A Different Legal Opinion On Ftc And Fees

[Bob Ipock]

https://www.ftc.gov/system/files/do...e_appraisal_letter_from_ftc_06302017_text.pdf

 

[Riick]

The one thing the FTC did not have anything to say about is the *fact* that the market for Mortgage-type Fannie/Freddie appraisals is not a Free Market. If they took that into account, their outlook might change.
oligopoly- noun

• A market form wherein a market or industry is dominated by a small number of large sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher prices for consumers. Oligopoly has its own market structure. With few sellers, each oligopolist is likely to be aware of the actions of the others. According to game theory, the decisions of one firm therefore influence and are influenced by decisions of other firms. Strategic planning by oligopolists needs to take into account the likely responses of the other market.

https://en.wikipedia.org/wiki/Economics_of_scale
https://www.dictionary.com/browse/monopoly

 

[Bob Ipock]

The one thing the FTC did not have anything to say about is the *fact* that the market for Mortgage-type Fannie/Freddie appraisals is not a Free Market. If they took that into account, their outlook might change.
oligopoly- noun

• A market form wherein a market or industry is dominated by a small number of large sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher prices for consumers. Oligopoly has its own market structure. With few sellers, each oligopolist is likely to be aware of the actions of the others. According to game theory, the decisions of one firm therefore influence and are influenced by decisions of other firms. Strategic planning by oligopolists needs to take into account the likely responses of the other market.

It seems that Fannie/Freddie would be BUYERS rather than sellers.

 

[Riick]

Depends on your perspective
as to who is the buyer & seller.

We sell to AMC, who sell to Bank, what sell to say FNMA.
--Or --
FNMA buys from banks,who buy from AMCs, who buy from us.

Which do you like?

Have look here..
https://en.m.wikipedia.org/wiki/Market_structure?wprov=sfla1

 

[Bob Ipock]

Depends on your perspective
as to who is the buyer & seller.
Have look here..
https://en.m.wikipedia.org/wiki/Market_structure?wprov=sfla1

I might be wrong. In my opinion Fannie/Freddie don't buy appraisals...they buy loans.

 

[Terrel L. Shields]

My read is basically the FTC says that C & R is whatever the AMC can shove down your throat, including $40 or less. But if the crush of work allows an appraiser to charge $1000, then the appraiser is a scumbag profiteer and should be punished.

 

[DWiley]

It seems that Fannie/Freddie would be BUYERS rather than sellers.

Aren’t the sellers of appraisal services the appraisers?

Small number of sellers??

 

[Meandering]

Aren’t the sellers of appraisal services the appraisers?

Small number of sellers??

Aren't the buyers of appraisal services equal or less than the sellers?

How many companies and sub-corps does your company own?


.

 

[DWiley]

The definition posted refers to a market structure with a small number of large sellers. Is that not the total opposite of the appraisal space, which has a large number of small sellers?

With regard to appraisals, any claim that transactions are concentrated in either a small group of sellers, or a small group of buyers, is specious and not supportable by any analysis of the marketplace

 

[gregb]

https://www.scotsmanguide.com/News/2018/04/Big-banks-boost-lending-as-small-banks-retreat/

pr 3, 2018 13:35 ET

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Big banks boost lending as small banks retreat


In the battle for mortgage-market supremacy, nonbanks are still coming out ahead, recent data suggests.



As credit conditions have eased, however, some of the nation’s biggest banks have been willing to take on riskier borrowers and step up lending, loan data from the American Enterprise Institute’s Center on Housing Markets and Finance suggests. In the new mortgage market dynamic — with lenders battling over a shrinking pool of borrowers and credit conditions easing — the small banks are increasingly the losers.

The big banks — here defined as a bank that originated at least 30,000 primary mortgages in 2016 — have ramped up mortgage lending in some areas, but smaller and mid-sized banks have retreated, AEI data suggests. The overall bank-versus-nonbank share has remained fairly stable since September 2016, with nonbanks the dominant players. Banks are defined as lending institutions that take deposits from consumers while nonbanks are generally funded through private investors.

