Intended User

[George Hatch]

Lots of appraisers do it, but I've also prevented off-label users (and reviewers) from proceeding under any unfounded expectations for my work with these disclosures, too. That's surely the most common application for being specific. I've been telling appraisers to be specific in both their SOW decisions and their disclosures for 20 years now, since the onset of these terms in USPAP.

 

[Lee Lansford]

I am sure in some instances it was required before as well. Now it is required in nearly all GSE first loan transactions.

What would the argument be? How do you explain the appraiser did not intend for the borrower would rely on the report?

Go one further, If the contract even states the parties are going to rely on the report, how do you accept the engagement without addressing that?

I tell agents not to rely on the lender's reports, for multiple reasons, but it is still in the contract and appraisers still accept the assignments without addressing the third parties or the lender accepting the loan application knowing the third parties are relying on the lender's appraiser, but engaging the appraiser anyway?

This is really more theoretical because absent any claim for punitive damages from fair housing issues, the mitigated damages from a bad appraisal are usually not substantial enough to litigate over. I have had this as a property owner several times. It is a waste of time to think too hard about a junk appraisal report $300 in the toilt

I am sure in some instances it was required before as well. Now it is required in nearly all GSE first loan transactions.

What would the argument be? How do you explain the appraiser did not intend for the borrower would rely on the report?

Go one further, If the contract even states the parties are going to rely on the report, how do you accept the engagement without addressing that?

I tell agents not to rely on the lender's reports, for multiple reasons, but it is still in the contract and appraisers still accept the assignments without addressing the third parties or the lender accepting the loan application knowing the third parties are relying on the lender's appraiser, but engaging the appraiser anyway?

This is really more theoretical because absent any claim for punitive damages from fair housing issues, the mitigated damages from a bad appraisal are usually not substantial enough to litigate over. I have had this as a property owner several times. It is a waste of time to think too hard about a junk appraisal report $300 in the toilet.

I clearly differentiate between who is an Intended User vs. those "others" who are Unintended Users. USPAP is not a shield against what unintended users may elect to do, but, it's wise to loudly alert people that (in effect) "You're not my client, I am not doing this appraisal to meet your needs, this appraisal may not be appropriate for how you elect to use the appraisal report, and, I'm not obligated to explain things in a manner that you can understand". I also spend some time on the concept of Intended Use of my appraisal report. That, in a nutshell, is more or less it.

 

[Terrel L. Shields]

I've prevented a couple lawyers from including me and my appraisal in their legal actions against my client by prominently making these distinctions in my reports and explaining them in deposition. They don't even bother taking the issue into the courts.

definition:​

A legal relationship between two parties based on contract, estate, or other lawful status, that confers certain rights or remedies. For example, parties that are in privity of contract can enforce the contract or obtain remedies based on it​

​

It's an obligation of the complainant to do their due diligence. If they are forewarned that they are not an intended user, then they fail due diligence by proceeding with using it. That was part of the gist of the lawsuit I was in. They claimed they relied upon the report despite being warned in the report that they were not the intended users. And since it was 6 years earlier, the judges ruled that they were aware of that thus the report was not concealed and the statutes of limitations began running and was much out of time. My lawyer had argued both privity and SOL expired.

 

[djd09]

HUD APPROVES AGREEMENT WITH JPMORGAN CHASE RESOLVING CLAIMS OF RACE DISCRIMINATION IN APPRAISALS ​

JPMorgan Chase allegedly valued a home for less than its worth because of owner's race​

WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) announced today that it has approved a Conciliation Agreement between JPMorgan Chase Bank and an African-American woman, resolving the woman’s claim that the mortgage lender, relying on an appraisal that she believed was inaccurate, valued her home at an amount lower than its actual worth because of her race. Read the agreement.

