Lender forced to buy back loan from fannie mae

[Delta85]

I'm NOT* trying to talk you out of your decision.
I just wonder why one would make that decision when the experts we pay to defend us against claims advises something different?
But, it doesn't matter why you (or anyone else) would do it and, despite my musings, it is your decision to make. This isn't a right/wrong kind of decision. It is a business decision. Take the action you think is best.

:new_smile-l:

EDIT TO ADD: UGGH! I meant to type "I'm not trying to talk you out..." and omitted the "not" (and, that is not a Freudian slip!). Sorry! :laugh:

Yeah I understand and I have no problem with appraisers who want to save workfiles for decades. That's a personal decision. USPAP says I can get rid of this stuff after 5 years and so I do. You can be sued regardless of whether you have a file or not. Without it they have less to build a case against you. And I keep going back to the Lois Lerner example. She's obviously guilty but since she eliminated all documents and e-mails pertaining to the scandal it looks like she will skate away mostly unharmed.

 

[hastalavista]

What ordinance? If the guiding force behind everything real estate appraisal related (USPAP) says discarding workfiles after 5 years is ok what more can they do to you?

I don't think too much about it. If I did, I'd have to build a warehouse to store all my files. Is 10 years long enough for each file? What if a claim is filed on year 11? How about 15 years? What if a claim is filed on year 16?

After a 40 year career should appraisers have 5000 square foot facilities rented out just to store workfiles?

One expert recommends 10-years, not 40-years.
My tax accountant recommends I keep my tax returns forever; I don't plan to rent space at Fort Knox to do that.
Either follow the expert advice or don't.

 

[Delta85]

One expert recommends 10-years

Sure, and when a lawsuit is filed on year 11 you will be in the same position I am if a lawsuit is filed after 6 years.

What is the statute of limitations on appraisal related lawsuits? Or is there even one to begin with?

 

[Junior Member]

Yeah I understand and I have no problem with appraisers who want to save workfiles for decades. That's a personal decision. USPAP says I can get rid of this stuff after 5 years and so I do. You can be sued regardless of whether you have a file or not. Without it they have less to build a case against you. And I keep going back to the Lois Lerner example. She's obviously guilty but since she eliminated all documents and e-mails pertaining to the scandal it looks like she will skate away mostly unharmed.

If an appraiser is truly engaging in intentional fraud or criminal acts, then, sure, that appraiser is probably better off without a work file. That appraiser might want to discard their files on day 1 -- because a record keeping violation is trivial in comparison. But this is not the kind of situation that affects 99%+ of appraisers who become defendants in lawsuits about their work. The more typical scenarios involve accusations that the appraiser's value wasn't supported because some review appraiser 7 years down the road opines that the appraiser should have use this sale or that sale instead or opines that the appraiser negligently misstated information about the property. A decent work file helps the defendant appraiser defend that kind of legal claim far more often than the appraiser is hurt by something in the file.

Leaving aside the simple hope that there is support for an appraisal in the work file, here is a recent case illustrating another reason why good appraisers with decent work files are better off retaining them:

The FDIC sued an appraiser. As is the case in most FDIC professional negligence cases, the appraisal was more than 5 years old. The appraiser had thrown away his work file, including the report, after the USPAP period. In his defense, the appraiser insisted that the report he was being sued over had been changed by someone after it left his hands -- that the value had been changed. If that could be proven, the case would easily be defended -- and indeed the FDIC has dismissed other cases when forgery of the appraisal was shown. However, this appraiser could not prove it because he had no records. After 18 months of litigation and with no apparent hope of producing evidence of the forgery, the appraiser (not insured by our company) settled for more than $500,000.​

In more typical cases, a decent work file contains things that are highly relevant to defense of an appraiser against professional liability, such as: communications with the client showing the client's knowledge of an issue or condition, photos (that may not be in the report) showing the property's condition at the time of appraisal, blue prints or plans relied on by the appraiser, and information given to the appraiser by the client or third parties. And, of course, we can also hope that a decent work file contains support for the actual appraisal -- which is the case for most appraisers.

-- Peter Christensen, LIA's general counsel

 

[hastalavista]

Sure, and when a lawsuit is filed on year 11 you will be in the same position I am if a lawsuit is filed after 6 years.

Yes, I will. I'm not sure what that has to do with my question (expert says "keep it for 10, so why not keep it for 10?")? But it doesn't matter, I've asked my question, and you've stated your position.

A business decision.

What is the statute of limitations on appraisal related lawsuits? Or is there even one to begin with?

I'm not sure, and there are probably some exceptions to normal rules (like, who is making the claim? Private entity vs. a public entity, for example).

 

[23Degrees]

Could this be a two pronged question? Privateer has provided points with regard to the work file being beneficial in a civil court situation. In these cases it seems fair to say that the focus is usually on one or maybe a handful of specific issues that get resolved on way or another without an expedition into other areas of the work file for the pure purpose of finding "something" to hang the appraiser over.

