AppraisalBuzz - Page 43

CRAIG CAPILLA Craig Capilla is a trial lawyer with the Franklin Law Group focusing on civil litigation and administrative law. As a former prosecutor for the Illinois Department of Financial and Professional Regulation, Craig frequently represents licensed professionals and entities in lawsuits and state licensing matters involving real estate brokers, real estate appraisers, and appraisal management companies, among others. For more information, you can visit www.charlesfranklinlaw.com or directly contact Craig by email at ccapilla@charlesfranklinlaw.com. APPRAISAL BUZZ FALL 2019 | 43 which rapidly expanded in the marketplace. In so doing, The AMC, which had long existed, was essentially legislated into prominence over several years. AMC regulation came to be, and with all of it, the liability pie was expanded too. Again, no one reading this publication should be surprised by the fact that all the players in the valuation and lending sandbox don’t always get along. There are countless articles and internet postings covering which group of people or companies are harming which other group. We’ve seen “modernization” take center stage, waiver requests, alternative products introduced into the market, pushes for more regulation, pushes for less regulation, and on and on. In some forums, the industry players seem to be talking past each other as much or more as they are talking with each other. Over the last decade, we have seen virtually every iteration of liability claim tried and patterns have �� regulatory complaint and/or suit against the appraiser due to a repurchase demand. We have seen lenders sue the external review appraiser. We’ve now seen them sue the appraisal management company as well. We have seen borrowers sue the lender, AMC, and appraiser all together, or separately. We have seen the AMCs and appraisers suing each other. We’ve seen �� aforementioned parties. Well, I’ve got news for you. As I said before, when it comes to determining where the liability rests when something in a real estate deal has gone wrong, everyone in the transaction is a target. There may be good legal arguments as to why one party or another may not belong in a lawsuit, but in order to make that �� me when I tell you, it is much better to never have the chance to make a brilliant legal argument because you managed to avoid the whole mess. The trend that has emerged, and that I expect to continue, is that the appraisers and appraisal management companies are attached at the hip. From the outset of a liability complaint, they are either sued together, or in concurrent lawsuits and sometimes consolidated by movement of the defense. When the claim is initiated by the borrower or some other third-party, the lender may well be right there with the other two parties in defense. More frequently now, a licensing complaint �� as well. The parties bringing these claims are smart enough to know that more participants on defense increases the odds of a payout. This is not news to the legal community, but it seems to be lost on some in the valuation and lending circles. The key takeaway here is that appraisers, AMCs, and lenders, are a lot more alike than not alike, at least when the lawyers get involved. It would behoove everyone in the process to consider how interests may be aligned to limit exposure to liability. Certainly, �� when it comes to business models, but there is great �� on some common interests vis-a-vis liability and risk reduction. There is equal or greater risk if the players �� market slows down or contracts again, all parties �� in a courtroom, which they cannot decline, and with absolutely no say in who they are seated next to. /www.charlesfranklinlaw.com link