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2.10.3 Broker’s Price Opinions

Broker’s price opinions (BPOs) are determinations of property value typically based on drive-by exterior examination, automated valuation systems, public data sources, and recent comparable sales. A servicer may obtain a BPO as an alternative to a full appraisal after a loan is placed in default status. As with property inspections, BPOs are often ordered automatically by the servicer’s software system. And, like property inspections, servicers may mark up the costs of broker’s price opinions.186

Servicers argue that BPOs are necessary to protect the value of the property securing the loan and the lender’s rights in the property. This assertion, however, has been rejected by a number of courts.187 For example, in In re Zunner, the court found the BPO “really does nothing to protect value.”188 Further, the Zunner court reasoned that a post-closing valuation was meaningless for purposes of limiting the lender’s risk and did nothing to protect the lender’s rights under the contract. In Bias v. Wells Fargo & Co.,189 the court denied the servicer’s motion to dismiss UDAP, RICO, conspiracy, and fraud claims based on the borrowers’ allegations that the servicer and other third parties marked up BPO and other fees.

Footnotes

  • 186 {181} Bias v. Wells Fargo & Co., 312 F.R.D. 528 (N.D. Cal. 2015) (certifying class when borrowers alleged that servicer failed to disclose mark up of broker price opinions).

  • 187 {182} Gewecke v. U.S. Bank, 2011 WL 4538083 (D. Minn. June 6, 2011) (mag.; denying motion to dismiss breach-of-contract claim when borrower alleged lender assessed fees for unreasonable broker price opinions; loan history showed six broker price opinions ordered, some within days of each other), adopted by 2011 WL 4538088 (D. Minn. Sept. 28, 2011); Porter v. Fairbanks Capital Corp., 2003 WL 21210115 (N.D. Ill. May 21, 2003) (complaint sufficiently alleged claim under FDCPA that charges for property preservation services and broker’s price opinions were not permitted under mortgage clause covering costs to protect value of property); In re Wasson, 402 B.R. 561 (Bankr. W.D.N.Y. 2009); In re Zunner, 396 B.R. 265 (Bankr. W.D.N.Y. 2008).

  • 188 {183} 396 B.R. 265, 266 (Bankr. W.D.N.Y. 2008).

  • 189 {184} 942 F. Supp. 2d 915 (N.D. Cal. 2013).