Lawsuit Alleges Inconsistent Standards

A recent lawsuit has brought to light allegations against the Appraisal Institute (AI) concerning its application of varying minimum passing grades and requirements for appraisal students across different states. These discrepancies are claimed to have persisted since at least 2008, raising significant concerns within the industry.

Whistleblower Claims of Retaliation

Maria Akins, who joined the Appraisal Institute in February 2024, asserts in legal documents that she alerted the organization’s leadership about these irregularities. According to Akins, her concerns were met with a discouraging “don’t ask, don’t tell” policy. Following her communication with AI CEO John Udelhofen in October regarding the need to retract certifications she could not substantiate, she faced immediate repercussions.

Shortly after her report, AI Vice President Craig Steinley canceled her planned work trip, an action Akins interpreted as retaliatory. In a subsequent text, Udelhofen suggested he was preparing an “employment separation package” for her, implying she would face a hostile work environment from Steinley if she remained in her position.

Termination and Legal Action

Akins escalated her concerns to human resources by reporting inaccurate exam scores, as well as Udelhofen’s communication. However, within months of her initial hiring, she was terminated in December 2024, a decision now challenged in the U.S. District Court for the Northern District of Illinois Eastern Division. The lawsuit claims violations of state whistleblower laws and retaliatory discharge.

Leadership Turmoil at the Appraisal Institute

This lawsuit adds to the ongoing turmoil surrounding the Appraisal Institute’s leadership. In September, CEO Cindy Chance was dismissed after just one year, prompting criticism from members who felt AI has not adequately addressed the challenges faced by residential appraisers. Observers suggest that Chance’s termination stemmed from her efforts to implement needed reforms that threatened established board interests.

“She was terminated because her positive changes threatened the entrenched interests of the Institute’s Board members,” stated Lori Noble, a West Virginia-based appraiser.

Concerns Over Diversity and Industry Practices

The Appraisal Institute has faced scrutiny from the Biden administration for its lack of diversity, with internal statistics indicating a predominantly white and male demographic within the profession. Additionally, appraisers have criticized the institute’s perceived close ties with appraisal management companies (AMCs). Industry professionals argue that AMCs take an excessive portion of fees while misleading the public about compensation structures, contributing to a marked decline in the appraiser workforce.

Ongoing Legal Developments

Compounding these issues, the law firm Hilgers Graben has initiated a class-action lawsuit against three AMCs in California, accusing them of misleading homebuyers and engaging in unjust enrichment practices. Additionally, the law firm Morgan & Morgan is considering investigating similar allegations within the sector.