Another twist to 'Who's the Client?'

[Caterina Platt]

An AMC orders an appraisal. It is completed per instructions with the lender's name in the client section of the URAR. AMC pays appraiser for the report.

Homeowner is disenchanted when he finds out out the true story of closing costs, rates, etc and wants to go shopping with the appraisal. I tell him I must recieve a written release from the client (in my mind, this is the lender). LO calls today and says he's never had to deal directly with the appraiser before and thinks it's fishy. Says release needs to be obtained from the AMC. I ask why in the world he would think this fishy when I am out to protect my client's confidentiality of the report, and want to hear straight from the horse's mouth - the lender. Says he'll provide a 'release' to the AMC. Ok, so does this new lender have to have a relationship with the AMC????? Do the confidentiality rules of USPAP extend to the AMC?

I'm fairly sure this LO is just adding more red tape to this issue in an attempt to get back at the homeowner. Just wondering what sticky legalities may exist here.

Any thoughts?

 

[rtubbs]

Caterina, I believe that we get into the habit of binding ourselves and blaming it on USPAP. In the situation you cited, my interpretation of AO-10 is that there basically is no client-appraiser relationship with either the AMC or the lender. The intended use of the appraisal for that client never materialized.

I look at it this way, if the homeowner paid for the appraisal and it was not used by the client I can't see where there is any further relationship between the appraiser and the client. It might be a different ballgame if the client paid for the appraisal.

I know, I know: it doesn't matter who paid for the appraisal; the client is the individual who ordered the appraisal. This issue has been hashed and rehashed and will probably continue to be rehashed.

The other option is to have the appraisal transferred by the lender.

 

[Jo Ann Meyer Stratton]

When I am in a similar situation I call the AMC first to get their permission to contact the lender. Some AMC's then contact the lender and will then fax me written permission to do a "retype" for the new lender. Some AMC's want the new lender to contact them directly and the AMC will deal with both lenders. After all, a lender really doesn't need a "retype" if they meet all the criteria, they can use the report with the original lenders name if they have been provided an original by that original lender. Some AMC's will tell me to call the original lender directly to get permission. The AMC is your client and that is the first contact for the appraiser. Occassionaly I have had an AMC fax me a release to do a new appraisal instead of a retype. I put a statement in the second report that I had previously completed an assignment for another lender, permission has been received in writing from that first lender to complete a new assignment. Always operate under the assumption of caution and consider how a complete stranger would view the situation as a conflict.

 

[Caterina Platt]

Joann,

Well, I spose I'm more of a stickler. I don't do any of the contacting or requesting for a transfer from anyone in 99% of the cases I've been asked to transfer a report. There are exceptions, but generally, I do not want to get involved in the borrower's issues. I was contracted by/for a client to do a report, if the borrower now needs my client's report, it is up to them to arrange that. Afterall, the borrower initially chose this mortgage lender, not me. If they want to dump them, they need to be doing the talking and arrange for the transfer.

The AMC, I tend to view as the middle man or 'distributor'. The instructions on the order state to name ABC Mortgage as the Lender/Client. The lender is obviously the one who needs and will utilize the report. The relationship between the AMC and the appraiser is a vendor/purchaser. Aren't we often referred to as 'Vendor'? I have never viewed them as my client.

What say the USPAP gurus? Do we have a dual client situation here?

 

[Jo Ann Meyer Stratton]

Some of the AMCs have written in big bold letters to not contact the lender--all questions are to be through them. Since the AMC orders the appraisal, I consider them the client, even though at their request I have typed the lender's name as the client; which is all covered by their order or engagement letter and then that would be part of my scope of work. So I always go back to the perception of a stranger-would that stranger think I have breached any confidential information? I do not approach the lender or the AMC at the borrower's request. I explain to the borrower that they need to talk to both their original and current loan officer/lender. Those two loan officers/lenders should work it out and never involve me. If the new lender/loan officer calls me, I tell them to contact the original lender or AMC and after I have received written permission from one of them (or both) then I precede. But I don't do anything until I have the written document in my hot little hands or fax. Just had a long discussion with a borrower today. Explained to him that if his current lender does not charge him for the appraisal, they do not have to provide him with a copy. If he decides to change lenders he will then have to pay the new lender an appraisal fee and I will not be able to do another appraisal for the new lender without written permission from the original lender because I would be disclosing confidential info from the original report. If he does pay the original lender for the appraisal, I still can't do anything for a new lender without written permission from the original because the appraisal report with its confidential information belongs to the original lender regardless of who pays for it--it is no longer my property. If he pays the original lender for the appraisal report, they will be required to give him a copy. And since an AMC is involved, I also explained to him that all questions and requests will have to go from him to the original lender, who will then contact the AMC, who will then contact me. Very important for all those proper channels of communication to be clear and distinct--and in appropriate chain of sequence.

 

[Frederick R. Ruffell]

Caterina, The very first line of your post answers the question. "An AMC orders an appraisal" There is you client. IMHO

 

[Caterina Platt]

FRR, and Jo Ann,

Ok, I understand your point and it is well taken. The AMC orders the appraisal=AMC is client. Great, but then on the report we type ABC Mortgage. Is that not misleading to the public? I have clearly stated in the report that the client is 'ABC Mortgage'. That is part of the reason I consider the AMC as a distributor of sorts. I would imagine that is also the reason the lender is always named on the order as the 'Client' and we are never referred to as 'agents' to the AMC's. The AMC has no use for the appraisal other than they had a 'buyer' for it. They are not the intended user of the report.

Incidentally, I have not initiated any contact with the AMC or the lender regarding this transfer. Nor did I ever initiate contact the lender regarding anything during the completion/inspection time frame or at any time there after. The borrower and his new lender have both contacted me and I keep responding with the fact that I need a release and the borrower/new lender need to pursue obtaining that. Not my business or my wish to get involved with that

Hmmm. Really don't think it matters in this case since I have heard from the lender, but I still wonder whom the courts would see as the appraiser's client in the case of these AMC's. Interesting debate. Thanks for the responses guys.

 

[Mountain Man]

Client does not always equal user, any more than cost will always equal value. When I get a request from an AMC, the client line on the URAR reads: Whoever AMC C/O My Bank. That way I list the client and the user. The fonts may be tiny, but it is there.

"The borrower and his new lender have both contacted me and I keep responding with the fact that I need a release and the borrower/new lender need to pursue obtaining that. Not my business or my wish to get involved with that"

You have it right! Let the HO grind his own ax with the previous LO :!:
If the previous LO and AMC do not release the report, I tell the HO up front and why I can't. I usually hear some comment from the HO about never doing business with them again. Some just do not learn from feeling the heat, they wait until the finger tips are blistered.

 

[bradellis]

Caterina,

The AMC is not your client. They clearly asked to to name the client in your report. In this, they are/were acting as an AGENT for the client.

Second, it appears that the intended use for your appraisal is over. It will be used by the "client" in making a business decision about whether or not to make a loan. Not up to you to determine if their loan terms are competitive. They have your number, reasoning, and your data. If they want to try to "hold up" the borrower (and we do not have enough info to determine that- depends upon creditworthiness, etc.) that is a marketng question for them and does not involve you.

Therefore, my reading ot this and the data from our instructor's course on USPAP seems to indicate that you can do a new appraisal on this property. Your first assignment is over and this is now a new one.

Brad Ellis, IFA,RAA

 

[Pamela Crowley (Florida)]

Brad's answer makes sense and it is what I would/will do - have done. Your relationship with that client is over. Do a new inspection and a new report. I usually give a very nice discount for this because it's very easy - new inspection, quick search for anything new that could make a difference, done!