We have a new “industry standard” making an appearance for both appraisers and Realtors. Those of us who do work with appraisal management companies and complete Broker Price Opinions are being asked to submit to and pass mandatory criminal background checks – “to ensure that every person who conducts business on their clients’ behalf observes the highest of standards and professional ethics,” according to an email from the LSI Division of Lender Processing Services (LPS).
This isn’t exactly new in terms of many states’ professional licensing protocol, or even the majority of most companies hiring policies these days. It is a subpar procedure in the way that the policy is being implemented, and possibly a violation of the Fair Credit Reporting Act (FCRA).
States which require criminal background checks for licensees utilize their own State Bureau of Investigations and FBI databases to determine if there have been any felony or misdemeanor convictions. Some states will also look at court records for additional information, if available online.
The current requests for background checks
The current requests many of us have been receiving for background checks, from companies like LPS/LSI (a preferred valuation partner of National Association of Realtors’ Realtors Property Resource), and thereby those Realtors who hold NAR’s Broker Price Opinion Resource certification, along with DataQuick, are being conducted by third parties, such as LexisNexis and Sterling Infosystems.
At least as far as LPS/LSI is concerned, in their email – which includes a link to LexisNexis and explains that four questions will have to be answered to verify identity, and which product to select (there was only one option) – it also says that LPS/LSI wants social security number verification, a felony/misdemeanor record check, a national criminal record file check and a global sanction search.
However, upon getting ready to pay for these verifications and searches (yes, Realtors and appraisers have to fork over the bucks for these), LexisNexis has a disclaimer/authorization as to what they themselves may be looking into, and it’s a hell of a lot more than mere criminal records.
Reading the fine (and questionable) print
According to the LexisNexis website, items may include “information regarding my credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living. This report may be compiled with information from credit bureaus, court record repositories, department of motor vehicles, past or present employers and educational institutions, governmental occupational licensing or registration entities, business or personal references and any other source required to verify information that I have voluntarily supplied. I understand that I may request a complete and accurate disclosure of the nature and scope of the background verification; the extent such investigation includes information bearing on my character, general reputation, personal characteristics or mode of living.”
It is one huge leap from requiring criminal records and verifying identity to potentially pulling credit reports, other court records, DMV records, speaking with past employers, personal references, obtaining school records and digging into one’s character, reputation or mode of living – in other words, a person’s way of life (which is quite subjective – does one become disqualified if their “way of life” is gay, anti-semitic or nudist?).
While LexisNexis has a nice CYA in the form of a checkbox authorizing the go-ahead and appears to be in compliance with current laws, LPS/LSI has failed miserably at doing so – enter the potential FCRA issues. LPS/LSI did not, in the email sent out to current providers like myself, give notice of the policy change, i.e. that appraisers and Realtors would be subject to background checks and ultimately have an investigative consumer report compiled as a condition of employment, separate from any other information, nor did they request any kind of permission to obtain said reports in written, verbal or electronic form.
Time for Appraisers and Realtors to defend themselves
Per the FTC, employers also have obligations under the Fair Credit Reporting Act. When background checks are conducted for employment purposes, including hiring, advancement or maintaining an employer/employee relationship, a disclosure must be given out, and it must be separate from other information. Consent from the employee has to be obtained, preferably in writing. If investigative consumer reports will be used, an additional notice has to be given out that one may be generated, and that the employee has a right for additional disclosures and the scope and summary of the report.
There are times when appraisers and Realtors need to join forces and become advocates for ourselves. This is one of those times. We have to know our rights (and we do have them) instead of rolling over and taking it, because something may be becoming a new standard in the industry.
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