Two clients

[Jeff Horton]

Friend has been asked to make the client the homeowner and the lender. We are questioning if we can do this. Does Anyone have any input USPAP or otherwise?

Doesn't FIRREA require us to be engaged by the lender and therefore making them the client?

 

[Farm Gal]

THere are better answers to Jeff's situation below: but folks might want to read this post anyway, as it entirely flys in the face of every USPAP class I have taken over the last many years... :roll:
EDITED 8/14/02 after reading other's responses (and to fix some of my typos )
Jeff:
I am no guru, but I believe that the way out of this is to do a report for both clients - seperately.

I know this is going to raise Cain, but based on the information I got from what I consider the Horses mouth(s) at this summers institute conference, I was told by folks I challeged directly to stand behind me and be quoted IF i got into any difficulties due to following their advice.

SO Per my notes taken during a class on USPAP and the Appraiser instructors: Danny Wiley (Member Appriasal Standards Board) and Stephanie Coleman (Screening Director Appraisal Institute) on or about 11 am 7/14/2002 Pacific Standard time:

There is NO prohibition from performing an appraisal for two or more different clients on the same property up to and including useing the SAME date of inspection and the reports can or can not have different signatures.

AND what you charge for your services on the second report is entirely up to YOU the appraiser.

The above are both direct quotes, my interpretation of YOUR situation is that you are in fact permitted to perform two appraisals.

[OK folks - I am braced for the inevitable barrage of folks telling me that I am wrong, WRONG, WAY WRONG] But there you have it: I have quoted my sources and time, place and circumstances quite thoroughly.

I have more to toss out at a later date... have fun, bye,

 

[Jeff Horton]

Thanks Lee Ann but what is happening is the Lender wants the Client to be listed as XYZ Mortgage/Owner of the property. It's not a matter of doing two appraisals it is about who the client is. Can the client be the lender and the owner on one report?

 

[Terrel L. Shields]

In my opinion, yes. I don't think it is the responsibility of the appraiser to determine whether the bank is violating their own laws. Nacho problem. BUT you must disclose to the private party that the client/lender does not have to accept the report and that they (the lender) has an obligation to engage the appraiser directly. Failing to do so is not your fault.

Question is why do you want to? Last one of these I did cost me more time than it was worth, and the borrower complained to high heaven. Nit picking the report without any real item that affected the value except in their mind [they wanted a newly purchased property to carry the mortgage for 2 properties...ha ha ha.]

 

[Larry Lyke]

Jeff --

There's no reason why you can't have 2 clients on the same report.

I don't see how it complicates things for you, except as Terrill indicated, you may have to read it to the nonprofessional party.

USPAP doesn't set out or violate ordinary business arrangements. It's mostly "planned" ethics.

 

[George Hatch]

I am assuming from your description that the lender and the homeowner are different individuals.

Intended use, intended user(s). From a USPAP perspective there isn't any reason an appraiser can't have more than one client name on a report, so long as everyone agrees in advance. Think of how often appraisals are engaged by both parties in a divorce, having decided in advance that they will accept the report as unbiased; or even engaged by one party but accepted by both. I have had a couple situations where one lender engaged me and instructed me to include another lender as the client, because they were going to joint venture the deal. Two clients, can do.

From a FIRREA perspective, if the lender has directly engaged the appraiser or the appraisal was engaged by another regulated institution they can use the report. But if both lender and borrower are named as the client, they are going to have a tough time proving that the appraiser was working specifically for the lender and is not beholden to the borrower. Also, a borrower is going to have a different intended use for an appraisal report than a lender will. The appraiser might end up having to write for both uses, which could become a hassle. Like Terrel said above, this might be a little more trouble than a typical fee would cover.

I think a slightly better solution, from the FIRREA standpoint, would be if the lender engages that appraiser (thus becoming the client of record) but instructs the appraiser to include the borrower as an additional intended user. This way there isn't any ambiguity as to whom the appraiser is working for or how the borrower came to be in possession of that original report they are shopping all over town.

If the lender's reason for asking for more than one client name is to ensure the borrower gets a copy in a timely manner, all they have to do is instruct the appraiser to forward a copy to the borrower at the same time they are submitting their report to the lender. This is probably the most expedient way to handle it, unless the borrower is also trying to use the appraisal for estate purposes or tax purposes or some other use. I usually send in 2 or 3 originals anyway, with the idea that the borrower is going to eventually get one of them.


George Hatch

 

[Jeff Horton]

Thanks for the input. I have forwarded the link to my friend. Going to have to get her registered on here and participating! (hint hint)

 

[Richard Carlsen]

I was told last year in CE that there has been a Michigan court ruling that the borrower is an added intended user of an appraisal and therefore the borrower has recourse against the appraiser.

If the lender asked me to make them and the borrower the client and put both names on the report, I would do it.

It is not up to me to comply with the secondary market rules if I am asked by my client to specifically break them. They are the ones who should know and they are the ones who will probibly have problems. But that is their choice.

 

[Steve Owen]

I agree with all above. As usual, George did an excellent job of explaining a complex issue. For more info, read Statement 9, particularly line 3588 and forward. Not only is there nothing that prohibits dual clients, but USPAP specifically allows it.