October 2, 2020
Formal disciplinary complaints against real estate appraisal professionals have become more and more frequent in recent years. Of course, not all appraisal complaints result in significant disciplinary action, as each state operates under its own set of laws and regulations.
For appraisers, if they have had a complaint issued against them, it would be normal to want to know about the process of complaints. Here’s an overview of the enforcement process of Real estate appraisal complaints.
Administrative Procedures
Each state has its own set of administrative procedures to take care of disciplinary complaints against professionals in the real estate industry, such as agents, brokers, accountants, and appraisers. In many states, investigators use the same administrative procedures for all professions. The process for disciplinary action is governed by state law, which addresses who processes, investigates, prosecutes, and adjudicates complaints.
A Complaint-Driven Process
While each state’s process varies, the one thing that many states have in common is that the process is complaint-driven. In essence, the state enforcement agency doesn’t seek out violators. In reality, enforcement agencies usually don’t have the resources to run their investigations against appraisers. These agencies act upon complaints filed by interested individuals or parties.
Government agencies like Housing and Urban Development (HUD) and government-sponsored enterprises like Freddie Mac file complaints. Individual mortgage lenders and appraisers can also file complaints.
Jurisdiction and Panel Review
The first thing that investigators look at is whether a complaint was filed under specific jurisdiction. This is a good first step because many complaints are filed with appraisal regulatory agencies where the lending company or the agency doesn’t have jurisdiction.
From there, cases are reviewed and forwarded to a prosecuting attorney, who has the power and authority to hire an investigator and have the formal review done on the appraisal report.
Dropping a Case or Requesting a Formal Hearing
After the prosecuting attorney has dealt with the situation, they might decide that they don’t’ have enough evidence to prosecute or nothing that there is wrong with the appraisal. In this case, the matter becomes resolved, and everything is closed.
In many situations, the attorney will negotiate a consent agreement, which is a negotiated settlement between the state and the real estate appraiser. If the parties don’t agree when all is said and done, then the matter is moved on and referred to a formal hearing. In some states, the hearing takes place in front of the appraisal board of commission, and in other states, the hearing takes place in front of a hearing examiner. Once the hearing is completed, the party is responsible for doling out a decision from the law judge or the board.
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