Appraisers' Free Forum

I posted this here because I may refer either the borrower or the banker here to read the replies. I got a new twist on the readdressing issue the other day, and I kind of wondered why this has never come up before.

To make it short, I did an appraisal and the borrower went with another bank. Then the borrower called me up and asked me to readdress it. I explained that I could not do that. Then, I sent a link to the OCC regs to the new bank. The LO, who is new, but seems pretty intelligent, said he understood it, but his compliance officer still had a problem with using it. They came back and asked if I could recertify it. I reviewed USPAP just to be sure, and then told them no. Along the way, the prior bank sent me a release letter allowing me to discuss the appraisal with the new bank or the borrower.

Now the borrower calls and says that (here's the new rub) the new bank now says that they understand they can use the appraisal, but they are concerned that they have no way of knowing if it has been altered.

She says that if I send them a copy of the old bank's letter that will satisfy them.

So, the problem seems to be solved. However, I just wondered what any of my peers think about this issue. If a bank uses an appraisal prepared for another bank under the OCC regs, how can they know it has not been altered? What do you think is the solution to this problem?

Steve Owen wrote:I posted this here because I may refer either the borrower or the banker here to read the replies. I got a new twist on the readdressing issue the other day, and I kind of wondered why this has never come up before.

To make it short, I did an appraisal and the borrower went with another bank. Then the borrower called me up and asked me to readdress it. I explained that I could not do that. Then, I sent a link to the OCC regs to the new bank. The LO, who is new, but seems pretty intelligent, said he understood it, but his compliance officer still had a problem with using it. They came back and asked if I could recertify it. I reviewed USPAP just to be sure, and then told them no. Along the way, the prior bank sent me a release letter allowing me to discuss the appraisal with the new bank or the borrower.

Now the borrower calls and says that (here's the new rub) the new bank now says that they understand they can use the appraisal, but they are concerned that they have no way of knowing if it has been altered.

She says that if I send them a copy of the old bank's letter that will satisfy them.

So, the problem seems to be solved. However, I just wondered what any of my peers think about this issue. If a bank uses an appraisal prepared for another bank under the OCC regs, how can they know it has not been altered? What do you think is the solution to this problem?

The 'new" lender is charged with making a decision about the quality and credibility of the report. I think, a letter forwarded to the appraiser from the original client giving permission (to the appraiser) to discuss this with the "new" client is an acceptable practice. It then becomes a decision for the "new" client to ascertain if the report is credible and meets their compliance departments requirements.

It will be up to the new client and appraiser, to discuss the report so the new client has the information, to decide the credibility of the report they are relying on for a lending decision.

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.

Here we have the rather common situation where a lender that is other than the specific intended user of the original appraisal obviously has access to it and is allegedly concerned about its authenticity and the appraiser has been duly from any constraints the confidentiality rule may have imposed. So what is left to do?

The issue isn't credibility, but authenticity. While compensation is a business issue appraisers must always consider in this day of faster/cheaper appraising, how long can it take to say whether the copy the bank has is the same as the one you sent?

It seems to me that your verification should take all of a handful of minutes and would allow the new bank to comply with authentication questions. Sounds like good PR to verify it for nothing since charging for it can't have a lot of impact on the bottom line, but could leave you off the new bank's list of future appraisers. I don't think anyone would understand why you would charge for something as simple as this.

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

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

Well, that may be true and I think the release from confidentiality is broad enough to permit that. But, that is the bank's call and how complicated and time consuming is that for the appraiser to do? I just don't see that it is a $ issue.

There is a simple solution and it is one of my business policies.

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.

The "free" new report does come with a catch: it is done at my leisure and may take anywhere from 5-10 days to get. Basically, you get the report when I have another paying assignment in that area. I ain't driving for free. If you want it faster, you pay a fee.

The new report includes a new effective date, walkthru, pics and research. They are fully compliant and totally bypass the issue of altered reports.

Many of you may disagree with my policy. I will tell you that it has paid off in spades with both private and business referrals as well as work from the new lender in many cases. Sometimes you got to give a little to get a lot.

There is one major exception to the free report: If the original order was paid for by the lender, you do not get a free new report. In those cases, the borrower must get a written release from the 1st client before I will even think about doing a new report. I know that a release is not needed when a new file is created, but I feel that it is important in that it makes any issue of confidentiality a moot point.

Furthermore, getting a release is rarely an issue as 99% of my work is COD.

Edd Gillespie wrote:

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

Well, that may be true and I think the release from confidentiality is broad enough to permit that. But, that is the bank's call and how complicated and time consuming is that for the appraiser to do? I just don't see that it is a $ issue.

I agree, it is not a time burdening situation, with little or no true expense involved.

If, I have to provide a hard copy I want my ink and delivery expense paid.

I look at it as another report with whatever liability/exposure that "could" be attached.

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.

I believe anytime you do something to an original report, submit it for any reason to anyone, you have increased your risk exposure.

Some would like payment for that and others maybe not.

Steve Owen wrote:What do you think is the solution to this problem?

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

You've already done the work...do a quick reinspect (assuming it's not 50 miles away), and charge them a minimal fee then everybody's happy!

No

It seems to be that having this report out there in two different places would double the liability exposure.

Jim Plante wrote:Annemieke, that would be true only if both banks were going to lend money using that appraisal.

Not totally true.

If I was a lender, had a report in hand, and felt it was not USPAP compliant, banking regs say I should forward to the proper regulatory agency. Does not say I can only do this if I am going to lend on it.

Jim Plante wrote:Bill, when she wrote "liability," I assumed she mean financial liability, as in lawsuit stuff.

I don't transmit any report that I'd be ashamed for the state board to see, so I don't consider having a report turned in to them to be a liability.

I agree no financial liability should exist, I was thinking along different lines, as to liability.

Bill Caudell wrote:

Jim Plante wrote:Annemieke, that would be true only if both banks were going to lend money using that appraisal.

Not totally true.

If I was a lender, had a report in hand, and felt it was not USPAP compliant, banking regs say I should forward to the proper regulatory agency. Does not say I can only do this if I am going to lend on it.

Arguably that potential is an asset depending on your perspective.