Appraiser Sues Over Blacklisting

Editor’s Note: This story, one of several recent instances of lone appraisers fighting back in court, is further proof that the tide is turning for appraisers: consider the spate of legislative reform now under consideration to support appraiser independence- as reported in the current WRE, and the stunning Fannie/Cuomo agreement, which while flawed, is a signal that appraiser independence is no longer just wishful thinking but on the “to do” lists of folks who have the power to make it happen.

“No appraiser should have to decide whether to keep putting food on the table or do their job correctly and not violate the law.”  – Jennifer Wertz

Appraiser Sues over Blacklisting

By Cary Barker, Assistant Editor WRE

One appraiser is fighting back in court after allegedly being blacklisted for reporting a “declining market” in one of her appraisal reports.

California appraiser Jennifer Wertz is suing Washington Mutual, eAppraiseIT, Lenders Services and others in a complaint filed in February 2008. The complaint alleges that she was removed from WaMu’s “proven” appraiser panel for indicating a “declining market” in a report from May 2007. (Read the complaint: Wertz vs. Washington Mutual.)

Reality Bites
Wertz says she has received numerous emails from “blacklisted” appraisers who say they lost their livelihoods for refusing to give in to pressure from lenders and/or appraisal management companies to “make a loan work.”

“Appraisers have little recourse in most cases. They just find themselves out of work if they don’t go along,” said Wertz. “For example, one appraiser told me her husband had heart surgery and she is their sole support.  They lost their home after she was ‘blacklisted’ for refusing to falsify an appraisal so the loan would get approved.”

Heavy hitters such as FHA, Fannie Mae and Freddie Mac announced at an industry convention last year (Valuation 2007) and via official statements, that they and their lender clients want to know if a market is declining, and that appraisers are accountable for making and reporting this determination accurately. Despite this, many appraisers say their reports are routinely rejected when a declining market is indicated.  “Many appraisers I spoke to at that convention after the pronouncement on declining markets had a much different version of reality,” said David Brauner, Editor of WRE. “Most said they had appraisals kicked back to them when they indicated ‘declining market.’ One veteran appraiser told me that over the years pressure from his clients over value was rare but that now, because of the declining market conditions (San Diego, Calif.), he’d been forced to give up most of his residential business as his best clients won’t accept ‘declining market’ and he won’t go along.”

Wertz says she wishes that all appraisers had the competence and conviction to do the right thing but there would be no incentive to commit fraud if there was no pressure to do so.  “I think the solution lies with providing strict regulation that is enforced to protect and insulate appraisers from undue influences by lenders and appraisal management companies. No appraiser should have to decide whether to keep putting food on the table or do their job correctly and not violate the law,” said Wertz.

“It is in the best interests of every homeowner, real estate investor, and taxpayer to let the appraiser be what they are supposed to be – an objective, uninvolved third party that does not have any personal or financial interest in the transaction,” said Wertz. “I believe we need more legal protection than what we are now receiving to be able to do our jobs as professionals.”

According to Wertz, WaMu had the case moved to Federal Court but a judge granted a motion to bring the case back to state court in April. WaMu attempted to move the venue from California to Washington State but was denied by the court, according to Wertz.

Geri Ann Baptisa, a spokesperson for Washington Mutual, told WRE that it is the policy of WaMU not to provide comment on ongoing litigation.

Read the complaint at WorkingRE.com, Sidebar: Wertz vs. Washington Mutual. Read Fannie Mae’s 07/11/07 Announcement on Declining Markets at WorkingRE.com, Sidebar. Also read Fannie Mae’s press release regarding their new Declining Market policy taking affect June 1, 2008, Fannie Mae’s Single National Down Payment Policy in Sidebar.

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