Low-Cost E&O Insurance from OREP Working RE Home Library/Previous Editions
Industry News
Teach Your Clients Well
At a recent industry show in Las Vegas (Valuation 2007), one speaker
suggested that appraisers facing pressure may try “educating” their
lender-clients about the rules, just in case they don’t know. You may be
surprised by what is set in stone. One document appraisers use for this
purpose is the Frequently Asked Questions on the Appraisal Regulations and
the Interagency Statement on Independent Appraisal and Evaluation Functions
(March 22, 2005). The Q&A was issued jointly by the following regulators: Office
of the Comptroller of the Currency, Board of Governors of the Federal Reserve
System, Federal Deposit Insurance Corporation Office of Thrift Supervision,
National Credit Union Administration (the Big Boys). Highlights include: “The
regulated institution may provide a copy of the sales contract for purchase
transactions. However, the information provided by the regulated institution
should not unduly influence the appraiser or in any way suggest the property’s
value.” Find more and the full Q&A in Teaching Your Clients Well (workingre.com
-premium content).
Blacklisting Follow Up
Last issue we told you about appraisers who were blacklisted- shut out of
work without their knowledge and without the opportunity to defend against the
charges (MARI: Solving the Blacklisting Mystery). According to Brad
Ellis, Chief Appraiser/Valuation Quality Assurance, Indy Mac Bank, the Mortgage
Bankers Association (MBA) created a task force to provide recommendations for
placing appraisers and others on “exclusionary lists.” The task force included
lenders and appraisers- Ellis was among them. The report is not available at
press time but according to Ellis, the report recommends the following: that
appraisers be notified first (before being placed on an exclusionary list);
provided an avenue for appeal and that a separate panel be established for
reviewing complaints. It also recommends that at least one person on any such
panel be a certified appraiser. Ellis recommends that appraisers be professional
in their responses; that they review their work, and if it’s incorrect, admit it
and fix the problem. He stresses that no one at any institution takes the
decision to remove an appraiser lightly but adds that appraisers do not have any
“right” to work for any particular lender. WRE will post the report when it is
released.
Cutting Expenses: Why Canceling Errors & Omissions Insurance Can Really Cost
You
As business slows, some of you are thinking about cutting expenses by either
letting your errors and omissions insurance policy lapse (not renewing) or by
canceling mid-term. If you do this, you risk losing coverage for all the
appraisals (and inspections) you completed in previous years (when you were
busy). As most every E&O insurance policy works the same way, if you let your
policy lapse, chances are that you will be unprotected should a claim arise from
a past report. Switching companies is no problem as most, including OREP,
provide prior acts free to new clients, as long as you make the switch on
or before your policy expires. As most claims take several years to surface,
letting your insurance lapse or not renewing could be very costly indeed, should
you be without coverage when a problem surfaces. Most companies, such as OREP,
offer payment plans which can keep your E&O insurance in place for around
$50 a month (appraisers). To understand your insurance fully, including a list
of “Dos and Don'ts for E&O Insurance,” see Cutting Expenses as Business
Slows: Why Canceling Your E&O Can Really Cost You (workingre.com) or call or
visit OREP (888-347-5273-orep.org).
Instant Messages are Appraisal Reports?
According to the Appraisal Standards Board (ASB), an appraisal by instant
message or text message is considered an appraisal report. Instant messages or
text messages are written communications and, for assignments involving real
property, are subject to the requirements of Standards Rules 2-2. Learn more in
the ASB’s USPAP Q&A- October 2007 (workingre.com).
Protecting your Intellectual Property Rights
"Copyright Appraiser" Tim Vining, MAI has started a consulting firm to help appraisers protect and control their intellectual property. For more see Fair Market Value Management Protecting Intellectual Property Rights or visit www.fmvmanagement.com.
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most respected vendors. Thanks for reading.