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Appraisers Sue AVM Co.

Group claims misled about data usage

June 6, 2007

By LISA D. BURDEN
WASHINGTON correspondent for MortgageDaily.com


Claiming they were duped into providing information that will put them out of business, residential real estate appraisers in three states have sued a company marketing a nationwide database of appraisals.

The company, FNC Inc., has denounced the lawsuit as without merit and said it will vigorously defend against the claims.

"FNC was very disappointed and disturbed to hear of this complaint," an FNC spokeswoman wrote in a statement e-mailed to MortgageDaily.com. "It tries to attack FNC's core commitment of protecting the information we transmit between the appraiser and the lender. As a result, we believe it is entirely without merit and will defend it vigorously."

Appraisers in Maryland, Virginia and Oklahoma filed the class action lawsuit in the U.S. District Court for the District of Maryland.

FNC is a Mississippi-based company that provides services to banks and lending institutions related to obtaining and analyzing information about residential and commercial real estate.

FNC also provides services to appraisers through Web-based AppraisalPort. Appraisers register with the Web site and pay $6.00 for each appraisal transmitted to the requesting lending institution. Lending institutions choose from a list of appraisers closest to the property that needs to be valued.

The system enables mortgage lenders to order real estate appraisals, allows the appraiser to confirm acceptance of the order and then provides for the digital transmission of the completed appraisal.

The appraisers have accused FNC in court of reneging on promises made on its Web site and in promotional materials that AppraisalPort serves only as a "secure pipe" for transmission of data and that FNC does not have access to the reports or that it would use the appraisals to build a database.

They claim FNC has built a national database using the information they provided through AppraisalPort.

In the lawsuit, the appraisers said FNC chief executive officer Bill Rayburn announced in a 2005 interview that the company had developed a "National Collateral Database" of residential real properties.

The appraisers claim information obtained from AppraisalPort is a significant element of the database. They say FNC downloads data they provide into FNC's database and then markets access to the data to lending institutions and other third parties.

"When an appraisal is transmitted to the lender, we are able to pop it open and suck all the data out," the appraisers claim Rayburn said in the interview.

"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 lawsuit alleges.

FNC's database reduces the need for new or additional appraisals for real estate, harming their commercial interest to the tune of millions of dollars, the appraisers claim.

In a 16-page complaint, they have accused FNC of false advertising under federal law and fraud, negligent and intentional misrepresentation.


Lisa D. Burden is a legal analyst for MortgageDaily.com and holds a law degree from the University of Maryland. She is currently a freelance journalist who previously wrote for Institutional Investor publications and the Baltimore Daily Record.

e-mail Lisa at: [email protected]


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