Vendor agreements with "hold harmless"

[Workbox]

Never Mind.........................

 

[mike32716]

If you crack open just about any file you will see some smiley faces. Both outlines and solid. They are nothing more than representative of higher characters other than the ones you see on your keyboard. I think ASCII 263 and 264. Nothing sinister here. The character sets go WAY back to the 1960's.

You can see them if you open a Word document and click Insert-Special Character, and them scroll down a ways.

 

[Pamela Crowley (Florida)]

The problem is not the ORIGINAL report you prepared on your computer. The problem is the possible corruption of that report given to the lender. An E&O company will defend your original report. Let's say that the original report was perfectly fine, but it had items in it that would preclude a property from being purchased by a GSE. Now suppose that those items were removed in the version of the report sent to the lender via AP and the lender ends up having to buy the property back. They think you gave them a bad report. They sue you. An E&O company would defend you, successfully, against a claim by the lender that your report was negligent (remember we are assuming that the original report was good). It was the lender, afterall, that required the use of AP, and presumably knows what they got themselves into. In discovery we find that the original report was corrupted by AP. (AP would have been subpoenaed to produce the original document). The lender loses the suite against you, the appraiser. Miffed, the lender then sues AP for sending them a corrupted file. AP turns around to you, the appraiser, and says you must now defend us because you agreed to indemnify us against claims. What do you the appraiser do now? Flee the county?

Consider this: AP data mines your appraisals. They sell that data to some entity that relies on it. The data is corrupted and that company experiences a loss. They sue AP for bad data. AP says to you the appraiser, "come and defend us as you agreed to indemnify us against loss"!

Those that didn't think this was any big deal need to read this again!

Thank you very much for posting this excellent discription of what this really is all about.

Those of you looking to the Appraisal Institute and/or the Appraisal Foundation for help, read this again:
Quote from Maverick's post:

from: https://www.aiready.com/dev/License%...iewlicense.htm

"PREAMBLE



FNC, Inc. (“FNC”) is the owner and sole distributor of, and reserves all rights to the Open Appraisal Document Interface (“OADI”) component source code. Although we encourage you to utilize OADI Components to suit your needs, you may not distribute derivative works based on the source code without express written permission from FNC. The intent of the OADI is to facilitate compliance with the Appraisal Institute ReadyTM program."

Please keep in mind that the majority of the rank and file AI members had / have no idea what some of their 'upper echelon' Board members have been and still ARE up to. Now take a look at the affiliations / memberships of those that were and are either Board Members and/or Advisory Council Members at the Appraisal Foundation.

Connect the dots and see what you come up with.

 

[Elliott]

Pammie said, Please keep in mind that the majority of the rank and file AI members had / have no idea what some of their 'upper echelon' Board members have been and still ARE up to.

No truer words were ever spoke.

When AI started cooking up the AI Ready scheme, I never saw any benefit to the
residential appraiser. When upper management started jumping from AI to
different corporations that were involved with AI Ready, along with connections
between governing members and corporate AI Ready, it became obvious that
AI was taken for a ride. A few people in AI saw an opportunity to take advantage
of an established organization to the detriment of the membership and the
profession as a whole. Very sad.

 

[mike32716]

For those that use AppraisalPort you know that upon acceptance of a report there is a text box for entering conditions to the acceptance of the report. For years I have been filling in such items as "subject to FHA case number", "subject to contract being provided", etc. Incredibly, the lenders never seem to read this, and I end up emailing or sending a message through AP.
So now to this proposition: What terms or caveats could we enter into this text box that would indemnify us? Essentially it would have to say that the lender understands the limitations of AP and that they agree not to sue AP (which keeps them from suing us). Any ideas?

This was from another site and sounds interesting. I too have used the "conditions" box to ask for supplemental information only to have to follow up with emails. Now, this is a bit sneaky, but if there is some language that we could cut and paste into the conditions box, we might be protected. It is apparent that the lenders (i.e. processors) never read it. The text would say something like the above. Maybe something like "You, the lender, have been sold a bill of goods. You acknowledge that you may not be getting an accurate representation of the report I sent to AP (or whomever). You, the lender, agree to hold harmless and indemnify me against any and all claims arising out of a claim from said portal..."

Any thoughts?

 

[Bearslide]

This was from another site and sounds interesting. I too have used the "conditions" box to ask for supplemental information only to have to follow up with emails. Now, this is a bit sneaky, but if there is some language that we could cut and paste into the conditions box, we might be protected. It is apparent that the lenders (i.e. processors) never read it. The text would say something like the above. Maybe something like "You, the lender, have been sold a bill of goods. You acknowledge that you may not be getting an accurate representation of the report I sent to AP (or whomever). You, the lender, agree to hold harmless and indemnify me against any and all claims arising out of a claim from said portal..."

