End of a business and a business model

The licenses of the founders and principals of one of NYC’s largest real estate appraisal companies MMJ (including Riverside resident and the owner of a new brokerage firm here in Greenwich, Jeffrey Jackson), have been revoked as the result of an administrative judge’s finding of fraud.

The outline of the dispute and the status of real estate   is here.

At the market’s peak, the appraisal firm Mitchell, Maxwell & Jackson was one of the most dominant in New York City. And one supervising appraiser, Marianne Mueller, stood out as MMJ’s most successful employee, according to the heads of the firm.

Then the recession hit, and relations between Mueller and MMJ soured, too.

The case, which The Real Deal first reported online, resulted in an administrative court judge ruling to pull the licenses of MMJ’s founders — Steven Knobel and Jeffrey Jackson — effective Feb. 1. But that harsh measure has been put on hold pending the founders’ appeal. [Now upheld ]

The bone of contention in that case: Mueller’s electronic signature. She accused MMJ of signing her name to 14 appraisals that she insists she never saw. MMJ eventually fired Mueller, who had climbed to executive vice president, and she filed a complaint with the New York Department of State, which regulates appraisal firms.

At a Dec. 27 administrative law hearing, a judge ruled in her favor, determining that Knobel and Jackson knew that their other employees were affixing Mueller’s electronic signature to the appraisals, all conducted in 2009. That’s when he ruled to pull Knobel and Jackson’s licenses — an action that sources say is virtually unheard of.

MMJ appealed the judge’s order. In January, a senior DOS official granted a stay to the firm, noting that the judge mistakenly used a test applicable to only brokers. (Brokerage firms are responsible for the conduct of their employees; appraisers, though, are not.)


Knobel and Jackson deny any wrongdoing. “[Mueller] tells different sets of stories, convincingly,” said Knobel in a sit-down interview with TRD last month. “But so did the people in the witch trials in Salem. And people got burned for it.”

Knobel and Jackson launched MMJ in 1991 and, by all accounts, saw their firm soar. “Every time I would do a closing, they seemed to be the appraisers,” said real estate attorney Adam Leitman Bailey.

By 2008, MMJ was one of Manhattan’s eminent appraisal firms.

“They went from a handful of appraisers to near 100 people,” said Jonathan Miller, who runs real estate analytics company Miller Samuel, which competes with MMJ.

Only two years later, though, MMJ’s client list, once about 3,000 strong, had dwindled to about 50, Knobel said. And many of the firm’s appraisers, most of whom weren’t salaried, walked out the door, too, when the business dwindled.


Many blame the housing crash on appraisal firms, contending they helped inflate real estate prices through their cozy relationship with mortgage brokers.

MMJ was never accused specifically of malfeasance, but industry sources told TRD that the firm relied heavily on mortgage broker clients and filled out appraisal forms with breakneck speed.

“They had people doing 40 appraisals a week,” said a fellow appraiser, who asked not to be named. That pace, the source said, was simply unrealistic; the appraisal form for a Fannie Mae home, for example, includes more than 800 questions.

Knobel acknowledged that a handful of appraisers might have completed dozens of forms — but only rarely. “And say you do [unit] 3B [in a particular building] and you get an order for 4B — how many of those fields do you have to redo?”

Miller did not point specifically to MMJ, but generally described his high-volume competitors during the boom years as “deal enablers.”

“They would mushroom in size and work mostly for mortgage brokers,” he said.

The real estate downturn, though, isn’t the only reason why appraisers hit the skids. It was a regulation that went into effect in 2009.

As TRD and others have reported, the Home Valuation Code of Conduct — called “havoc” by appraisers — strongly encourages the use of third parties called appraisal management companies, who dole out appraisal assignments instead of brokers and bankers. The intent of the regulation was to create a firewall between the lender and the appraiser, preventing mortgage brokers from dictating, or trying to dictate, appraisal values.

“[The change] destroyed the mortgage broker world and the traditional appraisal world,” one source said.

Knobel agrees: “The appraisal business is dead, and I will be the first to put a tombstone on it.”


Regardless of the outcome, there’s one thing perhaps all parties can agree on: The future is not very bright for appraisers.

Appraisals in New York now net between $600 and $700 each, and the appraiser gets a third to a half of that sum, according to a prominent Manhattan appraiser who asked not to be named. “What are you getting for that price?” he asked.

