New Client, Same Property
There is a problem that I would guess most appraisers run into on a somewhat frequent basis. Imagine the following scenario (it probably won’t be too hard since you have likely encountered something similar): You do an appraisal for Client A. Somewhere during the loan process, the loan is turned over or changed to Client B. Client B knows you recently completed an appraisal on the same property for Client A and asks for a copy of the appraisal in their name. What do you do next? It seems to me, at this point, you have at least four options: two of them are allowed, and the other two are, well, not.
Option #1 (not allowed): Since Client A owns the report, you could ask Client A for permission to share a copy of the report with Client B. Once Client A gives permission, simply change out the client name and send it to Client B. This is a problem because changing the client name on the report would essentially mean you created a second report without treating it as a new assignment.
Option #2 (allowed): Tell Client B, that while you would love to accommodate them, you unfortunately cannot send them a copy of your report because Client A is your client, thus the report is confidential to Client A. You can, however, complete another full report (including a new inspection) if they would like (remember to disclose prior services), and likely charge a full appraisal fee for your efforts.
Option #3 (not allowed): After obtaining permission from Client A, simply use the Fannie Mae update form (1004D) to transfer everything over to Client B. This is an issue, because you now have a new appraisal report without the majority of the necessary content and forms to support it.
Option #4 (allowed – but not common): Inform Client B of your ethical responsibilities and let them know that you can do another appraisal (retrospectively and for a reduced fee). Ask them if they would like you to complete another inspection (note that an inspection in not required for an appraisal, it is typically just required by the client). If they are okay with you not going back out to the property, you might make a business decision to offer them a less expensive fee and a quicker turnaround time. Essentially, they are ordering a retrospective appraisal (as of the effective date of your prior inspection). Remember to disclose all previous appraisals completed on the property by your company within the last three years including the report recently completed for Client A.
I personally think option #4 is the most realistic. Why would you want to make such a business decision? It allows you to help out your client while still doing so ethically. These types of things are typically ordered from companies who are either not currently your client or whom you already have a good working relationship with. Either way, this is a way to potentially build a new or better long term relationship.
Above all, if this problem arises for your business in the future, be sure to clearly communicate your ethical obligations to your client. Remain as professional and as helpful as possible, but remember to remain within your required parameters.
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 309 – A Creative Solution to the Reassigning an Appraisal Problem
- Be Nice or Be Quiet - July 2, 2021
- Being Liberal with Values Hurts Homeowners - June 28, 2021
- Why Are Appraisers Banned? - April 15, 2021
Or option #5, as in explain to the borrower when they call (you know they do) that the new lender can legally use the original appraisal as-is without the need for a name change (99% of the time its released). For the sake of public trust, borrowers need to know its the lenders (2nd, 5th, or 100th), who are shaking them down ($$$), and not the appraiser. Only after when the borrower knows the truth, and the lender declines to accept the original appraisal, would I consider other options. Instead of our government issuing PIWs 10% of the time (in the name of cost savings), why not educate and push lenders to require USPAP compliant reports only (no one off assignments), where as with a single set of standards, the appraisal can be transferred easily as is legally permitted? VA loans get transferred all the time with no cost to the consumer.
If I just copied an old report for a new client, perhaps I could also complete 4 to 9 appraisals per day like the coach.
Seek the truth.
Old news rehashed. Readdressing, Reassigning, Reappraising: Do’s and Dont’s
It’s often about optics in the loan package. Some companies are under scrutiny and lender b can get really touchy about a ported appraisal with that companies name on it. Also the multitude of unlicensed inexperienced persons running wild in appraisal distribution departments are likely to make these requests. They won’t read the above guidance but they will pressure the appraiser for an easy solution.