Any thoughts?

Short answer? PLENTY.

I got no sleep last night.....the information starting to come out, the various associations between AI and FNC....connecting the dots. It's starting to look extremely ugly.

I doubt it would do you any good to put something like that on their website or in your reports. I have SEEN what gets taken out of reports. It would just disappear....and there you will sit......fat, dumb and happy, thinking you are covered. By all means, put it in - but be aware, little chance it will ever be seen.

A better course would be to go to the lenders who insist you use this abomination. Ask them if they will sign a HOLD HARMLESS with YOU. They will want to know why you would make such a request. Show them the port's agreement, show them the letters from LIA, give them the articles from Working RE and The AppraisalScoop. Make them understand that they are facing immense liability. THEY are responsible for the reports - and THEY can be made to buy back thousands of loans for faulty appraisals (you know..incomplete appraisals)?

If nothing is going on, why this very onerous agreement? Seems to me the only party in this who needs to be protected and HELD HARMLESS is the appraiser. This agreement goes way beyond a standard software hold harmless agreement. It holds YOU liable for anything and everything everyone elses does - and YOU get to pay the full boat for THEM. Signing that agreement, working under that agreement..is no different than dropping your car insurance and then deliberately running red lights. Sooner or later, you will get in a wreck - and it will all be on YOU.

The only people that need to be signing HOLD HARMLESS for third party vendors, including AMC's - is the third party vendor HOLDING YOU HARMLESS.

 

[Bearslide]

And if you are still wondering.

This issue has been asked here many times...........for a very long time............this is just one example - and now, in light of so much information coming out......the reaction on this thread makes things a bit more clear. Some partial answers were given, that in the light of what is going on now, make it just a bit easier to connect the dots.

http://appraisersforum.com/showthread.php?t=129207&highlight=Calling+Brad+Ellis

Before anyone gets their tidy-whities knotted..........this is not aimed at Mr. Ellis..........I am sure he is dealing with his own very massive problems and I truly wish him well. Could be that many of those problems are a direct result of the incomplete reports he mentions.

 

[mike32716]

doubt it would do you any good to put something like that on their website or in your reports. I have SEEN what gets taken out of reports. It would just disappear....and there you will sit......fat, dumb and happy, thinking you are covered. By all means, put it in - but be aware, little chance it will ever be seen.

A better course would be to go to the lenders who insist you use this abomination. Ask them if they will sign a HOLD HARMLESS with YOU. They will want to know why you would make such a request. Show them the port's agreement, show them the letters from LIA, give them the articles from Working RE and The AppraisalScoop. Make them understand that they are facing immense liability. THEY are responsible for the reports - and THEY can be made to buy back thousands of loans for faulty appraisals (you know..incomplete appraisals)?

With regards to the first part. No, don't put the condition in the report. It has to be in the engagement letter (original order) to be a valid contract. The point is to get it into the documentation of the order that the lender will indemnify the appraiser from other claims. In other words if the lender sues AP and AP sues the appraiser, then the appraiser tells the lender to back them up. It goes in a circle. The conditional documention is indeed entered into the order flow. You can view it on the message page. I have asked processors if they read this and they just shrug their shoulders (this is the sneaky part). Not my fault if the lender does not use AP properly. Just print that message out, or the whole message page (expanded) for that matter, and put it in your file. It is a condition of acceptance of the report and the lender has 12 hours (I think, may vary by agreement) to decline that condition, which then becomes part of the contract for services.

There is an important distinction between indemnify and hold harmless. Hold harmless just means that they won't sue you directly. If they sue AP and AP sues you then you are still up the creek. Getting them to indemnify you protects you agains all suites arising out of the transaction. Remember, we are only limiting that indemnification to the possible corrupted files, so they can still sue you for a bad report assuming they got what you sent.

And yeah, I have mentioned this to several lenders. The problem seems to be that these decisions are made high up at a corporate level. Most likely by someone who has a vested interest in it working. i.e. a failure or possible liability issue that they did not forsee might get them fired. I have been in contact with the Chief Risk Officer of a large regional, and they do seem to be looking into it. Perhaps a list of URLs that we could compile and create a STICKY would help. Others could then easily reference those URLs when contacting lenders.

 

[Bearslide]

With regards to the first part. No, don't put the condition in the report. It has to be in the engagement letter (original order) to be a valid contract. The point is to get it into the documentation of the order that the lender will indemnify the appraiser from other claims. In other words if the lender sues AP and AP sues the appraiser, then the appraiser tells the lender to back them up. It goes in a circle. The conditional documention is indeed entered into the order flow. You can view it on the message page. I have asked processors if they read this and they just shrug their shoulders (this is the sneaky part). Not my fault if the lender does not use AP properly. Just print that message out, or the whole message page (expanded) for that matter, and put it in your file. It is a condition of acceptance of the report and the lender has 12 hours (I think, may vary by agreement) to decline that condition, which then becomes part of the contract for services.

