"While there is no
clear accounting of how much debt Evaluation Solutions left behind, the
current evidence suggests that the unpaid invoices to real estate
professionals total in the millions."
Fast becoming one the valuation industry’s most pressing problems, another
AMCs has failed; this time leaving appraisers and agents/brokers owed
thousands or tens of thousands of dollars. How the lender and regulators
respond may create an important precedent for the industry.
Fails: Appraisers and Real Estate Agents Stiffed Again
By Isaac Peck
Evaluation Services/ES Appraisal Services is the latest national appraisal
management company (AMC) to declare bankruptcy and leave hundreds of real
estate appraisers and agents/brokers with unpaid invoices.While there is no clear accounting of how much debt Evaluation
Solutions left behind, the current evidence suggests that the unpaid
invoices to real estate professionals total in the millions.
Shelley Smith (not her real name) is a real
estate agent/broker who says that she is owed over $46,000 by Evaluation
Solutions for over 900 BPOs that she completed over a six-month period. "I
worked for them for three years and they were always slow to pay. They
typically took 90 days to pay me,” Smith says.
Smith experienced the same issues as others with
regards to being lied to about when payment was being mailed out. “This
latest time, they actually sent me an email in October of last year that my
payment had gone out, so I kept working for them, but the check never came,”
Upon hearing the news that Evaluation Solutions
was filing for bankruptcy, Smith created a Facebook profile, Evalonline Complaint,
as a gathering place for appraisers and agents/brokers to come together and
discuss their options.At the time of this writing, the profile had 69
Since Evaluation Solutions went under, Smith has
been in direct contact with Chase, the lender and “client” who ordered all
of the BPOs through Evaluation Solutions. Chase initially instructed her to
fax her invoices over to their research team, but less than a week later
Chase sent notice to Smith saying that since they are not the direct vendor
they declined to pay the invoices or to further research the issue.
Through her Facebook profile, Evalonline Complaint,
Smith says she is gathering support for a class action lawsuit against Chase
bank, if it comes to that.According to Smith, a class-action lawsuit
against Chase will be used as a last resort if filing complaints with the
OCC and CFPB fail.
To Smith, this is also a case of fraud on
Evaluation Solutions’ part and she has also filed a Fraud Tip Form
with the FBI. “It is fraudulent behavior for them to accept money for work
from Chase, and then not pay us for doing that work. But also, the repeated
instances of emailing us that payment had been posted, when no payment was
coming, was intentionally fraudulent. I believe they intentionally lied and
engaged in fraudulent and criminal behavior,” says Smith.
(story continues below)
Those agents/brokers and appraisers who have been affected have been
actively sharing their stories online and putting pressure on the lender who
hired Evaluation Solutions, JP-Morgan Chase, to cover the AMC’s bad debts.
Last year under similar circumstances, appraisers cited numerous
regulations, including the statutes of FIRREA and the OCC (Collecting
AMC Debt from Lender), arguing that when an AMC fails to pay the
appraiser, the lender becomes responsible, since the AMC is an “agent” of
the lender (AMC
Bad Debt – Lenders Responsible?).
So far, Chase, the lender who hired Evaluation Solutions, is refusing to
Appraisers Left Unpaid
Nicholas Conteduca, an appraiser from Chicago, says he is owed well over
$30,000 for appraisals he did for Evaluation Solutions.After hearing they were ceasing operations, he created a website,
www.ESAppraisalScam.com, that allows appraisers and
agents/brokers to share information, collaborate, and post how much they are
owed. The website is littered with comments from appraisers and
agents/brokers who are owed tens of thousands of dollars.At the time of this writing, the running total reported to the
website is over $1,000,000.
Conteduca’s story has similarities with others. He says he worked for
Evaluation Solutions for two years and that slow payment was the norm.“It would typically take 60 days or more to receive payment, and
sometimes up to four or five months. But I always understood that they took
a long time to pay,” says Conteduca. The fact that Evaluation Solutions
consistently let invoices build up into the thousands, and tens of thousands
of dollars before paying, made it less alarming when the total invoice
amount would begin to build back up.
Like others in his situation, one of the reasons Conteduca kept working for
Evaluation Solutions was because they paid him higher fees than any other
AMC.“On orders where the standard fee was
$250-$300, they would pay $600 or $700 an appraisal,” Conteduca says.
