The FDIC Ups the Ante in Its Failed Bank Litigation

The FDIC has now taken over more than 250 failed banks since January 1, 2008.  As the receiver for these failed banks, the FDIC has filed over 160 lawsuits against mortgage brokers, title companies, attorneys, appraisers, borrowers and other parties it blames for the banks' losses.  So far, the stakes have been relatively small. What remained to be seen was just how hard the FDIC intended to push and whether its litigation efforts would come to resemble the tactics of the RTC.

The answer is in: it looks like the FDIC will take it to the limit.  This answer comes from the lawsuit the FDIC filed on July 2, 2010 in the Central District of California as receiver for failed Indymac Bank.  (All 309 pages of the FDIC's complaint are available here.)

Banks, industry professionals, lawyers and insurers have been watching closely to see whether the FDIC would pursue claims against directors and officers of failed banks. Doing so would be a clear signal of the FDIC ratcheting up its litigation vise. The FDIC's complaint in Federal Deposit Insurance Corporation v. Van Dellen, et al., C.D. Cal., Case No. 10-4915, is the first direct lawsuit the FDIC has filed against directors or officers of a failed bank in connection with this financial crisis.  In its complaint filed

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CoreLogic Files an Amended Complaint Adding More Defendants to Its AVM Patent Case and Interthinx Files a Counterclaim

One of the emerging ways that an AMC, or possibly even a lender, can expose itself to potential liability for selling or using an alternative valuation product (i.e., a non-appraiser valuation) is via alleged patent infringement.  As reported earlier on this site, CoreLogic filed a patent infringement lawsuit against eight AMCs and other AVM providers in April. In the lawsuit, CoreLogic alleges that it owns a broad AVM process patent being infringed by the various defendants who sell competing AVMs.

Some of the AVMs that CoreLogic accuses of infringing its patent include CASA®, ValuServ, iAVM™, Clear VALUE®, and LPS AVM Connect. This leads one to wonder if CoreLogic's lawyers are communicating with its marketing people -- because CoreLogic has used and sold some of these allegedly infringing AVMs itself.  A sample CASA® AVM sold by CoreLogic is shown here.  It's an odd strategy to sell a product for many years and then turn around and claim that the product is infringing your own patent.  It falls right into potential legal defenses that the defendants will undoubtedly pursue.

The new developments in the case are that CoreLogic filed an amended complaint yesterday and Interthinx filed a counterclaim against CoreLogic today.  The amended complaint adds three new defendants:

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An Update on the Single Biggest Threat to Appraisers: the FDIC

The FDIC continues to prove itself as the biggest current threat to appraisers and appraising.  Since January 1, 2010, the FDIC has filed 60 lawsuits as a plaintiff in federal court in connection with its receivership of failed banks.  This compares to 76 lawsuits for all of last year.  Unfortunately for appraisers, so far this year, at least 17 individual appraisers have been named as defendants in the FDIC's lawsuits, and the pace of claims appears to be increasing.  Aside from lawsuits, the FDIC's attorneys also have sent perhaps hundreds of demand letters to appraisers this year, each one another potential lawsuit.

All claims by the FDIC against appraisers -- without exception -- have alleged that the appraisers "overappraised" the subject property securing a loan.  The FDIC also doesn't hesitate to sue mere trainees, as is evident in the excerpts from a recent lawsuit shown here.

While there are certainly examples of poor appraising in some of the cases, I know that good -- in fact, excellent -- appraisers have been dragged into litigation or threatened by the FDIC.  The unfortunate fact is that the FDIC is looking at appraisers as if their reports are guaranties of value in the down market -- the FDIC is looking at them as far more than work product opinions generated by professional advisors. When the FDIC threatens to sue an appraiser, it means absolutely nothing that the appraiser may have delivered hundreds of excellent reports over the years of a relationship with a lender and, particularly in the commercial context, may have served as a trusted advisor.  All that matters now to the FDIC is whether it can argue that the value was high in a report and whether it can force money from the appraiser.  As written here before, the FDIC's tactics will not only hurt the individual appraisers but also hurt appraising as a profession.  The FDIC's tactics stifle good appraising.  They stifle appraisers' abilities to serve as neutral advisors and force them into defensive appraising, where the safest course for the appraiser is simply to "come in low" on value and avoid any potential areas of liability.  I'm not advising that "coming in low" is what appraisers should do -- it is just an inevitable result of the FDIC's overly aggressive tactics and a result that is being observed firsthand.  


