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11 Comments on Who do you report a revoked license to?
Richard, I didn't realize that lenders could come after appraisers for a loss due to a bad appraisal? I am shocked, wow.
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!
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.
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!
Craig, thank you for explaining. I am so surprised at this, but will keep my comments to myself, for now that is!
Andrea - your comments are ALWAYS welcomed! :)
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.
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.
Wow. That is eye opening. Do you do many review apparaisals?
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.