There is an important distinction between indemnify and hold harmless. Hold harmless just means that they won't sue you directly. If they sue AP and AP sues you then you are still up the creek. Getting them to indemnify you protects you agains all suites arising out of the transaction. Remember, we are only limiting that indemnification to the possible corrupted files, so they can still sue you for a bad report assuming they got what you sent.

And yeah, I have mentioned this to several lenders. The problem seems to be that these decisions are made high up at a corporate level. Most likely by someone who has a vested interest in it working. i.e. a failure or possible liability issue that they did not forsee might get them fired. I have been in contact with the Chief Risk Officer of a large regional, and they do seem to be looking into it. Perhaps a list of URLs that we could compile and create a STICKY would help. Others could then easily reference those URLs when contacting lenders.

Ye be a FINE pirate, Mike.....going to the lenders is what is needed. A glass o' rum fer ye, matey!

Your idea MAY have validity. I am not an attorney, but I'm not sure on one point. If you agree to the ports hold harmless agreement, I'm not sure that then going to the lender, via the conditional acceptance, after you have agreed to the hold harmless, would be valid. I honestly don't know. That would be a question to run by your attorney and your E & O carrier.

You are absolutely correct in that any decisions will be made higher up at corporate levels. That is why it is also important to bring up the issue of converted reports not necessarily being complete reports - and that THE LENDER is responsible for that report and may be looking at buybacks because they may not have the complete report. Why on earth ANY lender is willing to entrust the appraisal reports they depend on to ANY third party is beyond me. I guess they never considered (or did they????) the opportunity for alterations and changes to those reports.............

I will contact a moderator to request the sticky - that is an excellent idea. In the meantime, here are the links I have.

http://appraisalnewsonline.typepad.com/appraisal_news_for_real_e/2008/08/the-end-is-just.html

http://www.workingre.com/workingre/fnc-appraiser-firestorm.html

And this, from the other thread.


This is the response (in part) from an LIA (LSI) attorney

"........However, from the insurance viewpoint, you should still be concerned about the agreement because of the indemnification provision contained in paragraph 8. The reason you should be concerned is that, like all professional liability policies, your E&O policy does not cover claims against third parties (i.e., the policy covers claims against you because you are the insured) or liabilities assumed by contract. In the indemnity provision of this agreement, you are agreeing very broadly to pay all of AppraisalPort's losses, damages, expenses, etc. which might result from any aspect of an appraisal delivered through AppraisalPort
-- even if, the loss or damage is the result of AppraisalPort's own "sole negligence." In doing so, you are agreeing to pay potential costs and damages that are broader than can be covered by your insurance.
Indeed, as an example, you are agreeing to pay for losses not only due to your own potential mistakes, but also due to AppraisalPort's own negligence (if AppraisalPort, for example, chopped up one of your reports or deleted important information) and agreeing to pay AppraisalPort to defend against its own negligence. To the extent that such contractual obligations assumed by you in the agreement with AppraisalPort are broader than the liability you would otherwise have without the agreement, they are not covered by insurance. Thus, AppraisalPort's terms and conditions do expose you to potential liability that is not covered.
Based on our experience in reviewing other agreements of this nature affecting appraisers, the indemnity provision in the contract here is egregiously one-sided, particularly in light of the importance of AppraisalPort's proper handling of appraisal reports and data and the fact that use of AppraisalPort is forced upon you by FannieMae and other entities. .........

........
Whether you choose to accept the user agreement will have to be your business judgment based on the risks and rewards of doing business through AppraisalPort. We do sympathize with you, however, for the difficult position that AppraisalPort has placed you in and we would suggest that you voice your displeasure to AppraisalPort and the lenders and institutions which require that you use AppraisalPort. We intend to pursue such efforts as well on behalf of our 33,000 insured appraisers........"

 

[Bearslide]

Tis Labor Day, mateys.

and a beautiful day, at that. As I sit here, I ponder those who have gone before. Those many people who have stood tall and fought so that others might better enjoy the fruit of their labors.

We have many fine pirates aboard our ship, the tall ship named Public Trust. But today, I will raise a glass of rum.....our brew of TRUTH.....to two of our finest and most courageous lady pirates. Pam Crowley and Jennifer Wertz have engaged those who would cheat and steal from the Public Trust in courts of law. They have taken the battle upon themselves to fight the Cracken of Corporate Greed. They have emerged alive and victorious to fight another day. But make no mistake...their battles scarred them....and still they stand tall and arm themselves for the next battle.

Will you - will ANY of us.....do less?

This one is for Pam and Jennifer - aye, I be PROUD to sail with ye!

http://www.youtube.com/watch?v=haHAnIV_JE0&feature=related