Testifying Againist Appraiser - What Should I Expect ?

[Joe Birrell (NY)]

Received "Notice of Hearing and Complaint" from NY State as witness againist appraiser. Seems NY is trying to revoke license of out of town deal maker.

It was a classical FHA-HUD flip scam. Subject was in poor condition with estimated as-is value of $135,000. Property was flipped to hapless buyer for $225,000.

The current owner called me to help them figure out what in the hell happened. I did a review of origination appraisal for them. It was obvious fraud. FHA VC Sheets claimed property was "average" with no problems. Appraiser ignored identical comps a few blocks from subject, and used sales in far superior locations. Appraiser lied on almost all items. Interior sketch didn't match subject, even subject photos were of some other house. Subject was listed at time of inspection with excessive marketing time (366 days on market) for $175,000. It was THE worst report I've ever seen ! Propety owner turned in appraiser to NY State Attorney General, who in turn reported it to Division of Licensing Services. Complaint cites violations of USPAP, professional misconduct, and possible retribution to property owner. If I was this guy I'd leave town ASAP and turn in my license on the way out.

Anyway, what should I expect at this hearing ? I've been to court many times, but never had any dealings with this type of hearing. I'm also wondering how far the investigation has spread. There is evidence that RE broker, and and others (like the middle man "investor") were involved in the scam.

 

[airphoto]

Joe,

First, let me acknowledge how much I envy you your opportunity ..

Be prepared to testify merely to the items you were unable to verify, those which you found to be absolutely incorrect, etc. "Just the facts, ma'am!"

You're not prosecuting, therefore you don't have to make the case. Let the state folks do that .. just co-operate with them. Remember, you're not on trial. His attorney may wish to attempt to discredit you, but that's why you'll only have to 'prove' those items you found that were incorrectly entered on his report. I'm sure you'll have an opportunity to role play with the folks who've invited you to testify ..

 

[Ray Ohler]

weren't you interviewed by the state investigators? Did you do a Standard 3 review AND an appraisal? A lot depends on what your role is. If a complaint was filed alleging USPAP/State Law violations, the state prosecutor should have contacted you to let you know what to expect. If you supplied a copy of the review and/or appraisal to the state with your complaint then the "other side" most likely received a copy during the discovery phase. Probably early enough on so they have PLENTY of time to prepare some defenses. A lot of the garbage that is going on is rather "new" to the prosecutors but they more than likely aren't going to admit it. Watch the "F" word (fraud). You may think it, you may even KNOW it, but proving it is a completely different thing. Key element of fraud (civil or criminal) is intent. Most of the states don't bother going through the trouble of trying to prove intent unless it has been an appraiser with a LONG history of "incompetent" work and/or involves several complaints.

 

[Joe Birrell (NY)]

Ray:

So far, I have only received letter from legal counsel of NY State with comments they will be contacting me to prepare testimony. I did both a field and desk review, using a narrative format for property owner (victim of scam - current owner hired me). Review followed USPAP standards. File is well documented with data showing original report was bogus. I assume NY state officals have documents I gave to property owner.

Hearing is scheduled in September. Hopefully appraiser will turn in his
license before then. His license is up for renewal later in same month.

 

[David C. Johnson]

Joe:

Quick -- hire the most expensive lawyer around ASAP.

In states like NC you could end up doing time. 8O

(Yes, I read your posts very carefully.)

dcj

 

[Ray Ohler]

I didn't know from your first post when the hearing was scheduled for and thought maybe you were being "blindsided" with imminent testimony. I also see that the state prosecutor will be in touch with you. That's good, at least you will have the chance to either meet with them or at least have some conversation. At that point, if you don't already know, find out if the state has hired an expert witness in addition to your complaint. You are probably right in thinking that the homeowner supplied them with your documents, the state probably released them to the resondent and/or his attorney if he has one. Hopefully, the appraiser made numerous factual errors (not only physical condition) in addition to the overvaluation (alleged, I'm sorry). Bill is right as far as you are not the prosecution you should be there to support YOUR appraisal and review, period. Good luck with it.

 

[Larry Lyke]

Joe --

I can't decipher from your post whether its a department hearing or if you are going to court. The latter seems unlikely, as a public hearing is usually required to lay the groundwork through an administrative panel of some sort.

Just tell the truth as you understand it. It ain't much more difficult than that.

The defendant's attorney asks the hardest questions usually because they often have a hard time getting their questions informed by the issue as you the trained appraiser understand such things. Plus the defense attorney is trying hard to use appraisal buzz words to trigger familiarity with you to warm you to his client['s cause]. And to "inform" you that he's just one of the boys -- except, if you don't answer the questions a certain way, his "boy" is going to jail and losing his license.

 

[Ray Ohler]

not that far off the mark these days. Like I mentioned in the past, attorneys are "boning up" these days on representing appraisers in "administrative" hearing cases before state boards. Also, unfortunately, the state prosecutors are crying the same old governmental drone chant...."we don't have enough MONEY, we don't have enough PEOPLE, we don't have enough RESOURCES". Meanwhile, they have PLENTY of time to plan for their "golf outings" in Hawaii, attending retirement luncheons and lining up ANOTHER governmental job so that they can get ANOTHER pension because they...whatever. I'm REALLY not anti-governmental, I'm just anti-drone. If your "reviews" comply with USPAP (close to 100%) and the appraiser made substantial errors or blatant misrepresentations, other than "opinion" items, you should have no problem. It appears like your role will be to support your findings, period, but after you speak with the prosecuting attorney you'll better know the answer to that. If the prosecutor starts stuttering and flipping through papers you MAY want to take David's advice but before you hire an attorney make sure he doesn't start "break dancing" (in other words, make sure he has SOME working knowledge of the appraisal process). Good luck again. One thing you WILL gain, if nothing else is some knowledge of how the system works OR doesn't work. If you trust the work you did, stick to your guns. You may want to review your review to make sure you caught ALL the errors in the report and if not, see if you can somehow work them in to your testimony. Of course I wouldn't be suggesting that you try and TWIST the system. That would not be ethical.

 

[Joe Birrell (NY)]

Thank you everyone for your advice.

Like I said before, maybe this guy will leave town and turn in his license before the hearing. In any event I have sufficient time to prepare.

P.S. to David:

I hope your wrong. Hopefully NY is not like NC. That's what worries me though, I'm not that comfortable with whatever the state agenda might me. On the surface, it seems to be a no-brainer. I'll keep the attitude that I'm not the one on trial.

 

[David C. Johnson]

Joe,

I have to confess to some shameless opportunistic facetiousness (damn, I think I like that phrase !).

I doubt "board concerns" should be much of a concern in NY.

Keep us posted.

dcj