19th June 2013

Chase Denies Responsibility for Bankrupt AMC Debt

If Chase is successful, it means lenders who contract with AMCs for appraisals, broker price opinions (BPOs) and other services, would have no financial responsibility to make good on fees owed to end contractors, such as apprasiers, by bankrupt or otherwise malfeasant AMCs.

Editor’s Note: The bankruptcy earlier this year of the appraisal management company (AMC) ESA left millions in unpaid fees to appraisers, agents and brokers, who now are trying to collect from Chase, the bank who hired the AMC. What happens will have far-reaching effects on the appraiser-AMC relationship and the industry.

Chase Denies Responsibility for Bankrupt AMC Debt
by Isaac Peck, Associate Editor – WorkingRE

The bankruptcy of Evaluation Solutions/ES Appraisal Services (ESA) left $11 million in unpaid debts to its vendors and creditors, with a large portion owed to real estate appraisers and agents/brokers.

As WRE reported last month, (Stiffed Appraisers Go After Chase), the Florida court overseeing the ESA bankruptcy is considering granting a Bar Order that would absolve JPMorgan Chase, the principal client for all services performed, of all liability for fees due to real estate appraisers, agents, and brokers who performed millions of dollars of work on Chase loans. Much hangs in the balance: if Chase is successful, it means lenders who contract with AMCs for appraisals, broker price opinions (BPOs) and other services, would have no financial responsibility to make good on fees owed to the end contractors, such as appraisers, by bankrupt or otherwise malfeasant AMCs.

Chase Denies Responsibility
In its legal response to appraisers and agents who argue that Chase is liable for the unpaid work under federal laws such as Dodd-Frank, FIRREA, and OCC guidelines, Chase’s lawyers write: “Nothing further in FIRREA, or the Dodd-Frank Act amendments to FIRREA, the OCC regulations, or USPAP addresses payments to appraisers.”

Chase also seems to deny that it was the client for the appraisals and BPOs ordered (Chase is listed as the client on the appraisal reports), and also seems to question the notion that ESA was their agent. Chase’s lawyers write: “The appraiser’s client remains the party who, by employment or contract, engages the appraiser. Otherwise, there is nothing in federal law governing the payment of appraisers and nothing requiring a federally-regulated institution such as Chase to backstop or guarantee payment to appraisers engaged by an independent appraiser management company (“AMC”) such as Evaluation Solutions, even if that AMC is acting as the regulated institution’s agent for compliance with FIRREA and its implementing regulations.”

Chase’s lawyers insist that “Agent is nowhere defined in the OCC regulations.”

Due to this lack of definition, Chase’s lawyers define an agency relationship under Florida common law as the following: “An agency relationship may be established expressly or by estoppel (i.e. an apparent agency relationship). The standard for determining whether an agency relationship exists is whether the purported principal has control over the alleged agent.”

Using this definition of an agency relationship, Chase’s lawyers appear to deny that an agency relationship existed between Chase and ESA, even though Chase is listed as the client on all of the appraisals delivered to Chase and despite the fact that numerous federal regulations, including FIRREA, require Chase to engage appraisers in one of two ways only: either directly or through an agent such as an AMC.

The appraisers, agents, and brokers who are seeking to hold Chase responsible for their unpaid fees insist that Chase is liable precisely because ESA was their agent, and Chase must be held accountable for the actions of its agent.

Fighting Back
Sirima Chantalakwong is a BPO Agent in California whose company, ProValue, Inc., is owed $44,000 for BPOs performed over a six-month period. She is the principal claimant in the class action lawsuit filed on behalf of appraisers and agents/brokers across the country who are left unpaid by ESA.

Having requested to remain anonymous previously, Chantalakwong, referred to in earlier stories as Shelley Smith, and her husband Dan (Owner of the Evalonlinecomplaint Facebook page), have been crucial in organizing the opposition to Chase’s Bar Order and are the ones who initially hired lawyer Breck Milde, whose law firm appeared in the Florida Bankruptcy court to oppose the Bar Order.

After the initial hearing in Florida on June 4, 2013, where Milde opposed the Bar Order and urged the bankruptcy judge not to absolve Chase of its responsibilities to make good on the unpaid fees, both sides were given additional time to file proposed findings of fact and conclusions of law.

