VA Appraisal Request Form at Heart of AIR Violation Class Action
While the statute doesn’t explicitly mention that providing a loan amount is an AIR violation…
When a mortgage lender seeks to make a Veterans Administration-backed home loan, the lender requests an appraisal from the VA’s appraiser panel by using a form entitled Request for Determination of Reasonable Value. For many years, until it was revised in July 2022, this form had a box labelled “Refinancing-Amount of Proposed Loan.” This box asked the lender to fill in the proposed loan amount for refinances. Once submitted, the form begins the appraisal process and is provided to the appraiser assigned by the VA to perform the appraisal.
A lawsuit – Gregory v. Toler Appraisal Group and Gateway Mortgage Group – filed on behalf of a proposed class of borrowers in West Virginia alleges there’s problem here. The lead plaintiff contends that the mortgage lender’s provision of the proposed loan amount to an appraiser via use of this form violated federal Appraisal Independence Requirements (“AIR”) that are part of the Truth in Lending Act (in 15 U.S.C. § 1639e). These requirements make it unlawful for a creditor to seek “to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing of the transaction.” While the statute doesn’t explicitly mention that providing a loan amount is an AIR violation, the lawsuit complaint points to guidance in the Federal Interagency Appraisal and Evaluation Guidelines. That guidance states that inappropriate actions violating valuation independence include: “Communicating a predetermined, expected, or qualifying estimate of value, or a loan amount or target loan-to-value ratio to an appraiser or person performing an evaluation.”
Accordingly, in this case, the plaintiff borrower alleges that Gateway Mortgage violated federal Appraisal Independence Requirements when it included the proposed loan amount in the appraisal request for her loan back in 2018 and in the appraisal request forms for other VA borrowers. On behalf of other Gateway Mortgage borrowers in West Virginia, the action seeks, among other potential remedies:
- Restitution to borrowers of the appraisal fees;
- Statutory damages of up to $4,000 per borrower; and
- Other damages that may stem from the alleged AIR violations.
The case also includes an individual claim by the plaintiff that the appraisal for her loan was inflated – and she is suing the appraisal firm for alleged professional negligence on that basis. A central problem alleged with the appraisal is that the home described in the appraisal is not located on the real property appraised.
While this case is currently pending in U.S. District Court for the Southern District of West Virginia, it was first filed in April 2020. Why am I writing about it now? Because the District Court has just ruled on an important issue.
Gateway Mortgage sought to have the AIR violation claims dismissed, asserting in a motion for judgment on the pleadings that AIR violations could not be pursued by private plaintiffs. In legal jargon, Gateway Mortgage contended that 15 U.S.C. §1639e does not create a “private right of action.” On May 17, 2023, however, the Court ruled against Gateway Mortgage on that fundamental point. As the Court wrote: “Looking at the language of the statute, the Court finds no ambiguity – Congress intended to create a private right of action for violations of §1639e.“
The Court’s unambiguous ruling shines a light on an opening for other claims by borrowers alleging AIR violations.
Links to the complaint in the action and the Court’s ruling are below.
- LoanDepot Appraisal Discrimination Settlement - March 28, 2024
- Should Property Data Collectors Be Licensed? - February 29, 2024
- VA Appraisal Request Form at Heart of AIR Violation Class Action - May 23, 2023
Yes. That field should be removed. But it doesn’t stop the borrower from telling you what he needs, while he giggles, knowing he has just attempted to influence you.
The field was removed from the 1805 last year.
Yet they still communicate this through the assignment details…
Thanks Peter!
Very interesting. Now, playing devil’s advocate here, couldn’t it be said that providing a Contract for Purchase of a stated property (per USPAP, and GSE/VA/FHA guidelines) to the appraiser, which contains the agreed purchase amount could also be tantamount to ‘influencing the appraiser’ such as this VA case alleges?
That’s a big yes!
Absolutley
Took the damn thought right out of my head!!
Absolutely not! Your job is to review the contract.
The point is, the very nature of forcing to review the sale contract is potentially making room for an appraiser to become bias towards the sales contract price. If you didn’t have the sales contract price, would you value the subject at the same specific price point you did? Maybe, maybe not.
Be careful what you wish for. The target on your back not big enough already? How about applying that same standard to the list agent but in reverse; They are required to list at the appraisers value but are not allowed to list higher or lower than that point. Reviewing the contract is essential and this is not some abject exercise in the abstract. Either the sales agents did a good job at forming the contract in alignment with both GSE or other SOW rules at hand, and a reasonable price which fairly aligns with value, or they did not accomplish this task. This touches on the very reason for an appraiser, a check to balance. Something that can not happen if we’re operating in the blind.
One time I had an FHA sale where the seller had listed the typical; we will repair nothing, strictly as is! Yet the list agent accepted an FHA contract. They pulled a clever move and put language in the contract, buyer will forgo the FHA requirements and inspection. Then here comes me, last in the line, the dreaded appraiser. And don’t you know it, the crawl space was so moist, a drain pipe leaking, insulation falling everywhere, another crumby townhome rental not managed well and being offloaded to an unsuspecting buyer. Of course; market heat and buyer was against the wall, so they just went with whatever their agent said. You know, we’ll deal with this once we secure the buy but can not lose yet another deal due to these minor issues, we’ve been shopping for years. All understandable or mostly understandable positions.
Just a few problems; The appraiser does not answer to sales agents. The financing rules apply because the buyer needed financing, minimum property standards were applicable. So I called the repair items and informed them; They can not write away lenders standards in their purchase contracts. Just another example of why the appraiser is so important, why personal inspection is so vital, how agents game the system, and how the principals of consumer protection are upheld better simply by requiring the appraiser to be in place. I did not care if the buyer was getting those repairs or not, I was CYA covering my own liability and also that of the lender and GSE program. This is the symbiotic nature of requiring the appraiser, a win for everyone. Except perhaps the landlord seller whom was to cheap to fix his home problems before trying to dump that off on someone else… Now imagine that situation without a contract being presented to the appraiser.
