|> The Appraiser Coach|
Between a Rock and a Hard Place
by Isaac Peck, Senior Broker at OREP.org
As I write this, I just finished up a webinar on discrimination claims that I did in a podcast style with Craig Capilla, one of the nation’s foremost appraiser defense attorneys. (Visit OREP.org/Craig-Capilla-Webinar to listen to the replay.)
Our conversation reminded me that over 2,000 state board complaints are filed against appraisers yearly, according to my friend Tim Andersen, MAI and CEO at TheAppraisersAdvocate.com. That means roughly three to four percent of all appraisers in the U.S. have a complaint filed against them every year!
Of course, the majority of complaints (and claims) against appraisers come from homebuyers and borrowers. This is a frustrating reality for appraisers—the vast majority of the consumers do not understand the appraiser’s role, methodologies, or standards.
Enter the specter of discrimination accusations and innuendos. With dozens of national news stories publicly accusing appraisers of discrimination, federal and state appraiser regulators proposing changes to appraisal standards, and new “Task Forces” being organized—appraisers are now caught firmly between a rock and a hard place.
If a Person of Color has an appraisal come in low and they can’t buy or sell a house for the contract price (without the buyer bringing additional funds!), or they don’t get the value that they wanted when refinancing—it must be the appraiser’s fault, and it must be because the appraiser is racist!
(story continues below)
This is the reasoning that we see playing out across the U.S. Dozens of HUD complaints have been filed against appraisers alleging discrimination and Janette Miller, a California appraiser, is being sued for discrimination. In Miller’s case, and in the majority of the HUD cases, the complainants/plaintiffs were homeowners who were refinancing and, one may assume, didn’t get the value they were hoping for.
While this dynamic is, for the most part, outside of the appraiser’s control—there are still steps you can take to protect yourself. First, be sure that your E&O insurance covers you for discrimination (many policies actually exclude discrimination!). Second, now is the time to step up the quality of your reports and build a defensible workfile that documents what you did and why you did it.
Third, thoroughly review all of your canned commentary and the wording you use in your appraisal and remove any mention of race, national origin, etc., as well as any of the “taboo” words Fannie Mae is warning appraisers against using to describe neighborhoods—like “desirable,” “superior,” “inferior,” and many more.
Lastly, take extra care to treat everyone you meet in the scope of your business with the utmost care and respect. If you have any questions or need liability advice, please check out OREP Insurance (OREP.org) .
Stay safe out there!
About the Author
Isaac Peck is the Editor of Working RE magazine and the President of OREP, a leading provider of E&O insurance for real estate professionals. OREP serves over 10,000 appraisers with comprehensive E&O coverage, competitive rates, and 14 hours of CE at no charge for OREP Members (CE not approved in IL, MN, GA). Visit OREP.org to learn more. Reach Isaac at email@example.com or ( or (888) 347-5273. Calif. Lic. #4116465.
OREP Insurance Services, LLC. Calif. License #0K99465