Saturday, March 27, 2010

Appraisal Management Company Bill Advances in Florida House

On Friday, March 26, 2010, HB 303 passed the Florida House Government Operations Appropriations Committee with a unanimous vote. (The Staff Analysis link has not yet been updated with the vote tally).

The favorable vote is actually for a Committee Substitute (CS) bill. This is due to amendments suggested as a result of negotiations late Thursday evening. A group of opponents, including Bank of America and SunTrust, headed by a team from LPS (owners of LSI) posed a threat to the bill. LPS had been meeting with one of the members of the committee and she was leaning towards opposition. The Committee Chair suggested we meet and attempt to work things out.

After a nearly four hour meeting, changes were agreed to, an amendment drafted and sent to the committee staff for drafting. We shook hands in agreement close to 10:00 P.M.

Although the committee meeting started at 8:30 A.M, HB 303 was the last bill heard. Believing we had a deal, the proponents of the bill waived speaking in support. To our surprise, the LPS representative rose and spoke in opposition. After fielding questions from several of the committee members, including several stinging inquiries from Rep. Workman, a co-sponsor of the bill, the Chair weighed in.

Rep. Alan Hays, Chair of the Committee, had poked his head in on the negotiating meeting around 9:30 P.M. the night before. At that time, he asked how things were going and was pleased to hear we were all in agreement and had resolved a number of issues. When he addressed the LPS representative that was speaking in opposition, he reminded him of the comments made the night before, asked if they were true, and expressed his amazement at his change of mind and opposition to the deal he agreed to the night before.

There was no debate on the bill, and the vote was unanimous in favor.

If possible, express your gratitude to the bill's sponsor, Rep. Hudson, the cosponsors, Rep. Nehr and Rep. Workman. Include the Committee Chair, Rep. Hays and Committee member Rep. Wood.

Appraisers should also know the Florida Association of Realtors really stepped up to the plate on this one too. There were four FAR Legislative Team Staff members attending. Florida Realtors also facilitated the negotiating session on Thursday evening. This bill is one of their Legislative Priorities for 2010. Trey Goldman of FAR is really helping on this bill.

Here's the way Florida Realtors explain what happened:

The fourth week of this year’s legislative session will be remembered as the week when issues went from important to SERIOUS, starting with HB 303, the bill that requires Appraisal Management Companies (AMCs) operating in Florida to register with the Department of Business and Professional Regulation. Twenty four hours before the bill was to be heard in the House Government Operations Committee, Florida Realtors learned that the bill might be Temporarily Postponed (likely killing it for 2010) unless agreement could be reached among the stakeholders (Florida Realtors, AMC’s and banks). The gap was not small. But locking 12 lobbyists, clients, appraisers and a Representative in a room built for six can — and did — produce results. A mere four hours later, at 9:30 p.m., an agreement was reached and a (late filed) amendment was drafted.

When the bill was heard in committee the next morning, a win-win was narrowly averted when the AMC representative rose to oppose the bill he helped write the previous evening! Fortunately, we had visited with every legislator on the committee or their aide prior to the meeting, and the Florida Realtors secured their half of the Win. It also helped that Realtors in the districts of the 13 members of the Committee responded to a last minute Call-To-Action.
Stay tuned.

Passing this committee was extremely important. It was the last meeting of the Government Operations Appropriations Committee for the 2010 Legislative Session. There is one more committee stop on the Florida House side. There is still work to do on the Senate side as well.

Thursday, March 18, 2010


According to folks at Freddie Mac, their Home Valuation Code of Conduct Questions and Answers Page has been updated. The link to the left leads to the updated page.

I don't have a printed copy of the old Q and A page handy. As a result, it's difficult to determine the additions or deletions. These are among the ones we find to be interesting:
Q 2. Does the Code apply to non-origination valuation activities such as appraisals performed for loss mitigation activities?

A 2. No. The Code only applies to the loan origination process. It does not apply to a lender’s foreclosure/REO process, workouts, or any other type of loss mitigation activity.
Q 5. Does the Code apply to Freddie Mac purchases of private-label securities backed by mortgage loans that do not meet the requirements of the Code?

A 5. No. The Code only applies to 1- to 4-unit single-family loans sold to Freddie Mac by mortgage originators; it does not extend to Freddie Mac’s investments in mortgage-related securities.
Wondering why Fannie and Freddie are not interested in a Code of Conduct for rating agencies.
Q 6. How will you handle issues and concerns raised by customers as the Code is implemented?

A 6. Freddie Mac will work with our customers to address any issues or concerns regarding implementation of the Code. We will maintain ongoing contact through our various communications channels including newsletter articles and Web content. If customers have immediate questions, they should contact their Freddie Mac account representative, 800 – FREDDIE, or e-mail us using our Home Valuation Code of Conduct Inquiry Form.
Great! A form. Notice that the form is for sellers only. Where do borrowers, appraisers and others bitch?
Q 8. Does the Code apply to other valuation methods (i.e., automated valuation models, broker price opinions, tax assessments, etc.)?

