AMC Appraiser Agreements and Indemnity

Peter Christensen has written a post on the Appraiser Law Blog discussing appraiser concerns about the indemnity clauses contained in many AMC agreements.

"Many of our recent calls have concerned the TSI Appraisal Services Appraiser Agreement. This agreement is worth looking at because, though more extreme than others in its one-sided wording, it illustrates the typical legal problems for appraisers found in AMC agreements."

Peter's summation:

"In the end, whether an appraiser signs an AMC agreement like TSI's comes down to a business judgment: whether the benefit of doing business with the AMC (and receiving its appraisal orders) outweighs the potential risk it may cause, including potential liability beyond insurance coverage.

Based on our claims experience, as of this date, we have not received a material number of claims affected by indemnity provisions in AMC agreements, but the future is uncertain and these liability shifting provisions may become more significant.

An appraiser could also try to persuade an AMC to drop or amend its indemnity language. Obviously, the more that appraisers demand such changes, the more likely that AMCs will have to change their agreements and make them less one-sided."

The full article is here.

If you have time and interest, Jonathan Miller has an well written article about the effect HVCC and AMCs have had on appraisers and appraisal quality, and the use of distressed sales in reports.

Here: "Appraisers and Foreclosure Sales Bring Havoc to Housing Markets"

In general, I find his blog, "Matrix," informative, well considered and well written.

He has a section devoted to appraisers and appraisal issues, if you are not interested in the NY real estate scene.

TAVMA publishes AMC Standards of Good Practice in Appraisal Management

Title Appraisal Vendor Management Association (TAVMA) is a trade association of the real estate mortgage settlement services industry. For what it's worth, they have published a recommended set of voluntary standards for AMCs.

"a set of guidelines for participants in the appraisal management industry. The standards outline best practices to help ensure that appraisal management companies (AMCs) and appraisers deliver quality, objective valuations to their common customers - financial institutions. "

Maryland HB 42 - Appraisers Knowledge of RE Value Prohibited

Synopsis [via Ann O'Rourke, MAI, SRA, MBA]:

Prohibiting specified real estate appraisers from providing real estate appraisal services under specified circumstances in which the specified real estate appraisers know the asking price or the selling price of the real estate being appraised; providing that a person who violates the Act is guilty of a misdemeanor; and establishing penalties.

A person who violates any provision of this title is guilty of a misdemeanor and on 8 conviction is subject to a fine not exceeding $5,000 or imprisonment not exceeding 1 9 year or both.

So far, I have not seen any explanation about the motivation for this bill, or how to keep the asking and selling prices hidden from appraisers.

[Not to mention that it is direct conflict with USPAP! - Stan Sidor]

Source

FHA and Ginnie Mae Take Action against TopDot Mortgage

The Federal Housing Administration’s Mortgagee Review Board (MRB) immediately and permanently withdrew the FHA approval of Premium Capital Funding, LLC, a Jericho, New York-based lender doing business as TopDot Mortgage. This action prevents TopDot from participating in FHA programs and seeks a monetary penalty of $674,000.

In addition, the Government National Mortgage Association (Ginnie Mae) is defaulting and terminating TopDot as an issuer in its Mortgage-Backed Securities (MBS) program and is ending the company’s ability to continue to service Ginnie Mae securities. Servicing of TopDot’s $181.2 million dollar Ginnie Mae portfolio will be transferred to LoanCare Servicing Center, Inc.

The MRB and Ginnie Mae took these actions based upon TopDot’s numerous and egregious violations of FHA requirements, including failure to document borrowers’ income, evaluate borrowers’ creditworthiness, and approving loans with grossly excessive debt-to-income ratios without compensating factors to justify approval.

“This lender demonstrated a pattern of utter disregard for how we do business and its behavior not only put the FHA insurance fund at risk, but placed their own customers at greater risk of foreclosure,” said FHA Commissioner David Stevens. “FHA approval is a privilege that we entrust to the most responsible lenders. If any lender violates that trust, the MRB will take action to protect borrowers, the FHA insurance fund and FHA programs.”

