Exposure Draft USPAP 2018-19 - Appraisal Foundation

[Terrel L. Shields]

My "draft reports" are not unsigned. My "draft reports" simply recognize that this assignment will likely need to be revised as information is exposed. Just finished one. The legal was unclear. One the surface it looked like 30 acres plus "part of Lot 1"... well, no one knew what "lot 1" consisted of until a surveyor figured it out...Turned out the real legal was part of several lots and the total acreage as 311...we were thinking maybe 70. The O G lease legal was simply incorrect. The deed was unclear and in OK a mineral interest has no assessor card because they are not assessed and taxed that way.

 

[George Hatch]

Many words and terms in the English language have different meanings, dependent upon context and user. Hence the never-ending discussion of PUDs. The confusion lies in the effort to apply one meaning of the term to a situation where a different meaning of the term is required. Why this is so confusing is a mystery to me. Yet, it happens.

George, you know better than most that you can't legislate or regulate morality. If someone is going to lie, cheat, or steal, they are going to do it, regardless of consequence. You oft proclaim that USPAP is a principles-based document, but your argument on this issue is entirely rules-based. The efforts to apply a state's definition of a report to a discussion of USPAP and its definition of report is no less appropriate than trying to assert that a property's location within a PUD zoning district requires that the PUD block be checked in a URAR. That is wrong and to emphatically repeat that it is correct is unbecoming.

Draft reports are not acceptable for some intended users and some intended uses. For other intended users and intended uses, they are a business necessity. You can't disrupt the businesses of some because you fear the consequences of misuse by others.

I never had a problem with the USPAP-driven disruption of the undocumented comp checks or contingent fee assignments or letter-opinion-of-value practices that were once so prevalent in the business. Bad habits of the past is no justification for their continuation, let alone legitimization.

Even if I was inclined to offer special protection for some other outmoded appraisal practice, why would I do it for such a small group of appraisers to the exclusion of everyone else? And especially, why would I do it to accommodate the freaking lawyers, no less?



I would say that an example of "rules based" thinking is clinging to the idea that a report will (or can) only occur at the end of an assignment when we know for a fact that's not how it works for any appraiser in real life. EVERY appraiser has had the experience of submitting more than one appraisal report for an assignment.


I would also say that if a relatively small group of appraisers are currently submitting unsigned appraisal reports ( which all contain factually inaccurate references to the actual intended users and the actual intended uses of those communications) now in violation of USPAP then that doesn't establish some high moral ground towards which USPAP should adjust. Given that the widely acknowledged intent of using those labels is to prevent the other intended users of a subsequent report from understanding the true process that the supposedly unbiased appraiser used to produce that subsequent appraisal report doesn't exactly strike me as a mode of appraisal practice we should even condone, let alone make changes to USPAP as a means of legitimizing it.


I really can't think of a parallel situation where the appraisal profession actually encourages appraisers to *actively* participate with their client in obscuring from the other users of an appraisal report the extent to which the client influenced its content.

Perhaps you can think of such a parallel. If so, I'd love to discuss those situations. If you can think of some way to legitimize these changes to reporting requirements "for some situations but not for others" that would be consistent with the concepts and principles I'd be open to discussing that as well.

 

[hastalavista]

BTW, everyone should feel free to substitute "UAD-compliant URAR" or any other type of appraisal report for any other type of user for my references to the 120pg narrative and the attorney client because regardless of who/what there are otherwise ZERO differences in the actions and expectations for the competency and impartiality that are involved.

(my bold)

The idea that lenders are going to start ordering "UAD-Compliant URAR" reports as drafts is not in the cards. Not remotely. And the exposure draft doesn't open the door to that happening. Not remotely.

 

[George Hatch]

So you're saying that you don't recall hearing of clients calling appraisers up and asking them for comp checks or instructing appraisers to give them a heads up if value was coming in short or tossing appraisals they didn't like so they could shop around for the bigger and better deal? And that you can't imagine FHA numbers being issued - from the defensible position - after the lender has received an advance unsigned copy of an appraisal report with a favorable result?

