Who Can Complain About Appraisals?

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Dustin Harris

Certified Real Estate Appraiser at The Appraiser Coach
A multi-business owner and residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc. He owns and operates The Appraiser Coach where he personally advises and mentors other appraisers. His principles and methodologies are also taught in an online, Mastermind group. He and his wife reside in Idaho with their four children. Dustin Harris on e-AppraisersDirectory.com
Dustin Harris

Latest posts by Dustin Harris (see all)

Complain About a Complaint Filed - Who Can Complain About AppraisalsTime to get on my soapbox and complain about a complaint filed against me (not a charge, but merely a complaint). I did an appraisal of a multi-family property near my office. The property owner/borrower called me to complain about the appraisal since it came in far less than she thought it should (not unusual). Clearly, I could not answer her questions since she was not the client. This upset her greatly, so she filed a complaint with the State. The complaint had no basis in substance. In fact, the complaint was that my appraisal was too low. Since neither USPAP nor state statute see coming in “too low” as a violation, the complaint had not merit.

Anyway, the state contacted me with the complaint. I sent in a copy of the workfile and report, as well as answered all of the state’s questions. Eventually, the State of Idaho decided not to charge me with anything (there was, after all, not a violation of anything). All of what was needed to be in the workfile was in it. All that needed to be in the report was in it. My due diligence was obvious. My adjustments came from proper market data support. My value conclusion was credible and the appraisal report was not misleading. So, as I said, the state declined to file a charge against me. This entire process lasted just under one year and subjected me (and, to some extent, my family) to a lot of unnecessary stress, sleepless nights, and so forth. But, as I said, it all eventually went away.

Now, here’s my complaint: The property owner/borrower was not my client, therefore I had no responsibility to her (other than common courtesy). I had not agreed to appraise the property for her, nor had she paid me, so we did not exchange any good and/or valuable consideration. We were not in privity in any way. So, why did she have any standing to file a complaint against me? Idaho should have dismissed this complaint just as soon as it read her letter. Why? Because the complaint had no basis in law or fact, with which the state eventually agreed. The potential borrower was just mad at me for what she thought was a low-ball appraisal.

Now, it is clear to me that anybody can file a complaint against an appraiser at any time for any reason at all, including no reason at all. So, should a borrower be able to go directly to the state and file a complaint? More importantly, should a state appraisal board take seriously a complaint from someone who is not a client or named intended user? I say no!

But what if there are specific USPAP violations? That’s a different question. Nevertheless, it should not even consider a complaint that alleges merely the appraisal was not high enough – that the property owner (not my client; not a named intended user) merely disagreed with my value opinion.

Please let me know your thoughts on this. I know the state board has its responsibilities. But do those include bothering me for 75 or 80 of my precious hours to defend myself against a charge the state eventually concluded was baseless? Even the Standard Three review of the appraisal the state ordered found nothing amiss. So, chime in on this. Let me know if I’m wrong. I’ll appreciate hearing from you!

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 186 Should Only Intended Users Be Allowed to Complain About Appraisals?

Image credit flickr - Joegoauk Goa
Dustin Harris

Dustin Harris

A multi-business owner and residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc. He owns and operates The Appraiser Coach where he personally advises and mentors other appraisers. His principles and methodologies are also taught in an online, Mastermind group. He and his wife reside in Idaho with their four children. Dustin Harris on e-AppraisersDirectory.com

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58 Responses

  1. Avatar CJK says:

    I believe the only person who should have the ability to file a complaint is the client, or an intended user if named in the report. Not any third party. The state should reject all complaints that have to do with the opinion of value. One of the E&O insurance companies said that JP Morgan/Chase is the number one outfit that goes after appraisers (because they know we have insurance). What is upsetting is when an investigator agrees with the appraiser, but someone higher up the food chain says “nail him/her anyway.”

    We had this issue in Colorado a few years ago. The director of the Real Estate division wanted to make a name for herself. She went after any appraiser for any reason. Finally she went after the wrong person, after it hit the news the state had to cut all ties with her. A few years later she lost her law license because she was a bad girl. In Colorado the state went after one appraiser because the subject was located in a market that was covered by two MLS systems, the appraiser only used one, he should have known.

    My friend was nailed because the owner was the mayor of the town, the appraiser did not include a small loft area (40 sf) in a bedroom that needed a 6′ ladder to get to as GLA. He had to pay a fine, take classes, and have 10 reports reviewed (he had to paid for the reviews), to this day the bad mark is still on his license. He said the only error he had was not having his lawyer at the board meeting.

    Remember now, these are the same people who currently say desktop “appraisals” are just fine. Until the loans go into default that is. Just think of the number of complaints that will flood the boards (more money for them) when the owner learns that the appraiser never even saw the property.

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  2. Avatar Tom says:

    Is it an Appraiser thing to react passively when it comes to erroneous and un challengable complaints against the appraiser’s livelihood? Or can Nonclients, Lenders and their goons the AMC’s file actions and or blacklist you without notification? Here’s a fact: The 14th amendment states that no state can “deprive any person of their life, liberty, or property without due process of law”. Going after one’s license to practices falls under all three.

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    • Avatar chris says:

      Well said !!! Bring in the lawyers !!!

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    • Having said that, there is a cost in obtaining due process in Admin law courts. MOST states have a process so formal that it requires an attorney. E& O doesn’t come remotely close to covering attorney fees, and a soften as not urges settlement to minimize THEIR exposure.

