Judge Rules Appraiser/Lender Owe no duty of care

[Huds_Harm]

John M Pratt
July 19, 2024 at 1:23 pm
I have been an appraiser for 25 years, FHA approved, and what happened to this lady is unacceptable. This problem starts with the appraiser who is incompetent and should have had his/her license revoked. It is apparent to me that the appraiser allowed the AMC, Class Appraisals, to pressure them to complete the report quickly which leads to errors in the reports. Class Appraisals like all AMCs, uses computer programs to review the appraisal report for errors and deficiencies and get back to the appraiser for corrections. They apparently found the error about the connection to a well & septic however did not have the appraiser correct it the report which is their responsibility. The lender accepted the appraisal report and the review comments from Class Appraisals and apparently did not read the appraisal report or the review from Class Appraisals.

The appraisal report is prepared for the Client and FHA not the buyer and it is not the buyers’ responsibility to find or cure defects in the appraisal or the home inspection.

This is a total failure on the part of the appraiser, Class Appraisals (agent for the lender), Lender/Client and FHA and all should be found liable to the buyer. Everyone of these parties profited from this transaction at the expense of the buyer. This is a miscarriage of Justice.

 

[Dublin ohio]

Which would have been a required repair prior to closing

That is an assumption with no basis in fact.

 

[Huds_Harm]

Todd Redington, SRA AI-RRS AGA
July 19, 2024 at 5:09 pm
I work in an area where onsite sewage systems (OSSs) are common. A few years ago I put out a poll to appraisers that work in my area and similar areas asking 3 questions with the possible answer of always/sometimes/never
Q1 – do you pull the as built and OSS data prior to your site observation of the property?
Q2 – do you physically verify the location per the as-built of the OSS and water supply while at the site?
Q3 – do you research the OSS data for your comparables and verify the bedroom capacity of the system?

Q1 responses <10% always <20% sometimes
Q2 Responses <5% Always <5% Sometimes
Q3 Responses <1% always <1% sometimes

Now my question to this audience. If you don't know the bedroom capacity of the OSSs for the subject and comparables, how do you show the "market acceptance" of an OSS if you can't identify at least one sale in your analysis that has the same OSS capacity?

What if your subject only percs for 2-bedrooms and all your comps are 3-bed capacity systems. Think you might be in trouble when down the line the owner tries to expand the home to a 3-bedroom house and suddenly finds out it can't be done because of the limitation of the septic system. And before you go say it is the owner's responsibility to check that out before they buy the property, NO, it is the appraiser's responsibility to know the impact on value of the utilities available to a particular site.

If you have never appraised a property with an OSS, you better get educated cuz it ain't just a check box on page 1.

If you live in an area that does not have the data online, then make friends with the local health department peeps. If there are no records, "subject to documentation that the OSS has service capacity sufficient to serve the existing improvements and is functioning as designed."

You are going to lose clients, but it is better than losing your shirt, or worse your house.

 

[Huds_Harm]

That is an assumption with no basis in fact.

It did not meet minimum distance requirements which is a required repair.

 

[Mike Ault]

Todd Redington, SRA AI-RRS AGA
July 19, 2024 at 5:09 pm
I work in an area where onsite sewage systems (OSSs) are common. A few years ago I put out a poll to appraisers that work in my area and similar areas asking 3 questions with the possible answer of always/sometimes/never
Q1 – do you pull the as built and OSS data prior to your site observation of the property?
Q2 – do you physically verify the location per the as-built of the OSS and water supply while at the site?
Q3 – do you research the OSS data for your comparables and verify the bedroom capacity of the system?

Q1 responses <10% always <20% sometimes
Q2 Responses <5% Always <5% Sometimes
Q3 Responses <1% always <1% sometimes

Now my question to this audience. If you don't know the bedroom capacity of the OSSs for the subject and comparables, how do you show the "market acceptance" of an OSS if you can't identify at least one sale in your analysis that has the same OSS capacity?

What if your subject only percs for 2-bedrooms and all your comps are 3-bed capacity systems. Think you might be in trouble when down the line the owner tries to expand the home to a 3-bedroom house and suddenly finds out it can't be done because of the limitation of the septic system. And before you go say it is the owner's responsibility to check that out before they buy the property, NO, it is the appraiser's responsibility to know the impact on value of the utilities available to a particular site.