As far as value, well, if they’ve done a good job, sure, I’ll hit that number. If they’ve undersold I have no problem going higher, although I wonder what games they play at the closing table to make sure the seller does not see the higher than sales price valuation. And if I come in lower, well, that happens sometimes too. The market turns on and operating in the blind is not good practice. Either the appraiser can handle the heat of being in this pressure based scenario, or they should not be an appraiser. There is no magical solution to insulate appraisers from pressure, except perhaps, getting these amc third party companies off of our backs. If anyone would have recognized the appraisers warnings prior to the last meltdown, and canned a few ten thousand rogue mortgage brokers abusing the comps searching program, there would have been no need for the ‘protect the appraiser’ argument in the first place. I don’t need insulated from anything. Nobody is out there pushing me around. I’m doing competent market research and manual report development start to finish, with no help what so ever, and no outsourcing, every, single, time. That’s how you insulate yourself from pressure, don’t try and game the system.
I totally agree with you, but I’m just playing the devils advocate. If the sale contact itself actually causes the appraiser to be bias, then there really are bigger issues with that specific appraiser. In all, the sales contract is effectively subject specific market data. Some knuckle-head said they would buy X and “$X” amount. Is that sale contract feasible in the open market with anything similar to it. If it is yes, how much. If lower, how much – why on both.
Try this one on, it’s clever. A statement a sales agent told me quite some time ago. ‘You know what the problem with appraisers is? Once they get to the number, they quit grinding.’ This speaks on both sides of the issue, getting to the number feasible or not, and if so, is stopping there accurate either?
They love me in times of plenty. But when it’s lean, oh boy, it may be difficult to get me to even accept those orders. Like why should these agents inability to craft well formed deals become my problem? They get really peeved when I call them on the appraisal gap clause. Well, if you’re not comfortable putting that in there to beat the competition, don’t put that in there. The appraisal gap cash promise clause is not just a tool to win the contractual pole position, but rather the expression of a buyers willingness to drive the entire market benchmarks upward. I’ve had a few agents say; we’ve never had an appraiser actually make our buyer pay that. Not sure if I’m dealing with incompetent appraisers or lying agents at that point.
I’ll comp anything aggressively if I’m able and the home is deserving, but that does not always get people there. Agents sometimes just pick these clever things up at seminars; the appraisal gap clause, the foregoing inspection, will not object all of that. Meanwhile when I’m in the buyers shoes I’m objecting to something before ever even seeing the listing. Ha! I don’t care about the frustration of draining the agents time with a lot of showings and a lot of offers, that’s their job and not my worry. As a buyer I’m more about making sure that agent is not steering me to only high point deals, listings from their pals, or being reluctant to actually provide the agency I’m looking for, and being willing to negotiate. The problem with agents is the very first skill many of them develop is how to pat each others backs.
Thanks, good times.
I’m fully aware of your situation. Painfully aware. I have had agent block from getting work in a specific county because none of their ROV’s has any substantial data to support the listing price, nor the sales contract price with stories of “knowing” they could get it and therefore it must be worth it to ridiculous price grabs that anyone would laugh at, but them.
Appraisers aren’t supposed to be “grinding” at all. Appraisers research our data. YOU are expected to support your own pricing with relevant comparable sales. Appraisers WILL consider your data too.
We will also declare a Tidewater situation exists when market data we discovered, or the agent has provided does not support the contract price. Frequently agents are unable to support the price with valid sales data.
Thats not the appraisers fault or obligation. Agents repeatedly mistakenly think we are supposed to help make deals. Thats NOT our job.
Baggins, Well said. Very well said.
Paul, we are required to report point values. Truth is property has value ranges as you know. $400,000 property may be $380k-$400k: $390k-$410k, $400k-$420k.
I could be anywhere in the above ranges and not be ‘wrong’. Id hate to kill a deal just because I reconciled to the lower end while a contract was mid range.
Im NOT knowingly killing a deal over 5% while its still in my own range conclusion. The contract itself is market data. It doesn’t direct my value, but it shouldn’t be completely ignored either.
Now if Im already at the upper end of a range and contract is over that, then my conclusion will be lower. I guarantee in the above ranges a contract price of $420,999 is going to be rounded and capped at $420 000.
How can I claim to support that $999?
I’ve always asked and wondered why the sales contract was included due to the influence factor. I always use a range of values in my comp search,ie,if a home is contracted for $300,000, common sense dictates that the home is worth more than 200K and less than 400K, I always include the following statement; “In the search for suitable, similar sold comps the contracted sales price is NEVER a comp search criteria or parameter”.
Price relations in appraisal reporting is one of the more sophisticated and complex skills an appraiser picks up over time. Geesh, and lenders jump on that like nobodies business if you dare mention a price search filter, even if there is no way this is biased, like a $100k margin on either side, still have to avoid that method. In most markets which contain an adequate set of reasonably uniform properties, simple data sorting for a more narrow home type or home character will usually result in the same thing as a price search filter, but with additional benefits and market insight, as the price search can omit the outliers. Like only one certain type, size filter, ten years age up down, adjust out the rest. This market overview approach helps the appraiser understand the high and low potential, aka floor price, ceiling price, middle of the market, etc. Valuation analysis becomes more comprehensive with time and repetition, and get better reliable MC data. There is the low side, the middle, the highest and best market. Writing in laymen explanation within free writing areas helps limit the reader complaints, confusion, keeps clarification and revision requests down. Like for the topic of this article one wonders if the appraiser might have had better protection with a clearer use and recognition of the difference between ordinary and extra ordinary assumptions, because there is a difference and it’s important to be specific which one the appraiser may have relied on. I like to take the position that I’m doing all the value analysis work and want to share as much of the data and conclusions as possible for the reader, so if they have a different take on values, they can view the research exactly as I did. The graph and data extraction thing is good but the meaning of that approach can be lost on the common reader.
