Confidentiality, Readdressing, and a False Certification in the Workfile
Fourteen months ago an appraiser completed a report on a four-unit property for Lender A, which denied the loan. The borrower now calls demanding a copy, saying it is his report. Two days later the listing agent calls and asks only for the number. A month after that, Lender B asks the appraiser to readdress the same report to them and change the effective date at no charge. Twenty-six months after delivery, a state appraiser board investigator requests the workfile; the appraiser's file contains the signed report and two MLS sheets, and the remaining notes were on a laptop that has since been wiped. In reviewing the file, the appraiser notices that the trainee's certification states he personally inspected the property; he did not, and the appraiser signed the report.
1. Determine who may receive the report and what the appraiser may tell the borrower and the listing agent.
Read the worked answer
Borrower. The client is Lender A; the borrower is an intended user only if the report names him as one, which a typical lender report does not. Confidential information - value, analysis, the client's conclusions - may not be disclosed to anyone other than the client, the intended users, and third parties specifically authorized by the client or required by law. The borrower has no automatic right to the report merely because he paid the fee or owns the property. The appraiser should refer him to Lender A, note that the appraiser cannot discuss the assignment, and, if the loan was denied, point him to the lender's adverse action process. If the borrower has a legal right to the report under state law or a court order, that changes the answer, and the appraiser should verify before responding rather than deciding on the phone.
Listing agent. The same rule applies, more sharply: a request for just the number is still a request for confidential information. The appraiser declines and does not confirm or deny anything about the value, the client, or whether the property was appraised.
Practical notes. None of this is a limitation on the report's use by its intended users; confidentiality governs the appraiser's own dissemination. The appraiser should document both calls and the responses in the workfile. If the client authorizes release, get that authorization in writing and note it.
2. Analyze the readdressing request from Lender B. May the appraiser do it, and if so, how?
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Readdressing an existing report to a new client is not an administrative edit; it is a new assignment with a new client and a new intended user. The appraiser must treat it as such because:
- The new lender needs an opinion it can rely on, which requires confirming that nothing material has changed since the original effective date.
- Lender B has no relationship with the original client and was not an intended user of the first report; simply swapping the name would give them a report they were never meant to rely on.
- The original client's confidential information (including the fact that the first loan was denied) must not flow to Lender B.
What the appraiser should do. Require a new engagement, confirm the intended use and the current ownership and occupancy, and analyze market conditions between the original effective date and the new one. If a current opinion is wanted, update the analysis - new listings, new sales, current condition - and produce a new report with a new effective date. If the property has not changed and the market is stable, the work may be lighter, but the analysis must still be performed and documented. The appraiser may reuse data from the prior file, but not the prior conclusion without testing it.
Effective date. It cannot be changed to suit the lender. If a retrospective opinion is genuinely required, it must be developed as such. Repricing or re-dating a stale report on request, at no charge and with no analysis, is the classic route to a misleading report.
3. Assess the workfile and the trainee's inspection certification. What is the appraiser's exposure and what should be done now?
Read the worked answer
Workfile. The recordkeeping requirement is to retain the data and documentation the appraiser relied on and to make the file available on request. The retention period is at least five years after the date of the report, or two years after final disposition of a judicial proceeding in which the appraiser testified about the assignment, whichever is later; the state may require longer and should be checked. At 26 months the file is still within the retention window, so the file must be produced.
The file as it stands - a signed report and two MLS sheets - is inadequate. A report cannot be reproduced, substantiated, or defended from a cover page. Notes that existed but were destroyed are still a violation; losing them to a wiped laptop is not a defense. The appraiser should produce the file exactly as it exists, state plainly what is missing and why, and must not reconstruct notes and present them as contemporaneous records. Any supplemental material must be clearly dated and identified as created later.
The false certification. A certification that the trainee personally inspected the property when he did not is a false statement of fact in a report the appraiser signed and certified. This implicates the conduct provisions on misrepresentation and on certification, and the supervisory appraiser cannot rely on the trainee as a shield - the supervisory appraiser signed it. Exposure includes board discipline, loss of eligibility for federally related work, and civil liability to the lender that relied on the report.
What to do now
- Obtain legal counsel before communicating with the investigator; cooperation is required, but the framing matters.
- Produce the workfile and answer truthfully, including about the certification and the missing records.
- Review the trainee's other assignments for the same defect and stop the practice immediately; correct the certification language in future reports and document that inspection facts accurately.
- Do not amend the old report retroactively, and do not contact the lender unilaterally without advice.
- Notify any errors and omissions carrier in accordance with the policy, since the board inquiry is a potential claim.