      SOME appraisers in SOME states have a fair shot at defending themselves…but not the majority. God help you if you are in a state that is trying to make up for lost license revenue with $10,000 fines. They have been known to simply declare USPAP violations by Divine Right!

      My generic advice (unless you agree you actually DID violate USPAP) is to never accept a consent agreement-It will come back to haunt you tenfold and the wording of the stipulations are so horrible that John Dillinger looked like a choir boy in comparison.

      Such agreements also take out a piece of your heart and soul. “Confessing” to something you did not do will eat way at you forever.

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  3. Avatar Mike says:

    Dustin, I can sympathize with your situation and agree to an extent, but here’s the rub- if we start limiting who can file a complaint, how does a state with perhaps 2 staff (like mine, both of whom are not professional appraisers) – weed out the “no merit” complaints simply based on the initial letter? How do they determine- without a review by an actual appraiser or some type of investigation – that the “low” appraisal was perfectly valid OR the result of some substantial error or issue in the appraisal? I agree that borrowers have no standing to complain and we have no responsibility to them. But what about a review appraiser that sees your work 6 months or more later? I do a lot of review work. I have only 4-5 times in my career seen reports so bad I felt I had a moral obligation to turn it in to the state (I’m not in the business of filing nitpicky stuff) – but shouldn’t I, as an appraiser reviewing that report, have an ability to send something I see to the state? Don’t we all want that kind of check on our industry? Honestly I would think having reviewers send stuff to the state is the BEST way to self-police our industry. Most state appraisal boards are made of primarily of certified appraisers anyway, right? Again, I’ve been in your exact situation and I know the horrible stress and feeling of powerlessness it causes, but this is the unfortunate side effect of having a business that deals with the general public. The best we can do is EDUCATE people whenever we get the chance and just do the best work we can. State coalitions should push for modifications to state regulations to limit the time a state board has to investigate and provide initial results/charges (or dismissal) to something reasonable (90 days) under the idea that anything more does not constitute “due process”.

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  4. Vincent R Simon on Facebook Vincent R Simon on Facebook says:

    Support support support. Should be in every report anyway. No worries

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  5. Phillip Case on Facebook Phillip Case on Facebook says:

    I was investigated because a home owner got mad that I charged a reinspection fee and the lender did not tell them about an additional charges. But I ended up dealing with it. Nothing became of it but should not have happened.

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  6. Avatar CJK says:

    I am not impressed with some of the review appraisers. I had one who did not know the difference between urban and suburban, he did not know the difference between City and unincorporated County. He also used FNMA guidelines to review an FHA appraisal. He gave me a poor rating on a report that the FHA field office rated as Good. Should I have to spend time responding to this sort of BS? Or how about the review appraisers who do not even know what the current FHA or FNMA guidelines are. It is not my job to educate them. If a review appraiser does not know the difference between a HUD manufactured home and a state approved UBC/IRC “modular”, they need to move along, and take the review appraiser who does not know the difference between a Condo, PUD and town-home with them.

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    • What you cited is far more common than many would believe. Full-time review appraisers (some) have a tendency to take a do as I say not as I do approach to reviewing. They will impose their own unsupported and unsubstantiated subjective opinions on other appraisers work, even though they are out of state, and have not done a similar assignment in years.

      A good review follows the Ted Whitmer approach and USPAP SR3 and SR4. EVERYTHING else is garbage. Wells Fargo routinely manipulates desk reviews to produce technical errors that result in reappraisal with the appearance of it being ‘necessary’ rather than appraisal shopping. The ONLY purpose a desk review should ever be used for is to determine if a field review is warranted. It should serve no other purpose. Certainly not opining different numbers, values or adjustments.

      If a review is NOT SR# and SR$ compliant, then it is no better than an AVM or hybrid is compared to a real appraisal. Yet they are routinely being used to determine whether to file charges against appraisers.

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  7. In my career I have had 2 complaints filed against me. One from a borrower (while I was a trainee) who had an issue with the value. She stated I did not take her improvements into consideration. Turns out, her so-called improvements were made by the previous owner and were reflected in MLS photos from the listing when she purchased the property. Her bad. The property later went into foreclosure. I was terrified. Here I was, a lowly trainee and some asshat files a complaint! My mentor (who signed the report as supervisor) attending the board meeting with me. The complaint was dismissed by the licensing board, however in hindsight, ironically, I was grateful for the experience because of the lessons I learned. Do your job! Keep an ironclad workfile for every report. Because two years later, after I was certified, BLAMMO!!! Another one. This one was filed again by someone who was not the intended user. The complaint was filed by the listing agent because the appraised value came in below the purchase price. Nobody to hold my hand this time, but I didn’t need hand holding because, again, I had an ironclad workfile. This complaint too was dismissed. Board members have told me that over 75% of complaints are about value and are not filed by intended users. And each one of those must be investigated at great time, effort and expense, not only to address the complaint, but then for USPAP compliance. So let’s think about those hybrid products now. When the complaint is filed against the appraiser who completes these product types using information provided by third party sources, who’s going to protect the appraiser because he will be unable to protect himself. I agree; the state regulations should be changed so that only intended users are allowed to file a complaint. But that is going to have to be as a result of federal guidelines; state boards are not going to take than on themselves.

