Violating Appraisal Independence Through Harassment, Intimidation & Coercion
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- Property Data Reports for Appraisal Waivers - June 6, 2022
- A Push to Artificially Raise Property Values - May 26, 2022
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:
(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.