Appraiser hired by lender owes a duty to buyer/borrower.

[Elliott]

Smokey,
Not always. Most appeals cases have settled facts, that why the judges
get to summarize the case and then apply the law. I can appreciate that
the plaintiff was still trying to get his foot in the court house door. But it
would be funny if after their effort they find the square footage is reasonably
correct and not a significant influence on value. And even better would be
the forensic appraiser who says, "the original appraisal was correct based
on the sales available at the time and the loss in value was a function of
the market forces that occurred after the appraisal." And in a state like
AZ, that was most likely the case.

 

[Smokey Bear]

Most appeals cases have settled facts, that why the judges
get to summarize the case and then apply the law.

In those cases, the appellate court is determining if the law was applied correctly. They do not rule on the facts, only on the law and how it was applied.

 

[jay trotta]

Don't know the facts of the case - actually don't care; SF alone does not create value, it's just not that simple, nor is it the sole answer to Market Value.

To measure or not, is in ones own mind; 2nd level homes will never see any (2) appraiser's come in with the exact same SF.....thats a fact !! Along with town assessor's (they, in my area use a % differential).

Both "Sellers & Buyers" rely on what is provided; Agents may supply copies of assessor's field card data, therefore, the Buyer & Seller do not soley "rely" on the appraisal. The "seller" rely's (assessors field card data) on it because they have "paid" taxes for any number of years of Ownership - did they ever file an appeal ?? How was it appealed ??

Per FNMA guidelines (guidelines) the appraiser may use (IE: whatever) but needs to explain how and why the used what they used to make a determination. Comparables should be done in a like manner. You could measure the subject, coment on why you used the assessor's card field data and why it would bring greater consistency to the report by using similar input on the comparables. I have yet to have read that anywhere on this forum or others, that an appraiser had obtained permission to physically measure the comparables used in a report. Therefore, how would anyone know the "True SF" of the comparables (prove it factually) and if you could not verify it physically, you may have used the wrong comps..........hmm

There are alot of questions in appraising by the book of guidelines; what I feel is most important is knowing the area in which you practice. If something is totally out of wack there is a problem; if it's unique to an area -it could be a problem; if it is selling for more than anything of similar - style/quality/age and amenities, it could be a problem.
I suppose we could say, appraising is a problem; my old mentor use to always note - do the basic's and figure out what the "appraisal problem is" and if there's a solution.
hmmm

 

[Webbed Feet]

Good answer.

Working on my revesion today for all the AMCs, they have all got to sign off on it or no ticket for an appraisal. I am doing one general one to cover six months at a time. Attached will be my new fees.

Ask your attorney, I am not sure you can generalize the contracts that way (6 months at a time) Each and every "appraisal order" is it's own separate contract. The contractual relationship begins, and ends, with each and every appraisal order. I suspect that means to protect yourself, you have to make it a specific part of each and every contractual relationship per each contract.

 

[Terrel L. Shields]

Each and every "appraisal order" is it's own separate contract.

not so. blanket contracts can cover multiple assignments.

 

[Webbed Feet]

I always have the borrower sign my reciept that says they are aware that they are NOT my client, etc. I think I'm going to add something that says I have no fiduciary duty to them.

BTW, the appellate court only deals with issues of law, not issues of fact. They merely determined that an appraiser has a fiduciary duty to the borrower since they are a foreseen user of the report. So this goes back to the lower court and allows that count to be litigated, along with the issues as to whether the appraiser breached that duty. It sets a precedent only for that jurisdiction and only if it's not appealed and overturned. Other jurisdictions can cite the case as persuasive (once it's final), but are not obligated to follow it.

Smokey! Yikes!

The court already clearly understands that as an appraiser you have no fiduciary duty to them! You are NOT their agent! That will do you no good, unless you use the right label regarding the real type of "duties" you owe them.

 

[Webbed Feet]

What's your point webbed? When I talk about fiduciary obligation, I'm talking about the bank's obligation to its customers, not ours to the bank or to anyone else. Our obligation, of course, is to be an unbiased teller of truth, (the truth of our own opinion).

