ALJDEC - Licensing
23A-015-FIN · Department of Insurance and Financial Institutions - Financial · 2023-11-20
In the Matter of the Appraiser License of:
JULIE D. FRIESS
Certified Residential Real Estate Appraiser
License No. 20957
Respondent.
No. 23A-015-FIN
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: October 24, 2023 with the record held open until October 31, 2023.
APPEARANCES: Assistant Attorney General Zachary Howard represented the Department of Insurance and Financial Institutions. Respondent Julie D. Friess did not appear.
ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson
_____________________________________________________________________
FINDINGS OF FACT
1. The Arizona Department of Insurance and Financial Institutions (Department) has been authorized and entrusted by the Arizona legislature to regulate the appraisal profession in the State of Arizona by issuing licenses, investigating complaints, and disciplining licensees.
2. On or about August 8, 2000, Julie D. Friess was issued Certified Residential Real Estate Appraiser License No. 20957. That certificate is set to expire on August 31, 2024.
3. On February 9, 2021, Respondent Julie D. Friess performed an appraisal of a property located at 1355 East Lobo Lane, Munds Park, Arizona (Lobo Lane Appraisal) as part of a purchase transaction. The effective date of the Lobo Lane Appraisal was February 9, 2021.
4. The Department received a complaint regarding Respondent’s appraisal of the property located on East Lobo Lane. The Department’s investigation included a review of the Lobo Lane Appraisal Report (Lobo Lane Report) and the related work file. The Department investigator reviewed the report and several errors in the Lobo Lane Appraisal.
5. The investigation found that the Lobo Lane Report contained comments/opinions that were not supported and neither the report nor the work file included sources of the statements. This included comments about the impact of COVID that were not supported by data and the Lobo Lane Report did not adequately identify and analyze the use and value of market trends in violation of SR 1-3(a)(v); there were also no sources in the Lobo Lane Report or work file for several statements including but not limited to the statements, “[t]his gives people a temporary perception that things are okay but in September things will begin to decline, if not sooner, as the Servicers begin to close in and take homes from people and the brunt of the full-on force of the Depression begins...”
6. The investigation found that the Lobo Lane Report lacked data to support the claims that “patterns of fraud, inflated values, and predatory type lending are evident....” The Lobo Lane Repot also included a statement invalidating the definition of market value: “There is no possible way to predict or know how this is or is not impacting market value or what exactly market value is at this time. An extraordinary assumption is being made that the data being used I accurate data and the sales being generated reflect market value.” In a market value appraisal, the appraiser’s scope of work decision carries a burden of proof to support the appraiser’s conclusion. THE Lobo Lane Report did not contain support for several conclusions and statements. These actions/non-actions are violations of the USPAP’s Competency Rule, Scope of Work Rule, Ethics Rule, SR 1-2(f)(h), SR 1-3(a)(v), SR 21-1(a)(b).
7. The investigation also found that the Lobo Lane Report lacked support for the adjustments in the sales comparison approach. Specifically, the Lobo Lane Report and the related work file did not include data, support, or analysis to demonstrate why adjustments were made in the sales comparison grid. These actions/non-actions are violations of the USPAP’s Record Keeping Rule, SR 1-1(a), SR 1-4(a), and 2-2(a)(x).
8. Respondent performed an appraisal of a property located at 2500 North Paint Drive, Camp Verde Arizona (Paint Appraisal) as part of a refinance transaction. The effective date of the Paint Appraisal was March 25, 2021. The Department received a complaint regarding Respondent’s appraisal of the property located at 2500 North Paint Drive. The Department’s investigation included a review of the Paint Appraisal Report (Paint Report) and the related work file. The Department investigator reviewed the Paint Report and found several errors.
9. The Department’ investigation into the Paint Appraisal and the Paint Report identified several violations including: the failure to provide explanations or analyses for adjustments, which are violations of the Record Keeping Rule; limited discussion or analysis to support adjustments which is a violation of USPAP SR 1-1(a), 1-4(a) and 2-2(a)(x).
10. The Paint Report also included comments about the impact of COVID that were not supported by data and the paint Report did not adequately identify and analyze the use and value of market trends in violation of SR 1-3(a)(v). There were no sources in the Paint Report or work file for several statements including, but not limited to the statements, “[p]eople are under duress of this pandemic, the isolation and impending fear of getting sick and the possibility of dying or losing someone they love. People are under the duress of the workforce restrictions and lack the freedoms imposed on the public in general that are occurring and they are afraid for their health, safety and security, and not just from the pandemic but from the revolts occurring throughout the country as differing groups of people cause periodic uprising to show and express their frustration and fear.... The sale price of homes in northern Arizona area ‘appears’ to lack statistical reason and show patterns of irrational through, but only with data and time will this be evident if it is true. However, inflation and artificial appreciation are absolute factors right now along with evidence of predatory lending and along with this there is always fraud. All these things are clearly evident throughout the area” and “[b]rick and mortar businesses have for the most part gone out of business and it is not possible to determine what the unemployment rate at this time due to the data being disclosed to the public being so mixed and inconsistent.” These statements are misleading and constitute a violation of the USPAP Ethics Rule and SR 2-1(a). The investigation further found a statement in the report invalidating the definition of market value: “There is no possible way to predict or know how this is or is not impacting the true market value of the subject property or what exactly ‘market value’ is at this time.” The Paint Report lacks support for several conclusions and statements. Failing to identify and then complete an appropriate scope of work that enables development of credible opinions and conclusions is a violation of USPAP’s Competency Rule, Scope of Work Rule, and SR 1-2(h).