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    • Baggins Baggins says:

      Solutions to those concerns include disclaimers about intended users. Personally I can’t bring myself to say something as silly as; not intended to be used by any person for any reason. I do however have a long boilerplate intro describing the process, intended users, a limited scope of participation, advising people to get second opinions if there is any confidence issues regarding credible assignment results. Easy. It would not serve people’s best interests in the long run if state complaints were limited to intended users. In other terms, the fix would be in. We do not want that and sunlight is the best disinfectant because value related complaints may indeed bring to light inadequate developmental processes. You know, like when people use typing services, rely on inexperienced inspectors, move too fast without regard for the well being of people they’re providing services for. Client definition is one thing. Competent appraisal methods is an entirely separate matter.

      There are a lot of coaches out there. Pick the one that is right for you. Always winning, dang. How does he do it? Did you see the 100 shot challenge? We died of laughter, then came back to life.
      https://twitter.com/3yearletterman

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  8. Avatar Mike says:

    CJK, let’s differentiate between what we are calling a review appraiser, such as someone who is a staff appraiser and an appraisal management company or a bank, and a normal working fee appraiser who happens to do some field or desk review work. For those of you saying that only intended users should be able to file complaints, first I don’t know that that solves the problem. Lenders are just as likely to file a frivolous complaint as anyone else. Second do we really want to limit the ability of our peers to send in something that we see in the course of a field review or desk review that is really bad and needs the attention of the state? None of us likes the idea of ratting out our peers, but at the same time if we have respect for our profession we should be able to file a complaint against those that are egregiously violating the trust that we build as appraisers doing it the right way. I think at least one incremental step would be that state complaint forms need to have a required spot where a specific USPAP violation is alleged (i.e. what part of USPAP was violated). That won’t end everything frivolous but it might narrow down some of the “I just think it’s wrong” borrower complaints.

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    • Avatar CJK says:

      The way I see it we have 5 types of reviewers. 1. A fee appraiser who is doing a review for a client. 2. A staff appraiser who is doing a review for his company. 3. An employee (not an appraiser) who is reviewing an appraisal. 4. A certified appraiser who is on the state appraisal board. 5. A staff appraiser for the FHA/VA. I worked as a staff appraiser for 3 different lenders, and I also completed field reviews for FNMA back in the day.

      A good fee review appraiser should know his stuff, these are the ones who might see an error but know the difference between a mistake and deliberate misrepresentation. These appraisers will not fail a complaint with the state over minor issues . They know that no appraisal is perfect. The bad review appraiser (god complex) is the one who has made it his/her mission in life to find fault with every appraisal and report everyone to the state simply because he/she can. We have one of these in Pueblo, CO. The employee reviewer is the person who is not an appraiser and really has no idea what they are doing, other than checking basic items. The VA/FHA staff appraisers who do not even know what is in the current regs can be the worst. Call FHA 3 times in the same day, ask the same question, and receive 3 different answers. The state review appraises are so obsessed with USPAP that they can no longer think outside of the box.

      I just completed my continuing ed for the upcoming renew. I took the 7 hrs USPAP, and the 7 hr USPAP for review appraisers. Most review appraisers don’t even know that if they are giving an opinion of value they need to be geographical competent or they are in violation of USPAP, go figure. If the subject is in Denver and the review appraisers lives in NY, having access to the MLS does not make one competent.

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      • Baggins Baggins says:

        If appraisers take the time to provide high detail, unique reporting, meaningful content, being transparent with market data, providing more data so the report is more ‘self contained’, skate past all of that. You just can’t give too much credit and reach out of area, can’t search by price. Data sharing is so advanced these days. Appraisers make themselves easy targets by assuming they have some proprietary data access someone across the country or even across the world can not also gain access to. The game is simple. Just be honest. Expect some blowback and time drain, it comes with the territory. Appraisers do not have legitimate standing to bill people for complaints and questions after the fact. Again, appraisers should be thankful they did not have to go directly to court because that’s where it gets complicated and local jurisdictional rules can be game changers. It’s simply best form to never provide origination outside of your home state. For forensic and portfolio review, it’s a necessary evil to operate remotely, but that’s what limited scope and lending insurance is for. Cheers.

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        • Avatar CJK says:

          A lawyer for one of the large E&O companies has said that she can win cases just by the appraiser photos. She has told the appraisers to take photos of everything, even if it will not be in the report. Now, FHMA does not even want the appraiser to look at the property. Something smells fishy to me. How will the appraiser know if an adjustment is needed for view, location or functional utility? I predict the boards will be inundated with complaints. Something else to keep in mind, boiler plate comments do not hold up in court, we cannot disclaim everything away. I usually take 30-40 photos, now they just want me to sit at my desk. Some of the appraisers are going to be very busy in the next few years when the litigation starts over these Desktop reports. The complaints will be overwhelming .

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          • Baggins Baggins says:

            100 minimum! How long do you suppose it will take for all this to come back around? One presumes there is a standard average for the majority of defaulted loan products. I recall reading somewhere that’s just short of the 10 year mark. There is always the immediate default proportion within 2 years, lose a job, can’t hack the payment, perhaps just hate the neighbors. Then a 10 year mark, life changes, lose track, the home provided too much opportunity and they take on too much credit. Everything comes due and eventually one day the ability to leverage equity runs out. When over valuation takes on more gravity. People are dreaming if they think the fnma standard default rate will remain at 4%. Currency correction might be just around the corner. Black swan events are happening and gold just jumped like a track and field star. Things are happening. I’m fixing for an investment property when this all goes south. Strictly desk work is for nerds. If I’m going to do that I’ll bounce to an office, get bennie’s, vacation days, and weekends off. Get a company car and free cell phone. They’ve got to be kidding, we’re not going to go for this. If 10% of us are willing, that’s all they need. Article forthcoming; The exponential decline of the appraisal profession. I’ve got some good bullet points here…

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            • Avatar CJK says:

              The last several FHA appraisals I completed were all 0% down, seller paid all closing cost. It appears that no one learned anything from 2008-2010. When I first started in 1983, home ownership was a privilege, now it is an entitlement. As long as $250K – 300K loans are given away to people with a 620 FICO score and $800 in the bank. The crash is right around the corner. Now, FNMA is doing loans with no appraisals or desktop reports, the next crash will really cost the tax payer. Never fear, they always have the appraiser to report. What, no appraisal, lets blame in on the plumber instead.

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              • Baggins Baggins says:

                If a person owes money to the bank, they are not a home owner. Perhaps the most commonly used misnomer in our society today, home ownership. I’m on track to be an actual home owner and this 15 year note is running down quickly and I’m like 1/2 of the total payment to principal, 2/3rds if you only look at the mortgage payment part. One day this home is going to be working for me instead. Flip it to a rental, requalify, moving on up, to the east side, it’s time to get a piece of the pie. Moving on up! I’m waiting in line by the appraisal exit door. One day, but not quite yet. When it comes to complaints, hybrids, and radical policy changes, be careful what is wished for. One day you’ll be on the other side of the table. This might be the saving grace and we’ll know soon. All those regulators, politicians, they need home loans too. They’re going to be getting a taste of their own medicine on this one.

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    • You are right. Wells Fargo routinely abuses the ‘review’ process. It’s part of an overall intimidation philosophy which actually makes them appear more compliant with Dodd-Frank, than what they are really doing.

      No complaint should ever be permitted on the basis of a desk review alone. IF a desk review is claimed as a basis for such complaint, then it too should be required to be submitted and subjected to the same scrutiny as the appraisal purportedly reviewed.

      IF a non-client is filing a complaint, then it should require a field review by a competent peer to be performed first. (I have filed complaints on the basis of desk reviews and consultation with local third parties; but if real field reviews were brought back into play, I’d happily abide by the limitation.

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    • You point is valid Mike. As reviewers I assume we are acting for a client, so at least theoretically there’s a tie to the complaint and the client. I filed a complaint against the Clear Value hybrid appraisal author. (Currently still being analyzed by Georgia). Now, that’s a complaint that would never be filed by the client because of they are promoting that poor quality product to begin with.

      So then the next appraiser is told: “Well everyone else does these, why can’t you?” SOME provision needs to be made to allow for other appraisers to file complaints. still. The difference being that we presumably know when a report appears to be bad and a vested interest borrower or agent does not, and does not care.

      I don’t even think state regulator should be able to file complaints absent an actual independent outside complaint though. Too often used as a tool of intimidation or outright extortion. Tough problem to find a universal solution.

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  9. Avatar Michael Curtis, SRA, AI-RRS says:

    I take complaints very seriously, knowing how it can affect an appraiser’s livelihood. Doing review work only, I see so much garbage come through every day. However, most of the reports are compliant and acceptable with only minor deficiencies. I have filed 5 LEGITIMATE complaints against appraisers in the past year in 4 different states. All had valid USPAP violations that warranted filing complaints; 4 of which were out and out fraud. I have 3 more that I wanted to file in TX; they told me good luck because they was already a 24 month back log before they could even get to it. Had 2 filed in another state that came back and told me in a letter that yes, there were legitimate USPAP violations (5 in all), however the state considered them “minor”. They said that they would give them an educational alternative (found out it was taking 7 hour USPAP again; DUH!). I was told that in the future, if I didn’t like someones appraisal in their state or was unhappy with the value I should tell the client just to get another appraiser to give them what they wanted instead of filing a complaint. On the other 3 complaints, I expect something similar. The investigators called me and agreed with my complaints and said that they would look at them and that I should hear something back in the next 18 months since they were so short-handed. They each told me something like “In our state, we like to give educational alternatives. We don’t believe in taking away someone’s license or putting something negative in their records. Why don’t you get an attorney and just take them to court?”. Every one of these complaints were for (you guessed it) AMC reports submitted by bottom feeder appraisers or to be nice “the lower echelon of the appraisal profession”. Sad thing is that a lot of these appraisers know that they can get away with this stuff on a daily basis; others just don’t even know that they are in violation of anything since they were never properly mentored as a trainee. I’m beginning to believe that a lot of the bad appraisers know that the most they will get is a slap on the wrist which even then will take a couple of years. I’m glad I’ve only got a short time left in this business; I find my attitude turning more apathetic. Report quality is getting worse and not better with AMCs taking a bigger role and the advent of these ridiculous hybrid desktop reports where properties are inspected by non licensed people.

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  10. Avatar TruthBTold says:

    Once again the appraisers are being treated as if we are ex-cons out here doing appraisals. IF someone is complaining about value, and they have not produced any credible comparables, better than what the appraiser used, that should be the end of it! Why, because everyone in the industry knows that this is the number one issue with property owners and it usually stems from a lack of knowledge about valuation. A property owners only education about the current market is usually from salespeople – agents.

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    • Baggins Baggins says:

      This is the challenge for appraisers. Love it or leave it. Solutions include more detailed time consuming reporting which better educates report readers about the state of the market, where their home falls in the market spectrum, and what may be necessary to claim a higher ranking in the value spectrum if they so desired. We are there to shut down those whom seek to just phone it in, but we are not in place to assist the lender in churning through borrowers at a breathtaking pace in the interests of maximum profit.

