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AMC Fined for Removing Appraiser from Panel
By Isaac Peck, Editor
Appraisers have long discussed the worry of being secretly blacklisted by an appraisal management company (AMC) or lender. Fail to come in at value, consider additional comparables, drive back out to the subject at no additional cost, or turn a report in on time, and you could find yourself never getting another order from that particular client again.
Oftentimes, the appraiser is never notified that they have been removed from an AMC’s or lender’s appraiser panel. The work simply dries up. In extreme cases, some appraisers have filed lawsuits against the AMC/lender responsible alleging violations of appraiser independence and unfair business practices (See Smoking Gun Allows Appraiser to Sue over Blacklisting).
Many states also have AMC laws that have stringent requirements that AMCs must notify an appraiser when he or she is removed from an appraisal panel. Unfortunately, the lack of enforcement actions against AMCs for such violations has caused many appraisers to question whether such regulations have any effect at all.
However, in a precedent setting move, the Washington State Department of Licensing has recently become the first regulatory agency to fine an AMC for removing an appraiser from an appraiser panel without proper notification. In September 2015, the American Reporting Company (ARC) was sanctioned for “removing a real estate appraiser from [an] appraiser panel without proper notifications” and failing to “provide [a] real estate appraiser [the] opportunity to respond to removal from panel.”
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The penalty was a $2,000 fine and a one year license suspension, with the suspension being stayed (not imposed) provided that ARC complies with the law going forward.
Missed Deadline, No Work
Spectrum Real Estate Services, led by Jerry Cameron and Caitlin Ochoa, first began working for ARC in February 2011. Caitlin Ochoa says that ARC started out by sending Spectrum quite a bit of work. “They sent us 10 appraisals in our first month. One month later we got 24 appraisals. Everything was such high volume at that time, our lead time ended up getting slower and they still wanted a three day turn time. It got to the point where we had week long lead times, we tried to do the best we could to meet deadlines and we did meet deadlines,” says Ochoa
However, August of that same year, work began to fizzle for Spectrum. “When they stopped sending us orders, we called the appraisal coordinator at ARC and we said ‘hey what’s going on?’ They told us that we were too slow. We asked them to send us an order and let us prove ourselves,” Ochoa says.
The result: ARC never sent Spectrum another order.
Ochoa says that ARC also owed them for past appraisals. “They underpaid us a large percentage of our appraisals, so I carefully went through all of the accounting documents and matched every single payment they paid us, and what was underpaid. Then I had to go back and forth with ARC to finally get paid what they owed us,” says Ochoa. Ohoa says she then sent ARC a formal email, arguing that it is against Oregon law for an AMC to “remove an appraiser from an appraiser panel without prior written notice” (HB 3624 Section 5). However, ARC gave no response. “The lack of work really hurt our business. We went from getting a ton of work to nothing,” says Ochoa.
Then in October of 2012, Ochoa filed the complaint with the state board. As is typical with many state boards, it took the WA board a long time to investigate and respond. “It took years and it was a lot of work. The state wanted lots of evidence and all of our email communication,” reports Ochoa. When she filed the complaint, Ochoa was not even an appraiser at the time. “Spectrum is my father’s company. I was graduating from college and had just gotten back from China when all of this happened. I had been living there since 2008. I came back and then took my classes and became an appraiser. I’ve been licensed since March 2013,” says Ochoa.
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The end result was that in Sept. 2015, ARC was finally sanctioned by the WA Board for violating Oregon law and removing Spectrum from their appraisal panel without written notification.
Ochoa says that at the end of the day, standing up to ARC was both costly and time consuming. “I’m glad they had to hire an attorney and have a small headache, but the outcome of all this isn’t exactly a great victory. First of all we got subpoenaed by ARC during the board complaint process. They wanted original documents. We have a basement full of boxes and there was no way I would be able to go through every single box and provide them with all the information. I have to do my work. So we ultimately had to hire an attorney and spend a few thousand dollars to get the subpoena quashed. Not only did we not get back on this client’s panel, but we didn’t get anything out of it,” Ochoa.
Months later, Ochoa says Spectrum randomly got an email from ARC saying that the AMC will no longer be working with Spectrum Appraisal. “I emailed them back and asked them why, but they never responded,” Ochoa says.
However, Ochoa still maintains that appraisers need to stick up for themselves and not get pushed around by AMCs. “Appraisers should not have to be bullied by AMCs. We are professional firm and we expect the same from our clients,” says Ochoa.
The state laws that exist requiring AMCs to provide written notification to appraisers before removing them from an appraisal panel are intended to protect appraiser independence by preventing the blacklisting of appraisers who don’t meet value or acquiesce to inappropriate AMC demands. However, AMCs remain free to remove appraisers from appraiser panels for good cause or unprofessional business practices, but the written notice requirement is meant to prevent the secret blacklisting of appraisers.
In this sense, the enforcement of this law against ARC is good news for appraisers, as it will discourage the quiet, back-room blacklisting that so often takes place in the industry. Appraisers are rarely notified when they are removed from a client’s Approved List (or placed on a blacklist), and even fewer are given a clear reason why they are no longer receiving work.
