Editor’s Note:  Author T.J. McCarthy, a member of the Illinois Appraisal Board, sees a growing problem regarding lenders and AMCs filing complaints against appraisers. He offers this advice: be very careful in post-closing phone calls from AMC agents.   

When Nice Guys Finish Last (Uptick in AMC Complaints)
By T.J. McCarthy

You receive a call from a lender or an AMC who wants to talk to you about an appraisal assignment you recently completed for them. The call usually comes from the quality control department at the post closing stage of the loan. They start questioning you on your line item adjustments.  All the comparables are on smaller lots then the subject property and they feel your adjustment for lot sizes seems a bit high. You want to be a good little appraiser and not upset your client so you agree that perhaps they could have been a little lower.

While they have you on the phone, they also ask you if you think your time adjustments are a little aggressive. Again, not wanting to upset a good client, you tell them that maybe you were a little aggressive (even though you really don’t think you were…you’re just trying to appease them), and you state that you will try to find another public data source in the future that is more conservative. Your client thanks you and even tells you to have a nice day. You hang up the phone thinking you handled that rather well.


 

Fast Forward
To continue our hypothetical situation: a month later you receive a letter from the Department of Professional Regulation – Appraisal Division or the equivalent in your state. Your great client filed a complaint against you stating that you openly admitted to them in a phone conversation that you falsely inflated the value of your appraisal by using inappropriate site adjustments. You also stated that you often use non-traditional data sources to intentionally report market trends that are lower than normal to arrive at higher value conclusions. Yikes!

This is really happening to appraisers. And since the Dodd-Frank Act, more and more lenders and AMCs are sending in complaints on appraisers. I serve on the Illinois Appraisal Board which is involved in all appraiser complaints. In past years we used to say how we had never received a complaint from an AMC, which was true.  We would receive complaints from lenders directly but never from their AMC. Now we receive complaints regularly from AMCs. 

There is no question that the appraiser is getting slammed here for trying to be a “stand up” guy, attempting to clear up gray areas in their report. They’re engaging in what they perceive to be an honest dialogue with the quality control department (long after the loan has been funded). Unfortunately, at the post-closing stage, the lender isn’t looking for you to have a change of heart on your final opinion of value. There are no changes that should be made but now you have given the quality control department ammo for a state complaint.

No Changes
In addition to being careful about you say and don’t say, you should never change parts of your appraisal because you think it will make your client happy. They don’t drive the process. Perhaps you don’t even realize that you are giving someone a reason to file a complaint against you when you agree to the slightest alteration or allow the opinion of others to dictate how you will complete your assignment. In the meantime, they are on the other end of the phone writing down everything you say as they prepare to turn you and your report into the state.

I am not saying that all lenders and AMCs support this type of practice. I certainly am not telling you to ignore errors and omissions on your reports when a client discovers them and asks for corrections. Nor am I telling you to be unethical. But by trying to be accommodating, you could be creating a problem for yourself where one never existed.

I am a member of the Illinois Appraisal Board and I am involved in handling these complaints; I can assure you that the state of Illinois is receiving them.  I can’t tell you which lenders or AMCs are filing these complaints.

It’s getting pretty scary out there folks. We don’t have to make it harder on ourselves by being overly accommodating every time an angry client calls. We are appraisers not pacifiers!

About the Author
TJ McCarthy, SRA, IFA is a member of the Illinois Appraisal Board. The story, reprinted from an Illinois Coalition of Appraisal Professionals (ICAP) alert, was found on AppraisalScoop.
 

Limit Liability, Maintain Independence, and Fight Influence
In Working RE's upcoming Webinar Series, Limit Liability, Maintain Independence, and Fight Influence, nationally renowned instructor and expert Richard Hagar, SRA will detail how appraisers can protect themselves and their independence in the face of AMC requests, questions, and unethical attempts at influencing and distorting your report.  Hagar will help appraisers understand the new regulations that require lenders and AMCs to report USPAP violations, and how appraisers are exposed to the risk of penalties, complaints, and fines if they aren't careful and aware of their rights as appraisers.  Learn to protect your independence as an appraiser with Hagar's Three Part Series.