A 8. No. The Code applies only to appraisals.
There are too many reasons to comment on this question and answer. How about you all have at it in the comments.
Q 39. May an appraiser update an appraisal for another lender?

A 39. Yes. The Code does not prevent an appraiser from performing an update of an appraisal for another lender.
Maybe the HVCC does not prevent it, but that does not mean it can be done easily. Consult your 2010 - 2011 Edition of the Uniform Standards of Professional Appraisal Practice.
Q 61. Can an appraiser’s information be omitted from the appraisal report prior to sending it to the borrower?

A 61. No. A complete, unaltered copy of the appraisal report must be provided to the borrower.
No comment.
Q 62. If two appraisals are obtained as part of the underwriting process, does a lender have to provide copies of both appraisal reports to the borrower or only a copy of the appraisal used to determine value?

A 62. Section II of the Code requires that the borrower be provided with a copy of "any" appraisal report; therefore, copies of all appraisal reports obtained must be provided to the borrower.
And how, exactly, is that being enforced?
Q 65. If I am permitted to use an AVM such as Home Value Explorer® to estimate property value, am I required to meet the Code requirements in Section II and provide the borrower with a copy of the AVM result three days before closing.

A 65. No.The Code does not require lenders to provide borrowers a copy of an AVM result.
Why not?

Independent Valuation Protection Institute

Q 82. When will the Independent Valuation Protection Institute be established?

A 82. We are working with the New York State Attorney General, FHFA, and Fannie Mae regarding establishment of the Institute. Because the Institute has not yet been established, the provisions regarding it in the Code are not yet effective.
Question 82 and the answer do not present any change from prior Q and A lists. In my never so humble opinion, that is the most important question. It's telling that the answer is the same. It's also telling that the LINK to the IVPI has been removed from their answer!

How is it that other parts of the HVCC are deemed to be more important than the Independent Valuation Protection Institute? Why is it acceptable to implement only parts of the HVCC?

There is QUESTION #83. How about an answer to that one, FREDDIE?

Appraisal Institute, Others, Suggest AMC Statement of Principles

From Appraiser News Online:

The nation’s largest professional organizations of real estate appraisers have set forth a list of business-related principles that they say appraisal management companies should adopt and advocate. The exposure draft of “Appraiser and Management Company Statement of Principles,” released March 11, is open for comment and discussion from all stakeholders through May 1.

“Adherence to these principles will help ensure that quality appraisals are prepared by competent appraisers for financial institutions and other clients in a timely manner,” Appraisal Institute President Leslie Sellers, MAI, SRA, said.

“Agreement with these principles will promote equality and a mutually beneficial relationship between professional appraisers and the AMCs using their services,” said Mike Evans, FASA, president of the American Society of Appraisers. “Most importantly, adherence to these principals will ensure consumers are protected, and safety and soundness fostered, when lenders use AMCs for valuation services.”

The statement is a joint effort of the Appraisal Institute, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers.

Following the public comment period, the professional appraisal organizations will request that AMCs formally adopt the revised Statement of Principles and agree to comply with them in their interactions with appraisers, their clients and consumers, according to Sellers.

After adoption, the appraisal organizations will continue to work with all stakeholders, including the AMC community, to provide further clarification of each of the principles through such means as guidance documents and responses to frequently asked questions, Sellers said. The Statement of Principles is intended to evolve as the AMC industry continues to mature, and state and federal laws applicable to AMCs continue to be enacted and implemented, he added.

“The organizations look forward to working with AMCs, state boards, local chapters and consumer groups as the business practices of AMCs are refined to comply with the principles. The principles are intended to promote mutually beneficial business relationships between management companies and professional appraisers,” Sellers said.

In 2008, the professional appraisal organizations drafted and released model legislation for the registration and regulation of appraisal management companies. Laws based upon this model legislation have been considered by at least 25 states, with 10 states passing the bills – some of which await enactment – and the rest still under consideration.
CLICK HERE for a pdf copy of the draft Statement of Principles.

Since the TAVMA folks have been free and easy with their advice to the appraisal community, it will be interesting to see their reaction to this proposal.

Monday, March 15, 2010

Peronal Note - UPDATED

It's a sad day in the Appraiser Active family. My nephew, Jonathan Porto, a Marine, was killed yesterday in a non-combat accident in Afghanistan, near Marjah. My sister, Rachel, his mother, Jon's wife, Rachel Jewell Porto, and their two month old daughter, Ariana, could use your prayers. Jon was 26.

UPDATE - Jon's wife, Rachel, runs a blog - A Little Pink in a World of Camo.

It has recently been updated with the sad news. However, the prior postings show the joy they shared in their life together.

Please keep Rachel and Ariana in your prayers.

The Hillsborough County Sheriff's Office provided an escort for the motorcade from MacDill Air Force Base to St. Petersburg. The Tampa Bay Community showed their respect for Cpl Jonathan Porto.

Barbara Guzzon had produced the first segment of a tribute video.

Cpl. Jonathan D. Porto - "Bringing Him Home" from DiamondFilms on Vimeo.