Hybrid AMC’s And Appraisal Firms

[Evincere]

If one examines the terms (non negotible pricing being offered for hybrid products and expected return delivery/completion/deadlines, etc. etc. ) as related to criteria (tests) set for employee status in the article, Appraisers as contractors who choose to complete these products should be demanding employee status and any associated bennies.

BY PETER CHRISTENSEN ·

The monetary risk, however, may be much bigger for hybrid AMCs… company’s vendor panelists should be classified as employees, rather than contractors, plaintiff’s counsel offered evidence that the company “tells vendors where to go, when to go, what to do, when to get it done and how much and when they will be paid for their efforts…”


Appraisal Firms and Hybrid AMCs: Beware of the Dynamex Decision and Its Impact on Classifying Appraisers as Independent Contractors in California

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The monetary risk, however, may be much bigger for hybrid AMCs. Some of them may be targets for potential class actions. Such firms need to look closely at their litigation risk when they are delivering appraisals that are performed both by independent contractor panelists and staff appraisers.

These firms tend to be larger and most often actually do treat their true “staff appraisers” as employees, but they still have potential risk. Since they are now combining staff employee appraisal services with offering appraisals managed from third party vendor appraisers, their risk is that the independent contractors on their panels could be reclassified as employees — since those independent contractors are now performing work that is within the regular course of the “hybrid” AMC’s business.

http://appraisersblogs.com/class-action-lawsuits-hybrid-AMCs

 

[Randolph Kinney]

It will take time but expect a court action to be filed, especially in California, that will take down the AMCs.

 

[Terrel L. Shields]

It will take time but expect a court action to be filed, especially in California, that will take down the AMCs.

How is the hybrid model different from that of barbers? At least Realtors have explicit laws protecting their subcontracting on commission status.

 

[TRESinc]

looks like the easy out is for AMCs in CA to get rid of staff appraisers.

 

[Randolph Kinney]

Liability Concerns
Craig Capilla, a trial lawyer with the Franklin Law Group who specializes in real estate appraiser cases, says that the single most significant issue that appraisers face when performing hybrid appraisals is the reliance on third party data, subject property inspection or otherwise. “An appraiser must have a reasonable expectation for relying on information that he or she has not personally observed. This is not a new requirement. It is something the appraiser must remember when developing any opinion of value. However, the risk with hybrid reports is that the appraiser gets too comfortable and fails to adequately address this issue,” says Capilla.

Appraisers have already begun to face trouble with their state boards over hybrid assignments, according to Capilla. “We have started to see licensing complaints related to hybrid appraisal products in Illinois and I am certain there will be complaints in other states as more of these assignments are performed. Similarly, we have not seen a civil suit specific to these hybrid reports yet, but that typically follows the licensing complaints as it often takes more time to prepare those claims for litigation. We expect these lawsuits to arise in the near future,” reports Capilla.

According to David Brauner, Senior Broker at E&O provider OREP, you should ask your insurance agent whether your policy covers these appraisals— not all may. “We’ve checked on behalf of our insureds and so far, there are no specific exclusions for hybrid or desktop appraisals at OREP. Coverage extends to professional services related to real estate appraisal, but when discussing coverage, everything is case by case,” Brauner said. Here is some guidance from an OREP underwriter:

• Verify the information using the normal tools (public records, MLS).
• Disclose what sources the information was verified with and to what degree.
• State that the appraisal relies on the third party inspection report and if that report contains an error, the results of the assignment may be affected.
• Make sure the entire report is USPAP compliant.
• Consider a disclaimer that the appraiser is not liable for errors on the part of the inspector.

Regardless of inclusion of disclosures and disclaimers, Brauner notes that disclaimers do not always hold up in court.

http://www.workingre.com/navigating-hybrid-appraisals-2/

Of course there is a concern under the new California Supreme Court ruling that declares barbers are not 1099 employees, they are regular employees which throws liability against the AMC for employment issues as well as the hybrid appraisal.

 

[Meandering]

Liability Concerns

• Verify the information using the normal tools (public records, MLS).
• Disclose what sources the information was verified with and to what degree.
• State that the appraisal relies on the third party inspection report and if that report contains an error, the results of the assignment may be affected.
• Make sure the entire report is USPAP compliant.
•.

IAEG:

VIII. Minimum Appraisal Standards

The appraiser's scope of work should be consistent with the extent of the research and analyses employed for similar property types, (NOT LOAN TYPES) market conditions, and transactions. Therefore, an institution should be cautious in limiting the scope of the appraiser's inspection, research, or other information used to determine the property's condition and relevant market factors, which could affect the credibility of the appraisal.

According to USPAP, appraisal reports must contain sufficient information to enable the intended user of the appraisal to understand the report properly. An institution should specify the use of an appraisal report option that is commensurate with the risk and complexity of the transaction. The appraisal report should contain sufficient disclosure of the nature and extent of inspection and research performed by the appraiser to verify the property's condition and support the appraiser's opinion of market value. (See Appendix D, Glossary of Terms, for the definition of appraisal report options.)

XII. Evaluation Development

A valuation method should address the property's actual physical condition and characteristics as well as the economic and market conditions that affect the estimate of the collateral's market value. It would not be acceptable for an institution to base an evaluation on unsupported assumptions, such as a property is in “average” condition, the zoning will change, or the property is not affected by adverse market conditions. Therefore, an institution should establish criteria for determining the level and extent of research or inspection necessary to ascertain the property's actual physical condition, and the economic and market factors that should be considered in developing an evaluation. An institution should consider performing an inspection to ascertain the actual physical condition of the property and market factors that affect its market value. When an inspection is not performed, an institution should be able to demonstrate how these property and market factors were determined.

