Lender forced to buy back loan from fannie mae

[hastalavista]

In our experience (5,000+ professional liability claims, disciplinary complaints and demand letters since just 2002), a decent work file contains the keys to an appraiser's successful defense against liability. Without a decent work or without a work file at all, it is usually much harder to defend the appraiser.

-- Peter Christensen, LIA's general counsel

I suppose appraisers could have a differing opinion, but I don't understand why they would?
I'd consider over 5,000 discrete incidents to be a sufficient sample size to make a very credible conclusion.

Since at least one E&O carrier would rather have the work file to defend/refute claims made against the insured vs. not having it, why would the insured not listen to the insurance company they are relying on to defend them?

 

[Delta85]

Since at least one E&O carrier would rather have the work file to defend/refute claims made against the insured vs. not having it, why would the insured not listen to the insurance company they are relying on to defend them?

Well the other side gets to pick at that file too.

Look at the IRS scandal. I'm assuming they had the counsel and advice of attorneys and professionals much more powerful than anything the average appraiser would have, obviously those pros told them to eliminate the paper trail and all related e-mails. And so far investigators and congress have been stiff armed trying to corner them.

The IRS is obviously guilty but the strategy is the same for an innocent appraiser who does not want to be bogged down in complaints. The less the other side has to use against you the better.

 

[Pittsburgh Pete]

Well the other side gets to pick at that file too.

Look at the IRS scandal. I'm assuming they had the counsel and advice of attorneys and professionals much more powerful than anything the average appraiser would have, obviously those pros told them to eliminate the paper trail and all related e-mails. And so far investigators and congress have been stiff armed trying to corner them.

The IRS is obviously guilty but the strategy is the same for an innocent appraiser who does not want to be bogged down in complaints. The less the other side has to use against you the better.

Isn't the assumption that the IRS has something to hide? Likewise, if an appraiser has something to hide, destroying the file ASAP makes sense.

 

[Delta85]

Isn't the assumption that the IRS has something to hide? Likewise, if an appraiser has something to hide, destroying the file ASAP makes sense.

We legally are allowed to destroy files after 5 years unless involved in some sort of legal activity. The IRS deleted emails and paper trails in a frenzy to hide something even though they are obligated to backup and save such things. Big difference. But the strategy is the same. The less the other side has to use against you the better.

An appraiser who follows USPAP and trashes files after 5 years and then gets sued after 8 years will not look like he is hiding anything when the passage in USPAP is read in court on how long files are required to be stored.

 

[hastalavista]

The less the other side has to use against you the better.

I hear what you are saying. Many (maybe most) appraisers who post on this subject in this forum agree with you.

I don't have the same concern. And, this has nothing to do with "I have a better work file than the other guy, etc., etc., etc." My work file, better or worse than another appraiser, is sufficient enough so that it can be used to reconstruct the report. It will support my conclusions and my opinion.
I don't see any smoking gun in the work file. Every report has errors or omissions. My experience (and maybe Peter can chime in if he feels like it and my experience is incorrect) is that judges don't decide cases on typos or small inconsistencies.
The work file represents a contemporaneous record of the data and analysis I used when I developed my appraisal and reported those results. Sure, someone can ask "why didn't you use Sale X?" They can ask that anyway. With the work file, I can say, "I considered Sale X; it's here in the data; but I concluded Sales A, B, C, and D were better for these reasons...."

Like I said, Delta, you and anyone else can decide to torch your work file one minute after its retaining period. That is a business decision and yours to make. Whatever you do, it is the right one for you.

Having said that, I'd wonder why any appraiser wouldn't listen to what their E&O carrier advises, since they are the ones who have experience in representing appraisers with claims, and they are the ones who are presumably the optimal counselors to advise us how best to protect ourselves.

:new_smile-l:

 

[Delta85]

Every report has errors or omissions.

And a lawyer can make mountains out of molehills. Assuming your workfile is 100% perfect why give them ammo to play with when they are trained to find any little thing wrong and blow it out of proportion?

I understand what an E/O rep is saying but I also see the legal advice Lois Lerner got and she trashed everything and seems to be coming out of this just fine. She's as guilty as sin and everyone knows it but with numerous investigators combing through everything and being grilled in front of Congress she seems to be coasting to safety as this scandal plays out.

Imagine if she had a lawyer indicating that in fact the e-mails were saved for the legally binding period of time and were deleted only after that period had past? She's be in an even better position and probably still a big wig with the IRS.

 

[Delta85]

Sure, someone can ask "why didn't you use Sale X?" They can ask that anyway. With the work file, I can say, "I considered Sale X; it's here in the data; but I concluded Sales A, B, C, and D were better for these reasons...."

Answer: "All of my reports are fully supported and data is kept in my workfile. Unfortunately, USPAP allows me to discard workfiles after 5 years and since it has been 7 years since the effective date of that report the workfile no longer exists. Without my workfile and an original copy of the report I can not even be sure this report is mine or that data was not changed at some point after delivery."

And that would be the answer given for every question posed on that dated report. Therefore, I am not testifying to anything that can bite me in the butt nor does the other side have a workfile full of various items they might be able to utilize take advantage of.

 

[hastalavista]

And a lawyer can make mountains out of molehills. Assuming your workfile is 100% perfect why give them ammo to play with?

Again, you see risk where I see protection.

And, using that analogy, I'd rather have them play with the ammo in my ammo box than whatever ordinance they want to bring.

 

[hastalavista]

Answer: "All of my reports are fully supported and data is kept in my workfile. Unfortunately, USPAP allows me to discard workfiles after 5 years and since it has been 7 years since the effective date of that report the workfile no longer exists. Without my workfile and an original copy of the report I can not even be sure this report is mine or that data was not changed at some point after delivery."

And that would be the answer given for every question posed on that dated report. Therefore, I am not testifying to anything that can bite me in the butt nor does the other side have a workfile full of various items they might be able to utilize take advantage of.

I'm NOT* trying to talk you out of your decision.
I just wonder why one would make that decision when the experts we pay to defend us against claims advises something different?
But, it doesn't matter why you (or anyone else) would do it and, despite my musings, it is your decision to make. This isn't a right/wrong kind of decision. It is a business decision. Take the action you think is best.

:new_smile-l:

EDIT TO ADD: UGGH! I meant to type "I'm not trying to talk you out..." and omitted the "not" (and, that is not a Freudian slip!). Sorry! :laugh:

 

[Delta85]

Again, you see risk where I see protection.

And, using that analogy, I'd rather have them play with the ammo in my ammo box than whatever ordinance they want to bring.

What ordinance? If the guiding force behind everything real estate appraisal related (USPAP) says discarding workfiles after 5 years is ok what more can they do to you?

I don't think too much about it. If I did, I'd have to build a warehouse to store all my files. Is 10 years long enough for each file? What if a claim is filed on year 11? How about 15 years? What if a claim is filed on year 16?

After a 40 year career should appraisers have 5000 square foot facilities rented out just to store workfiles?