By David Brauner, Editor
Editor’s Note: A large lender is giving appraisers an ultimatum, saying in effect, violate USPAP or be placed on a “do not use” list. John Dingeman is one such appraiser who finds himself between that rock and that hard place. But he understands his rights and is fighting back.
Talk about being between a rock and a hard place.
The new normal for too many appraisers these days is being banished to a “do not use” list by a lender, without any opportunity for rebuttal or even knowing why (See Suspension Merry-Go-Round pg. 26). Now here’s a new twist: at least one large lender is giving appraisers the chance to rebut a questionable review- the problem is that doing so may violate the Uniform Standards of Professional Appraisal Practice (USPAP).
John Dingeman, a Certified Appraiser in Ariz., recently received a letter from Chase, citing “possible USPAP violations” and demanding a response within 21 days or else. The or else is exile to Chase’s Ineligible Appraiser List. Appraisers who have faced a similar fate say that orders from appraiser management companies (AMCs) dry up almost overnight as a result. Not only do orders stop that are associated with that particular lender but all orders cease. Here’s why: AMCs can’t take the chance that a loan, any loan, might end up at that lender someday- so they simply turn off the spigot and skip to the next appraiser on the call list; it makes sense given the consolidation taking place leaving fewer (big box) lenders controlling a larger share of the business.
Faced with violating USPAP or the loss of business, Dingeman chose a third option: fighting back. He responded to Chase with chapter and verse of various state and federal laws protecting appraiser independence. “Per USPAP’s Confidentiality section of the ETHICS RULE I am not permitted to discuss the appraisal or the results with anyone other than my Client or Intended User, and Chase is neither,” Dingeman said. “Even if the Client is no longer in business (Per USPAP FAQ 69) the appraiser-client confidentiality is not terminated and the appraiser is still required to comply with the requirements set forth, regardless of the status of the client.”
Because, in his words, he was threatened and intimidated with “placement on the Chase Ineligible Appraiser List” if he failed to respond within 21 days, Dingeman says he was compelled to send copies of the letter and his response to various state and federal regulatory agencies for action, as well as to the FBI and the Chase Appraisal Compliance Officer. “This type of intimidation placed upon appraisers is inexcusable and should not be tolerated. Chase should be accountable for knowing what USPAP requires,” Dingeman says.
Other problems cited by Dingeman are that he was not furnished with a copy of the appraisal, so he has no idea whether the bank has a true and complete copy. He also was not provided any information on the reviewer so can not be certain about their qualifications or geographic competency.
It’s good to know one’s rights, Dingeman says. In his rebuttal letter to Chase, Dingeman writes, “Please be advised that Arizona Revised Statute 32-3603 specifically states that all real estate appraisals and appraisal reviews performed in this state on a property in this state shall be performed only by individuals licensed or certified in this state. Please note that if the review appraiser involved is not licensed or certified in the State of Arizona as a real estate appraiser they are in violation of state law and subject to disciplinary proceedings from the Arizona Board of Appraisal.”
Richard Hagar, SRA, who advised Dingeman on the Chase issue, says, “Let’s be clear about this, Chase is asking the appraiser to violate USPAP and talk to them about an appraisal where they were not the client. If the appraiser won’t violate USPAP and talk to them, Chase says the appraiser is violating USPAP and will be blacklisted. Talk about twisting USPAP. How do you fight back? Know more than they do and fight back with the law, rules and regulations.”
Hagar, the presenter for the webinar How to Limit Liability, Maintain Independence, and Fight Influence, says it is critical for appraisers to know and understand their rights. “John and I talked extensively about his problem including the ethics and privacy issues,” said Hagar. “He is correct. There is a difference between a ‘client’ and ‘intended users.’ From my point of view, Chase was an intended user but not the client. While they may have obtained a copy of an appraisal, from someone, it does not make them the client. Since Chase did not ‘communicate’ with the appraiser at the time the assignment was created, nor identified as the client when the report was created, Chase does not appear to be the client. Issues like these are exactly why we created the Appraiser Independence webinars.”
Dingeman wonders what’s next. “The question now is what are the nine agencies that I sent a copy of this letter and my response to going to do about it,” said Dingeman. “They have a responsibility to the public and should be knocking on Chase’s door to find out just exactly how many of these letters have been mailed out. If these large banks are allowed to continue to threaten and intimidate appraisers and send every report to a regulatory board for complaint, as they threatened to, there will be no appraisers left.”
According to Dingeman, the saddest part is that banks do have a legal and fair remedy: order a retrospective appraisal with an effective date the same as the original appraisal. “This would engage the appraiser directly and make the bank the client,” he said.
***In Working RE’s upcoming Webinar Series, Limit Liability, Maintain Independence, and Fight Influence, nationally renowned instructor and expert Richard Hagar, SRA will detail how appraisers can protect themselves and their independence in the face of AMC requests, questions, and threats of blacklisting aimed at influencing and distorting your report. Learn to protect your independence as an appraiser with Hagar’s Three Part Series.
About the Author
David Brauner is Editor of Working RE magazine and Senior Broker at OREP.org, a leading provider of E&O Insurance for appraisers, inspectors and other real estate professionals in 49 states. He has covered the appraisal profession for over 20 years. He can be contacted at firstname.lastname@example.org or (888) 347-5273. Calif. Insurance Lic. #0C89873.