11. Respondent performed an appraisal of a property located at 250 Quail Run Court, Clarksdale, Arizona (Quail Run Appraisal) as part of a purchase transaction. The effective date of the Quail Run Appraisal was October 14, 2021.
12. The Department received a complaint regarding Respondent’s appraisal of the property located at 250 Quail Run Court. The Department conducted an investigation regarding the review of the Quail Run Appraisal Report (Quail Run Report) and he related work file.
13. The Department investigator reviewed the Quail Run Report and found several errors in the Quail Run Appraisal. The investigation found that he Quail Run Reprt contained unsupported comment/opinions that were misleading and not relevant to the appraisal. This includes but is not limited to a statement that “[t]he southern border of my state, Arizona is severely in crisis with hundreds of thousands of illegal aliens being released into Arizona unvaccinated over the past 6+ months.” It was further found that the analyses applied to arrive at the opinion or conclusions were inadequate, the value opinion stated in the report was not adequately supported, and the report lacked sufficient information to enable intended users to understand it properly. These actions are violations of the Scope of Work Rule, Ethics Rule, and Standard Rule 2-1(a)(b).
14. The Quail Run Report included a comments that “[p]roperties with functional obsolescence, if not impossible to rent, flip, renovate, and sell.” However, the Quail Run Report lacked support to show market resistance to the subject property. The investigation found that the Quail Run Repot did not properly identify the problem to be addressed and there was nothing in the work file to support, analyze, or calculate the cost to cure the functional issues discussed in the appraisal. These actions/inactions constitute violations of the USPAP Competency Rule, Record Keeping Rule, Scope of Work Rule, SR 1-1(b), 1-4(b)(iii), and 2-1(a).
15. The Departments’ investigation identified additional violations including: failing to identify and then complete an appropriate scope of work that would enable the development of credible opinions and conclusions in violation of USPAP’s Competency Rule, Scope of work Rule, SR 1-2(f)(h); the failure to provide explanation or analyses for adjustments, which are violations of the Record Keeping Rule; limited discussion or analysis to support the adjustments in the sales comparison grid, which is a violation of USPAP SR 1-1(a), 1-4(a) and 2-2(a)(x); failing to adequately analyze the effect on use and value of market area trends in violation of SR 1-3(A)(v).
16. Upon its completion of the investigation of the complaint, the Department the Department referred the matter to the Office of Administrative Hearings (OAH), an independent agency, for an evidentiary hearing.
17. On or about July 6, 2023, the Department issued a Notice of Hearing, setting the administrative hearing for 9:00 a.m. on August 15, 2023 and August 16, 2023, and charging that cause existed to discipline Respondent’s real estate appraiser’s license under A.R.S. § 32-3631(A).
18. The Complaint and Notice of Hearing was sent to Respondent via certified mail to her most recent addresses of record and emailed to her address of record
19. Respondent did not appear personally or through an attorney at the duly noticed hearing. Respondent did not request to appear telephonically. Accordingly, Respondent did not present any evidence to defend her license.
20. At hearing, the Department presented the testimony of Kelly Lutejin, Department Staff Investigator - Appraisal Investigations, submitted 12 exhibits.
21. Ms. Lutejin testified that Arizona adopted the USPAP Standards, which means that a violation of the USPAP is a violation of Arizona statute.
22. The USPAP ethics rule states that “[a]n appraiser must promote and preserve the public trust inherent in appraisal practice by observing the highest standards of professional ethics.”
CONCLUSIONS OF LAW
The Notice of Hearing that the Department mailed to Respondent at her address and email address of record was reasonable and she is deemed to have received notice of the hearing.
The Department has the authority and duty to regulate all persons engaged in the activities of real estate appraisal and with the enforcement of statutes, rules, and regulations relating to real estate appraisals. This matter lies within the Department’s jurisdiction.
The Department bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”
Arizona Revised Statues (A.R.S.) § 32-3635 provides, in pertinent part, as follows:
A. A registered trainee appraiser or a state-licensed or state-certified appraiser shall comply with the standards of professional appraisal practice.
B. An appraisal or appraisal report shall not be issued by a real estate appraiser unless it meets the appraisal standards established by this chapter and rules adopted pursuant to this chapter.
The Department established that Respondent violated A.R.S. § 32-3635 (A) and (B) as alleged.
The Department established that Respondent violated USPAP Standards as alleged in Findings of Fact 5 through 7, 9, and 13-15. Therefore, the Department established grounds to discipline Respondent’s real estate appraiser’s license under A.R.S. § 32-3631(A).
RECOMMENDED ORDER
Based on the foregoing,
IT IS ORDERED that within six months of the final order issued in this matter, Respondent Julie D. Friess must complete a total of 19 hours of corrective education courses, in addition to any other educational requirements that Respondent is normally required to complete.
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 decision. If the licensee accepts the Administrative Law Judge Decision, the 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.
Done this day, November 20, 2023.
/s/ Velva Moses-Thompson
Administrative Law Judge
Transmitted by either mail, e-mail, or facsimile to:
Barbara D. Richardson,
Department of Insurance and Financial Institutions - Financial
Barbara D. Richardson
Department of Insurance and Financial Institutions - Financial
Arizona Department of Insurance and Financial Institutions
[email redacted]
[email redacted]
Zachary Howard
Assistant Attorney General
Office of the Arizona Attorney General
[email redacted]
Julie D. Friess
[email redacted]
By: OAH Staff