You cannot imagine an appraiser responding to a complaint about an appraisal report by issuing a new report that surplants and nullifies the previous report on the basis of "THIS is the last report at the conclusion of this assignment" ? Leaving the state with no basis for proceeding. 'Cause if I can think of any of these possibilities - and more - well in advance of it being enabled then it's my assumption that some of these donkeys will be capable of seeing it later after the avenue is opened to them. I aspire to refrain from underestimating the intelligence or resourcefulness of other appraisers.


Now I clearly don't know what WILL or WON'T happen, but I can readily imagine that at least some lenders will take advantage of any such changes to request things like this from appraisers and I can also imagine appraisers acquiescing on the basis of it not being prohibited. You know, the same way some people are saying that USPAP currently allows for unsigned appraisal reports to be transmitted to the client so long as its prior to the conclusion of the assignment and on the basis of it not being explicitly prohibited in USPAP.

We know what kinds of violations have occurred in express violation of the existing rules. What we cannot know is the extent of conduct that conflicts with those rules that we avoided as a result of prohibiting them.

I think it's shortsighted to completely ignore how the lowest common denominator will use such rule changes to their benefit or to say they won't exercise their alternatives if/when the circumstances arise. People doing bad things directly in violation of the existing rules is bad enough. Enabling them to do the same thing from the defensible position and on the legitimate basis is arguably worse.

And I think it's especially shortsighted to do it for the purpose of kissing the legal profession's *** and in furtherance of their win-at-all-costs client advocacy.

 

[Ken B]

Comp checks aren't prohibited by USPAP. They never were and they never will be.

Unless USPAP starts prohibiting appraisers from providing appraisals, that is.

 

[George Hatch]

Touche. I used a common term of reference to a familiar form of subtandard practice involving substandard development and near-complete lack of reporting, disclosures or workfile retention.

It's similar to if I was using the term "draft" to describe something other than an appraisal report.


Good job. In fact, I can use that line to similar effect:

Drafts aren't prohibited by USPAP. They never were and they never will be.

Unless USPAP starts prohibiting appraisers from providing appraisal reports, that is.

Can't have it one way for comp checks and another way for drafts, amigo. Which is very much the point.

 

[Ken B]

Well, there you go again.

A comp check is the assignment. Upon delivery of the comp check, the assignment is complete.

A draft report is a preliminary communication. The assignment is on-going after delivery of the draft report.

It's pretty simple, really. Like most truths, explanation does not require lengthy diatribe.

 

[timd354]

Let's get down to the nuts and bolts.



Please discuss this information relative to the current Exposure Draft, report certification requirements, and rules of discovery. I would particularly value commentary from any current or former attorneys on the matter.

There is a legitimate need for appraisers who are hired as expert witnesses for litigation to be able to deliver draft reports to the attorney that hired them. This is because under the federal rules of civil procedure (see FRCP rule 26), the draft reports of expert witnesses delivered to the attorney are not subject to discovery while the final reports from expert witnesses are subject discovery.

 

[Peter LeQuire]

There is a legitimate need for appraisers who are hired as expert witnesses for litigation to be able to deliver draft reports to the attorney that hired them. This is because under the federal rules of civil procedure (see FRCP rule 26), the draft reports of expert witnesses delivered to the attorney are not subject to discovery while the final reports from expert witnesses are subject discovery.

...in which case, watermark every page of the report "Draft", provide the mandated signed certification, make a .pdf copy and store it where you store your other electronic stuff. Problem solved. Why revise USPAP?

 

[DWiley]

There is a legitimate need for appraisers who are hired as expert witnesses for litigation to be able to deliver draft reports to the attorney that hired them. This is because under the federal rules of civil procedure (see FRCP rule 26), the draft reports of expert witnesses delivered to the attorney are not subject to discovery while the final reports from expert witnesses are subject discovery.

OK, but how does that necessitate a need for a USPAP change? As I noted, I have delivered drafts to attorneys before, and they were not subject to discovery. But, under the laws of my state I still had to retain copies in a workfile. No conflict there at all. So, why the need for change?