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
[Editor's Note - Ken has collected many first-hand examples of appraiser blacklisting and we want to give them as much exposure as possible. I've split Ken's post today into two segments, with the first eight Blacklisting stories below. Tomorrow, I'll post the remaining examples in a Part 3 of this series]
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 think it appropriate to differentiate these 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.
In the first of this series I gave personal examples of both types of lists. I promised in this column to provide real case examples of the dark side: Black Lists. Each of these cases presented below have been sent to me with the individual names, the names of the lenders, the names of the loan officers...they are not anonymous gripes. I've redacted all references to the companies and the individuals, but those name remain in my files. Each of these folks have taken the time to read the first column, then taken the time to write me their story. These are busy people. That they took the time to write says a lot. I think clearly it is the tip of the iceberg.
Don't think you are exempt. The nature of Blacklists is such that you are not informed, you are not given a chance to defend yourself. You may well be on a list, or many lists. There are even a couple of companies I'm told, one of which was detailed in one of the cases, which creates the lists and shares them with many lenders...it's evidently a revenue source. So the potential affect on your business could be exponential.
I intended to reduce each case to the essentials...a bullet list more in keeping with today's busy schedules. But I can't communicate the pain and the frustration of good, honest folks who have been unjustly treated and their businesses damaged. So each of the stories are presented just as they were sent to me. My only edits are the redactions.
If others have such examples they want to contribute, please do so. Email me privately at [email protected]. I'll add them to the list.
Click below for the FIRST series of "Real Appraiser" Blacklisting stories . . .
Case 1
I have been put on a do not use list or a blacklist not sure which one applies, a large private lender in SSS I found out seven months after the fact said I did an appraisal all wrong listing about 5 different mistakes, after showing them I did the appraisal correctly with facts that I could prove they said they are going to leave me on the list because my measurements were different than a previous appraisal done by a different appraiser some time in the past that was in there position.
When I tried to explain why his was incorrect they said they didn't care knowing that it was the one thing I couldn't prove one year after doing the appraisal.
They even said they didn't care that 2 other appraisers and a course instructor who is also a real estate attorney and the OREA said the appraisal was done correctly, and the original lender did not have any problem with the appraisal "no condition's at all "this all occurred after the loan was sold.
Case 2
If you are still collecting this information, I am providing the following information. I have done desktop appraisals for XXX for a couple of years (usually a couple or more a week). There was never any "hit the number" pressure. That changed about 6 weeks ago when I refused to increase the value on a desktop. I advised them that the extra value might be there, but that the property would need to be inspected to determine an increase. That was the last order I got from them. I have called several times and was even told by one of the people there that I wouldn’t be getting any more work from XXXX because of it.
Case 3
On 5/11/06 I receive a fax from XXX of the XXXX governing body, regarding an appraisal audit that is being done on my work. It states that the reports (4 of them) within the audit were being audited for quality compliance. It also stated that additional information was needed to understand more about the subject properties, its market, and/or the comparable sales. Unfortunately, this was not the case. I wasted my time (which I didn't have to waste), and three whole days explaining to someone who definitely never read or considered any of my responses and is most definitely is not one of "my peers" as defined within the scope of work, and never intended to do anything but suspend me in the first place, why my appraisal reports were accurate and correct.
The appraisal reports were all excellent reports that utilized whatever available data in each areas markets in the very best manner, and only 2 typos could be found out of 4 reports. There were more typos on the audit pages than on my actual reports.
But the most interesting thing about these 4 chosen reports was that the very last report within the audit was [address deleted], a report that was never ordered by XXX, and even on the audit had no order number belonging to it. It also appears from the audit that there is only one report being audited, not two, and the audit states that certain attachments were missing from this report and this is a big error I have made (all attachments were on the reports when they were originally turned in or they never would have closed to begin with), when this report was never turned in to XXX, and it doesn't surprise me at all that there are missing pieces to it now, that have nothing to do with me.
More interestingly, XXXX, whose name is on the audit as Regional Chief appraiser calls me on the phone the last week in May, 2006. He tells me outright that the audit is actually an ongoing investigation of fraud related to the sale at [address omitted]. I asked why an investigation for fraud would take place when both appraisals came in considerably lower than the selling price, not higher and usually fraud is related to inflated values. I also told him that I had called the hotline about the loan officer, XXXX, which he told me he didn't know. He asked me if I would fax my work file to him. I told him I would cooperate in any way I could. I also told him I would never, ever commit fraud, or participate in a fraud scheme. He asked some other questions and hung up. I faxed him my work file.
