Real Estate Appraisers Editing and Proofreading Services

Asking an appraiser to explain a conclusion is expressly not prohibited. Seeking to influence one toward a target value is a violation. Both requests fit in one sentence, and federal law draws the line between them by naming examples on each side.

Section 15 U.S.C. 1639e(c) is a rule of construction. It provides that the requirements of subsection (b) "shall not be construed as prohibiting" a lender, broker, consumer, or any other person with an interest in the transaction from asking three things of an appraiser.¹ They are to consider "additional, appropriate property information," to "provide further detail, substantiation, or explanation for the appraiser's value conclusion," and to "correct errors in the appraisal report."¹

Four prohibited acts, and examples on both sides

Section 1639e(b) lists four acts that violate appraisal independence. The first is compensating, coercing, instructing or inducing anyone involved in an appraisal so that the assigned value rests "on any factor other than the independent judgment of the appraiser."¹ The second is mischaracterizing, or suborning a mischaracterization of, the appraised value. The third is "seeking to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing of the transaction."¹ The fourth is withholding or threatening to withhold timely payment for an appraisal properly provided under the contract.¹

The implementing regulation turns the same idea into examples a drafter can hold a sentence against. Paragraph 12 CFR 1026.42(c)(1)(i) makes it a violation to seek "to influence a person that prepares a valuation to report a minimum or maximum value."² It is also a violation to imply that future retention "depends on the amount at which the person estimates the value."² So is excluding someone from future work for reporting a value "that does not meet or exceed a predetermined threshold."² Withholding payment because a value came in low is on the same list, and so is conditioning compensation on the deal closing.²

Paragraph (c)(3) then gives six examples of actions that do not violate (c)(1) or (c)(2), and two of them sit close to the prohibited ones.² Obtaining multiple valuations "to select the most reliable valuation" is among them.² So is withholding compensation "due to breach of contract or substandard performance of services."²

The report answers to more than one authority

For a federally related transaction at an institution the Comptroller of the Currency supervises, six minimum standards apply together. An appraisal must conform to the Uniform Standards of Professional Appraisal Practice, "unless principles of safe and sound banking require compliance with stricter standards," and be subject to appropriate review for compliance with those standards.³ It must be written and "contain sufficient information and analysis to support the institution's decision to engage in the transaction."³ It must analyze and report appropriate deductions and discounts for proposed construction or renovation, partially leased buildings, non-market lease terms, and tract developments with unsold units.³ It must rest on the definition of market value in the subpart and be performed by a state licensed or certified appraiser.³

What has to be said about work not done

The Interagency Appraisal and Evaluation Guidelines ask for something drafters often leave out. The guidelines are supervisory guidance rather than a rule, and they are written in that register. Sufficient information in a report "should include the disclosure of research and analysis performed."⁴ It should also include the research and analysis "typically warranted for the type of appraisal, but omitted, along with the rationale for its omission."⁴ What was not done, and why, is asked for on the page.

The guidelines also ask for "sufficient disclosure of the nature and extent of inspection and research performed by the appraiser to verify the property's condition and support the appraiser's opinion of market value."⁴ Both requirements are met or missed in prose rather than in numbers. A report can be complete on its figures and silent on either.

A distinction that decides a deadline

Copies of valuations reach the applicant on a schedule. Under 12 CFR 1002.14(a)(1), a creditor provides a copy of every appraisal and other written valuation developed for an application secured by a first lien on a dwelling.⁵ Delivery is "promptly upon completion," or three business days before consummation, whichever is earlier.⁵ An applicant may waive that timing, and any such waiver "must be obtained at least three business days prior to consummation or account opening."⁵

One phrase in the waiver provision turns on a reading of two drafts. The three-day deadline does not apply to a waiver concerning a copy "that contains only clerical changes from a previous version," where that version reached the applicant three or more business days earlier.⁵ The regulation does not define a clerical change.

The value is the appraiser's alone

Nobody at an editing company forms a view on a value conclusion, on which comparables belong in a report, or on whether an inspection was adequate. Those are the appraiser's, and the regulations above are built to keep them there. Whatever arrives here stays confidential. Wording rules attach to the documents around the appraisal, and those are the ones we take up.

An engagement letter and a revision request sit beside the three requests the statute permits and the examples the regulation prohibits. The guidelines ask a report to say what research was omitted and why. A defined term has one meaning in the subpart, and the narrative may give it another. A figure in the narrative and the same figure in the reconciliation are one number printed twice.