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Cuomo v. eAppraiseIt: No Surprise that Appellate Court Affirms Denial of eAppraiseIt's Motion to Dismiss

I don't think it should come as a genuine surprise to most people familiar with the field, but yesterday a New York appellate court affirmed the trial court's decision denying First American Corp. and First American eAppraiseIt's (now part of CoreLogic) motion to dismiss in the action filed by New York Attorney General Cuomo against the companies in 2007.

eAppraiseIt's primary argument in the failed motion was that New York's Attorney General should be preempted by federal banking laws and regulations from pursuing state law claims against the defendants for their alleged appraisal inflation scheme with Washington Mutual.  The denial of that motion and confirmation by the appellate court should not be a surprise legally because, to make a long story very short, the specific case law regarding preemption in the appraisal context persuasively only supports a

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Yakas v. Chase: A Signal of Broader Valuation Liability Issues for Lenders

This is the first of a series of articles that will discuss valuation liability issues which either do not stem from true appraisals or affect parties besides appraisers.

Appraisers are by no means the only parties targeted for valuation liability claims.  While appraisers are frequent targets in connection with their own professional work, other parties have much wider scopes of potential liability relating not just to appraisals but also to other forms of valuation, including automated valuation methods (AVMs) and broker price opinions (BPOs).  Other parties are also much more exposed to potential class action liabilities relating to valuation.  One of the valuation liability issues confronting lenders pertains to their use of AVMs and BPOs in connection with the reduction of home equity lines of credit (HELOCs). 

A good example of one such case is Yakas v. Chase Manhattan Bank, filed in the U.S. District Court for the Northern District of California.  This lawsuit attacks Chase for its use of AVMs and is one of more than a dozen borrower class actions attacking lenders for using AVMs and BPOs in connection with HELOC

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AMC v. AMCs: First American CoreLogic sues Fiserv, IntelliReal, et al.

First American CoreLogic -- currently a subsidiary of First American Corp. in Santa Ana, CA but soon to be an independent company under the name CoreLogic -- has filed a lawsuit against a number of appraisal management and technology companies: Fiserv, IntelliReal, Interthinx, Lender Processing Services, Precision Appraisal Services, Real Data, Realec Technologies and Zillow.  It's not the kind of case you might expect about real estate valuation issues.



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Information for Borrowers Thinking About Suing an Appraiser

Suing an appraiser is generally a waste of the borrower's time, emotional energy and money -- not to mention that it causes emotional and financial suffering to the affected appraiser.  Here are several reasons why suing an appraiser is a bad strategy, based on my experiences as a lawyer:

• Most claims by borrowers against appraisers are unsuccessful.
  
  

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Downey Savings' Missing Loan Data: FDIC v. SK Hart

In some of the professional liability cases filed by the FDIC in connection with failed banks, the records available to the FDIC's attorneys have seemed incomplete. This case may explain part of the reason why.

On April 2, the FDIC sued a Utah-based real estate investment company named SK Hart Bayview LLC. In the lawsuit, the FDIC demands that SK Hart be ordered to return thousands of pieces of computer equipment that the FDIC sold to SK Hart in 2009. The equipment and data on it formerly belonged to Downey Savings. After the FDIC seized Downey

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The Single Biggest Liability Threat to Appraisers: the FDIC

The single biggest liability threat to both residential and commercial appraisers is the Federal Deposit Insurance Corporation.  The FDIC held a conference last week in Chicago for law firms interested in representing the FDIC.  What came out of that conference made me very anxious for appraisers, but it's much more than just a threat to individual appraisers.  What the FDIC is doing hampers the ability of the appraisal profession to deliver accurate valuations going forward.  The reason is: if you're an appraiser doing work for a lender (which may or may not be one of the 700+ troubled banks on the FDIC's watch list), your risk of being sued in hindsight by the FDIC for alleged overvaluation is eliminated by "coming in low" on the appraisal.  The effect on appraised values -- whether conscious or unconscious -- is a normal reaction to knowing that someone like the FDIC is shooting at you.  That means more loans don't get made.  I'm not advising that "coming in low" is what appraisers should do -- I'm just pointing out that it's the inevitable result of the FDIC's overly aggressive tactics and the FDIC's litigation stance that appraisers are virtually guarantors of value, as opposed to professional advisors.

