LenderVend Requirement For Appraisers to Upload Copies of Appraisal Workfiles

Peter Christensen

Peter Christensen

General Counsel - Attorney at LIA Administrators & Insurance Services
A graduate of the University of California, Berkeley’s Boalt Hall School of Law, he has been an attorney since 1993 and maintains the blog Appraiser Law Blog. LIA has been offering E&0 insurance and loss prevention information to the appraisal profession nationally since 1972.
Peter Christensen

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LenderVend Requirement For Appraisers to Upload Copies of Appraisal Workfiles - Imagecredit Flickr - GotCreditMany residential appraisers we insure and several appraiser organizations have contacted us in the last few days about an appraisal management company’s new requirement that their panel appraisers upload a PDF copy of their appraisal workfile for each assignment they perform.  The AMC is LenderVend, LLC and, according to its website, it is affiliated with mortgage lender Provident Funding.

We understand that LenderVend’s requirement imposes an additional burden on appraisers.  We’ve also heard firsthand from appraisers about the anxiety the policy is creating because of the unknown uses to which the workfile may be put by the AMC.  As is the case with any peculiar requirements imposed by particular AMCs or lenders, we think that appraisers should weigh these issues in deciding whether they want to perform services for the AMC or lender and/or in deciding how much to charge for their services because of the extra work entailed.

In general, there is no legal requirement for an appraiser to provide a workfile to a client or to the AMC of a client – unless the appraiser has agreed in a service agreement or as part of an assignment engagement that such materials will be provided.  Many appraisal service agreements with AMCs and lenders do contain a requirement that appraisers must supply workfiles upon request and/or state that workfiles become the property of the AMC or lender.

Our business is appraiser professional liability prevention and defense, however.  And, looking at this requirement from the sole perspective of an appraiser’s professional liability risk, we do not see the submission of a workfile in this manner at the time of delivering the appraisal report as creating additional liability risk for the appraiser and, in fact, believe it may marginally decrease an appraiser’s potential liability risk.  It may reduce the appraiser’s liability risk to the lender-client because submission of the workfile will be providing transparency for the support or lack of support for the appraisal before a loan is funded and provide disclosure as to what may or may not have been considered by the appraiser in the appraisal.  When the lender (or its agent the AMC) has received the workfile at the time of receiving the appraisal report, the lender will have a more difficult time claiming that it acted in ignorance of some alleged error by the appraiser that could reasonably have been discovered by reviewing the contents of the workfile.  The receipt of such information should marginally make it more difficult for the lender to establish certain legal claims because of the additional disclosure of information at the time the appraisal report is delivered.

Although we see the submission of a workfile at the time of delivering the appraisal report as likely — but only slightly — reducing an appraiser’s overall liability risk, we still do have concerns:

  1. We are concerned that appraisers, as a result of the policy of being required to upload a copy of the work file electronically, may not retain materials that we feel are very important to liability prevention, but which are not technically necessary for minimum USPAP work file contents – items such as extra photos not contained in the report, blue prints (when relevant to an assignment), and candid notes of communications with the AMC, lender, borrower, etc.  We advise our insured appraisers to continue retaining these additional materials, even if not required by or delivered to the AMC as part of the minimum contents expected by AMC for the work file.
  2. For those appraisers who do not maintain and submit a minimally compliant work file, it is conceivable that a state board complaint may be filed.
  3. Our concern about the specific requirement by this AMC also was heightened initially because LenderVend is affiliated with Provident Funding.  In 2014, Provident Funding submitted a relatively high number of demand letters to appraisers relating to mortgage repurchase losses that it alleged were incurred as the result of appraiser negligence.  We wrote an article about that trend entitled “Pirate Waters” in the 4th Quarter issue of Valuation magazine.  However, after considering the issues and as stated above, we believe that those types of claims would actually be harder to establish by a lender when either the lender or its AMC has received a workfile at the same time as receiving the appraisal report.  Thus, while Provident Funding’s prior frustrations with allegedly deficient appraisals might be one of the reasons leading LenderVend to seek to improve the review of appraisals by also receiving workfiles, we don’t see any logical relationship between the new requirement and future legal claims against appraisers relating to current appraisal work — but we will be on the look out.
Peter Christensen

Peter Christensen

A graduate of the University of California, Berkeley’s Boalt Hall School of Law, he has been an attorney since 1993 and maintains the blog Appraiser Law Blog. LIA has been offering E&0 insurance and loss prevention information to the appraisal profession nationally since 1972.

