Sunday, January 31, 2010

TAVMA Blog - 10 Reasons for Federal Regulation of AMCs

Jeff Shurman, over at the TAVMA Blog, as recently submitted a post - Ten Reasons Why Federal AMC Oversight is the Better Solution. Please take a look when you have a chance. Here's his list:

  1. Compel the federal regulator to create a uniform set of standards for AMCs, which may include or build upon TAVMA’s own Standards of Good Practice in Appraisal Management
  2. Compel AMCs to improve quality as needed to meet the agency’s rules and regulations;
  3. Flag educational and compliance gaps in AMCs’ systems that they can duly address;
  4. Encourage AMCs to invest in IT to meet reporting and compliance rules (compliance, record-retention, performance report generation, etc.);
  5. Provide compliant AMCs with a competitive advantage over those that lag in the compliance area;
  6. Put AMCs – which at the core act as agents of the lender conducting functions that the lender would otherwise do and be responsible for – under the regulatory auspices of the same entity tasked with overseeing, auditing, and supervising the mortgage lending industry;
  7. Ensure compliance of AMC product development efforts to consistent and reasoned standards and guidelines; regulatory clarity leads to innovation;
  8. Provide mortgage lenders a meaningful set of standards against which to assess current and potential AMC partners;
  9. Level the competitive field while weeding out bad actors; and
  10. Eliminate the oft-cited objection that AMCs are unregulated.

Interesting list. Would anyone care to address these one-by-one?

Appraiser Active wonders why TAVMA and AMCs are encouraging Federal Regulation now. It's also interesting, given the increasing number of AMCs being created by unsavory individuals with regulatory agency disciplinary history, that protection of the public does not make the list.

Maybe if the Federal government had not demonstrated such an inability to regulate financial institutions and Government Sponsored Enterprises, we would have a bit more enthusiasm for the TAVMA point of view.


Jeff Schurman said...

Hi Frank,

May I impose on your readers to consider (2) additional perspectives when re-reading the list?

The first is to give deep thought to each point in the list in this context: Regulating any industry or profession and at any level of government; fed, state, local.

Absent the additional context of the (AMC) industry, the messenger (Jeff from TAVMA), and the conclusion (fed v. state), the list seems to offer (to me anyway) a reasonable guide to what sound regulatory policy might look like for any industry.

Second, consider the list again but this time from the perspective of an AMC manager (I know… but please?); suspending context and judgment of just the fed v. state reg conclusion. Then ask if regulation based on these (10) points could benefit not only the AMC, but also its employees, suppliers, industry and consumers?

My belief is that the 10-point list itself is probably not what sets many appraisers off. It’s the context of the industry, the percieved bias of the messenger, and the conclusion in which it is being judged.

As we’ve discussed several times, I am not at all confident in the way some states are approaching their AMC registration laws. I explain just one example of this concern in Warning: What you’re about to read could be career-ending, on the TAVMA Blog.

Many thanks for the chance to weigh in with a plea for reconsideration.


Frank Gregoire said...

Thanks for taking the time to comment, Jeff. Let's see what everyone has to say.