This article got me thinking of law and such, and then I got another annoying robocall, so I checked in on the stir/shaken thing and such. Filing scam call complaints daily is quite the chore. 25 billion voip sourced robo calls, from just this one company. Unbelievable, at least they’re doing something.
https://coag.gov/press-releases/attorney-general-phil-weiser-sues-avid-telecom-over-illegal-robocalls/
When I have asked VA about this very topic, should I evoke Tide Water Protocol on orders where this number can’t possibly be met, they simply stated that figure is to be ignored in all cases. However, that number was use in retribution against me that I should have notified the lender/client (Guild in this case) that value needed to get the loan to go through was possible and they should cancel the order. VA was notified, but nothing done about it (they don’t want to lose Guild’s VA business). Guild since terminated all orders that are not VA (they can’t stop the VA order from coming to me). If we can’t call Tide Water and I can’t provide value for a house that I haven’t even inspected (any value provided over the phone is a value opinion/conclusion), seem like it’s just another example of how appraiser’s are there to speak for the market, but the market just want all things to go through at all time and there is simply no stopping it. This little box on the VA form is just the tip of the iceberg with week to week operations.
Yeah, well it’s like I was saying below, what if the lender would simply lean a little more to the middle, get on the phone, be honest with the borrower, be willing to sit back down and reform the terms of the deal. The instances like you mention are less likely to happen if a lender was using reliable valuation services at a different point in the mortgage origination pipeline, ordering the appraisal first, rather than last, using comp search methods prior to solidifying full engagement. The miracle which is automatic valuation modeling is coming up a little short lately.
It’s unlikely that a power player like the lender you speak of would pull back from one of the three major GSE’s. More likely there are simple technical controls to sub out a specific appraiser who’s not a good fit for their process needs. All lenders do that and it’s not necessarily a bad thing, to be able to work with who works best for your company needs. Sometimes they refer to this as mini panels or parsed vendor lists, things like that.
One can imagine the VA or any other well formed appraiser panel functions as a true rotational clearing house, and sometimes they do, but not always. The trick is to get on panel, provide best of ability performance, and be patient.
Personally I jumped off the VA list because it was tiresome and tedious to work with every single lender out there, it’s way nicer to just land with a small set of well performing reliable lenders who’s process you agree with. Run across fewer desperate borrowers. That being said though, it’s give and take, there is more potential and staying power with the VA model from the appraisers perspective, just comes with a lot of hassle though. Those same lenders whom use amc’s are also forced to deal with appraisers directly under the VA model, they let their resentment of the independent process be know, they can’t help themselves. I would not read too much into that, eventually you’ll be back in rotation. Don’t brush off Guild, they’re one of the better ones.
Missing the IVPI proposal yet?
https://www.workingre.com/wp-content/uploads/2013/08/IVPI-Proposalfinal.pdf
So, a Realtor that refuses access to an appraiser because they killed the Realtor’s last deal could be sued by the appraiser for violating AIR? This could get interesting.
Yes. That is also violation of NAR golden rules, conduct rules 10, 11, 12 and 15 if I remember. They are attempting to influence the market and/or which contractors are permitted to work on site. It is a form of discrimination. However, unless you are actually going to sue someone privately, don’t expect anyone in the regulatory industry to care.
VA can get away with just about anything. What could regulatory agencies do?
The regulator agencies could actually uphold the laws in place. Simple as that. Dodd Frank, Air, etc.
The reason the VA holds up better with more integrity than other GSE’s is not due to the management structure or any specific difference in rule making. The reason is primarily because military service persons have a better understanding of their constitutional rights, they are more prone and likely to insist on due process. Those benefits rarely flow all the way downstream to the appraisal value servicer.
Besides, when the CFPB wrote away the AIR provisions in Dodd Frank Regulation Z on appraisal independence which specifically levied $10k/$20k daily fines for failure to compensate appraisers with Customary AND Reasonable fee structures, that paper tiger lost it’s teeth.
Good luck taking a NAR backed Realtor to civil court for affecting an appraisers lender client arrangements. You would need a damned miracle or intervention from a superior race of sentient beings from another galaxy to pull that one off. All it takes is a single phone call, happens every single day of the week. It’s better to just let the realty person or broker company know they’re incompetent by simply picking up the phone and replacing them with someone else. The only just deserts an appraiser can expect in this system is a 100% fee and robust consistent fee for direct assignment and somehow form a remarkably low personal tax rate. This job is not for everyone.
I am a VA appraiser and I do not recall that box being filled in. While I agree with Dave’s comments it is not unusual for me to find issues with contracts that need correcting. Maybe that is why we get the contract??
I am as well. The sales contract is a piece of market data that needs to be analyzed. Some one signed a contract that they would pay “x” for said residence and putting down “x” in earnest money and/or an actual down payment. The bank is asking if the assets are worth the note being sought at a minimum, yes or no. Then the report is the articulation of the simple yes or no. I think the sale contract should be looked and provided, but the other side of the coin does make sense where it CAN unintentionally create bias.
