The Board of Appraisal has received information that ES Appraisal Services, registration #40150, has filed for Chapter 7 bankruptcy and is closing its doors for business.
If you have an open invoice on an appraisal completed in Arizona, which is past the 45 days required by statute, please file a complaint with Rebecca Loar at the Board of Appraisal by January 11, 2013.
A.R.S § 32-3675. Payment
EXCEPT IN CASES OF BREACH OF CONTRACT OR SUBSTANDARD PERFORMANCE OF SERVICES, EACH APPRAISAL MANAGEMENT COMPANY SHALL MAKE PAYMENT TO AN INDEPENDENT APPRAISER FOR THE COMPLETION OF AN APPRAISAL OR VALUATION ASSIGNMENT WITHIN FORTY-FIVE DAYS AFTER THE DATE ON WHICH THE INDEPENDENT APPRAISER TRANSMITS OR OTHERWISE PROVIDES THE COMPLETED APPRAISAL OR VALUATION STUDY TO THE APPRAISAL MANAGEMENT COMPANY OR ITS ASSIGNEE.
If you wish to file a complaint please send a detailed email to Rebecca Loar at rebecca1 @ azboa.gov and provide the following information:
- List the invoices that are outstanding
- List the property addresses for outstanding invoices
- List the date the appraisals were ordered
- List when the appraisals were completed and submitted to the AMC
- List how much you are owed for each appraisal
- Provide a grand total of the amount owing
- Attach a copy of the order forms
- Attach a copy of the invoices
- Attach a copy of any correspondence that you have had with the AMC (including emails, replies, etc.)
In the likely event that the bond is depleted, you may wish to contact the financial institution that utilized this AMC as a Third Party Arrangement. Please note that the 2010 Interagency Guidance, Appraisal and Evaluation Guidelines that was published by the FDIC on December 2, 2010, provide in part, the following:
“Appraisal Management Company – The Agencies’ appraisal regulations do not define the term appraisal management company. For purposes of these Guidelines, an “appraisal management company” includes, but is not limited to, a third-party entity that provides real property valuation-related services, such as selecting and engaging an appraiser to perform an appraisal based upon requests originating from a regulated institution. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) has a specific definition for this term in connection with transactions secured by a consumer’s principal dwelling or mortgage secondary market transactions. See the Third Party Arrangements section in these Guidelines.
XVI. Third Party Arrangements
An institution that engages a third party to perform certain collateral valuation functions on its behalf is responsible for understanding and managing the risks associated with the arrangement. An institution should use caution if it engages a third party to administer any part of its appraisal and evaluation function, including the ordering or reviewing of appraisals and evaluations, selecting an appraiser or person to perform evaluations, or providing access to analytical methods or technological tools.
32 See, for example, FFIEC Statement on Risk Management of Outsourced Technology Service (November 28, 2000) for guidance on the assessment, selection, contract review, and monitoring of a third party that provides services to a regulated institution. Refer to the institution’s primary federal regulator for additional guidance on third party arrangements: OCC Bulletin 2001-47, Third-Party Relationships (November 1, 2001); OTS Thrift Bulletin 82a, Third Party Arrangements (September 1, 2004); NCUA Letter to Credit Unions: 01-CU-20, Due Diligence Over Third Party Service Arrangements (November 2001), 07-CU-13, Supervisory Letter-Evaluation Third Party Relationships (December 2007), 08-CU-09, Evaluating Third Party Relationships Questionnaire (April 2008); and FDIC Financial Institution Letter 44-2008, Guidance for Managing Third-Party Risk (June 2008).
An institution is accountable for ensuring that any services performed by a third party, both affiliated and unaffiliated entities, comply with applicable laws and regulations and are consistent with supervisory guidance.32 Therefore, an institution should have the resources and expertise necessary for performing ongoing oversight of third party arrangements.
An institution should have internal controls for identifying, monitoring, and managing the risks associated with using a third party arrangement for valuation services, including compliance, legal, reputational, and operational risks. While the arrangement may allow an institution to achieve specific business objectives, such as gaining access to expertise that is not available internally, the reduced operational control over outsourced activities poses additional risk. Consistent with safe and sound practices, an institution should have a written contract that clearly defines the expectations and obligations of both the financial institution and the third party, including that the third party will perform its services in compliance with the Agencies’ appraisal regulations and consistent with supervisory guidance.
Prior to entering into any arrangement with a third party for valuation services, an institution should compare the risks, costs, and benefits of the proposed relationship to those associated with using another vendor or conducting the activity in-house. The decision to outsource any part of the collateral valuation function should not be unduly influenced by any short-term cost savings. An institution should take into account all aspects of the long-term effect of the relationship, including the managerial expertise and associated costs for effectively monitoring the arrangement on an ongoing basis.
If an institution outsources any part of the collateral valuation function, it should exercise appropriate due diligence in the selection of a third party. This process should include sufficient analysis by the institution to assess whether the third party provider can perform the services consistent with the institution’s performance standards and regulatory requirements. An institution should be able to demonstrate that its policies and procedures establish effective internal controls to monitor and periodically assess the collateral valuation functions performed by a third party.
An institution also is responsible for ensuring that a third party selects an appraiser or a person to perform an evaluation who is competent and independent, has the requisite experience and training for the assignment, and thorough knowledge of the subject property’s market. Appraisers must be appropriately certified or licensed, but this minimum credentialing requirement, although necessary, is not sufficient to determine that an appraiser is competent to perform an assignment for a particular property or geographic market.
An institution should ensure that when a third party engages an appraiser or a person who performs an evaluation, the third party conveys to that person the intended use of the appraisal or evaluation and that the regulated institution is the client. For example, an engagement letter facilitates the communication of this information.
An institution’s risk management system should reflect the complexity of the outsourced activities and associated risk. An institution should document the results of ongoing monitoring efforts and periodic assessments of the arrangement(s) with a third party for compliance with applicable regulations and consistency with supervisory guidance and its performance standards. If deficiencies are discovered, an institution should take remedial action in a timely manner.”
The 2010 Interagency Guidance, Appraisal and Evaluation Guidelines can be found in its entirety at http://www.fdic.gov/news/news/financial/2010/fil10082a.pdf.