Editor’s Note: Fast becoming one the profession’s most pressing problems, another AMCs has failed; this time leaving individual agents/brokers owed thousands or tens of thousands of dollars. How the lender and regulators respond may create important precedence for the industry.
AMC Fails: Appraisers and 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.
Those appraisers and agents/brokers 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?).
In fact, there is precedence for lenders stepping forward and paying the bad debts of their AMCs—last year MetLife Bank paid on AppraiserLoft bad debts (Lender Paying Appraisers Stiffed by AppraiserLoft) and Wells Fargo paid the unpaid invoices for their agent, JVI (Wells Fargo Paying JVI Bad Debt).
So far, Chase, the lender who hired Evaluation Solutions, is refusing to take responsibility.
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 pay. “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!” says Furney.
Appraisers are not the only ones who were left with unpaid invoices when Evaluation Solutions shut their doors. 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 Conteduca and Furney 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,” says Smith.
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 friends.
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.
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.