Any word on whether this Third Party Appraisal ordering process will become mandatory?

I know we still have a few lenders that have deadlines set for the end of the month.  But rumor has it there are folks still trying to get this overturned..

Anyone have any insight as to whether or not we may get lucky and this could get overturned?

Input is greatly appreciated!

I believe it will be a go----at least temporarily.  All my Lenders are requiring it after May 1st.

Looks like it will start May 1. 

Some lenders are starting it a bit earlier.  Some go by registration in their system, some by the application date.  How fun is that?

Take Action Now - please read and voice your opinion with your government representatives.

To contact your Rep via email, click here (must have your zip+4 for your home address... find it here)

Please contact your Senators and Representatives *_TODAY_*, and urge them to stop or delay the implementation of the final rule promulgated by the FHFA, which implements the controversial HVCC.

Congress has returned from recess; please contact your legislators' at their Washington, DC offices. You can access the contact information for your legislator here .  We encourage you to make every effort to try again if you are not initially successful in contacting them. It is vital to the overall effectiveness of this call.

Also, please forward this Call to Action to your mortgage broker and appraiser contacts! By encouraging other mortgage professionals to make calls, legislators will better understand the HVCC's negative impact on the entire mortgage market.

*Talking Points:*

               
*Its impact on Consumers:*

A.                 The HVCC negatively affects consumers by increasing the costs to consumers for an appraisal, reducing consumer choice and adversely impacting a consumer's ability to obtain a reliable and quality appraisal.

B.                 The HVCC creates a heightened risk for consumers by requiring the use of unregulated Appraisal Management Companies (AMCs) for appraisals. The original investigation that prompted the HVCC's creation was of an AMC and WAMU alleging that they engaged in practices of pressuring appraisers on behalf of WAMU.

C.                 It increases the time to fund loans for consumers which necessitates longer rate locks or extensions of existing locks thereby increasing costs to consumers. In the case that a new lender or broker is chosen, a new appraisal will be necessitated, increasing the time to fund.

D.                 It restricts the portability of an appraisal since each lender, in effect, will require a new appraisal.

*Its impact on Small Business:*

E.                  The HVCC squeezes out small business professionals that are striving to survive and have been working with consumers in the very neighborhoods where they are looking to purchase homes.

F.                  The HVCC affects small business appraisers, mortgage brokers, Realtors and lenders in all 50 states without having been reviewed by ANY state or federal legislature or agency.

G.                 Small business professionals who have indepth knowledge of local market conditions are being sacrificed for large AMCs who operate on a national scale to distribute orders through a primary processing hub or hubs which can be located up to thousands of miles away from the property being appraised.

* Its failure to comply with procedural law:*

H.                 Although the HVCC is broad regulation having a significant impact on small businesses and consumers, it did not go through the Administrative Procedures Act, the Regulatory Flexibility Act or other procedural laws as required by any regulation issued by a federal agency.

I.                    FHFA claims that as Conservator of the GSEs, its actions are not "agency actions" under the APA and that its actions are "expressly precluded from judicial review" as a result of the Housing and Economic Recovery Act.

*Appraisal standards exist:*

J.                   The Federal Reserve issued appraisal independence standards through Regulation Z being implemented this October which applies to every industry participant.

K.                The banking regulators issued interagency guidance on appraisal standards which are expected to become final this year.

* *

* *

*Background:*



1)      *The HVCC negatively affects consumers and the already fragile economy.*

As it stands today, the HVCC will take effect on May 1, 2009, and this rule states that GSEs will no longer purchase loans from lenders "accepting appraisal reports completed by an appraiser selected, retained, or compensated in any manner by any third party." It overwhelmingly impacts small lending institutions and independent appraisers to the  detriment of consumers.

a)      Consumers will have to pay more for their appraisals to have them completed by AMCs.

b)      The exclusive use of AMCs limits competition in the marketplace, leaving the consumer and independent appraisers at a disadvantage.

c)      The AMC model is flawed and will produce poor quality work that will create a continuation of the declining housing market.



