Violating Appraisal Independence Through Harassment, Intimidation & Coercion

Violating Appraisal Independence Through Harassment, Intimidation & Coercion. 

It shall be unlawful… to engage in any act or practice that violates appraisal independence…

Appraisers, I have written the info below, which you may use if you desire to send to your clients and local real estate offices.

It’s time for all appraisers to stand up to this kind of very adverse behavior, done by and promoted by many real estate brokers/agents across the US.

I have been chastised multiple times by brokers, and in one instance that I know of, was excluded (by the lender who told me) from doing another assignment when I didn’t appraise a prior sale at or above the contract price for a particular broker – who complained about that to the lender. In another case, I have actually seen a MLS listing which specifically mentioned an appraiser’s name, and said that the appraiser was not allowed to appraise the property when it was sold.

All of us have the ability to stop this abhorrent behavior. But we must be willing to take action against those who use such tactics against us. This notice is one step in that process.

If you use this, put your own name, etc. at the bottom.

Notice to Lender(s):

Please circulate this message to others in your organization.

This message is provided as a cautionary explanation about what some real estate brokers/agents will do when an appraised value does not equal or exceed a contract price agreed to by the seller and buyer. I am providing this info because the described action below is illegal, and the lender could become a party to the illegality if the lender allows the described activity to be done.

The appraiser has no responsibility to any of those parties (seller, buyer, listing broker, selling broker) when the assignment comes from a lender client. The appraiser’s duty is to protect and act in the best interest of the lender, and to appraise the property commensurate with a supported market value as documented by multiple neighborhood property sales evidence as shown in the appraisal. There are times when there is no justification for reporting an appraised value at or above the contract price.

Some real estate brokers/agents become belligerent when this happens. They will often complain to the lender and berate the appraiser. In some cases, the broker/agent will ask the lender to restrict the appraiser’s ability to perform future appraisals when that broker/agent is involved with another transaction. In extreme cases, the broker/agent will put a statement into a listing which attempts to forbid the appraiser from doing an appraisal on the listed property.

Please take great care to comply with the Dodd-Frank federal law, laws of the States, GSE, FHA, VA appraisal guidelines, and real estate association and MLS rules which are crafted to allow independent appraisers to do their work without intimidation or coercion, or by being restricted from any future assignments.

If brokers/agents ask the lender to be a participant in any such activity, and the lender capitulates and does not support appraiser independence, the lender could become directly involved with illegal activity.

Appraisers are beginning to file complaints and initiate lawsuits against brokers/agents and lenders when they learn that they have become a target of this action.

This is a portion of the Dodd-Frank law concerning appraiser independence:

15 U.S. Code § 1639e – Appraisal independence requirements

(a) It shall be unlawful, in extending credit or in providing any services for a consumer credit transaction secured by the principal dwelling of the consumer, to engage in any act or practice that violates appraisal independence as described in or pursuant to regulations prescribed under this section.
(b) Appraisal independence For purposes of subsection (a), acts or practices that violate appraisal independence shall include—
(1) any appraisal of a property offered as security for repayment of the consumer credit transaction that is conducted in connection with such transaction in which a person with an interest in the underlying transaction compensates, coerces, extorts, colludes, instructs, induces, bribes, or intimidates a person, appraisal management company, firm, or other entity conducting or involved in an appraisal, or attempts, to compensate, coerce, extort, collude, instruct, induce, bribe, or intimidate such a person, for the purpose of causing the appraised value assigned, under the appraisal, to the property to be based on any factor other than the independent judgment of the appraiser;
(2) mischaracterizing, or suborning any mischaracterization of, the appraised value of the property securing the extension of the credit;
(3) seeking to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing of the transaction; and
(4) withholding or threatening to withhold timely payment for an appraisal report or for appraisal services rendered when the appraisal report or services are provided for in accordance with the contract between the parties.

Thank you for your cooperation, and for supporting appraiser independence.

Dave Towne
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on

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14 Responses

  1. Avatar Jeff Pitts says:

    I agree and I have actually printed this out to send to some Realtors and lenders. I personally was threatened with a $50,000 lawsuit because the appraisal came in lower then the contract amount, by the seller’s Realtor (payable in 15 days). I have more than once been forbidden to step onto the property by the owner and never met them before. I have twice had my name put on a contract as an attempt to keep me from doing the appraisal (“my name” is not allowed to do the appraisal on said property). More than once I have had Realtors claim conflict of interest and there was none, also they said there was an ongoing lawsuit with my company and there wasn’t one. I have also witnessed on MLS remarks where a Realtor called out a specific appraiser in town as the reason the property sold “low”. I believe that appraiser in certain areas might need to sit down together and discuss what should be done, because I know that I am not the only appraiser in the area having these issues. I am also a Realtor, and I understand their mindset, but you cannot keep the appraiser from doing their job.

