First In Series - Ivpi Q&a #1

[Ken B]

V. Any employee of the lender...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.

This, in my opinion, is the best course for all involved. This is how, in my experience, it works on the commercial side.

A review appraiser working for the lender, but not on the production side, orders the appraisal, the appraisal is delivered to the review appraiser. The lender can identify local market appraisers who have the skills, experience, and business abilities the lender desires for the desired assignment.

No AMCs, no IVPI, no one putting minimally-trained baby appraisers on the same level as skilled and experienced veterans, letting a free-market economy work the way it is supposed to work.

Anyone thinking all lender employees are "tainted" by the desire to make the deal happen has never seen the bullets sweated by a branch manager of a production office during a compliance inspection.

Somebody asked for better options? It is already built into the HVCC.

 

[moh malekpour]

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.

The go go sub-prime market of last few years which was competing with GSEs and FHA is over and is not coming back. In that go go time, GSEs and FHA had to break their rules to compete with sub prime. That is gone, finished. There is not many sub-prime lenders out there any more. No investor buys their loans. GSEs and FHA with their new Jumbo loans are capturing more than 80% of market. It is going to be long time for investors to trust sub prime loan origination and underwriting so, there is no good option for MBs but to take their loans to whatever is available out there.

 

[The Warrior Monk]

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?

Yes.

Granted, it is a burden on the lender as far as costs. But the burden of not doing may be greater, especially at this point in time where a credit crunch exists. As an investor, I sure as hell wouldn't want to buy any portfolio that where the lender was relying on one of these AMCs to handle the collateral valuation portion.

I can't say that this is always true, but in my experience, lender-originated appraisals are a quantum leap better on the whole than AMC-originated appraisals. There have been plenty of bank-employed appraisers that have made posts confirming this.

 

[ceheckman]

The endgame will yield one AVM operated by the Central Value Agency. This Federal Agency will produce an insured value estimate on loan application. If the estimate fails to support a purchase price or refinance amount the applicant will have the option of hiring an independent appraiser. The results of that analysis along with the CVA's estimate will be arbitrated by the IVPI. New construction will enter the system by federally approved appraisers. Game over.

 

[SANDY]

The IVPI proposal will essentially have to compete with the AMCs for business. I cannot see the GSE's giving all of its business exclusively to IVPI.
The selling pitch for the IVPI proposal to the GSE's is obvious but I question its real viability without some type of preferential treatment by the GSE's. Why? because the AMCs will still be out there selling their speed while the IVPI appraisers will likely take longer turn times. I think quality is still going to be a hard sell even in these times. The only other selling point fir the IVPI is to try to undercut its total fee to the users. In other words let's say the typical AMC fee to a user is $500 of which $350 goes to the appraiser and $150 to them. The IVPI is going to have be able to operate on something significantly less than the $500 fee that the AMCs are charging, especially since the AMCs will likely offer faster turnaround times.

 

[PropertyEconomics]

The IVPI proposal will essentially have to compete with the AMCs for business. I cannot see the GSE's giving all of its business exclusively to IVPI.
The selling pitch for the IVPI proposal to the GSE's is obvious but I question its real viability without some type of preferential treatment by the GSE's. Why? because the AMCs will still be out there selling their speed while the IVPI appraisers will likely take longer turn times. I think quality is still going to be a hard sell even in these times. The only other selling point fir the IVPI is to try to undercut its total fee to the users. In other words let's say the typical AMC fee to a user is $500 of which $350 goes to the appraiser and $150 to them. The IVPI is going to have be able to operate on something significantly less than the $500 fee that the AMCs are charging, especially since the AMCs will likely offer faster turnaround times.

Unfortunately Sandy your allocations are wrong ... $350 to the AMC and $150 to the appraiser. Perhaps you havent been in the business long enough to get the math right .... .

 

[Lloyd Bonafide]

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.

David - Don't you think that if something similar to the Fannie/Freddie/Cuomo plan does take effect, that most lenders/banks that make jumbo loans will have to go along with Fannie, and not allow mortgage brokers to order appraisals, just to make their jumbo loans more saleable on the secondary market? The exception may be those few banks that do portfolio their loans and can make their own rules.


