Appraisers' Free Forum

I knew that I would get a lot of really interesting answers to this question, which is a big part of why I posted it. For clarification, let me say that, at this point, apparently all the new bank is asking for is a copy of the letter of release from the old bank, so apparently their "concern" about whether the appraisal they have might have been altered was just a red herring.

However, I thought that it was a really interesting question because the regs apparently put the new bank in a bit of a quandry if the appraiser cannot discuss the appraisal with them because of client confidentiality. I think the question is legitimate... how do they know that the appraisal has not been altered? After all, they got it from the borrower, who is not without vested interest. I believe that it might be a good discussion point of issue to take up with the ASB.

I will try to deal with your comments more or less in the order that they were made:

The real question I think about, is compensation for the "consulting" time the "new' client recieves from the appraiser. The appraiser did the job once and should be paid a fee (reasonable) for consultation, IMO.

Bill, compensation is not really an issue for me if the new bank wants verification that the appraisal is the same one I originally sent. I believe that they actually have possession of the original rather than a copy and I put my work on a unique paper. It will only take a few minutes for me to look at the most pertinent parts of the report and ascertain that no changes have been made. I realize that this is a business decision and that other appraisers might charge for this "service." The bigger issue for me is whether the service is even allowed... I believe that it would not be without the release from the original client and I'm wondering if maybe it should be (fodder for regulation change).

The issue isn't credibility, but authenticity.

That was my point when I responded to Bill, Edd. However, the bigger issue, IMO is whether an appraiser can verifiy authenticity for someone, other than the client, who has possession of a copy. IMHO, under current regs, this is not allowed without the original client's release... I am wondering whether it should be.

The only way to be positive about the report is to have the appraiser supply a copy of the original, IMO.

I don't believe I agree with this statement in this particular case. There may be some instances where it would be true.

If a borrower needs a "new" report (meaning an uspap compliant report to me and aka the 'ol recert or reassign asked for by lenders) they get it for free within 30 days of the original effective date. Post 30 days and it is pro-rated based entirely on my mood at the time.

FYI, WM, I do not necessarily disagree with your business policy, but it is not my policy. I might possibly consider doing this if it was a cookie cutter residential report. However, this appraisal is a summary narrative, not a ten page residential report. I started off telling the new bank that I would get a minimimum of $100 to reproduce an authentic original copy for someone who is entitiled to it (they were not, at that point) and therefore, $200 for an update was more than reasonable.

Once it is in the hands of the new client, with their name on it, you have another reviewer looking at it. Along with this goes risk of a complaint being filed.

At this point, the new bank is apparently willing to accept the appraisal, as the regs allow; I doubt seriously that the old bank will review it, even though they have a person on staff who is a certified appraiser. Also, Annemeike, liability (increased or not) is not really the issue for me at this point. I believe the liability risk is minimal to start with because I do not believe there are any errors or omissions of any significance in the original report.

Is there anything wrong with the 2nd bank ordering a new appraisal?

Of course, that would be an ideal solution from the appraiser's viewpoint, Mako, and also from the regulatory view point. It might also be the ideal solution from the bank's viewpoint. But, it would definitely not be the ideal situation from the borrower's viewpoint. This is an intelligent borrower who has some past appraisal dealings and some knowledge of the regs. I was told that the application was on the desk at four different banks when bank number one ordered the appraisal. The borrower was apparently aware of the regs and assumed that any other bank could accept the appraisal as originally produced. It is something of a frustration that the new bank tried to put it on the appraiser's back by attempting to influence the borrower that the appraiser was the sticking point to getting the deal done.

As for the end of this thread, liability is an issue every time you walk out the door... and sometimes even if you don't. But, consider this, is there not a greater possibility of a borrower who has been frustrated taking you to court (even though we know they could not likely prevail) than for liability to become an issue if everyone is happy? (Please be polite in your responses to this issue... I intend to invite the borrower, and possibly the bankers involved to view this thread).

Steve - you bring up a good point. My policy is directed at 1004 residential work.

Steve Owen wrote:I believe that it might be a good discussion point of issue to take up with the ASB.

I too think it is a good discussion point to bring up with almost anybody who knows anything about appraising, just don't expect the discussion about the point to be good if you ask the ASB. You already know pretty much what they will say and indeed, have already done it.