When I returned from my vacation 2 weeks later I received a Federal Express letter telling me I had been suspended from XXX. In it there were made up reasons about things wrong with my appraisals. There were errors and typos all over the letter and the audit, but it stated that I really needed to proof read my reports because out of the four reports, I had two typos.
Every reason stated, (barring two that were minor typos and one that was also ridiculous and had nothing to do with values at all) were untrue and completely fabricated made up lies, did not follow even XXX's own quality guidelines, and were unreasonable given the limitations of the jobs and available data. When I called XXX on the phone and told him I would never call the hotline again and turn someone in, he returned my call and said, "I didn't know you turned the loan officer in." (I already stated earlier that I had a conversation with him whereby I told him this and he said the exact same thing).
Then I re-hashed the conversation we had had in May about the audit being about a fraud investigation for the XXX property, and he told me he didn't recall ever telling me that. I suppose I faxed him my entire work file for no reason. (I have witnesses to everything discussed here. Multiple witnesses.) We had also talked about some other things that he in turn falsified what I said on the phone and put into his final audit report as reasons why I was not good enough to continue working as a XXX appraiser.
I called XXX repeatedly after this and sent him e-mails asking for an explanation and wanting to discuss this and he did not return any of my calls or e-mails. I e-mailed XXX and he did the same, ignored me.
Following all this XXX contacted you and you told her I was not removed from XXX's approved appraiser list. So I just decided to let it blow over and forget about XXX because I have plenty of clients, I have never been disciplined ever by the appraisal board, I am working on becoming an investigator for the appraisal board and working on my SRA for the Appraisal Institute, why waste my time, right?
6/15/06 I do an appraisal report for XXX on a house in XXX. She sends the report to NNN who does a desk review on it. The reviewer practically states in his review that I am incompetent but also make some big mistakes. He must have gone to the NNN school for appraisal audit. He states that my plat map and location map are "unacceptable". The plat map is just a replica from the county and the location map is the actual County Atlas scanned into the report in color with arrows placed onto the map book. One look at the review and anyone can see that someone is on a witch hunt. What happens next is even more amazing. They force XXX's client to pay $400 for a field review. The field reviewer comes back with a good report. My report is perfectly fine and they agree 100% with my report, its value and everything in it is fine and good. XXX turns around and tells her that they decided not to accept this field review and they are going to make her client pay for another field review! She took the appraisal report and her loan to another lender who made the loan without any reviews at all. She was totally disgusted.
On 7/14/06 XXX, review appraiser from XXX contacts me for no reason on a file I worked on in February. [address deleted]. She asks me question that is already answered on my appraisal report. Is the source of water common and typical to the subjects area and do all the comps. have the same source. My assistant pulls up the appraisal and points out that this is already answered on the report so why is she calling. She says she didn't realized it was already on the report.
On 7/17/06 XXX from XXX contacts me with questions on the same appraisal report. Per the branch this is their request: (I have e-mail copies of these requests) "have appraiser add an addendum to the appraisal for: Manufactured home addendum 1004c must verify: doublewide at least 24 ft wide, HUD data plate is affixed, towing, hitch, wheels and axles must be removed, property condition must be average or above."
XXX from my office pulled up the report and called XXX back and showed him in the report where each one of these items were already addressed within the report because the form actually asks all these questions and the loan could have never closed to begin with if they were not answered. He says in a perplexed voice," I can't understand why they have me calling you. This is ridiculous." No actually what it is is harassment.
On 8/21/06 XXX orders an appraisal for [address deleted], order #nnnn from me. It is ordered from XXX, the scheduler is XXX, for XXX. It states that I am being paid nothing and they want an appraisal update. We call XXX and I am told that the governing body has allowed me to temporarily do this appraisal report because the client wants me to do it, so they are making an exception for just this report. They will put me back on suspension afterward and they will not pay me to do it. (I have a copy of the order and I was actually told this over the phone.)
So I am completely unacceptable except when someone really wants and needs me and I am so low on the totem pole that I am supposed to not only accept this but do this for free? I told them no way. So they took me off the XXX approved list too. That's called blackmail I think. Definitely defamation of character. And here we are.
