Thursday, April 19, 2012

JPM Chase not the only bank blacklisting appraisers for refusing to violate federal law

Written by Biloxi

Distressed homeowners facing foreclosure are not the only victims that are bullied by the banks.Appraisers have become victims of bank abuses. We all know that there have been bad actors in the appraisal industry that have been a participant in the housing bubble by inflating appraisals as well as bad actors who got liar loans for home that they could not afford. But, my focus is on the appraisers who refuse to violate federal laws for the banks. Currently in the news, JP Morgan Chase blacklisted appraisers who refuse to violate the federal laws. Read more on this story. Click here.

This seems like an issue for quite some time now, yet this hasn't a lot of media attention nor attention on Capitol Hill. JP Morgan Chase is not the only bank blacklisting the appraisers. Take this story by an appraisers that told his story of being blacklisted by Citimortgage:

"I am a certified residential appraiser and have been appraising for the last 12 years successfully. A year ago I received a letter from CitiMortgage saying I was being blacklisted by them for a market update (1004 D) I was asked to do for them by PCV Murcor although the appraisal was done by another appraiser.

I [completed] the 1004D as requested and found the market conditions still stable. CitiMortgage apparently had a problem with the underlying appraisal done by another appraiser and is blaming me, as the address of the property [format] in his appraisal is the same as in the letter they sent me.

I wrote a letter to Gary Schlittler, their VP in charge of appraisals, and he said they were modifying the "punishment" by putting my name on the monitor section of the list (requires a field review) with any appraisal submitted to them by me. This has hurt my business not only from the lack of CitiMortgage business but they have also shared the information with other AMC's who will not place orders to me for their clients as their clients may be taking the loans to Citi.

In addition, Wells Fargo blacklisted their appraisers which resulted in a class action lawsuit against bank and its subsidary Rels Valuation:

According to the compliant, Rels and Wells Fargo have given appraisers predetermined comparable properties to base appraisals, further compromising the appraisers’ independence.

Plaintiff Pearsall, a long-time appraiser, completed an appraisal for Wells Fargo and Rels in 2007. After submitting his report, Rels asked that he alter the report to reflect the company’s desired views on the property.

After refusing, the suit claims Rels blacklisted Pearsall, stripping him of a large portion of his income.

Timothy Savage, an appraiser in Vail, Colorado, also submitted two appraisals to Rels in 2009, which the company rejected, asking him to increase the appraisal values. After refusing, Savage received a letter from Rels informing him that he is no longer included on the approved panel of appraisers, the suit claims.

And how about this class action lawsuit against Countrywide by a group of Idaho appraisers:

The lawsuit, filed in U.S. District Court in Seattle, claims Countrywide forced appraisers to use improper appraisal techniques that benefit the lender and punished those who did not participate by blacklisting individuals and companies for up to a year, denying them work.

JPM Chase as well as the other banks are in serious trouble for bullying appraisers to violate the federal law especially under the Gramm-Leach-Bliley Act of 1999 as well as the appraisers' requirement under Uniform Standards of Professional Appraisal Practice. Under Gramm-Leach-Bliley Act of 1999, appraisers, along with all providers of personal financial services are required by federal law to inform their clients of policies on privacy of client nonpublic personal information.

Prior to the Gramm-Leach-Bliley Act of 1999, appraisers were already under the confidentiality requirements of the Uniform Standards of Professional Appraisal Practice (USPAP). The confidentiality section of the USPAP Ethics Rule, states: "An appraiser must protect the confidential nature of the appraiser-client relationship. An appraiser must act in good faith with regard to the legitimate interests of the client in the use of confidential information and in the communication of assignment results. An appraiser must be aware of, and comply with, all confidentiality and privacy laws and regulations applicable in an assignment. An appraiser must not disclose confidential information or assignment results prepared for a client to anyone other than the client and persons specifically authorized by the client; state enforcement agencies and such third parties as may be authorized by due process of law; and a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation. It is unethical for a member of a duly authorized professional peer review committee to disclose confidential information presented to the committee."

This is just another example of the banks that feel that they are above the law.


Corey G said...

Predetermined sales comps for an appraisal...? It's not just taking development and analysys out of the hands if the appraiser, but it woukd be a clear conflict of interests thus vailating the Gramm...Act and what do they expect... appraiser to add the clients name as a person(s) who(m) assisted in the development... I cannot even imagine the look on the face from a legitimate reader of the appraisal.

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