Several online real estate sites have been following the story of yet another national valuation company’s bankruptcy declaration. At the end of December, it was reported that the Florida-based firm, Evaluation Solutions LLC, was shutting down its operation. This came as a huge shock to around 30,000 brokers, appraisers and other industry professionals who had been working in the field and supplying the 7-year old firm with their evaluations. According to Inman News, those 30,000 individuals had been working to provide the company with, “services such as automated valuations, broker price opinions, inspections, and appraisals for mortgage lenders, servicers, and investors.” Their Chapter 7 bankruptcy filing has pulled the rug out from many real estate pros all over the country.
Scores of their vendors have noted that from the start, Evaluation Solutions was always slow to pay. Isaac Peck, a contributor to the site, Working Wire, interviewed Chicago-based appraiser Nicholas Conteduca, who had worked for the company for the last two years. He observed that it would usually take 60 days or more to receive payment and often, even up to 4 or 5 months. He stated, “The fact that Evaluation Solutions consistently let invoices build up into the thousands, and tens of thousands of dollars before paying, made it less alarming when the total invoice amount would begin to build back up.” News sources are now reporting that current findings show there are unpaid invoices to appraisers and other vendors totaling in the millions.
Apparently appraisers and other vendors continued doing work for ES because they were paid quite handsomely for their services. The overall feeling appears to be that although receiving payment took longer than usual, when the paycheck finally did arrive, it was well worth it. “On orders where the standard fee was $250-$300, they would pay $600 or $700 an appraisal,” according to Nicholas Conteduca.
Since the bankruptcy filing was announced, hundreds of former field contractors have come forth with stories of ES office staff lying about how and when reimbursement for their services was being handled. Many have confirmed that they were only paid after repeated phone calls and e-mails to the ES accounting department.
JP-Morgan Chase has been cited as the lender who hired the appraisal management company, or AMC, and now heavy pressure is being applied for Chase to cover the outstanding debt. Apparently there are a number of regulations in place that impose the financial responsibility on the lender. In situations like this, the AMC is considered the agent of the lender, and the lender is ultimately accountable for the unpaid invoices. Case in point is this document from the Department of the Treasury.
The fact that in recent years both MetLife and Wells Fargo faced similar situations, and paidup, also fuels the fire.
As the ongoing investigation continues, it remains to be seen just how many more complaints will be filed against Chase and the Florida State Banking Commission. Of course, two regulatory agencies, the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB) will also be involved in the inquiry. Currently there are several Facebook pages dedicated to real estate professionals who were abused by the AMC. There is also talk of one or more class action suits and charges of fraud that could be leveled by the F.B.I.
To read more about this case, here is a link to the entire article by Isaac Peck: