Judge Rules Appraiser/Lender Owe no duty of care

[djd09]

They sure are.

Class Valuation Maximizing ROV Conversion Rates - Appraisers Blogs

It’s truly mind-boggling that a company would brag about their higher ROV conversion rates as if it’s some kind of badge of honor.

appraisersblogs.com

just like the mortgage broker ordering days...hit that number

 

[Fernando]

It sounds like your real estate agent didn't help you through the process in your purchase. More questions should have been asked and help in direction in what to watch out for.
If Septic is common in your area, agents, appraisers, home inspectors, and such should be more aware of local potential problems. If they are aware, they most likely put disclaimers to protect themselves for unforeseeable problems.

 

[Raven59]

The purchaser, as the primary stakeholder, is responsible for conducting due diligence. This involves getting additional inspections and asking more questions if they have any concerns. The MLS listing mentioned there was a septic and well system, which should have prompted the buyer to investigate further. It's important to understand that buying a property involves shared responsibility among all parties.

An appraiser’s job is to assess the property’s value based on what they can see and access. It’s unrealistic to expect them to know the exact locations and distances of underground systems like septic tanks and wells without specific inspection reports. If the buyer signed an "as is" contract, they accepted certain risks, typically negotiating a lower price to account for potential issues. It's not fair to blame others for risks they chose to take on.

The main issue is the distance between the septic system and the well, a requirement for FHA loans. This might limit the property’s eligibility for FHA financing, but it doesn't make the property unmarketable. There are plenty of other mortgage options that don’t have these restrictions. When it comes time to sell, the buyer must disclose this information, but the property can still be sold using other types of loans.

In any property transaction, it's crucial for everyone involved to understand and accept their responsibilities. The buyer, appraiser, and lender all have their roles to play, and clear communication and thorough investigations can help avoid problems. Acknowledging that everyone shares in the responsibility can lead to better outcomes for all parties. Clear communication is key to this process, ensuring that everyone is informed and on the same page. It appears the seller did their part. The appraiser seemed sloppy, but there is no proof the value was affected. The lender needed to be more precise, but they did what was asked and secured a mortgage. The agent has no duty to inspect for issues. How do you see your part in the equation?

I am saddened by what has happened to you. We all need to acknowledge the responsibilities that come with our roles. I believe the FHA should not mislead the parties about their responsibilities. FHA tends to leave everyone out there to fend for themselves, which is centered around unrealistic expectations.

 

[Carnivore]

I agree the appraiser should have checked the correct box indicating a septic system. Since he did not check it and if He had been aware there was no municipal sewer system property to hook into near the property. Well, that is an intentional act of omission. I don't think he did that intentionally. What I do think actually occurred is the appraiser had an incomplete workfile. i,e County GIS /parcel, Survey(if one exist. Plat of subject, City/county water & sewer lines map, all Prior MLS if any, aerials, and any other data that was available to the appraiser. I as a matter of Practice I Always collect all information/data available for my workfile. ALWAYS!

FHA 4000.1 has specific requirements about Septic Tanks and septic fields. i.e Subjects with a well. It's all there in that thousand plus page manual. 4000.1 is updated constantly. When I say constantly it is because it's a living manual. Most of it does not apply to appraisers.

Here is a major point. The Buyer/borrower (purchase or refinance does not always get a copy of the appraisal at or prior to closing. The buyer/borrower does not always know of a defect found and reported by the appraiser. Why? Simple, the FHA UW may waive certain defects. They rely on the Appraiser to list out potential defects and include a cost to cure ESTIMATE for each item.

This appraiser failed to do his 'Due Diligence'

 

[alebrewer]

Pictures of fences and decks are not FHA requirements. Are you sure she intentionally altered the photographs she took? Or just did a sloppy job of checking boxes?

I'm thinking that being sued for not including pics of the deck and fence would not be a profitable venture for anyone. I mean, what's the contributory value of a fence and deck - especially one that reportedly is in such disrepair? $1k? You couldn't get an attorney to answer a call for that kind of frivolous lawsuit...

 

[Terrel L. Shields]

The only one that is deceptive was the appraiser.

Well, that is an intentional act of omission.

Deliberate deception should not be assumed in the face of incompetence. And too many appraisers rush through too many inspections to be competent at their job. This is common, easily avoided, and shows a lack of several things. Training, pride in their work, and often the lack of appropriate pay for a job...which is no excuse but unfortunately is often a reason why appraisers try to blow through as many inspections as fast as possible so that their hourly compensation doesn't fall into the class of C store clerk or door greeter wages.

