Appraiser abuse is
apparently alive and well but the good news is that state AMC laws may
provide some relief- here’s how.
Editor’s Note:Suspension Merry-Go-Round is reprinted from Working
RE’s current print edition (click cover image at top
left to access). Since the story published in February, Working RE has run two
updates on blacklisting, Lender's Choice: Violate
USPAP or Blacklistedand Fighting
Your Way Off a Blacklist. As you will read here, some relief is
available thanks to AMC regulation passed in the state of California. AMC
legislation is also working in other states guarantying timely payment to
appraisers, prohibiting indemnification clauses and bolstering appraiser
independence. Strong AMC legislation at the state level is in the best interests
of every appraiser. As we learn in the three part webinar series Maintain Independence, Limit
Liability, and Fight Influence, presented by Richard Hagar, SRA,
many maladies appraisers suffer from these days are prohibited by state and/or
federal regulation, including blacklisting without cause, lower than customary
and reasonable fees and attempts to exert undue influence on an
appraiser’s work product. About attempts to influence
appraisers Hagar says, “Lenders and AMCs have two options, review the work and
A) Accept it and fund the loan or B) Reject it based on a USPAP compliant
review. Once rejected they must turn bad appraisers into the authorities and
stop using that appraiser. But do not try to influence or instruct the
appraiser. The ‘old’ banking ways are dead. Banks and appraisers better become
educated on the change and FAST.”
Suspension Merry-Go-Round
By David Brauner, Editor
Whoever believes the days
of value and other forms of pressure are behind appraisers, thanks to the Home
Valuation Code of Conduct (HVCC) and its focus on appraiser independence, ought
to talk to appraiser David Smith in San Diego- if they do they’ll get an
earful.
Appraiser abuse is apparently alive and well but the good news is that state AMC
laws may provide some relief- here’s how.
What Did I Do Wrong?
The story begins with appraiser Smith (wishes to remain anonymous), appraising
25 years, being notified by an appraisal management company (AMC) that he was
suspended from their roster after being put on “review status” by a lender.
As of this writing, three months have elapsed and Smith still doesn’t
know why.
“Review status” means that, by order of the lender, any appraisal Smith does
must be accompanied by a field review ($250). This added expense imposed on the
AMC means no more work for Smith from one of his largest vendors. Smith says at
the time of his suspension he was a “level one” appraiser with the AMC- the
highest ranking.
The AMC, that provided Smith with a very significant volume of work, told him
that any appraiser put on a review status is suspended until the status is
lifted by the lender. “I asked the AMC the reason for the suspension and they
said the lender wouldn’t tell them,” Smith said. “I was given a number to fax
the lender, which I did within an hour. I waited a week and called to follow up
and was told it could take up to 30 days to get a response. I asked to speak to
a supervisor and was refused.”
An email string verifies
that Smith was told by the AMC that they had no information about his suspension
and that he would have to contact the lender himself to get the issue resolved.
“Call us when it’s resolved,” he remembers them saying.
Smith continued to ask the AMC to intervene but they could do nothing to help.
“After five weeks of not hearing and losing a large volume of work, I called the
lender back and they said I was given incorrect instructions and should have
sent a letter to their risk management department. I did so immediately and
still have not heard back. In the meantime I lost work from a different AMC who
uses the same (big box) lender. This has cost me over $15,000,” Smith says. “If
I did anything wrong, I’d like to know what it is so that it can be addressed.
Why does it take the lender only one day to tell the AMC I’m suspended and 30
days or longer to tell me why? And why aren’t concerns expressed to the
appraiser before putting them on review status without any chance for rebuttal?”
Sometime later, Smith finally did hear from the lender. They told him that
appraisals of his were under review and that in order to lift the review status,
they would need to see more of his current work. According to Smith, they will
not say which files of his are in question or how old they are- so there is no
chance for rebuttal. This AMC and others who work with the “big box” lender will
not give him orders until the “review” status is lifted- an unfortunate Catch
22, since the lender needs to see more work in order to lift the status.
“I have no idea which files they are questioning. One can assume they don’t
suspect fraud because they will accept work from me as long as it is reviewed.
I did have one incident where my signature was used without my knowledge and one
where a report was altered. But I am unable to find out even which files are in
question. Without that I can’t work. If I can’t clear this up I’m getting an
attorney and going to court.”
Epilog: How do you Spell
Relief? Just before
press time, Smith says he may finally get some much needed relief, courtesy of
the California Office of Real Estate Appraising (OREA) and the new California
AMC licensing law- yes the government. “The OREA told me that the lender and
the AMC are in violation of the (state) AMC law which requires them to tell me
why I have been suspended,” said Smith. OREA code 3577, Section J states,“The Appraisal Management Company shall not remove an independent appraiser
from their panel of approved appraisers without prior written notice that
includes evidence which supports the basis of fact that the appraiser has
violated the Uniform Standards of Professional Appraisal Practice or other
applicable appraisal regulations or state statutes, or evidence which
demonstrates substandard performance, improper or unprofessional behavior, or
other substantive deficiencies.” Smith says
before filing an official complaint he will make the AMC and lender aware of
their responsibilities under the law to give them a chance to respond. But he
wonders what role AMCs really play in the process if he is the only player
sanctioned. “If I did something wrong and am being punished, what action did the
lender take against the AMC, who reviews and clears every appraisal? Is the
appraiser now the fall guy in every instance?”
Find the California AMC Regulation at WorkingRE.com, click sidebars and then
OREA_Regs.
Sign Petition: Tell Chase to Stop Intimidating, Threatening, and
Bullying Appraisers.
About the Author David Brauner is Editor of Working RE magazine and Senior Broker at
OREP.org, a leading
provider of E&O Insurance for appraisers, inspectors and other real estate
professionals in 49 states. He has covered the appraisal profession for over
20 years. He can be contacted at dbrauner@orep.org
or (888) 347-5273. Calif. Insurance Lic. #0C89873.
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