Wednesday, April 21, 2010

Head's Up!!

This just posted over on the Appraiser Law Blog. Authors are attorneys with LIA Administrators & Insurance Services.

The Single Biggest Liability Threat to Appraisers: the FDIC

By Peter Christensen
The single biggest liability threat to both residential and commercial appraisers is the Federal Deposit Insurance Corporation. The FDIC held a conference last week in Chicago for law firms interested in representing the FDIC. What came out of that conference made me very anxious for appraisers, but it's much more than just a threat to individual appraisers. What the FDIC is doing hampers the ability of the appraisal profession to deliver accurate valuations going forward. The reason is: if you're an appraiser doing work for a lender (which may or may not be one of the 700+ troubled banks on the FDIC's watch list), you know your risk of being sued by the FDIC for overvaluation in hindsight is eliminated by "coming in low" on the appraisal. That means more loans don't get made. 
The FDIC has taken over more than 200 banks since the beginning of the mortgage crisis. When the FDIC takes over a failed bank, it usually sells off the banking assets to an existing lender but retains all of the potential legal claims against the failed lender's directors, officers, mortgage brokers, accountants, lawyers, appraisers, AMCs, etc. The FDIC is now in the business of suing these parties, blaming them for its failed banks' bad lending practices.

Read the whole thing...

Sorry for the light posting lately. I've been swamped with appraisal and consulting assignments, and have been working on getting HB 303 and S 2210 (Regulation of Appraisal Management Companies) passed in the Florida Legislature. Both are on the 2nd Reading Calendar as of today.
Expect more information soon.