@Andrey Y.
I am an appraiser and i Just consulted with my mother, a Certified General Appraiser, about this. Plus, I decided to become an appraiser instead of becoming a lawyer, so I know a bit about both fields. Ironically, so does my mother as she currently has a law degree. Albeit, I didn’t study a lot of real estate law outside of what may affect me, but I have a knack for it. But we both believe that this could honestly be moved into class action lawsuit territory.
They can use their own appraiser, that is no problem. But they cannot utilize their own appraiser to give you a value, if that makes sense. It’s called a restricted appraisal report and although they’re pretty rare these days, they still exist in a couple forms.
It’s a bit different if this was a commercial appraisal report (as if they appraised the whole condo unit). But it sounds like each condo was valued individually.
If this is the case, their in-house "lender" and the appraiser both probably broke the law and USPAP. USPAP is the rule of god in appraising, and a fair, free market value is the ultimate rule. "Fair" includes being free of any conflicts of interest or undue influence. Technically, an appraiser can get past the conflict of interest part by stating in the report their relationship with the client... But perhaps the most egregious mistake was on the lender's part.
They likely did two things wrong. I bet they used a restricted appraisal report, but those are only allowed to be seen by the clients listed on the report and are generally never allowed as a "real" appraisal. The appraiser must follow this guideline and clearly state that it is a restricted use appraisal report. However, USPAP is clear in that the only people that can see or utilize the report are the clients listed. NOT you. So the lender using this form to convince you of the value would likely be fraud.
They also made a major mistake, most likely, by not offering you the chance to get an appraisal done and see the report. You have a right to, as a buyer. They might think they’re circumventing this by letting you see the restricted one, but that loops us back to fraud. It’s the fruit of the poisonous tree doctrine, at this point.
It’s also worth it to point out that after the Dodd Frank Act, lenders cannot typically have “in-house” appraisers. There are some loopholes, but it sounds like you can make an easy case that the appraiser and the “lender” were working together on values, which is one of the biggest no-no’s a lender or appraiser can do.
If hundreds of units are all valued at 60% and buyers were all misled, this could very easily and very literally lead to jail time.
I wish you the best of luck. Feel free to reach out and I’ll help in any way I can. I’m sorry that this happened to you.