Counter Suit
In a further development, the Trustee of ESA’s bankruptcy proceedings has filed a motion seeking sanctions against ProValue, Inc., arguing that ProValue is in violation of the automatic stay granted to ESA as terms of the bankruptcy. ProValue is ordered to appear in court on July 10, 2013 to defend its position. The Trustee is arguing that ProValue is liable for compensatory and punitive damages, as well as attorneys’ fees and costs for its attempt to block the Bar Order and prevent Chase from denying responsibility.

Appraisers, Agents Urged to Complain to Regulators
Chantalakwong is urging appraisers and agents to file complaints with Chase’s regulators and let them know about the position Chase is taking. She encourages appraisers and agent/brokers to cite the laws in the petition (found below) in their complaints and to urge regulators to require Chase to take responsibility for their agent, and enforce the federal regulations that require Chase to compensate appraisers with a customary and reasonable fee.

The question of whether lenders are responsible if the AMCs they use fail to pay contractors, such as appraisers, will have far-reaching and long-lasting effects on the industry, many insiders believe.

Complaint Form: Chantalakwong says appraisers and agents/brokers can use the following complaint form to contact regulators. She recommends using a personalized message and citing relevant laws (found in the petition): https://appsec.helpwithmybank.gov/olac_form/

Petition: Chantalakwong says appraisers and agents/brokers can use the following petition to ask Chase to take responsibility for their agent: http://www.change.org/petitions/jpmorgan-chase-take-responsibility-for-the-unpaid-fees-of-your-agent.

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18th June 2013

Nationwide Collateral Risk and Desk Review Appraisers Needed

Collateral Risk Solutions is an innovative due diligence firm specializing in nationwide appraisal and valuation auditing. Our services combine technology and automation with expert individual analysis to provide the most reliable decision making information available.

CRS is currently accepting applications for the following position:

Residential VALUATION SPECIALIST: Collateral Risk Solutions is seeking Residential Valuation Specialists with experience performing collateral risk assessments or desk reviews of residential appraisals on a nationwide or multi-state basis.

Mandatory requirements Cinclude:

  • Minimum three years residential appraisal desk review experience or appraisal collateral risk experience on either a national or multi-state basis where compensation has been based on production;
  • ability to identify fraud signs & appraisal overvaluation techniques;
  • ability to effectively utilize data search tools including RealQuest;
  • familiarity with various MLS boards;
  • excellent written/verbal communication skills and computer proficiency including Outlook, Adobe and Word required;
  • this is a telecommuting position requiring a full-time commitment.
  • All job offers are contingent upon favorable pre-employment 5-panel drug test and background investigation results. Equal Opportunity Employer.

    Principals only. Recruiters, please do not contact this job posting. For consideration, please apply online. NO PHONE CALLS PLEASE!

    Please forward resume to: resumes@colrisk.com


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    11th June 2013

    Some home improvements may add value to home

    CHICAGO, June 11, 2013 — /PRNewswire/ — The Appraisal Institute, the nation’s largest professional association of real estate appraisers, today advised homeowners to use discretion when deciding which home improvement projects to take on, saying that not all renovations positively impact property values.

    “Projects that take a home significantly beyond community norms are often not worth the cost when the owner sells the home,” said Appraisal Institute President Richard L. Borges II, MAI, SRA. “If they don’t match what’s standard in a community, they’ll be considered excessive.”

    According to Remodeling magazine’s most recent Cost vs. Value report, some of the projects with the highest expected return on investment are siding replacement, entry door replacement, attic bedroom addition, minor kitchen remodel and garage door replacement. Other renovations with high expected pay-offs include basement remodel, deck addition and window replacement.

    Borges advised homeowners that it may be best to hold off on big renovations if a homeowner isn’t sure how long they will be in their home. The longer a homeowner stays in a property, the greater the opportunity for a return on investment, he said.

    “Consumers should be aware that cost does not necessarily equal value,” he added.

    For an unbiased analysis of what their home would be worth both before and after an improvement project, a homeowner can work with a professional real estate appraiser – such as a Designated member of the Appraisal Institute – to conduct a feasibility study.

    During a feasibility study, the appraiser will analyze the homeowner’s property, weigh the cost of rehabilitation and provide an estimate of the property’s value before and after the improvement.

    Some green and energy-efficient renovations, such as adding Energy Star appliances and extra insulation, are likely to pay the homeowner back in lowered utility bills relatively quickly. Lower utility costs also are a draw for potential homebuyers. When appraising a home, the appraiser evaluates local supply and demand for green and energy-efficient properties and features.

