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For the regulator types.

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Lawrence R.

Thread Starter
Senior Member
Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
Calling all USPAP Gurus

If I complete, date and sign a report--and submit it to the client for thier use--and they call me back and ask me to make changes, how many reports do I now have "out there"?

Here is a scenario...

You make the mistake of doing a report for a broker or someone. You make a grievous error. They send it to thier lender who for whatever reason decides not to do the loan. They send it to lender number 2, and they ask you for more info, a new comp, and they ask you to correct your grievous error. You do, submit a revised report and the loan closes.

3 months later, you get a call from your REAB, and they have the original version of the report--WITH the grievous error in it, and want your head on a platter.

Can you then say, hey, that isn't my report, I fixed that error and sent it back out?

Remember, there were technically 2 different users, even though you only had one client.

What do you think would happen, and what do you think SHOULD happen?
 

USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
THis is not USPAP advice....this is personal advice.

If a mistake is discovered I would correct it along with a letter of explanation to the ORIGINAL CLIENT.

I would NOT make changes for lender 2 or 3. They were not your client.

Leave the old report in the work file and place the correct version in the same work file along with a copy of the letter that went to the original client.

That is the END of that assignment. If lender 2 or 3 want another appraisal report, it will be anew assignment and you are free to charge what you like.
 

Lawrence R.

Thread Starter
Senior Member
Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
THis is not USPAP advice....this is personal advice.

If a mistake is discovered I would correct it along with a letter of explanation to the ORIGINAL CLIENT.

I would NOT make changes for lender 2 or 3. They were not your client.

Leave the old report in the work file and place the correct version in the same work file along with a copy of the letter that went to the original client.

That is the END of that assignment. If lender 2 or 3 want another appraisal report, it will be anew assignment and you are free to charge what you like.

Thanks..this never actually happened to me, nor would I do this thing this way...I was just envisioning a scenario where a "dead" report was considered "live" and was wondering what USPAP, or anyone had to say about this.

We are assuming for the sake of this argument that the appraiser wasn't aware of the error until the 2nd lender asked for a correction. Let's assume that the appraiser isn't even thinking about lender #1. This report was done for a MB, who is the client. They are "pretending to loan" the money, so they are also the lender on the report. They are going to sell it after "they" "fund it". So on the report ABC mortgage is the lender and client.

We are assuming that lender one was out of the picture, not a player on the loan, and when we were made aware of the error, we fixed it for the current lender.

This sort of gets convoluted, which is part of the problem with MBs in the first place. I am not sure if I am articulating this right...but the heart of it is this...

What would happen to an appraiser if the "dead" version of the report ended up in the hands of the board?
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
This happened to Ray Miller and the State of Wisconsin are still trying to burn him at the stake.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Thanks..this never actually happened to me, nor would I do this thing this way...I was just envisioning a scenario where a "dead" report was considered "live" and was wondering what USPAP, or anyone had to say about this.
I can say these things take on a life of their own. That is why I always have preferred paper copies of report and why I don't do secondary market. I have one mortgage client. If they give the borrower a copy and that borrower goes to lender #2 who then calls me, I inform them that they are not my client, I have completed the report, and I have no intention whatsoever of establishing a relationship with them. I do not owe them a new report. Its not because I don't like business. It is because I don't like the risk and see only risk in dealing with MB. 80% of complaints to our state originate in secondary market loans.
Further, the secondary market by passing such reports around are extending your liability to other parties.
If I find a serious error, even if 3 years down the road, I correct it. I am not going to correct spelling or slight differences in sketches. (I am working on a commercial building I did 5 years ago and found a descrepancy in my parking lot measurement and new flood maps changed the site into In instead of Out of the flood zone. So? Did my memory fail and was additional parking area built? Maybe. I don't know.)
With the corrected copy I will report to the lender that they should replace their copy with this copy and return or destroy the copy they have. If it is a local bank (and 99% of my work is) I will personally take a copy to the lender and exchange it in person if possible. My new report will note that a revision was made and when and why.
You are dead meat before our state board if you cannot explain why a report differs from theirs.
Most mistakes don't affect the final outcome but when they do, it can be an unhappy time. USPAP babbles on about no one expecting perfection but in reality, they do expect you hit the bullseye every time...just not the exact same hole in the bullseye.
 

