Big Banks Want Brokers Licenses.

[Caterina Platt]

Well Brad, the 'scare you into action' speech from all my Realtor friends goes as such:

Once they cross this line, they'll be doing in house appraising, title insurance sales, surveying and everything else you can imagine.

Well, we already have 'in house appraising', but part of my beef with the whole matter is that the customer loses his options for shopping the best mortgage, and a lot of our small mortgage brokers may end up closing doors due to lack of business. This would be another step in the 'crush, buy or otherwise get rid of your competion' that has been taking place in the banking industry.

Further, unless Big Banker wants to cooperate with Realtors in the sale, the buyer loses his representation from a 'Buyer's Agent'. What kind of property conditions, inspections, etc. will be glossed over when the sales agent represents only the seller? Will the buyer be able to negotiate a fair price without the aid of a Realtor and/or market anaylis? Who will be there to aid the buyer in constructing a purchase contract that pertains to any of the buyer's position or concerns? The more I type, the more I think Ralph Nader would have a field day with this one.

I suppose my biggest concern is that it would be a huge step backwards in the area of consumer protection and representation in the most substantial purchase they would make.

 

[The Bob]

The ONLY reason the NAR doesn't want the bankers competing with them is money. Its as simple as that. Banks would be the first real competition they have ever faced. I have little sympathy for them. Remember, they lobbied directly against our (appraiser's) interest with all the loop holes for a "brokers opinion" of value. I doubt Congress will allow banks to compete with Realtors though, after all the NAR is the largest trade group in the country and they contribute accordingly. I think the proposed bill to limit bank competition has 200+ co-sponsors.

 

[Judy Whitehead (Florida)]

Headlines in our local issue of the Tampa Tribune yesterday was a photo of one of our Real Estate Brokers and about his trip to Tallahassee (his first of many to come) about this very same issue. The local Assoc. is lobbying very hard against it.

Another issue we have to deal with in Florida is the specter of ''sales tax on services'' rearing its ugly head again....that would affect appraisers, real estate agents, and most of the service businesses. This one was defeated about 10-12 years ago thanks to the lobbying efforts of the real estate people. I hope we don't have to give this one up for the bankers to become real estate brokers. Isn't that what politics is all about - negotiation?

 

[Francois K. Gregoire]

NAR (and I am a member) has been helpful in some states but not in others. I still have not seen them make a pronouncement that appraisals are a necessary part of the mortgage lending process.

Perhaps NAR would want to think this over. Only half of us belong. There are over 40,000 who do not, but who may well support their position if they gave us something- even in a policy position- that would make us feel all warm and fuzzy.

Frankie G- listening? You are the point guy.

Brad Ellis, IFA, RAA
National Director, NAIFA

Hi Brad,

Yes, I'm listening. NAR has, in fact, stated "appraisals are a necessary part of the mortgage lending process" and has provided comment letters in opposition to proposed rules to raise the deminimus. Yes, NAR supports a deminimus, but not the levels in place by banks and other Federally Regulated Lenders. Please Read this:

SOURCE

Text

APPRAISAL

ISSUE: Appraisal - De Minimis Levels.

NAR POSITION: NAR supports a licensed or certified appraisal for all federally-related transactions. Concerning the de minimis level, NAR supports a threshold level of $100,000 for residential loans and a $250,000 level for commercial loans. NAR believes that using appraisals more often should lead to better loan underwriting.

OPPOSING VIEWS: Regulators have continued to raise these levels continuously over the years. There is a belief that the consumer benefits because less appraisals mean less appraisal fees overall.

IMPACT ON REALTORS®: A properly conducted appraisal is key to the successful completion of the real estate transaction. Delays or poor appraisals may negatively impact the sale of residential and commercial properties.

STATUS/OUTLOOK: On May 7, 2001, NAR Government Affairs sent a Comment Letter on behalf of NAR's 30,000 Appraiser members to the National Credit Union Administration (NCUA) to protest NCUA Proposed Rule 12 CFR Parts 722 and 742, Section 722.3 (a)(1) - Appraisals. The Proposed Rule would in essence give certain Credit Unions with excellent credit standings the option of raising the minimum dollar amount that would require an appraisal from $150,000 to $250,000. Adoption of the Proposed Rule would mean less appraisal work for REALTOR® appraiser members from NCUA institutions. The Proposed Rule is not consistent with current NAR appraisal policy that mandates a $100,000 for residential transactions and $250,000 for commercial ones.

