Bob Murphy, the chairman and chief executive of
ValuAmerica Inc., a Pittsburgh vendor management company, said Fannie is trying to implement changes that the industry tried unsuccessfully to adopt 20 years ago, before the savings and loan crisis.
"The separation between appraisers and lenders has not occurred," he said. "The industry found itself in a situation where brokers and loan originators influenced appraisers to get higher property values."
Most vendor management companies do not conduct appraisals themselves, but there may still be an inherent conflict, Mr. Murphy said. "The nuance is that
if you're a wholly owned vendor management company, then you owe allegiance to your owners."
Absolutely correct. He forgot to add - and many leading AMCs exert just as much pressure as do MB or more!
Bill Garber, the director of government affairs at the Appraisal Institute, a trade group of appraisers, raised concerns about Fannie's expanded role in creating a clearing house of appraiser information.
"This would appear to place Fannie Mae in an appraiser regulatory role, and appraisers are already regulated," he said. "The clearing house concept seems to add a layer of bureaucracy and could subvert the current structure."
Mr. Garber said the Fannie deal would not solve the issue of "appraisal coercion," which he blamed largely on mortgage brokers for pressuring appraisers to inflate property values.
But he also chastised lenders and vendor managers for not hiring qualified appraisers and choosing "those that hit the numbers to get a deal done" instead. "Whenever you can insert protection for appraisal independence, we think that's a good thing," Mr. Garber said, and he would like to see more details of the proposed changes.
BULLSEYE MR. GARBER!!
Mr. Schurman said even though brokers have received plenty of criticism for pressuring appraisers, there still is
no clear definition of what constitutes illegal pressure.
His trade group defines inappropriate client pressure as
"bribery, coercion, and extortion."
TRIPLE BULLSEYE MR. SCHURMAN. The only ones who refuse to understand those terms are the individuals and companies bribing, coercing, and extorting Ethical Appraisers and financially rewarding Unethical, Incompents in direct violation of existing Federal Laws, OCC, OTS, FDIC, and Federal Bank & Mortgage ** AND NOW HUD/FHA *** Regulations, and State Banking, Mortgage Lending, Consumer Lending, and Appraisal Laws.