Steve Owen wrote:<snip>
However, I thought that it was a really interesting question because the regs apparently put the new bank in a bit of a quandry if the appraiser cannot discuss the appraisal with them because of client confidentiality. I think the question is legitimate... how do they know that the appraisal has not been altered? After all, they got it from the borrower, who is not without vested interest. I believe that it might be a good discussion point of issue to take up with the ASB.<snip>

Emphasis added

Sorry for not seeing this sooner but I actually had some work to do (for a change) and have been at it hard. The bolded part above is where the bank has a MAJOR problem, IMHO. If I remember correctly, the new bank cannot accept the appraisal delivered by the borrower - period! Then can accept a direct transmittal of it from the original client and then therefore (summarizing) deem it as safe, credible and accurate. That is where the problem lies.

If I remember correctly, the new bank cannot accept the appraisal delivered by the borrower - period!

Where is that in the regs, Otis? I have read through them many times and never caught that nuance. The OCC regs are here:

http://www.occ.treas.gov/fr/cfrparts/12CFR34.htm

And the specific reg in question is here:

http://www.occ.treas.gov/fr/cfrparts/12 ... dependence.

Steve Owen wrote:

The issue isn't credibility, but authenticity.

That was my point when I responded to Bill, Edd. However, the bigger issue, IMO is whether an appraiser can verify authenticity for someone, other than the client, who has possession of a copy. IMHO, under current regs, this is not allowed without the original client's release... I am wondering whether it should be.

OK, I have restrained myself beyond the pale.

Of course USPAP confidentiality controlling the actions of the appraiser under these circumstances is ridiculous and resulted in a convoluted ASB solution that essentially requires a whole "new" client-specific report, even though it may be a clone of the one they already have. Busy work at best, I think contrived out of some misguided notion that the integrity of the confidentiality rule must be preserved whether the method of preservation makes sense or not. Many appraisers apparently think they should be compensated for this busy work resulting in the new client feeling ripped-off. In the mean time it holds up the money rental machine and thereby contributes to Dubya's second recession.

Edd Gillespie wrote:...under current regs, this is not allowed without the original client's release... I am wondering whether it should be.

(emphasis added)

OK, I have restrained myself beyond the pale.

Of course USPAP confidentiality controlling the actions of the appraiser under these circumstances is ridiculous and resulted in a convoluted ASB solution that essentially requires a whole "new" client-specific report, even though it may be a clone of the one they already have. Busy work at best, I think contrived out of some misguided notion that the integrity of the confidentiality rule must be preserved whether the method of preservation makes sense or not. Many appraisers apparently think they should be compensated for this busy work resulting in the new client feeling ripped-off. In the mean time it holds up the money rental machine and thereby contributes to Dubya's second recession.

[/quote]

Please don't restrain yourself, Edd. (We wouldn't want you to get hurt.)



I don't believe that I disagree with any of that point of view. The real question is what to do about it.

...the integrity of the confidentiality rule must be preserved whether the method of preservation makes sense or not.

What is the alternative? As much as I appreciate you coming in with a very libertarian train of thought here, I do not believe that allowing each appraiser to decide for themselves whether or not confidentiality needs to be preserved is a very good answer. Do you have a better one?

Steve Owen wrote:

Edd Gillespie wrote:...under current regs, this is not allowed without the original client's release... I am wondering whether it should be.

(emphasis added)

OK, I have restrained myself beyond the pale.

Of course USPAP confidentiality controlling the actions of the appraiser under these circumstances is ridiculous and resulted in a convoluted ASB solution that essentially requires a whole "new" client-specific report, even though it may be a clone of the one they already have. Busy work at best, I think contrived out of some misguided notion that the integrity of the confidentiality rule must be preserved whether the method of preservation makes sense or not. Many appraisers apparently think they should be compensated for this busy work resulting in the new client feeling ripped-off. In the mean time it holds up the money rental machine and thereby contributes to Dubya's second recession.

Please don't restrain yourself, Edd. (We wouldn't want you to get hurt.)



I don't believe that I disagree with any of that point of view. The real question is what to do about it.

...the integrity of the confidentiality rule must be preserved whether the method of preservation makes sense or not.

What is the alternative? As much as I appreciate you coming in with a very libertarian train of thought here, I do not believe that allowing each appraiser to decide for themselves whether or not confidentiality needs to be preserved is a very good answer. Do you have a better one?[/quote]

Nope. And it has not one jot of libertarian thinking in it unless you wish to co-opt it, which you are welcome to do. Required appraiser confidentiality should be contractual and that is it, period. It actually is, partially, hence the client release comment and discussions.

