The problem is not the ORIGINAL report you prepared on your computer. The problem is the possible corruption of that report given to the lender. An E&O company will defend your original report. Let's say that the original report was perfectly fine, but it had items in it that would preclude a property from being purchased by a GSE. Now suppose that those items were removed in the version of the report sent to the lender via AP and the lender ends up having to buy the property back. They think you gave them a bad report. They sue you. An E&O company would defend you, successfully, against a claim by the lender that your report was negligent (remember we are assuming that the original report was good). It was the lender, afterall, that required the use of AP, and presumably knows what they got themselves into. In discovery we find that the original report was corrupted by AP. (AP would have been subpoenaed to produce the original document). The lender loses the suite against you, the appraiser. Miffed, the lender then sues AP for sending them a corrupted file. AP turns around to you, the appraiser, and says you must now defend us because you agreed to indemnify us against claims. What do you the appraiser do now? Flee the county?
Consider this: AP data mines your appraisals. They sell that data to some entity that relies on it. The data is corrupted and that company experiences a loss. They sue AP for bad data. AP says to you the appraiser, "come and defend us as you agreed to indemnify us against loss"!
This has been posted and qouted several times, but the more I think about it, this is really an excellent post that gets to the heart of many things and opens the door for more questions.
Some seem to think that this battle is all about alamode users not liking AIReady. Wrong. A number of users of other brands of software have the same conversion problems and the same issues and concerns with FNC/Appraisalport. Regardless of software, these conversions are not reliable and we have no guarantee what the lender is seeing - or getting - after conversion on AIReady - or for that matter - any conversion sent through a third party vendor. Any conversion requires the removal of the appraisers signature. In my mind, that means if it can be removed once, it can be removed again. The first part of Mike's post makes perfect sense.
The second part makes equally good sense. How many of you have gotten the call "how come you ignored this comp or that comp" and you go to check it and either the information they provided is wrong or it isn't even a recorded sale. There seems to be a mentality out there that "data doesn't lie". Well, that may be true - but what if the data is wrong - or out of context - or corrupted - to begin with?
Let's put forth this scenario. Appraiser A writes a report on a subject in Orlando, Florida. His client requires the use of an active listing. Appraiser A provides 3 current sales and an active. Converts the report through AIReady and submits it. Whatever magic slicing and dicing that goes on behind the scenes somehow corrupts information and ends up showing that active as a sold. Two days later Appraiser B writes a report in the same subject neighborhood. He also has to provide an active listing. He does his search, and the active listing that Appraiser A used, which happens to be right next door to his subject, is now showing in his MLS as withdrawn, so he weighs it, but discounts it and provides another active. His lender doesn't require conversion, but they do use the port or subscribe to it's database. The next day he gets a furious call from underwriting - "you ignored the sale right next door to your subect -. WHY?" He replies "what sale? There was a listing, but it was withdrawn, so I provided another listing. That sale never closed, and while I considered the withdrawn listing, it never sold, so of course I didn't use it." Answer "well, we have DATA that says you ignored it. Put that sale in your grid." or - "your report doesn't support the value - we know that because we have DATA that says it doesn't. The loan gets declined and Appraiser B is viewed as a less than sterling appraiser because he didn't provide THAT data. Think it couldn't happen? It has.
Take it one step further. The Regional Manager for that lender tells his various area chiefs - ok - word from on high - get tougher about our appraisers. Start culling appraisers - every department has to give me the name of at least 1 appraiser putting out sub-standard work to be put on the do not use list by Monday morning. Human nature being what it is, the area manager in charge of Orlando remembers the most recent encounter - and puts Appraiser B on the do not use list - for no other reason than the DATA says he lied. Want to bet it's happened?
Another scenario. Recently widowed woman, having just lost her husband to cancer with mounting medical bills, applies for a home credit line. She is working, has a decent job and excellent credit. The lender deems no appraisal necessary. They issue her a loan of $25k. She already owes this lender $150k, but the AVM says it's worth $185k, so they feel all warm and cozy lending her the money. A little time goes by and she decides she wants to sell because the house is too big and too many memories - she wants to downsize. But the Realtor advises her the house is only worth $150k - shows her the sales within one block, nearly identical, that all sold for $149,000 to $152,000. HOW COULD THIS BE???? That magical data that was provided by the AVM? All from the same zip code as the subject, all the same age and style. What's the problem? The problem is they are all 3 blocks away in a much superior development - and the zip code line runs right through the middle of the subject development. The true comps are within a block, in the same development - but different zip code - and the AVM can't differentiate. Think it hasn't happened? It has.
There are many minefields with this type of data and the methods of obtaining it. And now, the new port agreement will make those who sign it responsible for every one of these scenarios and more.
Some may think that those of us who are talking about this in public have hidden agendas. We have no agenda other than fighting a system run amuck - and then trying to force appraisers to foot the bill via a user agreement. There are those who think we keep changing areas of dispute. Of course we are - because new or expanded information is surfacing almost daily. There are some who seem to think our fight is secretely about datamining. Well, it isn't. But Mikes post sure makes that a very good arguement. Just how reliable is that DATA? And why should we be held responsible for it?
Then there is the issue of the actual appraisal. ANY conversion that drops or removes or even just "re-arranges" data is suspect. If it is doing ANY of those things, it has altered the report. The degree of that alteration is immaterial. What......a little alteration is ok, but a lot is not? Who decides what's a little? Who decides what should or should not be in a report? NOT A CONVERSION PROGRAM OR THE PEOPLE WHO PROFIT FROM IT.
While the current fight is about FNC/Appraislport, they brought it on themselves with that agreement. I have not heard of ANY E & O carrier that is saying "it's ok - sign it". But really - this issue goes to ALL conversion programs and ALL portals. The appraiser should be able to deliver HIS/HER report, as he wrote it, in the software of his choice, directly to the lender, in PDF. If it must be through a portal, then no conversions should be involved. Once delivered TO THE LENDER, if THEY wish it converted, let THEM convert it. But Mr. Olson answered that question at the VA REAB meeting in July. "The lenders don't want the repsonsibility of converting." So FNC/Appraisalport has made the decision that THEY will make appraisers responsible - for everything and anything that COULD go wrong and for everybody who has their fingers in the pie. THAT is what has turned this into a firestorm. Further, it IS coercive - sign or no business. If they are doing nothing wrong, if their software is reliable, if there is no chance for error or corruption, why THIS agreement?
So - I submit a simple solution. If FNC/Appraisalport is so adamant that there is nothing going on. Fine - accept the report in PDf, ship it to the lender and guarantee to the LENDER they ARE shipping the original. Let the lender do what they need to with the ORIGINAL - and then ship it back to Appraisalport for THEM to convert. No muss, no fuss. They can still run an electronic QC (if that's all they really wanted). They can still strip data (if that is their real end game). But the LENDER has gotten the original and the APPRAISER is absolved of any responsibility for anything other than HIS report. Under that scenario, no hold harmless is required. And since FNC owns the software, shouldn't be ANY problem for them to do the converting. And if the lenders want it so badly, shouldn't be any problem for FNC to charge THEM the $8 per upload. Simple. Everyone still gets what FNC claims they want. Think they'll accept that?
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