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...
According to the Appraisal Institute’s recently published 2013 Real Estate Appraisal Outlook, U.S. appraisers anticipate that litigation valuation/forensic appraisals will be one of the top five areas of growth in the next one to two years in both commercial and residential appraisal. Indeed, approximately 33% of surveyed commercial appraisers anticipate more demand from law firms and lawyers in the near future, with 24% of those surveyed expecting an increase in valuation consultation and studies in support of litigation. The appraisers’ prediction may be spot on the money as at least one U.S. municipality has begun to implement a plan to...
Appraisal Exemptions: Agencies Issue Proposed Rule to Exempt Subset of Higher-Priced Mortgage Loans from Appraisal Requirements WASHINGTON— Six federal financial regulatory agencies today issued a proposed rule that would create exemptions from certain appraisal requirements for a subset of higher-priced mortgage loans. The proposed exemptions are intended to save borrowers time and money and to promote the safety and soundness of creditors. The appraisal requirements for higher-priced mortgages were imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Under the Dodd-Frank Act, mortgage loans are considered to be higher-priced if they are secured by a consumer’s...
Federal actors could have responded to the appraisers’ warning and prevented the crisis On July 9, 2013 I participated in a radio interview with a lobbyist for the 100 largest financial firms. The San Francisco radio program host asked me what question I would ask the lobbyist and I said that any discussion should begin with allowing him to state his view of what caused the crisis. In the course of his explanation, he bemoaned the fact that there was no warning about the crisis. I found this ironic because I had just published that morning an article about how the...
The implosion of the real estate bubble reverberated across the American landscape. Neither residential nor commercial markets were spared. This implosion not only had a very palpable effect on the economy, but on the political debate of this nation as well. That political debate—as it seems is often the case—has turned to finger-pointing. Those fingers have now curled up into a fist, and that fist is now knocking on the doors of appraisers across the country. In the aftermath of the economic downturn, many banks were taken over by the Federal Deposit Insurance Corporation (FDIC) after their balance sheets dived...
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...
The Appraisal Institute and the American Society of Farm Managers and Rural Appraisers jointly sent a letter Feb. 28 to the Federal Deposit Insurance Corporation, the National Credit Union Administration and the Comptroller of the Currency expressing concern about the broad reach of a proposed Interagency Appraisal Complaint form. The agencies intend to provide a copy of the form to individual complainants, who, in turn, will return to the agency for information gathering and potential referral. In its letter, AI and ASFMRA expressed concern that the proposed form may not be the most effective approach and instead recommended complaint forms...
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...
Agencies Issue Final Rule on Appraisals for higher-priced Mortgage Loans Washington, D.C. – Six federal financial regulatory agencies today issued the final rule that establishes new appraisal requirements for “higher-priced mortgage loans.” The rule implements amendments to the Truth in Lending Act made by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). Under the Dodd-Frank Act, mortgage loans are higher-priced if they are secured by a consumer’s home and have interest rates above certain thresholds. For higher-priced mortgage loans, the rule requires creditors to use a licensed or certified appraiser who prepares a written appraisal...
Filing a Complaint Against ES Appraisal Services With Arizona Board of Appraisal The Board of Appraisal has received information that ES Appraisal Services, registration #40150, has filed for Chapter 7 bankruptcy and is closing its doors for business. If you have an open invoice on an appraisal completed for ES Appraisal Services in Arizona, which is past the 45 days required by statute, please file a complaint with Rebecca Loar at the Board of Appraisal by January 11, 2013. A.R.S § 32-3675. Payment EXCEPT IN CASES OF BREACH OF CONTRACT OR SUBSTANDARD PERFORMANCE OF SERVICES, EACH APPRAISAL MANAGEMENT COMPANY SHALL...
