Couomo - HVCC

[Don Clark]

You are exactly right. I was a 20 something in the midst of the S & L crisis, but if memory serves and my understanding is correct, there was a lot more involved to the collapse than faulty valuations.

At the time, a super regulated stock market was drunk on hostile take overs financed by junk bonds. The collapse of these firms due to overvalued securities certainly didn't seem to help the financial health of depository institutions, pension funds, penny stock brokers (Blinder and Robinson, Stuart James, etc.). It was another period of no-holds-barred and ignore your sensibilities. The stock market was already regulated to the hilt, yet that didn't stop the players.

We can't simply point to one aspect of our financial markets and put a bandaid on the situation and hope for a fix. As we've discussed, it's systemic. Either there's an all out collapse and restructure, or we're just biding our time until the next crisis.

Much of the S&L crisis can be traced to the Tax Reform Act of 1986. The investors who had been paying only 40% of capital gains after deducting fix up and selling expense, and who could use a system of double declining balance on their investments, suddeny had that all taken away. Also, the previous restrictions on S&L's as well as cerdit unions was removed and just about any financial institution could and did act like a bank and loaned money unders very shadyu cirumstances, little documentation, and appraisal completed very often by people who had no clue on how to do appraisals. In 1987 the stock market almost collapsed. There was a run on financial institutions who had very little in reserve. This caused disintermediation(demand with no funds available to meet demand).

The same congress that had just cut the legs off investors started looking for someone to blame. They found it in S & L's and appraisers. The rest is history.

 

[timd354]

It is just looking for a place to lie down and be buried. Closed casket, I am sure, as it will have been hacked to death before it is laid to rest.

My prediction, it is going to get much , much worse before it gets any better. I have joined the doom and gloomers.

The only hope will come form the banks themselves, making a change in the way they want business done.

Or, maybe if FNMA and Freddie get completely taken over by the Gubment.

Seeing how OFHEO was one of the parties that had to sign the Cuomo agreement creating the HVCC and the IVPI and seeing how OFHEO will cease to exist on or about October 1, it seems to me that the HVCC is dead unledd the new regulating entity signs onto the agreement.

 

[Caterina Platt]

Thanks, Don. I was working at a trust company in the retirement industry at the time. All my perspective of TRA came from the savings and stock market side of the business. The biggie being it was the piece of legislation that severely changed the deductability of all IRA contributions and affected our business. 20 somethings don't generally have to be concerned with capital gains. No matter, we too thought it was a piece of junk.

There was finally a tax law in place that encouraged savings, and congress wiped it out with TRA.

I remember Black Monday in October of 1987. 25% dip on one day is pretty ugly.

Back on topic: I've been doing some reading lately, and Andrew Cuomo's name keeps popping up and his alleged associations and dealings are not those of a person interested in cleaning up corruption. We white hat types want to attack this HVCC monster from a direct and above the table approach. It's how we're made, we're not programmed to be phony and underhanded.

Part of me wonders if his political enemies wouldn't be the best offense against the HVCC.

 

[panappr]

OK... I heard today from a client in San Diego that a FANNIE memo went out with some guideline changes, but couldn't get a copy of it. Supposedly, mortgage brokers are not being allowed to order appraisals, hence my order was canceled, this is the third cancellation in a week. Does anyone know anything about this???

 

[Pamela Crowley (Florida)]

Some lenders are doing that now, panappr. GOOD for them!

 

[panappr]

Some lenders are doing that now, panappr. GOOD for them!

Yea, I figured that, but I was just trying to make as much money as I could, before I have to resort to looking for another line of employment.

 

[ghrousseau]

OK... I heard today from a client in San Diego that a FANNIE memo went out with some guideline changes, but couldn't get a copy of it. Supposedly, mortgage brokers are not being allowed to order appraisals, hence my order was canceled, this is the third cancellation in a week. Does anyone know anything about this???

We did not receive any notices this week from any of the major investors or Fannie/Freddie regarding that. Fannie and Freddie made some significant changes on credit history regarding prior bankruptcy and foreclosure. There is also a new version of Desktop Underwriter being used now. Nothing was indicated regarding appraisals as of this time from what I saw. Our operations management and product development team constantly monitors any guideline changes that affect us. We have both retail and wholesale channels of business so we do order our own appraisals directly. Also, there is nothing currently listed on Efanniemae.com regarding that announcement.

 

[panappr]

We did not receive any notices this week from any of the major investors or Fannie/Freddie regarding that. Fannie and Freddie made some significant changes on credit history regarding prior bankruptcy and foreclosure. There is also a new version of Desktop Underwriter being used now. Nothing was indicated regarding appraisals as of this time from what I saw. Our operations management and product development team constantly monitors any guideline changes that affect us. We have both retail and wholesale channels of business so we do order our own appraisals directly. Also, there is nothing currently listed on Efanniemae.com regarding that announcement.

Well I don't really know the client, but I accepted the assignment because it was a legitimate sale, and COD, however, they stopped me in route. So I suspect what Pam said is most likely true, that the end user will now be ordering the appraisals. That's a shame because it was a really good assignment, which will now probably go to an AMC and somebody else will get it for 1/2 price.

 

[ghrousseau]

Well I don't really know the client, but I accepted the assignment because it was a legitimate sale, and COD, however, they stopped me in route. So I suspect what Pam said is most likely true, that the end user will now be ordering the appraisals. That's a shame because it was a really good assignment, which will now probably go to an AMC and somebody else will get it for 1/2 price.

There are some likely scenarios out there that I can think of. One would be net branch broker shops. Some companies like these have been scared into adopting the use of AMC's now. The corporate or "head" office may be telling the affiliates you must order the report from XYZ company. This, however is not a current directive from any of the major shops wholesale lenders sell to or from Fannie and Freddie directly. Was your client a broker shop?

 

[Anthem]

Many new policy changes are rapidly surfacing among Fannies biggest sellers... something is going on this month.