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  11. Avatar CJK says:

    If someone files a complaint with the appraiser board, and the board sides with the appraiser, does the appraiser have a case against the filer for defamation? Defamation: the act of communicating false statements about a person that injure the reputation of that person. If a home owner, broker, or some out of state review appraiser filed a complaint with the state and the state sided with me, I would be talking to my lawyer.

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  12. Avatar Seneca says:

    Had an AMC send in a complaint on behalf of a borrower who thought his house should have appraised for more. Complaint wasn’t any specific violations other than Market value not supported by data and inappropriate comparable sales. The report came back from the state with a clean slate. By the way the AMC is Class Appraisals. After four years they still try to send me orders. I always reply GO SUCK AN EGG.

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  13. Baggins Baggins says:

    Posters appear to be entertaining a proposal limiting due process. There is nothing unethical about having simple conversations with people. You are either independent or you are not, definition of the ‘client’ and whatever rule is implemented on that particular day does not change this. We have a duty to the public trust and that includes caring about individuals. It is time for this industry to get modern in this aspect, our positions have been co opted against the best interests of the public like we’re here to protect lenders exclusively. These days it’s not the citizens running the most influential scams, side swiping lenders left and right, but rather, the opposite is true. Powerful interests are currently restructuring the appraisal industry to take even more advantage of these individuals, removing vital checks and balances systems. Shutting down borrowers and their questions is not an ethical requirement for ‘client confidentiality’. The red line is not because a borrower dared to look you in the eye or call you directly on the phone and ask questions. If you automate away all the essential details that truly inform people with unique and meaningful reporting, expect a higher volume of complaints. Be thankful that did stop at the local regulatory board and you did not have to go directly to court. There is always the personal option, of caring about individuals and helping them be better informed. Hybrids seek to eliminate that as well.

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  14. Avatar Bill Johnson says:

    I had a reason to file a complaint against Dustin because the retired real estate agent I met in line at the store said its worth much more. I wonder why the zestimate I supplied wasn’t given more weight by the state board?

    Seek the truth.

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    • Baggins Baggins says:

      Your stamina to keep up with such relentless trolling of the author is remarkable. Best zinger of the month. Great job. Did you know that people pay cash for houses? It’s true, I have a flyer I just got in the mail which re assured me they’ll pay market rate, and I don’t even need an appraisal because they’ll pay cash! Rest assured, they’re not interested in selling, they just want to buy. I’m think about going for this and I’m seeing dollar signs everywhere I look! It’s an exciting time to be a ‘home owner’!

      https://www.google.com/search?q=we+pay+cash+for+houses+flyer

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      • Avatar Bill Johnson says:

        Baggins, dating back a couple of years now for every comment I made on the coach’s site it seemed the ratio of push back against me was 5 to 1. Now, perhaps most of it came from his Kool-aid drinking group of Merry Maids but none the less I figure I have 3 to 5 years of as you say “trolling” to be even. No Dustin I don’t want to be on your Podcast. As it relates to this article, one benefit of outsourcing to India is that they keep a hell of a work file. I’m glad it worked out and that truth prevailed.

        Seek the truth, or lie to yourself long enough until you forget.

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  15. Dustin, I think the party that pays for the appraisal should be the client rather than the lender. Many courts concur. I get that they are only paying a third party to hire me to provide a certain type report to the “real” client (lender). But purely from a standpoint of fairness. You pay for a service, it should entitle you to a seat at the table.

    Having said that, under the rules and USPAP version we currently have, TAF has declared that only the lender is the client—though FNMA has added that everyone else in the western world may also be an intended user.

    Given existing rules then no one other than an actual client should have any standing whatsoever to file a complaint. No one. There should be NO OTHER intended user other than the client. If they want to sell bundled securities, then let them value that portfolio separately.

    TAF has failed in performing their one single duty, and with it FIRREA is in extreme jeopardy of failing. Time for a major renovation to the entire system of mortgage financing…and not the version envisioned by Secretary Mnuchin.

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    • Avatar don says:

      Mike , It seems there are too many empty scrotum’s among independent appraisers. Standing up, defending your work is a given and part of our cost in assembling an appraisal.

      Filing complaints against others including appraisers is part of our public conscience. Citizenry is always inconvenient, it is frequently uncomfortable. But is a major reason other get away with bad stuff. No one wants to get another fired or run out of business, that’s not charity allowing dishonesty, that”s contribution to the crime.

      Maybe this why other can price themselves sooo loww

      Your letter to Dustin “our entitled seat” is an obligation to our profession.

      In California we had some contradiction to the Lender- client- intended user rules. Several appraisers took precautions in filling out the 1004 form.

      Earlier this month I related some of my personal history citing; “sense 1981”. I screwed up It was 20 years earlier. Ain’t nobody perfect

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      • True, however, I cannot in good conscience fault appraisers with families being unwilling to stick their necks out needlessly. I wish more would, but the reality is spouse and kids will take priority every single time.

        I do a lot of soul-searching before I turn a report in. Serious soul searching. Maybe 1 in 20 is so bad no other option is feasible if I want to be able to look into my mirror in the mornings. Oddly, I have seen more bad (truly bad) work done by so-called experts. Experts that are usually advocating in court while pretending to be impartial analysts. Can’t turn them in while cases are still pending..and even afterward not always possible per attorney clients. Fortunately, numerically these are far less frequent than lending appraisals that are ‘bad’.

