Intended User

[Carnivore]

George,

Michigan can and would probably be used as a precedent for an attorney seeking victory in another state! Then it goes to appeal lets say in california 9th district court of appeals and bingo instant screw job for appraisers nationwide!

Bottom line is that everyone is trying to profit from the use of our data and opinion without proper due consideration.

 

[Terrel L. Shields]

Michigan can and would probably be used as a precedent

I don't think it can be used as a legal precedent unless it is appealed and upheld there. Also, unless it is a Federal issue, even the Federal courts will only argue case law from the state of origination. In the Federal suit that i was in, the original filing was in Arkansas, the appeal was to St. Louis, Mo, but the courts only argued and applied case law from appeals from Arkansas. They may allude to supporting evidence from other states, but the argument has to go to the jurisdiction at hand.

I don't think Michigan is unique in having Judges declare borrowers "intended users" and that is the fault of us...we need to be educating the attorneys and judges as to what USPAP says, because they are not going to read it, but rather rely upon precedent regarding other professionals. Our societies should sponsor a speakers bureau to talk to the other professionals we met and to educate them on USPAP - before the County Bar Associations, the local Realtor Board, and the local State Chapter of bankers.

Judges only apply common sense in thinking that borrowers pay for the appraisal ultimately thus should directly benefit from it. They are unaware that the Feds intended to put distance between borrower and appraiser and banker and realtor as a way to prevent conflicts of interest.

 

[George Hatch]

Well, the Michigan cases would run into a problem at the federal appeals level because the federal government has already recognized The Appraisal Foundation as being the source of appraisal standards and appraiser qualifications in the United States. USPAP has already been adopted into federal (and state) law in its entirety. This is why I think the Michigan cases must have been poorly argued. State law might trump a rule or regulation but federal law trumps state law.

 

[Carnivore]

George,

I am not sure what may happen. I would agree that it appears that intended user case in MI was probably not argued well. Then again, maybe we are all wrong and the plaintif is correct. The evidence being that there was not an appeal. Remember,

1. OJ got off
2. a woman got 3 mil for spilling coffee on her self.
etc etc a plethora of other cases around the country that defy ones sensibilities

It is very possible that appraisers are at great legal peril.

 

[Phil Rice]

The premise of this post is an FHA purchase appraisal.

USPAP has already been adopted into federal (and state) law in its entirety.

George, you seem to imply that USPAP says the buyer is not the intended user.
Terrle says

we need to be educating the attorneys and judges as to what USPAP says

I have made a good faith effort to read USPAP, and my conclusion is that USPAP says the buyer is (most likely, in most cases) an intended user.

Can we get past assumptions and wishful thinking (what we want USPAP to say)? I know that appraisers do not want the buyer to be an intended user. Can we agree that per USPAP, the appraiser does not get to make a unilateral decision about who is the "intended user(s)"?

Terrell, George, Mike Garrett, Andrew, where in USPAP does is say something that tends to support your thinking on this subject? I don't mean this in a "challenging" way, I am trying to see the big picture and I am interested in better understanding where you are coming from.

From a USPAP perspective, where does it say anything that would support the idea that FHA is an intended user, but the borrower is not?

 

[Phil Rice]

Mike Garrett says:

A real estate sales contract usually has an "escape clause" in the event the property appraises below the contract amount. This, in it's self, does not entitle the borrower to claim "intended use".

USPAP says:

The client’s intended use may encompass requirements of one or more other intended users

The way I read STMT 9, USPAP says the CLIENT establishes the intended use and intended user(s). My opinion is not based just on this one sentence. Overall STMT 9 indicates the client tells the appraiser about intended use and intended user(s). It is the appraisers responsibility to make the appropriate scope decision and to disclose intened use, user, and scope in the report.

The word "intend" does NOT mean - what or who does the appraiser intend....... The word "intend" DOES mean, what the CLIENT intends to do with the report.

If the CLIENT intends to give a copy of the report to HUD, with the understanding that HUD is going to rely on (use) the report (to make a decision - insure the loan), that makes HUD an intended user. If the CLIENT intends to give a copy of the report to the buyer, and the buyer is going to rely on (use) the report (to make a decision - borrow the money), how is this any different?

It is the appraiser's responsibility to know who the intended users are, and to disclose this info (by name or type) in the report.

 

[Don Clark]

B) I would agree that a buyer can be, could become, and could be named as an intended user. But one state, and a state court cannot over rule a FHA/HUD supplemental standard since HUD is a federal agency and their ability to function is based on federal law. If in doubt you should direct such a question to HUD. VA clearly states that they are the client and all reports now say that and requires that a VA Fee Panel Appraiser name VA as the client on the report and "any VA approved lender as an intended user". That does not make the borrower an intender user.

You should clearly define who the intended users of the report are at the time of acceptance of the assignment. I shudder at the thought of having a universe of intended users, that is why I believe it is necessary to have those entities named at the time of the assignment with the client.

 

[Carnivore]

The Intended User statement on the Fannie Mae 1004(commonly used for FHA appraisals and many others lender type reports) Specifically says who the Intended user is by referencing the lender/client line.

Where I have a problem is that it then identifies other people, persons and entities as users. What is the reason for doing that? What purpose does it serve? Why is it so important to mention others?

Why not just leave it blank? Why not just state the lender/client indentified as the intended user?

OK, maybe I dont trust fannie mae lawyers. Maybe this was done under advisement to deliberatly obvuescate the legal truth.

 

[Richard Carlsen]

But one state, and a state court cannot over rule a FHA/HUD supplemental standard since HUD is a federal agency and their ability to function is based on federal law.

You could tell that to a state court judge all day and still have the verdict go against you.

I would reference you to USPAP 2004 line 106 and the definition of Jurisdictional Exception: It say nothing about the hierarchy of the courts system. It simply states "An assignement condition that voids the force of a part or parts of USPAP, when compliance with part or parts of USPAP contrary to law or public policy applicable to the assignment."

If the borrower has standing in law in the states eyes as an additional intended user, then you had better write the report with that full in mind, regardless of what the FHA or any other agency says. States control licensing. States control contract law within the state. Appraisers are licensed by the state. Appraisers write appraisal reports and give opinion of value as part of the process of fulfillment of a contract of sale. Ergo: Best do what your state says under law in this case.

I would hate to see the legal bill required to prove that FHA or USPAP prevailed in this case.

 

[Phil Rice]

But one state, and a state court cannot over rule a FHA/HUD supplemental standard .....That does not make the borrower an intender user.

FHA says that HUD is an intended user. FHA/HUD does not say (one way or the other) about the borrower. It is not HUD's decision to make. What about USPAP?

Andrew says:

The Intended User statement on the Fannie Mae 1004(commonly used for FHA appraisals and many others lender type reports) Specifically says who the Intended user is by referencing the lender/client line.

At the risk of asking a dumb question, where are you getting this from? Where is the "intended user statement" on the 1004?

Where I have a problem is that it then identifies other people, persons and entities as users.

Where is this?