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23 Responses

  1. Koma says:

    It’s always our choice. Personally I won’t work for them if that is their requirement. If/When it becomes mandatory I know how to stop it. Tell the borrowing public the price of an appraisal is going to cost 30-50% more for the rise in admin. cost. I don’t know about you by my time ain’t cheap. Stop it flat in it’s tracts it will! B-{)

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  2. ValleyGal says:

    No way I’m giving my workfile and raw data to the uneducated. What, you want stips on your workfiles too? It has full detailed MLS sheets which are copyrighted materials. I also include proprietary information from some other files. This is the kind of crap that turned me away from AMC work.

    One appraiser sent an email to LenderVend which he posted on the Facebook group:

    LenderVend’s recent announcement and corresponding PDF regarding the proposed requirement to upload copies of the appraisers workfile with every appraisal report is the topic of numerous conversations on appraiser chat sites and forums.

    The appraisers workfile represents proprietary work product that the client has no right to or expectation of receiving. Sending a complete workfile to a client is inconceivable by virtually all appraisers, as it should be.Providing a workfile is only required under the following circumstances:

    • submission to state appraiser regulatory agencies;
    • compliance with due process of law;
    • submission to a duly authorized professional peer review committee; or
    • compliance with retrieval arrangements.

    Comment: A workfile must be made available by the appraiser when required by a state appraiser regulatory agency or due process of law.

    This is much more than just the significant additional time involved. The workfile can include information of a confidential nature (such as interviews with market participants such as listing and selling agents who grant interviews conditioned on promises to keep these interviews confidential) and may also include data records which are copyrighted, such as MLS or data aggregator documents. It also contains the appraisers methods, techniques, sources, and other items that are used in developing their opinions and conclusions. From a business point of view, this information should be closely held as it might take many years and considerable expense to accumulate.

    It also increases an appraisers potential liability significantly.The overwhelming consensus so far is that appraisers would rather decline assignments from LenderVend than accept this requirement

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  3. bubba jay bubba jay says:

    brilliant idea – keep pushing appraisers away.

    i fired an AMC the other day for being stupid and asking ridiculous questions in numerous time-wasting revision requests. feels good, and the sun rose the next morning just fine. if i worked for LenderVend, i would be firing them too. i am betting LenderVend just slit their own throats with this one.

    wouldnt it be fun to meet the knucklehead that came up with this one? next thing you know, someone will be forcing us to run the dishwasher in the house to see if it works.

    the bleeding continues . . . . .

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    • ValleyGal says:

      …next thing you know, someone will be forcing us to run the dishwasher in the house to see if it works.

      Per FHA new handbook effective 09/14/2015

      “The Appraiser must operate all conveyed appliances and observe their performance.”

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      • Koma says:

        Like: Thanks for the information.

        Dislike: Just another thing to get blamed for if something is wrong with the appliance the day after we are there. Several years ago had a home inspection on a property we were purchasing and the home inspector broke the end of the dishwasher (5 yr old) locking handle. He felt terrible and I stated don’t worry I’ll fix it and I did. Warning everybody to up your insurance and put in a more heavily worded statement that your not a home inspector, plumber, electrician…etc..etc

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      • bubba jay bubba jay says:

        i dont know about the rest of you, but i have decided that if i am going to be forced to run anything, i will be requiring that either the listing agent or the home owner be there while i do it. no need to up the insurance. i dont need to take on any more liability, especially at this kind of pay.

        i can write up a very long list of reasons and stories as to why i touch as little as i have to during my inspections.

        once again, over-educated idiots, who have no clue what we really do in our businesses, are creating junk rules and regulations simply to justify their existence.

        the bleeding continues . . . . .

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      • bubba jay bubba jay says:

        thank you VG, but i was being sarcastic. 🙂

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    • Wayne says:

      Hopefully LenderVend will run off all appraisers. Let’s see them manage appraisals if they do not have any!

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  4. Retired Appraiser Retired Appraiser says:

    Jocelyn Wildenstein should be the poster child for the post 2009 valuation profession.

    Why not just send an AMC representative out each day to shadow the appraiser during every step of the process.  They could even help out by rejecting and selecting comparable sales prior to writing the report.  Come to think of it the shadow could even take a photo of the appraiser taking photos of each comparable sale used (you know…to prove they actually looked at the comps).

