Is this the END of USPAP?
Non-USPAP States – Is this the END of USPAP?
I recently got an email from an appraiser I have high regards for. He asked me a simple question that got me thinking. It was: “Why don’t a group of appraisers get together and form an AMC?” I found that an interesting concept. It has been done. Coester was an appraiser and now he is just an AMC. Allen Hummel, an Appraisal Institute icon, has an AMC. Why not? We know it better than anyone. But the devil is in the details.
Appraiser’s liability for mistakes or omissions in this appraisal report is limited to a refund of the fee paid for this appraisal!
So I have been pondering this now for about a week. I had to testify in court. I sat outside the courtroom for 4 hours shooting the breeze with a forensic accountant. He said his contract states he is only responsible for mistakes up to his fee. I see that all the time with home inspectors. Why can’t appraisers be responsible only up to their fee? Think of the money we would save on E&O Insurance. Years ago we did not have E&O insurance. How would that impact the way lenders order appraisals? I think they would want the highest quality appraisal they could get. Because $200 to $800 would be all they could get. Oh it’s nice to dream…
39 states with AMC laws
Another state, Idaho, just enacted AMC laws. There are now 39 states with AMC laws. That is over 3/4 of the states. So, is this because Dodd Frank stated the states shall regulate the AMC’s or because of the way some of them do business? Remember when EAppraiseIT testified under oath in the Washington Mutual Bankruptcy case in New York, that they removed the signature from an appraisal, changed it, and put the signature back on it in order to make the deal work? That is the case Cuomo made his mark and resulted in the HVCC.
Non-USPAP States – Is this the END of USPAP?
Indiana became the third state to become a non-USPAP state. This allows appraisers to do work that is not classified as an appraisal, like BPO’s. This system seems to be working well in Tennessee. Let’s see what happens in Indiana. Texas also passed legislation that allows alternative standards to appraisers… USPAP is no longer the only game in town!
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The liability is more complex than what is stated. Depending on what the issue is, the appraisers liability could simply be limited to the appraisal fee. And E&O may cover more than what is simply considered a mistake.
If there is anything more than a simply error and omission, the liability for the appraiser, home inspector, or attorney is going to be more than the professional service fee. One can’t write a legal agreement that excuses them from, say, fraud.
Should the cost of arson be restricted to the cost of a match?
Should the cost of a hit a run death be limited to the cost of a six pack?
I realize that you now work 12-16 hours a day six days a week but let’s try to maintain a reasonable level of insanity on this site.
I doubt many of us are involved in fraud. We as a group have a tremendous amount of pressure to arrive at an opinion of value that allows all the other game participants to get their paycheck! How many times have our estimate of value been lower than a sales contract amount? YOU know that appraisal will receive the “reconsideration of value request”, many times you will be dropped from an appraisal panel, the Realtors involved will label you as difficult or stupid. You may even get a complaint sent to your state board!
You have a buyer that is chomping at the bits to buy, a seller who has found a sucker willing to pay, a lender working on commission, a Realtor working on a commission, the surveyor needs this deal, the home inspector needs this deal, the pest inspector needs this deal, the insurance agent needs this deal, all of these folks as well as their friends and relatives WANT this deal! And there is “YOU”... a silly real estate appraiser giving your opinion that is not what they want to hear!
But wait….YOU are looking out for the “PUBLIC“. You are the one who stands for honesty and the American way. You are the person that needs a new career! LOL
Reasonable why? C&R fees are not reasonable, AMCs are not reasonable, SOW is not reasonable, clients are not reasonable, assignment requirements are not reasonable …. why should appraisers be reasonable? Let Alex dream! We need these dreams in order to keep sane in this business!
“He said his contract states he is only responsible for mistakes up to his fee. I see that all the time with home inspectors.”
I work for an E&O company that insures inspectors and appraisers. I can tell you this much, that statement is not true at all. Inspectors are always liable for more than their fee. People purchase a home based off the inspectors work. Their liability like that of the appraiser is much higher than their fee. It sucks, but it is the way it is. I have never personally seen a suit/case against an inspector where it was limited to only their fee. I know of small cases where the home owner wasn’t happy about something very small and the inspector just refunds his fee to move on and be done. However, that is not the limit of his liability. Another thing to note, most of the time an Inspector E&O policy costs more than an Appraisal policy. So not sure where your research comes from, but it is incorrect and your limit of the fee you propose will simply never happen.
glad to see USCRAP finally starting to show signs of its demise. so disappointing to see just a few states on the ball about this. NEWS FLASH – you cant regulate someones integrity.
it would take all week and hundreds of pages to explain why that document is such a joke and so gooned up. just isnt worth it any more.
the absurdity continues . . . . .