DANGER OF ZAIO Corporation

Zone Appraisal & Imaging Operations

they're building a better AVM - and/or a better pyramid scheme
 

Zaio Ceases Operations, Cites Market Conditions
By: PAUL JACKSON
October 30, 2008

And the real estate crunch continues to roll onward — but this time, it’s claimed the first collateral valuation provider, rather than a lender. Calgary-based Zaio Corp. said Thursday that it had “ceased operations” at Zaio Inc., its U.S.-based subsidiary that had been aggressively pushing its way into the real estate valuation and appraisal business in the States. The firm’s closing is immediate, and the company will begin selling off assets to fulfill payments to creditors, company officials said in a press statement.

All employees at the firm have lost their jobs, as well; the closure came as a shock to many, given Zaio’s presence at the recently-completed Mortgage Bankers Association annual conference in San Francisco.

The holding company, based in Canada, said it will look to “preserve capital and weather the current economic climate,” and that it would “redeploy its rollout strategy at a more favourable time in the economic cycle.”

Both James Kirchmeyer and Douglas Vincent have resigned from Zaio Corp.’s board of directors, as a result — Kirchmeyer re-assumed all of his prior assets sold to the firm when he joined the company from his own national appraisal management business, in a $3.2 million asset sale a few weeks ago that raised more than a few eyebrows at the time (including here at HW, which covered the transaction).

The surprise closure may likely leave more than a few appraisers — who paid the company to manage a so-called “appraisal zone” — in the lurch for the funds they paid to Zaio, as the company sells its U.S. assets to satisfy creditors. Officials at the Canadian-based parent company were not available for comment before this story was published. Finish reading the above article at:  Housingwire.com

ZAIO's intent is to come up with a more accurate automated valuation database that includes photographs of the exterior of each residential property in the U.S.   They want appraisers themselves to provide these pictures, along with a written description of the home(s) and neighborhoods they're in; so that ZAIO can gain leverage with lenders by telling them an actual experienced and licensed appraiser provided this information. 

Any appraiser who provides data that will be used by these Automated Valuations is cutting their own throats, and the throats of their fellow appraisers.  They are virtually guaranteeing that they themselves will probably see their appraisal workload cut in half (or more) in the future.  Cooperating in any way with AVM data providers is like one step forward and two steps back.  This includes those appraisers who have been sending data via the Appraisal Institute's "appraisalport". 

Any thinking person can see that a major cause of the subprime market meltdown, and the billions in losses lenders just took, was primarily do to lender use of these faulty "fuzzy logic" AVM modules, desktop loans and driveby appraisals.  My guess is that the rampant use of AVM's will go on hold for at least a while - which does not bode well for those who bought in to ZAIO's "scheme".

One appraiser got it right about ZAIO's scheme.  He said;

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