    The Appraisal Institute offers a free, informative brochure titled “Remodeling & Rehabbing,” which provides consumers with valuable advice on home remodeling.
    …continue reading the rest of this post: Some home improvements may add value to home

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    6th June 2013

    A sneak peek at the 2013 Appraisal Technology Report

    A sneak peek at the 2013 Appraisal Technology Report
    By: Jason Morgan

    On Monday, June 10, Valuation Review will release its anticipated follow-up to last year’s “App-raising Technology Special Report.” The 2013 Appraisal Technology Report will tackle the rise of appraisal technology, the growing adoption of mobile apps, predictive analytics, property identification, automated valuation models (AVMs) and beyond. This year’s report is for subscribers only. So make sure you’re a Valuation Review subscriber to get the full report delivered to you on Monday, June 10. You can subscribe by visiting the October Store. Here’s a preview of the content you can look forward to:

    Talking about the evolution of technology is almost a cliché at this point. Smart phones and tablets are glued to our hands. Social media speak like “hash tags” and “liking” are already ingrained into our everyday vernacular. In the appraisal industry, emails and appraisal software are the standard, as mobile technology is on the verge of permeating the tech landscape (just check out our feature story on page 5). While new technology adoption comes at the chagrin of some old school appraisers, the industry shows no signs of technological regression. …continue reading the rest of this post: A sneak peek at the 2013 Appraisal Technology Report

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    5th June 2013

    “Checkbox Chimps” and Review Appraisals

    by David Brauner and Isaac Peck – WorkingRE.com

    Appraisers are coining a new term for certain appraisal management company (AMC) staff – “Checkbox Chimps.” These are the personnel who are “reviewing” appraisals, and no matter how solid they may be, are instructing appraisers to change their reports.

    Are they really providing an “appraisal review” or are they just checking boxes on a form?

    Are these personnel allowed to issue instructions to appraisers? Are their demands crossing the line from standard requests for additional information to subtle attempts at illegal influence and improper intrusion into the process?

    Appraisers are being inundated by irrelevant requests like – instructions to re-label photographs, additional alternative street scenes or explaining the obvious – for instance, asking whether a porch is covered.

    AMCs defend their quality control requests, arguing that if appraisers did their jobs correctly the first time… but appraisers ask, what does a covered porch have to do with quality control?

    What bothers many appraisers these days- even more than low fees- is the constant and what seems like “unnecessary” challenges to their reports by AMC staff, who in many instances, appear to be less than qualified or competent than they are. Most appraisers know firsthand the extent to which this bogs down the process and negatively affects their efficiency and profitability. Not to mention delaying or killing deals. Few understand that some of this behavior may be at odds with state and federal regulation.

    There are differences between what is proper and what is in violation of state and federal laws, according to expert Richard Hagar, SRA, as per the OREP/Working RE Webinar Appraisal Review and the Law.

    Reviewing for “Completeness”
    According to Hagar, employees of an AMC are permitted to “review” a report for completeness. They can ask questions to verify all required information is included- photographs, sketches, maps, flood numbers, certifications, signatures, etc.: Is the address correct; the homeowner’s name spelled correctly?

    AMC staff is allowed to ask for additional information and clarifications that help the client understand the report. They are also allowed, in limited circumstances, to ask the appraiser to consider additional information that might not have been considered in the original appraisal. However, as Hagar states, there are limits on what is considered “additional information.” “In most of the instances that I’ve reviewed, the original appraiser already considered the ‘additional information’ that the AMC is asking about,” said Hagar. “So it appears that the AMC did not read the entire report, or failed to comprehend what they read.”

    Review Appraising
    While any AMC staff person is allowed to look at an appraisal and verify that it’s complete, only a state certified or licensed appraiser is permitted, by various state and federal laws, to challenge the appraiser on value or criticize the adequacy of the appraisal.

    AMCs are trying to ignore or find wiggle room in how laws define “appraisal review” or what constitutes a challenge to an appraiser’s value or methodology. To most appraisers, this question is black and white.

    According to Hagar, no one is allowed to have an opinion regarding the value of a property or the quality of an appraisal except a licensed/certified (review) appraiser. “Are AMC staff just reading the report and ensuring that it is complete? Or are they critiquing the quality of the report? Once someone starts questioning the quality of your comparables, or offering an opinion on the quality of a report, they have to be a licensed/certified appraiser, or they’re in violation of state law in most cases,” Hagar says. “If you go on to have an opinion regarding the report’s USPAP compliance, you have to be trained in USPAP.”

