When reviewing complaints submitted to the Division, or when taking calls from people who are upset about an appraisal, I often observe that a good portion of the concern expressed is from a lack of response from the appraiser. Specifically, this occurs when the appraiser will not address “issues” the person has with the appraisal and/or appraiser.
Having a third party call to discuss an appraisal report creates a difficult dilemma for an appraiser. Under USPAP’s Ethics Rule – Confidentiality, the part relevant to this discussion states “[a]n appraiser must not disclose: (1) Confidential information; or (2) assignment results to anyone other than…the client… (or) persons specifically authorized by the client”.
The obligation to maintain client confidentiality is often unknown to the caller/complainant, and quite often the caller/complainant paid the appraisal fee so they view themselves as the client.
The question I would ask is this: What is the best appraisal practice to appropriately handle an inquiry concerning an appraisal you performed from someone who is not your client?
An option, which some appraisers seem to take, (more…)
First, it is gratifying to know you are actually reading what we write and release. We know this is true because a little over a year ago, we received very few questions about subpoenas and today, after writing a little warning piece on the now infamous FDIC subpoenas being issued to appraisers by a private law firm, we get lots of questions. In fact, we get so many we decided to put together a short follow-up piece on different kinds of subpoenas and how to handle them. These are presented in ascending order of concern with the final one being the most dangerous. All are court orders and none of them can simply be ignored…unless you also want to learn about motions to compel and sanctions.
1. Fact witness subpoenas (aka subpoena ad testificandum):
This subpoena is issued to request you to appear as a fact witness at either a deposition or a trial. As long as you are only being asked to deliver testimony about factual issues, there is no reason to get your (more…)
In last month’s edition of the AppraisalPort newsletter, I covered some of the appraisal guidelines that were discussed at the National AI Connect Conference in Indianapolis, July 23-25, 2013. This month, I want to discuss another session that dealt with mortgage fraud. I learned a lot about how people are trying to get rich through fraud in this very interesting breakout session.
The session, “Residential Mortgage Fraud Enforcement: Trends and Identifying Schemes,” included presentations from Housing and Urban Development’s (HUD) Special Agent Eric Mascari, Interthinx’s Ann Fulmer, and Gary Crabtree, SRA, owner of Affiliated Appraisers.
The session focused on the small group of people from all sides of the real estate mortgage industry that try to pull off some very bold, and illegal, transactions. The group discussed many types of fraud. Some types involved an appraiser, who was part of the scam, but most types don’t directly involve an appraiser in the scam, although the appraiser may unknowingly become part of it. In most cases, these unwitting appraisers do not have any action taken against them, but it is good to be aware of the scams and their warning signs. (more…)
One of the aspects I love most about appraising is that every day is different. I inspect an average of 3.25 houses per day. Since every house is different, every day is unique. Despite the variety we enjoy, I have also recognized that, though the setting varies each time, there is some repetition. Specifically, the questions we get from borrowers seem to be similar over and over again.
One of the best lessons I have learned as a businessman is that, if there are any processes which are often repeated, developing a system for handling them will allow you to increase efficiency. This is true with answering questions that come up regularly. The following is a list of some questions (and my answers) I get most often from borrowers about appraisals and appraisal inspections:
“Do you need any help?”
Though by asking this question they are just trying to be nice, I am an introvert by nature and I really do not like the borrower peering over my shoulder through the entire inspection. Therefore, I can usually circumvent the question through my greeting. After introducing myself and telling them how the inspection will proceed, I always add “Now, I’ll try to stay (more…)
Appraisal Advisor is completely free for appraisers from here on out. They will not be charging appraisers anything to rate and review clients, and appraisers won’t be charged to view other appraisers’ reviews either.
The OCC is now requiring that lenders “assess the third party’s reputation, including history of customer complaints or litigation,” and “assess the third party’s financial condition.”
What does this mean for appraisers? It means that lenders are required to listen to what you’re saying about AMCs based on your scores, the invoices, reviews, and fees (more…)
Last Thursday, November 14, Navigators Insurance Company sued two more appraisers to enforce “regulatory claims” exclusions in the E&O policies they purchased. These appraisers are in Nevada. Like the appraiser sued by Navigators in Florida on November 6, the Nevada appraisers are being sued by the FDIC for professional negligence in cases filed about a year ago. The objective of Navigators’ lawsuits is to seek court confirmation of Navigators’ legal position that there is no coverage under Navigators’ policy for damages awarded against the appraisers to the FDIC, which is demanding about $500,000 from each appraiser, or any coverage for attorneys’ fees and costs to defend the cases beyond $100,000. The FDIC’s lawsuits against the Nevada appraisers are both scheduled to be ready for trial in December; as a result, the appraisers now each have two lawsuits they must defend: the FDIC’s case and Navigators’ case regarding the insurance coverage. One of the latest lawsuits can be found at this link on www.appraiserlaw.com. Accompanying the lawsuit as an exhibit is the appraiser’s E&O policy from the Navigators program with the exclusion.
Navigators’ lawsuits to deny the appraisers coverage again relate to (more…)
On October 30, the OCC issued a bulletin to all national banks and savings associations entitled “Third-Party Relationships: Risk Management Guidance.” The bulletin, in a nutshell, outlines how lenders should manage and ensure compliance of their third party vendors. AMCs, third parties in the OCC bulletin, must be managed by specific guidelines in order for lenders to maintain compliance.