  2. Avatar Joyce Potts says:

    David, you just don’t get it. Violating appraiser independence under Dodd Frank is about lenders. Realtors and the general public can NOT be prosecuted, per se. You can certainly file an ethics complaint on a Realtor, but good luck on how far that goes. The better answer is for appraisers to understand how the ‘system’ works. People trying to influence appraisers happens every day. It’s the nature of the beast.

    • Avatar Bruce W Lennick says:

      I disagree on so many levels that I don’t even know where to begin, this attitude is exactly why we don’t get the respect and why we were the punching bag during the last downturn in the market. We should not succumb to the pressures of the realtors, lenders, homeowners or anyone else. We are the line in the sand that should not be crossed when it comes to doing our job. And if you are doing your job correctly, then you should be able to state your case and defend that value. I personally do not want to do appraisals for anyone that would blacklist or blackmail me for values. And trust me I have run across this on many occasions in the last 30 years. And with the run up in values that has happened in the past year or two, I have limited my assignments to a very small group of clients that understand that and I’m OK with not having my name on over(under) inflated homes values just because a realtor or homeowner thinks their value should be higher/lower. I recently got a couple of calls from homeowners upset because now the taxing districts are raising values and they reached out to me to see if I could fight these values. These are probably the same people that were enjoying the fact that they were on top of the world because their homes values have gone up so much, doubling in some cases from just a few years ago. Stick to your ethical values and you will be much happier.

      • Baggins Baggins says:

        There are several different segments of home owners. Those whom participate more routinely in mortgage lending, and those whom do not. I had a lady asking me for assistance with independent work for taxation value disputes. Although I normally pass on those requests I was talking to her about the nature of this as she had helped me before with other issues in her industry. She was competent and went through all the paperwork process and such, had successfully argued for a lower valuation basis before several times. This time around was different though, assessor said they’d need to make a personal visit to their home to have more current information. The house was purchased decades ago and they had not refinanced in decades either. Home owner was surprised to learn that all the improvement work and permitted records was a component of a higher valuation basis rating. We talked about improvements, how that results in her categorical placement within her respective market segment, etc. And when I was just reading off some of the likely recent sales that were good matches to her house, she was quite surprised to realize the assessor is not digging into them for rising taxes, she was likely already enjoying a substantially under valued position. So she then declined the assessors visit and rescinded the valuation dispute effort. It is what it is, and many people may not have realized the pace of the market over these past 5 or so years. They’re just living their lives and the home serves a more utilitarian purpose rather than an investment purpose. I explained the different value types and she was satisfied knowing they were getting superior value in use with a low tax basis, and her new strategy was simply finding ways to shoulder the increased tax burden.

        Joyce, she’s a long time valuation industry advocate with a lot of wisdom. I used to always take the time to read her posts on other forums. I mean we all fought back within our means, from within the system. Think of how much worse it would have been, we are still here and kicking, at least for now. But this conversation string has me wondering, do realty agents insurers take a similar approach as appraisers EO insurers, like this one appraiser poster said the other day; your insurer can and will sell out your reputation to defend against a claim. What does realty agency insurance even cover? It’s got to be more dynamic than what appraisers deal with, and if there is a libel slander liability reputation sort of component there… Agent could have set themselves on that hook.

        Remember this one in the early days of AIR? “I have not intimidated, coerced, or promised favors to myself.” Something like that. It spoke of the nature that appraisers can not be the ones to sign AIR agreements, as that was the lenders compliance responsibility. For a brief period lenders were business as usual and were forcing appraisers to include AIR compliance documentation within reports to even get paid.

        So that led me to the concept of an appraiser joining NAR. That’s a real thing. Anyone here also a NAR member? Is that worth it?
        appraisal side legislative tracker. Interesting.

        • Avatar Bryan says:

          We have to be a member of NAR to be a member of the local MLS and they do nothing for us.