    Hagar says to look at some of the lawsuits launched by the federal government against LandSafe and Bank of America. The suits contend that “reviewers” inside LandSafe were not just geographically incompetent and lacked proper training- in some instances they were not even licensed or certified. Yet these people were “reviewing appraisals” and telling good appraisers how to do their jobs!

    So, it’s one thing to correct a typo and quite another to criticize an appraiser’s approach to value or comp selection. The line is crossed when “requesting clarification” turns into passing judgment on an appraisal, Hagar says.

    Chapter and Verse
    There are at least 32 states that have already approved AMC regulation legislation-these laws have not only mandated that any appraisal review be done by a licensed appraiser in that state, but they define a “review appraiser” and an “appraisal review,” effectively establishing guidelines on who is allowed to offer an “opinion” on the adequacy of an appraisal or make certain requests of an appraiser. For instance, the Arizona AMC Law states:

    32-3601. Definitions
    5. “Appraisal review” means the act of reviewing of the report that follows a review of an appraisal assignment or appraisal report in which a real estate appraiser forms an opinion as to the adequacy and appropriateness of the report being reviewed.
    18. “Review appraiser” means a person who engages in the activity of reviewing and evaluating the appraisal work of others from the perspective of an appraiser, generally for compensation as a separate skill. This includes the function of reviewing an appraisal report or a file memorandum setting forth the results of the review process.

    32-3603. License or certificate use; exception
    A. All real estate appraisals and appraisal reviews performed on real property in this state shall be performed only by individuals licensed or certified in accordance with the requirements of this chapter.

    According to Hagar, it’s not just state law, but there are also clauses in Dodd-Frank, FIRREA, and the Inter-Agency Guidelines that reinforce state laws and what they say about who can pass judgment on an appraisal. He also cites language from the Truth in Lending Act (TILA) in the webinar, which mandates appraisal reviews be completed by appraisers certified and licensed in the state in which the subject property is located.

    Quoting Hagar from the webinar (Appraisal Review and the Law), he says: “Reviewing is no place for an amateur. Only the unaware, the misleading, the foolish, or the people who are attempting quick, simple and, cheap are trying to get around the laws.”

    His advice: Do the job right and according to the law and we will all be better off.

    If you would like a copy of the lawsuit against Landsafe and Bank of America, regarding their alleged use of uncertified appraisers, send a request to Isaac at issac@orep.org.

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    4th June 2013

    ACI go Photo App Delivers Snap, Sync, and Send Technology

    ACI go Photo App Delivers Snap, Sync, and Send Technology – Appraisers snap photos, sync images to the cloud, and send photos directly to the appraisal report

    PALM COAST, Fla. — June 4, 2013 — Today ACI announced ACI go™, a free iPhone app designed to simplify image capture and assignment by managing both of these tasks during property inspections. ACI go also enables appraisers to replace their digital camera with a smartphone and use the apps integration with ACI Report. ACI go is available for download through the App store.

    ACI go and the iPhone work hand in hand to enable the appraiser to take pictures and tag photos with addresses, which are then posted to the cloud. Upon import, ACI go auto-populates the appraisal report with photos based on their tag. Other benefits of the app include automatically capturing GPS position of images and presenting them in map view.

    “Appraisers are using smartphones at the same rate as people are in other industries,” stated George Opelka, senior vice president of ACI. “High-definition image quality is now standard for iOS devices, so utilizing this platform to streamline the photo capture process makes perfect sense.”

    ACI plans to make an iPad version of ACI go available later this year.

    About ACI
    ACI, a pioneer in crafting technology solutions for the mortgage valuation community, has gained industrywide recognition and support from leaders in the field. ACI’s highly scalable appraisal solutions are tailored to the needs of the organizations ACI serves. The ACI client base features many of North America’s premier lenders, national appraisal companies, and real estate brokerage firms. From connecting appraisers nationwide to streamlining quality control, ACI enables organizations to process appraisals and manage exceptions in a consistent and efficient manner. Headquartered in Palm Coast, Florida, ACI (www.aciweb.com) is a Verisk Analytics (Nasdaq:VRSK) company.

    # # #

    George Opelka
    Senior Vice President, ACI

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