Merry Christmas - 2009

Wishing you all a Joy Filled Holiday Season

Real Estate Appraiser Threatens Cuomo!

UPDATE - BAIL REDUCED

Just to be clear, Appraiser Active is not recommending this as a course of action (especially during the Holiday Season)

From the Village Voice:

Latest Death Threat Against New York Official: Jack Geoghan vs. Andrew Cuomo

Just a few days back cops arrested a man who allegedly phoned death threats to Mayor Bloomberg and Ray Kelly. Now 45-year-old Jack Geoghan of Inter County Appraisers of Bayport, New York, is accused of leaving a message at the Attorney General's office promising, "If that fucker Andrew Cuomo is on the Long Island Expressway and his head is blown off with a 30.06, you'll know who did it." Police did not take this as a crimestoppers tip, and hauled Geoghan in. He is charged with terroristic threats and aggravated harassment.

The father also says that as a real-estate appraiser, Geoghan has been annoyed by Cuomo's attempts to regulate that industry, such as the establishment of a Home Valuation Code of Conduct, which requires appraisal fees be split between appraisers and appraisal management companies, which other critics have denounced, albeit less homicidally, as an undue financial hardship on appraisers.

There is much more to be said, but it's probably best to keep my mouth shut.

UPDATE - BAIL REDUCED

Dec. 17--A Bayport man charged with threatening to blow off State Attorney General Andrew Cuomo's head on the Long Island Expressway might have an easier time getting out of jail after a Central Islip judge reduced his bail Thursday.

Prosecutors said Jack Geoghan, 45, said he planned to "unleash the wrath of God" on Cuomo, vowing: "I am going to track him down and shoot him," court records show.

Geoghan's bail, originally set at $500 million at his arraignment Wednesday in First District Court in Central Islip, was reduced to $50,000 cash or $100,000 bond Thursday by State Supreme Court Judge Carol MacKenzie.

MacKenzie acted after Geoghan's attorney, Bryan E. Cameron of Sayville, petitioned for a bail hearing, arguing the original half-billion-dollar bail was "harsh and excessive."

Full Story

1 More Reason to Regulate Appraisal Management Companies

Wouldn't you know it. As soon as I publish "7 Reasons to Regulate Appraisal Management Companies in Florida", I realized the title should have been "8 Reasons". Rather than rewriting the post as ideas come to me and are suggested by others, it seems like a better idea to add posts to the blog.

It seems as though everyone and their brother is jumping on the AMC bandwagon. This company may have been in business since 1991 or since the world was an onion, but their promo demonstrates another reason AMCs must be regulated. Here is the page of interest. Among the "advantages" cited:

100% Loss Warranty - Protection from the liability of an appraisal coming back in the future that could result in a loss.

Will Match any Fee - We will insure competitive pricing and will match any quote provided in writing for any appraisal service.

How in the world can a company be an honest broker for an objective, unbiased, valuation service when the company has an interest in the outcome of the service? If the AMC warrants against loss, does it appear as though the company may have an interest in keeping the opinion of value on the low end? Might the AMC encourage the appraiser to keep the opinion of value close to the AVM estimate?

Is it curious that one of the main "advantages" cited is matching the fee quoted by their competitors? Does this imply a commitment to quality?

7 Reasons to Regulate Appraisal Management Companies in Florida

Thanks to Representative Matt Hudson, a bill has been introduced in the Florida House of Representatives to regulate Appraisal Management Companies (AMCs) in Florida. Representatives Peter Nehr and Ritch Workman have agreed to cosponsor the bill!

Since the introduction, some folks have been wondering why there is concern. Why is it necessary for more regulation? Shouldn't government just butt out and let the market sort things out?

For a start, here are 7 reasons to regulate AMCs in Florida:

• Appraisal Management Companies are not regulated in Florida


• Since May 1, 2009 and the implementation of the Home Valuation Code of Conduct (HVCC), a majority of Appraisal Assignments are placed through Appraisal Management Companies


• There is mounting evidence of Appraisal Management Company interference with Appraiser Independence including pressure to decrease or increase opinions of value, exclude or include specific comparable sales, and make specific adjustments to comparable sales


• There is mounting evidence of Appraisal Management Company alteration of Appraisal Reports and Appraisal Review Reports


• There is evidence of Appraisal Management Company ownership and management by individuals with Division of Real Estate disciplinary history or criminal records


• There is evidence of AMC use of unlicensed individuals for appraisal review


• There is a lack of transparency to the consumer with respect to appraisal fees and appraisal procedures and a need to protect the public from wrongdoing and disregard for appraiser independence

Let's take a look at the recent job posting for a "Quality Control Reviewer" by StreetLinks. This same job title was advertised back in August, 2009. The link is no longer live, but Appraiser Active discussed the job and StreetLinks in THIS post back then. It appears as though the duties and qualifications have not changed much. The only difference is now a college degree is "preferred" and candidates are Candidates are "required to take and pass the National USPAP Equivalency exam after 90 days of employment and continued education courses are required every 2 years or as the industry dictates."

Sounds GREAT eh? Here are a few more details about the position culled from a posting by a StreetLinks suit:

These are W-2, hourly positions at approx $17/hr plus insurance benefits and continuing education reimbursement. Opportunity for advancement into escalated reviews, appeals, and management.Involves performing an underwriter-style review of appraisal reports with an emphasis on evaluating the appraiser's approach to their value conclusion. StreetLinks' QC reviews take 35-40 minutes on average.

The post cited above is directed to "licensed appraisers". This was the first line:

StreetLinks National Appraisal Services is seeking an additional 30 licensed appraisers for our quality control department in southern Indianapolis.

Does it look to you they intend to use either licensed or unlicensed folks to review appraisals completed in all areas of the country? Does it appear to you these reviews will be done in Indianapolis, Indiana? Is there any license requirement listed in the qualifications? Which state?

Just in case the link disappears, here is the offering.

Quality Control Reviewer - Multiple Openings - Job - Street Links Jobs

Florida is not the only state interested in regulating AMCs. Take a look at a recent article from Oregon. The same reasons for regulation apply there, although the article concentrates on another aspect Appraiser Active has addressed previously; stiffing the appraiser on his fee. Here's a couple of excerpts:

Unlike appraisers and mortgage brokers, AMCs are not regulated in Oregon. Their wwners and employees are not required to undergo background checks. The companies are not required to be licensed, bonded or insured.

Solitz, for his part, says he has a good example of the need for new rules: an AMC that appears to be the target of a criminal investigation, one in which Solitz is a complainant.

