us anything other than your annual XSite fee — you don't even pay us back for the $50 application fee!) For that you get the ability to bypass checks, and promises that checks are in the mail.

And the ability to accept credit card payments will help you avoid collections in the first place, by getting your invoices paid promptly and smoothly. Since we know how appraisers work, we made the XSites "shopping cart" fit your needs. You can charge cards directly from an XSite order. The charge automatically is tracked in the order details so you will have a permanent history of everything that happened with that order. You can charge one of your customer's credit cards even if you're not in your office. From any computer, just log into your XSite's Admin functions. To top it all off, we've even given you access to a shopping cart from your mobile device! Who needs the ability to charge cards on the run more than you do?

Take the time while you have to be thinking about your income and expenses for the year anyway to clean up your outstanding accounts. And think about investing in an Enterprise XSite and XSellerate, to make the process more painless next year.

We're flipping the switch today (if it were only that simple!) and transitioning the Mercury Network over to our XSites Network system. This is going to mean some very positive changes.

As the name implies, the new network is centered on XSites owners. Each Appraiser XSite "plugs in" to the XSites Network backend, but shows the world your company, your brand identity. Clients will find you and order online directly from your site — not from a catch-all "directory" site that overlaps and maybe even overshadows your business identity.

Also, now that we have many thousands of Agent XSites, Inspector XSites, and Mortgage XSites users, we’ll be tying together the entire XSites family over time. You’ll be able to interact with other non-appraiser XSite owners, prospect for new business, and share XSites content across the industry. It’s an exciting time.

Some of the improvements you'll see:

	The junk and test accounts will be removed and the quality of the directory listings will be improved by listing only real XSites users.
	There won’t be a way to trick the system to boost your ranking. Listings in each county will be sorted on a seniority basis rather than on the basis of volume. Those appraisers who signed up for XSites from us earliest will be at the top.
	To eliminate the issue of appraisers listing themselves in every county in the U.S., we’ll be restricting geographic coverage to one free state per XSite. (Plus, “Elite” users get an additional state automatically.) More states can be purchased for $99 each.

While the "migration" to the new network is occurring right now, the geographical restrictions will be phased in over time.

The XSites Network is part of a long line of our ever-improving Internet solutions — from Project 2000 in 1997, to eDomina, to Mercury, and now to the XSites Network. Mercury and our marketing of it to the lender community “primed the pump” for online appraisal ordering, by creating a stronger presence for appraisers nationwide. And its revolutionary workflow engine with its “plugins” enabled national and local clients to go straight to you without management company fees being taken from you. Nearly 20,000,000 appraisals a year are handled by the network’s servers, and that number will only grow now. Without Mercury as the forerunner, it would have been impossible for XSites to have succeeded so rapidly as well.

We’ll send XSites owners and Mercury Network users specific transition instructions soon. Don’t worry – it’s nothing difficult.

Client pressure is arguably the biggest issue residential appraisers face. The recent Responsible Lending Act, bill H.R.1295, introduced in the House of Representatives last month (see our March 29 item), includes some marginal steps to curb it. We are enthused that a predatory lending and mortgage fraud bill covers client pressure on appraisers at all, and advocates deserve praise for getting a foot in the door.

But it's more of the same. The Responsible Lending Act's appraiser sections won't stop the often subtle pressure to hit the number on behalf of unscrupulous originators and their agents, because subtle pressure isn't covered. Tougher language and more effective actions are necessary.

Coverage of client pressure issues has relied on surveys tending to show that a majority of appraisers have felt pressure to hit a number. That's deplorable. But the problem is more prevalent than that, by far. And what's worse, the extent of the problem is unreachable by the Responsible Lending Act. Let us explain.

The bill doesn't just say "client pressure is forbidden," because laws have to be written in, well, legalese. The bill prohibits improperly influencing "through coercion, extortion, or bribery, the development, reporting, result, or review of a real estate appraisal."

Pete Mills, a senior vice president for legislative and regulatory affairs for Countrywide Financial Corp., told American Banker his company insisted on the addition of the words "coercion, extortion, or bribery," explaining to the publication that doing so would stave off "frivolous litigation."

This is a smart and predictable move by the largest mortgage originator in the country. Those three things should be outlawed, and those whose interest is in making sure their people comply with the anti-pressure measure should be expected to try to narrow the definition of pressure.

But we, and you, know that most pressure isn't outright coercion or bribery. The issue has been framed that way because the mortgage origination market is huge and the universe of appraisers comparatively tiny. And appraisers don't have an effective national advocate, at least compared to million-strong trade groups such as real estate agents have, or a Fortune 200 company in an area that's propped up the national economy in recent years.

Trouble getting paid, losing future business, and blacklisting probably do not amount to "coercion, extortion or bribery." Certainly, asking beforehand whether you can hit a number, and your not getting the assignment if you refuse, isn't those things. And therein lies the problem with the bill.

The only effective curb on client pressure would be forbidding a party with a commission or other stake in the closing of the loan from ordering the appraisal. But as Steve O'Connor, a Vice President of government affairs with the Mortgage Bankers Association, told American Banker, the question for lenders is "Do you need that if you have strong enforcement and a competent appraiser, or does it create additional burdens affecting the mechanics of transactions?"

With the more numerous and powerful bloc between appraisers and lenders having an incentive to narrow any bar on client pressure, the Responsible Lending Act is what you get. It remains to the appraiser to stand up to the more prevalent, subtle pressure — something you do every day. This new law won't change that, unfortunately.