Sunday, October 25, 2009

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.


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.

Tuesday, October 20, 2009

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, 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.

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.

Monday, October 19, 2009

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.

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

Saturday, October 17, 2009

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.

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.

Thursday, October 15, 2009

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

The text of the legislation is RIGHT HERE.

Tuesday, October 13, 2009

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.

Thursday, October 8, 2009

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.

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:


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.


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.


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.

Sunday, October 4, 2009


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


The Changing Face of the Appraisal Profession

HVCC - Appraisal Management Companies and Broker Price Opinion Issues

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.

Thursday, October 1, 2009

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.


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

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.