Close and I understand your points, well taken regardless. Spencer, imagine a better run system, like comp searching, or some better elevation and respect for the appraisers vital role and important worthy participation in mortgage lending. Perhaps showing actual respect for the appraisers independent conclusions on property value, forming the terms of the deal around the appraisers figure, rather than pushing the appraiser to provide values that fit their preconceived terms. Like perhaps showing actual compassion and respect for borrowers to assure they do not become over leveraged. I think somewhere in some dusty legal manual long since filed away at the bank, they used to refer to this concept as being an ethical responsible mortgage originator.
Sure with concept of collateral valuation consideration, that’s valid but is not the entire picture. How about some humble pie and reigning in lenders to better understand their job is not to say yes every damned time irregardless of harm. Personally I only work with salaried based mortgage lenders for my persona mortgage loan interests, for this exact reason. Protect yourself, the bias and harm is baked into the majority of originators business structures, they continue to form new schemes which increase risk while simultaneously managing the appraiser right out of the picture. In pursuit of the loan commission.
If there is bias to be found, it’s baked into this ridiculous notion that the terms of the deal must be formed prior to any communication with the appraiser, and absent of any reliable human based appraisal valuation analysis service. You know, like before Coumo sold us all down the river with HVCC to bail out his pinstripe bankster bandit buddies and their sweetheart junk fee raking insider colluding appraiser value pressuring amc buddies at EappraiseIT/Corelogic.
Because that’s how it used to work before a few bad apple appraiser and mortgage people ruined it for every single borrower and value related servicer in this entire country with their inflated value schemes which sent something like one in ten or more people into foreclosure. And now every appraiser is under a state of permanent probation, unending scrutiny, and unyielding pressure to posture as subservient to lenders. Or else the appraisers are denied participation in our own industry, forced to accept an ongoing conscious and blatant implementation of restraint of trade and racketeering activities perpetuated by groups like REVAA appraisal management company representatives, as somehow being legitimate business practices. The schemes they leverage upon the appraisal industry, in turn leveraging upon nearly every borrower in this country. Co opting the TAF leadership, implementing pay to play, a never ending series of insider trades to monopolize the lending industry. They’ll do and say anything. I guess give everyone a refund on their appraisal fees, as the lenders baked in pressures rendered that as inconsequential irrelevant service anyways. Throw the whole thing away and just let the lenders have total control without any meaningful checks and balances systems. That’s the federal governments idea of ‘consumer protection’, and ‘industry modernization’. One more time; Where does the actual money come from?
https://www.valuationlegal.com/2010/06/cuomo-v-eappraiseit-no-surprise-that-appellate-court-affirms-denial-of-eappraiseits-motion-to-dismiss/
Given that a lender does not select the VA appraiser or to directly provide the form to the appraiser I do not see how it is an AIR violation.
The allegation of including property not in the legal description is another issue.
It is because the lender is providing a predetermined value point they need to hit in order to make the loan work. It doesn’t matter the name of the Appraiser. They don’t care who the appraiser is, but what value point they hit. That is the whole, send a message to the appraiser with the number that work. I literally just got a VA order with a value point listed. The lender and the party that provides the order show a number to hit.
And if the appraiser doesn’t hit the number?
I have already shared my experience with one client where I lost all other work with them that wasn’t VA. I also shared that the regulatory agencies don’t really care, or at least they don’t care about small time stuff. If it was a multi million issue that is reoccurring, a news splash, they won’t lift a finger. Only option is to sue people personally, or take it and move on to new clients.
Allow me to post ten dozen instances of lenders somehow either purposeful or accidental, pushing ‘the number’ somehow into my field of view. It happens, this is not that big of a deal for the appraiser to know the terms of mortgage lending arrangements. As if the VA is somehow more exceptional than other GSE’s, they’re not. VA appraisers know darn well how top mortgage people are on the horn every single time like take care of our special borrower. Furthermore, only on paper is the notion true that nobody ever influences the rotation of appraiser selection. All it takes is a single upset phone call, you’re out. This happens to a random appraiser somewhere in this country literally every single day of the week.
Seems ‘thin’. VA has also had a Tidewater provision that absolutely runs contrary to AIR. If AV is lower than contract Tidewater had to be invoked. In a nutshell it tells borrower and agents value is an is due and come back with your nest support for value (like an ROV in advance.)
Flip side…back in 1971 I learned CRV / value will not come in higher than requested amount. In a property split on $25k house Vet only asked for $12,500. That’s what appraisal came in at.
Can’t imagine a vet. feeling screwed by a system that lets them buy with no money down and no closing costs.
It will be interesting to see how jury goes. Plaintiffs could win the battle and lose the war.
Mike Ford, Tidewater allows the agents to present sales to support the contract price. However, it is extremely rare that they can. So it’s pissing in the wind and proves the appraisers point that the contract price is too high. It also diffuses the situation where tempers are flaring and shows the agent to be at fault for not representing their buyers’ best interests. So I personally think it’s a good thing.
Tide Water is the pinnical of the way the entire industry should be run. If they appraiser can’t locate sale and the agents have sales they think are relevant, it has helped with the transparency of the entire process. 1. It let the seller/agent know the were just fishing with a high listing price ( or acting out of the norm with buyers bidding up); 2. Typically does assist in proving the appraiser’s point with sales that are mostly price grabs, or going well out side of typical search perimeters for price grabs; 3. On the off chance there was a listing that was mislabeled, or lacked any labeling and therefore didn’t show up in your searches, can then be used in the report. I have only had this happen 2 in all of the Tide Water’s that I have evoked. This would be SOOOO helpful in FHA and conventional orders. I think this would allow for folks to understand more about what appraiser’s do and how we do what we do.
Sounds like a great idea!
I know what Tidewater is. As to the frequency they fail to provide support, it depends.
The point is that it is a routine and accepted (by VA) disclosure of contract amount and an additional opportunity for involved parties to provide any information they may have failed to provide before.
