Thursday, April 7, 2011

Does the FDIC Sue Supervising Appraisers? Trainees? Review Appraisers?

We are often posed these questions by appraisers at our loss prevention CE seminars:  will the FDIC sue an appraiser who "only" signed an appraisal report as a supervisor?  Will the FDIC sue a trainee or former trainee?  Will the FDIC sue a review appraiser?

These are easy questions to answer.  The FDIC has sued and threatens to sue supervising appraisers, trainees and reviewers.

The highlights shown below from a 2010 FDIC lawsuit it filed as receiver for Downey Savings and Loan answer the questions in a single complaint because in this case, the FDIC sued all three: supervisor, trainee and reviewer (none of whom were our insureds).  What makes this case more worrisome, however, is that the 2005 origination appraisal for a loan that later went into default was easily proved to be a forgery -- but the supervisor and trainee who signed that report were forced to spend their money defending themselves to prove it.

The amount of damages alleged by the FDIC and which the FDIC demanded from the appraisers was $291,000 plus interest "at the maximum rate allowed by law."