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Home Owner as the Client of the Appraisal

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William Tsai

Thread Starter
Freshman Member
Joined
Jun 5, 2003
Professional Status
Certified Residential Appraiser
State
California
In mortgage transaction appraisals, we, the appraisers, usually receive the appraisal requests from loan originators/loan officers. The appraisal requests indicate the names of the clients to put on the appraisal reports. We all know that the home owners are not the clients for these assignments even when the home owners pay the appraisers for the appraisals directly. Consequently, apparisers cannot give copies of the reports to the home owner without the clients' permission. Your clients (usually mortgage brokers or lending institutions) own the appraisal reports.

Let's look at another scenario. What if a home owner hires you, the appraiser, to do an appraisal for a mortgage transacion (i.e. This home owner sends you an appraisal request.) The home owner pays for the appraisal COD. I don't think anyone would argue that the home owner is indeed your client for this assignment, right? Then, would you agree that the home owner has the right to release this appraisals to any one or more mortgage brokers or lending institutions he or she wishes since the homeowner is the client of this appraisal?

Let's go another step further. The mortgage broker of the above mentioned home owner now sends you an appraisal request asking you to change the name of the client of the appraisal from the name of the home owner to a lending institution. You, the appraiser, treat this request as a new assignment. Since effective date of the appraisal was only a few days (e.g. less than 2 days ago), you decided that a re-inspection of the subject property is not necessary and the comparables used on the report are still the best available comparables. You then proceeded to generate a new report by simply changing the name of the client. With the exception of the client name, the new report is identical to the old report with the same effective date. You send this new report to the mortgage broker. You also decide to charge a minimal fee for this second appraisal of the subject property since you did not do a lot of work.

In this scenario, have you violated appraiser/client confidentiality or anything in USPAP?
 

Thomas Fiehler

Senior Member
Joined
Jun 2, 2003
Professional Status
Certified General Appraiser
State
Ohio
Simple answer-For a lender to make a loan on the property, they must order the appraisal. Homeowner can hire me to do an appraisal but it will not be completed on one of the new FNMA/FHLMC forms so the lender will not be able to use it.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
It's a misleading report because you have changed the name with the intent to conceal the fact that the borrower engaged the appraiser.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Borrowers can order appraisals for non FRT transactions. Private money lenders are a prime example. It happens all the time and USPAP does not say its against the rules.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Borrowers can order appraisals for non FRT transactions. Private money lenders are a prime example. It happens all the time and USPAP does not say its against the rules.

The mortgage broker of the above mentioned home owner now sends you an appraisal request asking you to change the name of the client of the appraisal from the name of the home owner to a lending institution.

It's still misleading because an intended user has been duped into thinking the MB ordered the appraisal.
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
When a home owner orders an appraisal, I report my results on the AI Residential Form to prevent that scenario. Then if a lender contacts me (even if it is two days later) I go back out to the property, take new photos and then complete the report on the 1004. When the property owner contacts me initially I explain all of that very throughly so that they understand the appraisal report is for their use only and I can not disclose or discuss any information to anyone else. Once they receive the report they are free to do anything they want to, paper the living wall or publish in the local paper or whatever. If any one else wants an appraisal of their property that other individual will need to order a new assignment from me. Whether I give a discount on the second assignment or not is my business decision, which is also explained to the home owner.

Each order is a new assignment with a specific intended use and a specific intended user for each one. The home owner cannot order an appraisal with an intended use for a mortgage since they are not a lender. They can order an appraisal to assist in determining whether they will apply for a loan and the amount of the loan to be applied for--but not for the purpose of arranging a loan.
 

Dennis J. Black ASA IFAS

Senior Member
Joined
Mar 5, 2002
Professional Status
Certified General Appraiser
State
Florida
Not knowing the profession.

Either asleep in class or had a bad instructor.

A residential appraiser who based on the post does mortgage work, but knows nothing of the mortgage business.

There is a reason people have a dim view of most appraisers.

Sorry for the venom, but this forum has begun to disgust me.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Either asleep in class or had a bad instructor.

A residential appraiser who based on the post does mortgage work, but knows nothing of the mortgage business.

There is a reason people have a dim view of most appraisers.

Sorry for the venom, but this forum has begun to disgust me.


I agree .. but homeowners are not always honest either.
 
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