11th May 2012

Appraiser Blacklisting

posted in Become Appraiser |

Editor’s Note: Suspension Merry-Go-Round is reprinted from Working RE’s current print edition (click cover image at top left to access). Since the story published in February, Working RE has run two updates on blacklisting, Lender’s Choice: Violate USPAP or Blacklisted and Fighting Your Way Off a Blacklist. As you will read here, some relief is available thanks to AMC regulation passed in the state of California. AMC legislation is also working in other states guarantying timely payment to appraisers, prohibiting indemnification clauses and bolstering appraiser independence. Strong AMC legislation at the state level is in the best interests of every appraiser. As we learn in the three part webinar series Maintain Independence, Limit Liability, and Fight Influence, presented by Richard Hagar, SRA, many maladies appraisers suffer from these days are prohibited by state and/or federal regulation, including blacklisting without cause, lower than customary and reasonable fees and attempts to exert undue influence on an appraiser’s work product. About attempts to influence appraisers Hagar says, “Lenders and AMCs have two options, review the work and A) Accept it and fund the loan or B) Reject it based on a USPAP compliant review. Once rejected they must turn bad appraisers into the authorities and stop using that appraiser. But do not try to influence or instruct the appraiser. The ‘old’ banking ways are dead. Banks and appraisers better become educated on the change and FAST.”

Suspension Merry-Go-Round

By David Brauner, Editor

Whoever believes the days of value and other forms of pressure are behind appraisers, thanks to the Home Valuation Code of Conduct (HVCC) and its focus on appraiser independence, ought to talk to appraiser David Smith in San Diego- if they do they’ll get an earful.

Appraiser abuse is apparently alive and well but the good news is that state AMC laws may provide some relief- here’s how.

What Did I Do Wrong?
The story begins with appraiser Smith (wishes to remain anonymous), appraising 25 years, being notified by an appraisal management company (AMC) that he was suspended from their roster after being put on “review status” by a lender. As of this writing, three months have elapsed and Smith still doesn’t know why.

“Review status” means that, by order of the lender, any appraisal Smith does must be accompanied by a field review ($250). This added expense imposed on the AMC means no more work for Smith from one of his largest vendors. Smith says at the time of his suspension he was a “level one” appraiser with the AMC- the highest ranking.

The AMC, that provided Smith with a very significant volume of work, told him that any appraiser put on a review status is suspended until the status is lifted by the lender. “I asked the AMC the reason for the suspension and they said the lender wouldn’t tell them,” Smith said. “I was given a number to fax the lender, which I did within an hour. I waited a week and called to follow up and was told it could take up to 30 days to get a response. I asked to speak to a supervisor and was refused.”

An email string verifies that Smith was told by the AMC that they had no information about his suspension and that he would have to contact the lender himself to get the issue resolved. “Call us when it’s resolved,” he remembers them saying.

Smith continued to ask the AMC to intervene but they could do nothing to help. “After five weeks of not hearing and losing a large volume of work, I called the lender back and they said I was given incorrect instructions and should have sent a letter to their risk management department. I did so immediately and still have not heard back. In the meantime I lost work from a different AMC who uses the same (big box) lender. This has cost me over $15,000,” Smith says. “If I did anything wrong, I’d like to know what it is so that it can be addressed. Why does it take the lender only one day to tell the AMC I’m suspended and 30 days or longer to tell me why? And why aren’t concerns expressed to the appraiser before putting them on review status without any chance for rebuttal?”

Sometime later, Smith finally did hear from the lender. They told him that appraisals of his were under review and that in order to lift the review status, they would need to see more of his current work. According to Smith, they will not say which files of his are in question or how old they are- so there is no chance for rebuttal. This AMC and others who work with the “big box” lender will not give him orders until the “review” status is lifted- an unfortunate Catch 22, since the lender needs to see more work in order to lift the status.

“I have no idea which files they are questioning. One can assume they don’t suspect fraud because they will accept work from me as long as it is reviewed. I did have one incident where my signature was used without my knowledge and one where a report was altered. But I am unable to find out even which files are in question. Without that I can’t work. If I can’t clear this up I’m getting an attorney and going to court.”

Epilog: How do you Spell Relief?

Just before press time, Smith says he may finally get some much needed relief, courtesy of the California Office of Real Estate Appraising (OREA) and the new California AMC licensing law- yes the government. “The OREA told me that the lender and the AMC are in violation of the (state) AMC law which requires them to tell me why I have been suspended,” said Smith. OREA code 3577, Section J states, “The Appraisal Management Company shall not remove an independent appraiser from their panel of approved appraisers without prior written notice that includes evidence which supports the basis of fact that the appraiser has violated the Uniform Standards of Professional Appraisal Practice or other applicable appraisal regulations or state statutes, or evidence which demonstrates substandard performance, improper or unprofessional behavior, or other substantive deficiencies.”

Smith says before filing an official complaint he will make the AMC and lender aware of their responsibilities under the law to give them a chance to respond. But he wonders what role AMCs really play in the process if he is the only player sanctioned. “If I did something wrong and am being punished, what action did the lender take against the AMC, who reviews and clears every appraisal? Is the appraiser now the fall guy in every instance?”

Find the California AMC Regulation at WorkingRE.com, click sidebars and then OREA_Regs.

Sign Petition: Tell Chase to Stop Intimidating, Threatening, and Bullying Appraisers.

About the Author
David Brauner is Editor of Working RE magazine and Senior Broker at OREP.org, a leading provider of E&O Insurance for appraisers, inspectors and other real estate professionals in 49 states. He has covered the appraisal profession for over 20 years. He can be contacted at dbrauner@orep.org or (888) 347-5273. Calif. Insurance Lic. #0C89873.

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