That field has been removed from the 1805. The new 1805 form is dated Jan 2022.
Silly. The previous model of comp searching with appraisers seemed to make more sense. There is a difference between knowing the number and being pressured to hit the number. What’s next, with hold the contract from the appraiser too? Every single regulatory move just makes the target on the appraisers back larger, offloading liability and operational concern risk from everyone else, onto the appraiser. There is nothing wrong with the appraiser knowing the terms of the deal, in fact, rescind these rules and just go back to comp searching again. It was so easy to tell ethical brokers from predatory ones before these rules came forth. The predatory ones shopped the comp search to hit unrealistic numbers (of which the majority body of foreclosures eventually came from, which is how many of those whom participated in that process ultimately landed on suspension revocation lists or otherwise washed out), and the ethical brokers simply assigned direct assignment and skipped the comp search process all together. Or perhaps they still would comp search, one single time, to their individually trusted appraiser, then honestly relay the appraisers estimates back to the borrower before forming the terms of the deal, and everyone was happy. Hardly anybody became over leveraged. Instances of being disappointing with appraisers full service activity were rare, liability exposure was a fraction of what occurs now. And best of all, there were no predatory appraisal management companies preying on appraisers and mortgage lending consumers under this illusionary appraiser independence bull.
Stop relying on just the headlines, read the case file. The heart of this one is a divorce which happened within the first few years, and what appears to be generational property holding of multiple parcels, of which it appears that there was confusion what was included in terms of the mortgage, and what was not. I’m not quite clear because they don’t tackle the notes of review and assessors detail directly in the file, but I imagine one could research this amazing foresty area properties plat maps and property description to better understand how this occurred. My bet would be on systemic data irregularities where a seemingly benign mistake with multiple parcel identification recording steamrolled into the digital age, and everyone just took it for granted that information was accurate. What came to mind first for me after reading the file was how in the hell could an appraiser even begin to navigate that kind of complexity if relying on a third party property inspector, or having such unreliable non qualified support systems like having to run that order through an appraisal management company. For a tenth of the fee, expected to flip them in a half ours time on a bifurcated form. Yet another proof positive point the people running the ‘appraisal modernization’ campaign are plainly incompetent.
Direct assignment or bust. Additionally, there is nothing unethical about knowing the terms of the deal. Protect yourself, because all the liability is passed onto the appraiser. Take a very special note that (correct me if I”m wrong, it’s a difficult read), but take very special note that nowhere through the course of these proceedings, did the court challenge or even touch on the matter of the so called ‘intended user’ issue. Personally I’ll continue to operate under the duty of care principals, that regardless of whatever is written in the appraisal, everyone and their mother can and will rely on the appraisal report conclusions. Yet another instance of blowback occurring years later. Who in their right mind would skip the essential step of redundant parcel identification review and plat map verification at the county seat? The appraiser whom was sued, that’s who. Has that guy ever heard of walking the property? The lender was stupid, why didn’t they just adjust the loan down or release the lady’s interest or something, ridiculous. Talk to me about appraiser independence. That’s the appraisers sole and lone responsibility, nobody elses. Stop supporting the illogical notion that the appraiser somehow is more independent or more competent when forced to operate in the blind with inadequate data or poorly qualified information. The trip point for this one appears to be lack of adherence to the essential step of qualifying data from multiple sources, including assessor direct research. That’s how these things shake out, you can’t control what happens with peoples personal interests. There is always someone whom dies, divorces, becomes unable to work, and that’s when, for the very first time years later, people actually perform due diligence and take a hard look at ‘the appraisal’. Damn, I need to get out and do some yard work. I’m refusing to touch the mower because this industry crushed all my hopes and aspirations, just wasted talent.
I would sure like to see what’s going on in the courts and how they’re handling these issues. The hell with the sale agreement being provided or not. What’s in the report? Is the final opinion of value supported by the information provided in the report and is the analyses performed supportive? If so, wouldn’t it be harder to prove bias or anything else the accusers want to prove? Also, why not sue The Appraisal Foundation that’s authorized by congress “as the Source of Appraisal Standards…” as they are the ones who state, “an appraiser must…analyze all sales agreements of sale…?” Ultimately, it’s always about the appraiser.
I get where you are coming from, but you brough up another interesting point, analyze all sales agreements…Yes we are. You would be shocked at how many agents I ask for a redacted copy of the sales agreements and they say no. Even in the pandemic times with everything selling for higher at every turn. I would be denied so many times when the agents say the have “x” offers above listing, or at the same price, but when it’s put up or shut up….they chose shut up more times than not.
This is also the case in the request, or notification of value for VA when you first get an assignment, to get the loans to go through. Everyone that is not an appraiser seems to think they know what the value is, but as soon as you start asking for support, or where they got the notion their value….crickets. Nothing but crickets.
We are the easy target to point the finger at in all situations due to “other’s” preconceived notions of value. I assume it there wasn’t value estimates splattered all over the internet, there would be a greater reliance of what an appraiser actually said and not what all the unlicensed sources are saying.
Can anyone possibly help me out with a question ? We are a Military Family and purchased in Nov 2021.
I believe our appraiser and the selling agent committed Fraud. We live in a small town where every one knows everyone, We were located in WA Stated and purchased from Cross Country here in NC. The house went into Tidewater. 1) the comps were issued by selling agent, 2) appraiser used comps that were approx. 10 miles out and 15 plus years newer. This house is a disaster and appraiser blatantly lied on condition. Also, ignored a comp that was 4 houses down from ours that sold with in 90 days prior to ours. it was same year, same size, very comparable and sold for $80K less. What can we do? this house is in awful shape.The roof is shot, the deck is rotting and the fence was held together with zip ties. appraiser stated on report all were in good condition
If tide water was invoked, that means the value came under the contract price. It shins like you are stating there was an over value, but didn’t clarify if the stent supplied comparable sales after tidewater or before. Did he raise the value after tidewater? If it is fries, this should be right up to the star boards or VA.