This suspension appears to be a focused attempt to silence a whistleblower who works hard to make certain XXX continues to be a trusted industry leader. I would have never called that hotline if I knew this would be the result. I think the hotline is to root out the appraisers who are honest and not take care of the loan officers who are dirty.
The audit is unbelievably biased and just meant to remove me. There is not one thing on any of my appraisals that cannot be logically explained and is not clearly understood by an educated appraiser experienced in this market area, and/or lender. In addition, not one of the appraisal reports under review came in high, they actually all came in lower than their borrower's estimated value. I have been repeatedly asked by the "client" lately to a value re-consideration because they want a higher value, which is exactly what is not supposed to happen. Is it quality that was being audited, or maybe too much quality? The suspension requires me to take the basic appraisal courses I took in 1988 with Appraisal Institute that I have been asked to teach. These classes will not only cost me around $1000 to take, I will have to spend a week in a hotel, take 2 weeks off from work, and I need child care the whole two weeks to take remedial classes I don't need and don't deserve to be "punished" with, all to get back on XXX's and YYY's list (that they probably won't put me back on anyway). I also can't take them until the end of October, and be reinstated until December.
Case 4
I don't think that I, or any of the Appraisers in my little firm, have been directly black-listed (but how would we ever know), but I do believe we have been the victim of something just as insidious.
Last December, we completed an appraisal report for XXX (Lender was LLLL Home Loans) for a purchase. The subject was in-contract for $1 more than its final list-price, with non-typical seller concessions (3%) toward buyer's closing costs and points, after being on-market for nearly 13 months - starting at 13% over the final contract price and adjusting down to $1 less than the contract price for the 4.5 months prior to going in-contract. The loan amounted to a zero-down situation, which had nothing to do with the subject's value, but may explain why that particular buyer was willing to over-pay for the home. After thorough and repeated research, we could not support any value over 91% of the contract price.
Now, we don't run around "blowing up" sales for fun, and certainly not for profit. On those rare occasions where market data and trends do not support the contract price, we are VERY careful to verify the bejabbers out of every bit of data and give the contract value every benefit of the doubt. Some Appraisers suggest that we should completely ignore the contract price in preparing our reports, but we realize that our market data, and our understanding of that data, is not perfect, so we do make damn-sure of our facts and analysis before releasing a report that has a value below the contract price.
Subsequently, they sent the now-customary Request for Reconsideration, along with three "comparable" sales which we had already analyzed and set aside as far too superior to the subject to be fully adjusted within Fannie guidelines. We responded with details regarding why those sales were no appropriate comps for the subject and never heard another word about it.
Following up a couple of months later, we found that sale had closed with THAT lender at the original contract price. (I wonder if they included our report in their loan file when they sold THAT loan.) Then, we noticed a significant change in the volume and quality of the orders we received from XXX. In the six months preceding that order, we had completed $30,300 of orders for XXX - almost all within our primary suburban counties and mostly routine properties; in the six months following, XXX orders totaled $9,450, with NO orders within our primary counties and mostly comprised of odd-ball properties.
When I called the XXX vendor management folks to discuss the theory behind the volume discounts we had previously negotiated, the vendor management manager mentioned that we had been removed from their lender's preferred list at the request of the local lender's office, which just happens to be located in the same building as their Realtors.
So there we are - not ON a black-list, but removed from the typical rotation nonetheless for doing an honest job.
Case 5
I don't know if the lists at these brokers are official or if someday they will forget, but I appear to be blacklisted by XXX in YYY, SS for being unwilling to commit fraud and thereby making a real estate agent (who I actually employed to sell my mother-in-law a condominium) very upset. I had been able to support the sale price but could not ignore sliding glass doors opening out to open space about 10 feet above the ground. They had been a very big client for several years. I subsequently didn't feel their business was worth the risk.
Case 6
Attached is an email I recently received from a mortgage broker who didn't like my final value estimate or the "declining" property values box checked. As you can see, he threatened to "black list" me. This is the only the second appraisal my firm has developed for a mortgage broker this year as we work almost exclusively with banks.
[Runt's note: The email referenced was so laden with insults and curse words that it will not be included here. The email ended with..."I'll be sure to see that you are blacklisted by every major investor in the nation. Have a great day!!!"]
