Defending Appraisers: Being State Board & Civil Litigation Ready

Over 3,000 appraisers are questioned by a State Board or face Civil Litigation each year. Craig Capilla, a Trial Defense Lawyer who has led almost 1,000 appraiser-related cases and Keith Ellis, Chief Operating Officer with Anow are here to help by establishing a consistent, easily repeatable process and better-using technology that improves appraisers odds of winning. Join us May 23^rdfor a live webinar and learn how to better protect yourself from board complaints and civil litigation.

Craig and Keith gave us a sneak peek into the session…

Buzz: First, we’d like to say thank you to both of you for taking the time to join us today. We are really looking forward to the Webinar on May 23^rd. In a brief summary, can you tell us what the session will be covering?

Keith: 5% of appraisers find themselves in the state board or civil litigation, every single year – that’s thousands of appraisers. We want to help them become hardened targets against litigation and board action. Right now, it is just far too easy for appraisers to become targets. It is quiet now in civil cases, but as we look forward in the market, let’s say the next 12 months out – interest rates are rising, default rates are rising, concerns in commercial markets are rising. When the loans start to fail, the lenders, the debt collectors, even FDIC may come after appraisers through litigation.  This session is about what residential and commercial appraisers could be doing today to prepare themselves.

 Craig: I think that the one thing that is most concerning to me is we are seeing every week a new article, study or data on the record number of commercial spaces that are available; that fail or do not renew their leases. The high price per sq. ft leases are not getting filled or getting filled at far lower rates. I see a commercial bubble looming:  we could see a significant spike in the number of defaults, and that’s potentially bad news for appraisers. Everything looks pretty good right now, but the keyword is right now. Again, appraisers are the target of the state board and civil litigation – we want appraisers to be prepared.

Buzz: Why is this such an important topic for Appraisers to be aware of?

Keith: There is a game-changing nature for what can be done in the future. When you look in the past it has all been about USPAP, maintaining documentation or the minimum standards. 85% of the problems appraisers get themselves into are documented related. There are certain things appraisers should be doing for themselves to protect themselves, their license and their business. Technology has arrived at a point where it is easier for appraisers to do that.

Craig: Appraisers have been quick to adopt and incorporate technology where it can help them in their analysis. All of the big data creeps into the report which is fantastic and important. I think it’s great that the appraiser recognizes where these resources can help them. It is only pushing the profession forward.

What now exists here are other opportunities for technology to help – not by spitting some analysis or randomly generated number. Now, the opportunity for technology is to help the appraisers minimize their risk. If used properly a good technology platform like what Anow has is the sort of thing that can prevent an appraiser from making those critical errors. When Keith said 85% of problems can be addressed by proper record keeping and documentation we may see that 85% drop off. We want to see that drop off in complaints and civil action directed towards appraisers. Appraisers have no choice but to better their documentation processes.

Keith: How big of are some of the claims that pass through your desk, Craig?

Craig: I have seen claims in the low tens of thousands of dollars but also very large amounts. One particular claim filed by a bank comes to mind. A commercial appraiser for that lender was questioned and the demand for that appraiser was $3.5 to $4 million dollars.

Keith: I am sure that hurts their retirement funds?

Craig: Oh yes! Plus, whether or not they have enough insurance to cover that loss or if insurance is even going to cover it. Various reasons can result in the insurance not covering it because of the way the file has been managed, report concerns or notice concerns. If they are seeking $10,000 or $4 million, it is all about the same for the appraiser fronting that out of pocket. Again, the appraiser needs to be prepared – we want to see them better positioned to face board action or litigation and proactive in how they do the documentation.

Keith: When you talk about facing state board action, as about 2,500 appraisers do every year, that is your livelihood, your license at stake. If you are on the wrong side of the civil litigation, you can have $10,000 or even much more out of your personal pocket. Some appraisers have been soft targets because they have not gone beyond paper documentation, not gone on to become better users of technology to have a full and complete file structured in a way that makes it harder to go after the appraiser. Appraisers need better protection, but the question is:  can this be done efficiently so it’s not consuming a lot of extra time on a file?  That’s the question for technology – how do we make that part easier?  There would be a lot less litigation and appraisers would be better protected if they were far harder to target. 

Buzz: Craig, as a trial defense lawyer, you have probably seen a few cases regarding Appraisers licenses being threatened. Can you tell us a bit about the struggles the Appraisers faced that lead to this?

Craig: State board complaints are the most frequent. They are easy and cheap to initiate. The Regulator wants to know if the appraiser is competent, has the proper record and reporting skills and they want to know when, how and why the appraiser came to this opinion of value. The problems arise when the appraiser cannot produce the file to provide the regulator the evidence to the correct standard.  Probably 85% of the time or more it’s the documentation, not the competence of the appraiser, that causes that board action or civil case to go against the appraiser.

Buzz: Keith, how can Anow help Appraisers defend themselves?

Keith: Technology simplifies the process of documentation. Using Anow to run your business means the documentation needed to defend appraisers is generated automatically as a bi-product of simply operating in Anow. By capturing the right information at the right time and creating the right tracks of what you looked at during the investigation.  In absence of technology it is hard to prove what you did:  but with technology, it’s a lot easier to show what an appraiser looked at and when. Appraisers don’t want to add more unproductive time to the process of appraising, but they do need better, more comprehensive documentation. We want to showcase simple behaviors, changes, and technology to better document files and leave appraisers better prepared to defend themselves.

Craig: Complaints do not mean the appraiser is bad or even wrong. Adopting technology that improves processes means we have the opportunity to make things better, to make sure that appraisers are no longer an easy target.

Buzz: Thank you both for joining us. We are anticipating a very informative live session! If you would like to register for the webinar, please click here.

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