First In Series - Ivpi Q&a #1

[Marcia Langley]

It says how good the IVPI proposal may operate but doesn’t say how bad the AMC has been operating. Unless they are convinced that this proposal is better than AMC, they have no reason to change the old system that they know to the new system that they don’t know. The flaw of AMC should have been highlighted and addressed in details but it is too late now. May be we should highlight and address it in the comment section of HVCC.

Moh,

Absolutely! We can't stress this enough. Keep sending comments to the Fannie/Freddie comment forms but also to everyone else you can think of.

Stress your grief at the idea of all appraisals being driven to AMCs and why their practices hurt the public trust because they include appraiser coercion. Don't whine about fees, that won't sway anyone. Do this in addition to sending your endorsement for the IVPI Organizational Committee's proposal.

 

[The Warrior Monk]

Raise your hand if you seriously believe the GSEs will somehow reverse their stand on MB-engaged appraisals.

I honestly don't know what the future holds. But economics may force a reconsideration. MBs are not going away (well, some aren't; lots are out of business), and they do have the option of sending loan packages to nonGSE lenders, which allows them more control. If they direct enough loans away from GSEs to impact the GSEs bottom line, I suspect a reconsideration on the part of the GSE will happen.

 

[Marcia Langley]

I think whatever MBs are left will keep a niche. But I do not think they will reverse the part of the GSE agreement that prohibits the GSEs from buying loans with MB controlled appraisals attached to them.

If they direct enough loans away from GSEs to impact the GSEs bottom line, I suspect a reconsideration on the part of the GSE will happen.

David,

Actually that is part of the existing problem. The GSEs are ending up with some loans that were never intended to follow their guidelines. They accepted poorly quality-controlled packages simply because they wanted that market share. That's exactly what they are in trouble for now, and all the other players, too.

Claiming to have lofty requirements and controls while actively persuing and disguising the loans that don't in fact meet those requirements is the status quo for every segment of the industry. That has been the only way they could compete with one another for market share because everyone did it.

If government is the least bit successful in forcing some actual adherence by the participants to their own stated requirements, then the public trust will have gained something.

The whole point of having any sort of oversight on the financial industry is to have public trust related controls to counteract a blind persuit of market share.

 

[timd354]

Choice is a good thing.

It is more than a bit ironic that one of the biggest advocates of a mandatory IVPI rotational appraiser's panel which eliminates choice and competition would say that choice is a good thing.

 

[timd354]

How about a simple "yes" or "no" to this statement. Stop playing word games. Answer the question straightforwardly.

Yes or no.

"The intent of the IVPI is to require the appraiser to be a member or otherwise affiliated with the IVPI as a prequisite to receive appraisal assignments from lenders utilizing GSE secondary funding. If the appraiser is not a member or otherwise affliated with IVPI, said lender will not be able to utilize the appraiser as all appraisal requests must be routed through IVPI for assignment to their approved panel of appraisers."

Yes or no.

The answer is yes, it is a requirement to be a a member of the IVPI panel in order to perform appraisals for GSE related loans... read the proposal.

 

[Marcia Langley]

timd,

Do you see an alternative that would meet the goals of enforcing lender accountability for appraisal management?

I bumped up a thread I started titled, "One Way ...."

I'd be interested in what you think about it.

 

[Mike Kennedy]

moh malekpour: Mike,
I personally think the IVPI proposal is a good one but it doesn't address the AMC's problem. It doesn’t have a persuasive argument as to why GSE, NY AG and OFHEO should choose the IVPI proposal instead of AMC. There is nothing in there to inform them about the way that AMC operates.

:icon_idea: They already know. They have reams of hard copy orders, emails, BOTH MBS and AMC taped phone communications from

AMC log: "this conversation is being recorded.............." which most of the Lender owned or affiliated AMCs.....continue to use (including their "appraiser hotlines".

Please note: Investigations are on-going.......

"WHEREAS, the Attorney General’s Office and OFHEO believe that this forward-looking agreement will in no way prejudice any of the Attorney General’s ongoing investigations in the mortgage industry or OFHEO’s regulatory mandates but will provide appropriate and necessary reforms and stability to the market."

10. Fannie Mae agrees to cooperate with the Attorney General’s Office and OFHEO to effect and accomplish the terms of this agreement. Fannie Mae also agrees to continue to cooperate in the Attorney General’s Office’s ongoing investigation into the mortgage industry.

3. To that end, the parties agree that an independent entity, the Independent Valuation Protection Institute (the "Institute"), will be established to monitor and study this area. The Institute may, from time to time, propose amendments to the Code which the parties to this Agreement will review and consider.

4. The Institute will establish a complaint hotline for consumers nationwide to contact if they believe the appraisal process has been tainted or if they have been harmed by appraisal fraud.

5. Appraisers themselves will be able to contact the Institute if they believe their independence has been threatened in any way, including by undue pressure. Appraiser complaints will be handled in confidence to protect the appraisers from possible retaliation.​

The Institute, in its judgment, will mediate complaints or forward complaints to federal or state regulators. The Institute, in its judgment, may also forward complaints to state or federal law enforcement agencies for possible investigation or prosecution.

