• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Fed Reserve proposed ban on coercing appraisers

Status
Not open for further replies.

Doug Wegener

Thread Starter
Senior Member
Joined
Apr 14, 2005
Professional Status
Certified Residential Appraiser
State
Oregon
Did you all see the text of Bernanke's speech before Congress. Heres a link and a excerpt.

http://www.federalreserve.gov/newsevents/testimony/bernanke20080227a.htm



"In addition, for all mortgage loans, our proposal addresses misleading and deceptive advertising practices, requires borrowers and brokers to agree in advance on the maximum fee that the broker may receive, bans certain practices by servicers that harm borrowers, and prohibits coercion of appraisers by lenders."

"Finally, I would like to say a few words about the Federal Reserve's recent actions to protect consumers in their financial transactions. In December, following up on a commitment I made at the time of our report last July, the Board issued for public comment a comprehensive set of new regulations to prohibit unfair or deceptive practices in the mortgage market, under the authority granted us by the Home Ownership and Equity Protection Act of 1994. The proposed rules would apply to all mortgage lenders and would establish lending standards to help ensure that consumers who seek mortgage credit receive loans whose terms are clearly disclosed and that can reasonably be expected to be repaid. Accordingly, the rules would prohibit lenders from engaging in a pattern or practice of making higher-priced mortgage loans without due regard to consumers' ability to make the scheduled payments. In each case, a lender making a higher-priced loan would have to use third-party documents to verify the income relied on to make the credit decision. For higher-priced loans, the proposed rules would require the lender to establish an escrow account for the payment of property taxes and homeowners' insurance and would prevent the use of prepayment penalties in circumstances where they might trap borrowers in unaffordable loans. In addition, for all mortgage loans, our proposal addresses misleading and deceptive advertising practices, requires borrowers and brokers to agree in advance on the maximum fee that the broker may receive, bans certain practices by servicers that harm borrowers, and prohibits coercion of appraisers by lenders. We expect substantial public comment on our proposal, and we will carefully consider all information and viewpoints while moving expeditiously to adopt final rules.

*************************************************

Apparently the Federal reserve has proposed regulations banning the coercion of appraisers, and is requesting comment from the public. I will try and get the text of the proposed regulation and where we send our comments. I wonder if this is going to be another regulation with no teeth that will not be enforced and with no penalties to lenders.

I havent heard any news about this anywhere from Appraisal organizations. Did I miss it? Or did it not happen?
 

Fred

Elite Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
Apparently the Federal reserve has proposed regulations banning the coercion of appraisers,
I have no reference to cite, but wouldn't "coercion" already be "banned?"
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Around here, you don't have to coerc Skippy, just ask him. :leeann:
 

William K

Senior Member
Joined
Sep 21, 2007
Professional Status
Certified Residential Appraiser
State
Illinois
I have no reference to cite, but wouldn't "coercion" already be "banned?"

YES but to Propose banning it is a different story!:rof:

So do you think they were all sitting around a room when someone said hey "I THINK THIS COERCION THING IS BAD!"

I picture a scene from Blazing Saddles
" HOWARD JOHNSON IS RIGHT!":rof:


I'M FROM THE GOVERNMENT, I'M HERE TO HELP!:rof:
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
Everyone has a different interpretation of the word "Coercion."

Is owner's estimate of value considered coercion? We think so but I doubt if anyone outside the industry would agree.

We need $zzz,zzz to make the loan work. Coercion or just a good business practice? We say it is coercion, but, again, who, other than appraisers would agree? They are just "trying to save the borrower money."

There is a rationale for almost every attempt. If you think we will ever be successful in having lenders blindly order appraisals without regard or concern for what the final value might be, you are naive. It will never happen. This naivety is what opens the doors for skippy. Fielding these attempts is what separates a successful appraiser who follows the rules from one who simply discards an appraisal order because he or she construes everything as coercion.
 
Last edited:

JonGalt

Junior Member
Joined
Aug 4, 2005
Professional Status
Certified Residential Appraiser
State
Illinois
Fed Reserve proposed ban on coercing appraisers

And in other news:

"The check is in the mail"
 

xmtpedprl

Senior Member
Joined
Dec 6, 2005
Professional Status
General Public
State
Florida
Imagine that. A proposal to "ban" what should never be happening in the first place.

I've said it before, and I'll say it again:

FINE THEM.

That'll solve the problems overnight. Fine the $50,000 every time an order comes over with a value. Every time an e-mail hits with a statement like "If you can get me this value the order is yours..."

Fine them. And it will end.

Until then all else is smoke and mirrors.

Dave...
 

c w d

Senior Member
Joined
Oct 2, 2006
Professional Status
General Public
State
Florida
Leave it to the current financial leaders to propose doing the same thing and expect it to change anything. Isn't that the definition of insanity; doing the same thing expecting different outcomes?

And, is the owner's estimate of value coercion or pressure? No. But, what percentage of the inputted estimate of values are actually from the owner? And why has "estimate of value" become synonymous with "required value" if it's the owner's estimate? It's not. It is mostly a mechanism to allow the client to pressure the appraiser. It most cases the estimate is a required value to accommodate the owner's credit rating, payment potential, debt to income ratio, increased brokerage commissions etc, etc, etc.
 

Smokey Bear

Elite Member
Joined
Dec 8, 2004
Professional Status
Certified Residential Appraiser
State
California
and prohibits coercion of appraisers by lenders."
Well, duh! That's why they invented Mortgage Brokers, so the lenders regs wouldn't slow them down.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks