Jim and others
I think we are speaking to two different issues.
The first issue is whether there is a confidentiality issue with an appraiser reporting to a state regulatory board what you believe to be bad work product that you reviewed for the original client who received the product. In this case, I see no problems with this from a confidentiality issue unless your client has specifically asked you not to report, and even then, I do not believe that USPAP is the legal vehicle under which you could be held accountable. In other words, assuming that you received the work product in the normal course of your business, and you believe it needed to be brought to the attention of the regulatory board, you are not violating confidentiality issues under USPAP. I think John's post expressed the reasoning very succinctly.
The second issue is regarding the basis for turning in the your peer. If you accept the responsibility of turning in a peer, you can and should be held accountable for your action. I think you would agree that any allegations should not be frivolous, or generated by business concerns (turning in the competition). I would also suggest that in expressing your opinions regarding another appraisers work product, you are providing what you believe to be a professionally competent opinion as a fellow appraiser. In other words, your opinion should be in accordance with Std 3, that is to say it should "correctly employ those recognized methods and techniques necessary to develop credible appraisal review opinions and also avoid material errors of commission or omission. " (USPAP 2002 Std 3 lines 1118-1120).
In my opinion, turning a fellow appraiser into a regulatory agency for what you believe to be a faulty work product should require the highest level of professional diligence by the appraiser making the allegation. The basis for the allegations (your opinion) should not be merely based on what you believe the appraiser might have meant. It should not be a mere difference of an opinion that you do not find credible, but you should be able to point to actual misrepresentation of facts that are substantive in the analysis. You should also be able to cite specific sources as the basis for what you believe to be inappropriate technique or methodology and you should be able to prove (not just support) all of your allegations.
Many reviews accomplished for lender clients fall way short of this level of diligence. Stated differently, the scope of the review for lending work should be viewed as something far less than the scope of a review for presentation to a regulatory agency.
If the scope of your review is insufficient to adequately determine the underlying basis for why you disagree with someone else's work product are wrong; you are not doing competent work. Since in the course of normal lending work, we seldom get to review work files or discuss the issues with the appraiser, it would be very difficult to fully obtain a sufficient understanding of why someone else thinks the way they do. Therefore, turning someone merely on the basis of a lending review unless there are factual errors is a very risky business. If you can find factual errors (made up comps or incorrect assertions of zoning or incorrect property history ) ok, but disagreeing with comp selection and adjustments are largely judgmental issues. As a professional, you should be held accountable for a poor review product much in the same manner as if you did insufficient analysis to determine a highest and best use or in selecting poor comparable.
In summary, if you are going to argue that a peer should possibly have his license is reviewed, you should be damn sure you are 100% correct. Otherwise you are taking on huge risk. I am not saying you should not turn in fraudulent work, just that you need to be certain that you can prove the allegations.
The thrust of my prior post was to point out that I believe that there is a difference in the obligations regarding the scope of work we appraisers have when doing a review for lending work as opposed to the review which provides the basis for an allegation before a regulatory agency.
I have often posted on the problem with states, such as North Carolina, Kentucky and others who allow their investigators (and other fee appraisers they hire to testify) to do so without doing Standard Three reviews, is just this issue. By not acknowledging the a requirement to meet professional standards, they can just say something is wrong without providing any basis for the disagreement, much less proving it. In short, they cleverly shift the burden of proof in the formal legal proceedings to the respondent, not the legal counsel. In short, becomes a witchhunt. You have the choice of accepting the verdict of guilty, or spending thousands of dollars to defend against vague allegations of wrongdoing.
Such states argue that the board members are experts and can make such determinations based on just "facts". Those of us who regularly attend the NCAB know that this is not the case. For the most part, the sitting board members are well intentioned but they are not blessed with any exceptional insight or knowledge of the appraisal process, techniques, methodologies or theory. In fact, the opposite is true. They seldom refer to USPAP during a hearing except to extemporaneously misquote portions of the documents, they have never referred to a basic appraisal text in any hearing I have attended, and they presume that they way they do (or did) appraisals in their practice is the correct (and only correct way) to accomplish the task.
Accordingly, the board members and staff have made some outrageous comments regarding typical appraisal practice. Further, the investigators often argue differences of opinions or misrepresent what the appraisers opinion is since they never discussed the issues with the appraiser at any time prior to the hearing.
In fact, in the State of North Carolina, an appraiser often gets to a formal hearing without ever having an investigator or other expert witnesses review his work file or verbally discuss the merits of the case as fellow appraisers. In fact, in the State of North Carolina, the investigator (who is an appraiser) will deny that he is using any appraisal expertise in the scope of his investigation. The "expert witnesses" at the hearing may never have read his work file or discussed the merits of the case. The whole system is set up so that the investigator and any expert witnesses have no responsibility, no accountability for misleading statements or misrepresenting incorrect information. In the one instance in which it was shown that there "compelling argument" that the investigator and expert witness provided misleading information, the NCAB dismissed the charges against the investigator merely because it could not be proved that he deliberately lied.
As professionals, we should expect the highest level of diligence from our regulatory agency. What the State of North Carolina does is the exact opposite.
Regards
Tom Hildebrandt GAA
