Who do you report a revoked license to?

By
Real Estate Appraiser with AmcAppraisalsinc.com
http://actvra.in/4M

As I am completing so many reviews these days, for appraisals completed in 2006 and 2007 – it is a curious finding to come across a really poorly developed appraisal……only to find that the appraiser no longer has a valid license.

In one sense, it makes the job easier – as I don’t really have to report an appraiser who has already had their license revoked!   After reviewing the appraisal…it is clear to see WHY the appraisers (both registered trainee license and the supervisory certified appraiser) no longer have a valid license here in the state of Florida!

On the other hand – it is a wake up call to all to keep that E & O insurance policy in effect!  In this case – the client suffered a major loss!  The appraised value in July of 2006 was $480,000 according to these appraisers.  The current sale of the home in 2009 - $175,000.    The amount the home was over valued as of July 2006?  $150,000!

Who do you think the lenders will be looking to for losses exceeding $100,000?  Even if you no longer have a valid license…I wonder if you can still get sued for the financial losses?   And if you didn’t maintain and “tail coverage” with your insurance….will you be PERSONALLY liable for the loss?  Or at least be defending the lawsuit on your own?

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Andrea Swiedler 12/22/2010 09:47 AM
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Tags:
market value
appraisal review
market crash
errors and ommissions insurance

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Ambassador
1,037,181
Andrea Swiedler
Coldwell Banker Residential Brokerage - New Milford, CT
Realtor, Southern Litchfield County CT

Richard, I didn't realize that lenders could come after appraisers for a loss due to a bad appraisal? I am shocked, wow.

Dec 22, 2010 07:56 AM #1
Rainmaker
68,525
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

Yes - a whole host of new business for seasoned, experienced appraisers - is to review past appraisals from this time period (2005-2007) to determine what violations there were, if fraud was present, and if the home was over valued!

So many of these misreported market conditions, failed to make an analysis of the sale contract, and cherry picked comps to support a sale price - while ignoring other factors such as declining market conditions, alternative comps in the same area, etc.

A little digging into the "high" comps reveal they were either builder sales (with builder financing typically!) - or flips/fraudulent sales - especially when you see other sales within the same period, closer, that sold for $100,000 less!

In this case, the home was listed for $387,750, reduced to $378,000 - having 105 days on the market...then magically it was relisted at the expiration of that listing for $480,000.....and sold for $480,000 in 98 days!

Can you say "creative marketing" ?  Wow - had the buyer acted only 90 days earlier, they would have saved over $100,000 on the price!

Dec 22, 2010 08:02 AM #2
Rainmaker
90,311
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

I've been seeing quite a few reviews lately too, and some of those appraisers better hope they still have E & O.  My feeling is that the lenders want to reduce their losses any way they can, & going after appraisers or former appraisers for past bogus work will be considered.

Dec 22, 2010 08:05 AM #3
Rainmaker
68,525
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

Craig - I know that in some cases, I am reviewing both the original appraisal AND the field review done - as the mortgage insurers are no longer covering the losses when they can prove the original appraisal was flawed!

So when the lender is STUCK buying the loan back from Fannie Mae, and not getting compensated by the insurance (PMI) - who will they turn to?   The borrower obviously has no money becuase they just lost the home.  The appraisers are the only other "auditors" of the original loan - and if the original loan was flawed to the degree to mislead the parties.....SOMEONE is going to pay! 

I think the other shoe will drop when appraiser who have already lost their license, and no longer carry the E&O insurance, find they now have to hire an attorney to defend a lawsuit for negligence and loss.  I am not sure what statute of limitations there may be on that.   But it has created a curiosity in me to find out!

The WORST one I did the other day - was a $3,600,000 appraiser value....which only had a $850,000 value.  SUPER fraud and negligence on that one!  But I am sure there were more parties than just the appraiser who were privy to the details of that! 

Dec 22, 2010 08:19 AM #4
Ambassador
1,037,181
Andrea Swiedler
Coldwell Banker Residential Brokerage - New Milford, CT
Realtor, Southern Litchfield County CT

Craig, thank you for explaining. I am so surprised at this, but will keep my comments to myself, for now that is!

Dec 22, 2010 09:19 AM #5
Rainmaker
68,525
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

Andrea - your comments are ALWAYS welcomed!  :)

Dec 22, 2010 09:21 AM #6
Rainmaker
173,429
Richard Glesser
North Country Appraisal Services - Gaylord, MI

In Michigan, E&O is not required.  But over the past +/- 10 years, nearly all lenders have added the requirement.  There has been no doubt in my mind that the E&O requirement is merely a step in the lenders' grand plan to recoup much of their loses.  Suing appraisers for losses due to incompetence or fraud is only profitable if they're backed by a deep-pocketed insurance company.  Unfortunately, I'm sure there is a clause hidden in the small print of the E&O which invalidates the policy if the appraiser is unlicensed and acting outside the legal perameters.  While it appears these two should definitely be held liable and accountable, most likely they will lay low until all claims are filed against them and declare bankruptcy.  Were it not for the rampant corruption within the lending industry, one might feel sorry for the lender in this instance.

Dec 22, 2010 03:21 PM #7
Rainmaker
173,429
Richard Glesser
North Country Appraisal Services - Gaylord, MI

And they should still be reported to the state regulatory agency for violations based upon performing appraisals while unlicensed.  This should seal any chances of them regaining their licenses although, again in Michigan, penalties for breaking regulations are far less severe for those who are not licensed.

Dec 22, 2010 03:24 PM #8
Rainmaker
68,525
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser
Richard - the appraisals were from 2006, so they aren't current ones. I would hope they are not still doing any current appraisals! :)
Dec 22, 2010 11:54 PM #9
Rainmaker
166,954
Schuylkill Appraisal Services
Schuylkill Appraisal Services - Pottsville, PA

Wow. That is eye opening. Do you do many review apparaisals?

Jan 13, 2011 12:44 PM #10
Rainmaker
68,525
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

I do a lot of them, yes.  More so these days, as purchases have slowed and refi appraisal requests seem to have slowed to zero, except for the occassional FHA reverse mortgage. 

Jan 17, 2011 05:36 AM #11
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Rainmaker
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Richard D. Ferris

Florida State Certified (FHA) Appraiser
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