Otis wrote: If I remember correctly, the new bank cannot accept the appraisal delivered by the borrower - period! Then can accept a direct transmittal of it from the original client and then therefore (summarizing) deem it as safe, credible and accurate.

If I am not mistaken, the borrower CAN deliver an appraisal. It simply cannot be one that the borrower ordered. The borrower cannot be the client. But if the borrower has a copy prepared for WAMU, and they give it to Countrywide, then Countrywide can use it as they wish. The APPRAISER, however, cannot discuss it with the new lender, due to confidentiality. I do believe (and have yet to have it disproved) that I can confirm or deny the report that the new lender has a copy of the report that I prepared. But if they want something else (1004D, Income Statement, additional comps, etc,) it becomes a new order as I cannot discuss the current report with them.

Goodpasture wrote:I do believe (and have yet to have it disproved) that I can confirm or deny the report that the new lender has a copy of the report that I prepared.

When I thought I could influence this confidentiality thing with some positive and constructive criticism, I encountered the sources from which the USPAP confidentiality thing arose. The ASA part of it went so far as to include the identity of clients in confidentiality. So the answer from that side of the camp would tell you could not confirm or deny anything, and the rule is very much open to interpretation hence the ASB opinions and the comment. The beat goes on.

Why not make it contractual and an USPAP ethics violation to fail to follow the client's contract? The way it is now makes no sense in the fluid loan market most appraisers work in.

Tell me how a client's release can possibly void USPAP confidentiality unless it is contractual at its heart...oh, never mind.

Goodpasture wrote:

Otis wrote: If I remember correctly, the new bank cannot accept the appraisal delivered by the borrower - period! Then can accept a direct transmittal of it from the original client and then therefore (summarizing) deem it as safe, credible and accurate.

If I am not mistaken, the borrower CAN deliver an appraisal. It simply cannot be one that the borrower ordered. The borrower cannot be the client. But if the borrower has a copy prepared for WAMU, and they give it to Countrywide, then Countrywide can use it as they wish. The APPRAISER, however, cannot discuss it with the new lender, due to confidentiality. I do believe (and have yet to have it disproved) that I can confirm or deny the report that the new lender has a copy of the report that I prepared. But if they want something else (1004D, Income Statement, additional comps, etc,) it becomes a new order as I cannot discuss the current report with them.

Uh - Steve & GP - I believe there is a directive to the banks, aka, FRTer's, that they cannot use an appraisal delivered by the borrower, no matter who the "client" is shown on the appraisal (can't remember where I read it and it's way past happy hour for me to look for it). However, the bank, performing an FRT, can utilize the appraisal as long as it is transmitted to them by the original client (aka - lender). I'll try to remember tomorrow to locate that but, you know how the GUBRMNT documents are so it may take more than a few days.

Edd wrote:Tell me how a client's release can possiblly avoid USPAP confidentiality unless it is contractual at its heart...oh, never mind.

Edd, the clients are not bound by USPAP - only appraisers are!

Otis wrote:Edd, the clients are not bound by USPAP - only appraisers are!

So? My point includes exactly that, and to expand the thought: Since USPAP binds the appraiser, how can the client release the appraiser from its grip? The confidentiality rule requires the appraiser to hold in confidence those things told to him in confidence (contract). The confidentiality rule requires the appraiser to hold in confidence all of his conclusions and results (not contractual). The comment to the rule permits the appraiser to share without client permission [which is where we get the possibility of release from I guess] everything about the appraisal if the stuff the client told him is taken out (I have no idea whether that is a contractual release or something else, but it sure puts the client in charge of that part of USPAP).

If you recall, under advice from the AF folk I asked the ASB about the confidentiality rule. Their answer parroted the rule and ignored the comment. Just you all go ahead and try to confuse this further. Maybe the only way it makes sense is ignore parts of it.

The usual response I get when I'm on this soap box is that we need the confidentiality rule, it being good for the profession. Of course confidence is part of every profession and somethings that are not professions. My solution to this client control over it is to simply leave the thing up to the SOW. If the client doesn't care why should USPAP? It is a contract thing, and it still can be a USPAP violation if an appraiser can't keep his mouth shut when he has agreed that he will.