Thursday, September 29, 2011

Come Monday, Which AMCs Will Be Licensed to Manage Appraisals in Kentucky?

Appraisal management companies (AMCs) are facing an array of new regulatory hurdles under various state AMC laws.  With all the new requirements on AMCs and because of apparent and hidden compliance problems by AMCs which pose liability to their lender clients, we're probably not too far off from seeing some form of "appraisal management company management companies" or "AMCMCs" -- whose function is to assure that AMCs are qualified, appropriately licensed, properly insured and adequately bonded, and also to rate AMC performance (I'm only half serious).

In Kentucky, in particular, where AMC registration becomes effective 10/1/11, if AMCs want to operate legally, two of the hurdles they face are: a $3,500 application fee and the posting of a $500,000 surety bond.  We've had a few AMCs actually call us to ask if $500k is a typo (seriously).  It's not.  Thus, at this time, if an AMC intends to comply with Kentucky's AMC registration requirements and operate legally, it must post a $500k bond.  At the other end, some AMCs simply can't qualify for that bond at any price.

As of yesterday (9/28/11), only 11 AMCs were licensed in Kentucky -- though I do understand, some applications are in process.  Many familiar AMC names are missing from the current list.

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Tuesday, September 27, 2011

Free LIA/READI 4-Hour CE Seminar in East Brunswick, NJ on December 14, 2011

READI and LIA are presenting their 4-hour live CE seminar entitled "Loss Prevention Program for Real Estate Appraisers" on December 14, 2011 in East Brunswick, NJ.   The seminar is free to all appraisers who are either registered with READI or insured by LIA.  (LIA is the state-approved provider and the NJ code # is 2011-29500000.  See note below for additional state approvals.)

Who sues the most appraisers? What do they sue for? Which lenders pose the most risk to appraisers? Who is more at risk: residential or commercial appraisers? Which AMCs have sued appraisers for indemnification? You'll get the answers at the seminar and, of course, 4 hours of CE credit. 

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Monday, September 26, 2011

TCF National Bank Sues AMC Over "Evaluations"

Appraisal management companies (AMCs) -- and individual appraisers  themselves -- have avoided the brunt of mortgage-related litigation and  losses stemming from the lending crisis.  Both AMCs and appraisers have not been forced to defend against 98%+ of the potential  liability claims that lenders might have tried to press about allegedly faulty appraisal work performed during the mortgage boom years.  There are organizational, practical and legal reasons for this.

However, although late, and perhaps too late with regard to certain stale claims, the AMC liability train made a stop last week at another large AMC.  On September 21, 2011, TCF National Bank filed a complaint in federal court in Minnesota against Market Intelligence, Inc. The bank also sued LSI Appraisal, LLC, Lender Processing Services, Inc. and Fidelity National Information Services, Inc. as alleged successors in interest to the company.  Coincidentally, I was in St. Paul, Minnesota on that same day, teaching a few appraisers how to prevent liability.

The lawsuit filed by TCF National Bank is not about "appraisals" in the USPAP sense but rather

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