2)      *The manner in which lenders will collect fees in compliance with the HVCC is a potential violation of RESPA.*

a)       Lenders may be in direct violation of section 8(b) of RESPA due to possible up-charging and fee-splitting. Every lender will be at risk of HUD action on every brokered loan they underwrite.

b)      Lenders will not utilize brokers for fear of potential RESPA violations. In addition, those lenders who only do brokered loans will go out of business all together, and competition within the marketplace will cease to exist. Again, at the detriment of consumers.



*3)      **There already exists pervasive federal regulation of the mortgage lending industry's acquisition of real estate appraisals. *

a)      _FIRREA_ - In 1989, following the savings and loan crisis, Congress passed the Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA"), which established a multi-faceted real estate appraisal regulatory system involving the federal government, the states, and The Appraisal Foundation.  Since 1989, the federal agencies responsible for regulating financial institutions have promulgated regulations under FIRREA that set forth "generally acceptable appraisal standards," and have issued guidance relating to real estate appraisals, which, among other things, set forth standards for selecting qualified appraisers.  These regulations and appraisal guidelines both prohibit improper influence on appraisers and work to ensure appraisal independence.

b)      _FRB Final Rule_ - In July 2008, the Federal Reserve Board ("Board") issued a final rule prohibiting all mortgage brokers, mortgage lenders and their affiliates "from coercing, influencing, or otherwise encouraging appraisers to misstate or misrepresent the value of a consumer's principal dwelling."  In issuing this final rule, the Board concluded that "[no] particular procedure for ordering an appraisal necessarily promotes" fraudulent appraisals.  Rather, the Board determined that the "coercion of appraisers," whether by lenders or mortgage brokers, "is an unfair practice" and the final rule should apply to lenders and mortgage brokers alike.  NAMB fully supported the Board's final rule because it targets problematic practices, rather than business relationships that present no inherent problems.

c)      _FFIEC Interagency Guidance _- On November 19, 2008, the FFIEC regulatory agencies issued proposed revisions to the "Appraisal and Evaluation Guidelines," and requests for comment.  The FFIEC regulatory agencies are currently reviewing the submitted comments and plan to issue a final rule this year.

d)      _H.R. 1728_ - "The Mortgage and Anti-Predatory Lending Act of 2009" was introduced on March 26, 2009.  TITLE VI of the bill -APPRAISAL ACTIVITIES - deals with every facet of the appraisal process that will ensure true appraisal independence and protect consumers.

* *

4)      *The HVCC fails to comply with the Administrative Procedures Act.*

The HVCC is a substantive rule that created /de facto /regulation of the entire mortgage industry in violation of the Administrative Procedure Act ("APA").

a)      The FHFA is an agency and the HVCC falls within the definition of a rule under the APA.  As such, the FHFA was required to utilize notice and comment rulemaking proceedings under the APA, but the agency failed to do so.
b)      Because this rule/ /regulates the entire mortgage industry and the FHFA failed to follow proper rulemaking procedures, we believe the HVCC is void, invalid, and unenforceable.

Thanks  Jim for posting this info.

Below is the original announcement from NAMB.

Too little, too late to stop it Dana & Jim.  Maybe the results of having it in place for a few months will speak volumes. Let's hope.

The consumer will have to lead the charge.  If they feel wronged & give heat to their reps, that is the only way to get through.  A form sent by mortgage brokers will be ignored.  Especially if sent en masse.  The mortgage broker is the LAST entity that Congress will listen to on this matter considering the apportionment of blame.

Hi Bob,  The fight to overthrow the Home Valuation Code of Conduct is far from over.  There is much going on!

         Including

Call to Action!

April 16, 2009

Dear NAMB Member:

This is a Call to Action! Please contact your Senators and Representatives TODAY and urge them to STOP or DELAY (for at least 12 months)

Paul you are correct that the consumer must take action also on this matter.