Hardly anything, is what one industry expert thinks.

“Meeting a minimal standard is all that matters,” said Larry Sicular, founder of Sicular & Associates, a Manhattan-based brokerage and appraisal firm.


Filed under Uncategorized

18 responses to “End of a business and a business model

  1. How ’bout guy who rigged Calf Island appraisal ?
    Is he still doing jail time ?

  2. Mickster

    This happened everywhere back in the day – mortgage brokers telling appraisers what number they needed and appraisers meeting that….it was fraud but the whole system was rigged.

    • Yes, one of MMJ’s competitors said as much in the TRD article but the “everyone’s doing it” defense rarely works in a court of law.

      • anon

        the “everyone is doing it” defense does work to a certain degree, in the sense that it temporarily obfuscates the issue. just ask any obama water carrier.

        • I was going to point out exactly that, but decided to stick to the real estate issue, just this once. But you are indeed right, as Dollar Bill, Fudrucker and most recently, Democrat “Patriot” demonstrate, all the time.

        • AJ

          It may work when you’re giving press conferences or interviews on CNN, but in court, bullshit seldom cuts it. That is, of course, unless you’re someone truly talented like Bruce Cutler or someone handling gas station tax swindles in Maine.

  3. Anonymous

    Its pretty sad that the only reason this was exposed was an internal dispute—certainly not any regulator or watch dog in the industry.

  4. infoDiva

    Remember the days of the ‘drive-by appraisal’? I experienced two of those back in the 1990s here in town. My buyer’s mortgage was approved each time and the appraiser never set foot in the house.

    • In fairness, appraisers are comparing your house to others that have recently sold, and since they can’t get into those, the interior of your house is more or less irrelevant. That neato man cave you built for hubby, replete with cigar bar and porn collection? Doesn’t matter.

  5. anon

    One only has to look back thirteen years to the same crooked idea but in the art world – who doesn’t remember the juicy Christie’s and Sotheby’s debacle. Lots of “everyone is doing it” testimony heard there too. A quick look at “where are they now”, the top participants in that price-fixing mess are just fine and dandy: DeDe Brooks got that little ankle bracelet off and is playing golf in Hobe Sound like nothing happened. Friends circling around her as if she were not a crook. Kind of like the Noel linger-on’ers. François Pinault is busy siring babies with famous actresses. I repeat: the “everyone is doing it” defense WORKS.
    I just wonder why Martha Stewart didn’t employ it. For her to get as much jail time as she did was ludicrous compared to her crime, and the crime of the people listed in your story.

    • Mickster

      I could never understand the Martha Stewart sentence – ridiculous. I can’t stand the woman but the sentence…it may have been that she lied to the Feds..in fact I think that was the MAJOR issue – not the insider stuff

      • Just_looking

        Yes, that she lied and made them look bad, and they just did not like her, her attitude, the way she carried herself and the way she spoke.

  6. How wrong were the appraisers in their actual pricing? If a house comes on the market for $900,000 and five people line up willing to pay $1,000,000 then at that point I time it’s worth $1,000,000. Appraisers are told the purchasing price before they do the appraisal, which I never did understand. Appraisers are also six months behind because they use old data. The appraisers that are coming out to appraise, now that there is a so called management company skimming off their fees, are inferior. The ones that I have met are a joke.

    • Mickster

      Too true. Glad to see your injured finger is healed. You might use it to pick up the phone and return my call..huh..lol?


      They aren’t inferior- probably just old and tired of the shit. Noone new coming into the business.They need the same or more credentials from
      the licencing board. What are your crediantials? Old data is because of the City, County etc and in case you didn’t notice, nothing has been appreciating lately. .

  7. Is MMJ still licensed and legal in CT?
    They had an office here but I think it’s gone.

  8. Anonymous

    i’ve gone through 3 appraisals in past year or so on different properties. irrespective of the values (which were neither “good” nor “bad” for my purposes, since i was largely value indifferent), 1 was good (as in very comprehensive & well done), 1 was ok, and 1 was a joke (person had almost no idea what she was doing, other than being able to count the # of bedrooms).


      Wonder how she got her licence? Noone that stupid would make it. Are you sure you aren’t the one that is a joke. What a world. People that know nothing are so anxious to put other hard working people down when they don’t know what they are talking about OR don’t get what they want. Like babies.