“The race of a homeowner and the racial composition of their neighborhood must not influence the valuation of a home,” said Jeanine Worden, HUD’s Acting Assistant Secretary for Fair Housing and Equal Opportunity. “The Fair Housing Act prohibits the consideration of race as a factor in the appraisal of a home and in the provision of other real estate related services. Discrimination in home buying, mortgage lending, and property appraisal deprives qualified individuals of an equal opportunity to pursue homeownership as a path to family stability and financial security. HUD is committed to ensuring that all housing, whether for rent or for sale, is free from discrimination.”

Under the Conciliation Agreement, JPMorgan Chase Bank will pay $50,000 to the woman and provide home lending advisors and client care specialists with mandatory training on the Reconsideration of Value process and fair lending issues related to appraisals, including specifics regarding how to handle complaints of discrimination in the appraisal process.

The Fair Housing Act makes it unlawful to discriminate in the terms, conditions, or privileges of the sale of a dwelling because of race, color, religion, national origin, sex, disability and familial status. The Act also makes it unlawful for any person or other entity whose business includes residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction. Residential real estate-related transactions covered by the Act include making loans secured by residential real estate and appraising residential real property.

People who believe they have experienced discrimination may file a complaint by contacting HUD's Office of Fair Housing and Equal Opportunity at (800) 669-9777 (voice) or (800) 877-8339 (Relay). Housing discrimination complaints may also be filed by going to HUD.gov/fair housing.

https://www.HUD.gov/press/press_releases_media_advisories/hud_no_21_037

so, a borrower (not intended user) is financially compensated for appraisal discrimination and she was not the client. and the bank pays. and no appraiser name. come on, man.

​

 

[George Hatch]

The lender didn't admit guilt and this agreement does not amount to a finding of guilt or to a judgement by HUD. The lender just entered into an agreement with the complaint, which HUD approved, to pay her off.

That's no different than when an E&O carrier decides its cheaper and/or more expedient to pay the claim than to spent the resources it takes to fight it. Regardless of the actual facts, which sometimes will favor the case of the complainant vs sometimes favoring the case of the respondent.

 

[djd09]

sure looks guilty to me. they should of held out for 500,000. woke or broke.

 

[ZZGAMAZZ]

What others want or hope for does not place an obligation on the appraiser. This is why appraisers need to be quite clear as to Intended Use and Intended User(s). Anyone...anyone can "use" an appraisal report for any reason (e.g., lining the bottom of the bird's cage) that they elect, but, that doesn't mean that "the report" fits their needs or that you have an obligation that they understand your appraisal.

Maybe a silly question, but is the term "and assigns" appropriate? (I'm asking specifically about BK assignments because I don't know whether the BK court, etc., etc., need to be identified by type or name, or whether their use is implied because of the nature of the assignment.)

 

[Terrel L. Shields]

The lender didn't admit guilt and this agreement does not amount to a finding of guilt or to a judgement by HUD. The lender just entered into an agreement with the complaint, which HUD approved, to pay her off.

Except like the settlement NY got with Alphabet (Google/YouTube) over data mining and advertising to children, in clear violation of law, a class action has been filed and the settlement in NY will be front and center evidence as proof that it was tacit admission of the violation therefore is guilty.

sure looks guilty to me.

Perception is reality.

Again, I argue, unless there is clear evidence that the property is worth more than the borrower expects, it is best to just turn down any assignment involving an ethnicity different from your own.

 

[ZZGAMAZZ]

Except like the settlement NY got with Alphabet (Google/YouTube) over data mining and advertising to children, in clear violation of law, a class action has been filed and the settlement in NY will be front and center evidence as proof that it was tacit admission of the violation therefore is guilty.


Perception is reality.

Again, I argue, unless there is clear evidence that the property is worth more than the borrower expects, it is best to just turn down any assignment involving an ethnicity different from your own.

It is hoped that your suggestion is satirical, because to do so would be to surrender to the dark side of impending public policy, which might be inevitable but which each man must resist with all of our resources, intellectual or physical.

 

[George Hatch]

Declining service based on race is a non-starter. It doesn't even bear discussion.