I want want your full attention for three minutes. That's not too much to ask. Ignore your phone, forget the other activities surrounding where you are just now. Focus here for three minutes. I'll give you a few moments to get ready......
Now. Imagine you are in your office. It's a quiet Monday morning. No one else is there yet...a perfect time to relax before another hectic day, another hectic week begins. The coffee you just made is perfect! Hmmm, smell the aroma!
On the middle of your desk is the morning mail. Top of the stack is an envelope from your best client, one you've had for years, a good working relationship, built over time until they represent 15, maybe 25 percent of your business each month. Pay like clockwork, no value pressure. Great client.
Maybe another check is in there...let's open it and enjoy looking at the fruits of your labor, an example of all the hard work you've put into building your business over the years. You've worked hard, you still work hard, but you know you've built a business based on quality and service. The American Entrepreneur's dream.
But it's not a check. It's a letter. It reads.....
On Behalf Of Appraisal Review at XXX Bank
Sent: Monday, May 21, 2007 7:55 AM
To: AAAAA
Subject: Re: FW: Your XXX Appraiser Status
We are not able to accept new appraisals from you because one or more of our Investors or MI Companies is not accepting work from you. We sell loans not only to Fannie Mae and Freddie Mac, but also to large end investors such as YYYY or ZZZZZ. We do business with all of the MI Companies. I do not know which entity excluded you, but we are not able to share that information specifically even if you were to speak to a manager.
Thank you for your business.
XXXX Bank, Appraisal Review Department
Your day is ruined . . .
Your week is ruined . . .
Your business is in jeopardy!
Years of work to build a successful business is threatened. What happened? Who can I call to discuss this? How can I address the issue? The cold, hard answer is; You can't. Read the notice again. No recourse. Goodbye. Thanks for your business.
How would that make you feel?
What thoughts run through your mind?
Click below to continue reading . . . .
Can't happen to YOU you say?
Really?! It did happen, on a quiet sunny day this last May. To someone just like you. And it could be you next. Really. It could be you next.
Actually it may already have happened and you just don't know about it. The sad thing is, you may have done nothing wrong. The saddest thing is there is no recourse, no way to even discuss the problem.
OK...the three minutes I requested at the beginning are up. You can go back to multi tasking, dealing with the daily activities of your life, thankful that you weren't the recipient of that letter. You can scan over the rest of this column, maybe even not read it at all........
The first column in this series dealt with Lender Do Not Use Lists, and the darker version, Black Lists. We opined that Do Not Use Lists are a yin/yang proposition. On the one hand both good lenders and good appraisers agree with their existence. On the other hand, because of certain weaknesses in the system, those lists can actually defeat the objectives of both good lenders and good appraisers.
We differentiated between these two types of lists by two labels: Do Not Use Lists, and Black Lists. Do Not Use Lists, properly maintained, properly screened, with notification and recourse are good: good for the lending industry and good for the appraisal profession. Black Lists are not properly screened, have no notification or recourse procedures, and are bad: bad for the lending industry and bad for the appraisal profession and individual appraisers.
The letter above represents notification...that's good. But no recourse...that's bad.
I was going to wrap this series up today with suggestions as to how to correct this situation. Simple suggestions that are good for both the good lender and the good appraiser. But I have more cases that have been sent to me, and I feel an obligation to post them as I did the others.
CASE 16
Your article hit home. My sister and I received this letter (the one printed above) from XXX a few months ago. They would not give us any information about being removed. We have been approved with XXX for many years and had never has a problem.
CASE 17
Hi, I want to share my story too. I am blacklisted with XXX bank. I am considering a lawsuit for discrimination. I have been an appraiser for a very long time and have NEVER been investigated, punished nor has there been a hint of scandal.
I did a report many years ago, (7) and it was "Subject to completion" and somehow the loan got closed without a final. I was then put on the black list and never got a response to my defense.
Here is my point. I am certified, on 99.9% of the lenders, banks and credit unions along with all of the management groups, ERC groups and enjoy an excellent reputation. I am current in my education, have E&O Insurance and have never failed to respond to a question, request or need for expanded information. I don't see why a group or bank has the right to "chose" or cherry pick appraisers.
I feel this is a huge case of discrimination, blaming the appraiser for a mistake done by someone else and hung out to dry, so that someone hangs.... it is not fair...
Now, after many calls, letters and emails, I received a horrific list of almost every appraisal I ever did (that went there) with a bogus list of vague complaints and after I responded to each and every item...was ignored.
