appraisal management company

Ask Henry

Dear Henry,
Hers how it goes: AMC A calls or emails a bid request for a single family appraisal report from lender B. If the fee and due date are acceptable I receive the engagement letter with the agreed fee and due date. Sometimes the same day or even up to 2 weeks later I will receive a second bid request from AMC B for fee and due date from same lender B for same property. Once I have an engagement letter from AMC A and they cancel order because someone else will do the appraisal report for a lower fee or quicker turn time do I have any recourse from AMC A.

Is lender B playing by all the rules once they have already committed to AMC A? I have a small office of 6 appraisers and we are seeing a lot of this lately. Besides being unethical does lender B have the legal right do this? The lenders doing this are nation wide banks and mortgage company's

Please advise and respond to
Patrick Solitz
Appraiser in Oregon
pjsolitz@uci.net
541-385-3181

Dear Patrick,
I wish I could say that this is the first time I have heard this story. Keep in mind that I am not a lawyer (though I have three children that are). In business law 101, they teach you that once both parties have agreed to something (it must be legal) both parties are bound to the contract and neither party can cancel the contract without being liable for either damages or specific performance.

Unfortunately, any legal action will probably result in the loss of one or both of the parties.

My advice is to start by giving both the lender and the AMC the benefit of the doubt that they didn’t realize what they were doing by informing both of them as to what they have done. I would first try to do this verbally and if not successful then in writing. Hopefully, when they realize what they done they will take steps to correct the problem by reinstating your first contact.

If this continues to happen in the future and you don’t care if you lose their business I would try a small claims action in court which you can do yourself. This will bring a whole new level of people at the companies involved and this sometimes results in a correction without the loss of the customer.

If this does not work either forget it or hire an attorney keeping in mind that this will only bring you satisfaction as most likely you will never collect enough to pay the attorney fees.
H2

Ask Henry

DO NOT USE LIST
Dear Mr. Harrison,
While inquiring why my workload has slowed down, I was just informed by Streetlinks AMC that Chase has placed me on a banned list. Streetlinks cannot tell me why or for what reason. All they are saying is to get in touch with Chase.

I have tried 7 different numbers for Chase, Chase Financial, Chase Home Lending etc. and they are all telling me there is no appraisal department and no way to help me get this resolved. I even went into a Chase branch. Chase is telling me to go back to the AMC to find out who the contact person is. Naturally, Streetlinks does not give out that info and are directing me back to Chase, who directs me back to the AMC who directs me back to Chase who directs me back to the AMC and on and on and on.

I never received any notification from Chase explaining why they are banning me. It seems unfair that I can be placed on a 'do not use' list without any explanation or any chance to rebut what they felt is wrong with the appraisal. I’m not afforded any appeal, and I was informed that they share these lists. 10 years as an appraiser and not one single complaint, and now this and no one can tell me why or how? This is my livelihood! I have a mortgage and bills like everyone else. I cannot afford to not work.

Any help, suggestions, numbers to call...ANYTHING that you can offer that can help me resolve this would be truly and deeply appreciated.

Frustrated and unfairly treated,
Your Fan

P.S. I know it was with Streetlinks because they were the only AMC I was doing any work with.

Dear Fan,
Your situation is, unfortunately, not an isolated example of this unfair type of treatment. The easiest thing to do is hire an attorney to represent you. Other things that you can do is file complaints with the Appraisal Commission, or Banking Commission in your state.

Good luck, but I am not very hopeful that you will get satisfactory results no matter what you do.

HSH
askhenryharrison@revmag.com

Sound Off!

Dear Henry,
I see some merit to your proposed solution to the housing industry crisis (June 2011 Editorial). I just do not give it much hope. There are too many powerful lobbies that would rather just suck off the taxpayers while they sail to the Hamptons in their newly redecorated yachts.

I am sorry to say that the lessons that should have been learned from the RTC back in the mid-1980s were soon forgotten like a bad dream. The exuberance of lessened oversight allowed a new class of lenders that have brought back the dream as a recurring nightmare. The cost to taxpayers this time is more than money -- it's a fundamental sense of security and faith in our leaders and elected representatives that has been lost.

Regulation and the standardization of the appraisal industry should have been a good thing. New forms (then the MC and now the UAD) were supposedly designed to help. Now, appraisal is being delegated to the lowest common denominator generated by a computer model. May as well call it an AVM and be done with it.