If you have never appraised a property with an OSS, you better get educated cuz it ain't just a check box on page 1.

If you live in an area that does not have the data online, then make friends with the local health department peeps. If there are no records, "subject to documentation that the OSS has service capacity sufficient to serve the existing improvements and is functioning as designed."

You are going to lose clients, but it is better than losing your shirt, or worse your house.

My response would be, Did you conduct "soil testing for contaminants" on your subject and all comparables? Did you verify that the electrical service was up to code for your subject and all comparables? Did you verify that the subject and all comparables were "mold & radon free" at the time of sale? Did you verify that all the required "building permits were in place" for your subject and all comparables? Did you check the "proximity to registered sex offenders" for the subject and all comparables? All of those items (and many more) affect value, and none of them fall within the appraiser's purview.

 

[George Hatch]

John M Pratt
July 19, 2024 at 1:23 pm
I have been an appraiser for 25 years, FHA approved, and what happened to this lady is unacceptable. This problem starts with the appraiser who is incompetent and should have had his/her license revoked. It is apparent to me that the appraiser allowed the AMC, Class Appraisals, to pressure them to complete the report quickly which leads to errors in the reports. Class Appraisals like all AMCs, uses computer programs to review the appraisal report for errors and deficiencies and get back to the appraiser for corrections. They apparently found the error about the connection to a well & septic however did not have the appraiser correct it the report which is their responsibility. The lender accepted the appraisal report and the review comments from Class Appraisals and apparently did not read the appraisal report or the review from Class Appraisals.

The appraisal report is prepared for the Client and FHA not the buyer and it is not the buyers’ responsibility to find or cure defects in the appraisal or the home inspection.

This is a total failure on the part of the appraiser, Class Appraisals (agent for the lender), Lender/Client and FHA and all should be found liable to the buyer. Everyone of these parties profited from this transaction at the expense of the buyer. This is a miscarriage of Justice.

Nobody has said that the appraiser isn't responsible for their various errors. You have repeatedly argued against a sentiment which doesn't exist. This is the strawman fallacy and it will never become less of a strawman regardless of how many times you repeat it.

At issue here, and what you're complaining about, is to whom (in addition to the original client) the appraiser is responsible, THAT liability being determined as a matter of law. Even the appraisers who agree that the appraiser owes 3rd parties exactly the same responsibilities as a matter of professional ethics will also be compelled to acknowledge that the legal aspects are settled on their legal basis and as a matter of law.

By definition, what should be often ..... isn't. What's legal isn't always the same outcome as "justice". Known criminals walk free or don't get prosecuted or enter into plea deals for much lesser offenses every day due to the acknowledgement of the disconnect between what sometimes happens in the courts per the law as written vs "justice".

 

[Huds_Harm]

Nobody has said that the appraiser isn't responsible for their various errors. You have repeatedly argued against a sentiment which doesn't exist. This is the strawman fallacy and it will never become less of a strawman regardless of how many times you repeat it.

At issue here, and what you're complaining about, is to whom (in addition to the original client) the appraiser is responsible, THAT liability being determined as a matter of law.

And this is the only place where anyone mentions anything about what the borrower did or did not do.

 

[Surf Cat]

Bayou,

No one here has reviewed your appraisal, the purchase contract, counter offers if any, and or additional documentation such as inspection reports or the property profile.

All we have to go on is "the article" which you keep referring us to. Which is, by the way, a "one sided" story more like a campaign speech. That, and what you tell us based on our inquiries. Very much like a politician, when we ask a question, you don't answer the question and keep campaigning.

Instead of going round and round in circles again, what is it that you want from us?

 

[Mike Ault]

And this is the only place where anyone mentions anything about what the borrower did or did not do.

Because, in the final analysis, this is what we are engaged to do. And unfortunately, protecting the borrower's interests is not part of the FHA appraisal process.

 

[George Hatch]

And this is the only place where anyone mentions anything about what the borrower did or did not do.

The level of technical discourse here tends to run higher than the 1-paragraph feedback comments that get made at the articles. Bolstered by our experience with each other and what we are capable of understanding of the technical competence of our regulars.

So if you're going to equate scattered and miscellaneous comments at an article to the 570+ responses we've exchanged here as if they're all of equal depth and consideration and technical competency then by golly, bless your heart.

Nobody here is blaming you for what the appraiser didn't do. They're attributing to you for what you didn't do.