Judge Rules Appraiser/Lender Owe no duty of care

[Huds_Harm]

Quit sidestepping! Which inspection was done prior to the purchase? Prior to signing the documents?

We found out that the home inspector did not know where the tank was.... so it wasn't them.

So was it the company who pumped the tank? Or, was it the company who filled the tank?

How did you find out that the property needed a new septic system and a new well?

Since my hypothesis is incorrect, that means "you knew" about these issues "prior" to the signing of the contract. Yes?

I will refer you to the article and will no longer be replying to you.

 

[Huds_Harm]

Due diligence is a crucial part of the real estate buying process that allows buyers to investigate a property before closing on the sale. It's the time between an accepted offer and closing, and it gives buyers the opportunity to gather information and inspect the property to ensure they're getting what they're paying for. Due diligence also helps buyers' lenders feel comfortable funding the purchase.

Due diligence is also a crucial part of the appraisal process.

 

[Surf Cat]

Most of the well and septic situations I have run into are for properties which located outside of any "municipality" with a building or code enforcement department to report to. Actually, I have never heard of a "septic tank status" being reported by someone who pumped one out. Not doubting that is a commonplace occurrence in California, though.

Like Fernando, I rarely run into a septic systems. However, outside of Seattle where my brother lives, the septic companies are "required" to report to the building department septic services and report to them if the septic system is not up to code. W
To which, you will receive a letter to update or be fined.

How did you do in the pool tournament? I taught my son how to play and he can now curve, triple Bank, jump, and manipulate the cue ball amazingly. He surpassed my abilities for sure.

 

[Surf Cat]

I will refer you to the article and will no longer be replying to you.

Lol.... the ultimate side step. Good luck to you in getting that nasty appraiser.... don't look in the mirror though.

Due diligence is also a crucial part of the appraisal process.

Absolutely.

 

[Mike Ault]

Like Fernando, I rarely run into a septic systems. However, outside of Seattle where my brother lives, the septic companies are "required" to report to the building department septic services and report to them if the septic system is not up to code. W
To which, you will receive a letter to update or be fined.

How did you do in the pool tournament? I taught my son how to play and he can now curve, triple Bank, jump, and manipulate the cue ball amazingly. He surpassed my abilities for sure.

In my primary service area of Potter & Randall counties, we have a "Bi-County Health Department" administered by the City of Amarillo which is responsible for overseeing well and septic installations. The installer has to submit plans for approval. Those plans go all the way back to the 1980s. I inform my clients of the existence of that department, and advise them to check with them regarding well & septic separation distances. I am not a surveyor, nor an expert in such systems, and I avoid commenting on things beyond my area of expertise like the plague (except on this forum, where I impersonate an expert on all things). HUD, for short time, had verbiage in the 4150.2 which REQUIRED the appraiser to indicate the locations of the well and septic systems on their building sketch. Locating the well and septic tank on the sketch was never a problem for me, but locating "the septic system" was a BIG problem, and I never did such. After repeated and forceful pushback from people who actually knew what they were talking about, HUD dropped that requirement, and changed it to the current verbiage which says, approximately, that "we may comment on those distances if we feel comfortable doing so". I am never comfortable commenting on those distances, so I don't. There is always a County Health Department, and the prudent appraiser will always refer their client to an entity such as that regarding issues such as these. As far as pool goes, unfortunately no luck last night. There is generally between 20-25 of us that get together at various venues every night of the week for a tournament. I attend as many as possible, and try to stay up-to-date with the forum in between matches. Hopefully explaining my frequent "single sentence, less than eloquent replies". I did win a couple last week though, and took a second as well, so I'm not due for another win for a while. One of the things I enjoy about pool is the fact that you can play competitively in that sport right up until the day you die. And I'm getting old. We have one guy who gets around the table with a walker, and consistently runs the table against his opponents given any opportunity at all. It's one sport that you learn something new every day in, if you're trying to, and I enjoy that as well. It holds my interest, and I highly recommend it. Since you know how to "jump a ball", you already know what I'm talking about for sure…

 

[Huds_Harm]

Back when Cuomo was in charge of HUD, they were way out over their skis generating publicity for him with TV commercials of appraisers "wiggling pipes in basements" to reassure borrowers their property would be free from defects, & safe to move into. I checked one time, and HUD issued an average of six press releases a day during his tenure, most of which were strictly to generate publicity for his further political aims. One of his press releases indicated that his department would assist borrowers in suing appraisers for "triple damages" should the need arise. So, in my opinion, the borrower can be forgiven for expecting some sort of HUD "warranty" on her FHA loan.

Commissioner
Apgar declared that:

L``HUD will move aggressively to force lenders to
restructure inflated mortgages that result from
fraudulent appraisals or the so-called property flips.
We will push the loan back to the lender and make him
responsible for producing a loan that the borrower can
afford. If not, the FHA will intervene directly and
make the loan right for the borrower.''\168\
---------------------------------------------------------------------------
\168\ Hearing record, supra, at 45.