Spencer Paul:
yes. he did raise the price after he invoked tidewater. He was very dishonest
imo on the report. Everything from the conditions he stated , etc.. Also, the SQFT is 200plus off from County Records. This house is way smaller. WE only looked at this bc it was compairable to our house we had in WA as far as sqft. County listed it at 1500plus but sales report states 1736. There is no way its 1736.
Here is what he stated on the compairables:
“There were limited sales of similar type property in the subject area. Therefore, it was necessary to use comparables some distance away, make larger than normal adjustments and use older than normal sales. These were considered to be the best available comparables.”
There was no site adjustment warranted due to subject and all comparable sites having equal functional utility. There was no site adjustment warranted due to subject and all comparable sites having equal functional utility. There was no age adjustment warranted due to subject and all comparable having similar effective age.”
However this isn’t True about age. Our house was built in 1993
Compairable #1 15 years old
Compairable # 2 13 years old
Compairable #3 18 years old
They also are all updated and one is Waterfront. We dont even know where to turn. This entire town is corrupt and the selling agent is well known here .
Fed up : We didn’t know it was in this bad of shape. Unfortunatly we could not fly out here and the house was packed with the owners junk possessions during virtual walk through and inspection . We also had an inspection. No, we didnt try to outbid anyone. I take responsibility for entrusting the appraisers opinion and the inspection. That was our downfall. However, he clearly and willfully misled us on the report. I even contacted our broker after we got here , he agreed that using comps that were that different in age is ridiculous. I am also not happy with our own agent, but she isnt the one who signed her name to a report that is relied upon by the buyers and lender
The appraiser is not a home inspector. Your home inspector should have pointed these things out. And didn’t your agent visit the property? Didn’t they point these things out? At times, the VA overrides the appraiser when it comes to value. Is that possibly the case? In general VA appraisers are competent. Didn’t your agent have something to say to you during Tidewater? It’s two years after your sale. You closed on the house, lived in it for 2 years. I think the home inspector and your agent may not have been thorough. Why would your agent tell you to pay what you did if the house was in rough shape? Did they provide you with closed sales prior to making your offer? What I’m getting at is there were several people engaged in this prior to the appraisal even being done. And it’s two years later…..
WE didnt arrive here until Decemeber 2021. As far as the time we have been here, My Husband has been gone alot due to the Military . We have done what repairs to the house we could . I am Angry with our Agent as well . I have been researching for Months trying to figure out how to get help. Please dont fault us for that . Also, in NC you have 5 years. The point is.. it takes Money for lawyers, money we dont have. We had to replace floors and appliances when we got here. Floors were cracked, the tile in the kitchen all the way across . The bathrooms were dispicable , filthy and one wasnt even usable. When I tell you We live in a backwoods southern town, I mean that. There is no way there wasnt some inside Vodoo going on with this deal.
I missed the two years part. That and that alone is tough to get over. With that being said your only option at this point would be for the state boards to investigate and/or sue. If you do sue, you’re facing an uphill climb. You’re attempting to sue someone over an OPINION of value in court, which they would be viewed as an expert. Furthermore there is legal president that you can sue an appraiser over their opinions of value. That leave negligence and intent, of which typically is hard to prove, but not impossible. Why did you wait this long for action? If the house was as bad as you, said didn’t you back out and sue for earnest money back.
Thank you for your response. The reason we couldn’t back out is because we never seen the house until 6 weeks after closing. I understand that it seems like it’s been a long time. Its been a year and a half. Like I stated in previous comments, My Husband has been gone alot with the Military. I have been left to try and fix what I could. WE never should have been placed in this position. I thought the VA Appraiser was supposed to look out for the best interest of the VA Buyer. And to ensure buyer was not upside down on loan. At least that’s my interpretation under the VA Guidelines. However, No one looked out for our best interest here. I’m not saying we are completely without partial fault. But, We couldn’t come out here. My Husbands orders were changed last minute which caused us to live in an RV for 3 months. We had already sold our home in WA. We were desperatly trying to find a home in a nightmare market. That Market made it easy for folks in our situation to be taken advantage of. There is no way this Appraiser had our best interest in mind. I will Start with the State Appraisal board and ask for an investigation. Maybe I could also reach out to the Congressional office and see if the Military Liaison could assist with reaching out to the Appraisal Committee . I appreciate your input
I think that you are interpreting the appraiser’s responsibilities erroneously. They have no knowledge of your finances. When you say that the appraiser should be sure you weren’t upside down on the loan, that is the lender’s responsibility. The client of the appraiser is the lender and the VA. It is the hope of the VA that if the Veteran wants to purchase a house, they will be be able to do it, provided they are not paying too much for it. By Tidewater, the appraiser was saying you were paying too much. If they used certain sales and not others and you believe it was over valued, do you have other sales to support your conclusion? I understand your situation. However, did you read the home inspection report? Something about this whole scenario does not make sense to me. Yes, the appraiser has a responsibility to report the value accurately. But they are not home inspectors, loan officers or your agent. The agent should have shown you the defects prior to your making an offer. The home inspector had the responsibility of giving you an in depth report on defects. The loan officer should have counseled you on whether or not your finances could handle the purchase. And you bought the house sight unseen. The appraiser had no idea that was the case because the appraiser does not interact with the borrower when doing an appraisal.
With all due respect, I believe you are misinterpreting what I’m trying to say .
