Can Lenders create circumstances that cause an appraiser to violate USPAP?

Any of us who have been in the business more than one week, can answer this one. As of late I have notice a growing number of reviewers from various AMC’s who insist their clients are requesting that the neighborhood section in the URAR be presented in such a way that is now becoming a logistic nightmare. Many have said the percentage built-up must equal the present land use percentages. In other words, if the one-unit percentage is 80-percent then the neighborhood built-up must be more than 75-percent. This of course is absolute non-sense.

These two sections are discussing two different components of description. The present land use includes vacant land in their descriptions. An area can have 80-percent one unit, five-percent 2-4 unit, eight-percent multi-family, and seven-percent commercial and still be built-up less than 75-percent. This is because land use is not only referring to improved land use but also to unimproved land use.

Any appraiser that simply completes the appraisal report as instructed by the client is not providing the client with a report that is accurately presented. One of the foundational concepts of Uniform Standards of Professional Appraisal Practice is to not present a report that is misleading. This erroneous instruction is misleading and any appraiser who gives into this lender pressure has committed an error of omission and commission.

As for any one who is not sure. An error of commission is one where the appraiser responds to an instruction that should not be followed. This is compared to an error of omission, where the appraiser fails to report information or analysis that should be reported.