Tuesday, January 29, 2013
By Peter C
$9,349,612.97 + $1,698,799 = $11,048,411.97. That's how much failed Evaluation Solutions and its subsidiary entity ES Appraisal Services have left in combined unpaid appraisal and BPO fees owed to appraisers and agents/brokers -- according to their respective bankruptcy filings on January 25, 2013.
Last week, I had the opportunity to speak together with Tony Pistilli to the Collateral Risk Network about the subject of lender oversight of appraisal management companies. With that exciting topic as the theme, I focused on the specific issue of AMCs failing to pay independent contractor appraisers (and also failing to pay agents/brokers) and why that should concern lenders in terms of regulatory and liability risk. Of course, the issue already is a concern for many appraisers and their bank accounts because of the recent failure of not only Evaluation Solutions but also National Real Estate Information Services (NREIS).
The failure of Evaluation Solutions and its subsidiary ES Appraisal Services (I refer below to both companies as "ES"), in particular, provides a good look at the anatomy of an AMC's downfall and bankruptcy. ES filed its Chapter 7 Bankruptcy Petition on January 25, 2013 in Florida. The AMC had signaled that it would file for bankruptcy in December, when it was widely reported to have lost its biggest client JPMorgan Chase Bank.
Here are some of the interesting points I gleaned from reading ES' 231-page bankruptcy petition and its subsidiary's 87-page petition:
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