In the last newsletter, I included an email sent to me by Richard Hagar asking for appraisal reports. There were some questions about the confidentiality issue when providing reports. Of course, he is aware of the issue, I just didn’t include anything about it.

Here is his response:

I’m not asking anybody to violate confidentiality !!
Let’s look at a USPAP definition:

“CONFIDENTIAL INFORMATION: information that is either:
* identified by the client as confidential when providing it to an appraiser and that is not available from any other
source; or
* classified as confidential or private by applicable law or regulation.”(Gramm-Leach-Bliley Act is also applicable)

#1 Business Practices -Often appraisers come in to possession of appraisals that are not job or client related.
Example:
a) A lady came into my office and handed me an appraisal on her house, created by another appraiser. She wanted to know how
and where does she report the “bad” appraiser? I pointed her to the state web site and that was that.
However, I have a copy of a really bad appraisal – no confidentiality issues here.

b) Right after I teach appraisers or agents the class How to Identify and Prevent Real Estate and Mortgage Fraud I usually
receive one or two appraisals from the attendees. I don’t have a designated “client” and a confidentiality requirement, I have
a gift.

c) The other day, and unsolicited, I received a dozen appraisals via email. Later that day an AMC called asked me how much we
would charge to review the appraisals. We quoted a fee and their response was “no thank you.” This company did not identify the appraisals as confidential. They are not my client, never have been, likely never will be. We did not request copies of the appraisals and they appear to have been shot gunning the appraisals to dozens of appraisers. Do I have a confidentiality requirement in this instance? Likely not.

#2 Loan Application -
Borrowers sign away the confidentiality of their personal information when they make an loan application (If you don’t believe
me, read the fine print in the loan app forms the big banks are giving the borrower). So the borrower’s information on an
appraisal or credit report are no longer confidential (unless they don’t want a loan).

#3 Number of people -
Look up the dictionary definition of “confidential” it says: Meant to be kept secret.
Are you using the Internet or AppraisalPort? Copies of your appraisals are distributed to: AppraisalPort, the AMC, the
buyer/borrower, escrow company, mortgage brokerage, review appraisers, title insurance, PMI company, the lender, and maybe even
Fannie Mae where a dozen more people have access. Appraisals sent or uploaded via the internet are stored on dozens Internet
servers before they reach the final destination. Dozens upon dozens of people have access to the appraisal and your work.

#4 Secure PDF –
Did you, the appraiser, password protect your appraisal BEFORE sending it via email or uploading via AppraisalPort? You
didn’t !!! Then you have already distributed the appraisal and broke confidentiality. And some of you want to yell about
confidentiality!?

I’m trying to put together a little study to indicate the level of USPAP violations. I don’t have time to turn people into the
states.

What am I looking for? As many appraisals as possible. I’m not asking ANYONE to violate confidentiality. Blank out the
names and protect what you think is confidential “non-public” information.

However I’m receiving numerous appraisals from upset homeowners. So your clients and intended users are providing copies of
compliant and non-compliant appraisals.

Maybe you have something similar.

Richard Hagar SRA
rh@americanappraisals.com
or
7433 SE 27th Street
Mercer Island, WA 98040

Bob has been active in real estate valuation since 1987, earning the SRA designation from the Appraisal Institute. Valuation expertice is broad based, including residential, small and large income, land and commercial valuation. Additional experience in court testimony, oral and written presentations for governmental agencies and boards as well as residential construction and development.
http://www.marketvalue.com/StaffProfiles.aspx?ID=19701