Yes: we as an industry are growing old. There will be no new blood when the pay is less than a mindless position in a fast food or retail associate's job. There is no substitute for experience and honesty -- and experience is damned expensive. Tell me how many less than honest people have been reprimanded or lost their certification? Tell me how many young people can withstand years of substandard pay and costly education to qualify for a tenuous crack at independent self employment? And what is the meaning of "reasonable and customary fees"? All I know is that back in the 1970s, fees were in the $300+ range, there was a rotation at most lenders, and if too many bad valuations surfaced, you got drooped like a hot potato. Maybe there was more time and physical labor involved. Today, the cost of everything from insurance to data sources to software and hardware has skyrocketed. Rates have not changed much, except that the AMCs take a hefty cut. Many appraisers do not want to or will not work for an AMC -- or so they say.

Try to live in this market if you do not have some steady work! I would like to know just what percentage of assignments are not involved with an AMC. Perhaps someone should do a survey!

Joe Johnson
Cert. Residential Appraiser, FL

Sound Off!

A Tired Appraiser

A happy and prosperous New Year to all at Real Estate Valuation and Ask Henry Harrison!

Lot of talk out there about regression analysis becoming part of a report. I for one would be happy, but foresee a few problems. I gave up on regression as most of the people reading the reports did not understand what it is or what it means. Secondly, data input is as critical as with a real market comparison. My experience is that any savvy computer person can make the market comparison say anything they want. Sad, but there are no rules for the data input, and it often has to be expanded to competing neighborhoods.

There is no substitute for honesty and good judgment. Experience in these trying times is more important than ever.

I'm tired. Tired of taking a rap for working for an AMC. (I do a fair number of reviews, and most would not make it to first base for the people I work for!) Tired of competitors coming fifty miles, with no local MLS data, or geographic competence writing meaningless reports to support a value that cannot be reconciled.

Joe Johnson
jjohns58@verizon.net
Certified Residential Appraiser - Florida

Ask Henry

Retrospective Field Review - No Intended Use

Dear H2,

I have an assignment for a retrospective field review, dated March 2006. I have asked the AMC to provide the intended use of the review appraisal. Their response is that they did not get this information from the Lender. My initial thoughts about responding to this situation are to: (a) clearly state this condition in the report; and, (b) provide an assumption of the intended use for the review and condition a possible revision if the assumed intended use is not correct. Is this the right way to proceed?

David L. Prymak
dlprymak@dlprymak.com
Dayton, TN

Dear David,

Statement 9 in the USPAP goes into detail as to why the appraiser must know the intended use of the appraisal. I am not aware of any exceptions to this rule.

HSH
askhenryharrison@revmag.com

Ask Henry

Number of Comp Photo Reshoots

Dear Henry,

A larger appraisal management company is now requesting that the comp photos be recent to the season in which the appraisal is being completed. If a home is being appraised in the summer, they do not want comparable photos with snow or fall colored leaves on them.

How many times can an appraiser afford to retake old comp photos with gas at $3.15 a gallon, never mind the time consuming effort of going there in the first place. Some of my comps are in rural areas where each one could be 20-30 miles away from the other.

Is this a legal and legitimate request?

Jean Black
jeanblack@echoes.net

Dear Jean,

Often AMCs do not realize that their requests substantially increase the appraiser's costs. The USPAP requires that you have a scope of work dialogue with the lender/client. Unless something they requests conflicts with the requirements of the USPAP they are not in my opinion illegal or illegitimate. You really have four choices as to what to do. 1. Try to talk them out of the requirement. 2. Tell them that it requires extra work for which you expect extra pay. 3. Do what they request. 4. Refuse to do the assignment.

HSH
askhenryharrison@revmag.com

Ask Henry

Appraisal Management Companies

Dear Henry,

I am a certified residential appraiser, and I, along with a couple other appraisal firms, would like to start up an appraisal management company. Being appraisers, and never having gone down this road before, we are not sure where to begin. Where do we find the information that is necessary to create an appraisal management company in order to meet all of the necessary requirements, and to be legitimate? Do you have any resources pertaining to this?

Thank you for any help you may be able to offer.

Regards,
Keith VandenAkker
keithva@charter.net

Dear Keith,

Each state has its own requirements for AMCs. You should start by asking someone on the staff of your state's appraisal commission how to proceed. I think you should also hire a lawyer to advise you.

HSH
askhenryharrison@revmag.com