 

[Randolph Kinney]

This brings us, to Dynamex. It was about delivery drivers with written agreements affirming independent contractor status.

The court adopted California’s version of the “ABC” test to define when a business had suffered or permitted an individual to work under the first part of the Martinez test.

That test begins with a presumption that all service providers to businesses are employees unless the business proves otherwise. As articulated, the service provider has no voice in this process. The business must establish all of the following factors:

1. The worker is free [2] from control of the method, manner and means by which the services are provided both per the contract and as a factual matter;
2. The service being provided is not part of the company’s regular [3] business;
3. The service provided is customarily provided by an independently established trade [4], occupation or business of the same kind as the service being provided.

The Dynamex ABC test is also very different from the common-law definition generally applicable under federal employment law and employee benefits law in particular after Nationwide Mutual Insurance v. Darden, 503 U.S. 318 (1992).

https://www.law.com/therecorder/201...ntract-in-california/?slreturn=20180826112558


The following summary paraphrases that recap:

To prove the key point that the company’s vendor panelists should be classified as employees, rather than contractors, plaintiff’s counsel offered evidence that the company “tells vendors where to go, when to go, what to do, when to get it done and how much and when they will be paid for their efforts.” The evidence included:

• As part of being approved for Field Asset Service’ panel, vendors signed an agreement which, although referring to vendors as independent contractors, set forth detailed requirements for accepting assignments, scheduling property access, timely performance, photo requirements, status updating and quality control.
• Panelists were not given a meaningful opportunity to negotiate the agreement.
• Panelists authorized Field Asset Services to perform background checks.
• Field Asset Services offered assignments to panelists through its proprietary software platform and panelists were required to use this platform to upload their status reports, photos and invoices.
• Panelists were required to respond to assignment requests within 24 hours and complete assignments within a stated time period, sometimes just three days.
• Declining too many assignments or cherry picking the best could result in fewer assignments being offered.
• Field Asset Services “score carded” panelists on their acceptance/declination of assignments, status communications, timeliness of completion and quality. A low rating could result in a warning, reduction of work or ineligibility.
• Field Asset Services tracked its panelists’ performance and recorded warnings, counseling and eligibility suspensions in “vendor profiles.”
• At trial, Field Asset Services’ panelists testified that they worked long hours, often 10 hours per day six days a week. And, of course, since the panelists were classified as independent contractors, they did not receive overtime. Nor did Field Asset Services reimburse them for expenses such as mileage, insurance, equipment, cell phones, internet use or computers.

What happened? After four years of litigation, the court ruled on summary judgment that any vendor who derived more than 70% of his or her income from Field Asset Services should be classified as an employee and was thus entitled to overtime and payment of expenses. The essential reasoning was that Field Asset Services had the right to so closely control the work of its contractors (and also exercised that right) and the contractors were so dependent on Field Asset Services that the contractors were employees under California law.

With liability established, the issue was then how much did Field Asset Services owe its reclassified contractors? Last summer, the damages claimed by the named plaintiff and 10 class members went to trial. The jury awarded a total of $2,060,237 to those 11 individuals for unpaid overtime, unpaid expenses, penalties and interest. The award to the named plaintiff was a striking example: the jury determined that he worked 4,845 hours of overtime from 2010 through 2016 for which he should recover $98,615 in overtime payments (on top of the payments he actually received for doing the work) and that he should be awarded $168,746 for his unpaid expenses ($95,247 for mileage alone). It’s estimated that there are 100+ remaining class members potentially entitled to the same types of damages.

Because of the high stakes, the potential risk for hybrid AMCs needs to be considered very carefully by such companies.

http://appraisersblogs.com/class-action-lawsuits-hybrid-AMCs

 

[Addie]

. In respect for OP

 

[Evincere]

I don't know the answer but you may.

I have seen a bunch of desktops that are for re-hab short term loans from FDIC banks. Loans are under $250K. So may be waiver applicable (but doubt it because safety/soundness/IAEG language) But let's say they are Waiver eligible, yet the bank ordered a desktop appraisal report anyway. These are not GSE guideline reports in anyway.

So not even talking anymore about appraisers doing them (IAEG reports) as they are uneducated. I'm talking about Banks liability.

1) If the bank ordered the appraisal, aren't they calling off the waiver (if was applicable)
2) So if 1) is correct, these need to follow IAEG.
3) I've seen a bunch and on these re-hab the appraiser has only given hypothetical value and also that was all that was asked for.
4) If all the above correct and true, why are banks not being fined all day every day for these hypothetical values only?

If my assumptions/reading of rules are wrong, happy to learn.

Wrong thread.

Try posting your question here

https://appraisersforum.com/forums/threads/iaeg-gse-appraisal-discussion.221053/

 

[Meandering]

. In respect for OP

I find it odd that when I click reply to you, the above is all that carries over, yet when I click reply to everyone else, their entire post gets carried over.

So what kind of BS is this on your behalf?

And,

You are confusing two things.

IAEG does not have waivers, GSEs do, and you said they weren't GSE assignments, so what waiver do you think they qualify for?


Are you an advertiser with "special" forum privileges?

Or something else, we should all be concerned about?.

.