As the real estate market slowed over the past eight months in the mountains, some appraisers say they came under increasing pressure from banks to value properties for more than they were worth.
One of them, Avon appraiser Tim Savage, claims he was blacklisted by Wells Fargo Bank for refusing to provide inflated appraisals on two homes in Vail’s Sandstone neighborhood in January.
Savage and other appraisers have joined together to sue Wells Fargo Bank and subsidiary RELS Valuation appraisal-management company in U.S. District Court in San Francisco.
In one of the cases, Savage said RELS Valuation sent him an e-mail asking him to “support an increased valuation” for one of the properties, according to the complaint.
It happened again with a property on Sandstone Road, according to the complaint.
Savage looked at the information, then refused to increase his original opinion of value, sending an explanation letter to the company.
In February, Savage got a letter from the appraisal company telling him he had been removed from its approved panel of appraisers, according to the complaint.
A Wells Fargo spokeswoman in Denver says the lawsuit allegations are unfounded.
“We look forward to defending ourselves in court against these unfounded allegations,” Cristie Drumm said. “We’re confident our established appraisal process is fair, accurate and compliant with all governing standards and laws.”
Wells Fargo subsidiary Foothill Capital Corp. and separate company First American Corp. own RELS, which helps keep the appraisal process fair, Drumm said.
“At no time in the process is the appraiser given any guidance from Wells Fargo regarding an expectation of what the appraisal amount should be,” Drumm said.
Savage declined to comment specifically about the lawsuit, referring calls to his attorney, Tom Loeser, at the law firm Hagens Berman Sobol Shapiro, with offices in Seattle and San Francisco.
“What we found with Wells Fargo and RELS is that they used coercion to get appraisers to provide the numbers that they wanted,” Loeser said.
New rules that went into effect May 1 aim to avoid such issues by keeping mortgage brokers and bankers from having direct contact with appraisers.
Those rules, known as the “Home Valuation Code of Conduct,” have created a stir among some appraisers and real estate agents who say the rules are placing inexperienced appraisers in neighborhoods they’re not familiar with, cutting appraiser pay and derailing legitimate deals.
In general, however, Savage said he is supportive of the new regulations.
“There are good appraisal management companies that go into a market and pay the appraiser a fair market fee,” Savage said. “Lenders need to maintain their independence from the companies. That’s just the way that it is.”