Case 7
My experience with being blacklisted is as follows:
In the 1st quarter of 2006 I was contacted by one of my clients and a personal friend, at XXX mortgage, and was informed that I was on their "do not use" list. He had no other information, but told me he’d get back to me after speaking with his branch manager. We traded emails and phone calls over the following weeks with the end result being that the company attorney instructed him that he was not allowed to tell me why I was on the do not use list nor was he allowed to tell me where the information came from. While I was concerned, this client typically only gave us a handful of appraisals per year, so I did not make resolution a top priority, which turned out to be a mistake.
Shortly after the above, I was notified by XXX Credit Union, that our firm was "not qualified to do appraisals" for their company. Bear in mind, we’d been one of their primary appraisers for 10+ years. All attempts to find out why were met with silence. Phone calls, letters and emails all went unreturned. In hind site, I probably should have walked in and asked to speak with the CEO whose house I’d appraised in prior years. Regardless, we still do not know why we were suddenly "not qualified".
While in the process of trying to figure out what was going on, I came across "YYY". I’m sure you’ve heard of them, but just in case, their site is http://www.yyy.com . They seemed to be the main player in providing "blacklists"; however, given their hold harmless agreement, I did not access the site to see if I was on their list (at the advice of my attorney). The following is an additional snippet from my attorney regarding a portion of the problem I and we as appraisers face:
"I read the waiver and it says it is governed by the law of the state of Virginia and further that "Named Entity" acknowledges "X,Y and Z" which may be true or not. For example, you have no way of knowing example if YYY is just a conduit as the agreement states. The waiver then releases YYY from liability, even though any person or entity who republishes defamatory information may be liable for such republication. The aggrieved party can demand a retraction, but the rub is you can't do anything until you give YYY the release and get the list. I have not seen such a situation as this. One option is to send them a threatening letter yourself or from an attorney threatening claims of liable and slander. The difficulty is that will likely shut the door on getting the information to mitigate any damages. You also do not know if anyone has refused to retain your firm on the basis of this list, or more specifically how many times that may have happened."
I spent a fair amount of time searching other avenues for the source of the blacklisting; however, the fact that someone has you on their blacklist is not something one wants broadcast (especially when you don’t know the source and have no avenue of recourse). The only information I found was that in April of 2006 I was on WWW’s "do not use list"; however, in the following month, I was suddenly no longer on the list. Why remains a mystery to me.
My contact at XXX Mortgage moved on while I was still in the dark. In June of that year, I was contacted by another loan officer with their firm to do an appraisal. I told him I’d love to, but was under the impression that I was on their blacklist. He told me he had the list in front of him and I was not on it. Again, I don’t know what happened to get me off the list.
I contacted the appraisal advocacy group about YYY and got the "interesting, we’ll look into it" response and have never followed up. All in all it was an aggravating experience and remains a source of frustration. Given the limited recourse, I’ve moved on and work with the hopes that I don’t show up on any of those lists again.
I’ll be interested to see what other stories are out there.
Case 8
My name is AAAA and I am a state certified appraiser in SSS and my name appears on a black list.
I did an appraisal on a home in CCC, SSS that was located near the water and the home was built within the last ten years so zoning laws state that all living area of the home must be above a certain height. Most of these homes have the entire lower level as either a garage or storage area. The home I appraised had the been finished off with bedrooms and a bath and a great room and I knew the minute I looked at it that this could not be counted towards the total living area for the home.
I checked with zoning just to make sure and they also told me it was never supposed to be finished off into living area and no building department would issue a permit for this type of work. I might add that homeowners insurance would also not cover any of the contents of the home on this level. The home owner already had a contract on the home showing the living area as almost 3,200 sf but my report showed only 2,000 sf and I was asked to change the report which I would not do so that's why my name was added to the black list.
I knew they might find another appraiser who would say it was all legal and include the lower level as living area so they could make the deal work. The company I did the report for was XXXXX. The way I found out about all of this was from someone who works for them who told me what they did and he knew the story and wanted to let me know why I would not be getting any more work from them in the future.
Does this seem unfair? Does this seem Un-American? Does this remind you of the McCarthy Era of the early 1950's? It should, because it is all those things.
It is also not in the best interests of good lender and good appraisers. Next week we'll offer some suggestions that might improve the situation.
Click here to send me your valid, first person, Black List examples!
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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