    Bottom Line: The Valuation Profession can no longer be trusted, regardless of how much experience they have, how many classes they’ve taken, and how many ethics courses they’ve endured.

    The profession became a joke in 2009.  Since then (Extortion based ordering model, UAD, CU, Multiple Comps, etc.) residential valuation has become a grotesque caricature of of the incredible career that it once was.  When I think of the appraisal business pre 2009 and 2015 I am reminded of Jocelyn Wildenstein and how obsessive tweaking changed her life…and not for the better.

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  5. I love this blog and the topics covered. Needed to say that before I respond to the NON APPRAISER professionals thoughts on transparency, etc..

    The ONLY response I recommend to these types of requests are the following written response: “KMA!”

    It means exactly what you think it does. My ‘work file’ is not a completed USPAP compliant appraisal report. It may contain many hypothetical analyses and conditional “what ifs”; or trial and error cross checks that are NOT intended for anyone but myself. IF subpoenaed, I can legally allow a court or attorney to look at it in its raw state. It is enough for highly trained state regulators to duplicate my steps and arrive at similar conclusions. That does NOT mean it has enough data or order to be understood by an underwriter; investor or investors attorney when the BAD LOAN goes bad five years from now!

     

    I cannot believe they even consider suggesting what they have in their article.

    I dare say someone will have to PROVE to me that Standard Rule 2 allows me to “communicate” incomplete work file data containing various and sundry initial opinions that may or may not be supported during the development of my appraisal. Data which not only has a chance of being misunderstood; it is a virtual certainty it will not be understood by all the intended users.

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  6. bubba jay bubba jay says:

    you nailed it Mike when you said, “Data which not only has a chance of being misunderstood; it is a virtual certainty it will not be understood by all the intended users”.

    way too often, i am being asked to waste my time answering questions that are clearly coming from someone who knows a lot less than i do. if uneducated list checkers, sorry, “reviewers”, arent capable of understanding what we do now, how do we expect them to understand the whole darn work file? it seems like the more information we put in our reports to try and make things clearer, the more ammunition we give someone only to nit-pick. the time we spend answering questions is already bad enough, but this would just make matters far worse than they already are.

    the bleeding continues . . . . .

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  7. TomAl says:

    Apparently LenderVend changed their mandatory workfile requirement to voluntary. However, they added that the workfile must be made available upon request.

    Appraisal Workfile – Update 
    On 4/28/2015, LenderVend Appraisal Zone posted a notification detailing a policy change that would require panel appraisers to provide a copy of the work file for each appraisal submitted to LenderVend effective 5/21/2015. LenderVend is making a change to that notice as follows:
    • LenderVend will make it optional for the appraiser to upload a workfile (instead of a mandatory requirement).
    • LenderVend will create a separate upload utility where appraisers can upload their workfiles voluntarily. LenderVend will provide notification to appraisers when this technology is available on Appraisal Zone.
    Note: Recent changes to the mortgage industry, investor requirements and regulations have resulted in closer scrutiny of appraisals. Lack of support and documentation in the appraisal make it difficult for the intended users to understand the report. A well-documented and well-supported appraisal reduces turn-time, disputes and questions, while promoting report quality. The leaders in appraisal product quality will secure the majority of market share, which directly benefits the appraisers. The workfile is the responsibility of the appraiser. LenderVend urges its appraiser panel to ensure that appraisers’ research and diligence are documented in their workfile. Reminder. The appraiser’s workfile must be made available upon request by Client and/or designated entities (such as the AMC).”

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    • Koma says:

      TomAl thanks for the input, but I put dislike for their reasoning.

      BS! They’re blaming us again for all the problems. Must of had enough appraisers jump ship for them to change to optional. Still wouldn’t work for them. Reminds me of another AMC (SL) that I tried working for a few years back. They kept coming back with asinine revision request and when I said bye bye they kept moving their fee up and up. I still said No Thanks!

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  8. bubba jay bubba jay says:

    the problem is, every AMC is trying to out-do each other at our expense. and what started out as AMC’s working for us, has turned into all of us working for AMC’s. NAS was the perfect AMC – they were a middle-man between us and the banks – they handed out work, and thats all they did. they didnt get involved where they didnt need to. the AMC model is no longer an alliance, but a complete abortion due to non-regulation. AMC’s were quickly thrown in all our faces, without thought about the details or consequences, and here we are, in a huge, huge mess because of it. and unfortunately, now its too late, and its going to be darn near impossible to go back.

    the bleeding continues . . . . .

