BUT I PAID FOR IT!

(Reprinted courtesy of the “Colorado Real Estate Appraiser Update” Jan 2002)

"Several times each week Division of Real Estate staff handles e-mails, letters, faxes, buyers, and sellers angry that the appraiser will not give them a copy of the appraisal report (or even talk with them about it).  The common refrain from buyers and sellers is that, “I paid for the report, it is mine!”

Although understandable, there are a couple of problems with this assumption.  If federal money is involved in the transaction, Fannie Mae, Freddie Mac, HUD, VA, or other programs, then by federal banking regulations, the lender must be the client of the appraiser.  Another important fact to remember is that the person or entity who orders the appraisal is the client, not the person delivering the appraisal fee for the client.

For example, a homeowner decides to refinance his/her house.  The loan originator orders the appraisal with instructions to deliver the report within 24 hours and collect the appraisal fee from the homeowner.  The appraiser accepts a check from the homeowner at the property and sends the appraisal report to the lender.

A few weeks later, the homeowner starts calling the appraiser demanding a copy of the report that he/she paid for.  The logic behind the demand is that the owner believes he/she owns whatever they paid for.

It does not work that way.  Uniform Standards of Professional Appraisal Practice (USPAP) and federal banking regulations address the issues of client/appraiser relationship, confidentiality, and who will be the client if federal money is involved (primary or secondary market) in the transaction.   Once the client/appraiser relationship is established, the appraiser cannot discuss or provide copies of the report to anyone without the client’s permission.

Does this mean the homeowner can never get a copy of the report?  Not necessarily.  Under 12 U.S.C.A. Section 1691(e), part of the federal Equal Credit Opportunity Act, a residential mortgage applicant has the right to receive a copy of the appraisal report from the lender.  The request must be in writing, within 90 days of the loan application.  This does not change the client/appraiser relationship.  The appraiser still cannot discuss the report with the borrower without permission (a release) from the client.

What happens if the borrower wants to use the appraisal report to shop other lenders for better loan terms?  The other lenders cannot use the report for lending purposes until they establish the client/appraiser relationship with the appraiser.  The appraiser will need to get permission (a release) from the original client and any/all subsequent clients before reappraising the property for the new lender.  To avoid being misleading, the appraiser must disclose to future clients that she/he has previously appraised the property."