Mary Kinney, Ginnie Mae’s executive vice president, said “Ginnie Mae’s requirements are in place to protect the borrower and the American taxpayer. Both Ginnie Mae and FHA are working aggressively to ensure that borrowers are not harmed by the misdeeds of lenders. These lenders are on notice that they must strictly adhere to Ginnie Mae and FHA regulations to maintain their status within HUD programs.”

While TopDot may appeal FHA’s withdrawal by submitting a written request for a hearing before an Administrative Law Judge within 30 days, the filing of an appeal does not delay these actions. A complaint seeking civil money penalties will be served on TopDot in due course and the company will have the opportunity to contest the imposition of the penalties before an Administrative Law Judge.

The U.S. Department of Housing and Urban Development (HUD) is also continuing to evaluate the conduct of individuals who participated in TopDot’s violations of FHA requirements and will move quickly to take appropriate action against those individuals.

For more information, visit www.hud.gov.

Source

Appraiser's Wife Responds

"As you know, Mark Christian tragically passed in a senseless hit and run accident on New Year's Day while he was out walking his dog. While I did not know Mark well what I did know of him was that he was a good, honest, intelligent father, husband and appraiser.

I have known his wife Cheryl for many years and I met with her earlier this week.

She wants to express her gratitude for all of the cards, letters, prayers, condolences and donations from the appraisal community which she has received in the past month. Many of these were from people that she has never met from all over the country. She has been very touched by the outpouring of support from the appraisal community and she asked me to express her heartfelt thanks in this very difficult period in her life.

I am proud to be a part of this appraisal community and the caring people within it who show such compassion for their fellow associates.

Thank you,

Gregg A. Schneider

Appraiser, Bellingham, WA"

AMC Alert

All appraisers,

The BIG lenders/AMCs are fighting back against our legislation. They don’t like the control it will give the state, and the transparency it will give the public. We need your help, or this legislation may not pass.

First we need your help with some written evidence. Anything that shows the true operation of an AMC and how it harms the consumer or the state.

In the next week or so, we will then be asking you all to contact your specific reps. DON’T DO IT NOW. Wait, so we can get some talking points published.

Right now, we need some good evidence to compile and send to the committee.

We desperately need any evidence you have concerning the activity of AMCs:

1. Fraud – i.e. requests to remove things from an appraisal
2. Altered appraisal reports
3. Pressure for value, Etc.
4. Fees – Any written documentation that indicates you must work for their fees or you don’t work. i.e. price fixing, especially RELS or Landsafe.
5. If they state you will not receive future work if you don’t accept their fees
6. Reviews – reviews showing incompetence (lack of geographical competency)
7. Anything that may be viewed as a consumer protection issue.

WE NEED THIS ASAP

Thank you,

Michael Imes
Secretary, ACOW
President, Olympic Peninsula Chapter, NAIFA

ACOW Board Teleconference

Everyone,

Several emails have been going around from ACOW about AMC legislation. It appears the banks/AMCs may not be happy with our proposed law.

You are welcome to [read the previous post and request info from Stan or Michael], and comment to Stan at ACOW.

The board and reps will be having a short teleconference today at 1700 hrs to discuss feedback and possible action. Now is the time to have your voice heard.

Thank you,

Michael Imes, IFA
President, Olympic Peninsula Chapter, NAIFA

Model Legislation and Clear Capital Response

Stan Sidor has received a letter from Clear Capital, outlining their objections to our proposed AMC licensing bill.

Also available are the proposed RELS alternative AMC bill they are asking us to consider, and which they would support, in lieu of ACOW’s AMC bill.

Until I can get these posted to the ACOW site and get links, email Stan or Michael Imes for copies.

"You may distribute/forward to others as you feel is necessary, though please do NOT contact Clear Capital, or any legislators (we have already had appraisers who are constituents in each reps’ district for those on the committee considering our bill). Please direct ALL feedback to me for consideration in negotiations on the bill. Again, if you need a copy of HB 3040, our bill, then I can provide one to you – just email me and ask for a copy.

Thank you.

Stan Sidor

Update on AMC Bill

Everyone,

Ok, just got word from TK [our lobbyist that represents us in Olympia] that Wells Fargo will be attending the hearing on this bill tomorrow and they oppose it. Here are some concerns TK has:

1. It is an election year
2. Banks are big PAC contributors
3. Legislators are not likely going to want to have to address anything that is “controversial”
4. It is a short session, and they have a lot of other things to deal with

Based on the above, TK is not optimistic that this bill will pass, at least during this session.

