Sounding Bored is my semi-regular column on the state of the appraisal profession. There have been more changes made to the profession in the past several years than in the entire history of the profession, and most of the changes have not resulted in a more credible service. Still, I’d like to hope that the latest financial services sector turmoil will bring a clean slate approach to better regulatory oversight (devoid of insanity).
While appraisers face tough economic conditions in 2009, there is a lot of nervousness invading the insulated land of adjustments and contributory value. I can’t tell you how many people and several clients we have are under the impression that lenders are required to order appraisals through appraisal management companies effective May 1, 2009 under the new Cuomo/Fannie Mae Deal. Related news coverage makes the whole thing sound very scary.
Here’s the Fannie Mae Home Valuation Code of Conduct Frequently Asked Questions (FAQs) on Fannie Mae’s web site that answers many of the questions currently on appraiser’s minds. Here are the comments specific to AMCs:
Appraisal Management Companies
Q25. Is a lender required to use an appraisal management company for ordering
appraisals?
No. A lender may order appraisals directly from an individual appraiser.
Q26. May an appraisal management company affiliated with, or that owns or is owned
in whole or in part by the lender or a lender-affiliate, order appraisals?
Yes, an appraisal management company affiliated with, or that owns or is owned in whole or in
part by the lender or a lender-affiliate, may order appraisals if the appraisal management
company meets the criteria of Section IV.B. of the Code.
Q27. When a lender uses an appraisal management company, the appraisal
management company is responsible for retaining and paying the appraiser. Is it
likewise permissible for a mortgage broker to use an appraisal management
company, since the mortgage broker does not technically retain or pay the
appraiser?
No. The Code prohibits lenders from relying on an appraisal where the broker had a role in
selecting, retaining, or compensating the appraiser.
Q28. May a mortgage broker provide the lender with an approved appraiser list for the
lender to use when ordering appraisals for that particular broker?
No.
Please read the entire FAQ. There is a lot of useful information.
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I will maintain the belief that it won’t be too long before there are meaningful reforms. So far they are shooting the small fish. Simply recreational, this Havoc, but did you notice it ended Cuomo’s probe of Fannie’s records? I guess he grew tired of his lawsuit. We still need those records to figure out the flips and who the bad guys are and its all in there.
Mortgage brokers were puppets for an industry that was on the take and still is. It was the bankers that hired them and paid them. My bet is they will easily find replacements and ways around Havoc.
I’ve read the article, twice. Would you please add this to what I said yesterday?
So what changed?
Mortgage brokers have to use an AMC to get an appraisal after May 1 if Fannie is going to trade it on the secondary market?
Is that it?
I don’t know about you, but to me that very much resembles a non-event. Another tempest in the tea pot. Only the B team is suited up. I am selling my ticket for that one.