Solitz has been waiting two months to be paid by Valuation Logistics, a Portland-based AMC that does business with appraisers across the country.

According to an online appraisers forum, some are urging people to share information with Portland police based on reports of appraisers not being paid by the firm. Solitz is one of those cooperating with authorities, saying he has received two phone calls from a Portland police detective in recent days. The detective, Liz Cruthers, declined to comment.

The Better Business Bureau has rated Valuation Logistics with an “F,” or failing grade, citing four complaints involving billing or collection issues that the company either did not resolve or did not respond to.

Public records also show that staff of the agency that regulates Oregon appraisers, the Appraisal Certification and Licensure Board, has brought Valuation Logistics to the attention of the board’s appointed members. Of particular interest was that Olson co-founded the company with a Portland appraiser who has had several run-ins with the state board.

In April 2009, the board suspended that appraiser, Nathan Bernhardt, for six months based on nine violations of appraisal rules.

Asked about Valuation Logistics, Bernhardt said he is no longer involved in the firm but declined to otherwise comment. Other past business partners of Olson also declined to comment.

Public records show that Olson has been involved in other companies before going into the appraisal management business. He also has been under law enforcement scrutiny in the past, including an arrest in Clackamas County for contempt of court in 2007.

In 2005, in an unrelated matter, his participation in a Wilsonville manufacturing firm called Medium Build ended when his two partners accused him of embezzling more than $50,000 as well as transferring a company vehicle to a friend of Olson’s without permission, according to a Clackamas County Sheriff’s Office report.

Why do AMCs seem to attract the "best" in society? Just askin'.

IVPI Promises = Vaporware

We're just counting the days. It's been 7 months (215 days) since the implementation of the Home Valuation Code of Conduct (minus the Independent Valuation Protection Institute) and 2 months (62 days) since Freddie Mac updated their Home Valuation Code of Conduct Q & A Page with the Home Valuation Code of Conduct Interim Complaint form and it's announcement the IVPI Website would be up and running in November. Today is December 1, 2009.

Check the LINK provided by Freddie Mac for the IVPI site. You didn't really expect anything, did you?

Well, if Freddie has not created the promised IVPI, what have they been up to?

There has been a claim by Freddie Mac the HVCC has improved appraisal quality. Of course, the claim is supported only by anecdotal evidence that 15% more appraisals have come acceptably close to the automated valuation model it runs as a check.

Freddie has hired a new CFO.

The government-controlled mortgage finance company is giving CFO Ross Kari compensation worth as much as $5.5 million. That includes an almost $2 million cash signing bonus and a generous salary that could top $2.3 million.

Freddie announced on November 6th, it had posted a $5,000,000,000 loss.

Freddie Mac, the second largest provider of U.S. residential mortgage funding, on Friday posted a loss of $5 billion in the third quarter and predicted it would need more government support amid a "prolonged deterioration" in housing.

In more "good" news, Freddie warned their losses related to the bankruptcy of lender Taylor, Bean & Whitaker may increase.

The claim could add to the fallout from the Taylor Bean bankruptcy, which came after the government suspended its relationship with the firm. Freddie Mac has previously said its exposure to Taylor Bean's obligations to repurchase loans was about $500 million as of Sept. 30.

While total exposures to Taylor Bean are unknown, "the amount of additional losses related to such exposures could be significant," the McLean, Virginia-based company said in a filing with the Securities and Exchange Commission.

If you were inclined to give Freddie Mac (and Fannie Mae) the benefit of the doubt, our suggestion is to avoid holding your breath waiting for the IVPI. Why don't these folks come clean and admit wishful thinking will not make it happen?

Veterans Day - 2009

Please fly your U.S. flag today and express your appreciation to veterans. We have a lot to be thankful for, and veterans need a little more appreciation today.

History of Veterans Day

Claims Against Appraisers, the FBI and NAR Conference

It's early Wednesday morning, and I'm clearing up a few things in preparation for a flight across the country to attend the 2009 REALTORS Conference and Expo in San Diego. There was a last minute appraisal inspection today, along with an attempt to put one last assignment out the door. Efforts to clear my desk have kept me from posting, although I did update the H.R. 3044 page with the increased number of cosponsors.

Before heading out, though, I wanted to post links to two interesting posts on the Appraiser Legal Defense and Insurance Blog.

The first, Claims Against Residential Appraisers in 2009, describes the some of the major trends and issues seen in 2009:

1. Overvaluation Claims by Borrowers
2. Undervaluation Claims by Borrowers and Sellers
3. FDIC Claims
4. Claims Involving Trainees and Independent Contractors

There are some interesting observations and some good advice. It's worth a read.

The second post, The FBI is on the Phone for You, is must read. Given the heightened interest in mortgage and valuation related fraud, and the stepped up enforcement efforts of the FBI and other investigative agencies, it's nice to see some advice about what should the good appraiser do when the FBI or any law enforcement officer calls. Appraisal Scoop posted the same story a couple of days ago.

Friday afternoon (Friday the 13th and I'm superstitious), I will be attending the meeting of the NAR Appraisal Committee. Here's what the agenda looks like:

I. Call to Order and Introductions – Penny Triplett

II. Approval of Minutes from Last Meeting – Penny Triplett

III. ReportsAppraisal Foundation Trustee Report – Joe Traynor

NAR Representation on Appraisal Foundation Boards - Penny Triplett

The Appraisal Foundation Advisory Council (TAFAC) – Vic KnightIV.

New Business

A. Tentative: FHFA & Freddie Mac Speaker & FHA Speaker – Thomas Strickland

B. Legislative/Regulatory - Jerry Nagy

1. HVCC

2. HR 1728

3. HR 2336

4. Consumer Protection Finance Agency

5. FHA Appraisal Rules

C. Report of Broker Price Opinions Work Group – Penny Triplett

V. Other Business

A. Update on Appraisal Education Workgroup – Penny Triplett

B. Breaking out Appraiser fees on HUD-1 – Thomas Strickland

C. Next Meeting: NAR MIDYEAR MEETINGS - Washington, DC

VI. Final Comments and Adjournment

Immediately following the meeting the NAR Appraisal Committee will celebrate the anniversary of the RAA/GAA designations.

It's likely there will some discussion of this, as well. It was a surprise to everyone.

More, when I return next week.

Another Class Action Suit Filed - AMC Related

Well, well, well. Isn't this appropriate? On the same day a bill is introduced in the Florida House of Representatives to regulate Appraisal Management Companies, Hagens Berman Sobol Shapiro, LLP, files a class action suit against KB Home, Countrywide and LandSafe alleging a widespread and complicated inflation scheme. One of the major players in the alleged scheme is LandSafe, an unregulated Appraisal Management Company, owned by Countrywide.

