Getting Sued

[JENIFFERW]

I agree with Webbed. Someone saying they are going to sue you is a LONG way from it actually happening. I used to be a cop and was threatened with that on a daily basis. My standard response became, "take a number". No one ever actually did sue that said they would in 9 years time. I really doubt any attorney would take that case (I didn't get my loan because the appraiser didn't hit the number and I want my appraisal fee back), but you might get a small claims or a complaint filed against you though. Who knows with the current climate.

I would also agree though that if REO's were driving the market, they should not have been ignored (assuming that was the case). If your appraisal was no good, maybe the morally right thing to do is give a refund. Not because you did or didn't hit a target value, or because the loan did or didn't go through, but because you did a poor job that you can't defend (if that was the case).

Pick your battles wisely. Sometimes the course of least resistance is best, sometimes not.

 

[PropertyEconomics]

I am going to go against the grain here but I must ask a question first.

Who paid your fee and how did you collect it? If it came from the lender .....
I would ask the loan officer to have the President of the Company write me a letter, and yes it must be a letter on company letterhead and it must be sent via USPS preferrably certified ... explaining the situation to me and telling me they are being sued by a borrower for an appraisal fee. I would also ask them to put in the letter that they are releasing you from any liablity regarding the appraisal report you did and they are requesting your cooperation in helping settle this matter with their borrower.
IF you get that letter, I believe you have a business decision to make and the one I would make is to return the fee. I would do this not because I was wrong, and not because I feel an obligation because the loan did not go though ... but I would do this because sometimes it is best to make things go away than to let other alternatives happen.

The borrower could sue you (and it appears you may have an indefensible appraisal report ... which by the way you are already married to), the lender could black list you on MARI, and / or you could be turned into the state (and it appears there may be some serious issues with your appraisal report from what you have said).

Im sure many will disagree with my thought process, but I have spoken to a member of the Appraisal Board Compliance Committee here in my state and he has indicated to me that about 90% of all complaints sent to our state would never have occurred had the fee simply been returned or atleast partially returned. The decision is yours .. but honestly the time necessary to answer a complaint, to foster more business from this client (if they were a good client to begin with) and the good will that can be done by the simple act of returning the fee or a portion of it may pay huge dividends for you. Would I be happy about returning the fee NO. Would I return it because I didnt hit the value .. NO. This is purely a business decision. If you wish to see if they will split the fee with you .. then by all means make that offer to them and that is probably the route I would go first. I would ask them to put that in a letter too .. that they agree to return one half of the fee if you will return one half of the same fee.

I just sometimes think its better to kill the issue early than to let it continue.

Just my $.02 which you can pay attention to or not .. again .. the choice is totally yours.

 

[Midwest Guy]

Tim has perfectly articulated my thoughts.

Give the money back and hope this goes away. I wonder what the listings were in March.

I am not sure you did perform the service you were asked to do. The market was in a deep spiral long before March, long before LAST March. You are paid to show the market as it is on the date of appraisal. You did not account for the national housing crisis. How old were the comparables, did you mark declining Market on the report. Did you make negative time adjustments?

I think you should refund the money, not because you did not hit value, but because the report was not credible (just a guess) and you did not provide the service you were hired to do. Call it a defective product refund.

If i were that homeowner, I would have a copy of that report and turn it into the state.

 

[PropertyEconomics]

I am not sure you did perform the service you were asked to do. The market was in a deep spiral long before March, long before LAST March. You are paid to show the market as it is on the date of appraisal. You did not account for the national housing crisis. How old were the comparables, did you mark declining Market on the report. Did you make negative time adjustments?

I think you should refund the money, not because you did not hit value, but because the report was not credible (just a guess) and you did not provide the service you were hired to do. Call it a defective product refund.

If i were that homeowner, I would have a copy of that report and turn it into the state.

Moderator or not .. THIS is absolutely HORRIBLE ADVICE ... do not follow it. Mr Evans .. what are you thinking?

 

[Midwest Guy]

Shut the issue down before somebody asks a regulator to look that the situation and see an appraisal done in March 2008 with comps that were most likely April, May and June of 2007. Within 12 months, however not maybe not reflective of the current market.

I think no consideration was made for more recent sales and current listings, alerting the UW to a problem. If we use FNMA forms we are held to FNMA guidelines, which FNMA has made clear that they was current comparables in these markets conditions.

Moderator or not .. THIS is absolutely HORRIBLE ADVICE ... do not follow it. Mr Evans .. what are you thinking?

 

[Webbed Feet]

I did an Appraisal back in march in Rancho Cucamonga, San Bernardino County where most houses are going foreclosed. At the time there were still some comps that have sold for the real market value which I used in My report. a month and half later the Loan Officer contact me that the value is cut becuase by then all of the comps are only the foreclosure ones and he wanted me to change the report with some newer comps and more comment which I did. By the time he submit the report to another Lender the San Bernardino Market has gotten even worse. So they didn't fund the loan. he asked me to give the client their money back which I collected for my Appraisal. I didn't think it is fair to me since I provided the service he asked me to. Now he is telling me the client is suing him and his company for the Appraisal Fee and wants me to send them a check. Am I at fault here and should I give them the money back? Please help. This is Urgent.

I really feel the analysis of this post and suggestions for courses of action on this, by most the posters, shows how horribly weak, timid, scared, and too willing to capitulate too many appraisers have become. I freely admit I was the first one to say I didn't think this first post was worded so well. But look what had to have happened here.

