Author: Peter Christensen

Washington State Raises AMC Bond Requirement to $100,000 1

Washington State Raises AMC Bond Requirement to $100,000

As a direct result of the recent financial failure of appraisal management companies like Evaluation Solutions and ES Appraisal, the State of Washington recently enacted a new law raising the state’s AMC bond requirement from $25,000 to $100,000.  As of July 28, 2013, all AMCs registered in Washington will be required to carry a bond in the new amount. One of the purposes of the bond is to provide security for payments owed to appraisers by AMCs. If an AMC fails to pay an appraiser in accordance with Washington’s requirements, the appraiser then may have a claim against the AMC’s bond....

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Overtime Lawsuits Continue to Spread

Overtime Lawsuits Continue to Spread Among Valuation-Related Companies — Interthinx Becomes the Latest Defendant First it was Integrated Asset Services.  In February, I wrote here about three employee overtime class actions affecting the Colorado AMC filed on behalf of “timeline managers,” “valuation managers” and “quality reviewers.”  Then it was LandSafe Appraisal.  In April, I wrote an article about a newly filed overtime lawsuit by staff appraisers against that company. There is definitely now a small wave of overtime litigation unde the federal Fair Labor Standards Act (FLSA) affecting businesses in valuation-related fields.  The industry has become an easy target for...

Another Overtime Class Action Filed Against an AMC - Imagecredit Flickr - moppet65535 1

Another Overtime Class Action Filed Against an AMC

A lawsuit filed last week by a former staff appraiser against LandSafe Appraisal Services, Inc. exemplifies the overtime liability risk faced by many appraisal firms and appraisal management companies. In February, I wrote that overtime lawsuits by appraisers present a genuine liability risk to appraisal firms and AMCs.  In that article, I explained some of the special issues relating to whether appraisers properly can be treated as “exempt” employees for purposes of overtime compensation.  The real-world risk to an appraisal firm or AMC is that a staff appraiser will file a legal action alleging that he or she worked more...

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Read That Agreement Before You Sign or Leap

Having the most unfair agreement will cause the lender or AMC to lose those appraisers I recently ran across the provision below in a new contractor agreement between an AMC and its panel appraisers, when one of LIA’s insured appraisers asked me to take a look at the agreement. The contract contained the average indemnification provision found in most unfair AMC contracts in which an appraiser promises to defend and reimburse the AMC for “any and all liabilities, damages, costs and expenses (including all legal fees) arising out of or relating to any claim, action, suit, complaint, liability, damage, or other...

Overtime Lawsuits Affecting Appraisal Firms, Lenders and AMCs - Imagecredit Flickr - Pictures of Money 1

Overtime Lawsuits Affecting Appraisal Firms, Lenders and AMCs

Are employee appraisers of appraisal firms, AMCs or lenders “exempt” from overtime pay under the FLSA? Under the federal Fair Labor Standards Act (FLSA), employees in most types of businesses are required to be paid overtime at 1.5x their hourly rate if they work more than 40 hours in a seven-day workweek, unless they are properly classified as “exempt.” As I’ll show in three cases below against an appraisal firm, a lender and an AMC, this law presents a genuine liability risk to businesses in the valuation industry. Let’s start with what should seem like a basic question: Are employee...

Evaluation Solutions ES Failure 2

Evaluation Solutions Failure

Evaluation Solutions, LLC: The Anatomy of an AMC’s Failure and Why Lender’s Should Care Last week, I had the pleasure of speaking to the Collateral Risk Network about lender oversight of appraisal management companies. With that exciting topic as my general theme, I chose to address the specific issue of AMCs failing to pay independent contractor appraisers for appraisals ordered by the lender-client (and also failing to pay agents and brokers for BPOs). This issue has been brought to the forefront of many appraisers’ minds and bank accounts by the recent failure of two large AMCs: National Real Estate Information...

Seven Cases the Defendant Appraisers Won Based on Expiration of the Statute of Limitations 0

Seven Cases the Defendant Appraisers Won Based on Expiration of the Statute of Limitations

I am biased in favor of defendant appraisers. I always root for the defense, even if it’s one appraiser suing another appraiser (as in one case below). Defense is our business. Here, are seven cases where the defendant appraisers won based on a statute of limitations defense. That means even if there was something wrong with the appraisal at issue, the defense counsel still won the case. So, you have to give the credit to the defense counsel. That’s not to say there really was a problem with the appraisal in each case below — it just didn’t matter if...

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Who Has Been Suing the Most Appraisers? Two Names You Know. Two Names You’ve Probably Never Heard.

These are four of the parties who have been suing the most appraisers in 2011-12. I suspect most appraisers won’t recognize two of the names, unless the appraisers are defendants in one of their cases. The parties are in no particular order, but the last one does file the most lawsuits. LSF6 Mercury REO Investments This is an investment fund of a private equity company named Lone Star. LSF6 bought discounted mortgage debt from bankrupt CIT Group in 2008. In late 2011, LSF6 began suing appraisers in New York as part of what appears to be an experiment with mass...

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New York Attorney General v. eAppraiseIT: Settlement

The New York Attorney General’s Office announced yesterday that it has reached a settlement with CoreLogic, as successor to eAppraiseIT, over the 2007 lawsuit filed against eAppraiseIT by then-Attorney General Cuomo. This was the case, of course, that led to the HVCC with Fannie Mae and Freddie Mac. It also put the AMC liability train in motion, which has kept rolling since — resulting in significant lawsuits filed by both government agencies and private parties against a majority of the 10 largest AMCs. The NY AG noted that the lawsuit concerned approximately 10,000 appraisals in New York for WaMu in...

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FDIC Diversifies Its Appraiser Targets in Recent Lawsuits

In the last three months, since May 1, 2012, the Federal Deposit Insurance Corporation (FDIC) has sued 45 individual appraisers and appraisal firms in its capacity as receiver for one of the failed banks or lending institutions under its supervision. The appraisers targeted by the FDIC in its recent cases are a more diverse group, geographically and professionally, than in earlier cases, but in other respects the FDIC’s recent cases represent more of the same familiar story — suing appraisers to recover money damages for allegedly appraising properties too high for loans extended during the peak of the real estate...

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