The Maryland law firm of Shapiro Sher Guinot & Sandler PA sent a letter November 14th to the appraiser clients of one of the nation’s largest appraisal management companies, CoesterVMS.
This letter marked the beginning of tough times ahead for owner Brian Coester.
In it were claims that the law firm represented FVC Bank, according to a nearly illegible copy of the letter that has since made the rounds in the appraiser blogsphere. The letter states that FVC Bank is shutting down a $700,000 line of credit to CoesterVMS, which would seemingly indicate financial troubles for the AMC.
Responding via text, Coester said, “We are not out of business,” and that he was in the process of getting “what the bank did corrected.”
Coester later told HousingWire that FVC Bank recently took over Colombo Bank's assets, which held hundreds of thousands of Coester's money in an account, and wanted the line of credit moved. Coester said they were in the process of finding an new home for the AMCs' financials when FVC suddenly pulled the plug.
"In the middle of the night, they closed the line. It caused a huge disaster, but now we got all the money back," Coester told HousingWire Tuesday. Coester said they are reissuing checks to appraisers and said the bank contacting his clients was "a disaster." As a result, CoesterVMS business was cut by two-thirds, but Coester added: "The blizzard and holiday didn't help, but we're getting back to normal."
AMCs were borne from the ultra-tight regulatory environment envisioned by Dodd-Frank. The aim was to put an arms-length between LOs and appraisers, in order to prevent a return to the artificially high valuations common during the housing boom earlier this century. Lenders contact AMCs for valuations and then the AMC assigns an appraiser who is understood to be a prior unknown to the mortgage transaction.
After Dodd-Frank, AMCs boomed and many failed, some spectacularly, leaving appraisers with significant unpaid wages.
“The rumor mill around this is yet another big black eye for the AMC industry in general, as this is one of the big ones,” said one appraiser, off the record. “It’s common knowledge there are many, many appraisers who are owed money [by Coester].”
When contacted by HousingWire, a licensing specialist for the Virginia Department of Professional and Occupational Regulation responded with only the following advice to appraisers who may be affected:
If you would like to collect money owed to you from a company doing business in Virginia, you will need to do so through a Virginia court. According to Section 54.1-2021.1.D of the Code of Virginia, a suit may be brought directly against the surety bond or letter of credit required for an appraisal management company's licensure. If the property was not in Virginia, you may need to consult the laws of the jurisdiction in which the property is located. We recommend you consult an attorney regarding your options. However, the Virginia Real Estate Appraiser Board does not have the authority to order payment. If you would like to file a complaint against a licensee, please file a complaint with the Department of Professional and Occupational Regulation.
Calls and emails to the named parties at the law firm and bank have not yet been returned.
Mary Broz-Vaughan, Deputy Director of Communications & Board Operations at the DPOR told HousingWire, "We at DPOR have no knowledge concerning the allegations of asset/account seizure."