The FDIC has taken over more than 200 banks since the beginning of the mortgage crisis.  When the FDIC takes over a failed bank, it usually sells off the banking assets to an existing lender but retains all of the potential legal claims against the failed lender's directors, officers, mortgage brokers, accountants, lawyers, appraisers, AMCs, etc.  The FDIC is now in the business of suing these parties, blaming them for its failed banks' bad lending practices.


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Federal Judge Dismisses Eight Homeowner Class Actions Alleging Inflated Purchase Prices

On March 31, 2010, Judge Virginia Phillips in the U.S. District Court for the Central District of California dismissed eight homeowner/borrower class actions against home builders and their affiliated mortgage companies.  Filed on the same day by the same group of law firms, the eight lawsuits alleged that the builders and mortgage companies had schemed to inflate the price of homes paid by the homeowners at the peak of the housing bubble in 2004-2006.  The homeowners alleged that the builders and mortgage companies purportedly concealed that the purchases were risky and likely to lose value -- due to, among other things, the risk that many borrowers in the developments would default on their mortgages.

The lawsuits dismissed had named the following defendant builders and their affiliated mortgage companies: Standard Pacific, Lennar Corp., Richmond American Homes Corp., The Ryland Group, Inc., Centex Corp., D.R. Horton, Shea Homes, Inc., and Beazer Homes USA, Inc.  All of the cases had been transferred to Judge Phillips because of their similarity and common allegations.

The legal reasoning applied by Judge Phillips in each order dismissing the cases is identical.  Several of the orders are available here and are worth reading.  Here is part of Judge Phillips' reasoning:

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The Wheels of Justice Turn Slowly for BofA in its Lawsuit against MGIC over Rotten Reviews

We previously reported that MGIC had removed to federal court Bank of America's (technically its subsidiary Countrywide's) lawsuit against MGIC partly regarding rotten review appraisals.  We also reported our view that it was quite likely that MGIC would challenge Bank of America's ability to sue in court on the basis that the allegations in the complaint are subject to mandatory arbitration under the parties' insurance contracts.

Here's an update.  After the case landed in federal court, Bank of America filed a motion for remand -- a motion asking that the federal court judge push the case back down to the state court where Bank of America originally filed the lawsuit, in this case San Francisco Superior Court.  MGIC -- who lists no less than six attorneys on its behalf in its latest pleading -- then filed a demand for arbitration with the American Arbitration Association on February 24, 2010, seeking to have the 1,400 denied claims at issue arbitrated in private.  MGIC made the demand for arbitration under an arbitration clause in the various insurance policies it issued to Countrywide. 

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Appraiser Blacklist Class Action Updates: Rels Valuation and Landsafe

A law firm press release almost always coincides with the filing of a new class action complaint.  It generally serves as publicity for the law firm and as a way to attract assistance from potential class members and other potential cases.  And, then most times, you don't hear much about the case for a very long time.  When the plaintiffs' class action firm Hagens Berman Sobol Shapiro LLP filed class actions with appraisers as putative class members against two large lenders and their affiliated AMCs, the filing of each lawsuit was accompanied by a press release -- release about Landsafe lawsuit and release about Rels Valuation lawsuit.  Since then, there hasn't been very much news.

The allegations in each lawsuit are very similar: that two lender-owned AMCs allegedly colluded with their affiliated lenders to pressure appraisers to deliver inflated valuations and allegedly punished appraisers who did not cooperate by blacklisting them.  Blacklisting, of course, AMCs is a serious issue for appraisers and many affected appraisers feel they have been unfairly blacklisted based on low quality of review appraisals or other wrong information.  Here is an update on the status of each case -- both cases are on a very slow path toward resolution.

Sound Appraisal v. Wells Fargo Bank and Valuation Information Technology (dba Rels Valuation).  This case was filed on April 14, 2009 in the United States Disitrict Court for the Northern District of California as a class action on behalf of appraisers affected by Rels Valuation's alleged blacklisting practices.  A class action like this has five main phases:
(1) Filing of the complaint and motions to dismiss attacking the sufficiency of the allegations in the complaint -- in other words, if the plaintiff's allegations are presumed to be true, are the allegations enough to support the legal claims?
(2) Discovery and litigation about class certification -- is the lawsuit appropriate for a class action?  Are the alleged claims and damages of the proposed class members similar enough to be litigated together in a class action? If not, then the case becomes an ordinary individual plaintiff lawsuit by the plaintiffs named in the complaint. In my view, it will be challenging for the plaintiffs to certify a class in either of these actions because the potential class member appraisers likely have very different factual histories, different potential claims, and different types and amounts of alleged damage.  Often a decision on class certification is appealed in the middle of the case, but usually without success. 
(3) If a class is certified, discovery proceeds with regard to the allegations and defenses at issue.  In these cases, there would likely be many depositions of appraisers and appraisal managers.  Motions for summary judgment will likely be filed by the defendants at or near the conclusion of discovery.
(4) Settlement or trial.  (5) Appeal.


