Appraisal Scoop

HELP - I GOT SUED! What to Do (& Not Do) If It Happens to You

"HELP- I GOT SUED! What to Do (& Not Do) If It Happens to You" by Elaine Matternas was  recently published in Real Estate Valuation Magazine Online - Spring 2006.

The sheriff, process server, or maybe the mail carrier with a certified letter has just exited your office, leaving you with a thick sheaf of papers labeled: ABC Bank v. Mary Q. Appraiser.

What do you do next?

Here's a "summary" from the article . . . What NOT to Do!

Don't stuff the envelope in a drawer and hope that it will go away. It won't.

Don't take the sheaf of papers to the divorce attorney whose office is next door and ask him or her to respond for you. You need someone whose specialty is defending real estate appraiser errors & omissions claims defending you.

Don't take it upon yourself to call the claimant and explain to them that you have done nothing wrong.

Don't admit guilt or innocence.

Don't try to answer the lawsuit directly by yourself - what is called a pro se defense in legal terms.

Don't take the lawsuit personally.

Don't panic! The sky hasn't fallen and the world isn't coming to an end.

Take a deep breath, gather your facts and files, and start on the "What You SHOULD Do" list.

Illinois - "Comp Check" Complaint Form

Our earlier blog post Can you check comps for me? I want to know if I should order an appraisal included the ICAP instructions asking appraisers to email Value/Comp Check requests from lenders to the Illinois Department of Professional Regulation. 

ICAP has now been informed that Illinois has a special form [(6-2(4) Report] that appraisers must fill out and mail-in with a complaint.

Section 6-2(4) of the Residential Mortgage License Act of 1987 (“Act”) provides for the submission to the Office of Banks and Real Estate (“OBRE”) of an incident report involving an employee of a licensee that has knowingly submitted or caused to be submitted documents that contain willful and material misstatements of facts in connection with any licensable activity as defined in Section 1-3(a) of this Act.

Appraisers can sign the complaint if they want, or can simply write in the word ANONYMOUS on the signature line. The State told ICAP, "the more complaints against a specific lender the better".

Please mail your complaints to: IDFPR, Banking Division, Attn: Elba Aceveda, 122 S. Michigan Avenue, Suite 1900, Chicago, Illinois 60603

Download the 6-2(4) Report "Complaint Form" - click here.

They’ve been wrong before … and they’ll be wrong again?

How many of us don’t know what we should know? What an education we would get just by hanging out with those that have been around the business for years, trained in the old S & L traditions of taking Institute or Society classes, long tenures with “old school” chief appraisers, hoping to reach the target of a level one from FNMA.

What lessons you could learn by spending a year or two with the mentors of your mentor?

From the things I read on forums or in the media each day, it makes me wonder who trained some of these analysts, agents, appraisers, economists and others and how is it that they seemed to have skipped so many fundamentals. As an industry we need to get back to basics. We’ve forgotten what we learned or perhaps many of us never learned it in the first place

With the market changes that have taken place in the past few years, it’s no wonder that economists and analysts are rattling their sabers and hawking one position or another. The market has changed, with it comes uncertainty and that breeds the forecasts of doom, gloom and depression.

When looking over housing, economic and demographic reports; projections, statistics and forecasts of the past 25 years, how often did the experts get it right? Perhaps as often as they got it wrong or even less. The experts often don’t agree on the numbers nor can they dispute them in a manner that makes one of them the clear-cut winner. There’s no Super Bowl, World Series or Wimbledon of forecasting and therefore no “champion.”

So whom do you place your bet on? Who is the ranking member of the “expert fraternity” and why are these other pretenders to the throne getting press at all?

Read on . . .

"I'm a Tablet PC. I'm a Mac."

Thanks to jkOnTheRun: "I'm a Tablet PC. I'm a Mac.".  This is a hysterical spoof on the recent "I'm a PC. I'm a Mac." series of commercials. This time, it's a Tablet PC kicking a Mac's behind with the premise that you're more productive with a Tablet PC and that a Mac isn't for "work". I don't agree with the "a Mac is all for fun and video stuff", because you can certainly be productive with a Mac; nonetheless, the lack of a tablet from Apple is a perceived gap.

Maybe it's just me that sees that gap; what do you think? Should Apple produce a Tablet PC? What benefits over Microsoft-based tablets would you be looking for?

(via GottaBeMobile)

Predatory Lending, Client Pressures and Appraisal Frauds

After beginning research for a paper for a class entitled "Litigation Issues in Valuation" in January of 1999, I began a path that took me to unexpected places.

My initial topic was going to be on Civil Liabilities for Appraisers. I soon discovered that Mark Levine, PhD, MAI, of Colorado had already published a book on that topic, with several updates.  "Real Estate Appraisers' Liability" is 615 pages, published in 1998. It is mostly precedent setting court cases against appraisers, a far cry from the earlier seminar I had attended in 1987 by the SREA entitled "Real Estate Liability: How Far Does It Reach" by Wayne Whited, SRA of Tulsa.

I met Wayne and became friends and worked with him in the late 1980's and attended the pilot seminar. Back then there were no texts on the subject, lots of texts on Accountants Liabilities. There were even very few published court cases involving appraisers.

"But then, none of the cases from the S&L Crisis were published when Wayne wrote his seminar. Before that era was over, there were appraisers in federal prison for the first time. One in Texas was still working, with staff coming to the prison every day and he was signing reports. The AIREA changed their Ethics Rules to include "If a member is convicted of a fraud, we will expel them" or language to that effect."

Few in the industry really realize why we were licensed or what USPAP is used for or intended for.   The financial crisis caused by the failing S&L's and banks, resulted in Congressional Hearings, often referred to as the Barnard Hearings because that was the name of the Chairman.  Read on . . .