From the Press Release:

ORLANDO, FL - A Central Florida homeowner forced into foreclosure filed a class-action lawsuit last week against KB Home (NYSE: KBH), Countrywide Financial and LandSafe Appraisal Services, claiming the three conspired to rig housing prices in Florida, South Carolina and North Carolina, costing home purchasers millions of dollars, and fueling the collapse of the region's housing market.

The suit, filed in U.S. District Court in Orlando, Fla. on Friday, October 30, claims the three companies employed a well-planned scheme to control the typically independent appraisal process, jacking up home values, which, in turn, were used to determine the value of other homes sold by KB, affecting thousands of homeowners.
--
According to the 94-page complaint, Countrywide funneled all its KB customers' home appraisals to a single person at LandSafe, an appraisal subsidiary of Countrywide, who in turn would deliver an appraisal value at whatever KB and Countrywide ordered.

The complaint is 94 pages. For the appraisers reading this, the allegations made against the parties are nothing new. We have been watching this going on all around us, sounding the alarm and clamoring for someone, some entity, some regulator, to reign these bastages in.

Read it all RIGHT HERE

Appraiser Active mentioned another HBSS suit HERE. That one makes allegations against Wells Fargo and its appraisal subsidiary Rels Valuation. Isn't it interesting how the banks and their AMCs can game the system and dig deep into consumer's pockets and wallets?

UPDATE - Mary Shanklin of the Orlando Sentinel offers some additional details and statements from KB Homes.

Local suit accuses builder of inflating home appraisals

"It was common practice for builders and subdivision developers to have pet appraisers," Gregoire said. "That was true not only for subdivisions but also for builders within a subdivision or development — and, in particular, for condo converters."

It's time to Regulate Appraisal Management Companies - FLORIDA!

Quite a bit has transpired since the first "It's Time to Regulate Appraisal Management Companies" post here on Appraiser Active. Additional form are required for mortgage loan appraisals and, most notably, the Home Valuation Code of Conduct (HVCC) has been implemented.

However, some things don't change. Back in January, the Appraiser Active post noted that Appraisal Management Companies typically administer a network of certified and licensed appraisers to fulfill real estate appraisal assignments on behalf of mortgage lending institutions. They often recruit, qualify and verify licensure for their panel of appraisers.

We also mentioned a major problem with Appraisal Management Companies; they are completely outside the regulatory loop controlling real estate appraisers and protecting the public. No state or Federal agency is tasked with the regulation of Appraisal Management Companies. In fact, there is a documented case of a Florida Appraisal Management Company owned and operated by an individual that surrendered his Certified Residential Appraiser credential for permanent revocation to avoid prosecution for several complaints. That story was detailed by the St. Petersburg Times in May, 2009.

Well folks, it's time to gear up for the 2010 effort to REGULATE APPRAISAL MANAGEMENT COMPANIES IN FLORIDA!

Take a look at HB 303, filed in the Florida House of Representatives yesterday by Representative Matt Hudson. Matt is a REALTOR®, and well aware of the problems associated with Appraisal Management Companies.

Regulation of Real Estate Appraisers & Appraisal Management Companies:

Requires appraisal management companies to register with DBPR; provides exemptions; specifies application requirements & procedures; requires application, registration, & renewal fees for appraisal management companies; requires fingerprinting & criminal history records checks of, & provides qualifications for, certain persons who control appraisal management companies; requires nonresident appraisal management companies to consent to commencement of actions in this state; establishes additional acts for which appraisers are subject to disciplinary action; provides for discipline of appraisal management companies by Florida Real Estate Appraisal Board; provides penalties; revises requirements for retention of appraisal records; requires appraisal management companies to follow such requirements; requires DBPR & board to adopt certain rules.

Read the whole thing

Thanks, Matt!

Please let Rep. Hudson know of your appreciation, and how important this bill is for the appraisal profession, the real estate market and consumer protection in Florida.

Tallahassee Office - (850) 488-1028

Naples Office - (239) 417-6270

Pembrooke Pines Office - (954) 704-2990

email - matt.hudson@myfloridahouse.gov

Press Release - Majority Office

Security One Valuation Services - November 2nd UPDATE from Todd Barfield

It's been about a month since the last post with an update from Todd Barfield about the checks issued by Security One Valuation Services, LLC. Although the number of comments has tailed off, plenty of folks continue to email me with questions.

In response to an email sent to Todd over the weekend, this response was received today:

Email from FDIC to SecurityOne October 15, 2009

I can only answer your question on the release of funds: investigations should be completing the review of this account by the end of next week. If it turns out that the FDIC has no claim against this account, the funds will be released immediately.

From FDIC to SecurityOne October 23, 2009

Investigations is in the process of releasing holds. Yours has not been cleared yet. Thank you

There has been no further correspondence from the FDIC

That's all I have right now. If there is anything new, I'll let you know.

Sorry for the light posting and lack of updates. We have been swamped with a bunch of interesting assignments. When time permits, there is some news to post.

Generous pay for new Freddie Mac CFO

There was quite a bit going on the first week of October, and this slipped by. If you've seen it already, fine. If not, Appraiser Active offers the story without comment. Of course, your comments are encouraged.

ALL BUSINESS: Generous pay for new Freddie Mac CFO

The pay package given to Freddie Mac's new chief financial officer should have sent a message from Washington to corporate America about how executive compensation standards must change. Instead, it did just the opposite.

The government-controlled mortgage finance company is giving CFO Ross Kari compensation worth as much as $5.5 million. That includes an almost $2 million cash signing bonus and a generous salary that could top $2.3 million.

The Federal Housing Finance Agency, which oversees Freddie Mac, approved the pay package. A spokeswoman pointed to a statement that justified the agency's approval of the pay, which was done in part because the amount was comparable to what others in the financial services industry make.

Hmmm--

The McLean, Va.-based Freddie Mac has been without a permanent CFO for more than a year, when its two top executives stepped down as part of the government takeover in early September 2008. Acting CFO David Kellermann committed suicide in April.

Read the whole thing...

Here is another quick take - New Freddie Mac CFO hits the compensation jackpot

Home Valuation Code Has Improved Appraisal Quality?

Home Valuation Code Has Improved Appraisal Quality? Freddie Mac says so.

Though it is early in the process, Freddie Mac said it has seen a tangible improvement in the quality of appraisals of loans it buys since the Home Valuation Code of Conduct took effect.Patricia McClung, Freddie's vice president of offerings management, said at the Mortgage Bankers Association's convention here last week that of the appraisals the government-sponsored enterprise receives, 15% more have come acceptably close to the automated valuation model it runs as a check.

