Valuation Is Not a Verdict: Why We Need Structural Standards for Lawsuits Against Appraisers

Valuation is not a verdict, but right now it's treated like one. On July 17, 2025, a federal judge in Maryland granted summary judgment for appraiser Shane Lanham, dismissing discrimination claims after years of litigation and reputational damage [1]. He won. But that doesn't pay back the years he spent fighting.

Here's the problem: appraisers can still be sued over a professional opinion without any threshold showing of a USPAP violation, bias, or even a material factual error. Other professions that rely on judgment (medicine, employment law) require a front-end gate, such as an affidavit of merit (a sworn statement from a qualified expert) or mandatory administrative review. Something. Appraisal has no comparable screen.

To be clear: this isn't about shielding incompetence. Getting the square footage wrong, cherry-picking comparables, or ignoring a clearly shifting market should absolutely result in consequences. But there's a difference between a technical failure and a difference of professional opinion. Right now, the system doesn't distinguish between the two before litigation starts.

The current system lets feelings bypass facts.

Right now, someone can file a lawsuit based purely on suspicion. They don't like their appraisal number. They got a second opinion that came in higher. They believe something unfair happened. That belief alone is enough to trigger years of litigation.

HUD has been promoting discrimination complaints related to appraisals, including billboard campaigns that drew public pushback from the Appraisal Institute for oversimplifying the issue [2]. Awareness campaigns may spark attention, but they don't establish whether standards were actually violated. That requires technical review. The National Fair Housing Alliance reported 34,150 total fair housing complaints in 2023, but its public report doesn't break out appraisal-specific numbers reliably [3]. The problem isn't that people can't complain. The problem is that complaints can turn into lawsuits without anyone qualified ever asking: "Did this appraiser actually violate professional standards?"

We need a technical gate before litigation, not after. Before discovery costs spiral into six figures, someone with valuation expertise should answer basic questions: Did the appraiser follow USPAP? Are the comparables reasonable? Is there a documented factual error that leads to a material mistake? If the answer is no across the board, the lawsuit shouldn't proceed.

What defending a lawsuit actually costs

You'll find lots of vague statistics online about lawsuit totals and average defense costs. Many sources don't cite where the numbers come from, or they're years out of date. What we know from E&O attorneys and insurance carriers is that defending even baseless claims runs five figures minimum, sometimes much higher [4][5][6]. You start paying the moment you're served.

A structured pre-suit review with a 90 to 120 day deadline would almost certainly cost less than months of legal motions and paperwork. And it would filter out weak claims early. It's common sense about how process works.

While costs mount quickly, there's another structural issue: who even has the right to sue in the first place?

Who's supposed to rely on the appraisal anyway?

The intended user doctrine is clear in USPAP and backed by case law. Unless a borrower is named as an intended user, they're not supposed to rely on a lender's appraisal [5][6]. Courts have dismissed borrower lawsuits on that basis when the borrower was neither the client nor an intended user.

This doesn't shield fraud or malice. But it should stop third-party disagreement with a professional opinion from automatically becoming a lawsuit.

Who actually owns the liability

Federal regulators (the CFPB and DOJ) have said lenders can be held liable if they rely on appraisals they knew or should have known were discriminatory [7][8]. That points legal accountability where it belongs for most borrowers: toward the lender's decision. Unless there's actual evidence the appraiser violated the law or standards.

AMCs complicate everything. They keep 30 to 50% of the appraisal fee, sometimes as much as 70% according to documented splits published by Working RE [9][10]. When AMCs skim off that much, appraisers are underpaid yet still carry full liability exposure. That's a structural imbalance that makes a neutral expert screen even more critical. The cheapest or fastest opinion isn't necessarily the right one.

What other countries do

Other countries embed valuation inside structured frameworks like the RICS Red Book and the International Valuation Standards [11][12]. Those systems emphasize governance, documentation, and clear process. They're not identical to a US-style pre-litigation gate, so I'm not claiming they are. But those frameworks work because they build in professional checkpoints before disputes escalate, a concept our system lacks entirely.

Here's what I'm proposing

Before anyone can file a lawsuit against an appraiser, they should be required to go through an independent technical review. Not HUD. Not a civil rights agency with a political agenda. An independent arbitration panel staffed by people who actually understand valuation.

Create a mandatory pre-suit review panel with two certified appraisers who have local market competency, one public member, and an administrative law judge. Panel members would be appointed by state licensing boards to ensure impartiality, not selected by industry groups. Rotating appointments and published decisions would reinforce transparency. The panel's job is simple: determine whether there's evidence of a USPAP violation, a material factual error, or documented evidence of fraud or malice.

Require a qualified expert to file a declaration explaining exactly what standard was violated and how. "I got a higher number three months later" doesn't cut it. Neither does "I feel like I was treated unfairly." Show the USPAP breach. Show the factual error. Show the professional failure.

Set a 90 to 120 day timeline so this doesn't turn into another bureaucratic black hole where legitimate claims go to die.

Fund it through modest filing fees, and include fee shifting so appraisers get their costs back when baseless claims get dismissed.

If the panel finds a violation, the case proceeds to court or the complainant can file with HUD or state agencies. If the panel finds no violation and no evidence of malice or fraud, the case gets dismissed. Period.

This isn't about protecting bad appraisers. It's about stopping lawsuits that never should have been filed. If an appraiser followed USPAP, used appropriate comparables, and documented their work properly, a court has no business second-guessing the professional opinion just because someone doesn't like the number.

When the difference really does mean something

Sometimes a large gap between two appraisals isn't just professional judgment. Getting the square footage wrong, ignoring a clearly shifting market, or cherry-picking comparables shouldn't get a pass. A competent review panel can flag that quickly and let those cases proceed to court.

Right now, appraisers can be sued by people who were never their clients, often without the person filing the complaint ever using the HUD or state review process, and sometimes based on nothing more than a second opinion with a higher number.

Lanham got his day in court and walked away cleared. Not every appraiser has the resources or stamina to fight that long. Without a gate, many won't make it that far.

Until appraisal is treated as a professional opinion instead of a verdict, every appraiser's signature is a lawsuit waiting to happen. We need to build a gate that filters out the weak claims. Make people use it. But keep the door wide open for cases involving real bias and real incompetence.

References

Primary sources (court cases, federal regulators):

[1] HousingWire. Judge dismisses appraisal discrimination and defamation lawsuit in Maryland. July 17, 2025.
[7] CFPB. Protecting homeowners from discriminatory home appraisals. 2022.
[8] ABA Banking Journal. CFPB, DOJ: Lenders can be held liable for discriminatory third-party appraisals. March 2023.

Industry standards and international frameworks:

[11] RICS. RICS Red Book Global Valuation Standards. 2023.
[12] International Valuation Standards Council. International Valuation Standards. 2022.

Trade publications and commentary:

[2] Valuation Review. HUD-funded billboards overlook critical aspects of appraisal. 2024.
[3] National Fair Housing Alliance. 2024 Fair Housing Trends Report. Reports 34,150 total fair housing complaints in 2023.
[4] Peter Christensen. Hot Topics and Myths in Appraiser Liability. Appraiser Law Blog. 2017.
[5] Peter Christensen. Appraiser Law in the Real World. CLE and risk management materials. 2024.
[6] AppraisersBlogs. Lender Liability for a Negligent Appraisal and Buyer Borrower Remorse Cases. 2023.
[9] AppraisersBlogs. The Appraisal Fee Debate: Exposing the AMC Fee Deception. October 28, 2024, updated January 2, 2025.
[10] Capital Valuations VA. Understanding AMC Fees. 2024.