William K

Senior Member
Joined
Sep 21, 2007
Professional Status
Certified Residential Appraiser
State
Illinois
I would think most Boards upon receiving the complaint would ask for a copy of the work file with all copies of the report and information submitted to your client (MB). This would clear up the matter of the "different" reports if you kept your files properly documented.

I understand your question and I think the issue really is :

IF YOU MAKE A MISTAKE AND THEN THRU EITHER YOU OR YOUR CLIENT FINDING THE ERROR YOU CORRECT IT WILL YOUR BOARD STILL DISCIPLINE YOU?

I feel every appraiser out here who has been appraising for any period of time have reports that they hope don't end up with their appraisal Board due to an error that may have been made which ended up being corrected.m2: The good appraisers have fewer of these and they also tend to keep good records of when it happens should they need to defend themselves. Maybe someone has had this happen or maybe a board member has seen this come accross and can post what has happened in these cases?

GOOD QUESTION / SCENARIO!:clapping:
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
First hand experience. Once a report is sent it out there for the world.

I have sent out reports that might have an error or two, the lender has call and advise of the problem. One that comes to mind is a clone, file RM-2001 (which I don't do any more) had the house built in 2006, but in the grid I showed the age as 45-e/86-a. I did not change the 2006 date to the 1920 date it was built. When the lender called I sent out a second report RM-2001A note it was a revisied file and the date of the revision. If it had been for a second lender it would have had a different file #. The 2006 date did not affect the value. But it is still an error. :nono:

Now on two of my files that I revised the state of Wisconsin ask for my work file. I send them the orginal and the revisied files. They discounted the revised file with the correction and are acting on the original file that had the cloning problems. Couple this with one or two other cloning errors that did not affect value. To the state it shows a series of errors that mean that I am not Competent to do appraisals because there were mistakes in the original file reguardless of the reasons, never mind I sent in a corrected report. In two of the complaints they are using the original report.

I have learned some hard reasons in the past year. Never clone a report, reread your reports several times, never let anyone else pull data and enter it into the forms. Reguardless of how it happen on why, I am still responsible for the correctness of the report both the original and the corrected copies.:huh:

Now all of you reviewers out there that are looking to bury an appraiser, to dismantal a report and not judge if the information supports the value. Just remember that some day you could have a simple problem that seem like a little fish, but can become a whale. That some other appraiser may be waiting to give you a GI bath. How many can say that their appraisal reports are perfect and will agree with everyone who reads it????? :shrug:
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Larry-

I do not see this as a USPAP issue per se.
Perhaps you should title this "Calling all Regulators" and get feedback from Oregon Doug, Frank G. or Brian W. (any others I missed, I apologize)?

It seems to me that there are several issues to consider:
A. Who was harmed? (in this case, I assume no one since the loan did not go through with client A and was the appraisal was corrected for client B)
B. What was the level of error?
C. How was it caught, how was it corrected, and what is the likelihood it will occur again?

I think these are all regulator enforcement considerations.

Good luck!
 
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Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
I made a "grievous" error once. Luckily, it was before licensing so the OREA was not involved. I received an appraisal order for a parcel of land from a hard money lender that would be brokering the loan to a 3rd party. When I looked it up, there were two parcels, identical in size and both with the same address. I called the broker and asked which 10 acre parcel the property consisted of. He provided me the APN, which, I discovered AFTER I sent in the report, was the wrong parcel. I corrected it and sent in a new report.
Unbeknowest to me, the dishonest broker sent BOTH reports to the 3rd party lender. Believing the loan he was making was secured by two, 10 acre parcels, he funded the loan. The buyer defaulted and the lender foreclosed. He was happy to get the property back. (he was a "loan to own" lender.) However, the title company informed him his loan was secured only by ONE, 10 acre parcel. He sued me and I lost. My E&O carrier picked up the tab but made it difficult for me to get new insurance for a few years. The dishonest broker was also sued but threatened bankruptcy. I had the "deep pockets" with the insurance.

There were other issues but that mistake was costly! We were in litigation for 5 years including appeals.
 
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