It is the VA appraiser’s responsibility to ensure the VA buyer is not paying more for the home than it is worth. Am I incorrect on that? It has nothing to do with our finances. To answer your question, yes, there were homes that were more comparable to the comparables that were used. He clearly disregarded the VA guidelines for looking at homes within 1 mile . There was a home four doors down from mine that sold within the 90 day period prior for $80,000 less. It’s the same year the same size etc., in fact, it is in way better shape than the one we purchased. I had no knowledge of this, until after I began researching. Then there is also the square footage issue. 200 ft.² is a big difference.
The problem I have , is that the VA appraiser that was used on our loan did not do his due diligence. He stated that there were no comparables other than the ones that he listed. They were all , many miles away and much newer. He also stated that this property was in good condition. Now I don’t expect to be perfect as the house was built in 1993. But when you note on your report that the deck is in good condition, and that our fence is in good condition, and that our roof is in good condition and clearly it’s not that’s being misleading and providing misrepresentation of the property , we as the buyer as well as the lender relied upon his report, and the ironic thing is after he invoked tidewater it just so happened that he stated the house is worth exactly what the contract was for to the penny. Isn’t that ironic? There are many issues with this home not just the ones that I mentioned. The driveway was cracked all the way down there were cracks in the garage foundation. There were drainage pipes running from the roof and hanging down by chains draining off into the yard . One of her bathrooms was completely unusable, etc.. Our deck is literally rotting as in you step in it and almost fall through in some places the front porch was left unpainted and has mold all over the wood. You can see where they were. Bits and pieces replaced half assed replaced that is our ductwork had holes all the way through it. Kitchen tile busted ect . all the molding from every window has been removed leaving gaping holes around the windows, holes off the ceiling for massive hooks. Hanging throughout the house, holes and all the walls. At least quarter size I could go on and on, but again my main issue is his clear misrepresentation of the value of his house by his own words for comparables in my opinion, he will lie solely on the selling agent. Which they obviously work closely together very often. There was nothing unbiased about his opinion. It’s impossible to believe that it was. I came on here asking for help on where to turn. Not to be criticized because I waited. Ask about a time. I understand that sometimes appraisers are accused of things that maybe they shouldn’t be but this guy put it in writing and it’s easily disputed, especially the comparables alone.
Certainly the appraiser has a duty to represent a house correctly and credibly. Readily observable defects as well as positive features should be detailed. But I’m going to harp one more time about your home inspection report. Their report usually is complete with photographs. And your agent was supposed to have a fiduciary responsibility to you to act in your best interest. Your decision though, to purchase, was made when you signed the contract, which was prior to the appraisal being completed.
Another question (s) before you proceed with a course of action, can any single bit of the concerns you have be viewed by the photos in the inspection or appraisal reports, regardless of either individuals “calling out” the concerns?
Also the appraisers are there to promulgate public trust and protect the markets, without bias or advocate for the banks, buyers, sellers or any other third party with a vested interest in the transactions. It might be beneficial to have a retrospective appraisal assignment done by a few other local appraisers and see if they came to the same value conclusions as of the original effective date. If there is a small cluster with lower values, then you may have more weight for your positions.
I really hope you get your issues resolved and that a just conclusion comes your way through the agencies you are going to contact. There is one thing you should understand that I see you don’t. Don’t worry, you’re not alone. That is, an appraiser should not have and does not have your best interests in mind., however, your realtor should. An appraiser is NOT an advocate for a buyer, seller or finance institution. An appraiser is an independent, professional that provides an opinion of value based on facts, data and analysis that should support his/her opinion of value without representing anyone or anything other than the facts. So, you can’t sue an appraiser for failure to perform fiduciary duties.
You mentioned that you will start with the State Appraisal Board in your state. I agree. Also, do you have an attorney?
If Tidewater was invoked, the appraiser came in under contract. Did you have a home inspection? Your inspector should have caught those items. The appraiser is not a home inspector. And why did you make an offer to purchase that was so high, if you thought it was in bad shape? Did you try to outbid other people? It appears that you are not taking responsibility for your own actions.
And before the home inspection. I just thought about the listing, can any of the defects be viewed from the listing photos?
Spencer Paul, some can if you look really blow up some of the photos. This guy had this house packed with stuff . However, the Appraiser made sure to photograph the only small decent section of the fence. There is no way this wasn’t intentional. The rest of the fence and deck are rotting . I would be more than happy to send you what I have via email if you are willing to give me an honest opinion. My email is wendy32778@gmail.com
Holy Smokes! I’m just looking at this now. Possible avenues of liability; listing agent, buyers agent, home inspector, real estate appraiser. All of whom carry their own errors and omissions insurance. Material misrepresentations may have a cascading effect if repeated down the line. Your own home owners policy may also provide assistance with filing claims. And you may be able to call the local county assessor for an in person visit from their licensed appraiser, as it’s highly likely you’re now over valued and over taxed as the last sale is often an influential factor for updated assessment values. However, every repair you have made then corrects the assessment upward.
