Conference Committee Agrees to Appraisal Changes - UPDATED AGAIN

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After an all night session, the House and Senate Conferees declared the Conference Report passed early in the morning of June 25, 2010. Their report will now be filed with the House and Senate for consideration.

The bill is "only" 2315 pages; it will not be posted here. However, Subtitle F, referencing appraisal activities, is only 39 pages, so here it is for your reading pleasure.

HR 4173 Subtitle F Appraisal Activities

Within the document you will find amendments that mandate an "onsite" appraisal for certain high risk mortgages, wording to establish Appraiser Independence Standards, a requirement that appraisal fees conform to customary and reasonable standards, and a sunset of the HVCC.

There is also language to establish minimum requirements for AMCs, require states to register AMCs, exempt bank owned AMCs from state registration and an increase in the ASC Registry Fee.

The Appraisal Foundation, particularlly the Appraiser Qualifications Board, is granted even more power and control.

Mixed bag, in my opinion.

Your Comments?

UPDATE - 6/29/2010 Wall Street Journal: Finance Bill's Fate Uncertain in Senate

2ND UPDATE - 6/29/2010 The Hill:  Wall Street bill back to conference

There's nothing in the Hill story about the appraisal provisions in the bill. It's all about the politics of getting the Conference Bill passed by the Senate.

Court - Suit Against First American May Proceed

A state appeals court ruled that New York can proceed with its lawsuit accusing First American Corp. of inflating home values under pressure from Washington Mutual Inc.

According to a recently posted story, in a unanimous decision, presiding justice Luis Gonzalez wrote for a four-justice panel of the New York State Appellate Division:

 “The attorney general claims that defendants engaged in fraudulent, deceptive and illegal business practices by allegedly permitting eAppraiseIT residential real estate appraisers to be influenced by nonparty Washington Mutual,” presiding justice Luis Gonzalez wrote in today's unanimous decision. “We conclude that neither federal statutes, nor the regulations and guidelines implemented by the OTS, preclude the Attorney General of the State of New York from pursuing litigation.”

Additional stories HERE , HERE,  HERE and HERE.

EAppraiseIT gave in to demands for higher appraisals to secure more of Washington Mutual's business, Attorney General Andrew M. Cuomo said when he sued in 2007.  States including New York began investigations of the mortgage industry in 2007 as foreclosures rose nationwide.

This should be interesting.

HERE is the decision.

HERE is the Cuomo press release about the investigation.

In light of the language in H.R. 4173 that exempts bank owned/controlled AMCs from state regulation, isn't it interesting that First American (now Core Logic) is the partner with at least two big bank AMCs? First American is the alleged culprit in a huge fraud and now stands to benefit by escaping state attempts to regulate AMC activity.

Exempt Bank Owned AMCs? What are They Thinking?

Although discussion of the Wall Street Reform and Consumer Protection Act of 2009 has faded from the front page of the newspapers, in today's Washington Post, Ken Harney offers a column outlining some possible benefits to consumers and what he believes will go to the President's desk affecting housing and mortgage finance.

Of most interest to Appraiser Active is this:

Real estate appraisal improvements. The House bill would give the new consumer protection agency oversight on home mortgage appraisals and the power to create rules and standards to guarantee "appraiser independence" from pressures by lenders, realty agents and others. It also would require that once the new rules are adopted, the controversial "Home Valuation Code of Conduct" mandated last year by Fannie Mae and Freddie Mac be terminated. The code has been criticized by consumers, realty agents, builders and appraisers for encouraging lowball appraisals and the use of inexperienced appraisers willing to work for low fees. The Senate bill does not have appraisal provisions, but a bipartisan push is under way to convince conferees to adopt the House version.

None of the "appraisal improvements" were included in the Senate amendment to the House Bill, H.R. 4173. Some of the "appraisal improvements" are worthwhile, others not so. Among the most meaningful are amendments to FIRREA that will require states to regulate Appraisal Management Companies. (If you follow the link, start at Sec. 9503 and use the FORWARD button under the THIS DOCUMENT tab at the bottom of the page to read all the text)

Unfortunately, the above amendments also include this provision:

`SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM QUALIFICATIONS.

`(b) Exception for Federally Regulated Financial Institutions- The requirements of subsection (a) shall not apply to an appraisal management company that is a subsidiary owned and controlled by a financial institution and regulated by a federal financial institution regulatory agency. In such case, the appropriate federal financial institutions regulatory agency shall, at a minimum, develop regulations affecting the operations of the appraisal management company to--

`(1) verify that only licensed or certified appraisers are used for federally related transactions;

`(2) require that appraisals coordinated by an institution or subsidiary providing appraisal management services comply with the Uniform Standards of Professional Appraisal Practice; and

`(3) require that appraisals are conducted independently and free from inappropriate influence and coercion pursuant to the appraisal independence standards established under section 129E of the Truth in Lending Act.

This is preposterous!

Several states have already enacted laws to regulate Appraisal Management Companies. I’m not sure of the exact language for other states, but the bill to regulate Appraisal Management Companies recently signed into law here in Florida does not exempt ANY Appraisal Management Company from registration and regulation.

Based on comments and conversations with appraisers here in Florida and from around the country, the worst Appraisal Management Company offenders for fee abuse, unreasonable turn time demands and interference with appraiser independence are those owned or affiliated with regulated banking or financial institutions. EXAMPLE, EXAMPLE, EXAMPLE, EXAMPLE.

The failure of banks to properly throttle their lending practices helped to get us in this mess, and now the proposal is to let them run Appraisal Management Companies without state regulation?

It’s important to convince the Conference Committee to strike that exemption for bank owned and operated Appraisal Management Companies. Otherwise, the public can expect nothing more than the same "close scrutiny", "attention to detail", and "rigorous oversight" the Federal Banking Agencies exhibited prior to the current fiasco.

We cannot trust the regulation of bank owned/controlled Appraisal Management Companies to Federal Agencies.

The Senate has appointed their conferees:

Dodd; Johnson; Reed; Schumer; Shelby; Crapo; Corker; Gregg; Lincoln; Leahy; Harkin; Chambliss.

We're still waiting for the House to name their participants to the conference, but Barney Frank is sure to be there.

It's time to fire up the professional associations and the public to write their Senators, Representatives and the bill conferees to make sure bank owned AMCS are NOT EXEMPT from state regulation.

CRT Announces "Appraisal Dashboard"

On May 27, 2010, the Center for REALTOR® Technology announced "Appraisal Dashboard". Here's a portion of what their blog post has to say:

This project was made possible through a 6 month collaboration with RMLS of Minnesota, Live Valuation and the Center for REALTOR Technology. It was actually inspired by an appraiser getting the ear of Ed Newman from RMLS, who then got the ear of CRT who then got real jazzed up about this. This all coincided with some fortuitous events that led us to choose Live Valuation — who by the way, has one amazing programmer (Kannan), which you will soon agree to after you see the demo and the functionality, and the all out pure slick of this application.

So what the heck is the Appraisal Dashboard? Well, the basic summary is, it is a PHP web application that interfaces with live MLS data (MLS authentication and access required) and provides a visual search interface. The data can be exported (again, please refer to your particular MLS data rules/regs) into various formats that can be used with the Uniform Residential Appraisal Report and the MISMO format.

That's all I have for now. We have not yet tried the application, but should be able to find some time in the near future.

Cost? FREE for members of the National Association of REALTORS®. Yet another benefit of membership; this one specifically for Appraiser Members!

Rather than the link in the blog post, use THIS LINK for the video demos.