 

[Huds_Harm]

I'm thinking that being sued for not including pics of the deck and fence would not be a profitable venture for anyone. I mean, what's the contributory value of a fence and deck - especially one that reportedly is in such disrepair? $1k? You couldn't get an attorney to answer a call for that kind of frivolous lawsuit...

Not only is that not the lawsuit, it’s not the point. Concealing multiple items OTHER THAN the septic and well and cropping them out of view in every picture shows intent.

 

[Huds_Harm]

The purchaser, as the primary stakeholder, is responsible for conducting due diligence. This involves getting additional inspections and asking more questions if they have any concerns. The MLS listing mentioned there was a septic and well system, which should have prompted the buyer to investigate further. It's important to understand that buying a property involves shared responsibility among all parties.

An appraiser’s job is to assess the property’s value based on what they can see and access. It’s unrealistic to expect them to know the exact locations and distances of underground systems like septic tanks and wells without specific inspection reports. If the buyer signed an "as is" contract, they accepted certain risks, typically negotiating a lower price to account for potential issues. It's not fair to blame others for risks they chose to take on.

The main issue is the distance between the septic system and the well, a requirement for FHA loans. This might limit the property’s eligibility for FHA financing, but it doesn't make the property unmarketable. There are plenty of other mortgage options that don’t have these restrictions. When it comes time to sell, the buyer must disclose this information, but the property can still be sold using other types of loans.

In any property transaction, it's crucial for everyone involved to understand and accept their responsibilities. The buyer, appraiser, and lender all have their roles to play, and clear communication and thorough investigations can help avoid problems. Acknowledging that everyone shares in the responsibility can lead to better outcomes for all parties. Clear communication is key to this process, ensuring that everyone is informed and on the same page. It appears the seller did their part. The appraiser seemed sloppy, but there is no proof the value was affected. The lender needed to be more precise, but they did what was asked and secured a mortgage. The agent has no duty to inspect for issues. How do you see your part in the equation?

I am saddened by what has happened to you. We all need to acknowledge the responsibilities that come with our roles. I believe the FHA should not mislead the parties about their responsibilities. FHA tends to leave everyone out there to fend for themselves, which is centered around unrealistic expectations.

Nothing the purchaser does or does not do absolves the appraiser of the following duty

6Does the report indicate that the water is private? If yes, does the appraiser provide a comment on the availability of public water and if the subject is required to connect? Also, does the appraiser comment if private utilities are common for the area and if there is any impact on the subject's marketability?

8Does the report indicate that the sewer is private? If yes, does the appraiser provide a comment on the availability of public sewer and if the subject is required to connect? If also on private water, is there a comment noting if the subject meets the minimum FHA distance requirements from the well to the storage tank, drain field, and property? Also, does the appraiser comment if private utilities are common for the area and if there is any impact on the subject's marketability?

and the difference in conventional and federal definition is

The federal “as is” requirement is IN ADDITION TO the GSE scope of work which REQUIRES CONDITIONING THE APPRAISAL ON COMPLETION OR REPAIR when there are conditions that adversely affect the livability, soundness or structural integrity of the property.

 

[George Hatch]

This is exactly the first time I have ever heard of the existence of some federal definition of "as is" condition. You seem to be conflating the acceptability of the property to FHA lending program as defining its "as is" condition or value. That could only be interpreted that way if the appraiser's assignment was to value the property from the lender's perspective and expectations instead of the perspective of the market participants. In other words iof the appraiser was being tasked to answer the question of

​

"what's the value of the property to FHA within the context of their underwriting policies?"​

instead of​

"What's the value of the property in the market within the context of the actions of the market participants?"​

These are two different concepts and will sometimes have 2 different answers. If your atty didn't understand this then that might explain why they think theres a different definition of "as is" at the federal level vs its common usage definition.


None of the below are definitions. They are user-specific appraisal guidelines and protocols for how to handle these conditions in order to qualify for FHAs programs. "Do this when these conditions exist" is not synonymous with "this is what this term means"

 

[Huds_Harm]

They are user-specific appraisal guidelines and protocols for how to handle these conditions in order to qualify for FHAs programs.

And the appraiser did not comply to them.