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    • Avatar MKS says:

      Let’s go down this rabbit hole of “borrower-client” that Mr. Ford suggests. “Dustin, I think the party that pays for the appraisal should be the client rather than the lender.” says Mr. Ford. Is this really due to arbitrary USPAP rules, or simply a matter of common sense? So, let’s say the borrower is the “client”. As your client, or even co-client with the lender (assuming you could change USPAP for such a scenario) – the borrower would have a say in how the appraisal was performed, right? So, we get to have uneducated borrowers who know nothing about the process dictating how we perform the service? People “pay” for things all the time in real estate that are not for their direct benefit. When a borrower “pays” for mortgage insurance, that insurance is for the benefit of the lender, not themselves. It isn’t “unfair” – if they have poor credit and want the loan they can CHOOSE to take out a loan that has that requirement. Or not. Would the borrower/client then also be able to PICK or have a hand in selecting the appraiser? Can you imagine the fraud that would ensue? What a ridiculous idea. Just because the average borrower (and random misguided state court judge) does not understand the “borrower is not the client” concept doesn’t mean we should just go down that crazy path and change the basic reason we exist as appraisers. Yes, we are here to protect the public trust – but that is a function of our license in general, not be directly employed by borrowers. If the borrowers want an appraisal for themselves, they are free to hire their own appraiser for a non-lending appraisal to protect their own interests.

      Misguided idea #2 – “Given existing rules then no one other than an actual client should have any standing whatsoever to file a complaint. No one.” says Mr. Ford. Really? So, I do a field review on an appraisal. Maybe it came to me as some type of audit or QC. It doesn’t just have USPAP issues – it’s out and out fraud. The original lender was perhaps in on the fraud. Under you scenario I would have no standing to send this in to my state board? Uh, I don’t think so. I’m all for modifying how complaints can be filed, limiting what can be taken seriously (i.e. toss out the “but I just didn’t like the number” complaints with no substance) but limiting WHO can file to only the intended users would be absurd. Again, the fraud that would ensue would be ridiculous. Why give bad appraisers a much easier way to hide? As long as they, the lender and the borrower are all in agreement with the fraud no one can catch them. Even if it is audited by a GSE or investor, too bad, they just get away with it? Sorry, try again.

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      • Nicely parsed sophistry around that rabbit hole. Courts have held (for decades long before USPAP) that the party that pays for a service is the client; and that they are entitled to fiduciary treatment at a minimum. Prior to USPAP, (and even in the first few years), the borrower was, in fact, the client. That’s is a historical fact. You can look it up. “Clients” paid for me to provide a service as outlined by their specific choice of lenders stated and written appraisal policies. They did not get a say in how I performed my appraisal. What they DID get was the ability and right to question me about it AFTER i had performed it.

        The ‘client’ borrower-payer had no say in how the appraisal was performed. None. Nor did we have any problem in appraising at MV regardless of ‘desired’ loan amounts-lower OR higher. Yes, borrowers DID have a hand in selecting the appraiser. It was a great way of weeding out all the incompetents that low fee amcs prefer.

        ERC gave lists of approved appraisers and it was up to the client property owner to select their appraiser (AND PAY FOR IT at the door). Borrowers often selected mid to upper range fee appraisers after interviewing them as to apparent competency. Again, it weeded out the incompetents. Was there ever effort to assure a specific value? Of course, there was! As professionals, we learned how to say no & do our work objectively and ethically just as we are expected to do it now-regardless of L.O. pressures brought to bear.

        Borrowers ALSO frequently changed or wanted to change lenders in the middle of a loan application. THAT is the only reason the client designation was ever changed. If a borrower contacted the appraiser early enough, the appraiser had no problem (or prohibition) against changing the lender name to a new lender. Quite frequently this took place after borrowers learned the Loan Officers LIED to them about costs or rates. Obviously, lenders did not like this. The best way they came up with to prevent this late in the process poaching by other unscrupulous lenders; or astute owners shopping once they became suspicious, was to completely control the appraisal. PROHIBIT the appraisal from being retyped for use by another lender (with or without additional charges based on the appraisers business policies).

        As for ‘misguided #2’. I have not seen a USPAP compliant field review appraisal in over 10 years. Maybe they still exist – though I have my doubts. Certainly, FNMA half-assed ‘newer’ field review forms don’t meet those criteria for compliance. Look at the form itself. It was never designed to foster adequate review. It’s designed to promote rubber stamping of values. As for coming across a bad report via some kind of QC process where a lender was in on the fraud – how exactly would that even happen EXCEPT for a client that DID have standing? IT IS NOT YOUR JOB (in most instances) to send a complaint to a state board unless hired by your client for that purpose!

        I have and do turn appraisers in. When specifically requested to review work and consider doing so. Note the appraiser involved in AB bogs CLear Value report published in this same blog.. I operate under the rules in effect. Not what I suggest may be better alternatives. One of those better alternatives is that fraudulent hybrids would not even exist simply because the entire fraud supporting “hybrid appraisal” would not exist except as a restricted report.

        I’d stand corrected on the ‘nobody’ statement. Make it client; specifically identified intended user (other than the FNMA laundry list of users) OR another expert appraiser that is willing to submit an SR3/SR4 appraisal review along with the complaint. One in which the accused would have recourse against false complaints.

        If nothing else, my suggestion would eliminate Wells Fargo and their trained rubber stamp seals at CoreLogic from using the phony desk review process by out of state appraisers to coerce and then punish appraisers that failed to play ball. (Proof on file if either named party thinks they have a suit).