But with an investigation by SOME state boards, based on what I've read, when you hand over the work file due to a complaint about a specific issue the whole thing is given a complete exam and it is rare that they can't find something to sanction the appraiser over. No work file is perfect and if the motivation is a fishing expedition then trouble is guaranteed.


Is that a consideration that can be worked into the odds of having a problem when making the discard/no discard decision at the five year mark?

 

[Delta85]

If an appraiser is truly engaging in intentional fraud or criminal acts, then, sure, that appraiser is probably better off without a work file. That appraiser might want to discard their files on day 1 -- because a record keeping violation is trivial in comparison. But this is not the kind of situation that affects 99%+ of appraisers who become defendants in lawsuits about their work. The more typical scenarios involve accusations that the appraiser's value wasn't supported because some review appraiser 7 years down the road opines that the appraiser should have use this sale or that sale instead or opines that the appraiser negligently misstated information about the property. A decent work file helps the defendant appraiser defend that kind of legal claim far more often than the appraiser is hurt by something in the file.

Leaving aside the simple hope that there is support for an appraisal in the work file, here is a recent case illustrating another reason why good appraisers with decent work files are better off retaining them:

The FDIC sued an appraiser. As is the case in most FDIC professional negligence cases, the appraisal was more than 5 years old. The appraiser had thrown away his work file, including the report, after the USPAP period. In his defense, the appraiser insisted that the report he was being sued over had been changed by someone after it left his hands -- that the value had been changed. If that could be proven, the case would easily be defended -- and indeed the FDIC has dismissed other cases when forgery of the appraisal was shown. However, this appraiser could not prove it because he had no records. After 18 months of litigation and with no apparent hope of producing evidence of the forgery, the appraiser (not insured by our company) settled for more than $500,000.​

In more typical cases, a decent work file contains things that are highly relevant to defense of an appraiser against professional liability, such as: communications with the client showing the client's knowledge of an issue or condition, photos (that may not be in the report) showing the property's condition at the time of appraisal, blue prints or plans relied on by the appraiser, and information given to the appraiser by the client or third parties. And, of course, we can also hope that a decent work file contains support for the actual appraisal -- which is the case for most appraisers.

-- Peter Christensen, LIA's general counsel

That's good info. My question to you as an expert in your field is what is the statute of limitations for complaints and lawsuits that involve appraisers and their reports?

Also, in the case of Lois Lerner for example, why is she seemingly benefitting from e-mails and paper trails having been destroyed? If an appraiser can be found liable even with no workfile but simply a complaint, why can the head of the IRS get away with the current scandal by simply saying "sorry, the e-mails are lost.?"

 

[Delta85]

But with an investigation by SOME state boards, based on what I've read, when you hand over the work file due to a complaint about a specific issue the whole thing is given a complete exam and it is rare that they can't find something to sanction the appraiser over. No work file is perfect and if the motivation is a fishing expedition then trouble is guaranteed.


Is that a consideration that can be worked into the odds of having a problem when making the discard/no discard decision at the five year mark?

I think many of these complaints and lawsuits are fishing expeditions and a workfile only adds fuel to the fire. I've heard many times that state boards WILL find SOMETHING in a report and/or workfile to justify some kind of monetary sanction.

 

[Pittsburgh Pete]

That's good info. My question to you as an expert in your field is what is the statute of limitations for complaints and lawsuits that involve appraisers and their reports?

Also, in the case of Lois Lerner for example, why is she seemingly benefitting from e-mails and paper trails having been destroyed? If an appraiser can be found liable even with no workfile but simply a complaint, why can the head of the IRS get away with the current scandal by simply saying "sorry, the e-mails are lost.?"

Ms. Lerner was not head of the IRS.

Seems that with your mentality the appraiser without a workfile would be tarred and feathered as anyone investigating would assume that the files were destroyed in order to destroy evidence of wrongdoing. Or hasn't that been your point about Ms. Lerner all along.

 

[Delta85]

Ms. Lerner was not head of the IRS.

Seems that with your mentality the appraiser without a workfile would be tarred and feathered as anyone investigating would assume that the files were destroyed in order to destroy evidence of wrongdoing. Or hasn't that been your point about Ms. Lerner all along.

Lerner is a top executive with the IRS. Enough so that she was the lead person called before Congress.

Try and follow me here as I will repeat my explanation I offered earlier. The appraiser can LEGALLY and with full blessing from USPAP discard workfiles after 5 years. Lois Lerner destroyed e-mails and papertrails obviously trying to hide something even though she had a responsibility to save and back up that data. She was in the wrong, the appraiser is in the right but BOTH are using the same strategy and in the case of Lerner, at least as of today, it appears to have worked in her favor.

So the appraiser without a workfile will be skewered in court while a top IRS executive, obviously lying about computers crashing in order to hide data and being grilled on live tv by Congress, gets away free? Sounds odd to me.