Tagged: Errors & Omissions

You’re Safe From the MRLG (Unless You Have E&O Insurance) 3

You’re Safe From the MRLG (Unless You Have E&O Insurance)

Since we last wrote about the unusual subpoenas coming from the offices of the FDIC through the law firm called the Mortgage Recovery Law Group (MRLG), we’ve learned some interesting things that you need to know. To read the original blog post “What to do if you get a subpoena from the FDIC”, CLICK HERE. First, the MRLG contracted with the FDIC in late 2010 to pursue collection of losses for the FDIC resulting from the many bank failures caused by the economic (real estate) downturn. Of particular interest is that the MRLG is not working on a contingency fee...

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Fannie Mae Issues “Hard Stops” on Appraisal Messaging

As of January 28, 2013, Fannie Mae started placing greater restriction on the data they collect to ensure uniformity. You will now begin seeing a “hard stop” issued by Fannie Mae on messaging. This change affects Appraisers working with AMCs or other lenders who submit data to Fannie Mae. What has changed? As appraisers know, the Uniform Collateral Data Portal (UCDP) is an electronic tool that Fannie Mae uses to ensure uniformity in the data that Appraisers collect and submit. The theory is that being able to track trends and information through data collected on appraisals will ensure more informed...

Home Inspectors Appraisers Doomsday 6

Home Inspectors & Appraisers’ Doomsday

The Sky is Falling for Appraisers & Home Inspectors Chicken Little was right – the sky is falling…and landing on both appraisers AND home inspectors. Home inspectors often suffer from a general lack of respect, part of which is caused by the fact that they have no single set of national standards of practice like appraisers who have USPAP. Appraisers, on the other hand, suffer from what is commonly known as appraisal creep where the conditions and requirements of appraisal work keep expanding, but the fees for the work either shrink or stay the same. Now, forces within the government...

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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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...

Should I Attach My E&O Declarations Page to My Appraisal Report? 2

Should I Attach My E&O Declarations Page to My Appraisal Report?

Attaching E&O Information to Reports Because some AMCs still wrongheadedly insist that appraisers do it, we are asked this question a lot: “should I attach my E&O declarations page to my appraisal report?” The answer is always the same: it’s a bad idea. It’s bad for both the appraiser and the client/AMC. It is perfectly reasonable for a client or an AMC to ask for proof of E&O insurance and ask to receive updated insurance information each year. That’s common to many professions, but there is no good reason to require that the information be included within or attached to...

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The Mysterious “Notice of Claim” to Appraisers Relating to FDIC Lawsuits

This post is for appraisers who have received a document entitled “Notice of Claim — Appraiser” relating to lawsuits filed by the FDIC (see example below). We have received multiple reports from appraisers and defense counsel about the mysterious “Notice of Claim.” The notices are so far nearly identical and state that the FDIC has filed a lawsuit for damages against one of two AMCS (either CoreLogic-eAppraiseIT or LSI Appraisal) based on one or more of the recipient appraiser’s appraisals and that the appraiser may be the subject of claims for negligence by one of those AMCs or by another...

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What is the FDIC Suing Appraisers About? Some Examples of the FDIC’s Specific Allegations?

The FDIC continues to sue residential appraisers in connection with origination appraisals and review appraisals performed for failed lenders between 2003-2009 on loans now in default. It may be helpful, or scary, for appraisers and AMCs to see for themselves exactly what kinds of alleged USPAP violations or other errors the FDIC is claiming in lawsuits against appraisers. Therefore, I have copied below the FDIC’s actual allegations against several appraisers. These are word-for-word the entirety of the FDIC’s claimed errors against these appraiser defendants. Please don’t shoot the messenger. I’m a lawyer, not a USPAP expert, but even I know...

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The 8 Biggest Appraiser Liability Cases in the U.S.

I have described below the 8 biggest appraiser liability cases with which I am familiar that are currently pending in the U.S. These are cases that specifically name appraisers, appraisal firms or appraisal management companies as defendants. That’s an important distinction because the appraisal industry has been fortunate that only a small fraction of litigation about financial losses blamed on appraisal deficiencies actually names any appraisal defendants. Yet, the stakes below are very significant for the appraisal industry because the realistic measure of damages at issue in just these 8 cases — not the plaintiffs’ puffed-up alleged damages — is...

AMC’s Filing Complaints Against Appraisers 0

A Refreshed Warning about Some Risky E&O Sold to Appraisers

We first warned appraisers about this problem almost a year ago, but many appraisers are still falling prey to the marketing for some “no frills” E&O insurance policies and their lack of coverage. Advertisements for this product appear in some respectable newsletters and publications. Fortunately, others have taken steps to protect their members and readers by providing information, e.g., the Appraisers Coalition of Washington published a warning for its members in April last year on the ACOW website and Ann O’Rourke also published a warning last year in her popular Appraisal Today newsletter. The central problem is what might be...

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