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Editor’s Note: Nearly two years have passed since Working RE first reported the story of John Dingeman, an appraiser who faced the difficult choice of either violating USPAP’s Confidentiality Section or suffering the wrath of JP Morgan Chase by refusing. Finally, this holiday season, there is some good news to share.
Positive Resolution to Chase Blacklisting Saga
by Isaac Peck, Associate Editor
You may recall Dingeman’s story: Chase, one of the largest and most influential banks in the country, was not the original client on the appraisal in question. Despite the Uniform Standards of Professional Appraisal Practice’s (USPAP) confidentiality requirements, Chase demanded that Dingeman respond to its requests or else. Dingeman chose to stand his ground and follow USPAP. His decision cost him dearly. Finally, this holiday season, there is some good news to share.
In March 2012, Dingeman refused Chase’s initial request to discuss an appraisal with the bank because of the Confidentiality Section of USPAP. Immediately following his refusal, Dingeman was placed on Chase’s Ineligible Appraiser List. Chase then filed a complaint against Dingeman with the Arizona Board of Appraisal. The complaint was promptly dismissed and found to be without merit.
As Working RE reported, Chase responded by challenging the mainstream interpretation of USPAP, arguing that whenever a client sells a loan, the transfer constitutes authorization for the appraiser to discuss the confidential aspects of the appraisal with whoever purchases the loan. What happened next shocked many in the industry. After deciding to follow USPAP, Dingeman was not only placed on Chase’s blacklist, but also on the U.S. Department of Agriculture’s (USDA) national blacklist, since Chase underwrites USDA loans. This type of action can all but put an appraiser out of business.
The good news? After battling for over a year, Dingeman recently learned that he has been removed from Chase’s “Ineligible Appraiser List.” He’ll be the first to tell you that it didn’t happen without a fight.
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OCC Contacts Chase
Shortly after being placed on Chase’s blacklist, Dingeman filed several complaints with the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC), only to have the OCC dismiss his complaint and the CFPB decline to take action against Chase.
Over a year after the OCC initially dismissed his complaint, Dingeman reports that the OCC sent him a letter, dated August 8, 2013, indicating that “based on OCC discussions with Chase, you are no longer on this [Ineligible Appraiser] list.” After calling around to both local and national appraisal management companies (AMCs), Dingeman confirmed he was removed from the list. He says he checked with several AMCs who update their appraiser lists regularly and they confirmed that on August 7, 2013 he was on Chase’s ineligible appraiser list and the next day, on August 8, he was not.
While Dingeman can’t be sure what prompted Chase’s reversal, the timeline suggests that a follow-up call from the OCC may have caused the bank to finally remove Dingeman from the blacklist. The disappointing reality for Dingeman is that it took the OCC over a year to take action.
Chase Responds
Wanting Chase to confirm in writing that he was removed from the blacklist, Dingeman had his lawyer contact the bank and request a statement regarding his eligibility to perform appraisals for them. In its response to Dingeman, the bank denied all wrongdoing and said, “In the interest of avoiding further expense to the parties and to bring about closure to this matter, we can confirm that as of the date of this letter John Dingeman is not on the list of appraisers ineligible to receive Chase appraisal assignments.”
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Chase’s Case, TAF and USPAP
In their responses to Dingeman’s complaints with the OCC and the CFPB, Chase insisted that the sale of the loan constitutes authorization for the appraiser to discuss with them the confidential portions of the appraisal report, even though they were not listed as the client originally. Chase argued that because they were assigned the loan, the report is no longer “confidential” to them.
In an earlier story, Working RE reported that Dingeman cited FAQ 69 of the 2012-2013 edition of USPAP which indicates that there is no provision for terminating appraiser-client confidentiality the way that Chase suggests. Through further research, Dingeman discovered that The Appraisal Foundation (TAF) had addressed this exact issue in a Brochure titled Appraisers, Appraisals & You, A Lender’s Guide to USPAP.
TAF’s interpretation in the Q&A below, taken from the Brochure, leaves little room for misunderstanding:
(Question) I have a copy of an appraisal performed for another client. I would like to ask the appraiser some questions about this appraisal. Does USPAP prohibit the appraiser from discussing the appraisal with me?
