Definition of client

[MARKETVALUE]

Wanted to get a group reaction on an on going question around here. If I'm not mistaken, the client is defined two fold; 1. Who orders the assignment, and 2. Who pays for it.

So on deals that we collect at the door, who is our obligation to? Mortgage company or Homeowner or both? Can we legally discuss the aspects of the appraisal with the homeowner if they inquire, IE value etc..?

I dont want to banter the symantics of even involving the HO in the process but I am looking at it more from a confidentiality stand point.

Let me know what you think

MRM

 

[Shannon]

Dear MRM:

I think it depends on what you define. I've looked through USPAP 2002 and think the only part that applies is AO-10. Here's the link to that tow page opinion:

http://www.appraisalfoundation.org/html/US...PINION%2010.htm

I don't know if you'll have to paste this link , or if it fits.

I have also heard discussion that goes, "If they pay for it, they're the client." I don't agree, and I explain that to homeowners with COD appraisals. Look on the NC Appraisal Board's FAQ about giving out copies.

http://ncappraisalboard.org/FAQ.htm

Hope this helps.

Regards,

Shannon Julian
Chapel Hill, NC

 

[Neil (Texas)]

Re-read the USPAP. The client is NOT identified "two-fold." According to USPAP, the act of engagement estalishes the appraiser-cleint relationship. NOT who pays for the appraisal.

USPAP 2002 Edition, Definitions, Page 2

Quote:
CLIENT: the party or parties who engage the appraiser (by employment or contract) in a specific assignment."


USPAP 2002, FAQ, Page 34

55. IDENTIFICATION OF THE CLIENT

Question: Who is the appraiser's client?

Response: The client is the party or parties who enage an appraiser (by employment or contract) in a specific assignment. It is the engagement for an assignment, not payment for an assignment that establishes the appraiser-client relationship.

56. PAYMENT BY A PARTY OTHER THAN THE CLIENT

Question: I am a certified general appraiser whose practice includes both residential and commercial appraisal assignment. Recently it has become very common for my "client" to require me to pick up the check for the appraisal fee from the borrower. This takes place in both residential and commercial assignment. Since I am being paid directly by the borrower, does he become the client?

Response: No, USPAP defines the client as;

The party or parties who engage an appraiser (by employment or contract) in a specific assigment.

Comment: The client identified by the appraiser in an appraisal, appraisal review, or appraisal consulting assignment (or in the assignment workfile) is the party or parties with whom the appraiser has an appraiser-client relationship in the related assignment, and may be an individual, group, or entity.

The act of the borrower or any other entity paying the appraiser does not make them the client under USPAP. However, state laws could take precedence over USPAP in this situation. Therefore, you should contact the pertinent jurisdictions to ensure that USPAP is not in conflict.
End of Quote.

 

[MARKETVALUE]

Neil,

Very insightful answer. Looks like it is real cut and dry.

Thanks!

MRM

 

[Ben Vukicevich SRA]

MRM,

Here's one I came across recently and I still referred the borrower to the lender for a copy of the report because I'm not messing with it nor do I want to think that hard.....about USPAP. I just gave him a big sermon about how important USPAP was to life on planet Earth and told him to have the lender forward a copy of my emailed appraisal to him which solved the problem.

Scenario: Homeowner is using an internet lender. Internet lender does not care who performs the appraisal and leaves the engagement of the appraiser to the borrower, who must also pay for the appraisal. The borrower must forward all "paperwork" for loan approval which seems to be the price they pay for the lower rate offered by the internet mortgage companies-the borrower does a little loan processing to save on the interest rate. There is no contact between the appraiser and the lender via phone, fax or email. Borrower forwards name and address of the lender/final destination of the report to the appraiser so the report can be emailed.

OK, USPAP gurus. I know who the lender is. But who really is the client; the homeowner or the lender? I would say the homeowner as I've had no relationship with the lender. And I don't want to hear about borrowers not being able to engage the appraiser directly because that's for FRT's and this is not an FRT. It's never cut and dry. Maybe we need another USPAP opinion.

