Chitwood, the argument that a client must pay when an AMC does not is pretty
clear under FIRREA and Supplemental Standards.
Collecting AMC Debt from Lender
By David Brauner, Editor
One appraisal company at least has collected monies owed by the now defunct
appraisal management company (AMC) AppraiserLoft. How did they do it? They did
it by citing chapter and verse of FIRREA.
C. Brent Chitwood, office administrator for Phoenix Real Estate Appraisal in
Irmo, South Carolina, says he was able to get a mortgage company to reimburse
his appraisal firm for monies unpaid by AppraiserLoft after pointing out that
FIRREA requires contracts be with licensed real estate appraisers.
FIRREA, the Financial Institutions Reform, Recovery, and Enforcement Act of
1989, targets appraisal reform and includes the establishment of appraiser
“Initially, the mortgage company told us they would not reimburse us because
they had paid AppraiserLoft for the appraisal and that our contract was with
AppraiserLoft, not with them. Therefore, they said they were not liable for
payment,” Chitwood says. “Our attorney confirmed, however, what we believed.
That according to FIRREA, the contract must be with a licensed real estate
appraiser and AppaiserLoft is not such an entity.”
According to Chitwood, the argument that a client must pay when an AMC does
not is pretty clear under FIRREA and Supplemental Standards.
This is from the correspondence Chitwood sent to the mortgage company: “The
issue of responsibility for payment appears to be in question. We are
providing you with our research to assist you in understanding our position
in this matter and the legal precedence that we will use to pursue
(1) You are required under FDIC Rules and Regulations Minimum Appraisal
323.4 to use a State Licensed Appraiser for this loan.
(2) As state licensed appraisers we are required to identify the client and
the intended user by USPAP, the Uniform Standards of Professional Appraisal
Practice. This was done by obtaining that information from your agent. The
client (you) is documented in the client section of the appraisal that is
part of your files.
(3) You are required by law and rule to contract with a state licensed
appraiser either directly or through an agent. See
323.5 (b). You may not contract with a party that is not a state
licensed appraiser or its DBA. So AppraiserLoft, a regulated AMC, is either
your agent or you have violated this provision.
(4) According to The Appraisal Foundation,
USPAP Client Issue #93, payment by a party other than the client:
the act of the borrower or any other entity paying the appraiser does not
make them the client under USPAP. Therefore your position that payment from
the borrower to your agent somehow changes the Vendor/Client relationship is
(5) The transaction took place between Phoenix Real Estate & Appraisal, Inc.
as the appraiser legal entity and xxxx Mortgage as the client. AppraiserLoft
acted as your agent to order, review and assure compliance with your
(6) You received our product and utilized it to conduct your lending
business. You received an invoice stating our (the Vendor) name and address,
Your (the Client) name and address, a description of the product, and the
amount due. An Invoice is a legal demand for payment.”
After hearing the argument, the mortgage company promptly paid Phoenix the
monies owed ($300). “It worked for us and I’d like to see it work for the
whole bunch of others who lost money working for AppraiserLoft,” Chitwood
Click here to read about another appraiser who isn't taking no for an
answer when it comes to fees owed.
About the Author David Brauner is Editor of Working RE magazine and Senior Broker at
OREP.org, a leading provider of E&O Insurance for appraisers, inspectors and
other real estate professionals in 49 states. He has covered the
appraisal profession for over 16 years. He can be contacted at firstname.lastname@example.org
or (888) 347-5273. Calif. Insurance Lic. #0C89873.
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