Bribe or Business expense?

[MARKETVALUE]

Question for the group--

How would cash/gift certificate incentives to loan officers for appraisal work be viewed by USPAP? Legally? Ethically?

Example: Joe Smith loan officer, orders three appraisals in a month, he automatically recieves a $25 gift certificate to (insert restraunt/Electronics store here) from our company.

We are batting around some ideas for volume increase around here, and while this seems to feel as though it would be a 'gray' area or even across the line, none of us are smart enough to cite specific case law or possible USPAP violations for this practice.

Let me know what y'all think--

Thanks!

MRM

 

[David Mullen]

That sounds like what loan officers do to get business from agents.

Personally, I would not do it.

I have been told by some underwriters that in order to get business from their companies, I would need to "smooze" their loan officers since they pick the appraisers.

I am kind of particular about who I associate with and while I don't have a weak stomach, cannot imagine having to take any of these people to lunch or even a coke.

 

[Brad Pack]

Yes, you can, as long as it's fully disclosed.

Ethics Rule


Management:


"The payment of undisclosed fees, commissions, or things of value in connection with the procurement of an assignment is unethical.


Comment: Disclosure of fees, commissions, or things of value connected to the procurement of an assignment must appear in the certification of the written report and in any transmittal letter in which conclusions are stated. In groups or organizations engaged in appraisal practice, intra-company payments to employees for business development are not considered to be unethical. Competency, rather than financial incentives, should be the primary basis for awarding an assignment."

 

[rtubbs]

MRM

I believe it's just plain good business to reward your best clients every now and then. I do a variety of things: gift certificates to their favorite eateries; gift certificates to the local mall or their favorite shop; continental style breakfast (bagels, donuts, fruit, etc.) for their staff meetings; goodie baskets (usually a variety of candles or something similar); etc. And no, I don't disclose that in my reports; let's face it, USPAP doesn't own us.

 

[Ray Ohler]

the way it was phrased makes it APPEAR to be tied to the assignment.

..orders three appraisals in a month he AUTOMATICALLY receives....

One thing to buy your clients "gifts" once in a while, another thing when you tie it to their "bestowment" of work volume to you. If you do it, just make sure it isn't "written policy" and hope that anyone that works for you doesn't have any grudges against you in the future. It's BRUTAL out there these days.

 

[jtrotta]

Marketvalue;
Your question; "cash/gift incentives to "loan officers" for appraisal be viewed by USPAP? Legally?"

First off you now change your name "Marketvalue" no longer fits 8O

Secondly, when you buy - your business, you are open to a myriad of problems and loss of strength in securing other business; remember it always starts off small and then gets larger (similar to your other head).

When you walk into court, how would you defend your action of buying business and rendering an unbiased opinion :?:

8)

 

[Larry Lyke]

It's done everyday and not disclosed.

I wouldn't do it. BUT, I have done it by giving gifts.

What about the friendlies who play golf together and put the whole thing on the appraiser's tab. How is the USPooP people gonna find out. You can't issue a subpoena for a fishing expedition -- UNLESS, of course, you took your client on a "fishing expedition!"

There's so many ways around it. BUT, I thoroughly agree with that other party post above -- ONCE you start down that path, THEN you have to BUY all the business you get from that client, EVENTUALLY -- and the price keeps going up.

 

[Joe Birrell (NY)]

I've been in this business for 24 years and with the excepetion of the first
year (bottles of wine at Christmas), I have never given anything to any LO, UW, etc. and it hasn't affected my business at all. So, all those out there who are giving "gifts" think of all the money you could have saved !
(which is a better reason for not doing it).

 

[Larry Lyke]

Joe --

It is tax deductible and considered a cost of doing business by the IRS, if you do it.

Now convince USPooP.

 

[MARKETVALUE]

Appreciate the opinions--

First of all with a clean conscience and an absolute clear mind, in no way did or do I intend this 'practice' as a way to secure values. What I am opening up for discussion, in no way dictates the quality and intergrity of work I put out. So yes, the name MARKETVALUE, still very much applies. My pure intent in this type of reward for volume scenario, is to secure a larger percentage of work of the LO's that use multiple appraisers. In no way am I somehow implying that yes not only will i bestow gifts upon you, but i will leave the value blank for you to fill in. I am a little confused as to why that was the interpetation of some who posted.

What begat this line of thinking, was yesterday we visited a mortgage sweat shop and dropped off pizzas (definately the cost of doing business, taking care of your clients. If USPAP has a problem with that tell them to sue me or try to run me out of the business. And if any appraiser thinks they are above bringing lunch to your clients or taking care of them at Christmas, then I would question how else are you hurting your business.)......ok so here we are with 40 pizzas, salads, drinks etc., As i said above, no problem, I would fight to the bitter end if I was accused of unethical behavior as a result of this type of action. So taking it further where do you cross the line in taking care of your client? When is it a problem? When is it unethical? Obviously swapping value for volume is unaccepatable. But if you are not comprimising your report is there ever a problem??

Thats where I was coming from, nothing more, nothing less.....

One prevailing theme does seem to be prohibitive. It does feel that it is one of those scenarios in life, that once you start you cant stop or turn around....definately a major issue to consider. Maybe the lunch everynow and then, and taking care of your top producing LO's once in a while is a smarter attack, versus trying to actually quantify the reward in relation to the action.

Thanks again all...

MRM