A) An appraisal report is completed and delivered.

B) A month and a half later (45 days?) a review is completed that arrives at a lower value opinion OR someone runs an AVM or something and some UWer just "cuts" the value. For all anyone on this forum, or the O.P. knows as he / she has not posted any more meaningful information about this, the UWer cut the value for reasons that had nothing to do with the original appraisal. This delay was the fault of the O.P.'s client!

C) The appraiser is asked for what must be considered an "Update" or new assignment. Again, we have no idea if this was completed correctly or not as the O.P. did not respond to my post saying a request for "newer" comps is a new assignment request. Regardless, the appraiser attemped to work with the appraiser's client on this.

D) C is now followed by another delay at the fault of the O.P.'s client!

After the delays the bottom tanked worse in the market. For all anyone on this forum knows the delays were in fact due to the market was tanking and intentionally committed by the wholesale lender(s) involved. A combination of a weak borrower and the market could have caused all involved to play games with this one. It may have had absolutely nothing to do with the O.P's appraisal. So far I have read absolutely nothing that the borrower is making any demands on the O.P appraiser whatsoever.

If you ask me, the loan officer has jerked this borrower around to the point the borrower is one ticked off puppy. The loan officer is now attempting to fix it by trying to stick it to the appraiser in a shake down to obtain money to "refund" the appraisal fee to the borrower over acts committed by the loan officer and loan officer's company. Or was this really a mortgage broker? ....

The last question of the O.P., that I highlighted in red, cannot be answered as the O.P. is not answering questions being asked by forum members. There really is not enough information to answer it, only speculation on everyone's part. And a lot of people using that speculation to advise handing money back when there is not one shred of information regarding what the borrower is wanting coming from the borrower. Only a demand by a loan officer that doesn't even sound officially backed by any company. Just a stupid phone call.

I absolutely shudder at the thought of all the outside people reading this thread. It portrays an industry comprised of frightened rabbits willing to give up their daily bread to the first lowly coyote that barks at them. Keep it up people. It won't be long and every appraiser in this country will be inundated with demands for fee returns whenever any loan doesn't fund.

Run rabbits run......

Webbed.

 

[Farm Gal]

PE - What has 'Moderator' got to do with it? Green doesn't mean putting on a Appraisal-Crown, it just means some of us are trying to make this a place for civil professional discussion... So to that end, why also assume on the basis of a few words that the OP has an 'indefensible' report?

If everyone jumps on all new posters as 'Skippys' and goes into full attack mode this place get 1)boring and 2) populated only by know-it-alls.

C'mon folks... the OP stated the following:

At the time there were still some comps that have sold for the real market value which I used in My report. a month and half later the Loan Officer contact me that the value is cut because by then all of the comps are only the foreclosure ones

Spelling and syntax aside, have you all performed Std 3 reviews on the report, to know if those 'real' market values were appropriate for the market as of that date?

The Duck has a great point as regards giving money back due to 'failure to achieve the desired value/closed loan' being in violation of USPAP....

However IF there is a problem with the report failing to consider the FULL market as of the original effective date... (as in foreclosed properties *may* have formed a valid indicator of a different value....) the business decision to make a refund may have great validity... and sad to say may be a wise business decision anyway.

Anyone can get sued anytime anyplace... I refuse to run a business looking only to that end.

The OP is the one who has to search his heart and determine if the original appraisal as of the ORIGINAL effective date was properly performed.... subsequent valuation dates are new appraisals.

So what-cha think, M. Original Poster?

 

[Bama Bayou]

I agree with Webbed. Someone saying they are going to sue you is a LONG way from it actually happening. I used to be a cop and was threatened with that on a daily basis. My standard response became, "take a number".

My standard response is "do what you have to do, but since you have threatened legal action I will no longer have any communication with you except through my lawyer". Then I hang up the phone. And no, I don't tell them who my lawyer is. That could cost me money.

It's real easy to make a threat to sue or "turn you in" to the appraisal board. They just pick up the phone and start making threats. That is why it is a good idea to assume that every report you write will be "turned in" or used against you in a lawsuit. That way you will be sure to kick their butt if it happens, and confident to tell them to get lost if they threaten you.

 

[Bama Bayou]

I absolutely shudder at the thought of all the outside people reading this thread. It portrays an industry comprised of frightened rabbits willing to give up their daily bread to the first lowly coyote that barks at them. Keep it up people. It won't be long and every appraiser in this country will be inundated with demands for fee returns whenever any loan doesn't fund.

Run rabbits run......

Webbed.

Right On! I was thinking the same thing. I can hear it now. "Well, they changed the laws and said we can't pressure appraisers about the value, so we'll just demand a refund if it doesn't fund". Same difference, same results of inflated appraisals.

 

[Michigan CG]

Moderator or not .. THIS is absolutely HORRIBLE ADVICE ... do not follow it. Mr Evans .. what are you thinking?

I am thinking that someone was paying for a credible report that reflected current economic conditions, current market conditions and the the OP didn't think that foreclosures were "real market value". Whatever that is, this downfall started long before March of this year. "Real market value" is foreclosure in many markets.

When you sell a product it should be quality. From what I can read into it, this was not a quality product, nor was it reliable. No one can say in their right mind that they did not know about the national housing crisis, yet alone an appraiser. If I am going to pay for an appraisal I would expect the appraisal (product) to be reliable. He sold a bad product (not reliable), and in this country the payer of the bad product should get a refund.