Despite his promises, however, this promised relief had yet
to appear more than a year later. When Apgar, a Clinton
Administration appointee, left HUD early in 2001 along with
Secretary Andrew Cuomo, nothing had been done.
The Subcommittee has since learned that Apgar's promises to
the Subcommittee, and to borrowers across the country, appear
to have been empty ones. According to information provided to
the Subcommittee by HUD official Laurie Maggiano, in fact,
Apgar couldn't possibly have followed through on his sweeping
reassurances because the law prevents HUD from forcing lenders
to reduce loans that FHA insures. On May 14, 2001, Maggiano
advised Senator Barbara Mikulski that in Apgar's Subcommittee
testimony a year previously, ``FHA perhaps over committed what
it was able to deliver.'' Apgar's disingenuous promises,
therefore, stand perhaps as the final legacy of Secretary Cuomo
and his fellow Clinton Administration appointees at the
Department of Housing and Urban Development--a legacy of lax
oversight and poor management upon which the Subcommittee
Minority hopes new HUD Secretary Mel Martinez and the Bush
Administration will be able greatly to improve

and nothing has changed.

 

[Mike Ault]

Commissioner
Apgar declared that:

L``HUD will move aggressively to force lenders to
restructure inflated mortgages that result from
fraudulent appraisals or the so-called property flips.
We will push the loan back to the lender and make him
responsible for producing a loan that the borrower can
afford. If not, the FHA will intervene directly and
make the loan right for the borrower.''\168\
---------------------------------------------------------------------------
\168\ Hearing record, supra, at 45.

Despite his promises, however, this promised relief had yet
to appear more than a year later. When Apgar, a Clinton
Administration appointee, left HUD early in 2001 along with
Secretary Andrew Cuomo, nothing had been done.
The Subcommittee has since learned that Apgar's promises to
the Subcommittee, and to borrowers across the country, appear
to have been empty ones. According to information provided to
the Subcommittee by HUD official Laurie Maggiano, in fact,
Apgar couldn't possibly have followed through on his sweeping
reassurances because the law prevents HUD from forcing lenders
to reduce loans that FHA insures. On May 14, 2001, Maggiano
advised Senator Barbara Mikulski that in Apgar's Subcommittee
testimony a year previously, ``FHA perhaps over committed what
it was able to deliver.'' Apgar's disingenuous promises,
therefore, stand perhaps as the final legacy of Secretary Cuomo
and his fellow Clinton Administration appointees at the
Department of Housing and Urban Development--a legacy of lax
oversight and poor management upon which the Subcommittee
Minority hopes new HUD Secretary Mel Martinez and the Bush
Administration will be able greatly to improve

and nothing has changed.

I hadn't read that, but it's consistent with the facts as I understood them at the time. A big "publicity stunt", designed to further the political careers of the "slimy principles" involved. Thanks for posting it, you have added to my knowledge today.

 

[George Hatch]

And this is where I have a problem with you attempting to deflect to the borrower.

The loan I applied for was CONTINGENT upon the APPRAISAL determining the home met all FHA MPR requirements.

Nothing a borrower DOES OR DOES NOT do absolves an appraiser and lender of their duty.

The only entity that was REQUIRED to do something and did not was the APPRAISER.

Referring to who is doing what is no deflection and I have repeatedly stipulated to the appraiser's liability to the lender for not doing what they were required to do for the lender. The appraiser wasn't actually doing it for you and neither was the lender getting an appraisal for you. These days a lot of lenders are making loans without any appraisal, and the lenders in those transactions don't owe those borrowers anything in the event of a breakage or repair, either.

Your LOAN was contingent upon the property meeting the lender's requirements, that discretion belonging to the lender. That is nowhere close to saying your PURCHASE was contingent upon those conditions.

I realize you don't like the extent to which the meanings of the terms being used are of effect on a judge's ruling, but that's how our legal system works. Don't shoot the messenger.

 

[George Hatch]

Due diligence is also a crucial part of the appraisal process.

Nobody said otherwise. The appraiser is on the hook for their errors. But per the legal ruling the judge apparently has ruled that in this case they're not on the hook to you.

You mentioned earlier that the appraiser was required to take some additional education. If that was at the hand of HUD then that might represent what they thought was the appropriate response to an appraisal report with these errors.

 

[Fernando]

NO AND NO

I don't see septic in my area.
However, whenever I have an ADU or unpermitted addition, I always check with the building department to see the status.
In the past, many times buyers and even the agents don't do their due diligence in finding out if done with permits.
With full disclosures, sellers need to state what was done with permits especially after they inhabit and did some work without permits.
However, unpermitted work done prior to seller habitation would be less knowledgeable and that's when I check records dating as far back as I can (some departments still use microfiche).

The point is that many buyers and agents don't investigate more about subject property when making an offer.
I do more detail research and discuss it in my report. I assume buyers do not use my report (not suppose to but they do) to renegotiate the price.
My report is for the lender in which a copy to be given to the buyer later (out of my control when lender gives copy report).
My report is for the lender to make a lending decision not for a borrower.