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    • Jeremy Hall Appraisals - Colorado Jeremy Hall Appraisals - Colorado says:

      Nahhhh….   Don’t be a defeatist.  Embrace liberty.  Seek and you shall find.  Knock and the doors shall be opened.  You have liberty of choice, and nobody can take that away from you, if you don’t let them.

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    • Mike Ford Mike Ford says:

      Bubba Jay you are 100% right. AMCs have never thrived in a competitive environment. Just look at the history of LSI; ATM or Ocwen (who had to change their name because they became so tainted!).

      The real problem is they produce no product. Neither physical nor intellectual. They provided a service and once the successful model is out there, any monkey can duplicate it.

      To compete effectively, they first cut fees. They didn’t have to do ANYTHING to cut quality-that happened all by itself! THEN they started offering pre screening for value (pretend we don’t know anyone at an AMC running ‘comp checks’ first!). Some pay kickbacks (WHAT A SHOCK!). All are seen by banks and direct endorsement lenders as giving them ‘enough’ cover for statutory compliance requirements.

      Of course none actually DO the things regulators charged banks and lenders to assure get done under FIRREA or Dodd-Frank.

      At best, they gave banks ‘cover’ for inflating “appraiser fees” and pocketing the surplus.

      The real solution is simple. IF a lender is big enough to make decisions about lending a quarter of a million dollars (times many hundreds or even thousands of transactions) of government sponsored or insured or guaranteed loans, then they are big enough to have their own internal ordering departments AND to be required to conform to appraiser independence regulations. They don’t need illusory separate departments. What they need are PRISON SENTENCES for anyone that violates independence requirements!

      Congress is so far removed from ethics OR honesty that they forget it USED to play an important part in American business. It USED to be celebrated, rather than scorned by certain college academic elitists.

      The Andrew Cuomo experiment in granting huge windfalls to title companies was and remains an abysmal failure. Most of the originators have abandoned the ‘profit center’ and gone on to new scams. All that’s left are the second and third strings.

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  9. Jeremy Hall Appraisals - Colorado Jeremy Hall Appraisals - Colorado says:

    You know I was busy working overtime for a while and did not keep up with the news.  This company assigned me an order.  Luckily, I escaped having to deal with the digital workfile issue because this particular company demanded my bank account numbers, as they refused to send an actual printed check.  They actually cancelled the order because I said paper check or no go.  Dodged another industry bullet with that one, because I would not have agreed to submitting the digital workfile.  The digital workfile retention SOW  was buried in their 50 something dual engagement document set.   Paper is a more environmentally friendly choice.  Paper is easy to work with, lasting and durable, easy to use in the field, easy to write notes and analysis notes on the paper.  Easy to stack and sort and consider while I’m also using a single monitor.  I know some appraisers love to feel the power of 10 screens as bright as the sun, while living inside of a wireless frequency bubble, but not me.  I keep it wired and will always use paper.  Do you think LenderVend would have accepted a fedx envelope with my 2″ high work file, loaded with all raw market data, 4 different filtered market data approaches, separated data, hand written analysis, and maps?  I’m not sure I could have complied with that standard if I wanted to and was all digital, because that information is the property of MLS and I only have permission to use it ‘within reports’, and no where else, unless I purchase the more expensive commercial subscription.  This sounds like an issue that your local MLS could solve right away, because such information sharing could quite possibly be a violation of the subscription and member terms.

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  10. Mike Ford Mike Ford says:

    “Voluntary but available on request?” How exactly is THAT voluntary?

    Does an attorney make his work files available to clients on request? How about a CPA engaged in tax advising? A psychiatrist?

    My work files are just that MY work files. They may or may not be intellectual property, They may or may not have privileged data. They may or may not even be legible to others. They do not have to be. Because they are MINE!  Period!

    I am a State General Certified Real Estate Appraiser; A Realtor(r), hold two appraisal designations from NAR, am a peer review committee chairmen for my appraisal guild and am a former Senior Appraiser with the Treasury Department.

    If you do not believe me qualified to perform your appraisals do not hire me!   MY ONLY response opt being asked for a work file by anyone other than my state regulators or a duly executed subpoena is “GO TO HELL!”