          • Baggins Baggins says:

            Isn’t that what always happens with compulsory programs, once they get you in, it’s a money grab with inadequate representation. And that explains why NAR is able to boast 25k appraiser members nationally. My MLS which I think is the largest in this state, makes it easy and just gives us a $5 surcharge for not being a member of NAR and still lets us have equivalent access. So that’s obviously something the local MLS board of directors can effect and change the rules as they see fit. You could mount a movement to change the rules and regs to save a hundred a year yourself and begin the process of cutting NAR down in terms of income until they stopped capitulating and started helping appraisers more. Cumulatively, that would make a difference. 25k x $100 yearly dues = $2.5m yearly income. Public data indicates that’s 1% of their yearly income stream.

            Shoot, if NAR is a non profit lets look at their tax returns too, why not. This is the year of reviewing tax forms and I never knew every single national group in the valuation industry was not for profit status.
            Why are all these non profits in the appraisal industry apparently years late on their taxes? I’m sensing a pattern here. Or perhaps there is a publishing delay?
            Wow, it’s the biggest one yet, 177 page filing.
            There is all the media groups they use on pg 8, we could start writing them letters. Then you’re into long lists of directors and tedious name research to discover industry associations. Those are very light work weeks, wow. I used Control+F to search andre perry, thankfully no returns… Who else? Pg 114, a $72.7m yearly lobbyist write off… And they stand by and let appraisers suffer this appraisers are racist false accusation slander? Newsflash to NAR, as appraisers get black eyes, this naturally extends to you guys too. The majority of people I meet presume I’m also a sales agent.
            Holy smokes! I may just transition my modest little soon to be extinct appraisal business to be a non profit. Look at the potential. I’ll offer free to consumer appraisal services consultation and get a government grant. Dang! Who knew non profit paid this well?!?!? Pg 129. Well, I think we’ve discovered why automating the appraisal industry and seeing us all gone, slow walking any and all efforts to help American appraisers may be beneficial to some people. American housing for everyone! Pg 154. Top dude gets $4m a year… Chief advocacy officer got $630k? Where is the appraisers advocate? In contrast to that 2014 article link, raises for everyone! Sure, as all the appraisers nationally go under and so many receive death threats or other unethical applications of force for our political views or daring to go against the amc industry and stand up for consumer protection principals. I’m not just going to buy any lawn mower, I’m going to buy the lawn mower of the century. Obviously, I’ll have to set up a not for profit lawn mowing company too.

            “The National Association of REALTORS®, an Affiliate Sponsor of The Appraisal Foundation(link is external), is designated as an “Appointing Affiliate Sponsor” and has the right to appoint a member to The Appraisal Foundation Board of Trustees. The National Association of REALTORS® has been an active participant in The Appraisal Foundation from its inception and participates in The Appraisal Foundation Advisory Council (TAFAC).”

            Did we just find a way to get Mike Ford, Johnathan Miller, or Dave Towne onto the TAF board of trustees decision making panel? Then they could use that position to get NAR to officially recognize AGA as deserving a seat at all decision making tables related to the appraisal valuation services industry? Just brainstorming here…

      • The problem comes when you are dealing with someone who is unreasonable. I have done 2 appraisals for an investor who finds a house nearing the end of it’s effective life, puts rock on the front, and tries to refi out thinking he can get the same price as a new build near by. He has family who are realtors, and they all seem to have drank the koolaid and believe my value conclusion is “not right”.

        There is no reasoning with them…

    • Avatar Lindsey welch says:

      Regardless of what law exists for appraisers or lenders, we should start pointing fingers towards the lack of oversight and regulations that realtors and AMCs are under. We should collaborate and gather a documented list of misleading information from realtors and AMC businesses. I’ve got a list that I’m presenting to a Fannie Mae senior collateral risk manager on Tuesday during my meeting with him. I hope he will be willing to start looking elsewhere other than hyper focusing on appraisers.