As background, in 1994, the Federal Financial Institutions Regulators issued final regulations increasing the threshold level, below which a licensed or certified appraisal is not required, to $250,000 for residential and commercial loans. Financial institutions may obtain an appraisal below the threshold level if they determine one is needed. Under the final regulations, financial institutions must obtain an "evaluation" of property loans below the threshold level which may be conducted by persons with or without a state license or certified appraiser designation. In addition, the regulations add several other exceptions to the general rule requiring licensed or certified appraisals (i.e., abundance of caution, repayment not based on cash flow of the property).

CONTACTS: Doug Miller 202-383-1117, Peter Morgan 202-383-1233

PRIMARY REALTOR® COMMITTEE: Commercial Legislative/Regulatory Subcommittee

NOTE: Peter Morgan is now part of the NAR Staff Support for the Appraisal Committee. The Credit Union Comment Letter mentioned above was written by the Appraisal Committee.

Here's the NAR Comment Letter to the National Credit Union Administration.

[url=http://www.realtor.org/AppSourc.nsf/pages/NCUAappraisalRegulations?OpenDocument]CREDIT UNION LETTER

Any other requests? Some things CAN be done.

 

[bradellis]

Frank-

THANKS!

I'm guessing that we appraisers ought to be backing up NAR's postions on this, or at least that is my opinion.

Brad Ellis

 

[Mountain Man]

Thanks Frank,
That is good info for my "neat stuff" file.

 

[Caterina Platt]

quote="JimBob"]
The ONLY reason the NAR doesn't want the bankers competing with them is money. Its as simple as that. Banks would be the first real competition they have ever faced. I have little sympathy for them. Remember, they lobbied directly against our (appraiser's) interest with all the loop holes for a "brokers opinion" of value. I doubt Congress will allow banks to compete with Realtors though, after all the NAR is the largest trade group in the country and they contribute accordingly. I think the proposed bill to limit bank competition has 200+ co-sponsors.
[/quote]

It may not be the only reason, however, it is the main reason. But, is there a problem with that being the biggest reason? Maybe it doesn't have all the warm fuzzies as the 'Buyer representation' issue, but is profit a dirty word these days? Is the reason all the big banks want into the real estate industry for philanthropic issues? No, of course not, it's profits.

What is the main reason an appraiser hates the AVM? To save their own bacon. We need to maintain our existance. Who are we to lack pity for another industry fighting for their own existance when we are doing the same thing ourselves. What argument do we use against the AVM? Well we'd appear nothing less than self serving and stupid if it were, "Please Mr. Lender, you gotta let me keep my job. Don't use that computer generated value." The only one who cares whether the appraiser survives is the appraiser. So, we have to look at the more compelling issues that affect others by the use of the AVM. I feel representation of the buyer's interests and negotiating position is pretty compelling. After all, that's why we Realtors aren't all seller sub agents and this confusing agency issue was implemented in the first place.

The large banks in our country are on a feeding frenzy against thier competition and have been for 10+ years. Any small to mid size institution that has a decent balance sheet gets gobbled up by one of the mega banks to stamp out the competition, please the share holders, etc. They've taken this same feeding frenzy into other industries such as insurance, brokerage services, and now trying to consume the real estate industry. Ever get concerned that one day we'll wake up and find out that 3 or 4 huge banking conglomerates now control basically everything in our economy? Think of the powerful lobby and control they would have over congress. I'm concerned enough about the power they already weild.

This all may sound like I've been loading up on my paranoia pills, but seriously, the macro economic structure of our system needs to be diversified for the sake of balance and competition. If one sector controls the majority of the industry and money, and as a result wags the dog when it comes to congress, we are in real trouble.

 

[Pamela Crowley (Florida)]

Caterina,

I didn't read anything in your post that sounded like paranoia to me. It sounds like a reasonable and learned opinion based in reality.