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Appraiser Blacklist Case Update: Horton v. National City and eAppraiseIT

Many appraisers call and write us with regard to the hardships caused by being blacklisted by a lender.  Some appraisers want to know if filing a lawsuit would fix their problem -- either with a court order or monetary damages.  As an insurance provider, we're in the defense business, helping our insureds avoid risk and loss and defending them when they are sued for something covered by their policy.  However, as an attorney who is familiar with the appraisal practices at issue and who has litigated defamation and interference claims, I generally tell appraisers that litigating a blacklist problem against a lender or AMC is a long, potentially expensive path with a small likelihood of immediate personal benefit for the appraiser.  This kind of litigation isn't long and expensive just because the defendants fight hard, but also because there are many valid privileges and defenses that apply to alleged defamation.  I offer these views with sympathy for appraisers who have had their businesses injured or destroyed by sometimes unfair and unsupported blacklisting practices.  The alternative paths that appraisers might choose to obtain relief include regulatory/administrative complaint processes and putting effort into the adoption of appropriate state regulations as more states pass laws giving regulatory authority over AMCs to appraisal boards.

The case of Horton v. National City and eAppraiseIT demonstrates just how long a path it can be when an appraiser files suit against a lender and an AMC.  I've tried to be neutral in describing the history of the case -- I don't know whether the claims have merit or not.  The plaintiff Nancy Horton is a certified residential appraiser in Illinois.  She appraised for National City for 11 years.  According to her complaint, most of her work was for National City during that period and she did an average of 390 appraisals per year for National City during the last several years.  However, in late 2005, National City placed Ms. Horton on its blacklist or "do not use list" on the basis of several reviews by an unidentified appraiser.   She alleges that the blacklisting was wrongful and that it violated National City's own rules adopted pursuant to unspecified federal regulations.  She further alleges that the review appraiser's statements (or statements attributed to the review appraiser) regarding deficiencies in her appraisal reports were false and that her efforts to rebut the review findings went without any meaningful consideration or reply by National City.

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Reducing the Risk of Borrower Claims

Borrowers are currently the most common source of claims against residential appraisers. Regardless of the fact that they are not the intended users identified in almost all reports, borrowers are filing a majority of the lawsuits and demand letters we see against residential appraisers. This article discusses common borrower claims and suggests new approaches that appraisers might consider on how to decrease the risk. (No party contemplating filing a lawsuit against an appraiser should view the discussion of claims here as an indication that pursuing a claim will be fruitful. Anyone considering suing an appraiser should read this first: "Should I Sue the Appraiser?")

Alleged Overvaluation

The single most common claim asserted by borrowers is that the appraiser overstated the value of the subject property. These claims come mostly from borrowers who purchased or refinanced properties near the peak of the bubble and are now in financial distress. Quite simply, more mortgage defaults mean more claims by distressed borrowers hoping for a financial payoff.

Most overvaluation claims by borrowers fit a common pattern: borrowers typically allege that they borrowed or paid too much because the appraiser overstated the property’s value and often also accuse the appraiser of conspiring with the lender to make sure the loan would close. There is always more to the story with these claims, however. The appraiser’s defense counsel typically discovers that the lender overlooked its underwriting guidelines or the borrower’s inability to pay or that the borrower lied to get the loan. And, in many cases, the borrower never even looked at or considered the appraisal until his or her lawyer started coming up with parties to sue and therefore did not legally “rely” on the appraisal.

Alleged Undervaluation

On the flip side, a noticeable new trend in the last year has involved complaints by borrowers that appraisers have undervalued properties. This trend unfortunately means that appraisers are being attacked from all sides. Claims alleging undervaluation are usually made soon after the delivery of a report and are often intended by the borrower to intimidate appraisers to change valuations or to strike back at appraisers who have reported lower than desired values.

