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Contact: Jeremy Bagott, MAI, AI-GRS
Tel: 805-794-0555
email: jbagott@gmail.com
VENTURA, Calif. (May 12, 2023) – An astute real estate broker recognized the name of a Michigan man awaiting sentencing in an armored-car robbery. The latter had been engaged by one of six companies authorized by mortgage giant Fannie Mae to dispatch so-called “data collectors” to borrowers’ homes. The broker alerted the bank and the National Association of Realtors. New, progressive laws designed to conceal felony convictions from employers, combined with a recent policy decision by Fannie Mae and Freddie Mac that authorizes the use of low-paid, unlicensed “home data collectors” to replace state-licensed appraisers, all but guarantees more such incidents.
In California, state Senate Bill 731 – a so-called clean-slate law – will take effect in July. The law dramatically expands eligibility for those with felony convictions to have their criminal records sealed or expunged, meaning those records can no longer be accessed by potential employers. In New York State, Assembly Speaker Carl Heastie promised to consider a similar clean-slate bill before the end of session in mid-June.
States with broad felony and misdemeanor sealing and expungement, according to the Restoration of Rights Project, are Arizona, Arkansas, Colorado, Illinois, Indiana, Kansas, Massachusetts, Michigan, Nevada, New Hampshire, New Mexico, North Dakota and Washington. Many more states offer what is called “limited felony and misdemeanor relief.”
Vermont has had an expungement process since 2011. It removes arrests or convictions from a person’s criminal record as if it never happened. Opponents of such laws question whether sealing the records of criminal convictions is safe for America’s workplaces.
Combine the trend to seal the records of felons with the push by mortgage giants Fannie Mae and Freddie Mac to replace many of the nation’s 80,000 heavily regulated state-licensed appraisers with a combination of computer algorithms – known as “black box appraisals” – and unlicensed human inspectors called “property data collectors.” The data collection process, according to Fannie Mae, entails a full interior and exterior inspection of the borrower’s home.
In a recent presentation, Veterans Administration Chief Appraiser James Heaslet revealed that one of the six companies recently contracted with Fannie Mae to replace or augment appraisers had engaged an individual with an armed-robbery conviction as a home “videographer.”
Paschal Uchendu, 27, of Mason, Michigan, was reportedly awaiting sentencing and out on bail, having pleaded guilty to bank larceny. He and two other men were facing up to ten years in prison, up to three years of supervised release, and fines in excess of $250,000. Looking to earn a few bucks until his sentencing on March 8, 2023, he was reportedly approved by a company called Class Valuations to enter borrowers’ homes to perform various tasks.
Heaslet, a retired Marine Gunnery Sergeant, is skeptical about the use of non-appraisers to enter homes. “The veteran always comes first,” he said. “The VA is always concerned about the protection of our veterans, about who goes into veterans’ homes.”
As of this writing, the VA only allows licensed or certified appraisers or, where applicable, licensed trainees to perform interior inspections of veterans’ homes. The idea of unlicensed individuals being hired off the streets and paid a pittance to video and photograph the interiors of borrowers’ homes, which would include the exact location of valuables and children’s bedrooms, has been unsettling to some.
Leigh Brown, a real estate broker, video-blogger and coach based in Charlotte, North Carolina, questions whether borrowers should let property data collectors into their homes at all.
“We’re getting these emails that for $50, $60 [or] $75, they’ll pay you to walk into a house [and] do an inspection without a license,” she said. “The data collectors aren’t under a regulatory body. As a consumer, do you want them in your house? They might all have great intentions. They might all be honorable people, but I’m a bit of a skeptic. I just don’t know who they are.”
In the Michigan armored-truck heist, it was reported that a real estate agent in the Grand Rapids area recognized the man’s name from local news accounts and flagged him to the lender and the National Association of Realtors.
“I’m not a fan of heavy regulation, but regulation has its place,” said Brown. “This is crazy. Why in the world are our institutions trying to get rid of certified appraisers? There’s too much power getting consolidated into the hands of big banks.”
John Dingeman, chief appraiser at Class Valuation, LLC, the company that engaged Uchendu, contends the property data collector – called “scanners” internally at his company – had not yet been convicted when his company engaged the man and thus would not have been on any criminal database.
“Class takes these allegations seriously,” he wrote on an appraiser bulletin board, “and we wanted to take the opportunity to provide clarity. We have a standard protocol where all scanners are background-checked. As you are aware, a background check will reveal all convictions. However they will not reveal pending matters. The scanner at hand had a pending criminal matter that was not revealed in the background check. As soon as Class became aware of this matter, the scanner was removed from our panel prior to completing any services.”
According to the Veterans Administration, Uchendu had already been convicted in the theft of $1.2 million while being approved to work for the company as a property data collector.
Many business leaders, including those with banks, have applauded the wave of clean-slate laws being passed by the states.
Nan Gibson, executive director of the JPMorgan Chase PolicyCenter, said in written testimony to the New York legislature in early 2022. “By reducing barriers to employment for those with criminal records, we will be able to get more people back to work more quickly.”
The nation’s borrowers, brokers and sidelined appraisers have been less upbeat about the expungements.
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Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.
Author. Coach. Keynote speaker. Leigh Brown is laser-focused on inspiring real estate agents to break through and Just Say Hi!