The improved quality of mortgages bought by Freddie and Fannie Mae reduces the repurchase risk for mortgage lenders because of lower defect rates, she said.

Hmmmm. Maybe we should send Patricia some of the appraisal assignment requests from Appraisal Management Companies we've seen that are accompanied by an AVM estimate, complete with Comparable Sales. Have you seen those? No wonder "15% more have come acceptably close".

Marko Berishaj, a vice president at DartAppraisal.com, a Troy, Mich., management company, said the code is not responsible for a rise in appraisal costs. He cited three factors, including supply and demand: more appraisals ordered but fewer available appraisers. In addition, he said, the cost for appraisers to comply with new certification requirements is being passed along. And finally, the requirement for a market conditions report has also added to expenses.

Is there someone out there that would like to set Marko straight?

During a question-and-answer session, one mortgage banker said that in her experience management companies are using out-of-area appraisers to do desk reviews and she has had to educate these people.

Kathy Coon, the chief appraiser at FNC Inc.,** an Oxford, Miss., technology company, replied that if the mortgage banker was using an appraisal management company but had to educate the appraiser it was time to find a different company. But another mortgage banker in the audience countered that, as correspondents, they do not always get to choose which appraisal management company to use. Otherwise, it would be easy to switch, he said.

**(Appraiser Active) They can call themselves whatever they want, but they're still an AMC

Yeah, it's working out just great. Here is another point of view. It's a firsthand accounting of an appraisal saga by a reporter for the Atlanta Journal Constitution.

My $290,000 home’s worth what?

This is a story of how my $290,000 home was appraised for $115,000.

The tale begins in 2004, when my wife and I decided to buy a three-bedroom, two-bath 1920s bungalow in Ormewood Park in southeast Atlanta. It had been lovingly renovated by the previous owners, who’d also added a new master bedroom and dining room.

-----

The appraiser hired by the lender, Wells Fargo, took measurements and shot several photos as he tromped through our toy-strewn house.

He jotted a few things down on a form and left.

We put it out of our minds until mid-June, when the appraisal results arrived in the mail. I couldn’t believe what I read.

How could our house, purchased just five years before for almost $300,000, be worth just $115,000?

Didn’t the appraiser notice the pristine renovation? The original fireplace? What about the high ceilings, the plantation shutters, hardwood floors, granite counters and the spacious master bath?

Another shock: The $115,000 valuation was far below what our home had sold for in 2002, before being renovated and enlarged.

-----

In the meantime, I scoured the report to try to figure out what had happened.

The appraiser used three recent sales in our area —comparables — to generate what he deemed our house’s market value. But two of those sales were foreclosures. One nearby house had sold “as is” for $129,000. The other, located on a traffic-clogged main street a half-mile and a world away from our quiet street, had gone for just $80,000.

I decided to check on the higher-priced home. Its new owner welcomed me inside and showed off its handsome hardwood floors and shiny stainless-steel appliances. But he laughed when I explained why I showed up on his doorstep.

When he’d bought it, he said, the house was in terrible shape. The floors were covered with damp, mildewed carpet. The water heater was broken. Someone had ripped out and stolen the appliances. The kitchen sink didn’t work.

He’d fixed it up nicely, though it lacked the back porch and dining room our home has. But still, our bank’s appraiser had valued our home much lower than his — before he’d made any improvements.

-----

A Wells Fargo spokesman said the company takes appraisals very seriously.

Well, YES, you DO! I wonder what the AVM that went along with that assignment request from the Wells Fargo affiliated AMC indicated the property was worth?

Read the whole thing.

Rating Agencies - Code of Conduct?

Now, for something a little bit different. A break from the Home Valuation Code of Conduct. Over the weekend, there was an interesting story:

How Moody's sold its ratings -- and sold out investors

As the housing market collapsed in late 2007, Moody's Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.

A McClatchy investigation has found that Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.

Instead, Moody's promoted executives who headed its "structured finance" division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: "toxic assets."

As Congress tackles the broadest proposed overhaul of financial regulation since the 1930s, however, lawmakers still aren't fully aware of what went wrong at the bond rating agencies, and so they may fail to address misaligned incentives such as granting stock options to mid-level employees, which can be an incentive to issue positive ratings rather than honest ones.

There's more

"This was a systematic and aggressive strategy to replace a culture that was very conservative, an accuracy-and-quality oriented (culture), a getting-the-rating-right kind of culture, with a culture that was supposed to be 'business-friendly,' but was consistently less likely to assign a rating that was tougher than our competitors," Froeba said.

After Froeba and others raised concerns that the methodology Moody's was using to rate investment offerings allowed the firm's profit interests to trump honest ratings, he and nine other outspoken critics in his group were "downsized" in December 2007.

and, towards the end of the article:

Others who worked at Moody's at the time described a culture of willful ignorance in which executives knew how far lending standards had fallen and that they were giving top ratings to risky products.

"I could see it coming at the tail end of 2006, but it was too late. You knew it was just insane," said one former Moody's manager. "They certainly weren't going to do anything to mess with the revenue machine."

Moody's wasn't alone in ignoring the mounting problems. It wasn't even first among competitors. The financial industry newsletter Asset-Backed Alert found that Standard & Poor's participated in 1,962 deals in 2006 involving pools of loans, while Moody's did 1,697. In 2005, Standard & Poor's did 1,754 deals to Moody's 1,120. Fitch was well behind both.

"S&P is deeply disappointed in the performance of its ratings on certain securities tied to the U.S. residential real estate market. As far back as April of 2005, S&P warned investors about increased risks in the residential mortgage market," said Edward Sweeney, a company spokesman. S&P revised criteria and demanded greater buffers against default risks before rating pools of mortgages, he said.

Still, S&P continued to give top ratings to products that analysts from all three ratings agencies knew were of increasingly poor quality. To guard against defaults, they threw more bad loans into the loan pools, telling investors they were reducing risk.

The ratings agencies were under no legal obligation since technically their job is only to give an opinion, protected as free speech, in the form of ratings.

"As an analyst, I wouldn't have known there was a compliance function. There was an attitude of carelessness, or careless ignorance of the law. I think it is a result of the mentality that what we do is just an opinion, and so the law doesn't apply to us," Kolchinsky said.

Read the whole thing

There's a video at the link for the Cliff's Notes version

Moody's Responds

Chase Manhattan Ineligible Appraiser List - Policy Change?