A typical scenario involves a homeowner seeking to refinance a loan on a property purchased at the peak of the real estate bubble. The appraiser will accurately report a current value that in many cases is 20% to 30% less than what the homeowner paid. When the loan officer informs the homeowner that the loan cannot be made and provides the appraisal to the homeowner as required by the HVCC, the homeowner or his or her attorney sends a demand letter to the appraiser threatening to sue the appraiser or report the appraiser to the state unless the appraiser raises the value or somehow “retracts” the report. Often, there is a threat that if the homeowner does not obtain the loan he wants, he will sue the appraiser for the interest that the homeowner theoretically would have saved if the homeowner had received his or her desired loan. In our opinion, most of these claims are frivolous, and we view them as an indicator that appraisers are doing their job and providing accurate information to their lender clients.

Square Footage

The third most common borrower claim we see involves square footage. These claims usually involve appraisals performed for purchase loans. The borrower typically alleges that the appraiser overstated the square footage of the subject property and thereby caused the borrower to pay too much for a home. The borrower will usually demand an amount for the “missing” square feet (e.g., $200 per square foot times 300 square feet). Alternatively, a borrower will claim that he or she would never have purchased the home at all if he or she had known it was 300 square feet smaller and then demand payment from the appraiser for the entire purchase cost. In square footage claims, the appraiser has sometimes not even made an error in the report – the homeowner may be relying on inaccurate information from another appraisal, the owner’s personal measurement or public records. Other times, the appraiser did err and the error results from measuring incorrectly, relying on plans or public records without identifying that reliance, or counting areas that should not be included in gross living area.

Sewer versus Septic

Year in and year out, claims about appraisers misidentifying whether a home is on a septic system or public sewer continue to roll in. A common scenario here occurs when several years after purchasing a home, a homeowner encounters a waste blockage and is informed that his or her septic system must be repaired or replaced. The homeowner is shocked by the cost and notices that the appraisal identified the home as being on a public sewer. Now, the homeowner makes a claim against the appraiser for the cost of the septic system repair or seeks the cost of connecting to a public sewer, if available. Of course, the homeowners who make these claims never appreciate the fact that they never had to pay monthly sewer fees.

Other Borrower Claims

The other claims that borrowers bring against residential appraisers taper off from here into a creative shopping list. The more frequent of the claims on this list include:

1. Problems with the condition of the structure like leaking roofs, electrical problems or undisclosed damage;
2. Erroneous flood zone determinations;
3. Property line/boundary issues and unidentified easements; and
4. Nearby nuisances such as retention ponds or factories.

A Suggested Claims Prevention Strategy

It should go without saying that the first rule in reducing the risk of claims from any source is to do good appraisal work and to disclose and analyze the effect of any specific conditions or anomalies affecting a property. The best disclosure and analysis uses real world language tailored to the specific issue with the property, not canned phrases from a macro key entry.

Leaving aside that general advice, the common thread woven into nearly all borrower claims is that the borrower is almost always not the appraiser's client or intended user. This fact can serve both as a tool for appraisers to decrease their risk of becoming the subject of a borrower claim and as a viable defense when such claims are pursued. The appraiser should not do or say anything either verbally or in the report suggesting that the appraiser expects the borrower to use or rely on the report or that the borrower may use or rely on it.

Most appraisers, of course, include a short explanation in their reports clarifying who the intended user of the report is and limiting the intended user to the identified lender/client. The typical language limits use of the report by the identified lender/client to evaluation of the subject property for a mortgage finance transaction. The language we see in most reports and that I definitely recommend keeping is:

The Intended User of this appraisal report is [name of the Lender/Client]. The Intended Use is for the identified Lender/Client to evaluate the property that is the subject of this appraisal for a mortgage finance transaction, subject to the stated Scope of Work, purpose of the appraisal, and Definition of Market Value. No additional Intended Users are identified or intended by the appraiser.

The inclusion of this standard language – acceptable to Fannie Mae – is without question a good idea and does assist in the successful defense of many borrower claims.

The other very important language that we see and expect in most reports is:

The appraiser is not a home inspector and this appraisal report is not a home inspection, the appraiser only performed a visual observation of accessible areas and the appraisal report cannot be relied upon to disclose conditions and/or defects in the property.

This very standard language also has assisted the defense of many borrower claims. Generally, all of this kind of language addressing similar subjects is often valuable in defending against claims.