        Think about it. What was the purported necessity for TAF to change the definition of client EXCEPT to protect loans in the process from competitor poaching? Also, hows that HVCC foolishness induced AMC thingy working out for everyone? Instead of borrowers having any say in who appraises their property-now it’s the commission loan officers and brokers that get to control who is on or off a list; or who gets phony charges filed against them in order to support removal from a list.

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        • Avatar MKS says:

          So – the only time another appraiser should submit a complaint – by your proposal – is that they put THEIR OWN license at risk and submit a Standard 3/4 review along with the complaint? Well, here in the real world, that would mean that no one – except a self-hating moron, would ever turn a complaint in. I think there’s something wrong – I turn it into the state for THEM to do THEIR job but I have to be willing to have MY livelihood at risk to do so? Do you even hear yourself? Imagine if we treated any other legal issue that way. “Yes, hello, 911, I heard glass breaking and I see flashlights in my neighbor’s house – send police” Police get there – turns out they came home early, power was out. No burglary. Ok. Oh, sorry – now we have to send YOU to jail for the 911 call you made in good faith. Sorry, don’t call 911, because if you’re wrong – you go to jail. Not made something up. Just wrong. That would be absurd. But that’s what you’ve proposed. If reports are so bad, based on your statements, but we want to make it as hard as possible to hold bad appraisers accountable? That sounds like a good plan.

          As far as field review form – no “form” is USPAP compliant. Ever. “Forms” don’t comply with USPAP. Appraisers do. That’s why we add things to forms. I’m sorry you haven’t seen a “compliant” field review in 10 years – I’m certain you’ve never seen my work and I’ll assume you weren’t talking about all field reviewers. And yes, I remember what life was like prior to USPAP – don’t patronize me by assuming my age. That was 3+ decades ago – things change. You want to re-live the glory days and start writing things on napkins and green hornet forms again – go ahead. Unfortunately that’s not how things work now and there’s no going back. So deal with reality.

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          • Bobby Jones on Facebook Bobby Jones on Facebook says:

            They all find something wrong with the report regardless of how well AND how proven all adjustments. that’s there job is to screw the honest appraiser. then you make one mistake that’s not value related and guess what you violated 1 uspap rule in turn violates 3 more. it’s all bs and a game to people… granted yea if it’s fraud sure turn them in but if it’s just a minor mistake that didn’t effect value I wouldn’t put the appraiser livelihood on the line for that as you never know what we as actual appraisers go throw for work these days and the fee. So I say stop being a jerk & try appraising yourself

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            • Avatar MKS says:

              Well “Bobby Jones” – it’s not a game to me. I have pride in what I do as both an honest appraiser that does appraisals myself as well as performs field reviews. My main work IS fee appraisal work – so don’t sit there and judge me and tell me to “try appraising yourself”- I have been for several decades so shove off. At least I can write one sentence that doesn’t need spell and grammar check. Holy cow, dude, learn to grasp the English language. I only “turn in” things to the state once every year or two that have, in my opinion, significant issues- fraud, major valuation errors, etc. Everyone can make a mistake. I’m sure my reports have mistakes. Mistakes are not the problem. It’s when mistakes rise to the level of being misleading or negligent. Just “getting the value right” is not good enough. We should be beyond the “well, I reckon’ it’s worth ’bout THIS much, here let me scribble that on a napkin” phase in our profession to having people that can COMMUNICATE results in an educated manner. Not legalese or minutiae, but CLEAR and CONCISE. If that hurts your brain too much, find something else to do for a living.

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          • “Yes”. If you (as an appraiser) cannot cite the specific areas of an appraisals non-compliance, then you should not be filing a complaint. (IMHO)

            IF states were doing their jobs, we’d not be having this discussion. “Do I even hear myself?” Seriously? It’s a keyboard and written text. Before playing sophist games about ‘forms compliance’, check your own verbiage.

            We both operate in a system of what is, rather than what I, you or anyone else would prefer.

            Out of state desk top ‘reviewers’ (specifically CoreLogic working on behalf of Wells Fargo) routinely use the review process to blacklist; suspend and turn in other appraisers that either fail to play ball with the WF loan reps; or in post-purchase audits where a higher than desired CU score or AVM ‘risk rating’ triggers a false elevated risk rating.

            The current system has no risk to the complainant, therefore there are no disincentives against filing false complaints. Patronize You? Why on earth would I bother?

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            • Avatar MKS says:

              So, let’s recap:

              1) Mike Ford makes a proposal about the way things should be in the future – that a fellow appraiser should not be able to file a complaint.

              2) Mike Ford changes the subject when challenged about why this is a dumb idea – that we have to “operate in a system what is”. Not the discussion here. The discussion is about what is proposed for the FUTURE.

              3) Mike Ford’s only substantive argument for his “proposal” is that “CoreLogic reviewers” might do bad things. No evidence or logic for why the ability to lock out large AMC reviewers justifies locking out ALL complaints of this type and how that helps the appraisal industry – just more irrational barking, as usual.

              4) We’ve learned that when Mike Ford wants to try to sound intelligent he repeats forms of the word “sophistry” over and over again.

              Here’s a new, simple word for you Mike – BULL SHIT. Past, present and future tense, written or verbal form.

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          • So you are saying appraisers with the courage of their convictions to support their beliefs are self-hating morons? Sophistry can be SO much fun! Let’s all play!

