Threat of lawsuit

[Atlanta CG]

I did a COD appraisal, the customer (borrower) has changed lenders, new lender wants a copy with their name on it, first lender will not send a release letter. I stated that I could not perform a new appraisal without the release. Of course, borrower said, "But, I paid for it, you won't send me a new copy, I'll sue." How do others handle this? Do you do the new appraisal stating all the details in the report regarding the first lender, even though they refuse to release it? I know this has been discussed before but I need a quick and simple answer regarding this specific instance. I don't want to get sued, even if in small claims, but I also do not want to lose the original good client.

 

[airphoto]

You prolly won't lose the original 'good' client ..

Invite the borrower to sue you .. but explain to them/her that you'll be countersuing for your time at $75.00/hour for time spent on their suit! Suggest that they contact their state's attorney general, first, with respect to their need to sue .. let him/her explain to them why they don't own the appriasal. Offer to do another appraisal for second lender, at full fee of course ..

 

[Mountain Man]

John,
I had a similar situation once, except the customer was an attorney. He threatened to sue saying he had never heard of a law against re-printing the report for another lender, and the report was his to do with as he pleased. :roll: I just faxed over the certification and limiting conditions, with some other Uspoop stuff, and said go for it. The lender did finally give in, after much harassing. But if he did sue, I figured the worse case scenario would be the judge ordering me to reprint the report. Okay no problem, now I have a court order in files.

Now days, I tell the customer to call their lender for the release. When you get it from the lender, send me a copy or fax and you get your report. I do NOT get in the middle of those fights any more.

 

[Ray Ohler]

for anyone who does any volume this probably wouldn't be practical. A while back I think it was Jeff(AL) who prepared a brochure outlining this among other items. Anyway, for the few "collect" from borrower jobs I have done I explain it to the borrower before hand AND prepare a letter for them to sign when I go to the property. Simple letter explaining that although they paid the appraiser directly...and so on. I also note on an addendum, referenced in the body of the report, the disclosure that the fee was paid directly by the borrower...and so on. However, like I said, I could probably count on both hands the number of mortgage appraisals I have done in the last 16 years that I collected for at the door.

 

[Jeff Horton]

Your right Ray, I did the brochure and I am thinking of handing the brochure everytime I have do an appraisal (to the homeowners that is). The borchure is still up on my web site if someone wants it. I dont remember the URL but you search the archives and find the post.

 

[Larry Lyke]

John from Atlanta --

You may have any easier out on his one.

Being that the customer did select the lender and did pay you for it, it is my opinion that he can de-select the lender.

Have him write you a note telling you to change the lender to _____ and then do it.

Comments.

 

[Neil (Texas)]

Larry

I recently did that very thing. Property owner paid at door (check cleared) and I explained that they could receive a copy from the lender.

Couple days later the owner called informing me that they were changing lenders and needed a reprint sent to new lender. My attorney told me to get a statement from the owner explaining that they had terminated their loan application with the original lender and were requesting a reprint sent to new lender.

 

[bradellis]

John,

USPAP covers this. The purpose and intended use of the appraisal is for Client X to make a determination as whether or not they will make a loan on the property according to the terms/conditions of their quote and good faith estimate to the borrower. Clearly, the borrower does not want to deal with Client X anymore.

Since he will not be doing business with Client X, the appraiser client relationship is over.

Now what you have is a totally new assignment. You may produce a new appraisal, as of the original effective date, for new client Y. Naming the borrower as client doe not work as banking regs require that the lender order the appraisal. Get a letter from the buyer outlining his wishes to use another lender, get the new lender to order the appraisal, and charge a fee that you feel is fair for the extra work- that is between you and your client.

Brad Ellis, IFA, RAA