The staff at Evaluation Solutions often lied about when payment was going
out too, according to Conteduca. “There were times when they said they sent
out a check but they didn’t.The only way
to get paid was to constantly email and call them,” says Conteduca.
Conteduca says he has been in contact with Chase, who
had told him they would contact him on January 10 with a response, but so
far he has heard nothing from them.
William Furney, an appraiser from Rhode Island,
says his firm is owed $73,960 for work done over six months. “Five of my
appraisers and myself were doing work for Evaluation Solutions. I’ve already
paid out around $40,000 to my appraisers, so now I’m out the money that they
owe me,” says Furney.
Furney, who had been working for Evaluation
Solutions for three years, confirms Conteduca’s experience that Evaluation
Solutions was consistently slow to pay, but that they also paid a little bit
more than other AMCs.“They had owed me money before this. They paid
me here and there and sometimes a few months would go by,” says Furney.
Furney says he only did a few appraisals for
them in the beginning because of their slow payment, but then they would
“One time it went for five months, so I started putting a lot of pressure on
them and they sent me a large sum,” Furney says.Furney ended up doing so much work
for them that he made a few friends at their office. “The girls from the
office would text me, asking me if I needed work,” says Furney.
“This time around, the amount they owed me was
getting larger and larger and I started freaking out. They would tell me,
‘I’m really sorry, I’m going to Fed-Ex you a check so you’ll have it by this
day,' but the check would never come,” says Furney.
On the day Evaluation Solutions shutdown, Furney
was still trying to get paid. “I started getting really fed up so I called
one of the girls there who I knew.She said that she was putting
pressure on the head of accounting, and that my check should’ve gone out
already.She told me that the head accountant was in a
meeting and that she’d call me right back.I got a text message an hour later and
she said ‘I just lost my job, they just kicked everybody out,’” says Furney.
After hearing that Evaluation Solutions was
going under, he called the WAMU-Chase Department in Florida. “The manager
there told me he was being bombarded with calls from appraisers, then gave
me the cell-phone number of the regional manager of the mortgage department
at Chase,” says Furney. “When I originally called the regional manager, he
told me to send him a list of my invoices and that he would get to the
bottom of it, but he never called me back.When I finally got him back on the
phone, he told me he ‘got wind’ that Chase isn’t really responsible for this
and that he couldn’t help me,” says Furney.
“This regional manager had the manager at
WAMU-Chase in Florida call me back and he immediately started reading a
script.It was pretty clear that Chase had their legal
department send around a script to read to all appraisers calling in about
this issue. I managed to get him off the script and he ended up telling me
he was the one who hired Evaluation Solutions and he offered to refer me to
his other clients!I said no thanks, that’s my kid’s college fund!”
Moving Forward It has been less than a month since Evaluation
Solutions closed its doors, so it remains to be seen how Chase will handle
this issue. From what appraisers and agents/brokers on the ground are
saying, it is likely that within the coming weeks numerous complaints will
be filed against JP Morgan Chase with the OCC, CFPB, and with the Florida
State Banking Commission.If Chase continues to deny responsibility for
Evaluation Solutions’ bad debts, the response by regulators might set a new
precedent for the industry- whether it holds Chase responsible or not.
The bankruptcy of Evaluation Solutions is a
glaring reminder that the proper regulation and vetting of AMCs continues to
remain a problem for the industry.Working RE has covered this issue in depth and
appraisers and agents/brokers are encouraged to read the stories of others
who have been successful in getting lenders to pay for the bad debts of the
AMCs they hired:
Working RE also has an
AMC Rater blog, where appraisers
can share their experiences with AMCs and pick up on AMCs who are having
payment problems. On the AMC Rater blog, appraisers were warning that
Evaluation Solutions was slow/no pay as early as April 2012.
About the Author Isaac Peck is the Associate Editor of Working RE
Magazine and Marketing Coordinator at OREP.org, a leading provider of
E&O Insurance for appraisers, inspectors, and other real estate
professionals in 49 states. He received his Bachelors in Business Management
at San Diego State University. He can be contacted at
Isaac@orep.org or 888-347-5273.
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