Arizona Board of Appraisal Dismisses USPAP Violation Complaint Filed by Chase Bank. Here’s Why it Matters. —Appraisers Guild

At Stake was Client Confidentiality  

The Appraisers Guild reports on an important bit of recent case law.  On August 10, the Arizona Board of Appraisal dismissed the USPAP violation complaint filed by Chase Bank against John Dingeman on initial file review.  Why is this newsworthy?  Because it represents a major victory for appraisers everywhere.  Dingeman, has been fighting strong arm tactics employed by Chase Bank in an attempt to force him to violate Client confidentiality by discussing details about an appraisal on a no-defunct loan that Chase acquired.  More:

Dingman took his fight right to the street starting a petition on Change. org and other outlets to share his story with fellow appraisers.  We are happy to also report that Dingman, a founding member of the Coalition of Arizona Appraisers (COAA) and an active AGA member, received assistance through OPEIU coordinated discussions with the AFL-CIO relationship with Chase’s Union Privilege Representative in the weeks leading up to these most recent turn of events.

Opinions vary widely on this issue, but one this is clear, appraisers are bound by USPAP and, client requirements, even when a user of the report doesn’t like it.  Ironically, even Chase’s own appraisal requirements instruct that the appraiser is not to discuss the appraisal:  “Reporting of Values: During and upon completion of the appraisal, neither the value conclusion nor any other aspect of the valuation should be released to anyone other than JPMorgan Chase Bank’s appraisers.”

Pete Vidi, National President of the American Guild of Appraisers stated “This has clearly been an attempt by Chase to circumvent due process and pressure appraiser to violate their professional standards. Additionally, the action by Chase is a clear example of “pressure” to the independence of the appraiser which is a violation of a number of federal statutes and regulations.  This is a critical point that must be reversed by Chase. If this is allowed to stand future disagreements by appraisers will be treated by Chase in the same manner jeopardizing professional appraisers.”

Unfortunately, Chase did not wait for a board decision to put John on several “do-no-use lists.”  They did so at the same time they filed the complaint and all the while, harassing John into answering questions about the report.  But yet Chase could not provide written authorization from the original client or a subpoena to allow the appraiser to be in compliance with USPAP if he were to respond to their questions.

It is widely speculated that Chase is trying to defend a repurchase claim on a bad loan for which this appraisal was used. It would appear that Chase failed to execute proper due diligence on the loan in question before acquiring it as certainly the cause of the repurchase is because the loan would have defaulted.   One can only assume that Chase was hoping to gain information that is not in the report that would assist them.  Two concerns immediately come to mind:  if the information is not in the report, it is either not relevant to the opinion of value or, it is confidential.

Public Trust

Consider these statements in the argument of confidentiality of the appraisal report in the name of public trust:

• Suppose an appraiser shares with another an appraisal report – just to show them how beautiful the house is.  The person viewing the report recognizes the expensive art and collectables in the house and takes note of the address.  The person than commits burglary.
• Suppose and appraiser measured a home 500 square feet larger than public records (right or wrong).  The appraiser provides the sketch along with the address to the assessor changes the square feet and raises the tax base of the property.
• Suppose the appraiser identifies an addition.  The appraiser provides an address and shows photos of the addition to the building and planning department.  The municipality then issues a fine to the homeowner and requires them to abate the addition.
• Suppose the appraiser discusses the assignment results with a real estate agent.  The current deal of $200k falls through.  The property is back on the market for $200k.  The real estate agent makes an offer with a prospective buyer at $190k because they know that is what it appraised for.

The public trust is violated when an appraiser is COERCED into violating federal and state laws.  How is the public trust violated?  First, they believe that appraisers are regulated and have rules and laws to follow.  If the rules and laws are not enforced than the public is harmed.  Second, they have a right to believe that the reports remain confidential.

Read the whole piece here. 

Client Confidentiality is Critical in Appraisal Work.  A Recent Arizona Case Demonstrates Why.