This should not be allowed. Is anyone else interested in coming in on a class action suit???
CASE 18
Hey, Ken,
I have a story to tell.
Not long after I was certified, I did a purchase appraisal ordered through a local broker I knew. The home was recently foreclosed, but in livable move-in condition. In the report, I noted some minor damage that I thought might be unsafe, and made the report subject to their repair. When I did my final inspection, I noted that the repairs had been made. Some time later, I received a letter from the chief reviewer at XXX, to the effect that I was going to be removed from their approved list over this appraisal. He claimed that the home had over $20,000 in code violations that I had not disclosed. He also sent their book of Appraisal Guidelines and asked for my rebuttal on his list of issues. Oddly, he made no complaint about my value estimate.
At that point I had never heard of XXX, and didn't even know I was on their approved list. I had never seen this special book of Appraisal Guidelines. (Incidentally, I have never met an appraiser who knew about XXX's special guideline book.)
In my rebuttal, I included many interior photos showing that the home was perfectly habitable and typical for the area. The home had no "condemned" stickers or signs, and with the few exceptions I had noted in my original report, it looked like hundreds of other normally maintained homes the area. I pointed out that nowhere did their guidelines state that the appraiser was to have knowledge of building code or to obtain any such report from the village. Certainly, such additional research is well beyond the scope of the typical mortgage appraisal and an appraiser is simply not the right person to ask about building code compliance.
The rebuttal absolutely did no good. XXX made no response to the rebuttal, except to say that they had indeed removed me from their list. In order to be returned to approved status, they wanted me to have the State review my appraisal. According to the State, they do not review appraisals, and would only investigate if I lodged a complaint against XXX. At this point, I decided to drop the issue, since I had already spent too much time on it, and none of my other clients used XXX.
Unfortunately, XXX grew in popularity in my market, and when one of my major clients found I was on their "Do Not Use" list, they dropped me like brick, paid up their account, and never returned my calls. Months later, I found out what had happened from a loan officer. Since then, nearly every major client of mine has brought up XXX, and I'm sure it has cost me tens of thousands in income. I tried a couple of times to get XXX to reopen the file, but they consistently refused. Obviously, I have been very happy to hear that XXX has pretty much closed down.
Given this experience, if I were to have the same thing happen again, I would not respond with a rebuttal, but with a letter from an attorney. Clearly, this company was not interested in dealing with me fairly, they just wanted to make me the scapegoat for a situation that still remains murky to me.
CASE 19 and 20
Have a perfect one. XXX Bank. They put you on a 'review' list where you have to have 5 of your reports reviewed by their appraisers to come off the list. However, you never ever do. I did numerous appraisals for them through a management company, and they blew a hissy over my not agreeing with them on a review. The pressure from XXX's appraisal department for a determined result they thought was correct was horrible. They put me on this review list and it has interfered with a lot of my clients using me for many assignments. I think XXX does this to restrict appraising to a group they approve or it is punishment for not agreeing with their appraisal department. I can't prove it, but I am working on that.
NNN, the same exact thing happened to me with XXX. I spent 4 years trying to complete 5 appraisals and haven't been able to. I was removed for the same exact reason as you.
(This last sentence was included from the fellow who sent the case to me....that's why it's CASE 19 and 20.)
CASE 21
I was put on a 'do not use list' with XXX as a trainee. The supervisor was not put on the list and continued to get work from them. They told me it would last 2 years and I could not dispute it. Even after the two years I would be reviewed. My 3rd comp was just over one mile away but needed and explained. Since there is no lender contact or estimated value given there is no reason to push values so I'm not sure what the problem was. I did a lot of work for them and never had a problem before this.
Next week I'll try to wrap this up....with simple suggestions that include due process, fair play, and are in the interests of good lenders and good appraisers, and will improve the lending industry and the appraisal profession.
If anyone wishes to send me additional examples of Black Listing, email them directly to me at [email protected].
If you don't have an example, but want to comment on this column, the series on Black Listing, or just your opinion of the issue, either pro or con, I encourage you to use the comment feature at the bottom of the screen. I'll welcome and print all opinions, no matter what position you wish to take.
Additional Articles by Ken:
The author is the owner of Acorn Appraisal Associates, a 21 year old firm offering a wide range of quality appraisal services to the Financial and Business Communities in the greater Houston SMSA
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