ALJDEC - Licensing
23A-004-FIN · Department of Insurance and Financial Institutions - Financial · 2023-05-01
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
In the Matter of Appraiser License of:
Stephanie N. Lam,
Certified Residential Real Estate Appraiser, License No. 1025226,
Respondent.
No. 23A-004-FIN
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: April 11, 2023.
APPEARANCES: Stephanie N. Lam failed to appear. Assistant Attorney General Zachary Howard, Esq, for the Arizona Department of Insurance and Financial Institutions.
ADMINISTRATIVE LAW JUDGE: Kay Abramsohn
FINDINGS OF FACT
On February 23, 2023, the Arizona Department of Insurance and Financial Institutions (Department) issued a Notice of Hearing and Complaint setting this matter for administrative hearing on April 11, 2023 at the Office of Administrative Hearings in Phoenix, Arizona.
The Notice of Hearing provides notice to Respondent that the administrative hearing was being held to determine whether grounds exist to (a) revoke or suspend Respondent’s License No. 1025226 for a period of three months and (b) required the completion of corrective education classes. Additionally, the Notice of Hearing sets forth the background information of two complaints having been received against Respondent’s License and the allegations therein, as well as the Department’s investigation regarding the complaints and the Department’s findings of violations.
At hearing, the Department presented the testimony of investigator Kelly Luteijn; the Department’s Exhibits 1 through 9 (Bates 00001 through 0144) were admitted to the hearing record.
Respondent’s Arizona licensure became active June 20, 2021 and is set to expire May 31, 2023.
The Department received two complaints, one regarding an appraisal performed on a residence on Rainbow View Drive in Lakeside, Arizona, and one regarding an appraisal performed on a residence [under construction/reconstruction] on Windy Lane in Heber, Arizona.
RAINBOW DRIVE APPRAISAL
On November 29, 2021, Respondent completed the Rainbow Drive appraisal for purposes of a mortgage refinance transaction.
On review by the Department, the Investigator identified multiple errors and failings in the Rainbow Drive appraisal and workfile: (a) representing there was a fireplace but providing no photographs thereof; (b) stating there was bedroom carpeting when the photographs showed hardwood flooring; (c) failing to mention any upgrades over the preceding 15 years; (d) failing to mention any of the community amenities; (e) failing to provide analysis of the location differences between the subject home and the comparables that were not located within the subdivision; and (f), failing to provide field notes or analysis to support her findings. The Department determined that these errors and failings were violations of the Uniform Standards of Professional Appraisal Practice (USPAP) Record Keeping Rule [Standard Rule] 1-1(a)(c), 1-2(e)(i), 1-4(a) and 2-1(b).
On review by the Department, the Investigator identified issues with Respondent’s use of comparables in that she had not appropriately analyzed or supported in her workfile the differences in gross living areas (GLA). The Investigator noted that Comparable (Comp.)#2 and Comp.#4 appeared to have been included due to recency in their sales when compared to Comp.#1 and Comp.#3 but the GLA had been adequately accounted for in the appraisal. Further, the GLA in Comp.#5 was not only 2.5 times the GLA in the subject property but the Comp.#5 lot was 2 times the lot size of the subject property. The Department determined that these issues were violative of USPAP Competency Rule, Scope of Work Rule, and Record Keeping Rule, 1-1(a)(b), 1-4(a) and 2-1(a)(b).
Finally, the Department determined there were multiple other violations: (a) failure to include the MLS listings in workfile [Record Keeping Rule]; (b) failure to provide explanations of analysis in providing only limited discussion to support adjustments [USPAP SR -1-(a) and 1-4(a)]; (c) failure to provide analysis of location differences as to Comp. # 4 and Comp. #5 or market trends [USPAP SR 1-1(b)]; (d) failure to provide original photographs per engagement agreement and only providing MLS photographs [Scope pf Work Rule]; (e) failure to report/analyze the prior sale of the subject property [USPAP SR 1-5(b)]; (f) failure to produce an appraisal with sufficient information to demonstrate compliance with Standard 1 [USPAP 2-2(a)(x); and, (g) failure to report the appraisal fee [A.R.S. § 32-3673(B)].
WINDY LANE APPRAISAL
On March 9, 2022, Respondent completed the Windy Lane appraisal for purposes of a purchase transaction.
On review by the Department, the Investigator identified multiple errors and failings in the Windy Lane appraisal and workfile: (a) failed to make adjustments for the differences as to age and construction upgrades from the subject property; (b) the lack of details about the home’s features post-renovation along with use of “construction” photographs; (c) limited descriptions of the interior and exterior details fail to support the assertion that the subject is, in fact, Q2 quality; (d) inconsistent analysis of differences as to subject and comparables and resultant failure to make adjustments as to Comps.#1-4; and, (e) failure to provide adequate support for the value opinion. The Department determined that these errors and failings were violations of the USPAP Competency Rule, Scope of Work Rule, Record Keeping Rule, and Standard Rules 1-1(a)(b), 1-4(a) and 2-1(a)(b).
