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

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?

Appraisal Today newsletter

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

Appraisal Today newsletter

The "Green Hornet" – first lender appraisal form from 1962

Revisiting The Green Hornet
By George Opelka, ACI

Excerpts:

Introducing Form #17-PRA

In the late 1950s, my Dad (Gregory Opelka) taught real estate appraisal courses in the evenings at the Savings and Loan Institute in downtown Chicago. Through his teaching ventures, he was invited to serve as an appraisal consultant to the U.S. League of Savings and Loan Associations. Additionally, he wrote a monthly appraisal column for publication in the Savings and Loan News, a trade magazine-a division of the U.S. League. As a result of an early consulting-writing assignment with the U.S. League, my Dad created appraisal form “#17-PRA” in 1962.

The appraisal report form was presented to the Appraisal Committee of the U.S. League for review and consideration for adoption and use by savings and loan associations across the United States. The form was initially presented on green paper with green ink strictly for marketing spin. The form was approved for nationwide members’ use by the U.S. League’s Appraisal Committee and was numbered form #17-PRA, Professional Residential Appraisal by the U.S. League staff. Form #17-PRA was then printed and sold by the Accounting Division of the U.S. League. Remember, this occurred in 1962 (pre-ACI), so the completion of this form was intended to be a handwritten field report, and submitted accordingly.

It wasn’t until after the form was released and in production when the appraisal staff of the First Federal Savings and Loan Association of Indianapolis submitted a report critiquing the new form. This critique was published in a monthly professional trade magazine of the Society of Residential Appraisers. Of historical note, it was this local Indianapolis S&L appraisal committee that affectionately dubbed the new form “The Green Hornet”! Ironically, the name stuck and even today, almost fifty years later, the Green Hornet continues to charm and identify with the residential appraisal process.

The URAR ERA

In 1984, twenty-two years after the birth of the Green Hornet, a new initiative to create a standard appraisal form was spearheaded by the Society of Real Estate Appraisers. A committee was formed out of this initiative, wherein the Society of Real Estate Appraisers appointed F. Gregory Opelka, MAI, SREA, SRA, as Chairman of a new Uniform Appraisal Form committee. He was directed by the SREA to select and work with appraisal representatives from the Appraisal Institute and several various government agencies. Howard Sears, acting President of the SREA called for the development of a new common form. Aside from the SREA, the Institute, Fannie Mae, Freddie Mac, FHA and the VA, there were a few other government agencies, and all were actively involved in the development of this new form.

The advent of the personal computer provided better tools to develop the successor to the Green Hornet-an appraisal form using spreadsheet-like software. Initially, my Dad designed the new form in Visi-Calc and then shifted to developing it in Lotus 1-2-3.

My comment: I wonder what would have happened if a standard lending form was never developed? I remember when every relocation company had a different form. What a hassle!! I don’t even want to think about what if every lender had a different form….

http://appraisalbuzz.com/buzz/features/revisiting-the-green-hornet

How much vacation time do self employed appraisers usually take per year?

www.appraisalport.com Poll Results, June 17, 2013

How much vacation time do you usually take per year?
None 893 votes 15%
1 week or less 2,251 votes 39%
2 weeks 1,624 votes 28%
3-4 weeks 712 votes 12%
5-6 weeks 128 votes 2%
More than 6 weeks 107 votes 2%
I’m partially retired 128 votes 2%

Total Votes: 5,843

My comment: I remember 26 years ago, when I was a corporate employee with 3 weeks vacation, plus sick leave. Of course, I was not a good employee. I am just not suited for working for someone else. But, I do miss those regular paychecks, vacation, benefits, etc. etc.

Quirky houses can make lenders nervous

Excerpt:

Want to live in a geodesic home or a reproduction of a medieval castle? Jumbo borrowers shopping for offbeat homes may face challenges in getting a mortgage.

Kristi Gillis and her husband, Bill Hollars, bought a geodesic home in Montera, Calif., for $700,000 last fall. The couple was preapproved by a major bank for a jumbo mortgage, but when they told their lender they planned to buy the domed home, the bank withdrew the financing. Every lender they contacted refused to discuss a loan because of the house’s unusual shape. “What was upsetting is that we thought we’d done everything right,” Gillis said. “We both were pretty shocked, and even the agents involved were surprised.”  (They did finally get a loan)

“An artsy person who lives outside the box will look at one house and think it’s stunning,” said Karen J. Mann, a Discovery Bay, Calif.-based appraiser who covers the San Francisco, Silicon Valley and Sacramento communities. “When an appraiser looks at it, it’s about what’s the norm for the area.

My comment: And the appraisals can be nightmares!! Fortunately, we can google the address and see the house before re-negotiating the fee or Just Say No!

Link to original article: http://www.marketwatch.com/story/quirky-houses-can-make-lenders-nervous-2013-07-02?siteid=rss

Appraiser education levels

Question: What is your highest level of education (non-appraisal related)?
www.Appraisalport.com poll results

Didn’t finish High School. 93 votes     1.5%teacher and class
High School or GED 300 votes             5%
Some College classes 1,475 votes         25%
Community College Graduate (AA) 555 votes 9%
Tech school graduate 139 votes          2%
University Graduate (BA, BS, etc.) 2,947 votes 49%
Graduate Degree (MA, PhD, etc.) 506 votes 9%

Total Votes: 6,015

My comment: Down from the Stone Age, pre-licensing, when it was hard to get an appraisal job without a bachelor’s degree, but still 58% with at least a bachelor’s degree and only 6.5% with no college.

What level of education, training, and experience should a review appraiser have relative to the appraiser originating the report?

www.Appraisalport.com poll results
More   2,772 votes   48%
About the same   1,993 votes    35%
Less   25 votes    0.4%
It doesn’t seem to matter these days   980 votes    17%

Total Votes: 5,770

Working on Xmas = USPAP violation

stress-relax signs

AppraisalPort Poll Results 12/10/12
www.appraisalport.com

During this holiday season, I plan to:

=======================================================================

Take some time off to relax at home with family and friends. 1,720 votes  37%
Take some time off to travel and see family and friends. 457 votes           10%
Take some time off to catch-up on all those home improvement projects. 195 votes   4%
Take some time off to go somewhere for a real vacation. 162 votes           3%
Work straight through the Holidays – way too busy to stop. 2,109 votes  45%

Total Votes: 4,643

My comment: Bad, Bad, Bad for 45% who will be working! And this does not even count just not working on Xmas!!

Appraisal Today newsletter

AQB issues 2nd Exposure Draft of Proposed Supervisors/Trainees Courses

2 appraisers“One of the changes adopted by the AQB requires that individuals who become Supervisory Appraisers or Trainee Appraisers after January 1, 2015, complete a course that, at a minimum, complies with the specifications for course content established by the AQB. The course must be completed by the Trainee Appraiser prior to obtaining a Trainee Appraiser credential, and completed by the Supervisory Appraiser prior to supervising a Trainee
Appraiser.”

Written comments requested by January 11, 2013.

If this is an issue for you, be sure to speak out!! The AQB reads all comments.

Link: https://appraisalfoundation.sharefile.com/d/s8623b44b00f462db
Issued on November 29, 2012.