  3. Baggins Baggins says:

    The solution to issues dealing with MLS systems, are better MLS systems management approaches. Here in Colorado the local MLS system imposes weighty fines for non compliance on a variety of issues. Link provided. What some realty people fail to recognize, is that the appraiser is a member of the MLS organization too. If you’re in a location which imposes the non realtor member surcharge is of no consequence. If you pay into an MLS, you’re a member, and should enjoy equal protection and all safeguards other agents do. If the rules do not encompass a specific issue, you can ask the board of directors to have that changed. MLS groups are ran by volunteer realty groups so it’s a quorum not a dictatorship. I’ve highlighted some of our local rules to assist these other appraisers in fishing out relevant content from whatever their rules may be. Their first step is to thoroughly review the MLS systems rules and regs where this is happening. (RESO link at bottom has a really cool MLS systems map nationally) In CO we have the managing broker program, so if you’re dealing with just an associate, the first call is to their managing broker, go right over the associates head.
    “All Subscribers are subject to the MLS Rules & Regulations and may use MLS access for only those activities authorized under their respective licensure and in accordance with these rules and may be disciplined for violations thereof.”
    “When information is entered in the Broker Remarks, it must be specific to the listed property and must comply with all federal, state and local laws (e.g., fair housing and anti-discrimination laws).”
    “The Board of Directors is comprised of REALTORS® who were elected to ensure that REcolorado® operates within established policy governance guidelines. ”
    “Participants must not knowingly or recklessly make false or misleading statements about competitors, their businesses or their business practices.”
    “Participant:Any brokerage owner, employing broker, independent proprietor, certified or registered appraiser or managing broker acting on behalf of All Participants must agree in writing to comply with the MLS Rules & Regulations and . Participants are ultimately responsible for any affiliated Users, including their compliance with MLS Rules & Regulations and >”
    “Fines range from $25 to $15,000”
    “The severity of discipline will increase incrementally and will commensurate with the offense. Multiple repeated violations and flagrant disregard for the rules; or violations that may negatively influence the effective and efficient functioning of the MLS or may potentially harm clients, customers or the public will be referred to the MLS Rules & Regulations Committee for the appropriate discipline and/or may be subject to immediate sanctions.”
    Also related, what is an MLS?
    Between Daves well written content and whatever is there in your local MLS rules and regs, one would imagine any appraiser would be able to mount an effective defense to these activities just about anywhere. Document everything into a special work file.

  4. Avatar Bryan says:

    I think after reading this article that you are under the misconception that they care! Let’s just say Wells Fargo. Where are the articles and committees and lawsuits for the Mortgage Fraud their loan originators committed? Reopen every file? Pull the Mortgage license? Nope.

    • Baggins Baggins says:
      Well Bryan there is that… I’m telling you table based fines are meaningless they don’t even touch corporations of such tremendous scale. Fines based on income would incentivize the legal community to get better and more intimately involved with oversight and watchdog activity. It would certainly take pressure off of appraisers. One does not have to reach far to wonder why big lenders want less oversight rather than more. Transitioning the appraisal industry into an automated system will certainly result in less individual oversight. Fleecing consumers individually is so tedious, fleecing them at scale is where the money is. Lets revisit their 3b settlement from a few years back.
      “As part of the deal, Wells Fargo admitted that between 2002 and 2016, it falsified bank records, harmed the credit ratings of customers, unlawfully misused their personal information and wrongfully collected millions of dollars in fees and interest. ”
      Pepsi challenge for someone at the Brookings Institute to run a racial demographic research paper on that one… It fits dead center what their stated causes are, if they are being honest about such activity focus.

  5. Avatar Lindsey welch says:

    I’m up for the fight. I have a meeting with the senior manager for Fannies collateral risk department next Tuesday. I will be bringing up some key points. Currently, I am filing an ethics complaint against a realtor who posted a very misleading MLS file about a transaction that had over $80k in items that were never built. How did I find that out? Because I received an appraisal for the construction close out loan 2 days after the “settlement date” posted in the MLS, have all the photos, budget information and in person conversation with the homeowner. Upon requesting the MLS REMOVE the mls information, I quickly learned that they do not have to verify settlement sheets with realtors. Now rewind two years ago, when I wrote to FREC that there were too many VA and FHA loans above ask without concessions, they quickly told me they are not responsible for realtor licensing regulations!! Yet, the Fl Real Estate Commission holds that title. I will be bringing it to the attention with the senior manager of Fannie next Tuesday about this major oversight. Yes we are to verify, but will an RE agent tell you the truth? I don’t trust any of them. Not when it comes to a sales person. Besides that, we recently had an AMC ask us to remove cost to cure for some very evident drywall damage around the ENTIRE KITCHEN!! We don’t need more regulations for appraisers. RE agents and AMCs should be getting blasted. I’m sick of it! I’ve already written AEI and got some feedback. I’m emailing everyone that may matter for our situation. I suggest everyone else fight back too.


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Violating Appraisal Independence Through Harassment, Intimidation & Coercion

by Dave Towne time to read: 3 min