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ACLB on assigning the appraisal to another lender

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OSU Beavers

Elite Member
Joined
Jan 10, 2007
Professional Status
Licensed Appraiser
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Oregon
I'm in a rush and can't find the excellent write up that the ACLB put out a few years ago explaining why we "just can't change the name of the client on the appraisal report"?

I'd like to get the pdf of just that to send out when clients ask.

Please post a link or attachment.

Thanks
 

OSU Beavers

Elite Member
Joined
Jan 10, 2007
Professional Status
Licensed Appraiser
State
Oregon
Found it

Unlike the AMCs I don't know how to chop out two pages of a pdf so here is the cut and paste. It's a public document.

Perhaps the most often asked question here at the Board office pertains to letters of assignments and/or changing the client’s name on an appraisal report.

Usually, the scenario goes something like this: A lender or mortgage broker (Lender A) orders an appraisal which the appraiser completes and delivers. Then the borrower decides to switch to a different lender/broker (Lender B). Lender A then issues an “assignment letter” which ultimately ends up in the hands of the appraiser.

With most assignment letters, Lender A signs over its rights and/or interests in an appraisal report to Lender B who is now supposedly free to use the appraisal report for their own loan decision. In most cases Lender B will not make the loan unless the appraisal report identifies them as the appraiser’s client. The problem is they are not the client. (USPAP defines “client” as “the party or parties who engage the appraiser in a specific assignment”). Usually at this point Lender B asks the appraiser to change the client name on the appraisal report from Lender A’s name to their name. THIS IS NOT ALOWED BY USPAP - DON’T DO IT!

Alternatively, some assignment Letters are addressed to the appraiser whereby Lender A instructs the appraiser to basically assign or transfer “client-hood” from Lender A to Lender B and then change the client’s name on the original appraisal report. DON’T DO IT! Lender B is not the client because they did not engage the appraiser in a specific assignment.

To recap the problem, Lender B has an appraisal report they say they will not use because their name is not listed as the client and the appraiser cannot change the client name on the report because Lender B is not the client; Lender A is. There are two solutions. First, Federal Financial Regulatory agencies have rules in place that allow the receiving lender to use such appraisals without being readdressed (See §34.43(c)(2) of Chapter 1 of Title 12 of the Code of Federal Regulations). Remind Lender B of this and inform them that this is the easiest solution. Second, the appraiser can have Lender B order (engage them in) a new appraisal assignment. Thus a new client relationship is established and the appraiser is free to complete the new appraisal which happens to be on the same property with the same borrower.

It is not necessary for the appraiser to obtain an assignment letter or permission from Lender A to reappraise the property since the engagement to perform an appraisal from Lender B constitutes an entirely new assignment. There is no rule in USPAP or in the Oregon Administrative Rules that requires an appraiser to wait six months (or any amount of time) before re-appraising the same property. The appraiser has three options for accepting the new assignment.

The first option is to start from scratch and re-inspect the property, research current market data and issue a value opinion with a current effective date.

The second option saves time by having Lender B order a retrospective appraisal specifying the exact effective date of value which should be identical to the previous appraisal completed for Lender A. This eliminates the need to re-inspect the subject property and to perform additional market data research (since the effective date of value is the same for both appraisals). The appraiser should exercise care to clearly identify that the (new) appraisal report contains a retrospective value and must be certain to date the new appraisal report with the current date of report. Since the time involved under this scenario is usually considerably less than performing a whole new appraisal; many appraisers negotiate a lower fee and faster turn-around time with the new client.

The third option is to not re-inspect the subject property but research current market data and issue a value opinion with a current effective date. This requires using an extraordinary assumption that the condition of the property as of the current (effective) date of value is the same as it was when last inspected for the previous appraisal assignment. Remember to make the appropriate disclosures in the appraisal report when utilizing an extraordinary assumption.

When option two or three above is used, it is highly advisable to clearly communicate with the new client, at the time of the assignment, to ensure the option chosen will satisfy underwriters and/or any other intended users of the appraisal report.

Sometimes Lender A is unhappy about their borrower switching to Lender B and would prefer that the appraiser not facilitate the switch by performing a new appraisal for Lender B. Many appraisers make a business decision to not jeopardize their relationship with Lender A by appraising the property for Lender B without an assignment letter or permission from their first client. This is a business decision and is not directly addressed in USPAP.

It is important to remember that all appraisal assignments require a workfile compliant with the Ethics Rule-Record Keeping section in USPAP. Be sure to keep separate workfiles for each appraisal. As such, it would be necessary to either copy relevant data from the first appraisal workfile to insert in the second workfile (or simply make reference in the second workfile as to where the data relied upon for the second appraisal is located i.e. in the workfile for the first appraisal).

Some appraisers mistakenly believe that performing a second appraisal on the same property for a different client (within a short time frame) violates the Confidentiality section of the Ethics Rule. This is not true. However, the unauthorized communication of confidential information from Lender A’s appraisal to Lender B is a violation of Confidentiality. Further, the appraiser must never divulge the assignment results from Lender A’s appraisal, even if they are the same as those for Lender B.

“Confidential information” is often misunderstood to mean just about anything contained in the work file or appraisal report. USPAP defines “confidential information” as “information that is either identified by the client as confidential when providing it to an appraiser and that is not available from any other source; or classified as confidential or private by applicable law or regulation”.

In summary, assignment letters alone do not make it permissible for appraisers to change the name of the client in an appraisal report. To do so is a violation of USPAP. An appraiser is permitted to re-appraise the same property within any time period for a different client but a new client relationship must be established.

The appraiser has three options in performing a new assignment. Two of those options could save time and money for the new client but clear appraiser-client communication needs to occur to ensure that the client understands what they are getting. Finally, separate complete work files must be maintained for both appraisals.
 

Oregon Doug

Senior Member
Joined
Jan 15, 2002
Professional Status
General Public
State
Oregon
OK, Mr Beavers - so, whats your point? Every Oregon appraiser is supposed to already know this. Most do, but thanx for posting it for the few who may not.

Oregon Doug
 

OSU Beavers

Elite Member
Joined
Jan 10, 2007
Professional Status
Licensed Appraiser
State
Oregon
It's a great letter which I wanted to share with a few Lender Bs but could not find in a hurry. I found it last night so I posted it.
 
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