13th June 2012

AppraiserLoft Fined almost $1 Million for paying AZ appraisers late

posted in Appraiser News |

A now-defunct San Diego company that handled home appraisals across the nation failed to pay appraisers in Arizona at least 171 times within the past 18 months, a Phoenix judge recently concluded.

AppraiserLoft, the company in question, has been at the center of several non-payment and late-payment claims from appraisers, former employees and other parties, before and after it shuttered suddenly in October, according to public records.

In this bundle of cases, administrative law judge Diane Mihalsky found that the company failed to pay Arizona appraisers for completed work within the required 45 days set by Arizona state law — 181 times. It appears AppraiserLoft either resolved or made attempts to resolve 10 of those cases, but appraisers in the remaining 171 cases say they haven’t seen payments yet, court documents show.

Mihalsky, in a June 6 order, recommended that the Arizona Board of Appraisal fine AppraiserLoft $5,000 for each of the 171 violations, totaling $855,000, and revoke the company’s license as an appraisal management company.

The board of appraisal, which regulates companies like AppraiserLoft, is scheduled to consider the recommendation at its July 13 meeting.

Appraisal management companies, also called AMCs, are meant to act as buffers between lenders and home appraisers by assigning and managing appraisal orders. Though relatively unknown to those outside the real estate sector, AMCs have increasingly been used by lenders to comply with anti-fraud rules the industry adopted three years ago.

Thirty states, including California, regulate them, but policies vary. In California, the appraisal board has no authority on late or non-payments to appraisers because those matters are considered civil. That’s not the case with the Arizona Board of Appraisal.

Neither company founder Aman Makkar nor his wife, Harpreet Makkar, majority owner of the company, appeared at the May 17 hearing in Phoenix, where Mihalsky heard evidence on the non-payment and late-payment claims. Court records show the Makkars did not make arrangements to attend the hearing via telephone, or present evidence to dispute or remedy the appraiser claims, court records say.

The Makkars could not be reached for comment.

Former AppraiserLoft employees also have filed unpaid-wage claims against officials of the shuttered company. In a separate matter, Aman Makkar, AppraiserLoft’s founder, entered a settlement agreement in 2011 to return $1.5 million of his earnings from a Ponzi scheme. Makkar has paid $873,746 so far but is in default for the outstanding balance, the case’s court receiver told the U-T San Diego in May.

http://www.utsandiego.com/news/2012/jun/12/judge-sd-firm-failed-pay-appraisers-171-times/

We really need this type of litigation passed in all states dealing with AMCs. If an appraiser is not paid within 45 days, they get fined and then their license gets revoked.

Hopefully the Appraisers Guild of America will take up this topic!

What do you think?

Bryan

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