(Answer) Yes. USPAP prohibits the appraiser from communicating assignment results or confidential information (both, as defined in USPAP) to anyone other than the client and parties specifically authorized by the client (with the exception of those authorized by due process of law, state appraiser regulatory agencies, and a duly authorized professional peer review committee under certain conditions). Even if you were identified as an intended user in the original appraisal report, you are not part of the appraiser-client relationship. Therefore, authorization from the client would be needed if you wanted to discuss assignment results or confidential information with the appraiser.
Without an agreement between the appraiser and the original client allowing the release of the information pertaining to the assignment, the appraiser is prohibited from communicating assignment results which include the appraiser’s opinions, assumptions, conclusions, the value conclusion or any confidential information as defined in USPAP. The appraiser may confirm that he or she performed an appraisal on the subject property, unless he or she was contractually obligated with the original client not to make such a disclosure.
This statement by TAF, in a document specifically addressed to Lenders to explain the meaning and intent of USPAP, seems to directly contradict Chase’s interpretation of USPAP.
Lessons Learned
One of the lessons for Dingeman, and perhaps for appraisers everywhere, is that getting the attention of regulators is not easy or automatic. “I’m very fortunate to have been removed from the list, when many appraisers in the same situation have not been, but it requires hard work,” Dingeman says. It is bittersweet for Dingeman that the OCC, who originally dismissed his complaint with no explanation, was quite possibly the agency that prompted Chase to remove him from the list, after languishing on it for more than a year.
Placement on a blacklist can seriously damage an appraiser’s career, Dingeman says. “I’m still removed from certain AMC panels and it can be hard to get back on them. Certain AMCs have had to go back into their systems and pull a new query before they reinstate me. Even then, the market is slower, so they don’t need more appraisers on the panel right now.”
In the process, Dingeman says he has diversified his practice to include non-lender assignments, consulting, and appraisal instruction. “I have spent an enormous amount of time familiarizing myself with guidelines and regulations within the industry. All of which have afforded me the opportunity to serve my peers as Vice-President and now President of the Coalition of Arizona Appraisers and on the Government Affairs Committee for the National Association of Appraisers. My advice to any appraiser is to continue to learn, branch out into different disciplines, and be professional in your day-to-day business,” says Dingeman.
At the end of the day, Dingeman is grateful to be off the blacklist. He says removal from the list and the Arizona Board of Appraisal’s dismissal of Chase’s complaint against him are final vindication that the original appraisal in question was fully compliant with USPAP.
2014-2015 USPAP
Julie Friess, SRA is an Arizona appraiser and USPAP instructor who says that the 2014-2015 USPAP training materials place an added emphasis on the Confidentiality Section of USPAP. “There is a whole section in the new 2014-2015 USPAP instructor training class regarding the responsibility of confidentiality that appraisers have to their clients. In the very beginning of the new 2014-2015 USPAP, they redefine assignment results with the purpose of communicating that USPAP’s Confidentiality clause includes more than just the appraiser’s opinion of value. Instead of the focus being on the value, the focus is now also on the appraiser’s opinion and conclusions. An appraiser develops an entire analysis of a market and how comparable sales are related to the subject property and that analysis is also confidential and falls under the definition of assignment results. The class also reiterates that the Ethics Rule prohibits discussing the assignment results with anyone other than the parties outlined therein,” says Friess.
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While the added clarification is certainly a positive, Friess isn’t sure it is necessary. “I think it should have been very clear before the new changes to USPAP, there are so many USPAP FAQs and Lender’s Guides that have already clarified this point. It’s also interesting that Chase has a clause in their engagement letters that says the appraiser is not to discuss the assignment results with anyone but them. So they expect exclusivity and to have all of their information kept confidential, but they want people to bend the rules for them.”
As far as what lenders intend to do to address this issue, Friess says that some potential solutions are being considered. “I’ve been in meetings where it was proposed for lenders to have it in their engagement letters that if the loan is sold, the purchaser would automatically become the new client, but I don’t think anyone has adopted this practice yet. A potential problem with this is that it might put the appraiser on the hook to have to answer questions to a ‘client’ many, many years down the road.”
Union Busts Chase
Dingeman’s case attracted attention from many appraisers and appraiser organizations alike. The American Guild of Appraisers (AGA) took a special interest because Dingeman is a member of the Guild. The AGA is registered under the Office and Professional Employees International Union (OPEIU), which is chartered under the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). The AFL-CIO is the largest and most powerful union in the United States, with over 12 million members.
