Many residential appraisers we insure and several appraiser organizations have contacted us in the last few days about an appraisal management company's new requirement that their panel appraisers upload a PDF copy of their appraisal workfile for each assignment they perform. The AMC is LenderVend, LLC and, according to its website, it is affiliated with mortgage lender Provident Funding.
We understand that LenderVend’s requirement imposes an additional burden on appraisers. We've also heard firsthand from appraisers about the anxiety the policy is creating because of the unknown uses to which the workfile may be put by the AMC. As is the case with any peculiar requirements imposed by particular AMCs or lenders, we think that appraisers should weigh these issues in deciding whether they want to perform services for the AMC or lender and/or in deciding how much to charge for their services because of the extra work entailed.
In general, there is no legal requirement for an appraiser to provide a workfile to a client or to the AMC of a client – unless the appraiser has agreed in a service agreement or as part of an assignment engagement that such materials will be provided. Many appraisal service agreements with AMCs and lenders do contain a requirement that appraisers must supply workfiles upon request and/or state that workfiles become the property of the AMC or lender.
2. For those appraisers who do not maintain and submit a minimally compliant work file, it is conceivable that a state board complaint may be filed.
3. Our concern about the specific requirement by this AMC also was heightened initially because LenderVend is affiliated with Provident Funding. In 2014, Provident Funding submitted a relatively high number of demand letters to appraisers relating to mortgage repurchase losses that it alleged were incurred as the result of appraiser negligence. We wrote an article about that trend entitled "Pirate Waters" in the 4th Quarter issue of Valuation magazine. However, after considering the issues and as stated above, we believe that those types of claims would actually be harder to establish by a lender when either the lender or its AMC has received a workfile at the same time as receiving the appraisal report. Thus, while Provident Funding’s prior frustrations with allegedly deficient appraisals might be one of the reasons leading LenderVend to seek to improve the review of appraisals by also receiving workfiles, we don’t see any logical relationship between the new requirement and future legal claims against appraisers relating to current appraisal work -- but we will be on the look out.