Nevertheless, disclaimer-type language in a report is not a complete strategy. Borrowers, lawyers and courts routinely find ways to ignore an appraiser’s carefully crafted standard language. In many cases, the language will just be cast aside as “fine print” or “boilerplate.” For example, in a recent case in California, the court of appeal strained to reverse a summary judgment that had been granted against a borrower who claimed he paid too much for a property because he relied on the opinion of value contained in a report prepared for a lender. To overturn that decision, the appellate court needed to find a way to support a conclusion that the appraiser reasonably could have expected the borrower to rely on his appraisal despite the exact disclaimers above. The court stretched and reached that conclusion by observing that the borrower was identified in the report:

While the disclaimer contained in [the appraiser’s] appraisal report is evidence that he did not intend third parties to rely on the report and his opinion as to the value of the property, [the borrower] presented evidence from which intent may be inferred. [The borrower]'s name appears repeatedly on [appraiser]'s appraisal report, identified as "borrower" . . .

For that court, just having the borrower’s name in the report was enough evidence to support a finding that the appraiser could reasonably expect the borrower to rely on the report and to disregard the traditional language limited use of the report
to the lender/client. With decisions like that, there is little wording that can be placed into a report that will fully insulate the appraiser from borrower claims.

To take risk avoidance to the next level, an appraiser might consider the twofold approach suggested below – which does require some extra effort. An appraiser should also be ready to customize and add to the following suggestions to better fit the appraiser’s individual practice and context.

Refinance Loan Appraisals. For appraisals performed for refinance transactions, I suggest that the appraiser who wants to further reduce the risk of a borrower claim develop a routine procedure of providing the borrower with a standard form on the appraiser’s letterhead informing the borrower of certain key matters or, even more ideally, develop a very short questionnaire for borrowers to fill out while the appraiser is conducting his or her inspection and have the homeowner sign the questionnaire. This strategy works with refinance appraisals because the borrower is typically present for the appraiser’s inspection.

Some possible language for the appraiser’s information sheet to the borrower is:

I have been hired to appraise your property for the lender. Even though you may pay an appraisal fee or later receive a copy, the appraisal report that I will prepare is for the lender’s use only. You should not use or rely on my appraisal for your own purposes. If you require an appraisal for your own use or are concerned about your property’s value or any conditions which may affect your property, you may engage an independent appraiser of your own choosing. The Appraisal Institute, the National Association of Independent Fee Appraisers, and the American Society of Appraisers [other resources can be named] are professional appraiser organizations and have on-line resources to help find an independent appraiser in this area. Because of my duties under the Uniform Standards of Professional Appraisal Practice and other regulations and guidelines, I cannot speak with you about the results of my appraisal assignment. If you later have any questions or comments regarding my appraisal you should contact the lender. Thank you.

The appraiser can adjust or tailor this language to fit the appraiser’s own practice. If language like this is used in an appraisal information sheet, the appraiser should try to be consistent in following that practice with every refinance appraisal and keep a copy in the work file with a notation that the appraiser delivered it at the time of the appraisal. An even stronger approach might be to include the language in a short questionnaire filled out by the borrower with a few “easy” questions like “has the property been listed for sale in the last 12 months” or “have any additions been made to the property without building permits?” The advantage to this approach is that the appraiser will then have a document signed by the borrower indicating the borrower’s receipt and also have another source of backup in his or her file (though the borrower’s responses should not be relied on exclusively). In the near future, we may have a proposed questionnaire.

Purchase Loan Appraisals. The challenges are greater in developing a similar approach with appraisals for purchase loans. Here, the appraiser typically does not meet the borrower and I do not suggest that the appraiser separately send or make contact with the borrower. To do so only invites misunderstanding and miscommunication. Thus, the appraiser is limited to language contained in the report itself (including addenda) and to any extra attachments. Finally, the appraiser is challenged by the fact that AMCs or lenders may oppose the appraiser’s attempt to include non-standard language or extra attachments.

I do not suggest that the language of the above advisory be incorporated into the report itself or into any formal addendum that is part of the appraisal report. Fannie Mae and certain lenders would likely object to this. Instead, I suggest that appraisers seek to include similar language as a separate attachment to the appraisal report in the same way that an appraiser may attach his or her license or resume. It may be entitled “Appraisal Information for Borrower” and printed on plain paper and attached at the end. Some lenders and AMCs may object and ask the appraiser to remove it – the appraiser can adjust his or her practices in view of such business realities and try to keep the page in reports for other clients. A few lenders and AMCs may even remove it from the report themselves, but that will not decrease its effectiveness entirely. If the appraiser has a record in the work file of transmitting it with his or her report, that information will be strong evidence that the appraiser had no intention or expectation that the borrower would rely on his or her report.
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