In the case of Spectrum and ARC, it appears that ARC did not even formally remove Spectrum from its appraiser panel until the State Board complaint was settled, but simply stopped sending work, suggesting that AMCs and lenders sometimes side-step the notification requirement by leaving an appraiser on a panel, but still effectively blacklisting that appraiser for internal purposes.
In the case of ARC, that defense does not appear to have held up, and the law was enforced.
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About the Author
Isaac Peck is the Editor of Working RE magazine and the Director of Marketing at OREP.org, a leading provider of E&O insurance for appraisers, inspectors and other real estate professionals in 49 states. He received his Master’s Degree in Accounting at San Diego State University. He can be contacted at Isaac@orep.org or (888) 347-5273.
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by Michele Mitchell
I was recently removed from a panel after being on it for 10 years. They sited quality of work. However, I had my work reviewed and the quality was good with plently of comments to support it. Come to find out, the lender that was allowed to bring me on as a perferred appraiser back in the day had just left the company with her team. All of the sudden after 10 years Im told my quality was bad. Its a lie and I intend to fight it.-
by Debbie Biehl
No reason to have to have an appraisal in 3 days. By the time the AMC’s find a person cheap enough, in the area they need, they spend sometimes a week looking.-
Then you as an appraiser are put to the gun to invent the appraisal in 2-3 days.
We NEED the time. They need to be more efficient, as they are not producing the product. Precisely why I do about 2-3 appraisals a month for AMC’s. I still have problems with their nagging and insisting on hour to hour updates. Slows me down.
After 29 years doing appraisals I think I know how long I need to work and think through my appraisals.
by Louis Ferri
I would like to applaud Spectrum for standing for their rights to be informed of their position on the panel; however in the long term it cost them a lot of time and money and it did not get them any justification or back on the panel or get them any more assignments. It just seems to me that fighting for appraiser rights is a useless effort in time and money with no positive result for any appraiser. We do not have any control over anything that has to do with our profession. I am continuously being pressured by AMC ‘S to reduce turn times, work on weekends, accept reduced fees, countless abserd / rediculous revisions/clarifications and blanket emails regarding assignments to various appraisers for a quote for an assignment that goes to the lowest bidder. When are we going to have some positive influence? Unfortunatly, I don’t believe it’s going to be within my lifetime.
by John Ford
This was not worth the trouble. Basically the cost to the amc was $2000. Nothing else. The lesson here is don’t allow any one amc to become a majority of your business. Limit each amc to a percentage that your comfortable with knowing that at any given time that percentage could go to 0%.-
Glad they stood up. More appraisers should. I know I was given the run around by an AMC . Their complaint? I didn’t answer the phone or respond to their questions. Correct. I was on vacation and responded when I returned. By the time I returned, I had a letter of suspension. I called to get clarification because I was unaware of any offense I’d done. And that was their answer: I didn’t respond to their messages. They gave me a 2 month suspension, costing me thousands. When they lifted the suspension, I saw where I was on a Watch List. Uh uh. Y’all aren’t that doggone great. I called and asked to be removed. I smile every time I get a request from them since i cover a really rural area. You cost me…now I cost you TSI.-
Yeah, if you haven’t concluded by now that trying to exist as an independent appraiser, with AMC work is a temporary condition, hopefully, this story will help you see the light. The existing AMC – independent appraiser process is not a free enterprise for an independent appraiser. The AMC’s/banks control your fees, your turn times, implement their own rules and guidelines, some contradicting USPAP. While someone else has so much control of “your” business, you incur all the liability. I just got a survey from an AMC for desktop appraisals, asking how much I would charge and how many I could compete in an hour. The only info. they give is that 80% of the form comes filled out. They say nothing about what else is required. They could have easily sent a copy of the form. No other profession allows such nonsense!-
by Chris VanDyke
No teeth to the law. The Board “stays” the suspension, meaning the only hit the AMC takes is the $2,000. Pretty common across the country – small penalty to pay to get someone that won’t “make the numbers work” off your panel from the AMC’s perspective (or lenders if they handle their orders themselves). Most Boards are as afraid of AMCs as appraisers are.-
State boards need to be more vigilant with the AMCs for these types of arbitrary and capricious business practices. They still want to go after the “low hanging fruit”, the evaporating real estate appraiser. Behind the closed doors of AMCs, much shenigans.-
by Lee K Fullerton
Are there regulations regarding an appraiser requesting to be removed from an AMC’s approved list?-
by Ken C
It would be nice if the Editor of OREP was an appraiser, or understood appraisal process. In my business, I always come in “at Value” when I complete an appraisal. But, I don’t always come in at the Value the mortgage company, or the AMC, wants, but I always come in at my estimate of Market Value. (From Working Real Estate: “Fail to come in at value or refuse to consider additional comparables, drive back out to the subject at no additional cost or don’t turn a report in on time, and you could find yourself never getting another order from that particular client again.”) Really — “At Value” ? Maybe one should say “The appraiser’s estimate of Market Value was lower than the Sales Price and further negotiation may be necessary to keep the contract in place in order to close on the loan.” The Sales Price is NOT Market Value in all instances, and the whole purpose of the appraisal completed for a mortgage broker is to determine if there is adequate collateral to secure the loan. It is not to ensure the mortgage broker “earns” a commission.-