Appraiser mill settles lawsuit

[Eli Weiss]

The following is just part of the article for the full articles click the links below.

A Bakersfield appraiser whose company set the values of more than 20 homes for Crisp & Cole real estate has settled his portion of a massive lawsuit for $590,000.

Former subprime lender Fremont Corporation alleges in court documents appraiser Mark Newton's professional negligence led to a loss of more than $8.56 million.

Newton and his insurance company agreed to the settlement. The insurer will be responsible for the payment.


Newton's appraisal license was suspended for 60 days following a hearing by state regulators in March.

In that hearing, regulators determined Newton was negligent in allowing employee-appraisers and trainee-appraisers at his company to use his signature on home values that did not meet professional standards.

In a settlement document filed with the Kern County Superior Court, Fremont attorney Michael St. Denis outlines what he calls lax supervision of what amounted to an appraisal mill:

"During the hearing (with state regulators) ... Newton admitted that his appraisal company was churning out 300 appraisals per month during 2005 and 450 appraisals per month during 2006. Newton only had two other licensed appraisers assisting him in handling that case load."

Five other appraisers recently settled with Fremont lending, court documents show:

David Clark and his company, David Clark Real Estate Services, settled for $10,000.

Appraiser Eric Bonilla agreed to a $12,500 settlement.

Gary Killian and his company, Killian Appraisals, reached a $3,000 settlement.

Appraiser JameS Rudick will pay Fremont $55,000.

And J. Richard Krizo and Pacific Appraisal Consultants have agreed to settle for $19,500.

http://www.kget.com/mostpopular/sto...risp-Cole-lawsuit/IYZtYew4cE2ObPNbIpv3JA.cspx

And here some more on this....

Two months after successfully defending his appraiser's license from revocation, Kirksey J. "Mark" Newton Jr. has reached a tentative settlement agreement with a former subprime lender over work he did for a former Realtor under investigation for mortgage fraud.

In March, an administrative law judge ruled Newton could keep his appraiser's license after finding errors and omissions in his work. But the judge ordered Newton to pay a fine of more than $28,000 to cover the cost of the California Office of Real Estate Appraisers' investigation and undergo additional training.

http://www.bakersfield.com/news/bus...nears-settlement-agreement-with-former-lender


Now, can I know why he was only suspended for 60 days, and why his insurance company is paying the settlement? This is a slap in the face for all hard working appraisers, and a pat on the back for appraisal mills.
I have long argued that appraisal mills are the number one enemy of this industry, and they are responsible for the low fees and quick turn time the AMC's have set. Because they have been accepting these fees since AMC's existed, and proved that they can submit reports in 1 day.

If anybody is interested in improving this industry, they should first target the appraisal mills.

 

[Verne Hebert]

There is no hen house. There are no foxes.

And Fremont should be renamed to Ray Charles Lending Group with the motto over the front door

"It all looks good to Me"

 

[Ken B]

So he grossed $3 million in two years and was forced to take a two-month vacation, while his insurance company pays the fine.

I hear those european cruises can be pretty nice.

 

[Pittsburgh Pete]

Interestingly, his insurance company was Lloyd's of London. Were the usual suspect E&O providers on to his game?

 

[Eli Weiss]

So he grossed $3 million in two years and was forced to take a two-month vacation, while his insurance company pays the fine.

I hear those european cruises can be pretty nice.

Yup, now all appraisers will be paying even higher insurance premiums because of this settlement.

 

[Pittsburgh Pete]

Do three appraisers qualify as a "mill"? Sounds more like a greedy rogue than an example of an appraisal mill. We have three appraisers and we are hardly a mill--more like a shanty!

 

[Eli Weiss]

Pete, read this "Newton admitted that his appraisal company was churning out 300 appraisals per month during 2005 and 450 appraisals per month during 2006"....

I doubt that 450 appraisals were handled by three appraisers. I guess he may not have utilized licensed appraisers for most of these. He may have hired regulars, to do inspection, photographs, and some girls to type up the reports.

 

[Elliott]

"During the hearing (with state regulators) ... Newton admitted that his appraisal company was churning out 300 appraisals per month during 2005 and 450 appraisals per month during 2006.

"Several of the properties valued by Newton and his company San Joaquin Appraisals are now the subject of a federal mortgage fraud investigation centered on former Realtors David Crisp and Carl Cole."


I thought E/O didn't cover fraud? Which is what this sounds like. I don't want to pay
more E/O because of this chump.

Couldn't find Mark Newton in OREA, but Kirk popped up:

First Name Last Name MI Full Name
Kirk Newton J KIRK J. NEWTON
Name of Company Phone
San Joaquin Appraisals 661-631-0100
Mail Address Mail City Mail St. Mail Zip County
4500 California Avenue, Suite 209 Bakersfield CA 93309 Kern
App. Type Lic. Lev. Lic. Num. Lic. Status Date Issued Date Expired Renewal Issued Renewal Expires
Renewal AR 013965 Suspended 11/06/2008 11/05/2010
Renewal Type
56 Hour Continuing Education Required
Compliance
3/4/2010 - Director adopted Administrative Law Judge decision effective 4/3/10. License suspended for 60 days effective 5/3/10, 5 year probationary period, $28,578 enforcement costs, 15 hrs. USPAP, 45 hrs. basic education, submission of appraisal logs during probation for work sample review. Violations of USPAP S.R. 1 and 2, Conduct section of the Ethics Rule, and the Competency Rule in multiple appraisal reports: failure to accurately analyze the relevant property characteristics for the subject properties; commission of a series of errors in the Sales Comparison Approach including the use of inappropriate sales comparables, the exclusion of relevant sales comparables, the failure to accurately report the relevant property characteristics of some of the sales comparable, and inappropriate analysis; failure to analyze current listings and pending sales of the subject properties; and the failure to analyze the previous sales of the subject properties in the past three years.

 

[Metamorphic]

Pete, read this "Newton admitted that his appraisal company was churning out 300 appraisals per month during 2005 and 450 appraisals per month during 2006"....

I doubt that 450 appraisals were handled by three appraisers. I guess he may not have utilized licensed appraisers for most of these. He may have hired regulars, to do inspection, photographs, and some girls to type up the reports.

What am I missing here.

50 wks/yr x 5 days/wk x 3 appraisers = 750 appraiser days of available effort.
If they did 450 together that's 1.6 days per appraisal. Not a completely unreasonable pace.

What were fees in 2005-2006?

 

[TJSum]

What am I missing here.

50 wks/yr x 5 days/wk x 3 appraisers = 750 appraiser days of available effort.
If they did 450 together that's 1.6 days per appraisal. Not a completely unreasonable pace.

What were fees in 2005-2006?

They did 300-450 per month, not yearly. At 450 per month, each of the three would have to do 150 per month, or 5 per day, each and every day.