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Validity of a Complaint?

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by stefan olafson, Jun 5, 2007.

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  1. stefan olafson

    stefan olafson Senior Member

    0
    Apr 2, 2003
    Professional Status:
    Certified General Appraiser
    State:
    North Dakota
    A theoretical problem which needs an answer!

    After 2006 USPAP became effective Lender A requests an appraisal from Appraiser R. Appraiser R completes 2055 appraisal after communications with Lender A informing them of limitations on available data because of remote location and poor public records. Lender A accepts completed appraisal and funds loan for Buyer L.

    Fast forward about seven months to Buyer L filing complaints with Real Estate Commission and Appraiser. Seems Buyer L purchased the property sight unseen, never even knew where it really was prior to picking up keys with directions to the house. After living in the home they realized that because of a high water table (seasonal, based on rainfall) the basement had some small water problems. When their sump pump quit working they just let the basement fill with water? When they purchased the property the sellers disclosure stated the presence of a well and an underground storage tank. Apparently the ust was a gas tank with the pump assembly enclosed in a planter in the yard.

    After about seven months of no complaints or phone calls the complaints went out.

    Now the question for my fellow appraisers.

    USPAP requires us to name the intended user (in this case the lender) and the intended use (the financing a purchase transaction) which both occcured. There was never a question from Lender A to anyone.

    Now, if a borrower (not an intended user) files a complaint with a state regulatory body, what is their duty? To investigate the complaint even though the complainant is not the intended user? To investigate even though there has been no complaint from the intended user?

    I'm really confused on this one? If the state regulatory body was to follow through on a complaint from and unintended user, what is the good of USPAP?

    I really would like to read some well thought out responses to this one?
     
  2. DB

    DB Elite Member

    0
    Apr 29, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Tennessee
    In my opinion ... and experience .. anyone can file a complaint, any time, any where and for any reason. What the board does with it is up to them. If all that you say is true ... I wouldn't lose any sleep over it ... unless you are seeing the commissioner's wife on the side ... :rof:
     
  3. stefan olafson

    stefan olafson Senior Member

    0
    Apr 2, 2003
    Professional Status:
    Certified General Appraiser
    State:
    North Dakota
    DB, this is all hypothetical, I am aware any one can file a complaint. My question is USPAP requires us to state intended use and user as well as other info. If the intended user is satisfied with the work product then why would an unintended user have the ability to entirely screw up ones life?

    If a teacher gives a student a C, the intended user of that information is the school district. If an unintended user of the information on a grade, then complains to the school board, does the school board feel it necessary to investigate the teacher?

    If the state regulatory agencies in charge of licensing were to deal with only intended users, wouldn't the process be a lot cleaner???

    Just wondering what others are thinking
     
  4. DB

    DB Elite Member

    0
    Apr 29, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Tennessee
    My thinking is that, if the report is accurate and the buyer is just looking for a scapegoat, they would look to the realtor and the home inspector first ... I don't believe that any state board would entertain such a complaint, but if they did investigate, would likely clear the appraiser of any mis-doing, within minutes of reading such a complaint ... JMO ...
     
  5. Mr Rex

    Mr Rex Elite Member

    246
    Jan 12, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina
    I think I would seek legal counsel with someone who understood the Intended Use/User arrangement. The borrower has a beef with the seller first, then maybe the lender. The Appraiser has a relationship with the lender, and its based on inspection from tho street. No one in this arrangement was able to make any representations to the buyer except the seller. The lender agreed to loan based on the data they had, the appraiser valued based on the data they had, and that data was provided to the client, the lender. The borrower accepts all the risk, and needs to seek relief from the party they have most direct contract with, the seller. Of course I'm not an attorney, but I did spend a night in a Holiday Express with a JD.
     
  6. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    Top Poster Of the Month

    750
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    That depends upon the state and its procedure. In our state, the board has to accept the complaint but to pursue anything they have guidelines
    As I recall there has been a case or two where the courts ruled that unnamed parties do not have a stake in these appraisals unless the appraiser was aware that they would possibly use it.
    I am assuming you mean narrowly in the context of Std 9 and the intended user provision..If that board ignores the implications of the above, and the courts follow suit..then, Std 9 is meaningless piffle.

    All I ever did was file my briefs with a paralegal... :)
     
  7. George Hatch

    George Hatch Elite Member

    351
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    What about if there was no complainant other than the state?

    The question here is not who has the legal standing to complain about your work; the three questions that are relevant are:

    - Was the SOW used reasonable for the intended use/users as identified?

    - Did the appraiser do what they said they did for that SOW?

    - Did the report adequately disclose the assumptions and limitations used in the appraisal?

    If so, then nobody has any recourse against the appraiser for any reason. Credibilty is defined within the context of the intended use, not against a standard of absolute and pure knowledge. It says so right in the book:

    "The Credibility of the assignment results is always measured in the context of the intended use." (SOWR, lines 399-400)

    Moreover, we are not required to be omniscient:

    "Perfection is impossible to attain, and competence does not require perfection." (SR1-1.c)

    The intended users could have requested and received a more comprehensive inspection process had they asked for it. They didn't ask for it and the appraiser had no reasonable way of knowing that one or more of the assumptions used for the exterior-only inspection process was incorrect.

    An appraisal is not a home inspection and we don't warranty condition for buyers. If this buyer wanted an idea of the condition of the home they should have hired a home inspector to go through it.
     
    Last edited: Jun 5, 2007
  8. Michigan CG

    Michigan CG Moderator Staff Member Moderator

    493
    Nov 1, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Michigan
    Another reason to insist on an interior inspection?

    2055 -- $350
    1004 -- $300
     
  9. Otis Key

    Otis Key Elite Member

    0
    May 15, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    I believe, and I don't speak for my state board or any other, that it is their obligation to investigate any and all complaints - much the same as the police do about a neighbor who complains at unusual noises next door or down the road. (Just my mind set - right or wrong).
    Yes - same reason as above.
    Yes again, unfortunately for this theoretical situation. There needs to be an investigation. That also means the good/honest in all aspects of life and work will also suffer some............Unfortunately!

    USPAP does not govern complaints or the public - that is a real shame - but the court systems do. IMHO, USPAP is like the lock on a door - it's only there to assist/demand/help keep the honest ones honest and to be used for those that are NOT. Right or wrong.

    And I truely hope, believe, that this is a true theoretical situation. Unfortunately, I've read too many articles about somewhat similar situations that were not.

    BTW Timothy Evans, I charge more for a 2055 (which might be why I haven't done one in years) than a full access appraisal. It's a liability factor that I put into place years ago.
     
  10. Brian Weaver

    Brian Weaver Senior Member

    6
    Apr 16, 2005
    Professional Status:
    Gvmt Agency, FNMA, HUD, VA etc.
    State:
    Illinois
    In Illinois we take ALL complaints. My job is to sort out what IS and what ISN'T a complaint.

    Intended use and user is not a gate that locks out all other complainers.

    Don't forget, states aren't disciplining licensees on BEHALF of anyone other than the state. Period.

    If Illinois issues a discipline its not coming from the Intended User, Joe Homeowner or me or even the Appraisal Board...its coming from the Illinois Program. That's why the ASC reviews each state's program rather than fret over what party is in power or what person occupies the governor's mansion.

    That's the real answer.
     
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