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Appraiser may be liable to third party for inflated valuation
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The Idaho Supreme Court concluded that an appraiser could be responsible for an inflated property appraisal for a home loan that ended in default, even though the lender who made the loan was not the original client who commissioned the appraisal.
The case, CUMIS Insurance Society Inc. v. Massey (No. 40002), was based on an appraisal of Steven and Valerie Hruza’s real property performed by Wade Massey, owner of Capitol West Appraisals. The couple was seeking a loan from Clearwater Mortgage, a lender who commissioned Massey to appraise the property.
In June 2007, Massey’s Summary Appraisal Report showed the Hruzas’ property to have a market value of $1.15 million. However, Clearwater decided to decline the Hruzas’ loan before even considering the appraisal. After Clearwater declined the loan, both Massey and Clearwater jointly agreed that the Summary Appraisal Report contained errors, that the errors would not be fixed and that Massey would not be paid for the appraisal.
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