When Dingeman was first placed on Chase’s blacklist in 2012, the AGA leveraged its position as a member of the OPEIU/AFL-CIO, to engage representatives who were responsible for managing the union’s relationship with Chase. At the time, Chase had Union Privilege Status with the AFL-CIO, making it a preferred vendor, allowing members to enjoy preferred deals on Chase credit cards, mortgage services, car loans, and other banking services, and driving significant business to the lender.
Peter Vidi, President of AGA, says he was actively involved in pressing for a resolution of Dingeman’s case. He says that after the AGA took up the issue with the Union Privilege representatives, a dialogue about Chase’s treatment of Dingeman began. The fact that Chase was blacklisting a union member, and not being forthcoming about it, gave the Union Privilege representatives good cause to request an explanation from Chase, according to Vidi. Vidi says that the Union representatives were displeased with the way Chase was handling the situation.
Shortly after, Chase’s Union Privilege status with the AFL-CIO was revoked. While Vidi notes that there were a variety of factors that came into play regarding the union’s decision to revoke Chase’s Union Privilege status, the bank’s treatment of Dingeman was certainly “another nail in the coffin.” The monetary benefit to Chase as a preferred vendor to the union is difficult to estimate but Vidi says he’s certain that if Chase had a choice, it would rather not lose the business of such a powerful organization.
Vidi says this is an example of the benefits that an appraiser union can bring. “This is a clear demonstration of the actions that our group takes on behalf of our union members. That’s the way a union works, if one of the members is mistreated, the union goes to bat for them,” says Vidi.
We’re always listening: Send your story submission/idea to the Editor: dbrauner@orep.org.
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by Gerry Porco
Can anyone guide me, I also am on the s%$# list for Chase & JP Mogan. How do I go about getting removed. This is been since 2008. Also PNC Bank, too
-by BP
I see later after this you were reinstated-in May. I would love some help too!!!
-by BP
Can you give any tips??!! they put me on there back in 2008 and stated they gave me a chance to respond. they didn’t. they just turned me into the state!
-by David
I ran AML-BSA departments for 15 years and am shocked to see that all appraisers in the US have not formally unionized themselves. Why not pay a union due, the management company is taking more than their fair share and appraisers only get an opportunity? I am sickened to find out that 2015 does not hold the promise of regulating appraisal management fees, defining management review fees separate from appraisal fees, and aligning with regulatory agencies to protect stockholders, consumers, homeowners, investors, and secondary markets from rouge practices such as adding specific work requirements, like FNMA’s new requirements, without specific standardized fees. These practices thin the attention of the appraiser to relevant issues and move appraisers into underwriting; but as everyone reading knows, that is how FNMA circumvents handing appraisers the comparable sales and dictating price and credit quality. As appraisers continue to be the pin cushion for regulatory and industry risk, YOU are painting yourselves into a corner of liability the Banks will surely stick you with. I know my former employers sued appraisers, I know they won, I know they blacklisted appraisers without the risk of backlash or liability, I know the appraiser’s lives were destroyed by juries who were not fully in the know and by lawyers who were not hardened into the appraisal industry. An everyday example is when an appraiser is blacklisted, but the state issuing the license says the bank’s issues are irrelevant; no offense to Mr. D mentioned in this summary, but you stopped short of this debate because YOU could not financially protect all appraisers, but a solid Union would have pressed on and created law to protect an industry. I know, I sound like a quack, but if appraisers don’t push back, the Banks will keep eating your lunch with your reputations in the balance.
It is my opinion you must unionize! Banks circumvent laws regularly, somebody step up and figure out how to unionize the industry. Require banks to use Union appraisers, make them arbitrate legal issues at their own expense BEFORE you get blacklisted and #*%+#€< protect your fees!
Dont misunderstand my position, I am not pro Union except in this case. This is where big business, regulatory agencies and investors are clearly taking advantage of a labor force. Regulators and banks alike will be forced to reckon with you as a group, fraudsters can be isolated and kicked out of the Union, solid defense funds (war chests) can accumulate, and appraisers can build their own risk tools to eliminate the managevent company's insatiable appetite for your fees because you can work directly with FNMA and FHA to create those tools so Cuomo's regulation's will stay in place forever while protecting yourselves.
The seven year cycle is coming around again, what will happen to you at the end of this one if you don't fix the mess from the last one?
Cheers and happy new year!
-Dave
by Paul Davidson
Thanks for the info,BTW, if anyone needs to fill out a HUD 1 form I found a blank form in this link http://goo.gl/3k4EVM. This site PDFfiller also has some tutorials how to fill it out and a few related tax forms that you might find useful.
