Email Subscription

Your Email Address:


WHAT IS A LENDERS “PREFERRED” LIST?

This is a question that occasionally comes to me from my fellow business associates. This question is usually followed by “What banks have me on their “preferred list”? Well this idea was quite popular prior to the advent of HVCC (Home Valuation Code of Conduct). Let me tell you from my experience, and from the experience of other appraisers what this “preferred list” has been for us.

The idea was for lenders to acquire a list of appraisers that completed high quality appraisal reports. Most lenders have there own list of specific requirements that an appraisal report must include above and beyond USPAP (Uniform Standards of Professional Appraisal Practice).

The way an appraiser finds out about the lenders list of specific requirements is by submitting their appraisal to a lender, then having the appraisal rejected. Rarely does one know up front what each lender’s specific requirements will be, and they change according to market changes. But when an appraisal is kicked back, this is what’s known as a “condition”.

At that time, the lender will tell you what conditions need to be met, but they will not tell you what their complete specific lists of conditions are. So every time you submit your appraisal, you get hit with another condition.

Many lenders allow up to 3 conditions, then you are blacklisted. Remember, these conditions are above and beyond USPAP. This may be one example of how an appraiser will get off the “preferred lists” and become blacklisted. The way an appraiser finds out if they are blacklisted can be humiliating. You find out when your client (Broker or Realtor) selects you as an appraiser for a lending transaction, you have done the inspection and submitted the appraisal report to the lender. You then get a call about being blacklisted not from the lender, but from your Broker or Realtor who you have built a strong relationship.

Your Broker or Realtor wants you to fix the problem, as they are usually in an escrow time crunch. So you call the lender to find out why you have been removed. The lender will not tell you why. They usually refer you to an “800” number to call. You call the number and hear this long recording that tells you to submit your request in writing.

But you don’t have time to do this! So you lose the appraisal assignment. The lender then picks someone from their preferred list, and that is that. In one instance, I was finally able to get a lender to respond to why I was blacklisted. They used vague terms as “inaccurate” or “lacking viable comparables”, but for some reason, could not specifically tell me why. In another instance I found out that my original appraisal had been “compromised” and was not the report I had sent to them at all!! And of course, the burden of proof was on me! Whoever did the compromise was safe and sound, while I was blacklisted, guilty before proven innocent.

Most of these situations happened prior to May 1st 2009 when HVCC kicked in. Now that HVCC is in place, and lenders only obtain the services of appraisers from the AMC’s they own, should Brokers and Realtors be concerned or even inquire about a lenders “preferred list”?

Also:

Is any preferred list by the lender really in the best interest of the general public?

Why is it appraisers are not given the lenders lists of specific requirements that are above and beyond USPAP upfront?

Is the preferred list a way to weed out and control the appraiser’s ability to act independently?

Now that HVCC has been enacted, is a lenders preferred list still relevant?

Sincerely,

Lamarr C. Banks