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#1491 - 04/30/01 06:31 PM Another privacy question
I Wear Many Hats Offline
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I Wear Many Hats
Joined: Mar 2001
Posts: 591
the beautiful state of ME
So you are assigning an appraiser to appraise a commercial property. From what I have been told, the lender often share the customer's personal tax returns with the appraiser. Since we are appraising the property at the customer's request, I would imagine this would be a covered exception. BUT, would you suggest having an agreement with the appraiser not to share any information further as a matter of course? Thanks for your help.

Sue

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General Discussion
#1492 - 04/30/01 06:40 PM Re: Another privacy question
Mary Beth Guard Offline
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Mary Beth Guard
Joined: Oct 2000
Posts: 797
Oklahoma City, OK
Why would the lender possibly want to share the prospective borrower's tax returns with the appraiser? The appraiser is asked to perform a very specific function -- the valuation of a parcel of property. That valuation should be based on the condition of the property, recent sales prices for comparable properties, etc. I think it's a violation of the applicant's privacy to share personal financial information -- such as from tax returns -- because there is simply no justification for the appraiser having that information.

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#1493 - 04/30/01 07:06 PM Re: Another privacy question
Michele Petry Offline
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Joined: May 2001
Posts: 7
Not only that, but couldn't it be argued that the appraiser was using that information to arrive at a pre-determined value conclusion? It seems to border on a violation of USPAP.

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#1494 - 04/30/01 08:01 PM Re: Another privacy question
I Wear Many Hats Offline
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I Wear Many Hats
Joined: Mar 2001
Posts: 591
the beautiful state of ME
More information: this is what my commercial lender says:

The entire personal income tax return would not be shared, but in some cases we may share Schedule C or Schedule E. Schedule C would show business income for use in valuing the business enterprise; Schedule E would show income and expenses associated with rental real estate which the appraiser would use for detemining valuation via the income approach.

Corporate/Partnership Returns would be shared for the same purposes

Is this a privacy issue??

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#1495 - 04/30/01 11:12 PM Re: Another privacy question
Princess Romeo Offline

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Princess Romeo
Joined: Jun 2001
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Where the heart is
If you are looking at the strict interpretation of GLB, then only CONSUMER information is covered. And CONSUMER information is that information obtained by a Bank in response to a request for a financial product for personal, family, or household purposes.

So it would appear that a transaction for a COMMERCIAL office building would not fall under the Privacy Regs even if it meant sharing information about an individual.

ONE CAVEAT - heaven forbid you would be using a commercial building as collateral for a consumer loan. Don't laugh - I've seen it - A loan secured by an office building to pay for cost overruns in the construction of the building owner's PERSONAL residence. Imagine the shock on the Loan Officer's face when I told him that Reg Z disclosures were needed!

The other part of the GLB states that information can be shared when necessary to complete a transaction initiated by the consumer. If sharing certain tax return information is necessary in order to prepare an appraisal, it seems that would fit under the allowable exception.

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