Verdict on Lehman Bros vs. Passarelli & Potts

[Ken B]

Don't most home inspectors limit damages to their fee? If they can, why can't we?

How does such an action protect the public trust?

 

[Smokey Bear]

How does such an action protect the public trust?

How does being the fall guy for everything under the sun protect the public trust? We get paid the least and seem to have the most liability, and are most likely to get sued, get complaints filed against us etc. People who buy loans and were so far down the chain want to sue us when they didn't even get a full copy of the appraisal and didn't read it, but want to rely on it. We get screwed from every direction, and it's time to put a limit on it.

 

[Workbox]

How does being the fall guy for everything under the sun protect the public trust? We get paid the least and seem to have the most liability, and are most likely to get sued, get complaints filed against us etc. People who buy loans and were so far down the chain want to sue us when they didn't even get a full copy of the appraisal and didn't read it, but want to rely on it. We get screwed from every direction, and it's time to put a limit on it.

Thank You! Well Stated.

 

[PropertyEconomics]

How does being the fall guy for everything under the sun protect the public trust? We get paid the least and seem to have the most liability, and are most likely to get sued, get complaints filed against us etc. People who buy loans and were so far down the chain want to sue us when they didn't even get a full copy of the appraisal and didn't read it, but want to rely on it. We get screwed from every direction, and it's time to put a limit on it.

There is a limit Smokey ... its the amount to which the client (lender, borrower, public, whomever it was) was damaged. This case is proof that you cant collect more than you were damaged.
I would think with your legal background you would certainly understand that a statement within a report limiting liablity to the amount of the fee is hogwash. It will not stand the test of legality. This case also proves that. Sounds to me like ... case closed.

 

[Fred]

How does being the fall guy for everything under the sun protect the public trust? We get paid the least and seem to have the most liability, and are most likely to get sued, get complaints filed against us etc. People who buy loans and were so far down the chain want to sue us when they didn't even get a full copy of the appraisal and didn't read it, but want to rely on it. We get screwed from every direction, and it's time to put a limit on it.

Other than moving to Arizona where privity still holds, how do you propose we limit plaintiff's rights granted by the Restatement of Torts and the judges?

 

[Fred]

“intended user,” the appraisals clearly stated that they were for “mortgage-lending purposes,” and Passarelli testified that he knew the appraisals would be used for mortgage financing.

Mike, weren't you the one trying to explain to me how "portable" appraisals don't increase appraiser liabilty? Doesn't this case punch yet another iceberg size hole your Titanic?

 

[William K]

After reading thru this thread and the case info I have to agree with PE in that my biggest concern is not the increase "intended users" but rather that the court relied upon a valuation as of a different effective date than the effective date of the original appraisal report. To me this sets the potential for a bad precedent.
How are we responsible for future value when the assignment is for todays value considering all current available information?


If this is really looked at I can see a potential for lawsuits in that an appraiser's value opinion as of 2005-2006 is substantially higher than todays value opinion of the same property. I can see argument that the appraiser should have known this was a housing bubble and should have accounted for such in their appraisal report and valuation, and by not doing so has caused the borrower / public to incur substantial loss. I can actually see being presented into evidence comments on this forum that there was a housing bubble being discussed about by educated and informed appraisers even prior to the 2005-2006 time frame!
Maybe I'm being pessimistic.

 

[Carnivore]

WilliamK,

The greater lesson here is that the Courts dont give at Rat's Patooey what the TAF/ASB has written or has to say about these issues unless they choose to do so.

 

[Smokey Bear]

I would think with your legal background you would certainly understand that a statement within a report limiting liablity to the amount of the fee is hogwash. It will not stand the test of legality. This case also proves that. Sounds to me like ... case closed.

Guess I forgot to put the <rant> code around it - of course I know legally it wouldn't hold up, but I'm just sick of everyone looking to the appraiser when things go bad. Too many appraisers are getting sued that didn't do anything wrong, but hey, they've got E&O so let's go after them. My rant was a "screw all of you I'm sick of this" not a legal theory. </rant>

 

[Ken B]

Let's say an appraiser reports a property's value is $100 bucks. A review of the appraisal reveals that a credible value as of the effective date of the appraisal was $35 bucks.

A year later, the lender begins foreclosing on the properties as purchasers realize they were scammed. Due to an appreciating market, a credible value when the lender begins to take possession of the properties is $50 bucks. Upon the date the lender takes possession of the properties the realized loss is $50. Upon the effective date of the appraisal, the appraisal was "off" by $65 bucks.

Should the appraiser be liable for $50 or $65 bucks?

Let's say there is a depreciating market in the year between funding and initiation of foreclosure proceedings. As of the date the lender begins to take possession of the properties, a credible value is $25.

Should the appraiser be liable for $65 or $75 bucks?