Is reviewing appraisals in another state illegal?

[PropertyEconomics]

Administrative review is normally outside the view of our state. However, if a non-administrative review is submitted with a complaint and the reviewer is out of state, then it is my understanding that the reviewer will get a letter of reprimand from the board if not duly licensed here. And if they are, the review gets the fine tooth comb.

Terrel .. the arugment has been made that your state, for example, has no authority over someone who is not licensed there therefore the letter of reprimand will mean what? I mean with no jurisdictional authority over someone practicing in New York .. what can Arkansas really do? I suppose the State AG can charge an appraiser with a criminal act of acting without a license but the question is would they?

I dont know the answers to the questions but it is a subject that I have taken great interest in lately and am striving to learn more about.

 

[JTRock]

I am dealing with a reviewer right now that lives in michigan and works for flagstar. This person is driving me crazy as they have no knowledge of the local market and is relying on satellite imagery to make assumptions. If they are licensed in their state then they should be licensed in my state because they are performing an appraisal review. This just doesn't seem compliant to me.

 

[hastalavista]

In my opinion, the answer to this situation is simple.

I don't really care if an entity hires someone from Montana to review my work in California.
The only thing I do care about is that the person is (a) competent to complete the review given the review SOW and (b) then competently completes the review assignment.
I've advocated since I first started posting on this forum that if a lender uses a review as a negative mark against an appraiser, then that appraiser is entitled to a copy (a full copy that includes the review SOW) of that review.

Therefore, the simple solution to the issue is this:
A. Just like we are moving toward national licensing reciprocity, that should include regulatory oversight reciprocity.
and
B. Give a copy of the review to an appraiser if that review is used as a negative mark against the appraiser.

If we had these tools, then we could judge the quality of the review based on its presentation and SOW. If we thought it was lacking, we could file a complaint with our state board that (in my example) should be in a better position to determine if geographical competency was necessary and not demonstrated than the Montana Appraisal Board. If our board found issues, then it could enter a finding and Montana would honor it.

This would accomplish the following:
A. Provide more transparency about the review process. I don't care if the lender declined the loan based on the review; that's the lender's prerogative. I do care if my standing was impaired due to the review. So the lender can deny the loans all day. But if the lender uses the review to blacklist me, I should be entitled to a copy of that review.

B. It would probably cause clients to be more careful in writing their review SOW requirements. That's a good thing. Again, if a review can be completed by an out-of-state appraiser in a centralized location that is efficient for the client, what do I care? (I actually do care and I'm in favor of efficiency). But if the SOW is such that the lender wants something that a remote appraiser is not qualified to do, that is the lender's problem and relying on a non-qualified appraiser is inexcusable.

C. I think it would improve the overall quality of the reviewer. It would certainly increase the liability for the poor quality reviewers since there would be more transparency. Ultimately, appraisers are responsible for the SOW; so if a reviewer is in a situation where she/he is not qualified, she/he should decline the assignment or stop it when they identify they are unqualified.

As I said, it is very simple. I don't care where you are from and you are free to review my work consistent with the SOW the review requires. My only requirement is that you are competent to do so. Competency is judged not on where you are located, but on your license level and the credibility of your results.

In essence, I hold a reviewer to the same standard that I hold myself to.

 

[Doug DeMars]

Competency is judged not on where you are located, but on your license level and the credibility of your results.

Maybe...

Denis, I like your train of thought. Competency is near the core of this topic. Legal considerations aside...the moral question should point toward competency. And how do we judge this? USPAP ethics ask the appraiser to be professional and decline assignments that extend beyond their competency...or at least inform the client they currently lack the requisite experience and will take steps to become competent.

IMO, review appraisers are lying to themselves if they believe they can provide a competent review of another's work if they are unfamiliar with the market it is located. Yet, depending upon the SOW, a review appraiser could provide a modest critique based upon what they may believe to be a credible assignment result.

 

[Rich Heyn]

If an appraiser performs an appraisal review on a property that is located in another state in which they are not licensed, is this compliant with the laws that the states have established? I don't quite see how this would be USPAP compliant. How could an appraiser in New York perform a review on a property in Florida and consider themself competent within that market? I perform reviews sometimes on properties that are within my market area but would be foolish to think I could do so on properties in another state! It seems like there are so many reviews being done out of state now so am I missing something? Have appraisers been sued for this?

I've been under the impression that the reviewer is reviewing an appraisal report and not reviewing a property.

 

[vanguard]

It might be interesting to discover how much cross-border enforcement occurs. Which states may have a reciprocity agreement with reguard to appraisal oversight.

 

[J Grant]

The PC statements such as it depends on the SOW and competency of the reviewer...bottom line, a person out of the area is not competent to determine if a report has credible assignment results. As for getting around it by making an EA, how can an out of area reviewer make an EA that the report results are credible, when they have no idea?

It is a shame appraisers take these jobs, because if they were honest with themselves, they'd admit that an appraiser in Chicago has no idea if an appraisal done in rural Nebraska is credible or not. Then again, you don't even have to be an appraiser to do certain QC reviews. But more lenders and AMC's are using appraisers to fulfill the due diligence clause. Or they are using someone who used to have a license...does that mean the ex licenses disciplined by states end up reviewing? How ironic is that?

I would hope that in time, this loophole might be closed and lenders/AMC's forced to use reviewers with local competency. (the professional/diligent ones do this of their own accord now)

 

[Don Clark]

I've been under the impression that the reviewer is reviewing an appraisal report and not reviewing a property.

That is the way I see it as well. And, I doubt any state would charge an appraiser in a different state with a violation of their state law and then extradite that appraiser for punishment. That would be laughable. I have done many reviews of appraisals, and reviews of reviews of appraisals in many different states. I have acted as an expert witness in many cases based on those reviews and often on state findings against appraisers. I have never had a state appraisal board make any comment about being certified in another state. Many states hire appraisers from other states to assist them in a case where the state it'self needs an expert opinion. One such case was in North Dakota several years ago. The3 state hired an AQB Certified USPAP Instructor from Alabama to testify in it's behalf. I was hired by the appraiser to assist him. Testified by telephone before an ALJ as an expert witness. The appraiser also hired an instate AQB Certified USPAP Instructor to assist as well.

USPAP does not place restrictions on appraisers who do such work based on jurisdictional boundaries so it is not a USPAP issue so long as the review appraiser meets the competency requirements of USPAP. It may be a state issue but they lack any real enforcement mechanism.

 

[Stone]

Exactly what is a state board in one state going to do about a reviewer in another state who doesn't hold a license in the first one?

 

[J Grant]

Originally Posted by Rich Heyn
I've been under the impression that the reviewer is reviewing an appraisal report and not reviewing a property.

Right, but the report results ares based on a property, and the comps, and the market data. Are the report results credible is a USPAP issue. How can an out of area reviewer tell if the results of the REPORT are credible or not, since they know zip about the contents of the report, and have little data or time to research the contents?

RE, can they justify their lack of market knowledge by claiming the review is "just" for USPAP compliance, if they can't answer the USPAP question, are the assignment results credible?


The kind of reviews Don Clark refers to sound like legal cases or state board issues and sounds like specialized work.
.
The reviews the rest of us are referring to are reviews of appraisal reports done by out of area or out of state reviewers, often done in a short time frame. ( 15 minutes to a half hour spent on reviewing a report expected from many clients).