-by Sarah Devers
Could you tell me how to appeal &/or where to appeal to?Appreciate any help,thanks!
-by Sarah Devers
I would like to send an appeal letter to Chase, does anyone have an address, email or phone number for them?
-by Jeffrey Buelow
I have been reinstated by chase just got the news today.
-by Hans Schaetzke II
I was recently removed from Chase blacklist so now I take delight in collecting the same food stamps while I deny them access to my expertise. I’m sure they are heart-broken.
-by Jeff McMurchie
I wont work for Chase, nor will I do business with Chase. I would suggest all appraisers have this attitude. Chase used five of my appraisals for properties they owned I did for ES Appraisal Services. As we all know ES filed for bankruptcy and they couldn’t pay the $2,000 they owned me. I contacted someone at Chase and of course they brushed me off. I know Chase was not found liable for the unpaid appraisal fees by ES, but wouldn’t you think they would be a good client and pay us, since they used the appraisals? I do also believe they received bailout money from the Feds when times were tough. Now who wants to do business with them?
-by SAQM
Can someone please enlighten me on how this had become a win for the appraiser and appraisers. Not to sound pessimistic, just realilstic, but, he fought this for two years, lost thousands in revenue, was taken off the elig list, lost valuable time, likely will take him years to recoop and although he was relisted with chase, he is very likely not to get any orders. This industry is making a mockery out of appraisers. What effect did this have on chase?? zero effect.
-by art gaudette
just like Dingmans case, why due appraisers have to pay for the existence of AMC,s? It would appear that 2 other groups should also have to pay for their existence, both banks and the barrowers. But we all know about banks– they are immune,, with there deep pockets paying there way to legal justice, to only there likings. So money/wise they should not have to pay for AMC usage in the appraisal process.
-by John Potter
Dingeman is entitled and should sue for lost wages.
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by Lori Noble
Congratulations John and thank you for leading by example, showing the industry what right looks like and how right always wins; sometimes it just takes longer than it should. I know this was a long, grueling, and often misunderstood experience. Thank you for introducing me to the American Guild of Appraisers and Peter Vidi; I’m honored to be a member of an organization that cares enough to take the lead in such a complex and bully like environment. I hope the report above inspires others to join the Guild. I’m so happy for you! Bravo gentlemen and all who worked through this debacle, you’re commitment and endurance is surely recognized and appreciated!!!!
-by Mike Ford
Good for Mr. Dingeman!
The article does not indicate whether the USDA blacklist was ever cleared up. Was it?
As professional appraisers, we all need to stand up for principles like Mr. Dingeman did. No doubt it was costly, and emotionally draining, but it is the price we must pay to maintain our professional credibility.
This article is well worth printing out for follow up on the Appraisers Guild and AFL-CIO info. A LOT of us looked into unions and found none. Here is a national scope union, and it is a recognized one. If anyone is waiting for the Appraisal Institute to take action, don’t hold your breath. Similarly, FNMA is not about to press for regulations to stop their interference into the appraisal process itself.
One of the most informative articles I’ve read recently. Thank you.
-by Pat Millard
I have been following this story on Dingeman being blacklisted. I would have not believed it was possible to win, but as we all know he still last, client’s and income during the process. I also did not know that there was a union (The American Guild of Appraisers (AGA), ) that can represent appraisals. Little is known about this orginization, and should be marketed to appraiser throughout the U.S., to help strenghten the appraiser’s concerns, rights, etc. If possible forward the contact data on AGA. Leaving with this comment, appraiser very seldom come out ahead on any issue, so this win gives all of us hope.
Pat
-Appraiser – MI
by Mike
This is a great victory for us appraisers against a giant like Chase. My question is, Now that he has been taken off the blacklist, has Chase actually sent him any work. The attitude I’ve come across for years with them is that they are always in control.
-by Rory@Novacall.net
We would not be having any of these conversations if the appraisers would have demanded that the appraisal fee was broken out on the HUD1 (itemized closing statement). If the amount paid the appraiser and the fee taken by the AMC was disclosed at every closing there would be contagious backlash. This conversation would have stopped five years ago. Any violation of the HUD1 is a violation of RESPA and if you any modicum of self, you do not want to violate RESPA. That’s why the AMC fought so bitterly to keep it out of HVCC and Dodd-Frank. Where was the AI?
-by jeffrey buelow
I have been blacklist d for a desk review. Somebody HELP.
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