Appraisal Advisor offers compliance with that regulation by providing lenders, AMCs, and appraisers with its ratings and reviews system. Appraisers’ constant scoring of AMCs on Appraisal Advisor is now, more than ever, THE key deciding factor in which AMCs lenders use. With Appraisal Advisor, Appraisers are being heard, AMCs are being scored, and lenders have an easy, cost-effective way to abide by the OCC mandate.
The bulletin requires that lenders now maintain a compliance solution for AMCs that (more…)
“I was just asked by an AMC to get a background check. Do I have to comply?”
As risk management advisors for Appraisers and Inspectors, this is one of the questions we hear over and over again.
Let’s face it — appraisal fees are lower than ever before. Essentially, AMCs are asking you to do the same amount of work for less pay. In some cases, they’re even asking you to do more work. Does it make sense then that you have to get a background check in order to work for a specific AMC?
Unfortunately, the increased costs associated with getting a background check are not the only problem Appraisers face. Other concerns include identity theft, hassle, and fees that are simply unfair.
- Identity Theft - Think about the information included in your background check — your name, address, date of birth, social security number — precisely the information needed for identity theft. The AMC, banks, loan officers and others will have access to this information. If that doesn’t scare you, (more…)
Fannie Mae will implement new proprietary appraisal messages in the Uniform Collateral Data Portal beginning Nov. 9, the government-sponsored enterprise reported Sept. 24.
The new appraisal messages will expand on existing Fannie Mae appraisal messaging and focus on providing additional data validation and reasonableness checks. The messages also will highlight possible eligibility concerns prior to loan delivery.
The data included in the reports is based on the appraisals provided to the UCDP in the previous month, and includes an overview of all appraisal messages (including Fannie Mae critical messages), (more…)
On September 5, 2013, in a professional negligence case against two Colorado appraisers by the FDIC, a federal court ruled on an issue concerning USPAP confidentiality. It was a simple issue, but it’s one of the very few court decisions relating to USPAP’s poorly written confidentiality rule (this previous post here explains why the rule is poorly written). This is the rule:
An appraiser must not disclose: (1) confidential information; or (2) assignment results to anyone other than: the client; persons specifically authorized by the client; state appraiser regulatory agencies; third parties as may be authorized by due process of law; or a duly authorized professional peer review committee …
The question for the court was: in response to a discovery demand in the case, did one of the defendant appraisers have to handover appraisals of the same property that were for different clients and unrelated to the loan at issue despite the confidentiality rule in USPAP? The court’s answer was (more…)
Three years after the creation of a database seeking to standardize the home appraisal process, Fannie Mae and Freddie Mac continue to see major issues in numerous appraisals submitted by mortgage lenders, American Banker reported Sept. 12.
Fannie Mae conducted a sampling of appraisals and determined that 17.6 percent contained contradictory information, typically pertaining to the condition or quality of the property, Robert Murphy, the GSE’s director of collateral and single-family risk policy, told a Phoenix conference of risk managers. He added that those two factors are the most important in determining a property’s value.
Elevated appraisals contributed to the housing market collapse because lenders frequently pressured appraisers
I have done a series of articles about the efforts of honest appraisers (which began in 2000) and loan brokers to alert the lenders, the markets, and the government to the twin fraud epidemics (appraisals and “liar’s” loans) committed by lenders’ controlling officers that drove the financial crisis.
Honest appraisers could have profited greatly by becoming dishonest appraisers who would be given the lucrative assignments by fraudulent lenders’ controlling officers and their agents. Instead, honest appraisers suffered serious losses of income because they refused to succumb to the extortion efforts of the fraudulent lenders and their agents. A national survey of appraisers in early (more…)
I recently read a summary of an interview of James Gorman, CEO of Morgan Stanley. When Gorman was asked about the chances of another financial crisis like the one we had 5 years ago occurring, he replied that “the probability of it happening again in our lifetime is as close to zero as I could imagine”. To this statement, my reply is quite simply “bull—-!”
Here are the reasons why another financial crisis can happen in the next few years.
1. Government and personal debt remain at unsustainable levels.
2. The US budget is still not balanced.
3. Due to 1 & 2, interest rates must go up. (more…)
In the August edition of the AppraisalPort Newsletter, I reported on some of the general information covered at the National AI Connect Conference in Indianapolis, July 23-25, 2013. This was a great conference, covering a wide range of topics. This month, I want to pass on some information covered in one of the breakout sessions for residential appraisers.
The session was titled, “Residential Chief Policy Roundtable” and included presentations from Fannie Mae’s Robert Murphy, the Appraisal Institute’s Bill Garber, HUD’s Ada Bohorfoush, and the VA’s Gerald Kifer.
At Fannie Mae, Murphy handles many of the issues regarding appraisers and the appraisals they produce. He explained that since the implementation of the Uniform Appraisal Dataset (UAD) and data delivery to the Uniform Collateral Data Portal (UCDP), Fannie Mae has been able to capture appraisal data for all of the loans they buy. Before this program, they typically saw appraisals only when there was a problem with the loan but now they (more…)
CHICAGO, Oct. 22, 2013 /PRNewswire-USNewswire/ — Appraisers anticipate continued growth in mortgage lending appraisals and in specialized areas of consulting, according to a recent survey conducted by the Appraisal Institute, the nation’s largest professional association of real estate appraisers.
Commercial appraisers said the top five areas of growth in the next one to two years (in order of potential) are mortgage lending appraisals, land valuation, litigation valuation/forensic appraisal, real estate consulting (fee-based) and right-of-way/easements. Residential appraisers said the top five areas of growth are (more…)