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  16. James Falcon on Twitter James Falcon on Twitter says:

    I had the same thing happen, State called me

    In the end the only thing they said was that I failed to say the view had TREES

    Called it a N;Res in the Sales Grid

    After all, 500+ homes in the sub-division but, Gee

    Yes, it is in the mountains and the Sub-Division has many trees

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  17. Avatar Ike says:

    For many years I have served on the state appraisal board. Yes, the majority of our cases involve a disgruntled borrower who was unhappy with the value conclusion. The others often come from a certain few “bank lenders” who simply must enjoy turning in appraisers, for whatever reason. We know this happens and take it into account.

    After initial processing, which is done by public employees, we receive the file and review all cases at the next monthly meeting. Unless there is a glaring USPAP violation, the majority of cases are closed immediately. That said, you may get admonished for improper certification, etc. But that is simply a wrist-slap, “be a little more thoughtful about USPAP” than anything else. That does not go on your public record, but we still know just in case you get turned in again.

    I can understand that it may have been a stressful situation (one year is too long, IMHO). But it is a reasonable process and fair to the well-meaning, conscientious appraiser. Just don’t be the appraiser turned in with a $300,000 value based on comps 3 miles away when there are 10 neighborhood sales all below $200,000. We would be looking at that one pretty closely.

    My best advice is to be as cooperative as possible, as soon as possible. Present a well-worded, concise statement on why you believe the complaint is wrong. Understand that the investigator probably knows very little about USPAP and some of the board members may not know your market or property type. Help them to understand. Believe me, they do not volunteer their time on the board to mess with someone’s livelihood.

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    • Glad you posted. Which state? Sounds like that is how is supposed to function.

      ASC ‘encourages’ all states to clear cases in less than a year…UnLESS the appraiser disputes the allegations in which case there is no limit. My case took over 3 years (complete dismissal of all charges and complaints – BREA CA) among the most dishonest I’ve found across the USA AND incompetent.

      I respect any state that honestly follows USPAP SR3/SR4 & when applicable SR1 in their reviews. Anyone else should be shut down. It’s the epitome of hypocrisy to cite USPAP as the MINIMAL acceptable federal standard, and to then permit a state to skirt or skip USPAP completely under the guise of some other form of magical ‘investigation.’

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      • Avatar Ike says:

        It is not all BS. I can honestly say that I am proud of what we do in the name of public trust. We really agonize when a tough decision needs to be made about someone’s license. But appraisers who collect fees up front and never deliver reports or obviously fabricate values should be disciplined.

        Our state staff is incredible, but overworked. That is why I think it is important for appraisers to know that the investigators are public employees who also investigate complaints against barbers, architects, real estate agents, etc. They are only information gatherers. The best thing one can do is to communicate with the actual board to discuss USPAP and appraisal methodology in a proper manner.

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        • Yet no state is named.

          Also, state regulators are not supposed to only be “information gatherers.” Clearly, AARO has confused you. According to USPAP, compliance is to be measured (by peers) in the context of the intended use and based on what other appraisers would do (or most likely do) in a similar circumstance.

          That’s ok though. If USPAP is inconvenient fo regulators, then I’m sure TAF will have no problem changing a word or phrase here; omitting one there, or completely negating the long standing peer requirement

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          • Avatar Ike says:

            What does naming my state have to do with anything? Board business is confidential and certainly not supposed to be broadcast on some chat room. I thought this was an interesting topic and posted some generalities about my experience as a veteran, working appraiser that became a member of the state board.

            And no, AARO does not have me confused. I have never been to one of their meetings and they have never addressed our board. State “regulators” as you want to call them are merely public employees, which was my original point. They are not appraisers and do not know or understand USPAP. They take care of administrative issues and gather information to present to the Board. As the Board, it is our job to make decisions and enforce USPAP and our state laws.

            Since you chose to insult me, I will step aside so you can continue on with your pontificating.

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            • Ike, it lets readers research the state’s posted procedures for investigating complaints.

              I fail to see where you have been insulted. AARO has communicated with all state boards. It’s in their name. Association of Appraisal Regulatory Officials. Here is a link. https://www.aaro.net/.

              Your words – not mine…”State “regulators” as you want to call them are merely public employees, which was my original point. They are not appraisers and do not know or understand USPAP.”

              THAT has been MY point all along in my criticisms of so-called regulators. ANYONE that does not know or understand USPAP is NOT competent to enforce it!

              I revise my earlier comments. Clearly, your state has NO IDEA of how to enforce USPAP or even investigate it properly for compliance, based on your own comments.

              Ike, the ‘insult’ is any current or former investigative or enforcement official that does not know or understand USPAP believing they are competent to judge its compliance OR opine about it at all.

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  18. Bobby Jones on Facebook Bobby Jones on Facebook says:

    It’s all bs

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  19. Bobby Jones on Facebook Bobby Jones on Facebook says:

    Texas is a joke beware the reviewers there are funny

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    • That hasn’t been AGA’s experience there so far. They have a little peculiar process in that initial complaints are reviewed first by the two attorneys there, and only then do they go to the appraisers on staff.

      To me, it’s problematic because the complaints are (apparently) reviewed first for possible enforceability issues rather than first for USPAP non-compliance, but from what cases I’ve reviewed so far ultimate resolutions appear fair and reasonable. Admittedly there has only been half a dozen or so Texas issues we have had to deal with at AGA from the complaint process. Had one extended complaint about a former Board Member there that went on to run for a political office being alleged to exert his (former) board position to ‘go after’ his competition. Unresolved issue; fortunately he lost his election bid.

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Who Can Complain About Appraisals?

by Dustin Harris time to read: 2 min