Acting Secretary of Housing and Urban Development Alphonso Jackson said HUD would withdraw the agency's expansive proposal to reform the Real Estate Settlement Procedures Act (RESPA) from review by the Office of Management and Budget (OMB). The move kills reform for now.

Real estate service provider advocacy groups, including the National Association of REALTORS®, Mortgage Bankers Association, American Land Title Association, Real Estate Settlement Providers Council and the Appraisal Institute had expressed concern about HUD's proposed reforms.

“We are concerned that appraisals will be bundled in the closing package, eliminating price and service disclosure requirements to consumers in residential real estate transactions,” Don Kelly, the Institute's vice president of public affairs, said in Washington this week. “For years now, the housing market has been the driving force in our economy. Nevertheless, all real estate investments, including homes, come with risk. The appraisal is an important safeguard in the investment process and serves to protect homeowners and financial institutions as it helps them assess that risk,” Kelly said.

HUD plans to huddle up and resubmit a new proposal for public comment. "I plan to revise the rule, if necessary, and to re-propose the rule, requesting additional comments, after I have had an opportunity to brief members of Congress and to meet with affected consumer and industry groups," Jackson said.

The New York Supreme Court handed down a precedent-setting ruling in that state this month when it found that an appraiser engaged in professional malpractice and ordered a trial on the issues of causation and damages. In New York, unlike most other states, the Supreme Court is a trial-level court beneath the Court of Appeals.

Appraisals of a property in Floral Park, New York were prepared by defendant Rossback on February 28, 1990, listing a fair market value of $700,000.00; January 22, 1991, listing a fair market value of $554,000.00; June 3, 1993, listing a market value of $530,000; and January 19, 1994, indicating no change since June of 1993.

The last appraisal consisted of a one-line letter wherein Rossback advised that "the value of the above mentioned property has not changed since I did the appraisal in June of 1993."

Plaintiff Lakemed Realty Corporation was a tenant at the premises, when it purchased the property for $600,000.00 on April 23, 1991. The plaintiffs sought damages alleging that they are now in the position of selling the subject property at a price far below the value established by the defendant appraiser.

An expert hired by the plaintiffs described Rossback's "miscalculation/mismeasurement of the building which is 5,260 square feet NOT 6875 square feet RESULTING IN AN OVERVALUATION OF THE PROPERTY OF AT LEAST 25 percent." He also said that the 1994 appraisal letter was deficient because land value conclusions were not supported by any sales information contained within the body of the appraisal. The report concludes with the expert's opinion that the 1994 letter update "is totally deficient and unsupported. Since the appraiser is a New York State licensed appraiser this report must conform to the reporting requirements as set forth under the Uniform Standards of Professional Appraisal Practice. This report does not meet any of those standards in terms of form or content."

Rossback admitted that he did not consult building records maintained by the town, did not obtain a Nassau County Property Description Card and did not obtain a survey. He measured only the first floor, but not the second floor, for the first appraisal. He never remeasured the premises following the first appraisal, and he never re-inspected the premises for the third and fourth appraisals. The admissions and the expert's report led the court to find Rossback had committed professional malpractice.

Rossback attempted to escape liability by saying the appraisals were prepared for Early, a vice president with Lakemed, while Lakemed was the purchaser of the property. A similar argument might have been used in a mortgage context: The appraisal was prepared for the lender, not the buyer who relied on it. The court rejected this argument: "Where an appraiser knows that a specific third party will be relying on its appraisal, tort liability will ensue if the appraisal is negligently prepared and relied on by the third party to its detriment."

The case is Early v. Rossback.

What to know and do to back up your essential files

Whatever backup method you use, here are some very important points to keep in mind:

• Make backing up a routine. Once you do that, you make it as simple as anything else you do daily — brushing your teeth, for example — and you can do it as often as possible with negligible "hassle factor."
• If you use media other than the Vault or another remote backup service, make sure you store the media in a safe place! Many computer disasters will be contained inside your desktop or laptop, but not house fires, for example.
• Always verify that the backup has been successful! It's important to eliminate the "hassle-factor" in backing up so that you do it as often as possible. But don't let that keep you from making sure an automated process was successful. With the Vault, you receive a post-backup e-mail called a "Vault Activity Message" which tells you what was uploaded and when. Make sure you get that e-mail! Also, you can log into the Vault and sort by "Last Updated" or "Description" to verify.