Category: The Federal Deposit Insurance Corp.

Who are Mutual First, LLC and Savant Claims Management? Why is Mutual First Suing Appraisers? - Imagecredit Flickr - paurlan 2

Who are Mutual First, LLC and Savant Claims Management? Why is Mutual First Suing Appraisers?

Some appraisers are now being targeted in lawsuits by an entity named “Mutual First, LLC.” It has filed at least 35 lawsuits since May. Mutual First is not a bank, credit union or any kind of regular financial institution. It’s an entity aiming to make money for investors by suing appraisers. Based in Texas, it acquires foreclosed loans for small fractions of the original principal amounts. It then files lawsuits against the appraisers who performed appraisals years ago for the original lenders who made the loans. In its lawsuits, Mutual First claims that the appraisers are liable to Mutual First...

Personal Property, permits...rules of engagement 6

Rules of Engagement

Recently a particular engagement letter format has been circulating amongst residential appraisers from several nationally chartered banks. Aside from the usual intended use and exposure time boilerplate requirements there are several new problematic inclusions. Personal Property All personal property transferring in a purchase transaction must be described in the appraisal whether or not it was listed in the sales contract. Any client is free to ask for a shopping list of tchotchkes, but if an appraiser is appraising an abandoned residence with piles of junk laying everywhere…they couldn’t afford my time to sift through it all like in an episode...

Proposed Rule for AMCs 0

Proposed Rule for AMCs

Agencies Issue Proposed Rule on Minimum Requirements for Appraisal Management Companies WASHINGTON — Six agencies today issued a proposed rule that would implement minimum requirements for state registration and supervision of appraisal management companies (AMCs). An AMC is an entity that serves as an intermediary between appraisers and lenders and provides appraisal management services. In accordance with section 1124 of Title XI of the Financial Institution Reform, Recovery, and Enforcement Act of 1989, as added by section 1473 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the minimum requirements in the proposed rule would apply to states that...

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Blacklisted? How to Get Reinstated

There is a high cost of being blacklisted. When a lending institution loses confidence in an appraiser’s work, the bank or AMC will put them on a “do not use” list, also known as a blacklist. In some cases, this means an appraiser has made a costly mistake. However, some banks are taking blacklisting to an extreme by treating appraisers as guilty until proven innocent without cause or reason why. If unchallenged, this practice can be devastating because being blacklisted even once can have permanent detrimental effects on an appraiser’s career, income, and reputation. By engaging in blacklisting lenders are...

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Subpoenas and Other Things That Go Bump in the Night

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...

Regulatory Claims Exclusion 0

Regulatory Claims Exclusion

Navigators Sues More Appraisers to Deny Coverage under “Regulatory Claims” Exclusion 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...

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Federal Court Rules on USPAP Confidentiality Issue in FDIC Lawsuit Against Appraisers in Colorado

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...

Appraisers E&O FDIC Exclusions - Image courtesy of Stuart Miles / FreeDigitalPhotos.net 3

FDIC Exclusions in Appraiser E&O Policies

Many appraisers don’t know about or don’t understand the new FDIC and “regulatory agency” exclusions found in many appraiser E&O policies. Why is it relevant to know if your policy has an FDIC or regulatory agency exclusion of some sort? The main reason is because the FDIC sues appraisers for professional negligence — such lawsuits are discussed in prior posts: here and here. How do you determine if a policy being offered to you contains an FDIC exclusion? First, no policy sold by LIA in its appraiser E&O program contains any FDIC or similar regulatory agency exclusion. If you are...

The Appraisal Complaint National Hotline 2

The Appraisal Complaint National Hotline

Jim Park, the Executive Director at the Appraisal Subcommittee (ASC), gave an informative presentation at Valuation Expo this past June. In this session, Jim reviewed the functions and oversight duties of the ASC and current status and regulatory issues with the States. One of the more interesting topics covered in Jim’s presentation regarded the Appraisal Complaint National Hotline, which was established in accordance with the Dodd-Frank Act, put into law July of 2010. TThe National Hotline, which began taking referrals in March of 2013, acts only as a facilitator for complaints. In other words, the National Hotline identifies the Agency(s)...

Statute of Limitations for Appraisers 1

Statute of Limitations Against an Appraiser

The Statute of Limitations for a Claim Against an Appraiser Why You Should Keep Your Workfile for 7 to 8 Years In 2013, many lawsuits against both residential and commercial appraisers continue to relate to appraisals performed years ago at the peak of the real estate price bubble, 2005 to mid-2008. These lawsuits are filed by borrowers, lenders, investors or the FDIC and typically allege that an appraiser’s inflated value resulted in the plaintiff borrowing, paying or loaning too much money.  The plaintiff blames its loss on the appraiser and sues for damages. When reporting a claim like this to...

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