Statute of limitations for appraisals

Statute of limitations for appraisals
Why You Should Keep Your Workfile for 7 to 8 Years
By Peter Christensen, Liability Insurance Administrators, www.liability.com

Excerpt:

In 2013, many lawsuits against both residential and commercial appraisers continue to relate to appraisals performed years ago at the peak of the real estate price bubble, 2005 to mid-2008. These lawsuits are filed by borrowers, lenders, investors or the FDIC and typically allege that an appraiser’s inflated value resulted in the plaintiff borrowing, paying or loaning too much money.  The plaintiff blames its loss on the appraiser and sues for damages.

When reporting a claim like this to our office, one of the most common questions a defendant appraiser will ask us is about the applicable statute of limitations. The question is usually something like: “I did the appraisal in 2005, more than five years ago. I threw out the workfile because USPAP only requires me to keep files for five years. Won’t the lawsuit be dismissed based on the statute of limitations?” The answer to that question is almost always “probably not.”

The purpose of this Claim Alert is to clear up misconceptions that appraisers read and hear regarding statutes of limitations and to advise appraisers about the importance of retaining workfiles well beyond USPAP’s bare minimum recordkeeping requirement.  A good workfile is the appraiser’s defense tool kit when a claim comes in.  Without that workfile in hand, the appraiser’s defense counsel will usually be hampered in his or her ability to defend a claim.  Our advice on this issue is simple: keep your workfile for seven to eight years (unless a longer period is required under USPAP’s special requirement for assignments where the appraiser has provided testimony).  The discussion that follows should help you understand why.

My comment: Worth reading. You can be sued at any time, for anything, by anybody. Be careful out there. Have I always kept my files for over 5 years? No. Three years ago I significantly downsized my office at got rid of a lot of appraisal files  over 5 years old. Mistake!!!

http://www.liability.com/claim_alerts/statute-of-limitations-for-a-claim-against-an-appraiser.aspx

Alternative Valuation Products and USPAP

Appraisal Foundation issues Draft White Paper – Alternative Valuation Products and the Uniform Standards of Professional Appraisal Practice

Excerpts:
“At the request of its Industry Advisory Council, The Appraisal Foundation has drafted the attached white paper on Alternative Valuation Products and the Uniform Standards of Professional Appraisal Practice (USPAP).“

“The white paper is intended to provide information to assist appraisers, users of appraisal services, and others, with a greater understanding of Alternative Valuation Products and their use in the marketplace. The paper also attempts to view these products in light of an appraiser’s USPAP obligations.“

“All interested parties are encouraged to comment in writing before the deadline of December 31, 2013. Respondents should be assured that each comment will be thoroughly read and considered.“

Included are BPOs, AVMs, CMAs,
– Appraiser Price Opinions (APOs)
– Reconciliation Review Non-Standard Desktop Valuations/Field – – Reviews Full inspection proprietary appraisal form (non-GSE form)

My comment: lenders have been looking for an alternative to an appraisal report for a long, long time. For many fee appraisers, the issue is a low fee, even if it is uspap compliant. FYI, the Industry Advisory Council is composed of representatives from lenders, AMCs, etc. Of course, it is not the total fee, but the per hour billing, that is most important. If you get $400 for a report and spend 8 hours (including travel time, stips, etc.) you make $50 per hour. If you spend 4 hours for a $250 appraisal fee, you also make $62.50 per hour. Don’t make the mistake of focusing on the total fee.

Click here to read the 36-page document. The first 13 pages is the main section. The remainder is mostly excerpts from state laws.
https://appraisalfoundation.sharefile.com/download.aspx?id=sf61dc8e04054957a#

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Why are Appraisers Furious at Fraud by their Peers while Corporate Lawyers are Complacent?

Thanks to appraiser Joe Lynch for posting this link online!!

Excerpts:
I have done a series of articles about the efforts of honest appraisers (which began in 2000) and loan brokers to alert the lenders, the markets, and the government to the twin fraud epidemics (appraisals and “liar’s” loans) committed by lenders’ controlling officers that drove the financial crisis.

Honest appraisers could have profited greatly by becoming dishonest appraisers who would be given the lucrative assignments by fraudulent lenders’ controlling officers and their agents.  Instead, honest appraisers suffered serious losses of income because they refused to succumb to the extortion efforts of the fraudulent lenders and their agents.

I have spoken to several groups of professionals who audit and many board members.  I always ask:  “who were the heroes?”  Which members of their profession stood up and put their careers on the line to prevent the crisis?  They have not been able to come up with a hero from their professions.

What about corporate lawyers?  I get the same answer about heroes when I speak to legal groups made up of professionals who represent corporations

Why are Appraisers Furious at Fraud by their Peers while Corporate Lawyers are Complacent?

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Whose responsibility is it to bring new appraisers into the appraisal business?

www.appraisalport.com  Poll Results

Lenders and/or AMC’s 80 votes 1.5%
Fee appraisers 378 votes 7.4%
Appraiser Organizations 153 votes 9%
All of the above 520 votes 10%
No one specifically – market demand will drive it like any other profession. 3,882 votes 76%
Other 114 votes 2%

Total Votes: 5,127

My comment: my favorite choice was left off – lenders! They trained most of the appraisers prior to licensing.

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Mortgage forecast – loans predicted to drop 30% in 2014

Mortgage forecast – loans predicted to drop 30% in 2014
Mortgage Bankers Association, September 2013

Commentary (9/24/13)

Excerpt:
We expect housing starts and home sales to continue to
increase, as home prices continue their recovery. Rising rates have already caused refinance activity to drop significantly, but home buyers who are able to and need to purchase a home will likely adjust accordingly in the current rate environment to complete their purchase. The Fed’s delay in tapering asset purchases has pushed rates down slightly, but we expect
that this is just a pause and rates should continue to increase in the coming months.

Our forecast is for mortgage originations to total $1.6 trillion in 2013, with $989 billion in refinances and $616 billion in purchases. Originations will drop to $1.1 trillion in 2014 as refinances drop to $388 billion, while purchase originations should continue to increase to $703 billion.

2013 actuals and forecast – mortgage loans – in billions
Q1       Q2      Q3       Q4
482     494     369     260

2014 forecast
Q1       Q2    Q3    Q4
251     283     290     267

Interest rates – in percent
2013 actuals and forecast
Q1      Q2    Q3    Q4
3.5     3.7     4.6     4.8
2014 forecast
Q1      Q2    Q3    Q4
4.8     4.9     5.0     5.1

For the full MBA finance commentary, go to
http://mbaa.org/NewsandMedia/PressCenter/85717.htm

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