“There has been no impact in the share of the nonbanks because the relationship between the large banks and nonbanks has not changed,” said Ed Pinto, co-director of AEI's Center on Housing Markets and Finance. “They (banks) are still well below the risk appetite of the nonbanks,” Pinto said.

Nonbanks originate about 46 percent to 48 percent of all home-purchase loans originated for the government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac, according to AEI. That figure has been stable for several quarters. The large bank share has risen to around 38 percent from a low of 31 percent in 2015.

Meanwhile, the share of GSE purchase loans originated by smaller and mid-sized banks has fallen over the past two years by 5 percentage points, to 11.4 percent.

Pinto said that smaller banks tend to be more risk adverse. In the conventional loan market, the big banks are essentially grabbing the loans that smaller banks won’t do as credit conditions ease.

As of mid-year 2017, the latest data available from AEI, nonbanks were originating slightly more than 60 percent of all single-family mortgages, which includes the GSE loans as well as Federal Housing Administration (FHA) and other government-agency loans. The overall bank share has stabilized at just over 35 percent. Credit unions and other lender types make up the rest.



The overall bank share of the FHA loan market remains low. Nonbanks originate around 80 percent of all FHA purchase loans and around 90 percent of refinances, AEI data suggests.

Small banks pull out



Small banks began to lose additional market share to big banks around the time that Fannie Mae and Freddie Mac introduced low-downpayment programs that allowed borrowers to put as little as 3 percent down, AEI data suggests. Bank of America, JP Morgan Chase and Wells Fargo & Co., in quick succession in 2016, rolled out low-downpayment loan programs in partnership with Fannie Mae and Freddie Mac.



More recently, Fannie and Freddie also eased standards to allow a borrower to carry a debt-to-income load of up to 50 percent. Pinto said some of the large banks, along with most of the nonbanks, are lending to these standards, but the small banks are not following along.

Pinto said AEI expects the small-bank share to keep falling. He said large banks also may start pulling back again if credit conditions ease further, a condition that would cede more of the mortgage market to the nonbanks.



“As the [risk] index keeps increasing, which it has been pretty continuously since we started, the nonbanks are going to continue their very high share,” Pinto said. “They may even start growing again. We think the small banks are going to shrink because they are going to shy away.”



Nonbanks — which include national lenders Quicken Loans, Freedom Mortgage and loanDepot — are well positioned to remain the dominant players as the market shifts over to primarily home-purchase loans, according to analysts.



“There has been some ‘expansion of the box’ in terms of credit criteria [among banks], but the truth is that banks really don't want to make below prime [below 680 FICO] loans,” said Christopher Whalen of Whalen Global Advisors. “Non-banks will go there, but mostly for sale into the FHA/VA [Federal Housing Administration/Veterans Affairs] market.”



“We are in for a tough slog for the next one to two years in terms of profitability,” Whalen added.



In an environment like this, Whalen said banks especially will be challenged to increase their volume.



“There are not many fish in the bottom third of the credit scale who can actually qualify for a loan, so using different credit scores or changing criteria really is not going to matter,” Whalen said.



The Urban Institute also tracks the nonbank share of mortgage lending. In its latest monthly report, the nonbank share declined slightly in February. Urban researchers said that figure tends to be volatile, and it was too early to determine if banks were gaining any real ground.



To gain market share, the banks would have to come back to FHA lending, said Karan Kaul, a research associate with the Urban Institute. Banks largely stopped making FHA loans after the Department of Justice and the U.S. Department of Housing and Urban Development forced several big banks to buy back faulty loans from the pre-recession era, and aggressively sought large punitive settlements under the False Claims Act.



“[HUD Secretary] Ben Carson has said more than once that the previous administration’s enforcement of the False Claims Act, they are going to be looking at that,” Kaul said. Banks have yet to be wooed back to FHA lending, Kaul said. He also noted that if banks do decide to come back into FHA lending, it won't be an instant process. The bank would have to hire loan officers and develop new programs.



“These things take time to work out,” Kaul said. “For a bank that has pulled out of a certain lending program, it is not [like flipping] a switch.”