Back in November the Appraiser Legal Defense and Insurance Blog included a post "Unfair State Board Complaints by a National Lender". Although the name of the lender was not identified in the post, the complaint letter example provided resembles those submitted by Chase Manhattan Mortgage.

For the past several months, appraiser bulletin boards have been plastered with posts and comments from appraisers concerned about their business and reputations after Chase Manhattan Mortgage moves them to "ineligible appraiser status". It looks like a change is in the works.

Mortgage News Daily reports:

And while we’re talking about appraisals, Chase Correspondent clients were told that Chase is making changes to their Collateral Policy which became effective October 2. They are eliminating Chase Approved Appraiser status, establishing minimum appraiser requirements, validating review and ineligible appraiser status, and eliminating First American Appraisal Services (eAppraiseIT) as a Chase-approved Appraisal Management Company (AMC). In fact, the Chase Appraiser Web site has been updated to remove all Chase Approved Appraisers.

Correspondents can immediately take advantage of the revised minimum appraiser requirements and validation of Chase Ineligible status. Chase Home Lending will no longer approve, suggest or dictate the use of any specific appraisers. All appraisers with one of the valid state appraisal license/certifications (state license, state certified residential, state certified general) are permitted to complete appraisal services for loan transactions sold to Chase based on loan amount & complexity parameters. (A field review by a State Certified Appraiser is still required when the original appraisal is prepared by an appraiser in a Chase Review status.)

Appraiser Active wonders if these changes have anything to do with Mark Simpson leaving JPMorgan Chase Bank?

This is all we have on this right now. Appraiser Active would like to hear from folks that have been affected by a move to "ineligible appraiser status" and how the policy change affects you.

In the course of working as a member of the Florida Real Estate Appraisal Board Probable Cause Panel, Ive seen plenty of the reviews and appraisals that prompted Chase to move appraisers to "ineligible appraiser status". IMHO many deserved the status. However, many did not.

Governor Signs California AMC Legislation into Law

UPDATE - 10/15/2009 - Link to additional columns about the legislation


California became the sixth state to enact a framework for the regulation and oversight of appraisal management companies when Governor Arnold Schwarzenegger signed Senate Bill 237 into law on October 11th, 2009. Effective January 1st, 2010, S.B. 237 will require appraisal management companies operating in the state to register with the Office of Real Estate Appraisers. The law also sets forth standards with which an appraisal management company must comply, and provides enforcement authority to OREA.





Read more at the Appraisal Institute Appraiser News Online, or visit Inman News.

UPDATE! - Here's another article with quite a few related links from EXAMINER.com.





The text of the legislation is RIGHT HERE.

AARO - Association of Appraiser Regulatory Officials Fall Conference

Monday evening, I returned from Washington, D.C. after attending most of the Association of Appraiser Regulatory Officials (AARO) Fall Conference. Speakers from Fannie, Freddie, HUD, The Appraisal Foundation, The Appraisal Standards Board, The Appraiser Qualifications Board and many other groups and companies provided a wealth of information.

It will take a while to write some posts and updates. Although I would like to start posting right now, I'm headed across the bay to talk with a group of real estate agents from Charles Rutenberg Realty about appraisal, the HVCC and FHA changes.

Watch this space over the next few days.

Congressional Hearings - HVCC Problems Exposed

Early this morning, we posted some information about a Congressional Hearing on "The Future of the Federal Housing Administration’s Capital Reserves: Assumptions, Predictions and Implications for Homebuyers", and mentioned at least one of the several witnesses will discuss the Home Valuation Code of Conduct (HVCC).

It turns out that one other witness at that hearing, Boyd Campbell, brought up changes to the FHA Appraisal process in his written testimony and HAVOC in verbal testimony.

FHA has also released mortgagee letters on appraiser independence, effective January 1, 2010. We support FHA’s language related to geographic competence, especially as it relates to the use of Appraisal Management Companies (AMCs). FHA does not require lenders to utilize AMCs, and reinforces the importance of geographic competence. Consumers and REALTORS® have encountered significant problems with appraisals when the appraiser is not familiar with the community in which the home is located. FHA’s mortgagee letter states that lenders and appraisers are both responsible for the quality and accuracy of the appraisal. FHA states that the lender is responsible for determining whether an appraiser’s qualifications are sufficient prior to assigning an appraisal. Appraisers are reminded that USPAP applies to all appraisals performed for properties that are security for FHA. In addition, FHA’s letter states that if the lender orders an appraisal through an AMC or another third party organization the lender must ensure that specific guidelines are followed to ensure the FHA appraiser is compensated appropriately and that the fee charged to the consumer for the appraisal report is consistent with the market rate for appraisals.

The letter also provides guidance on the subject of appraisal portability. NAR believes it is important for borrowers to have complete flexibility in choosing a lender, and should not be hampered by having to repeat an appraisal simply because they switched lenders. NAR feels strongly that consumers should not be required to pay excessive fees for appraisals, nor be subject to appraisals conducted by appraisers who are not familiar with their market. Mortgage brokers and lenders underwriting staff will be prohibited from ordering the appraisal. This will create a firewall between lending staff and the appraiser and enhance the independence of the appraisal process. To further support the independence of appraisers and to ensure uniformity in the real estate industry we have called on FHA to work with the GSEs to established a combined frequently asked questions (FAQ) document that will be codified in existing appraisal policies. In a recent meeting, FHA Commissioner David H. Stevens has asked his staff to begin discussions with the GSEs to further explore this recommendation. We support these changes by FHA.

In another room, the House Small Business Committee, held a hearing on “The State of the Nation’s Housing Sector: An Examination of the First Time Buyer’s Credit and Future Policies to Sustain a Recovery”.

The witness list included Joseph Confora, Broker Owner of Century 21 Selmar Realty, on behalf of the National Association of Realtors®. His testimony touched on a number of subjects, and included quite a few comments and recommendations concerning the HVCC:

APPRAISAL: THE HOME VALUATION CODE OF CONDUCT

The tax credit is a good thing, but a major stumbling block for consumers and for practitioners is the current operation of the property appraisal process. In fact, current appraisal practices threaten to undermine the efficacy of the tax credit. NAR supports the independence of appraisers and the integrity of the appraisal process. We commend Attorney General Cuomo and both government sponsored enterprises (GSE), Fannie Mae and Freddie Mac, for their efforts to address appraisal fraud in the mortgage industry. We wish, however, to express concerns about the Home Valuation Code of Conduct (HVCC or the Code) they have issued. We support its intent to address appraisal fraud, but we have serious concerns about the implementation and adverse unintended consequences it has had on the real estate industry.

