FIRREA ?

[larryhaskell]

Had a request to retype a report because the borrower was changing lenders. Whenever this happens I always get permission form the first lender. In this case, the lender agreed to release the appraisal but said it was irrelevant to the bank since FIRREA in 1989. Most of our clients are willing to release appraisals in these cases but generally want to make sure they get their appraisal fees covered. Just curious how some of you handle this situation. I would feel uncomfortable retyping a report without permission from the first lender.

 

[cebo]

I do the same thing. Some aren't happy but comply with my request but most all comply. Lenders are not required by law to change the name of the client, but most have policy requirements on this. I've been told that this primarily to get around legalities.

 

[Farm Gal]

Larry:
Based on my in class discussions with MR. Danny Wiley ASB Chairman a month ago in Hawaii, further details are in an old post cant recall when.... I cited time day date, and location and have other witnesses names and numbers from the class roster...

You can in fact do a NEW appraisal for the NEW client, with the original effective date, and a new signature date.
or better yet:
You can suggest that the homeowner gets the copy of the report that the lender HAS to give to them (and stay out of the middle entirely). Yes as per FIRREA, the 'new' lender CAN use the report.

All this was news to me, but hearing it from relaible sources in front of many witnesses means I am comfortable with this news. I will try to find the old post where others (including USPAP instructors) chipped in with opinions and other source documents.

Fraid for now you'll have to take my word on the matter or search through my old posts of which there are lots... try looking for search word "Danny Wiley"... or "Stephanie Coleman"~

Regards,
Lee Ann

 

[Steve Owen]

Larry, I always get permission in writing before changing the client. I also make a notation in the report that it was originally prepared for a different client and was changed at that client's request. I believe that if you do not do that, it might be considered misleading.

However, banking regs allow a different entity than the report was prepared for to use it in most circumstances without any requirement for readdressing. The rules do not allow for a lender to use a report that was prepared for an individual; only one that was prepared for a different bank. I always tell them this and sometimes it eliminates the request for a retype.

 

[Richard Carlsen]

I absolutely never, ever ask a client if I can redo or change their report in favor of someone else. I consider that bad business ethics. If the new bank wants the appraisal, they call the owner of the report (my client) and request that it be released. The owner of the report sends me a fax releasing it and we redo the report in the new bank name for a small fee.

IMNSHO, asking a client for permission to change the name on an order is a very poor practice. You are just libel to catch your good client on a bad day and this could well tick them off resulting in you loosing business. Besides, it takes time to make the calls and all of the coordination. Time is something which we don't have an over abundance of these days.

 

[Mountain Man]

I am like Richard. I do NOT get in the middle of things and call my clients for a release. I tell the HO to get their LO to fax it to me.

 

[brunge]

I concur with the last 2 responses. Let the second client contact your original client. They can then forward a copy of the release to you. Why put yourself in the middle. You might come across as asking for favor from them, or inconveniencing someone. That’s not worth $50 or $100 or worse: falling out of grace with a source of revenue.

 

[bradellis]

Guys,

Pay attention to LeeAnn. She has it quite right.

Once you have finished and delivered your report to the client, you are done.

Next client calls you to do the same house- have at it.

Different intended users=different assignments.

I know it is hard to swallow after being taught these many years that you owe this allegiance to the first client.

We are not the gate keepers on fights and competition between two lenders.

Brad Ellis, IFA, RAA

 

[Austin]

Brad: What you say may be true if the client is a lender, but if the client is a private individual I think you may have a problem. For example: I hire you to appraise a property so I can negotiate a favorable price. You hand me the report and the seller of the property in question wants to know what you told me so he can counter negotiate the offer. You do the same appraisal for him thus selling out barganing position. This is a clear violation of confidentiality. Different intended user here does not = different assignment.

 

[Steve Owen]

Austin, this is one of those grey areas that exist because of the nature of the world (not necessarily because of USPAP, although it does play a role).

The question here is whether the intended use has been fulfilled. If it has, then Brad is quite right, it is perfectly okay to appraise the property again. In the example you give, it would not be okay IMHO.

Now, the real question in my mind, in relation to the original question in the post, is: if the first client's deal fell through, has the intended use been fulfilled?

This is one of those areas where good appraisers are going to use great discretion to try to avoid doing anything unethical. And, it is also an area where those few shoddy operators out there are going to give the rest of us a black eye.