Excerpt from the Appraiser Law Blog:
"How is it that the FDIC can be suing about appraisals delivered 5 or more years ago?
"First, when the FDIC sells off the assets of a failed lender for which it has been appointed receiver, the FDIC typically retains for itself the right to claims against parties like professionals and officers and directors whom it can blame for losses of the failed lender. The standard language included in FDIC asset sale agreements is shown to the right.
"Second, under its interpretation of the Federal Deposit Insurance Act, the FDIC receives an extension of any state statutes of limitations -- an additional three years for tort claims (e.g., negligence) and six years for breach of contract claims, running from the date of the FDIC's appointment as receiver."
The entire article is here. (This excerpt is about halfway down the post.)
While we're on the topic, Peter Christensen has more valuable information:
The FDIC's Use of its Pre-Claim Investigation Powers
"Unlike private lenders or other private parties, even before the FDIC files or threatens a lawsuit, the FDIC has broad investigatory powers that it tries to use in some cases to essentially shake the file cabinets of a professional upside down to find something that may support claims against the professional who worked for or rendered services to one of the 350+ failed lenders that the FDIC has taken over since 2007.
With respect to appraisers specifically, the FDIC has subpoenaed appraisers to produce five or six years worth of appraisal work files for a failed bank -- so that the FDIC can comb through the appraisals and work files for potential claims."
[Ed.: In most other contexts, this would be referred to as a "fishing expedition."]
How to Determine if an Appraiser E&O Policy Excludes FDIC or Other Regulatory Agency Claims
"The best way is to read the policy including all of its relevant endorsements and, if more clarification is needed, ask the broker offering you that policy. If the appraiser is considering new insurance, it is advisable for the appraiser to ask for a complete copy of the policy and all proposed endorsements before binding coverage. Exclusion of coverage for FDIC claims is just one concern in this current liability environment, but it is a big one for appraisers who performed any appraisals for loans (mainly between 2004-2008) made by or sold to any of the 350+ failed lenders taken over by the FDIC since 2007."
Appraisers: Be Sure Your E&O Covers FDIC Complaints
"In state insurance filings, GenStar has now indicated that future E&O policies effective after 6/1/2011 for appraisers needing insurance for work before August 2008 will contain an exclusion for damages alleged by the FDIC. Most insurers are making this move because of the FDIC's hyper-aggressive litigation tactics against individual appraisers -- insurance premiums that most appraisers can afford are just not enough to cover the FDIC's view that appraisals are a form of mortgage insurance."
Thanks to Peter Christensen from the Appraiser Law Blog.