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Should I comply with this stip?

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Lysander in Charlotte

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Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
The following statement is included on page 3 of all my 1004 reports.

This report is written for the specific scope of work as stated above, its intended use, and the intended user who is the client and only the client. If other parties choose to rely upon this report, the appraiser is not obligated to such parties, and it does not result in such parties becoming intended users of this report.

I received the following stip from Major Big Bank.

the underwriter is requesting that the verbiage regarding the lender/client on page 3 be revised so that it does not exclude anyone. Please email the revised report to me and I will have it uploaded into appraisal port. Any urgency in completing this would be greatly appreciated.

Should I comply and remove the statement? This statement has been in all my reports since the forms changed , and it has not been an issue before. I like the statement and think it properly belongs in all reports. However, I've had experience with winning battles and loosing wars. Consequently. I try to choose battles carefully. Is this one worth going to the mats?
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
THE INTENDED USER OF THIS APPRAISAL REPORT IS THE LENDER/CLIENT. THE INTENDED USE IS TO EVALUATE THE PROPERTY THAT IS THE SUBJECT OF THIS APPRAISAL FOR A MORTGAGE FINANCE TRANSACTION, SUBJECT TO THE SCOPE OF WORK, PURPOSE OF THE APPRAISAL, REPORTING REQUIREMENTS OF THIS APPRAISAL REPORT FORM, AND DEFINITION OF MARKET VALUE CONTAINED HEREIN. NO ADDITIONAL USERS ARE IDENTIFIED BY THE APPRAISER.


is the ONLY language permitted on the fannie 1004_05

 

George W Dodd

Senior Member
Joined
Jul 9, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Mike,

The only language permitted by Fannie but they are not the only users of this particular form report.

Did the client identify any additional users of the appraisal at the time the order was placed? Did you ask? Do you have an engagement letter?

If they have a specific user then I might consider revising the report to include that user, otherwise no.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
If your client really is the only intended user and this lender isn't your client, then why would you do anything for them?

As far as I can tell, this lender wants to expand your liability to anyone who has a copy of your report in their hands. In your place I would categorically decline under any circumstances to do that.

What I would offer up is the explanation that you are required in USPAP to identify your intended users and the intended uses. If they want to expand the list of those uses and users after the fact that could easily have an impact on both your SOW and your report.

Ask them exactly who the other intended users are (by name, if possible) and exactly what the other intended uses are, so that you can ensure your appraisal and appraisal report address the needs to those users in a meaningful way. If they can answer that - which I doubt - you should put that information into your report so that if a problem comes up later it can be judged within the context of the conditions under which you originally built the appraisal and appraisal report.

I wouldn't use a Fannie form for any assignment I didn't have to. They knowingly and deliberately stacked the deck against appraisers with their unreasonable verbiage. Reasonable accountability for appraisers is one thing, laying their throats open to any frivolous lawsuit that comes along is quite another.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Who could possibly argue with George Hatch?

Except if the appraiser wants/has to do GSE work then they have to accept laying their throats open to liability. It's an assignment condition. Take it or leave it.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Op

Mike,

The only language permitted by Fannie but they are not the only users of this particular form report.

Did the client identify any additional users of the appraisal at the time the order was placed? Did you ask? Do you have an engagement letter?

If they have a specific user then I might consider revising the report to include that user, otherwise no.

The following statement is included on page 3 of all my 1004 reports.

I received the following stip from Major Big Bank. :)
 

Brad Ellis

Senior Member
Joined
Feb 7, 2006
Professional Status
Certified Residential Appraiser
State
California
Lysander,

If the assignment was for a Fannie Mae compliant appraisal, then yes, modify that landugage to what Mike Kennedy posted.

While George is correct that it expands your liability it is not because others are intended users; rathere is is because the courts have already decided that those who may rely on the reprot have standing in a legal action- and that was specifically intended by Fannie and it has been publicly stated many times.

So, Greg is right here, too. If you accept such work than you have contractual obligations to comply with their rules.

This one is certainly not worth fighting over in my view.

Brad
 

Will Granger

Sophomore Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Ly, I have this in my form as well. I tell people my E & O carrier demands it. If I don't use the statement, I don't have E & O, which is required by the lender. I see I haven't been on the forum since 2002. Wow! I've gotten old since then. :^) Have a good Christmas.
Will
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Welcome back Will! been hibernating??

IF this is a fannie mae report, the fannie mae approved statement is the only thing acceptable. i would put it in there. Having said that, it is the reason that i only have one mortgage client and i will never use this certification willingly only as a necessity. Luckily that is only 1 or 2 reports a month. The privity issue is one that I feel is a Damoclean sword hanging over appraisers. When will it drop? Under Fannie you can only stare at it and take the hit when it comes.
 
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