Bias and Discrimination in Reports, Yes or No?
- “Valuable” Advice From an AMC - February 6, 2023
- Tenant in Distress… What Would You Do? - February 2, 2023
- Appraiser Countersuing Black Homeowners for Defamation - January 30, 2023
Appraisers, should we include discussion of B&D in our reports? Wait, What?? Bondage and Discipline? No, not that. Bias and Discrimination.
Yes, it must be addressed very clearly.
Now, before you blow a cork or throw your mouse at the computer screen, let’s examine what’s really been impacting ‘us’ for the past 4 plus years.
One of our peers, who’s become somewhat famous for the way articles are written about appraisal and other topics, had a recent article ‘rebroadcasted’ in AppraisersBlogs, FTX Bought Government’s Silence; Did Fintechs Buy Attacks on Appraisers?
A statement in that article exposes some of what has been happening:
Another now-retired Certified General appraiser, who has a consulting and advocacy business designed to assist appraisers across the US, replied to me via email concerning this topic:
The two appraisers are spot on. What we’ve been subjugated to for years stemmed from the statements of one person. Once that person was awarded a seat at the top of the food chain, underlings and associates have had to ‘toe the line’ and have become key players in this politically motivated chain of events discrediting appraisers.
We now know of two ‘lawsuits’ filed against appraisers, with the alleged claim being “racial bias and discrimination.” Both of these actions were formulated on basically the exact same game plan:
- Borrower requests a lender loan using real estate as collateral
- Lender, via an AMC, hires a local appraiser to appraise the property
- Report is submitted; borrower get a copy; borrower disputes the ‘opinion of value’ and demands that another appraisal be done
- Second appraisal is completed and delivered by a different appraiser, with the report miraculously stating an appraised ‘opinion of value’ thousands of dollars higher than the first appraisal; it is believed by the borrower to be the absolute correct authority on the subject’s value
- Borrower then decides to file suit against the FIRST appraiser and AMC, claiming this appraiser was improperly biased in a discriminatory way against the borrower
So what can appraisers do to fend off claims of ‘B&D’ in their reports? While it’s true anyone can be sued by anyone else at any time, it’s my contention that additional verbiage in reports may help thwart the attacks. It’s also my contention that if the two appraisers in the aforementioned suits had had such language (shown below) in their reports, then the tactic used by the plaintiffs might have been relegated to the dustbin, as successfully proving a negative is problematic.
This is a good time for appraisers to thoroughly examine every line of commentary in reports used for ‘clones’, or in the templates from which reports are started. Make sure there is absolutely no language that either directly or indirectly states or implies anything to do with racial bias and discrimination of the subject property owner, borrower, tenant or of the neighborhood..
Your reports must concentrate on the, unrelated to who lives in it, will live in it, or anything about who resides in the neighborhood.
I’ve been reading the 4th Exposure Draft to the upcoming USPAP, which we think will be implemented as of January 1, 2024.
The ASB has been wrestling with all the ‘stuff’ swirling around appraisers concerning alleged bias and discrimination, and the proposal is to add a new section (Nondiscrimination) into the Ethics Rule concerning this. A well-known Washington DC attorney firm has been working with them to get this implemented.
While we don’t know yet if the current proposed wording will be approved, either the draft or some other version of it probably will be.
Much of the verbiage in appraisal reports is there as CYA.. If we don’t, we just leave ourselves exposed to attacks by borrowers and their attorneys. Don’t just rely on the preprinted wording on the ‘forms.’ Re-state that in a definitive statement.
The wording I’m going to use in my reports is shown below. Use this if you like, or re-write it in your own style.
By including this in reports, it gives ‘us’ a defensible position in case someone decides to attack our report and use bias or discrimination as the allegation. The plaintiff will have to prove that the appraiser actually did the opposite of what is stated. In other words, prove a negative, which is very difficult. So this statement actually may discourage report users from attacking us for this aspect.
Below is the wording you may use if you like, some of which is ‘lifted’ from the 2024 USPAP 4th Exposure Draft. The bold print is the key to this article:
Appraisers, you’ve basically been “hung out to dry” as the expression goes. Because none of the many appraiser organizations, the ASC, TAF or anyone else has publicly defended the work we do and how we do it as a nationwide campaign, individual appraisers will have to defend themselves. The above report language can be used as a start.