Wendy, this is more of an open forum for current issues. There is also a specific appraisal issues forum meant for general public on another popular website The Appraisers Forum. You can simply form an account, then post your own thread. Unlike this website, the AF’s more traditional forum setting from the link below can keep the issue fresh, for as long as appraisers and/or yourself continue to comment and bump the thread. You could simply post a link to this article on that site for a summary of the issue.
https://appraisersforum.com/forums/forums/ask-an-appraiser.169/
NC appraisal board, how to file a complaint. This is your last step not your first, after assembling a complete comprehensive set of supporting documentation. You only get one shot at the complaint, make the most of it with careful assimilation of evidence first. That would include an additional home inspector, a review of the first home inspection. Then to include a forensic review of the first appraisal, something which you can order independently from a qualified appraiser, and does not need to be anyones business but your own, as you would be the client. The VA may offer review services and forensic review.
http://ncappraisalboard.org/disciplinary/complaints.htm
North Carolina realty commission. This is the link to file complaints against sales agents. Again, you’ll want some other documentation preferably from a forensic review, additional home inspection, series of your personal cost and labor receipts from all the repairs you had to complete, photo documentation of the actual state of the home at the time, etc.
https://www.ncrec.gov/complaintform
All that being said, effective age is an important consideration. It may be acceptable to comp 20 years apart, if the homes have similar effective age. Then it’s important to consider the high and low market value and price ranges. One gains perspective if ‘they’ve paid too much’ or paid a higher price than the market value would indicate, based on this spectrum of analysis. Example; You bought $150k, but prices range from $125k to $175k for that category of home. You would have bought average price, for average condition. Market value is a moving target and price is not the same thing as value. One sale example does not set the market. Only a person with access within your states specific MLS data systems can answer that question, because only they will have the necessary data access to review comps and market conditions at the time of your previous sale.
It’s considered a violation of appraisers ethic for an appraiser to advocate for a consumer in a position like this, which is why you’re inundated with more questions than answers from the appraiser respondents to your post. An appraiser is limited by ethical constraints which are enforceable by their respective state boards. So it’s sort of a cat and mouse game as appraisers would help concerned individuals identify resources and relevant data points to consider which may either bolster a claim or position, or possibly also discount the concern.
If you want an advocate you’ll need a lawyer or to be your own advocate utilizing resources like posted above. First you assemble proof and documentation, then make complicated decisions from there. If you want monetary compensation you’ll likely need civil court, although professionals insurance may cover the claim to avoid complaints. So there is no one size fits all firm rule for how to approach these issues. Again, with or without a lawyer is your choice but always better to have someone experienced in navigating those systems.
Hope that helps. Caveat Emptor; Buyer beware. When one signs their name to real property contracts this is the largest investment of peoples lives, not something to be taken lightly. You should have drove that RV all the way to the home and delayed closing with contract amend and extends before signing, or had a trusted independent third party review that home first, or just picked up a short term rental or lived in bed and breakfast settings or an rv on an empty lot of necessary. Military and professionals whom use relocation services have a much more complex situation to manage than those whom are local for more thorough review. This happens all the time though, especially with people moving to new states, site unseen purchases.
Do some simple math, what’s more expensive, taking a loss to refurbish that home then capture a reasonable resale price later, or paying for representation to hold people accountable. Are you able to recoup expenses with write offs? Factor that in. We paid avg price for our home, only to later identify an untold number of deficiencies down the road. If in doubt, get two inspections. Never ever provide sellers inspection terms relief regardless of what the agents advise. There is more protection for condition issues from an inspector than an appraiser. If everyone else is paying high prices for a certain class of properties, that is the market, and the appraiser is obliged to call that as market value. Appraisers should not make materially false statements within reports, that is where liability occurs. People certainly were overpaying in 2021, you’re not alone. Get a 100 ft vinyl tape measure from the hardware store, some grid paper, (one square is one foot) and measure the home yourself to know for sure. Hope that helps. Thanks for stopping by the Appraisers Blogs.
Thank you Sir for your response ! You have given me Wonderful advice and I appreciate the time you took to write this ! This has given me a much better understanding of what we need to do ! Again , I Thank you for your Kindness!
It’s all good Wendy, I have an excess of free time on my hands. Most of the appraisers like myself whom focus on mortgage lending issues are going out of business soon, a consequence of ongoing GSE and FNMA changes in policy which seek to replace licensed accountable people with unaccountable non licensed third party outsourced servicers. That’s called the property data collector and appraisal waiver program, so beware that’s happening if you have to move again and are unable to utilize VA lending. Under the new ‘appraisal modernization’ systems which are currently being implemented, there would be one less professional person to even hold accountable, and you may not have even had an appraisal to review in the first place. At any moment the VA could adopt similar policies.
If what you are saying can be backed up with proof and research, some of the people give the rest of us a bad rep. Rule number one for consumers in the real estate realm; Never worry about hurting someone elses feelings, never let them pressure you, and look out for yourself first. Do not extend trust to strangers no matter how trust worthy they may seem. Always assure there is a sound system of checks and balances in place, full accountability. Always be prepared to simply walk away and start the process over with different people and a different home selection if necessary.
Assemble a comprehensive summary of the issues, a factual data packet, and clearly defined purpose for what you hope to achieve. Form that into one single pdf document so you can shop around. Leave the emotion and frustration out of the issue, just deal with facts. That would define the scope of work or SOW for independent and/or professional engagement. Shop that around to agents elsewhere, an attorney, your insurance provider, a pro senior appraiser whom has the data access in your town, all of that.
Your first stop is identifying which MLS coverage area you are in, so you can shop in the right coverage locations. Some MLS systems do data sharing so the exact location may be a non issue, you’ll have to figure that one out by calling the MLS systems or reviewing their coverage and sharing informational sections of the website. Your state has the equivalent of gerrymandered boundaries with coverage so look into that first. Some MLS groups share with each other, others force individual subscriptions. Some appraisers and realty people buy into multiple systems, some only buy into one, so asking if they have full MLS coverage in your county is an important qualification of services question. That is a possible explanation for researchers being blind to local sales data.
And I never researched if home inspectors are required to be licensed in your state. If so, there is a similar state board licensing for them too. About half the states in this country require home inspectors to be licensed, the other half does not. Generally speaking, they all are expected to have insurance and claims coverage regardless though. Cheers.
https://www.ncrmls.com/coverage-map