Dodd-Frank, Interim Final Rule, or GSE Appraiser Independence?

[hastalavista]

I'm looking for the citation requiring that an appraiser be given written notice if he/she is to be put on an exclusionary list by a lender or its agent.

I have PDF copies of Dodd-Frank, the IFR, and the GSE Independence, but I cannot find the specific reference, read them all (not the entire Dodd-Frank... just the appraisal section).

Can someone point me in the right direction?

Thanks!

 

[hastalavista]

Just a follow-up:

I've re-read the documents and still cannot find any reference to requiring a lender or its agent to provide notice to an appraiser when that appraiser is being removed from an appraisal-panel eligibility list.

Maybe there is no such rule and it is just an urban legend?

 

[BRCJR]

Just a follow-up:

I've re-read the documents and still cannot find any reference to requiring a lender or its agent to provide notice to an appraiser when that appraiser is being removed from an appraisal-panel eligibility list.

Maybe there is no such rule and it is just an urban legend?

I think that requirement disappeared in the transition from HVCC to Dodd-Frank.
States seem to be handling this issue when an AMC bill is passed. It does not include a "lender". It is only related to an AMC.

 

[hastalavista]

I think that requirement disappeared in the transition from HVCC to Dodd-Frank.
States seem to be handling this issue when an AMC bill is passed. It does not include a "lender". It is only related to an AMC.

Few AMCs (based on my research) initiate the "do not use" decision. That is a lender decision; the lender instructs the AMC that appraiser X is no longer eligible for its assignments. The AMC does not create the list.

I think you are right that the original notification obligation was HVCC. Interesting that the Appraisal Independence document (which replaced HVCC) didn't include the notification-requirement.

 

[3 Putt]

Part truth Part Urban legend...It is not in Dodd Frank, it is written in by the individual state.

For example...Texas

Sec.A1104.161.AAREMOVAL OF APPRAISER FROM APPRAISAL PANEL.
(a) Other than during the first 30 days after the date an appraiser is first added to the appraisal panel of an appraisal management company, a company may not remove an appraiser from its panel, or otherwise refuse to assign requests for appraisal services to an appraiser without:

(1)notifying the appraiser in writing of the reasons for removal from the company ’s panel;

(2)if the appraiser is being removed from the panel for illegal conduct, a violation of the Uniform Standards of Professional Appraisal Practice, or a violation of this chapter,
notifying the appraiser of the nature of the alleged conduct or violation; and

(3)providing an opportunity for the appraiser to respond in writing to the notification.

 

[hastalavista]

Thanks, Todd.

Here's where I see ambibuity in the way that provision is written (and I'm sure it is written similarly in all states):
The regulation identifies the panel as being the AMC panel.
Lenders are the primary drivers of exclusionary lists (although AMCs can stop doing business with an appraiser on their own as well).
What happens if Citi has an appraiser on their exclusion list, but Chase does not? The appraiser can still get work through the AMC, but not for Citi jobs. Does the appraiser need to be notified?
Then, what happens if Chase stops using the appraiser as well; the AMC will no longer order from that appraiser. But it isn't the AMC's "list", it is the lender. Must the AMC notify the appraiser in that case?

I don't expect anyone to have an answer, I'm just thinking out loud.

Todd- thanks again!

 

[NC Appraising]

NC has something like that. But I'm with you.....I've seen it somewhere else also.



Although the AMC's are tying their best to get it changed as we speak.

 

[BRCJR]

Thanks, Todd.

Here's where I see ambibuity in the way that provision is written (and I'm sure it is written similarly in all states):
The regulation identifies the panel as being the AMC panel.
Lenders are the primary drivers of exclusionary lists (although AMCs can stop doing business with an appraiser on their own as well).
What happens if Citi has an appraiser on their exclusion list, but Chase does not? The appraiser can still get work through the AMC, but not for Citi jobs. Does the appraiser need to be notified?
Then, what happens if Chase stops using the appraiser as well; the AMC will no longer order from that appraiser. But it isn't the AMC's "list", it is the lender. Must the AMC notify the appraiser in that case?

I don't expect anyone to have an answer, I'm just thinking out loud.

Todd- thanks again!

From Virgionia AMC statute:

7. Allowing the removal of a real estate appraiser from a list of qualified appraisers used by any entity without prior written notice to the appraiser.The notice shall include written evidence of the appraiser's illegal conduct,substandard performance, or otherwise improper or unprofessional behavior or any violation of the Uniform Standards of Professional Appraisal Practice or licensing standards for appraisers in the Commonwealth;

I read this as it is, in Virgina, the AMC list to manage and control.

So if a lender says you cannot use appraiser x anymore I think the AMC must disclose that fact to an appraiser.

I do think an AMC would have "regional", based on geo-competency, approved lists, but not "lender" approved lists.

It is up to the AMC to provide an approved panel for assignments and it is not to be influenced by lenders.

In a perfect world, of course..........

 

[hastalavista]

I do think an AMC would have "regional", based on geo-competency, approved lists, but not "lender" approved lists.

There are lender-exclusion lists.
One can be fine with, say, Citi but be off of Chase's list.
An AMC that does business with both could use the appraiser for Citi but not use him/her for Chase.

If I were writing the law, I'd require the decision-maker to notify the appraiser.
So, if it were the AMC, it would tell me.
If it were the lender, it would tell me.

In one aspect, it would be better to be dropped by a lender rather than an AMC (presuming the AMC has more than that one lender as a client).

Further, if the law is such that the originator must state the reason for exclusion, it would be difficult, say, for Citi to tell the appraiser
"You are off of our list because Chase through you off of their list".

 

[Adios]

Thanks, Todd.

Here's where I see ambibuity in the way that provision is written (and I'm sure it is written similarly in all states):
The regulation identifies the panel as being the AMC panel.
Lenders are the primary drivers of exclusionary lists (although AMCs can stop doing business with an appraiser on their own as well).
What happens if Citi has an appraiser on their exclusion list, but Chase does not? The appraiser can still get work through the AMC, but not for Citi jobs. Does the appraiser need to be notified?
Then, what happens if Chase stops using the appraiser as well; the AMC will no longer order from that appraiser. But it isn't the AMC's "list", it is the lender. Must the AMC notify the appraiser in that case?

I don't expect anyone to have an answer, I'm just thinking out loud.

Todd- thanks again!

Todd is correct. But as a practical matter a lender or AMC cannot manage 56 different policies. So policy and processes need to be standardized. It is also just good business practice. And a lender or AMC must be able to defend their decision to regulators. If they don't have a fair and transparent process they put themselves at risk.