Thursday, January 29, 2009
Monday, January 26, 2009
One major problem with Appraisal Management Companies is 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 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. This individual, in fact, was the subject of at least 10 complaints by consumers, lending institutions and other appraisers. His discipline prior to the surrender for permanent revocation included fines, probation, completion of education and a period of suspension.
Appraisers, appraisal associations, the Florida Real Estate Appraisal Board and the Florida Association of Realtors believes the failure to regulate Appraisal Management Companies is a danger to the public. Their concern is heightened by the pending implementation of the Home Valuation Code of Conduct discussed in a prior post.
Thankfully, the Florida Association of Realtors has stepped up to the plate and stated their support of an effort to establish regulations for Appraisal Management Companies. During their January 26, 2009 meeting, the Board of Directors of the Florida Association of Realtors passed a motion to support the registration and regulation of Appraisal Management Companies operating in Florida. Draft legislation has been written by a concerned group of appraisers consisting of members of the Appraisal Institute, the National Association of Independent Fee Appraisers and the Florida Association of Realtors. The Florida Real Estate Appraisal Board supports the concept as well.
The Florida Chapters of the Appraisal Institute will take the lead in securing sponsors in the Florida House and Senate. We will do our best to keep you apprised of the progress.
Wednesday, January 21, 2009
As reported by the Appraisal Institute - Appraisal News Online
Four of the five federal bank regulators have called for the withdrawal of the Home Valuation Code of Conduct and the Home Valuation Protection Program and Cooperation Agreements saying they could “unnecessarily undermine the safe and sound extension of mortgage credit, reduce the availability of mortgage credit to many consumers, and ultimately lead to less reliability and accuracy in real estate appraisals.”
There may be some sense out there after all!
Monday, January 12, 2009
Sunday, January 11, 2009
The Federal Housing Finance Agency (FHFA) has announced the "final" Revised Version of the Home Valuation Code of Conduct (HVCC).
The Code is based on an agreement between the Enterprises, the New York State Attorney General Andrew Cuomo and FHFA to improve the reliability of home appraisals.
The "agreement" was originally between Fannie Mae, Freddie Mac, the Office of Federal Housing Enterprise Oversight and Cuomo. The New York Attorney General made a big splash is THIS ANNOUNCEMENT. The settlement was prompted by an investigation of mortgage and valuation fraud initiated by the New York Attorney General in response to allegations of shady dealings between an Appraisal Management Company, Washington Mutual and a group of appraisers doing contract work for the Appraisal Management Company.
Due to many problems with the original HVCC, the failure of WAMU, Fannie, Freddie and a myriad of other reasons, the agreement was revised after a comment period. However, it's far from perfect and, if implemented, will have a significant effect on your brokerage business and the relationships you have built.
"The integrity of our mortgage system depends on independent appraisers," said Cuomo. "Washington Mutual compromised the fairness of this system by illegally pressuring appraisers to provide inflated values. Every company that buys loans from Washington Mutual must be sure that the loans they purchased are not corrupted by this systemic fraud."
The lawsuit filed last week details a scheme in numerous e-mails showing First American and eAppraiseIT caved to pressure from Washington Mutual to use appraisers who provided inflated appraisals on homes.
E-mails also show that executives at First American and eAppraiseIT knew their behavior was illegal, but intentionally broke the law to secure future business with Washington Mutual. Between April 2006 and October 2007, eAppraiseIT provided over 250,000 appraisals for Washington Mutual.
Here's one take:
An Appraisal Upheaval
by Kenneth Harney
When you apply for a mortgage to buy or refinance a house, should you be concerned that your appraiser is being paid much less than the $300 to $600 you're charged, perhaps half?
Should you know who pockets the rest, or that cut-rate fees are too low to attract the most experienced appraisers?
Should you care that the appraiser might be pushed to come up with a number so quickly -- almost overnight in some cases -- that he or she doesn't have the time to do a proper inspection and accurate evaluation of comparable properties, pending sales contracts and local market trends?
This agreement is not good for consumers, real estate brokers or appraisers. Why?
- Appraisal assignments will be funnelled through an Appraisal Management Company (AMC). Regardless of the definition and explanation at the link above, the reality is many AMCs have established a priority system that looks like this:
- The HUD-1, Closing Statement, will contain a charge for Appraisal Fee on Line #804. It will not indicate that the fee is the amount paid to an anonymous AMC and that only a fraction of that fee is paid to the appraiser. Doesn't RESPA require transparency by requiring that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services?
- Not one state in the United States Regulates the activities of Appraisal Management Companies.
Here in Florida, a group of professional appraisal associations, appraisers and others is working to protect the public by initiating legislation to regulate the actions of Appraisal Management Companies. Watch this space for more information once the bill is filed. To protect your business and the relationships you have built with related professions, your support is necessary.