As to the bank's fiduciary obligations, they still exist in most banking relationships, or perhaps I slept through those six AIB courses prior to the start of my appraisal career.

Holy cow you all are having trouble with this! Calvin, the bank is NOT it's customers "Agent" in most cases. There may be some limited cases where banks become "agents" over a minor's trust account or an estate for example, and therefore a fiduciary relationship can be created. But most customer / bank relations there are no fiduciary obligations! .. The banks are providing a service to a customer. The banks are NOT an agent of all of their customers! Explain to me what you know about the word "Agency," how an agency relationship beteen a bank and a borrower was created. I'd love to hear it. It's a creditor / debtor relationship. Somehow, I have never heard of an advocate of a person getting to foreclose on the person's real estate and take it from them. LOL! Nice advocation going on there!

 

[Calvin the Airedale]

Holy cow you all are having trouble with this! Calvin, the bank is NOT it's customers "Agent" in most cases. There may be some limited cases where banks become "agents" over a minor's trust account, and therefore a fiduciary relationship can be created. But most customer / bank relations there are no fiduciary obligations! .. The banks are providing a service to a customer. The banks are NOT an agent of all of their customers! Explain to me what you know about the word "Agency," how an agency relationship beteen a bank and a borrower was created. I'd love to hear it. It's a creditor / debtor relationship. Somehow I have never heard of an advocate of a person getting to foreclose on the person's real estate and take it from them. LOL! Nice advocation going on there!

After reading your response I wondered, had I somehow become confused as to the meaning of "fiduciary relationship"? Was my bank training somehow flawed or obsolete?

The following online sources were consulted:

http://en.wikipedia.org/wiki/Fiduciary_duty

http://legal-dictionary.thefreedictionary.com/Fiduciary+obligation

http://www.lectlaw.com/def/f026.htm

Nope. I understand the concept.

Please reread the facts of this case and tell me the bank did not have a fiduciary obligation regarding the appraisal of the collateral!

 

[timd354]

After reading your response I wondered, had I somehow become confused as to the meaning of "fiduciary relationship"? Was my bank training somehow flawed or obsolete?

The following online sources were consulted:

http://en.wikipedia.org/wiki/Fiduciary_duty

http://legal-dictionary.thefreedictionary.com/Fiduciary+obligation

http://www.lectlaw.com/def/f026.htm

Nope. I understand the concept.

Please reread the facts of this case and tell me the bank did not have a fiduciary obligation regarding the appraisal of the collateral!

I will address your challenge, and the answer is that the bank has the collateral evaluated for its own benefit, not for the benefit of the borrower and owes no fiduciary duty to the borrower regarding the evaluation of the collateral.

You are really confusing this situation with the situation where the bank is doing something on behalf of the customer, such as taking and holding the customer's deposits for safe keeping or where the bank is appointed as the trustee of a trust account, etc. In such cases, their is a fiduciary duty that clearly arises. Contrast this to the case where a customer takes out a mortgage loan from the bank. The bank is not making this loan on behalf of the customer or the customer's interests, but is, in essence, simply selling money to the customer. Clearly, the fact that the bank lends money to a customer does not establish a fiduciary realtionship, otherwise the bank would be unable to charge interest on the loan. The bank evaluates the collateral not to protect the customer or the customer's interests, but to protect the bank's interests. Thus, there is no fiduciary relationship established based upon the bank merely evaluating the collateral. In fact, regarding the collateral on a mortgage loan, it is much more arguable that any fiduciary relationship that exists would be the fiduciary relationship of the borrower to maintain the collaterall and keep it properly insured per the borrower's contractual obligations.

The Duckman is correct in that you have a complete misunderstanding of the concept of fiduciary duty as it applies in this case.

 

[Hamlet]

A fiduciary duty is simply the obligation for one party to act in the best interests of another party. By definition an appraiser cannot be a fiduciary because they must remain unbiased in forming their opinion.