That is why I posted  Consumer Beware HVCC - Home Valuation Code of Conduct may cost you much more $$$ and aggravation. 

On the Consumers - Questions, Answers, Help  section of Mortgage News Daily.

Which I believe will and should be reactivated on Mortgage News Daily...

 Consumer Beware HVCC - Home Valuation Code of Conduct may cost you much more $$$ and aggravation.  Mortgage Questions.

NAMB provides essential advocacy efforts to members ensuring their interests are represented and protected on the federal and state levels. Please continue to check this page as it will periodically update to reflect the most recent advocacy efforts provided by NAMB.

http://www.namb.org/namb/NAMB_Fights_for_You.asp?SnID=744937111

Latest info I have is it will take effect May 1st.  Also the NAR requested a 1 year delay (on Monday) for effective date to May 2010.  Like stated above - too little, too late.  There also have been some lenders that were already implimenting the code as far back and February.

When does the knee jerk reaction stop?  The process wasn't broken, the lender programs and requirements were broken.  Sorry, this is a little off topic -- But the implications of this process are huge.  You think home prices spiraled out of control a year ago, wait until you get an appraisal company that isn't local doing the reports, comparing foreclosure sales to your new purchase, then contract purchase prices start coming in higher than appraised values.  Our real estate partners are really going to be pointing fingers in about a month.  On top of turn times of two weeks before you even get an idea of the value of the real estate you are trying to get financed.   Our lenders are requiring us to pay them up front with a credit card before they will even order the appraisal so we in turn have to establish an escrow account to collect the money from the borrower because we can't collect and hold money for appraisal services through our company's operating account.  They are requesting we list their appraisal fee as an application fee on our GFE's, which is exactly opposite of ALL OF MY TRAINING on proper disclosure.  This HVCC is the brainchild of one over zealous politician trying to get another notch in his belt.  If they truly wanted to address the housing crisis, they would be forcing themselves upon the MI companies, the 2nd mortgage holders, loan mod departments, etc.  Suffice it to say all of our lenders are enforcing this as of May 1st, any application not registered and 1003 submitted prior to then is required to be part of this "new and improved" procedure.

Not one Catherine? How do you know this? What are your sources? I know of an appraiser in my area that has been VERY active on this topic. Just curious...

This is from an email i received from Everbank.

So, on purchase loans are appraisers now going to have a target to hit?

Victor Burek:

So, on purchase loans are appraisers now going to have a target to hit?

Appraisers have always had a target to hit on purchases.  There is specific information in the purchase agreement that is required to included in the report.  Therefore the need for appraiser to have a copy of the purchase contract.  The purchase price is one of those specific items of information.  Unfortunately, many appraisers use the purchase amount as a target, but a competent appraiser will ignore that amount and/or subtract out any concessions that may be included. 

AzAppraiser:

Appraisers have always had a target to hit on purchases.  There is specific information in the purchase agreement that is required to included in the report.  Therefore the need for appraiser to have a copy of the purchase contract.  The purchase price is one of those specific items of information.  Unfortunately, many appraisers use the purchase amount as a target, but a competent appraiser will ignore that amount and/or subtract out any concessions that may be included. 

Looks like appraisers will be "influenced" on purchases.  Goes directly against HVCC...

Catherine Coy:

Why does an appraiser even need a copy of the contract.

As stated in my earlier reply posted above - Quote "There is specific information in the purchase agreement that is required to be included in the report.  Therefore the need for appraiser to have a copy of the purchase contract.  The purchase price is one of those specific items of information." End Quote. 

The information included in the report from the purchase contract is required by Fannie/Freddie/FHA.  If you read an appraisal report it states the appraiser must analyze the sales/purchase contract and comment on it in the report and there are specific places in the report for that and other required information.

One of the biggest comlaints from appraisers (even long BEFORE the HVCC) has always been the fact that NOBODY reads the report submitted.