However, Wells’ reps are willing to sit down with us after the hearing in an attempt to try to “work out” differences.

Just an “FYI” on this…. W[e w]ill continue to work on, and keep everyone posted.

Thanks,

Stan Sidor

HUD Termination of Lenders' Approval to Originate Loans

The U.S. Department of Housing and Urban Development announced actions against more than 200 mortgagees last week, and today the agency reported five more firms that faced further actions.

For those interested, here is HUDs list of terminated lenders.

FHA Tightens Borrower Requirements

Federal Housing Administration (FHA) Commissioner David Stevens today announced a set of policy changes to strengthen the FHA's capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities. The changes announced today are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the nation's housing market recovery.

The FHA will propose to take the following steps: increase the mortgage insurance premium (MIP); update the combination of FICO scores and down payments for new borrowers; reduce seller concessions to three percent, from six percent; and implement a series of significant measures aimed at increasing lender enforcement. U.S. Housing and Urban Development Secretary Shaun Donovan previewed the changes in December of last year, noting that the FHA would announce additional details before the end of January.

"Striking the right balance between managing the FHA's risk, continuing to provide access to underserved communities, and supporting the nation's economic recovery is critically important," said Commissioner Stevens. "When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency's history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market's recovery. Importantly, FHA will remain the largest source of home purchase financing for underserved communities."

Source

Results of 'green' hearing

On Wednesday this week a legislative hearing was held in Olympia to review a potential new law which would require appraisers to have specific ‘green building’ CE training before accepting an appraisal assignment for a residential or commercial structure built with ‘green’ components.

Stan Sidor's comment regarding the hearing outcome:

"The committee chair does not believe it will pass out of committee, though we are monitoring. Nothing more to do with/on it right now."

(Thank you to Dave Towne for this information.)

"Green Building" C. E. Requirement Proposal

Everyone,

Responding to the e-mail that I received from ACOW President Stan Sidor regarding 2010 WA SB 6635 "AN ACT Relating to the appraisal of green buildings; amending RCW 18.140.010; and adding a new section to chapter 18.140 RCW."

The bill did have its instantaneous hearing today. Stan was able to put the brakes on it at today's hearing. While it looks good for now, no proposed legislation in Olympia or the "Other Washington" is ever "Dead" for even a current session of a legislative body until the body adjourns "Sine Die" at its legal end.

The main issue with SB 6635 is that appraisers, as the main people directly affected, had no notice or opportunity for input toward its drafting. It was good to see you at the meeting last evening. I apologize for not being able to get this to you later last evening as I intended, or earlier today.

Should the market generate sufficient need for this education, I believe that there is no need for this special legislation because 18.140 RCW already contains authority for DOL and the REAC do this by amending the WAC after the required public comment period. SB 6635 is attached.

Stan, and TK Bentler (ACOW's lobbyist in Olympia) are also working to keep the Governor's budget axe deflected from the REAC. Preserving the REAC is another very important project (VIP) for the entire appraiser community by ACOW. Please give ACOW your fullest support.

Everyone can find their WA Legislative District and US Congressional District, together with Senators and Representatives at http://apps.leg.wa.gov/DistrictFinder/Default.aspx. Please get to know them and know you are a voter in their district. Your voice as a constituent is powerful to their ears. Information on all bills filed in the Washington Legislature is found at http://apps.leg.wa.gov/billinfo/.

!!!

All appraisers will strengthen our collective voice and our individual voices by contributing our time, talent and treasure to ACOW. It is us. Information galore and the membership application form are at http://www.acow-wa.org/. ACOW is sponsoring Richard Hagar's (American Home Appraisals) "Winter Seminar" on two timely topics (each 3 hours, AM & PM) in Seattle (Feb. 5, Friday), Tacoma (Feb 9, Tuesday) and East Wenatchee (Feb 11, Thursday). Details are at http://www.acow-wa.org/200902_winterseminars.html.

