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Working for a Motgage company/owning an appraisal business

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Jason McConniel

Thread Starter
Freshman Member
Joined
Dec 9, 2002
What are the legal (USPAP) details about working for a mortgage company. I have been approached about a very lucrative position as a VP of recruitment and quality control, and wanted to know if I could still keep my appraisal business and not violate any USPAP rules. Could I still do work for this company as well?
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
What's the difference between working on staff for a bank and working on staff for a mortgage brokerage? USPAP doesn't get into how your business is set up, as long as you're not working on contigency (you only get paid if the deal goes through) or offering kickbacks to get the work.

Having said that, I know an appraiser who also was the broker of record for a mortgage company years ago. His fee shop took in an appraisal order from that mortgage company and performed it (using a fee split appraiser who was working for him) without disclosing his involvement with the mortgage brokerage. There was eventually a complaint and the state went after his license based on the percieved conflict of interest. He eventually prevailed and kept his license, but I'm not sure of whether he had to pay any fines or take any other discipline. Of course, this took several years before it was finally resolved, during which time his license status was under a cloud. I'm sure he never did that again.

I can't see any reason why this setup would cause you any problems so long as you maintain your ethical standards. Other than that, just make sure that you prominently disclose your relationship with your client so that nobody can accuse you of misleading them. I would disclose in your report, maybe in your resume, that you are currently an employee of the mortgage broker. It might be a good practice to also note it in your addenda when you define who the client and intended users are. something like "It is acknowledged that the appraiser is a staff employee of the Client, 'We-Fund-Anything Mortgage Broker'."

Working as an employee on a part time basis while conducting your own appraisal practice shouldn't be a problem, either. Like I said before, just make sure you disclose in all of your reports the exact nature of your relationship. That, and I recommend you make sure that your inital agreements with your employer are in writing and that they stipulate that you get to keep custody of your workfiles. You know what happens when employment arrangements end up poorly.

If in doubt, you can always just write the scenario up in a letter, send it or fax it to your state board and request a written opinion from them. Whatever suggestions they make, follow them to the letter. Obviously, you'll need to keep their response safely tucked away for a rainy day.


George Hatch
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
Jason:

Working for a bank/mortgage company and keeping your appraisal business active is different than a staff appraiser doing work on the side if the bank/mortgage company would permit you to do so. If your state real estate comission would allow you to do so I would have at it. But why in the heck would you want to jepordize such a potentially good deal by doing appraisal work for this company as well. Conflicts only have to be perceived by some to become real. How can you do an unbiased job of quality control when you would be likely be judging your own work. Seems like a conflict to me. If there is plenty of work in your area, why would you need to receive work from your employer? It just seems to me that you are asking for unnecessary problems. Has your potential employer told you that doing appraisal work on the side is ok?
 

Jason McConniel

Thread Starter
Freshman Member
Joined
Dec 9, 2002
The company is also starting a out source processing department. When you look at it from a promotional perspective you can see that I will be knocking on the same doors so to speak. It was presented to me as a way of having everything in house. Such an arrangement makes more since for the mortgage end ... simply put they know were we are with the report by yelling down the hall instead of calling every five minutes to leave a message.

I agree it does open the door to trouble, but I am conflicted by what I see as the future of appraising. Every one is going into a one shop covers all concept, (mortgage, title, RE brokerage, inspections) fees keep getting lower, technology allows for faster turn times, and the general market expects instant gratification. I am looking to be in more of a managerial position with my company, but yet at the same time do not see why I can not maximize my time and space and include several other aspects of related industries to increase my profit potential. (processing company=mortgage clients to process loans, if they do in house processing I can get their appraisal work then. Recruitment=similar to RE brokerage, visit RE schools to recruit the future LO's and "appraiser trainee" :wink:

I am part of the new generation of appraisers. I am the youngest appraiser I have ever met in person or seen at CE classes. I know that this industry is changing and I want to keep ahead of the pack. I already use the latest digital tech around. My entire inspection is done digital now! If they just get the wireless BB up my employees or I will not have to ever come into the office!

The individual inquiring for me wants it all in house. And sees the efficiency of it all. Well so do I...I brought it up. Do you gentlemen agree? I am shifting to more of a business mans perspective as I get older and want to maximize my time and efforts. Killing three birds with one stone sure sounds better then working 80 hours a week doesn't it?!
 

Randy Beigh

Senior Member
Joined
Jan 16, 2002
Jason

I'm with George. USPAP doesn't get into such business arrangements.

If your new company does business with your appraisal firm, disclosure may be in order to avoid the appearance of conflict, but much beyond that, I wouldn't worry about it.

Good luck on your new position.
 

Jason McConniel

Thread Starter
Freshman Member
Joined
Dec 9, 2002
I read somewhere that having an appraisal certification you could not own more than 10% of any mortgage/lending institution. That is why I have been so concerned. As VP a certain percentage of stock will be allocated to myself. Which could jeopardize my appraisal company. As I posted earlier on the help board, there are curtain aspects of USPAP that I have miss understood. Ex. Sponsor must accompany trainee on all inspections for two years. I thought this was the interpretation of USPAP's rule about personally supervising trainees!
 

Randy Beigh

Senior Member
Joined
Jan 16, 2002
Jason

Stop reading "somewhere". :D

Since you are this far along in appraising, you have taken USPAP. Show me where in that messy document that it says anything about trainees, let alone that they must be accompanied by someone with a license.
 

Jason McConniel

Thread Starter
Freshman Member
Joined
Dec 9, 2002
Mr. Beigh,

Exactly!!!!!!! I am so confused with all the regulations that I am in a state of "paralysis of analysis". My frustration is what brought me to this board in the first place. What I have understood in the past has been thrown out the window in just about one day talking with you gentlemen. BY THE WAY THANK YOU.

Please understand that I have had some of the worst teachers. Two of my three previous bosses no longer have appraisal certs. LOL. In my 8 hour USPAP CE class taught by an AI instructor I learned more about appraising then in my previous 30 hour course taught by one of those RE Schools. This gives you some idea about how bad our appraisal education system is! Now that I have had AI training and my last boss was an SRA I have come leaps and bounds in my appraisal practice.

But I still have problems with Myth and Rule in comparison to LAW! I hope you gentlemen have patience with me as I pick your brains in an attempt to become a better appraiser.
 

USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Don't think for a minute that USPAP is the beginning and end of appriasal regulation.


Stop reading "somewhere".

Since you are this far along in appraising, you have taken USPAP. Show me where in that messy document that it says anything about trainees, let alone that they must be accompanied by someone with a license.
_________________


North Carolina Appraisal Board RULES do require all nw trainees rto be accompanied by their supervisor for the first 50 inspections. This is for all trainees who started work AFTER 08/01/2002.

I am sure some other states have similar rules.

I urge every appraiser to get the latest copy of the BOARD RULES from your state and read it. Read it and learn it.

There is no excuse for appraisers to be "unaware" of the rules, laws and standards that we are subject to. Ignorance will not be a good defense.
 

Randy Beigh

Senior Member
Joined
Jan 16, 2002
Excellent point, Bob

I know nothing about Jason's state of Texas, but in Washington, we do not have a trainee's license, yet. They are talking about it. The states do vary. But, even a state law would not likely require any trainee to have a trainer forever or for X number of years, inspecting every home. 50 appraisals sound good to me,(actually, sounds like some arbitrary number) unless the trainee has some kind of previous experience that he brings with him, then it could be less or more. This should be between the trainer and trainee.
 
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