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  11. Jeremy Hall Appraisals - Colorado Jeremy Hall Appraisals - Colorado says:

    These companies don’t value professionalism.  Just today an amc accidentally included me in a broadcast order email, for an order I negotiated, which is currently in my Q.  Shotgunning the order all over town, because I asked for the 15 bucks to make the 400 minimum, and asked for 2 weeks out.  Those are great friendly terms, but I’m not sure if I’ll offer friendly terms to this amc into the future after that move.  Amc’s really are absolutely awful at standing up to lenders, which makes them poor stewards of appraiser independence when they operate that way.  I quote all shotgunned orders at $500 minimum.  But at least there is a mailed check and no digital workfile requirement.  Some amc’s make the other guys look better and better.  If appraisers could operate their business around a question mark and never book out more than a week, there would be more appraisers.  I dare the amc’s to agree to their own terms, with their own income on the line.

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    • Koma says:

      There are some of us out there to blame also. In one of the areas I cover appraisers are accepting full appraisals for $200 from AMC’s! There is no way I’ll ever except that measly fee! Glad that I took the time to diversify my business and being in more than one area.

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      • bubba jay bubba jay says:

        i would LOVE to see those reports. you and i would never accept those assignments because we are doing our jobs as required of us, and we know there is NO WAY that any appraisal is ever worth that kind of money. if an appraiser is doing EVERYTHING he/she is suppose to be doing – inspecting the property, measuring the property, taking the comp pics, doing the research, due diligence, explaining properly, etc., then he/she would KNOW that an appraisal could never be worth $200.

        taking into consideration everything such as gas, writing a GOOD report, our time, software, state and federal taxes, health care, education, etc., a 1004 is easily worth $500 all day long. too many appraisers do not understand the true value of the job we do or our professionalism. (i guess it doesnt help when we have no control over our fees anymore either).

        i used to think that most appraisers were some of the smartest people i know. i am beginning to think they are the dumbest.

        the bleeding continues . . . . .

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    • Mike Ford Mike Ford says:

      OUTSTANDING Jeremy!

      I used to quote shotgunned orders at $650 but $500 is cool too. Also heartily applaud you for sticking to your guns on the $15. Its not the fifteen bucks; it’s the constant undercutting! IF AMCS had been paying $450 or more to begin with, we’d not be having these posts and discussions. Now it is too late. $450 is not enough anymore. Not with UAD; 1004MC and CU to contend with.

      Join me in the American Guild of Appraisers (AGA) and lets start working for the ‘reasonable’ part of customary and ‘reasonable’!  http://www.appraisersguild.org

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  12. Jeremy Hall Appraisals - Colorado Jeremy Hall Appraisals - Colorado says:

    You know I might do that.  As sales persons are running circles around me with their income which is tied to home pricing, and hence maintains balance with economic inflation, I’m going to move on my sales license this summer.  Feel sort of silly for not having it already because I’ve probably missed out on 6 digit income while I’ve screwed around with amc nonsense.  I’ll land with something new or alternate this summer.  For now, I’m too busy and am advance paying bills and such.  The music is going to stop this summer and fall if the rates go back up to near 5%, which I think they probably will.  Many a check to check living high appraiser and many amc’s are going to get crushed in the semi-near future, simply due to reduced order volume.  I waited all these years to be in high demand, and it’s finally happening, but I’m still focused on the exits.  I tell all those lender agents, that until they can get the fee back to the proportional rate where it should be, which is around $800 standard, this industry will continue to shed appraisers instead of acquiring them. But that’s all part of the master centralized banking plan, to eliminate the checks and balances system.  If the checks and balances system does fail, buyers and sellers will need dual appraiser realty agents more than ever before.  Focus on operational efficiency actually crushed this appraisal industry like nothing before.  It was more damaging than the failing economy.  Appraising is a labor of love, logic, and science, all mixed up together.  Imbalance has taken hold of this industry because lenders are backed by taxpayers, appeal to GSE’s for most loans, and they subsequently don’t want or need anything more than minimum standards.  There is no organization that can appeal to the government about correcting the money and solvency of mortgage backed securities, until such time as the Fed is finally audited, if not all together disbanded.  Only then could we finally enjoy economic stability, if the dollar stops being fiat and becomes tied to solid commodity again like silver.  Until such time, we’ll continue to deal with corporate intervention to private business, backed by the government, on every turn.  It’s happening everywhere, not just for appraisers.  This one is for you brother.  You’re going to love this one.  
    LenderVend Requirement For Appraisers to Upload Copies of Appraisal Workfiles

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