In a letter to the heads of the Department of Housing and Urban Development, Federal Financial Institutions Examination Council, Veteran's Administration and the Federal Housing Finance Agency, NAR President, Ron Phipps, encourages the bar of indemnification clauses used by Appraisal Management Companies (AMCs).
An excerpt:
"Appraisers provide an independent and impartial analysis of the market, and acredible opinion of the value of real property. This analysis is a critical component of the mortgage transaction and, in recent months, has become thesubject of unnecessary pressure. The mounting use of indemnification clauses by AMCs may be interfering with the appraiser’s independence and objectivity. In many cases, appraisers are asked to sign contracts that include language to indemnify and hold harmless the AMC against any suit, threat, or claim on any work product or service provided as part of the contract agreement. In some instances, the appraiser is even required to indemnify the lender and the AMC for amounts equal to their costs in repurchasing a mortgage loan, regardless of any proof of culpability on the part of the appraiser."
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