Why Blog?

"I just don't have much to say."
"I don't know what to say."
"I don't have the time."

These are often things that I hear regarding blogging.  At first these things may seen true because blogging can be quite overwhelming.  But I will address these issues and help set your mind at ease - so you can start to blog.  The first two items I will cover together in point 1:

1. "I just don't have much to say." | "I don't know what to say."

I know that - especially as a small business - it can feel that way.  But everyone has a lot to say.  You can blog about benefits to your clients and something that will make them interested.  Think of questions that they ask you every day.  Things that they may want to learn and understand.

You can blog about things that are happening in your industry.  Read other blogs, articles, newsletters, etc...and see what is happening.

What about funny stories?  A bad phone call, a bad situation, your car breaking down?  You name it - tell your customers a funny story.

Don't forget - blog about your company!  Events, happenings, new services or products, new employees etc.

2. "I don't have the time."

Can you come up with something better?  No one EVER has the time for things that they either don't want to do or are overwhelmed with.  Now that I have given you ideas about what to say - you don't have a reason to feel overwhelmed.

So make the time.  Either first thing in the am or at the end of the day works best.  Schedule an hour a few times/week - and then you will be off and running!

Good luck!  And most importantly - have fun!

Author: Brooke Long: Cataluna is a web design and print marketing company located in Shakopee, Minnesota.

IS it a "Buyers Market"?

I don't think we ARE in buyers market - It's something else (certainly not a sellers market).  I think it is a stagnation market: where the buyers are not there, and they may not come back in adequate numbers until prices reach affordable levels. 

Soon the evidence will be clear that prices are dropping and the "Press" with report such vigorously (the news now is that the inventory is high and sales are slow).  Once it becomes common knowledge that homes are losing value - the potential buyers will sit on the sidelines and not return to the market until they believe prices have stablized or are starting to move up again.   

The problem with loan officers pushing to make loans - is that they don't care (and are not held responsible for bad loans they make) - they just want to make loans (and collect their commissions).  The people trying to refinance now are doing so for the "cash out", not for better rate and terms.  Then you have appraisers slow with work - willing to help out - as long as they can collect an appraisal fee. 

A 3-D situation:

1. desperate homeowner,
2. desperate loan offiicer and
3. desperate appraiser. 

Who gets hurt when the loan goes bad?  Whoever is holding that loan when it goes bad - that is why there is Cert 23 - informing the appraiser that successors and assigns may rely on your appraisal report.  The borrower who has been allowed to over-extend themselves and loses the house to foreclosure - causing credit problems into the future.  And the appraiser whose inflated appraisal sits in the loan file.  Does the loan officer who put together the deal - seeked out the agreeable appraiser - and hinted to the borrower that over-stating their income would help the loan get funded - be held accountable: NO! 

The Lemmings are in line and headed toward the cliff - the wise appraiser needs to stop and say - this is not a good idea.  Unfortunately the pressure will not slow anytime soon and more appraisers will move to the dark side just to keep food on the table.  The end result (I hope) will be the licensing and standards for loan officers.  But by then there will be many dead lemmings at the base of the clift - sure hope I don't know any of them (that would make me sad). 

Author: Beverly Bayer, SRA:  Chief appraiser for Bayer Appraisals in the City of Moreno Valley, CA..  Beverly began appraising in 1977 and is a past president of the S. Calif. Chapter of the Appraisal Institute.  Beverly recently wrote an article for Working RE Magazine (July 26, 2006) entitled, "Appraisal Form 'Gotcha' Traps (from an appraiser who knows)."

"Can you check comps for me? I want to know if I should order an appraisal"

That's a common question that is asked of appraisers every day. Lenders and borrowers don't want to waste their time and money on loans that won't "Appraise Out". Comp Searches (pre-appraisal market value opinions) may also seem like good "Customer Service". 

That may appear to be true on the front-end, but those "searches" back-up appraisal production on the back-end (causing delays in appraisal delivery) and generally it's expected that the appraiser will not be compensated for THEIR time!.  Also . . Did you know that checking "comps" and providing an "estimate" of a home's value prior to receiving the appraisal order MAY put the appraiser in violation of the Uniform Standards of Professional Appraisal Practice (USPAP) and jeopardize their state license?

  "But ALL of my other appraisers do it!"

New Illinois lead paint law affects property owners and managers

Amendments to the Illinois Lead Poisoning Prevention Act were signed into law on June 20 and are effective immediately. See an analysis of the new requirements as well as existing state, federal and city of Chicago requirements, prepared by IAR Governmental Affairs staff, below . . .

Do I NEED An Appraisal Web Site?

Real estate appraisers today work in a very competitive market, but the Internet can provide an excellent marketing edge to appraisers that want to be successful on the web.  Success in real estate hinges on how well your business is known and how well you can respond to your client's questions. An online presence will build your brand and your appraisal business at the same time.

Attract Non-Lender Business: A huge proportion of homebuyers use the internet to search for a home. It is estimated that up to 80% of homebuyers and sellers use the Internet for research and to search for home listings and real estate services.   The Internet offers the convenience that busy people need. If a homeowner needs a "Pre-Listing" appraisal, they'll often use their their lunch hour on the internet to search for you. Your website will be available 7 days a week, 24 hours a day.

A Web Site As The Hub of Your Business: First and foremost, an appraisal practice is a business – a service business, more precisely.

Managing turn times, efficient workflow, and constant status feedback to demanding clients is a bear, even in a one-man shop. Throw in the complexities of additional staff and it’s nearly impossible to meet today’s responsiveness and service standards without solid tools.   That's where a web site can help! . . .