Home Valuation
Code of Conduct​

[FONT=Times New Roman,Times New Roman]I. No employee, director, officer, or agent of the lender, or any other third party acting as joint venture partner, independent contractor, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery, or in any other manner

V. Any employee of the lender (or if the lender retains an appraisal management company, any employee of that company) tasked with selecting appraisers for an approved panel or substantive appraisal review must be (1) appropriately trained and qualified in the area of real estate and appraisals, and (2) in the case of an employee of the lender, wholly independent of the loan production staff and process.

The lender also shall not use any appraisal report obtained by or through an appraisal management company that is owned by the lender or an affiliate of the lender, provided that the foregoing prohibitions do not apply where the lender has an ownership interest in the appraisal management company of 20% or less and where

(i) the lender has no involvement in the day-to-day business operations of the appraisal management company,

(ii) the appraisal management company is operated independently, and

(iii) the lender plays no role in the selection of individual appraisers or any panel of approved appraisers used by the appraisal management company.

[/FONT]

 

[The Warrior Monk]

timd,

Do you see an alternative that would meet the goals of enforcing lender accountability for appraisal management?

I bumped up a thread I started titled, "One Way ...."

I'd be interested in what you think about it.

All of the lenders we work for (or at least the divisions we work for) order the appraisals in house through a division independent of the LO's, and many times are even located in another state. The lender is responsible to their investors, appraisers are watched carefully, there is no pressure on the appraisers, and fees aren't anywhere near $250 (or less). Lenders are fully responsible for their own actions. They are also aware of the garbage they would get from AMCs, which is why these particular divisions will not use them.

 

[Marcia Langley]

david,

The optimum solution is for lenders to handle appraisals for mortgages the same as they handle them for your work. No outsourcing of responsibility or accountability. Everything in house.

Do you think that is attainable?

 

[moh malekpour]

moh malekpour: Mike,
I personally think the IVPI proposal is a good one but it doesn't address the AMC's problem. It doesn’t have a persuasive argument as to why GSE, NY AG and OFHEO should choose the IVPI proposal instead of AMC. There is nothing in there to inform them about the way that AMC operates.

:icon_idea: They already know. They have reams of hard copy orders, emails, BOTH MBS and AMC taped phone communications from

AMC log: "this conversation is being recorded.............." which most of the Lender owned or affiliated AMCs.....continue to use (including their "appraiser hotlines".

Please note: Investigations are on-going.......

"WHEREAS, the Attorney General’s Office and OFHEO believe that this forward-looking agreement will in no way prejudice any of the Attorney General’s ongoing investigations in the mortgage industry or OFHEO’s regulatory mandates but will provide appropriate and necessary reforms and stability to the market."

10. Fannie Mae agrees to cooperate with the Attorney General’s Office and OFHEO to effect and accomplish the terms of this agreement. Fannie Mae also agrees to continue to cooperate in the Attorney General’s Office’s ongoing investigation into the mortgage industry.

3. To that end, the parties agree that an independent entity, the Independent Valuation Protection Institute (the "Institute"), will be established to monitor and study this area. The Institute may, from time to time, propose amendments to the Code which the parties to this Agreement will review and consider.

4. The Institute will establish a complaint hotline for consumers nationwide to contact if they believe the appraisal process has been tainted or if they have been harmed by appraisal fraud.

5. Appraisers themselves will be able to contact the Institute if they believe their independence has been threatened in any way, including by undue pressure. Appraiser complaints will be handled in confidence to protect the appraisers from possible retaliation.​

The Institute, in its judgment, will mediate complaints or forward complaints to federal or state regulators. The Institute, in its judgment, may also forward complaints to state or federal law enforcement agencies for possible investigation or prosecution.

Home Valuation
Code of Conduct​

[FONT=Times New Roman,Times New Roman]I. No employee, director, officer, or agent of the lender, or any other third party acting as joint venture partner, independent contractor, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery, or in any other manner

V. Any employee of the lender (or if the lender retains an appraisal management company, any employee of that company) tasked with selecting appraisers for an approved panel or substantive appraisal review must be (1) appropriately trained and qualified in the area of real estate and appraisals, and (2) in the case of an employee of the lender, wholly independent of the loan production staff and process.

The lender also shall not use any appraisal report obtained by or through an appraisal management company that is owned by the lender or an affiliate of the lender, provided that the foregoing prohibitions do not apply where the lender has an ownership interest in the appraisal management company of 20% or less and where

(i) the lender has no involvement in the day-to-day business operations of the appraisal management company,

(ii) the appraisal management company is operated independently, and

(iii) the lender plays no role in the selection of individual appraisers or any panel of approved appraisers used by the appraisal management company.

[/FONT]

What they know and their solution to it is the shortcoming of HVCC. All they have done is changing the lenders ownership of AMC from full to less than 20%. Is this going to solve the problem? I don’t think so. It is a minor patching. As long as lenders can own 20% of the AMCs shares, they are going to have a large interest in their operations. All the AMC has to do is to change its name from A to B and call itself independent.
Do they know that AMC is not legally and ethically accountable to anyone or any agency? Do they know that AMC shops for the appraisers with lowest fees and fastest turn around time regardless of the appraisal qualification because they are not liable for the appraisal works and the appraisers performance? HVCC hasn’t addressed those questions and IVPI proposal didn’t remind them either. Lenders ownership of AMCs from full to 20% is not going to solve any problem. AMCs should operate as an appraisal company and be licensed from all states that they distribute appraisal orders and comply with USPAP and states laws. AMC has to be accountable for appraisers selection and appraisal quality.