The HVCC has been in effect for five months. The Code is causing delays in closings and even canceled sales, which lead to artificially low existing home sales. While our monthly index of pending home sales shown steady growth in potential home sales for seven straight months, NAR’s Chief Economist, Lawrence Yun, notes that not all of these contracts are turning into closed sales. He notes that “The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules.

and

HVCC May be Increasing Costs to Consumers

The HVCC agreement reached between the Attorney General Cuomo and the GSEs, and approved by Director Lockhart, does not address the costs of the real estate transaction. Appraisers now must consider their obligations under the Uniform Standards of Professional Appraisal Practice (USPAP) and the Appraisal Foundation and the additional burden of complying with the HVCC. Higher costs may also be an issue for lenders. The creation of a new set of standards to follow and a new oversight organization may lead to increasing the cost of the real estate transaction. According to NAR survey data, the cost of the appraisal has increased by as much as $100 for consumers.

and

AMC Regulation Improving at State Level

Because the HVCC requires mortgage brokers to arrange for appraisals through third party organizations, AMCs now have an increased role in the real estate appraisal process. In fact, the number of our appraiser members obtaining more than half of their assignments from AMCs increased from 13 percent to 40 percent after May 1, 2009. These AMCs are giving appraisers assignments in areas where they lack geographic competency. For a variety of reasons, appraisers may feel compelled to take these assignments. More than 70 percent of Realtors responding to our June survey report appraisers lacking geographic competency for their assignments. Recently, Fannie Mae, Freddie Mac, the FHFA, and FHA have all reaffirmed the existing geographic competency rule found in the Uniform Standards of Professional Appraisal Practice (USPAP). While the geographic competence problem existed prior to the implementation of the HVCC, the problem is exacerbated by the increasing prominence of AMCs since May 1, 2009.

NAR believes there is a critical need for regulation at the state level. Aside from geographic competency, our survey found that appraisers have less time to complete an appraisal report and the quality of appraisals is deteriorating. Perhaps most importantly, both Realtors and appraisers report that overall fees to appraisers are declining, so the cost of an appraisal is increasing for the consumer.

and one of the best points!

Lender-Owned AMCs Cause Conflicts of Interest

The proposed HVCC would have barred lenders and affiliates of lenders from relying on an appraisal report obtained by, or through, an appraisal management company (AMC) that is more than 20 percent owned by the lender or affiliate of the lender. The final Code does not limit lender ownership of AMCs. We disagree with this result. NAR believes that lenders should be prohibited from using an appraisal report from an AMC where the lender or the lender’s affiliate maintains any ownership stake. Allowing lenders to obtain appraisal reports from AMCs where the lender has a stake in ownership does not meet the goal of the HVCC to assure the independence of the appraisal process.

There is much more in the written testimony. You can read it all right HERE.

In my view, there's quite a bit to like about this testimony from the NAR representatives. Nevertheless, there is room for improvement. After all, this hearing was before the Committee on Small Business. There should have been some discussion of the adverse impact of the Home Valuation Code of Conduct on thousands of small, independent appraisers and appraisal companies. Soon, the data will be available about the number of appraisers leaving the profession, primarily because of HAVOC.

Looks like Appraiser Active will have to get busy and compose some talking points for the next hearing.

HVCC - Will be Mentioned in Congressional Hearing

Today the House Committee on Financial Services, Subcommittee on Housing and Community Opportunity will start a hearing in the early afternoon. Although the subject of the Subcommittee Hearing is "The Future of the Federal Housing Administration’s Capital Reserves: Assumptions, Predictions and Implications for Homebuyers", at least one of the several witnesses will discuss the Home Valuation Code of Conduct (HVCC).

The prepared testimony John Councilman, Federal Housing Committee Chair, National Association of Mortgage Brokers, includes these comments:

All the emphasis is mine.

The HVCC is a highly controversial shift in appraisal policy that is the result of a joint agreement reached between the GSEs, the Federal Housing Finance Agency (“FHFA”), and New York Attorney General, Andrew Cuomo. The HVCC purports to enhance the independence and accuracy of the appraisal process. However, what the HVCC truly accomplishes is an increase in consumer costs, a decline in appraisal quality, the extension of closing deadlines, and the virtual extinction of independent appraisers.

.....

The impetus behind these new appraisal policies – the HVCC and the new FHA guidelines – is the perception that appraisers were being pressured or improperly influenced by mortgage originators. However, the HVCC is failing to provide any greater protection for appraisers. Appraisers are still subjected to significant pressure and undue influence, but instead of coming from mortgage originators it is now coming from the Appraisal Management Companies (“AMCs”) that were granted a virtual monopoly over the appraisal process by the HVCC.

In fact, a growing number of appraisers are reporting that the pressure and attempts to improperly influence their professional judgment is far worse under the AMC dominated regime prescribed by the HVCC than it ever was when appraisers were permitted to work directly with originators. Specifically, appraisers are reporting that AMCs are requiring them to prepare appraisals in violation of the Uniform Standards of Professional Appraisal Practice (“USPAP”) and generally accepted appraisal guidelines.

Today, unlike when an appraiser had multiple mortgage broker and/or loan officer clients, the HVCC has restricted their work to be on behalf of only one or possibly two AMCs. Under this construct, if an appraiser fails to comply with any AMC "request,” they will no longer receive appraisal assignments from possibly their only client. With many knowledgeable and skilled appraisers unwilling to work under such conditions and consequently leaving the profession, the appraisers that remain willing to work for the AMCs are generally far less qualified and experienced. This has resulted in a rapid decline in appraisal quality since the implementation of the HVCC, which directly contradicts the widely purported view of HVCC proponents that turning over virtually exclusive authority for appraisal ordering to thirdparty AMCs would produce more accurate appraisals.

The prepared testimony of each witness is available on the House Committee on Financial Services website. The hearing will be web cast as well.

It would be nice if the NAR testimony made some of the same points. Unfortunately, it's pretty vanilla and much less forceful.

By the way, H.R. 3044 is stuck at 110 cosponsors. Follow the links and encourage your member of Congress to support the bill.

TAVMA Blog

Appraiser Active has linked to the TAVMA Blog previously. It prompted a few comments and an interesting discussion about Appraisal Management Companies and the effect on them as a result of efforts by states to bring them under the regulatory umbrella.