Finally, the Department determined there were multiple other violations: (a) failure to include the MLS listings in workfile [Record Keeping Rule]; (b) failure to provide explanations of analysis for adjustments [Record Keeping Rule]; (c) providing only limited discussion or analysis to support adjustments [USPAP SR 1-1(a) and 1-4(a)]; (d) failure to produce an appraisal with sufficient information to demonstrate compliance with Standard 1 [USPAP 2-2(a)(x); and, (e) failure to report the appraisal fee [A.R.S. § 32-3673(B)].
On October 31, 2022, the Department issued, via email, a Letter of Remedial Action (LAR) and copies of the two investigative reports, requesting that Respondent meet with the Department or sign off on the LAR.
On November 2, 2022, the Department discovered that Respondent had not opened the communication. The Department then left a voice mail at the phone number on file and, further, contacted the employer of record; the Department was informed that Respondent no longer worked at the company.
On November 9, 2022, the Department sent, by certified and regular mail, the Letter of Remedial Action (LAR) and copies of the two investigative reports to Respondent’s address of record. The Department again requested that Respondent meet with the Department or sign off on the LAR by November 21, 2022.
On November 15, 2022, the Department was informed that the mailing was not able to be delivered to the address of record but a further effort would be made.
As of the date of the Notice of Hearing (February 23, 2023), the Department has had no response from Respondent to the email, voice mail, or USPS mailing. Further, the Department also has not heard from Respondent with regard to any business, residence, email, or phone contact number changes. A.R.S. § 32-3621(D) mandates that a licensee shall give written notification to the Department of changes within ten days after the change.
Due to her failure to appear at the administrative hearing, Respondent failed to dispute or rebut any of the Department’s allegations.
At hearing, the Department argued that the undisputed allegations are violations which support discipline in the form of a suspension and required professional education.
CONCLUSIONS OF LAW
The Department has authority to regulate all persons engaged in the activities of real estate appraisal and to enforce the applicable statutes and rules pursuant to A.R.S. § 32-3601 et seq. The Department bears the burden of persuasion to show that Respondent violated the statutes and rules as alleged. A.R.S. § 41-1092.07(G)(2). The standard of proof on all issues in this matter is that of a preponderance of the evidence. A.A.C. § R2-19-119.
A preponderance of the evidence is:
The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.
Black’s Law Dictionary 1373 (10th ed. 2014).
Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona; see also State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.").
“Substantial evidence is evidence which would permit a reasonable person to” conclude that the proposed finding should be substantiated. See Sierra Club – Grand Canyon Chapter v. Ariz. Corp. Comm’n, 237 Ariz. 568, ¶ 22, 354 P.3d 1127 (2015 App.)(citing In re Estate of Pouser, 193 Ariz. 574, 579, ¶ 13, 975 P.2d 704 (1999).
Preponderance of the evidence demonstrated that Respondent engaged in the alleged conduct and actions, as alleged in the February 23, 2023 Notice of Hearing, incorporated herein. Therefore, the Administrative Law Judge concludes that Respondent's actions and conduct violated the noticed USPAP provisions and the applicable Arizona statutes.
RECOMMENDED ORDER
IT IS ORDERED that Respondent’s Certified Residential Real Estate Appraiser, License No. 1025226 be suspended for three months,
IT IS FURTHER ORDERED that Respondent complete corrective professional education in the amount of eleven (11) hours consisting of the following: (a) a four (4) hour course through Appraisal Foundation called “Appraiser Self-Protection: Documentation and Record-Keeping;” and, a seven (7) hour course called “Supporting Adjustments,” and pass any accompanying examinations associated with those courses,
IT IS FURTHER ORDERED that Respondent provide proof of completion of the coursework within three (3) weeks of course completion as well as provide proof to the Department of completion of all corrective action within six (6) months of Department’s final ORDER in this matter.
Pursuant to A.R.S. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the Administrative Law Judge Decision. If the licensee accepts the Administrative Law Judge Decision, the Administrative Law Judge Decision shall be certified as the final decision by the Office of Administrative Hearings.
In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be forty (40) days from the date of that certification.
RECOMMENDED this day, May 1, 2023.
/s/ Kay A. Abramsohn
Administrative Law Judge
Transmitted electronically, or by mail, to:
Barbara D. Richardson
Department of Insurance and Financial Institutions
Stephanie Lam
460 W. 1/2 St. N.
Snowflake, AZ 85937
Zachary Howard
Lynette Evans
Assistant Attorneys General
[email redacted]
[email redacted]
[email redacted]
[email redacted]
By: OAH Staff