I WOULD LIKE TO SAY THAT THE HVCC ONLY DOES ONE THING GOOD FOR APPRAISERS AND THAT IS KEEPS US AT BAY FROM THE BROKERS WHO WANTED INFLATED VALUES. THE HVCC DOES NOT PROTECT US FROM THE LENDERS. THE LENDERS / BANKS STILL GET TO CALL ALL OF THE SHOTS ON WHO CAN PERFORM THE WORK FOR THEM. SO, WE ALL KNOW THAT THEY CREATED THE CURRECT FINACIAL MESS WITH THE CREATIVE (ALT-A) FINANCING MARKET. THEY LENT EVERYONE AND THEIR BROTHER ALL THE MONEY THAT THEY COULD. KNOWING NO ONE COULD REALY AFFORD IT, IF THE MARKET STARTED GOING THE OTHER WAY. THEN THE SECOND IT EVEN APPEARED TO GO THE OTHER WAY THEY SHUT DOWN ALL THE PROGRAMS THAT COULD HAVE HELPED MOST AMERICANS STAY IN THEIR HOMES THAT THE CREATIVE FINANCING HELPED THEM OBTAIN. NO ONE IS STATING THE OBVIOUS WHICH IS THAT THE LENDER WERE FRAUDULENT WITH THIS FROM DAY ONE. SO NOW WE GIVE THEM OUR MONEY (TAX MONEY) TO BAIL THEM OUT AND GIVE THEM MORE POWER TO PUSH APPRAISERS AROUND? SO, LETS LOOK AT THIS FOR ONE SECOND AS IF ONE OF OUR CHILDREN JUST GOT IN TROUBLE ON THE PLAY GROUND. YOUR CHILD THROWS SAND AT SOME OTHER KID. YOU SAY SHAME, SHAME, SHAME, AND THEN HAND THEM A BUCKET OF SAND. THAT IS ALL THAT WE DID FOR THE LENDERS. I HAVE MET MILLIONIARS OR WERE 2 YEARS AGO BANKRUPT. I HAVE MET SINGLE MOMS WHO BOUGHT THEIR FIRST HOUSE, NOW ANSWERING THE DOOR TO A RENTAL NOW. WE GAVE THE LENDERS MORE POWER OVER NOT ONLY WHO THE LENDERS ARE GOING TO USE FOR APPRAISALS BUT, HOW MUCH WE ARE GOING TO GET PAID. WACOVIA IS NOT GOING TO USE “JOE THE APPRAISER” IN ARKANSA AND THEN SEND ALL THE OTHER WORK FOR THE THE OTHER 49 STATES TO AN AMC’S JUST BECAUSE “JOE” DOES A GOOD JOB FOR THEM IN ARKANSA. THEY ARE GOING TO SEND IT TO THE AMC. I HAVE RECENTLY CAME ACROSS A FRAUDULENT UNDER VALUED REPORT. NOW WHAT IS BAD ABOUT AN UNDER VALUED REPORT, THE SAME AS AN OVER VALUED REPORT IT IS FRAUDULENT. AND SIMPLY BECAUSE IT IS THE LOWER VALUE AND THE APPRAISER PANELS MANGER FOR THIS MAJOR LENDER IS NOT AN APPRAISER IT LOOKS GOOD TO HIM SO, HE LIKES IT BETTER. NOT THAT THERE WAS 10 TIMES THE DATA IN MY REPORT THAT PROVES THE CRAPPY “LOOKING” APPRAISAL THAT I DID. THE OTHER REPORT LOOKS BETTER AND “FITS” THEIR GUIDELINES FOR WHAT THEY WANT SO HE IS RIGHT. THEY SIMPLY IGNORED THE VALUE, IGNORED ALL OF THE HISTORICAL DATA FOR 35 YEARS, INCLUDING CURRENT DECREASING MARKET DATA. SO AGAIN THEY GET TO CONTROL EVERYTHING SO THAT WE CAN END UP IN THE SAME SITUATION AGAIN AND ALL THAT WE HAVE TAUGHT THEM IS, IT IS OK, WE WILL BAIL YOU OUT. THE LENDERS NEED TO NOT EVEN BE ABLE TO TOUCH A REPORT UNTILL IT HAS BEEN CHECH AND REVIEWED BY SOME ONE OTHER THAN AN AMC THAT THEY SEND WORK TO, OR THIER OWN, NON-EDUCATED REVIEWERS THAT ARE SITTING IN HAWAII AND THE REPORT IS FROM MAINE AND THEY ARE SAYING IT IS NOW GOOD SINCE IT DOES NOT “FIT OUR GUIDELINES” HOWEVER,IT IS WELL WITHIN FANNIE MAE AND USPAP’S GUIDELINES. IT NEEDS TO BE ILLEGAL FOR ANY APPRAISER TO BE IMPLOYED BY THE LENDERS THEM SELVES AND THAT A CENTRAL REVIEW PANEL FOR EACH STATE IS ERECTED AND THE BANKS PAY FOR THAT SERVICE FROM WHAT THEY WERE PAYING THEIR “OWN” REVIEW APPRAISERS. THEN THAT VALUE NEEDS TO BE ATTACHED TO A SYSTEM FOR THAT LOAN AND THIS WAY THEY CAN NOT ORDER “ANOTHER” ONE BASED ON THE FACT THAT THEY DONT LIKE THE NUMBER BUT IT HAS BEEN DONE TO EVERY RECOGNIZED STANDARD AND NOT THIER PERSONAL OWN “GUIDELINES” THAT CAN NOT BE MEET ON EVERY PROPERTY THAT IS OUT THEIR.