Appraisers vs FNC, Inc. - Lawsuit Over Control of Appraisal Data
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An interesting battle is shaping up over what access a data processor should have and how they can use it. A company, FNC, Inc., sold it’s services as a data middleman. They would take the appraisers reports, digitize them, and then package them in a format that is easier for the mortgage companies to access.
What they never told the appraisers who bought into using their system is that they would also scrape off the data and resell it to others at a later time. This is costing the appraisers a hunk of money and potentially putting old data that is not as accurate out into the lending world.
Back in the day when data was all on hard copies and distribution of information was difficult, this was not a problem. But now that most information is digitized, how will experts such as appraisers continue to have control over the distribution of their work? And after they complete the job and the data on a home has been sold, who has control of it?
These questions will be coming up more and more as time goes along.
The lawsuit was filed last month by appraisers in Maryland, Virginia and Oklahoma against FNC Inc. of Oxford, Miss. FNC markets a high-tech system that converts traditional appraisals into electronic formats, then sends them to mortgage lender customers.
FNC processes about 400,000 appraisals a month, according to the company, and deals primarily with the 45 to 50 largest mortgage lenders in the country.
The appraisers are seeking a minimum of $25 million, plus punitive damages.
The suit alleges that FNC has “duped” thousands of appraisers into using its AppraisalPort system with assurances that their appraisal data is “secure” and that FNC “does not have access” to any report or any intention to store or re-market it. In fact, according to the suit, FNC “downloads this data … and then markets” it, cutting appraisers out of potential additional business with no compensation.
The suit quotes Bill Rayburn, FNC’s CEO, as telling an industry publication that “when an appraisal is transmitted to the lender, we are able to pop it open and suck all the data out.” via the baltimoresun.com.
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Comment by Brian J. Davis on 3 June 2007:
Actually FNC does not have to “digitize” the appraisal reports as they are already in what’s called the “AI Ready” format that was developed by FNC in cooperation with the Appraisal Institute (no longer part of the process).
Also it’s NOT an issue of “putting old data that is not as accurate out into the lending world”.
To the contrary, it IS an issue of reselling “new, accurate, verified and confidential information from copywrited appraisals” without compensating or notifiying the appraisers.
The complaint claims that, “Contrary to the representations made by FNC to appraisers, FNC has and is continuing to copy, store, and use appraisal report electronic data transmitted via the Appraisal Report service. In fact, it has built a national database of information about properties using appraisers’ information transmitted on AppraisalPort.”
According to the complaint: “On the FNC web site for the AppraisalPort service, FNC advertised and represented that FNC does not access or store the appraisal report electronic data transmitted by appraisers to lending institutions using the AppraisalPort service, that this data is “secure” and that this data is “unseen” and “untouchable” by FNC and third parties, and that this data is not used to build a database”
The complaint alleges: “Based on these representations, FNC charged appraisers up to $6 each time they transmitted data using its service. These statements and representations made by FNC are not true. In fact, FNC downloads this data into FNC’s National Collateral Database and then markets access to this data to lending institutions and other third parties.”
“Thus, not only does FNC collect fees from appraisers based on misrepresenting the service it is providing, it collects additional profits from others based on the very same data and the work of the appraisers it dupes into using its service.”
The complete complaint can be downloaded from: http://tinyurl.com/ywtydg
Comment by G. Swifty on 12 September 2007:
FNC is not the only entity trying to put appraisers out of business, what about Fannie Mae charging $50.00-$75.00 to the lender to waive the entire appraisal . Even on purchases.
It would seem everyone in the lending industry wants appraisers gone and we all no why.
Comment by G. Swifty on 12 September 2007:
FNC is not the only firm trying to eliminate appraisers. What about Fannie Mae charging lenders $50.00 - $75.00
to waive the entire appraisal. Even on purchases. As a prospective buyer I would want to know if the property I am buying is worth it.. I hope the class action against FNC is positive for appraisers. What is needed are laws on a national level for the practicle use of these reports.