This post, interests me. Here's an excerpt:

And, although I've not written an article on the topic, I'd say that the HVCC has to some extent forced some good appraisers – and bad and in-between appraisers too to be fair – out of the market. My theory about where HVCC may play a role involves appraisers who built their marketing strategy around direct-orders from mortgage brokers and Realtors. Banning broker- and Realtor-ordered appraisals abruptly severed these appraisers’ direct marketing ties to some long-time clients. Some were able to acquire new clients and join one or several AMC fee panels. However, it is likely that others lost their traditional client base (i.e. brokers) without an immediate alternative or perhaps the business development acumen to sustain the business.

Yet if demand for appraisers has dropped by half over the past 6 years as measured by mortgage originations, and the number of certified and licensed appraisers has trended upward during that time frame, wouldn't it make sense that there'd be shakeout in the ranks of appraisers?

FWIW, there has been a shakeout in the ranks of appraisers, but at least here in Florida, the dramatic drop has been in the number of TRAINEE Appraisers. during the last renewal cycle (November 30, 2008), over 4,000 Trainees failed to renew their license. Here is the current licensee count. It will be interesting to follow the renewal statistics in states AFTER the HVCC implementation. Talk on the street is the Appraisal Subcommittee is worried about their budget for the coming year because of dismal appraiser renewal numbers.

I've had some interesting back and forths with Jeff. This seems like it will start another one. What do you think?

Jeff was supposed to be on the AARO Panel with me next weekend. It's too bad the cast of characters has changed.

AARO - Association of Appraiser Regulatory Officials

The ASSOCIATION OF APPRAISER REGULATORY OFFICIALS (AARO) will be meeting October 10 - 13, 2009 in Washington, D.C. for the Annual Conference. This is the second of two meetings AARO has each year.

According to their bylaws, their MISSION is to improve the administration and enforcement of real estate appraisal laws in member jurisdictions. The agenda for the Fall, 2009 program reveals the effort to meet that mission. In addition to regular meetings of their committees on AQB Oversight, ASB Oversight, Investigator Training and Education, several panel discussions and guest speakers are scheduled. These include:

Consistent Enforcement - Enforcing USPAP

• Joe Traynor - Chair, The Appraisal Foundation Consistent Enforcement Task Force
• Jenny Tidwell - Appraisal Policy Manager, Appraisal Subcommittee

Updates

• Jim Park - Executive Director, Appraisal Subcommittee
• David Bunton - President, The Appraisal Foundation
• Sandy Guilfoil - Chair, Appraisal Standards Board
• Gary Taylor - Chair, Appraiser Qualifications Board

The Changing Face of the Appraisal Profession

• Joan Trice - Appraisal Buzz
• Jim Amorin - President, Appraisal Institute (AI)
• Richard Edmunds -President-Elect, American Society of Farm Managers and Rural Appraisers (ASFMRA)
• John Marazzo - President, National Association of Independent Fee Appraisers (NAIFA)

HVCC - Appraisal Management Companies and Broker Price Opinion Issues

• Jeff Dickstein - National Association of Broker Price Opinion Professionals (NABPOP)
• Frank Gregoire - National Association of Realtors® NOTE: I am appearing as a representative of the National Association of Realtors® Appraisal Committee
• David Feldman - Real Estate Valuation Advocacy Association (REVAA) and Title/Appraiser Vendor Management Association (TAVMA)

Lender Policy Updates and Issues

• Peter Gillispie - Federal Housing Administration / Department of Housing and Urban Development
• Robert Murphy - Fannie Mae
• Jacqueline Doty - Freddie Mac
• Gerry Keifer - Veterans Administration

From 2000 through 2008, when I was a member and Chairman of the Florida Real Estate Appraisal Board, I attended nearly every meeting of AARO. Each provided great opportunities to meet with other state regulators as well as individuals involved in appraisal policy development, appraisal standards development and enforcement and refinement of appraiser qualifications.

Although I won't be able to attend the entire meeting, each of the above discussions is on my calendar. I'll try to live blog a bit from the AARO meetings next weekend and provide a full update after returning to the Sunshine State.

FWIW, you can catch my article about the HVCC on page 4 of the latest AARO Newsletter.

Security One Valuation Services - UPDATE from Todd Barfield

It's been about a week since we posted the email from Todd Barfield. He provided some information about what is going on with the FDIC and checks issued to Appraisers from Security One Valuation Services, LLC; many of which were returned to the depositor unpaid.

Since many readers and commenters are still asking questions, and there has been no apparent resolution, we asked Todd Barfield for an update on the situation. Here's what he has to say:

The communications between the FDIC and legal counsel for SecurityOne Valuation Services, LLC (SecurityOne) have been substantially unproductive. We do recognize the FDIC is dealing with a lot of issues other than those of SecurityOne and believe we have established a good working relationship. Therefore, we have been patient in awaiting some meaningful response. However, that patience is near exhaustion. SecurityOne starts from a position of disadvantage; that is SecurityOne is not even sure what the FDIC’s current position is. At this time we have not received any of the requested documents regarding the account at Platinum Community Bank. These documents will be key to resolving SecurityOne’s issues with the FDIC.

SecurityOne is in doubt as to what restrictions the FDIC is unilaterally imposing on significant liquid assets of SecurityOne. However, we simply do not have information adequate to evaluate the potential outcomes.

This is unfortunate for all of us. There have been various threats of litigation from vendors against SecurityOne Valuation Services LLC. We are hopeful that these vendors will reconsider any legal remedies at this time. Consequently, once our vendors begin legal proceedings for collection on SecurityOne Valuation Services LLC, it is most likely the entity will have no choice other than to file for bankruptcy protection. This will not be beneficial to anyone involved and will only reduce SecurityOne’s ability to pay its creditors if the funds are released. Additionally, there would be more government intervention.

Thank you for your patience and we apologize for the inconvenience.

That's all we have for you at this point. Please let me know if you hear any news; good or bad.

FREDDIE MAC UPDATES HVVCC PAGE - IVPI Complaint Form Added

Since the Home Valuation Code of Conducte (HVCC) was implemented on May, 1, 2009, we've been wondering when (and if) the Independent Valuation Protection Institute (IVPI) would be established.

Well, folks, today we get a bit of information. Freddie Mac has updated a page with some information about the IVPI. Here's what Freddie has to say:

Independent Valuation Protection Institute

We are working with the New York State Attorney General, FHFA, Fannie Mae and other mortgage market participants to develop the Independent Valuation Protection Institute (Institute).

When established, the Institute will offer, among other services, a method for receiving complaints related to non-compliance with the Code. In the interim, a Web site is being created to receive and register complaints from appraisers, individuals and entities on non-compliance with the Code. The interim Institute Web site is currently under development and will be launched in November 2009. The sample complaint form [PDF] that will be used for complaint submissions on the interim Institute Web site is now available to preview. While the complaint form is available for previewing today, it may not be submitted until the interim Institute Web site is
launched.

The provisions related to the the Institute are not effective until the Institute has been established.

Make sure you follow the link to the sample COMPLAINT FORM.

This is my favorite part:

Thank you for your submission of a Complaint Regarding Improper Appraisal Conduct as described in the Home Valuation Code of Conduct. You may not hear anything further related to your complaint or the outcome of the resulting investigation. Your complaint will be taken seriously and appropriately investigated.

For some reason, I thought the IVPI was supposed to offer a "hotline" for complaints? Here's the language in the HVCC:

The Independent Valuation Protection Institute

An Independent Valuation Protection Institute (Institute) shall be created as approved by the parties. Subject to section IX, when the Institute is established, the lender will provide information to appraisers and borrowers regarding the availability of the Institute's services, which are expected to include: (1) a telephone hotline and email address to receive any complaints of Code of Conduct non-compliance, including complaints from appraisers, individuals, or other entities concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process, which the Institute will review and report as provided in IV.B(8) and IV.C(2) of this Code of Conduct; and (2) the publication and promotion of best practices for independent valuation. The lender shall not retaliate, in any manner or method, against the person or entity that makes a complaint to the Institute.

Comments?

Todd Barfield (Security One Valuation Services, LLC) Speaks

Last week, Appraiser Active mentioned that Todd Barfield, one of the owners of Security One Valuation Services, LLC, gave us a call to provide some explanation about what is going on behind the scenes. He was invited to send us an email with more information and assured it would be posted here. He no longer has control of the Security One web site and says he has no means of communicating with appraisers that have received checks that have been returned unapid.

The email below was received this morning from Todd Barfield. It is reproduced exactly as it was received.

In our efforts to keep the appraisers informed about this unfortunate situation with SecurityOne Valuation Services LLC (SecurityOne), below are some emails providing correspondence with the FDIC to SecurityOne. Please note, SecurityOne representatives and its legal counsel were working diligently to protect the funds and move the money from Platinum Community Bank several weeks prior to it’s closing, however, these requests were denied (the FDIC was not involved at that time). In addition, we encountered several delays once Taylor, Bean & Whitaker (TBW) filed for bankruptcy protection. After discussions with the restructuring group for TBW, SecurityOne was permitted to resume operations and continue paying our appraisers. There are additional investigations we are pursuing in relationship to the account at Platinum Community Bank. At this time, SecurityOne and the FDIC have not been provided the necessary account information to determine if the funds qualify for The Temporary Liquidity Guarantee Program (TLGP). The FDIC has been very cooperative, however, to our understanding, must fully investigate SecurityOne’s affiliation with Taylor, Bean & Whitaker. Realistically, SecurityOne and its vendors are in a very unusual position because the bank funds are frozen.

Without belaboring too much detail, we are all in a similar situation and consequently the payments for SecurityOne’s legal representation have been returned also. Fortunately, our legal counsel believes we are very close to some answers on the insurable status of the funds and they will continue working on this for a limited period of time.

SecurityOne will continue to process payments and replace the returned checks once the funds are released.

Thank you for your understanding and support.

The following program may be applicable to SecurityOne’s account at Platinum. As indicated on the FDIC website, Platinum did not elect to “opt out” of this program, however, the FDIC legal department is researching this matter for clarification.

The Temporary Liquidity Guarantee Program (TLGP) is a program adopted by the Federal Deposit Insurance Corporation (FDIC) on October 13, 2008 during the Global financial crisis of 2008 to encourage liquidity in the interbank lending market.

Several stated purposes of this program are (1) "to decrease the cost of bank funding so that bank lending to consumers and businesses will normalize." [1] and (2) "to strengthen confidence and encourage liquidity in the banking system by guaranteeing newly issued senior unsecured debt of banks, thrifts, and certain holding company, and by providing full coverage of non-interest bearing deposit transaction accounts, regardless of dollar amount."

The TLG Program became effective on October 14, 2008 and was subsequently revised based on bank feedback. Many FDIC insured entities have chosen to not participate ("opt out") in one or both of these programs.

EMAIL CORRESPONDENCE FROM FDIC TO SECURITYONE VALUATION SERVICES LLC

Monday September 21, 2009 (it appears there is a typo on the date 08.04.2009 which should read 09.04.2009)

We are receiving a tremendous amount of phone calls regarding an appraiser blog reporting on SecurityOne Valuations and the returned checks. It may reduce the volume of calls both to your business and the FDIC and help your business's reputation is people knew the reason the checks were being returned. Perhaps you could post something like this on the blog:

"Platinum Community Bank was closed but the Office of Thrift Supervision on 09.04.2009. The FDIC was appointed as receiver of the institution and paid out the insured deposits. ALL deposit accounts were closed which means that checks that had not cleared our account as of 08.04.2009, are being returned to the payee with a notation "Bank Closed" or something similar. SecurityOne Valuations is working with the FDIC to release our funds so we can begin replacing the returned checks."

People just need to know what is going on. We would appreciate your assistance on this matter.


Wednesday September 16, 2009

I have requested information from my contractors onsite. It may take a few days for a response. However, I did want to let you know that I can not provide any information as to correspondence with the OTS. Number 3 in your letter requests document copies of "instructions or other communications with the OTS." I suggest you contact the OTS for this information. Thank you.


Tuesday September 15, 2009


This email is in response to the SEVERAL emails and phone calls from Security One Valuation Services to the FDIC.

Currently, there is an account hold in place on an account was originally set up with funds from TBW or funds that shared ownership with TBW or an officer of TBW. TBW is now involved in a fraud investigation for both the Platinum Community Bank Receivership and the Colonial Bank Receivership. The Receiver has the ability to hold accounts that may be related to a fraud investigation. If Security One can prove that none of the funds in the account stem from TBW or belong to TBW or any of its officers then we can release the hold.


The FDIC's specific statutory basis for freezing a depositor's funds of a failed bank is codified in 12 U.S.C. § 1822(d), which allows the FDIC to withhold payment of a portion of an "insured deposit" of a depositor pending the determination and payment of a liability of the depositor to the bank involved. The Corporation may withhold payment of such portion of the insured deposit of any depositor in a depository institution in default as may be required to provide for the payment of any liability of such depositor to the depository institution in default or its receiver, which is not offset against a claim due from such depository institution, pending determination and payment of such liability by such depositor or any other person therefore.”


Please let me know if you have any further questions. Thank you.

At this point, that's all I have. We'll stay in touch and provide updates when available