Loan Officer Working As Appraiser

[Ray Miller]

Question for Forum.


I have a man who would like to work with me while he gets his license. I will sign off on his appraisals, which I have done for others in the past.

My question is this. He is currently employed as a loan officer for a mortgage lender. He will receive orders from others with in the company to do appraisals for. At the same time he says he will not do any appraisals for his on loans. But I would have no way of knowing if they are his or not.

I see a real conflict of interest here.

I have also gain knowledge, from several sales reps, that he is trying to buy four or five more software programs for others. That he is trying to set up his own appraisal office, even before getting his license.

My gut say to get away from this problem, before it starts.

What dose the forum say. Would like to hear from more then one, or how other might treat this.

Ray Miller
www.raymiller.ws

 

[Patrick Egger]

Ray ...

If he doesn't hit the value, will he blacklist himself? ... sorry, just had to ask. I think you would have to disclose that he works for the lender/client as a loan officer and as such, that may be an issue for someone down the road (regulator/auditor/reviewer).

To avoid any conflict, I would suggest that he be assigned to jobs that do not involve his company. Then you have nothing to disclose. Even so, provided that they are not his loans there's no technical conflict ... no different than an appraiser with a real estate license that works for Century 21 .... does he now not do any appraisals that involve homes sold by C21? I think disclosure is the key and if I was the client, I wouldn't want him doing the appraisals simply because of that ... could cause me a problem down the road.

On the other issue of buying software to set-up his own company, etc ... based on what you wrote, I'd be concerned and would have to wonder what's this guy up to. I think you can only have one trainee and that the trainee shouldn't have trainee's .... etc.

 

[Carnivore]

Most lenders will not use an appraiser that works also as a Real Estate Broker.

I would run, he will find someone else like you. Remember, he is not going to jeopardize his loan commision kick backs over your ethics.

You might let the state knopw what this clown is up to. Maybe they will deny his trainee license!

 

[Mountain Man]

To avoid any conflict, I would suggest that he be assigned to jobs that do not involve his company.

Agree. No problem doing for others, but I would not let him do for his own loan company. Even if it's not a conflict, it could Look like one.

But then you through in this little part: <_<

I have also gain knowledge, from several sales reps, that he is trying to buy four or five more software programs for others. That he is trying to set up his own appraisal office, even before getting his license.

Not to sound like The Old Guy..... but run like the wind. He sounds like trouble all around. I have worked hard to establish my company's professionalizm, and come from a very well know back ground. All it would take to undo my hard work is one yahoo using my name, acting like a loan-ranger.

Sorry for the bad pun.

 

[Ed Woodruff SRA]

I think you already know the answer to this question, but you're a nice guy, and it's hard to say "no" sometimes, especially if he seems to be a "nice" guy, too. I do not see how you would benefit from associating yourself with this fellow. No decent person likes to make others unhappy, but you must do what's best for yourself. I see trouble down the road - sounds like he very well may do things in the future that would make you uncomfortable, and could even cause you embarrasement. I'm not saying he's dishonest, but it sounds like he's definitely out for himself, and has no problem using you as a tool to get where he thinks he wants to be. He probably comes off as an ethical and sincere person, or you would give him no consideration at all.

We must all think about the future value of our present decisions. What would happen if you do hire him, and what would happen if you did not. Doesn't sound like he's going to make you much money, and will go into competition with you as soon as he gets his license, probably from the same clients you have now, if you do work for the mortgage company he works for. Personally, I would just say no. Even if he becomes angry or bitter about this, that's better than you becomming angry or bitter at yourself for hiring him.

 

[Mike Simpson]

I'm an example of Patricks comparison of real estate agents who're also appraisers.

I don't do appraisals for agents I work with--I don't see a problem performing an appraisal for an office of the same name in a different area--these companies are independently owned (although this situation hasn't even presented itself yet). I just prefere to avoid even the appearance of conflict of interest.

Interestingly enough--when agents are told I've a duel license their first response is almost always, "isn't that a conflict of interest?" I ask them to explain the "conflict,"--they've never been able to.

At the latest USPAP class I attended last spring--there was a loan officer in the class who also had his appraiser's certification. At one of the breaks I overheard him talking with a first year newbie--they were discussing whether the newbie (& the newbies boss) performed "comp searches," and whether they "called for every little condition," or were "reasonable" in the LO's words. All this at a USPAP CLASS!!

-Mike

 

[larryhaskell]

Ray:


RUN, RUN, RUN.


Mike:

It seems odd that an agent would mention the term conflict of interest to you when they are permitted by law in most states I presume to represent both parties in a transaction. :blink:

 

[Mountain Man]

It seems odd that an agent would mention the term conflict of interest to you when then are permitted by law in most states I presume to represent both parties in a transaction.

Or none at all....... while still collecting a commssion based on the sales price.

 

[graindart]

The loan officer will probably have his own license and multiple trainees within a month or two. My friend just moved to Wisconson a few months ago and got his license. He's been working under a supervisor for a couple of years and has plenty of experience, education, etc. But, what really surprised me was that Wisconsin only requires 500 hours of experience and no minimum length of time. I was shocked to say the least. Maybe I'm just used to Montana, but to get licensed here it's 2000 hours of experience in not less than 18 months. This means that claiming 10 hours of experience per appraisal, someone could conceivably become a licensed appraiser in Wisconsin in a month or two (as long as they could fit in a quicky 90 hour education bundle). The other thing that really surprised my friend was that when he submitted his application, no proof of experience, sample reports, or copies of completed reports were submitted or requested. Maybe I'm just located in a strict state or something, but I know when I got licensed (and most recently certified) I had to submit a few reports and then the board requested a few more from my submitted log. Maybe I'm missing something, but it seems like it would be just too easy to get a license in Wisconsin in a matter of months. Is Montana just unusually strict or is Wisconsin just unusually easy?

 

[Steve Wyrick]

Ray,

Their may or may not be a violation of conflict of interest, there is always a way to justify it. But, there is absolutly a PERCEPTION OF CONFLICT OF INTEREST, and sometimes perceptions even if they are wrong beome the accepted truth.

I think this guy is going to run a number on you. He is going to accept orders from his other LO's in his own office, you are going to sign off on. Numbers hitter. He is trying to buy software, he is not going to do the appraisals, the LO's are, going to give them to him to bring to you. Unless you are going to be over his shoulder at every turn from inspection to completion there is no way you are going to be abel to say for certain that he did it all himself and have some nagging thought in the back of your mind that the scenario above is not happening.

Finally, how are your other brokers going to feel knowing that this LO and you by association are going to be doing appraisals for them with a perceieved pipeline right back to this guys competing office. Just wait for the first time your appraisal for one of them comes in under price, or customer for whatever reason cancels the application with them and goes to this guys loan company and gets a loan. Your rep goes out the window and expect to get a call from the State on complaints in addition to losing clients.

Say No and Run don't walk from this.