Can Realtors Still Talk to Appraisers After May 2009? (HVCC went into effect on 05/01/09)

Hi,

I have a question on whether loan officers are able to talk to appraisers, and to what extent. My house is currently under contract, and we just got back a really low appraisal that we believed very much undervalues our house (as did the potential buyer), to the extent that it used the wrong property and tax records as its baseline (a property that is less desirable than ours)… and even labeled the report with the wrong address!

My realtor took two approaches to try and clear up the mess. First, she contacted the appraiser and alerted her of her errors as politely as possible. The appraiser refused to review her appraisal. When my realtor called the loan officer to point out the errors and ask for a second appraisal, the loan officer got extremely snippy and said that any errors in the report were merely “typographical errors.” Lo and behold, my realtor then got an email from the appraiser that said that any errors she had made were “typographical,” which is a term she had not used before and clearly indicated that she and the loan officer were talking with each other. Then, the loan officer sent my realtor another email with a “corrected” appraisal back that removed any “typographical errors.”

If a home loan doesn’t go through and everyone is above board, that’s fine, but I think that the appraiser and loan officer are walking a very fine ethical line. We have now gotten the loan officer to agree to a second appraisal (because the buyer requested it), and I’m keeping my mouth shut for now. But, after this is all over, regardless of the outcome, I want to know what type of recourse there is out there for homeowners (such as a better business bureau) that would either alert others to our troubles with both the appraiser and loan officer, or better yet, have our case looked into by FHA.

Thanks

Opps…didn’t proof read.

Instead of punishing and getting rid of the bad appraisers that can’t remain UNbiased, they tie the hands of all appraisers and let the bad ones remain.

I’ve been appraising here in the MN Twin Cities area for about 15 years now. One of the old dogs that don’t have the sense to get out. I’m Certified & FHA approved. My wife says I’m certifiably insane, if that counts for anything, lol.

I’ve been very lucky to build up good business relationships with Lenders that pay full fees. I won’t work for these blood sucking AMCs that take a huge chunk of the appraiser’s fee for themselves. It is no wonder that there are so many RE Agents getting upset because of low ball appraisals ruining their sale. What do you expect when the appraisers are getting paid 1/2 fee? These are desperate newbies doing anything for work. These desperate appraisers (aka “Skippy”) are skipping appraisal steps so they can rush out 3 appraisals a day. Typically the use REOs and Short Sales as comps without any consideration to the variance from a fair sale defined in Market Value. They can fill out a form without clerical errors so that it makes the AMC’s silly QC phone monkeys happy, but they aren’t appraising. I realize I am painting with a broad brush here. I’m sure there are appraisers out their doing good appraisals for 1/2 fee. This is the exception to the rule.

It will be interesting to see the affect of the Dodd-Frank Wall Street Reform and Consumer Protection Bill, which has just passed. It states there is a $10,000 fine PER OFFENSE for failure to comply in regards to a Lender or AMC not paying what is normal and customary for appraisal services. This should match the complexity of the assignment. Fees are set according to the scope of work and complexity of assignment. Minimal fee for a 1004 here in the Twin Cities is $350. This does not include the additional $25-$50 for 1004MC. This is typical, customary and reasonable for this area, according to all credible reports. Each State/City will vary.

I have a feeling we’ll be seeing some class action suits against these AMCs. I won’t shed a tear, either.

I am very interested in your discussion about talking to the appraiser because we are trying to buy a house and the appraisal came in low. Ever since, the selling realtor has been giving comps., blue prints, her own measurements and conclusions on the property, even yelling at him and the lender, and when that didn’t work she has threatened to sue the appraiser, the lender and us. The appraiser is local and I am told very well regarded in this area. I find it hard to believe this realtor is acting ethically and within the HVCC law. Have you received clarification on this, Ryan? This would seem to be a good reason to limit the realtor – appraiser contact.

Thanks, Ryan. Unfortunately it seems this is not uncommon practice for this realtor. Her measurements are not accurate, and the appraiser did review her information stating that it does not change his valuation. I look forward to seeing clarification on this topic.

Hey John, I agree that the Realtor is not acting professional and not very ethical, but the HVCC Agreement and Guidelines were binding on Lenders, not a realtors…it applies to lenders only. But as Ryan pointed out, you need to remind the agent of her own ethics that she is called upon to adhere to. Her own Code of Ethics of the National Association of Realtors says;

Quote:
“…………….. In instances where their opinion is sought, or where REALTORS® believe that comment is necessary, their opinion is offered in an objective, professional manner, uninfluenced by any personal motivation or potential advantage or gain.”
………………….. “Accepting this standard as their own, REALTORS® pledge to observe its spirit in all of their activities whether conducted personally, through associates or others, or via technological means, and to conduct their business in accordance with the tenets set forth below. ”

The appraiser should ask the agent to respect the Code of her trade and for her to appreciate the objectivity required by her own Code. It can’t be uninfluenced by lack of any personal gain…and she certainly seems to be seeking to gain $omething.

Now look at the appraiser ethics:

Conduct:
An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.

An appraiser:
???? must not perform an assignment with bias;
???? must not advocate the cause or interest of any party or issue;
???? must not accept an assignment that includes the reporting of predetermined opinions and conclusions;

As you see, appraisers cannot allow themselves to be pressured into being biased, advocating for the RE agent’s cause, or reporting the opinion of someone else as if it is their opinion. The agent is held to a Code of Ethics, just as appraisers are. You (and the appraiser) should insist that that any and all future communications regarding this matter be solely through the lender. There are avenues they can take if they don’t agree with the appraisal. It’s called a reconsideration of value. They present their evidence (comps) to the lender, the lender presents them to the appraiser to look at as see if they are better indicators of value then the ones he picked. Typically, they are not. They typically would necessitate even larger adjustments, or greater distance than the current comparables, possibly producing a misleading value.

As far as pressure from an agent…that’s a joke. They have nothing to pressure the appraiser with. They didn’t hire the appraiser and they have no influence on future jobs. Yelling at an appraiser – not something I would do, if I were an RE agent. You familiar with the phrase, don’t bite the hand that feeds you?