Evaluation Liability

[J Grant]

Danny, I thought took the same position? Maybe I expressed it poorly because I said it as a negative assertion in response to Dale ( none of what he said in his post exempts an appraiser from USPAP just because it is called an evaluation)

Individual state laws can differ and I can't' claim to know what each is...I did state in one of my posts the exception would be to USPAP compliance would be a state or local law JE, but that is from what I understand of the law as a non attorney. ...

 

[J Grant]

duplicate

 

[J Grant]

The AG for the State of Tennessee disagrees with that assertion. . There is an official position paper, if you want to research it.

As noted in the PREAMBLE, an appraiser MUST comply with USPAP when required to do so by applicable law or regulation.

The Tennessee law basically gives one who holds appraisal credentials two ways to respond to a request for an "evaluation." One could either (1) follow the EVAL standards, apply the "This is Not and Appraisal Language" and deliver an evaluation, or (2) "upgrade" to an appraisal report of some type.

I personally like the TN law because it allows the appraiser to accept the work (meaning it does not flow to non-appraisers) regardless of the formatting wants/needs of the client. In most cases, I delivered an appraisal report, but in some cases the client was insistent on using their evaluation format. I was good with either because I know my law and USPAP both well enough that compliance is a non-issue for me. Of course, performing either was subject to appropriate compensation.

I am a bit confused...you accepted the evaluation as an okay format or product under TN law, but if you signed it as an appraiser, did you still make our own work USPAP compliance? Or you believe the TN law relieves an appraiser of USPAP when they do an evaluation and include not an appraisal language?

 

[Meandering]

Ghee whiz,

Thanks Danny.

The AG for the State of Tennessee disagrees with that assertion. . There is an official position paper, if you want to research it. As noted in the PREAMBLE, an appraiser MUST comply with USPAP when required to do so by applicable law or regulation.

Isn't USPAP a regulation?

And on a stand alone basis, as a regulation, requires USPAP compliance from Appraisers, when performing "evaluations" via the USPAP DEFINITIONS - which conveniently ARE a part of USPAP?

Hence it is inline with TN Law, that appraisers follow the REGULATION which is USPAP?

Dang.

.

 

[hastalavista]

Well thank you Denis,

So let's see if we can tackle this together.



The initial question, why won't the E&O insurance companies cover appraisers preforming evaluations, should be clear, why we are here.

We don't have to tackle this together because I have no disagreement with you that appraisers completing evaluations need to follow the USPAP. And, if the E&O policy requires USPAP compliance to cover the appraiser, and if an appraiser doesn't follow the USPAP when completing an evaluation (which becomes an appraisal if an appraiser completes it), then I wouldn't expect the E&O policy to cover that event if something went wrong.
I said that early in the thread.

My return back to the thread was to make it clear that evaluations are not required to be completed in compliance with the USPAP, and non-appraisers can do them all day long and not worry about USPAP compliance (with limited exceptions).

 

[Meandering]

My return back to the thread was to make it clear that evaluations are not required to be completed in compliance with the USPAP, and non-appraisers can do them all day long and not worry about USPAP compliance (with limited exceptions).

Okay, so let's take this one step further.

As an appraiser,

You can not label your appraisal report an evaluation, no matter how creatively you entwine that verbiage into your report labeling because,

Appraisers can not complete evaluations that are not appraisals, and appraisals are not evaluations when created by appraisers,

HENCE, intertwining the nouns of "Evaluation" and "Appraisal" and "Report" into a label for the work product creates a misleading Appraisal report - because you can not create an "Evaluation" as outlined in the IAEG, you can only create the "Appraisal".

.

 

[SpartanAG]

Some of the posters in this thread are jumping to wild conclusions based on over analyzing and misinterpreting how the different guidelines, regulations and standards are applied. To be blunt, it doesn't matter what the posters in this thread think about this topic. It only matters what your state board, your client and their regulators think. I'd be willing to bet only a handful of the posters opining on this topic have any actual real world experience dealing with evaluations/appraisals, the lenders that order them and the regulators that oversee the lenders.

I used to work for a large regional lender. We did most of our evals in-house. I've talked with my state board members, bank regulators and my counterparts with other lenders. Evaluations are a targeted product used by lenders for specific internal purposes. They are used to have something in the file to make the regulators happy. The loan amounts for these evals are typically under the de minimus ($250,000). If we didn't like an evaluation, we didn't go after the evaluator. We just ordered an appraisal. The regulators rarely looked at the files with less than $250,000 loan amounts (which is were all the evaluations were). If they did look at a file and felt like the evaluation was not adequate, they would just have us order an appraisal. No one went to evaluator or appraiser jail.

I would love to see some examples of state boards, lenders or regulators going after appraisers for providing evaluations.

I encourage those that may be interested in doing evaluations for some of their local clients to seek out information beyond this thread. Talk with members of your state board. Seek out experts like Calvin Moye or David Reinold. Talk to chief appraisers for your local lenders (not AMCs).

 

[SpartanAG]

because you can not create an "Evaluation" as outlined in the IAEG, you can only create the "Appraisal".

Just a reminder for the other readers of this thread: The IAEG states what must be included at a minimum to be an evaluation, but you can add to that minimum to meet both IAEG and USPAP.

 

[BRCJR]

I cannot believe, as it appears, many do not actually know what constitutes a "Restricted Appraisal".

 

[SpartanAG]

Isn't USPAP a regulation?.

No. USPAP is a standard. When the USPAP Rules and Standards apply is covered in the Preamble Lines 180-207.