HUD Claims and Defaults by Appraiser

[Francois K. Gregoire]

Hi All,

Peter Miller files a story with an interesting point of view.

See REALTY TIMES

 

[Atlanta CG]

Oh goody, seems that I have one default. Is there any way we can discover which property defaulted?

 

[larryhaskell]

How do we find the default list. Not that we can do anything about it, but personally, I would like to know how many fanilies I've put out on the street. If I can find them, I will let all of them live in my house until they get back on their feet.

 

[Francois K. Gregoire]

Hi All,

The link to the HUD/FHA Appraiser Claims and Defaults page is no longer working. It would not be a surprise if it makes a return, though. HUD has provided a notice of proposed rules for the Appraiser Watch Program.

Here are some interesting comments from the HUD Office of the Inspector General with respect to the proposed rules:

There is quite a bit of interesting information in the Full Report to Congress HERE

from page 88**********

FHA Appraiser Watch Initiative

This proposed rule would establish regulations for the Federal Housing Administration (FHA) Appraiser Watch Initiative, provide a fully computerized Appraiser Watch monitoring system, and establish a performance standard that appraisers would be required to meet to maintain their status on the Appraiser Roster. Appraisers would be removed from the Roster if the rate of defaults and claims on closed mortgages linked to their appraisals exceed the rate established in this rule.

We nonconcurred with this proposed rule because we did not agree with removing an appraiser from FHA programs based solely on the default/claim rate of loans that the appraiser was involved in processing. This may, inappro-priately, hold the appraiser responsible for defaults that are the result of poor underwriting practices by the lender. We recommended, instead, a closer examination of the work performed by appraisers on loans with high default/claim rates. Also, the standard of over 200 percent of the default and claim rate appears to be a high standard for triggering action, considering the problems being experienced in the program.

We recommended a standard that would be more inclusive of poorly performing appraisers, such as 50 percent above the norm for the area. In order to seek additional public comment, the Department intends to publish the Appraiser Watch Initiative as an Advanced Notice of Proposed Rulemaking instead of a proposed rule. This regulation had not been issued at the close of the semiannual reporting period.

 

[wyecoyote]

I've read about this several times. I am not FHA or VA appraiser, however, why doesn't FHA have a watch list for Loan Officers? Would this not really be better than an appraiser watch list? After all as some have posted before an appraiser does not have information to such things as ability to pay, Credit scores, income, debt to income ratio, and the loan docs to see if there is any funny business going on. Just thought I would ask.

Ryan

 

[Larry Lyke]

All of this appraiser watch stuff happens much too late in the process to benefit the "program" in terms of preventing appraisers' actions from hurting "the program's intentions," i.e., to help put the lower classes or limited-funds lower-income people into a home.

Nor does the program take into consideration the neighborhood location of the house. So many of these FHA properties are in less than ideal locations, and those are the properties more easily matched to the type of people who buy them who are more likely to default.

It's no less a program designed to solve a problem for which the cause has not yet been carefully structured.

Final answer: It's targeted at the wrong end of the program. By time the defaults have occurred, it's several years down the road. One appraiser, if responsibile, could have triggered lots of defaults.

Nothing beats local/regional appraisal review -- preferrable before the loan closing!

 

[Bob Ipock]

Larry,

There should be a question, with a yes or no block to check on every appraisal and then space for a "twenty-five words or less" written answer.

The question would be. Mr/Ms Appraiser, as a buyer would you be willing to pay the "estimated market value" for this property? If not, why not.

 

[Larry Lyke]

Bob -- Good idea.

And my response would be, I'll be happy to respond after I've been paid!

 

[Dick Hemry GAA]

Larry: To me it is a lot like "steering". A couple of days ago, I viewed a recent 02/02, FHA sale from street & alley and it's a piece of crap. It is a 2 family, a double (side by side 2 story living units). Sold for $5,000.00 over its list price of $25,000.00. I called Realtor and he said was in good condiiton when sold but new buyers must be tearing place up. First off, could not have been in good condt. when sold in Feb. and yes, new owners do appear to be trash too. This property should never have been approved for FHA but this sort of stuff is becoming more evident each day locally. The Realtors and scum bag mortgage brokers really know how to work the system. They own some of the "FHA APPROVED" appraisers. There ought to be a law...................

Dick Hemry, GAA

 

[Bob Ipock]

There ought to be a law...and there is! Thre damn sure ought to be some enforcement!