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May 30, 2007 Vol. 121 |
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Editor’s Note: You can find the class action, filed by a group
of appraisers against FNC, Inc., posted at
www.workingre.com.
(story below) |
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Federal Suit Alleges Misuse of Appraisers'
Data by FNC
by David Brauner, Editor
In a federal class
action, a group of appraisers from across the country has filed a
complaint against FNC, Inc. for allegedly saying one thing but doing
another with their data. The complaint alleges false advertising,
misrepresentation, breach of implied contract and more. It is asking
for $5 million in damages.
The complaint may ultimately clarify
related issues that are currently unresolved, such as the proper
reuse and resale of appraiser’s data. Many appraisers have declared
their unwillingness to permit data from their reports to be used
and/or resold to build databases designed to replace them.
(story continues below)
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(story continues)
Background
FNC, through its AppraisalPort service, provides a Web interface
for lenders and appraisers to order and transmit appraisal reports.
The complaint alleges that, “FNC has repeatedly assured and
represented to appraisers who use its AppraisalPort service that FNC
does not have access to the appraisal report data transmitted from
the appraiser to the lending institution via the AppraisalPort
service.” And that, “FNC represented that it is not building a
database using the transmitted appraisal report data.”
The complaint quotes the AppraisalPort site as allegedly having
said, “We facilitate a completely secure connection between you and
your clients, allowing only the client institution and yourself to
have access to your report. We provide the secure ‘pipes’ to link
you to your clients, but the data that travels those pipes is unseen
and untouchable by anyone but your client and you.”
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The complaint also quotes FNC marketing material and interviews with
key personnel which suggest otherwise. According to the complaint,
FNC marketing material allegedly states, “FNC plans to take the
informal and small scale collateral data sharing that now exists a
revolutionary step further by establishing a national database of
residential properties.”
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FNC’s Chief Executive Officer, Bill Rayburn,
is also quoted in the
complaint as allegedly saying in an interview, “We invented a
process that allows lenders to turn these collateral documents into
data and images, and we have systems in big lenders that allow them
to process mortgages a lot more efficiently. What we do is extract
data in the process for collateral. That’s our first line of
business.”
Rayburn is also quoted as allegedly saying, “Our
second line of business is, we take
that data and we warehouse that data... we have
developed a national collateral
database where lenders and other market
participants share this collateral data, building a national
collateral warehouse, if you will.”
Angela Atkins, FNC Public Relations Manager, told WRE, “FNC was very
disappointed and disturbed to hear of this complaint. It tries to
attack FNC’s core commitment of protecting the information
we transmit between appraiser and lender. As a
result, we believe it is entirely without merit and will defend it
vigorously.”
None of the appraisers involved in the complaint would comment for
this story but their counsel Toby Marzouk, of Marzouk & Parry, did.
Marzouk told WRE, “FNC expressly represented to appraisers that the
data they submitted using FNC's ‘secure’ data transmission service
would not be accessed or used by anyone other than the recipient
lender. Contrary to that representation, however, FNC not only
accessed that data, it ‘warehoused’ it and used it to build its own
valuable database, access to which it then re-sells to others. Thus,
the appraisers were taken advantage of twice: first, by paying for a
service that was not what it was represented to be, and second, by
having their own data warehoused and used in a way that competes
with them down the line.”
Marzouk continued, “To our knowledge, FNC is the only company that
made these representations and did this. The case is brought as a
class action because there are thousands of appraisers who have used
the FNC services and suffered damages as a result. Some of them may
not even be aware of what happened to the data they were told they
were submitting only to the particular lender which had asked for
the appraisal.”
You’ll find
the complaint posted at
www.workingre.com (FNC complaint).
Please do not reply to this email, send your comments
here. |
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