Guest 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 firstname.lastname@example.org or (888) 347-5273.
Stiffed Appraisers Go After Chase by Isaac Peck, Associate Editor
In January, Evaluation Solutions/ES Appraisal Services (ESA) declared bankruptcy, leaving thousands of real estate appraisers, agents, and brokers with unpaid invoices for work performed. With close to nine million dollars in unpaid invoices for appraisals and broker price opinions (BPOs), it is the worst of a growing number of appraisal management company (AMC) failures that have left appraisers stiffed and steaming.
The fallout has been extensive. According to the bankruptcy documents filed by Stutsman, Thames and Markey P.A., the law firm handling the bankruptcy proceedings, over 10,000 individuals and firms are listed as debtors, making it the most devastating and farthest reaching AMC bankruptcy in recent history.
Since Working RE first reported on this in early 2013, the appraisers and agents affected have been pressuring Chase, the lender who hired ESA for most of work, to make good on the AMC’s unpaid debts. Many appraisers have filed complaints with the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB). So far, regulators have been indifferent to the problem.
Chase Tries to Settle Chase is directing inquiries to Brian Reese, a Regional Manager of the WAMU-Chase branch in Florida. Nicholas Conteduca, an appraiser owed over $30,000 and founder of Esappraisalscam.com, designed to help appraisers collect unpaid fees, reports that Reese told him that Chase will not make any decisions about paying unpaid fees to appraisers until the bankruptcy proceedings are over. The lawyers handling the case told Conteduca that the bankruptcy case could take 12-18 months to complete. Reese did not respond to numerous phone calls from Working RE.
But time may be running out for appraisers thanks to a legal maneuver that is part of the bankruptcy proceedings. Chase is seeking to settle its debts with the now defunct ESA to the tune of $2,316,000. However, that money will not go to pay fee appraisers and agents. All but about $100,000 is earmarked for a secured debtor of the AMC, Summit Financial Resources, L.P., a hard money lender. So, there will be only about $100,000 remaining to cover the estimated $9 million in unpaid fees to appraisers, agents and brokers. This is the equivalent of paying a little over one penny on the dollar for the work that appraisers and agents completed on behalf of Chase.
Worse for appraisers and agents/brokers is that the settlement agreement by Chase allows the bank to avoid any future claims. Included is a Notice of Bar Order which bars all related claims and lawsuits once the secured debtor is paid. This order prevents appraisers, agents and brokers from taking any action against Chase as a means of collection, including taking the bank to small claims court, filing liens on properties where they performed work or filing any other claims for their unpaid fees. For this reason, many appraisers and agents are working together to block the Bar Order.
The deadline to object to the motion to approve the Settlement Agreement and Bar Order is May 24, 2013 at 5:00 p.m. (EST). Additionally, on June 4, 2013, an evidentiary hearing on the motion to approve the settlement agreement will be held in a Florida court. The notice specifically states that “any party opposing the relief sought at the hearing must appear at the hearing or any objections or defenses may be deemed waived.” (Read the Full Text of Settlement Agreement here) == Here’s how some appraisers are fighting back.