Has their been any discussion on whether mortgage brokers could order appraisals on their own through an AMC that is approved by lenders, so that they could shop their loans to more than one investor? (Hopefully they will be ordering through the IVPI).

 

[Mike Kennedy]

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.

Moh, the IVPI proposal is based on total agreement with your bold above. It proposes the only (known) RADICAL, but necessary, control mechanism which offers direct solution to the "cosmetic fix" you correctly cite.

Of course, since most major Lenders voluntarily delegated their primary Charter Act and Truth in Lending Act reponsibility for Internal Processing, Review, Quality Control, and Consumer Loan Mortgage Origination to AMCs and Mortgage Brokers ............

they certainly CAN voluntarily admit the errors in judgement which created this fiasco, and re-institute Ethical, Quality Based, INTERNAL Appraisal Processing, Appraisal Review by CERT/LIC Appraises ONLY, and attract, retain, and compensate the MOST Ethic Loan Originators.......and THOUSANDS of the most experienced, geocompetent, and ethical Appraisers who REFUSE to work for MOST of the existing (and neophyte startup) AMCs for ALL the reasons stated in the HVPA, HVCC, and the IVPI Proposal.

No additional federal or state legislation required. Common Sense is.:icon_idea:

Placing Consumer needs before Corporate Compensation Packages while restoring Confidence in their Boards, Exec Committees, Senior Management, Employees AND ALL Mortgage Service Vendors is critical. Regaining International and Domestic Investor Faith in their Bottom Line is essential. Everyone ......Wins.

 

[Mike Kennedy]

The IVPI proposal will essentially have to compete with the AMCs for business. I cannot see the GSE's giving all of its business exclusively to IVPI.
The selling pitch for the IVPI proposal to the GSE's is obvious but I question its real viability without some type of preferential treatment by the GSE's. Why? because the AMCs will still be out there selling their speed while the IVPI appraisers will likely take longer turn times. I think quality is still going to be a hard sell even in these times. The only other selling point fir the IVPI is to try to undercut its total fee to the users. In other words let's say the typical AMC fee to a user is $500 of which $350 goes to the appraiser and $150 to them. The IVPI is going to have be able to operate on something significantly less than the $500 fee that the AMCs are charging, especially since the AMCs will likely offer faster turnaround times.

:icon_idea: IVPI Q&A #1, Answer #2.


Answer 2:

Per existing Regulatory Guidelines recommending the Lender

SHOULD ​

​

pay the Fee, the IVPI proposal requires the Lender to pay the Appraisal Fee, and IVPI’s processing surcharge, at the time of order.

The appraisal fee will be held in escrow and paid immediately via electronic payment to the Appraiser upon IVPI’s receipt of the completed report.​

​

 

[Mike Kennedy]

IVPI Q&A 1, Answer #1.

David - Don't you think that if something similar to the Fannie/Freddie/Cuomo plan does take effect, that most lenders/banks that make jumbo loans will have to go along with Fannie, and not allow mortgage brokers to order appraisals, just to make their jumbo loans more saleable on the secondary market? The exception may be those few banks that do portfolio their loans and can make their own rules.


Has their been any discussion on whether mortgage brokers could order appraisals on their own through an AMC that is approved by lenders, so that they could shop their loans to more than one investor? (Hopefully they will be ordering through the IVPI).

:icon_idea:

• Increase appraisal portability between Consumers, GSEs, Lenders, Independent Mortgage Originators, and other Market Participants.​

Thousands of Consumers across the Country benefit substantially by “free market” economies based on competition when Ethical Loan Brokers advocate their customer’s interest. The IVPI Committee disagrees with the HVPA prohibition and recommends a viable alternative.

All GSE appraisals would indicate the Client as “​

Any Approved GSE Lender”. Consumers should have viable options.

For example, the Consumer could choose to make a loan application with either a Direct Lender or LO/MB. The Loan Package, including the appraisal ordered through IVPI, would then afford the Consumer access to the best rates, terms, and would allow appraisal portability.

An impenetrable “shield” will be established requiring Lenders and/or LO/MBs to order appraisals through IVPI.​