This is also being copied to Stan as ACOW President, and to Michael Tabor as ACOW's Blog Master. Everyone is welcome to comment, edit and/or share it as you wish. The ACOW Blog is a great forum for sharing your thoughts on any appraisal topic at http://wa-acow.blogspot.com/.

Keep smiling. 2010 should be better for appraisers with more changes in values (some up here, some down there), more active players, more foreclosures (only helpful to appraisers), and more flow of stimulus dollars to the local levels.

JIM
James H. (Jim) Irish, SRA
Certified General Real Estate Appraiser

Kitsap Appraiser Needed to Attend Senate Hearing

All,

I did not receive this information until a day after it was due, but I am posting it so that everyone can be aware of what is happening "behind the scenes."

Michael Tabor

ACOW URGENTLY NEEDS (WOULD LIKE) TO HAVE AN APPRAISER FROM KITSAP COUNTY ATTEND A WA STATE SENATE HEARING TOMORROW, WED 1-20-10, AT 3:30 PM IN OLYMPIA ABOUT SENATE BILL SB6635 AND TO TESTIFY (BRIEFLY) ABOUT HOW IT IS CONSIDERED A “POOR PUBLIC PROCESS” TO INTRODUCE A BILL ON AN AFTERNOON, AND THEN SCHEDULE THE HEARING FOR THE VERY NEXT AFTERNOON, PROVIDING VERY LIMITED NOTICE TO AFFECTED CONSTITUENTS.

This pertains to a bill introduced by Sen. Karen Fraser that will require appraisers to have education in appraising “green” type properties. I can “guide” the “volunteer” as to exactly what to say, where to attend, etc. – just need someone who could be available on this short notice. The committee chairperson is Phil Rockefeller from the 23rd District, which covers much of Kitsap County (click on link for map). I will testify on ACOW’s behalf as to why ACOW OPPOSES this bill (copy attached), but it would be good to have an actual constituent there from the chairperson’s district to essentially “complain” to the that we were given very limited notice of this hearing.

Please poll your chapter members for anyone willing to attend, and have them contact me asap.

Thank you.

http://apps.leg.wa.gov/DistrictFinder/default.aspx?District=23

Stan Sidor

AMC Information: Solidifi

A "heads up" to fellow appraisers who work with AMCs:

I recently applied to Solidifi, as they allow appraisers to collect their full fees. When I read the "Terms of Service" contract, I found the following clause:

(b)YOUR INDEMNITY: You, at Your expense, shall defend, indemnify and hold harmless Solidifi, its affiliates and their directors, officers, employees, agents and subcontractors, from and against any Claim brought against them [a list of reasons follows].

I consulted with two attorneys, who confirmed my understanding that in layman's terms, this means, "if anything goes wrong, you [the appraiser] will hire and pay for an attorney for Solidifi."

I also wrote to Solidifi to see if it was possible to delete or modify that clause. Mark Pawelek, the Director of Appraisal Management, responded:

"Regarding your concern about the hold harmless clause, our company simply acts as a portal or conduit for the ordering of appraisals between lenders and independent appraisers. The appraisals are conducted independently by appraisers such as yourself and Solidifi doesn’t influence or alter the contents of the appraisal reports. Therefore it would not be prudent for us to take on the independent appraisers liability if he or she made a material error / omission or fraud related to the report. This liability is the same liability that the appraiser would have if the lender was ordering directly with the independent appraiser."


In my view, if Solidifi is merely a conduit, then Solidifi's risk is restricted to their actual involvement, and Solidifi should carry its own insurance for that risk. The idea that Solidifi has the same liability as the appraiser is (as far as I can tell) factually incorrect.

Regardless of the argument, for an AMC to push its liability (whatever it may be) onto appraisers is simply outrageous. This would be analogous to appraisers extracting an agreement from Microsoft that required them to hire our legal help because we use Windows to prepare our reports.

I also think enough has probably already been said about the recent events which have allowed appraisers to be divided and exploited.

I see that a few states are drafting regulation for AMCs, and I am looking forward to those regulatory changes which will hopefully help curtail the opportunistic predation that has been a hallmark of AMC practices.

I also sincerely hope that appraisers throughout Washington consider membership in ACOW as a way they can help all of us stand together and effectively resist our attackers and detractors.

.

AMC Deadbeat List

The Appraiser's Forum has a link to an AMC deadbeat list that has been developed by contributors to the site.

I have no way of checking the veracity of this listing, so use it with your own discretion. I am posting this in the event it is useful to any of you who work with AMCs.

One of Our Own, Killed

Obituary:

Mark S. Christian, age 54, of Bellingham, WA passed away on January 1, 2010 as the result of injuries sustained in a hit-and-run accident. He was born on February 5, 1955 in Boston, MA to the late Howard and Marjorie Christian. Mark grew up in Massachusetts and graduated from Boston College before moving to Los Angeles.

He lived in California for a time before moving to Seattle where he received a Master's Degree at the University of Washington. He later moved to Bellingham where he was a self-employed real estate appraiser. Mark loved the outdoors. He was a member of the track and field team at Boston College. He was an avid hiker, mountain climber, golfer and skier. He coached his daughter's soccer team.

Mark was very interested in bible study and the Scriptures and was an active member of Chuckanut Community Baptist Church. Mark is survived by his wife Cheryl (Toddhunter), son Adam of San Francisco and daughter Diana of Los Angeles. He was the brother of Howard, David, Emily, Magdalen and John Christian, Dorothy Baker and the late Carol Christian, all of Massachusetts. A celebration of Mark's life will be held on Saturday, January 9, 2010 at 2 p.m. at Chuckanut Community Baptist Church (1921 Fairhaven Avenue, Bellingham).

Source


Excerpt from Bellingham Herald:

A Bellingham man is dead after being struck by a stolen van driven by a teen in a hit-and-run accident on New Year's Day. The man who was fatally struck by a van on Chuckanut Drive on Friday evening, Jan. 1, died of blood loss from head injuries, according to the medical examiner.

18-year old Sean F. Crissy told police he was sending a text message, had been drinking, and was "tripping on mushrooms" at the time he struck and killed 54-year-old Mark Christian.

Christian's wife said her husband went on his evening walk Friday night. She reported him missing when he never returned.

...After striking Christian, Crissy allegedly drove the van to Arroyo Park, texted his father that the van had been stolen, and walked away. He never called for help for the man, but did text his friends telling them he'd been in a crash, according to KIRO TV News.

Crissy, according to Police spokesman Mark Young, was arrested and booked into the Whatcom County Jail on Saturday on charges of suspicion of vehicular homicide.

The News Tribune reported Crissy has no felony convictions but has had several run-ins with police. His father, Franklin Crissy has a protection order against him because his son allegedly threatened and assaulted him.

Crissy's bail was set at $400,000.

Christian is survived by a wife and two children.

Source and Kiro4


WHAT WE CAN DO

This is an open letter to ask all appraisers to try (in spite of these difficult economic times) to make at least some small donation to his widow and family. Anyone interested in making a donation, no matter how small or large, can do so by sending a check made payable to Cheryl Christian in care of her church at;

Cheryl Christian c/o Pastor Paul L. Gibson
Chuckanut Community Baptist Church
1921 Fairhaven Avenue
Bellingham, Washington 98229

Anyone wishing to verify the information can contact Pastor Gibson at;
(360) 757-9376-Pastor-Gibson
(360) 422-7761-Message-and-Fax
Hulbush@hotmail.com

A memorial service for Mark S. Christian is being held on Saturday January 9th, 2010 at 2:00:PM at Chuckanut Community Baptist Church.

I'm asking that each of us to simply look in the mirror, then look at our families, think how the last two years have been "not so good for honest appraisers", and think if this had been you. A little bit from all of us is a lot. I know so many appraisers who right now could not afford to pay for their funeral - again, think if this had been you. Maybe you're a member of an appraisal organization, chapter, etc. I'm sure it would mean a lot to the family if the check or a note with it said it was from a fellow appraiser or appraisal group.

I've included below a few of the local news stories and links to television station video, etc. for you to view, verify and share. It will really make you stop and think. There but for the grace of God go all of us.

Thanks for your time and consideration, I hope that you'll do what you can. Please feel free to forward this email to any and all appraisers you know.

Sincerely,

George E. Nervik
From the AI Forum