So on the URAR in the Lender/Client Line, I would place: the Lender's name followed by Mr. Homeowner's Name-the Client, then the Lender's Address to be USPAP compliant. USPAP gurus, how's that look? What a misleading mess that is....................I'm glad the guy believed my USPAP sermon, didn't question it and went away-to bug the lender for a copy of the report.

Ben

 

[Ray Ohler]

but in all likelihood, won't. You said you were engaged by the borrower. Fine. He/she is your client. Now, no one is probably going to like this but here is what I believe is the proper way to comply with USPAP and CYA. A. You should have, in your workfile, a letter (at least a short note) from the borrower indicating that they are aware that although they paid you directly, the appraisal report will be addressed to the lender for the intended use stated in the appraisal (this case - mortgage financing). If they wish to receive a copy, they are to obtain it from the lender.
B. Also, request that the "mortgage company" (a lot of internet "mortgage companies" are nothing more than go betweens so you might run into a problem here) send you a fax authorizing you to address the appraisal to them along with their requirements for an appraisal "package".

NOW, probably ninety-nine times out of a hundred there won't be a problem, either now or in the future. HOWEVER, if there are any problems (i.e., mortgage company couldn't place the loan in time for the guaranteed interest rate, problems with report or attachments, etc.) everybody starts screaming and somehow YOU fouled the thing up. Like I said, if you have everything in writing (which may be a royal pain in the a** to get) at least YOUR bases are somewhat covered. Before anyone screams at me, read the FIRST sentence in THIS paragraph -
NINETY-NINE...

 

[Anonymous]

<<I have also heard discussion that goes, "If they pay for it, they're the client." I don't agree, and I explain that to homeowners with COD appraisals. Look on the NC Appraisal Board's FAQ about giving out copies.
>>

What USPAP or the state said about who is or is not the client does not mean squat. It is what a JUDGE says. I cannot reference because I cannot recall the source of that...perhaps the Appraisal Journal which publishes abstracts of appraisal related court proceedings. A judge did rule that the borrower paid for the appraisal and therefore had a vested interest as a CLIENT. If similar rulings occur it will become case law and that means USPAP will be null & void on the issue. They have been overtaken by events before (see the missing sections in USPAP 2002)

 

[Ray Ohler]

employed. That is one reason for me personally getting as much as I can in writing. I don't do that much mortgage work anymore but come across one here and there. Now, to REALLY shake it up, WHAT jurisdiction has jurisdiction? The state where the appraiser is located (and PROBABLY the subject - but maybe not)? Cyberspace where the "mortgage company" is located? OR, the state where the lender (funder of the mortgage) is located? OR, ALL of the above. Then again, it probably will not ever NEED to be answered. :lol:

 

[Ben Vukicevich SRA]

Hey Ter.

Finally someone who understands USPAP for COD's!! All that "client confidentiality stuff" on residential appraisals is nothing more than a USPAP cave-in to the lenders. Lender A engages the appraiser but the fee is COD. The borrower gets mad at Lender A because of last minute rate changes, whatever and changes to Lender B who has more favorable terms. We (appraisers) cover Lender A's attempt to rip-off the consumer by citing "lender/client confidentiality." Sorry Mr. Borrower although you paid for the report, you can't have a copy. Lender A will not release the report to Lender B just to make it miserable for the borrower, to make the borrower cave-in to Lender A's last minute antics or to make the borrower pay for another appraisal with Lender B hoping it can't be completed before the closing date which is usually in short order. Anything to keep the deal at Lender A at Lender A's terms. If the appraiser releases the report to Lender B, Lender A files a USPAP violation with the state. It's a good racket for the lenders. Not good for Mr. Consumer.

So all USPAP does is increases Lender A's chances of closing the loan at the last minute at terms that are not favorable to the borrower, with the appraiser's blessing/complicity, of course.

I've seen it happen too many times, especially with B/C lenders. I never have any problems with "A" paper lenders......then again the appraisal fee is usually not COD for an "A" paper lender.

Ben

 

[jtrotta]

MRM - why so bashful of your real name :?:

Neil, pretty much got ya covered; but also you should check "your" state law & regs., ours is specific to the homeowner who is entitled to a copy

whats your states take on it :?