HVCC and Bond News

[Elliott]

CP said, Given that it has support of 80% of congress, a veto is unlikely.

So your saying the 'committee' version of the bill already has 'bonding' in it?
I don't recall that the House version had the $300 billion bailout in it. I
can only hope there are a few stedfast Republicans who will stall it.

In other news,

House GOP Leader Wants Countrywide Probe

By Jesse A. Hamilton on June 25, 2008 1:19 PM | Permalink | Comments (0)

Rep. John Boehner, the Republican leader of the House of Representatives, jumped into the pack of members demanding Rep. Barney Frank, chairman of the House finance committee, call for a hearing to look into the Countrywide Financial Corp.'s VIP program that benefited the mortgages of members of Congress (including Sen. Chris Dodd.)
They want Frank's committee to look into the matter before slamming home the pending housing bill (though Frank, Dodd and the other major voices on the housing bill are inches away from finishing the months-long effort.)
"Democrats who receive sweetheart deals from their campaign contributors shouldn't be pushing legislation forcing taxpayers to bankroll a $300 billion bailout of scam artists and speculators, and the American people have every right to demand answers if they do," Boehner said in a statement today.
He said, "Chairman Frank and Speaker Pelosi should begin immediate hearings to examine the special 'VIP' housing perks that Countrywide gave powerful congressional Democrats at the same time it was hiking mortgage rates on American families. I am also concerned by news reports suggesting that banks wrote the bailout provisions of this bill to allow them to 'cherry-pick' the mortgages that are least likely to be repaid and dump the debt on taxpayers."
Minority Leader Boehner wanted to be associated with the similar sentiments of a recent letter to Frank from a number of House members. (When he referred to banks writing portions of the housing bill, he was talking about a Washington Post story today.)

 

[Couch Potato]

CP said, Given that it has support of 80% of congress, a veto is unlikely.

So your saying the 'committee' version of the bill already has 'bonding' in it?
I don't recall that the House version had the $300 billion bailout in it. I
can only hope there are a few stedfast Republicans who will stall it.

There is no bonding in H.R.3221.

 

[Elliott]

CP,
Great link to the bill. If that is indeed the bill, I couldn't find any association
of appraisers, appraisals, and a requirement for bonding of said appraisers.

I did run across some interesting 'language.

`(14) APPRAISALS- Any appraisal conducted in connection with a mortgage insured under this section shall--

• `(A) be based on the current value of the property;
  `(B) be conducted in accordance with title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.);
  `(C) be completed by an appraiser who meets the competency requirements of the Uniform Standards of Professional Appraisal Practice;
  `(D) be wholly consistent with the appraisal standards, practices, and procedures under section 202(e) of this Act that apply to all loans insured under this Act; and
  `(E) comply with the requirements of subsection (g) of this section (relating to appraisal independence).
  
  --------------------------------------
  
  `(g) Appraisal Independence-
  • `(1) PROHIBITIONS ON INTERESTED PARTIES IN A REAL ESTATE TRANSACTION- No mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, nor any other person with an interest in a real estate transaction involving an appraisal in connection with a mortgage insured under this section shall improperly influence, or attempt to improperly influence, through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, non-payment for services rendered, or bribery, the development, reporting, result, or review of a real estate appraisal sought in connection with the mortgage.
    `(2) EXCEPTIONS- The requirements of paragraph (1) shall not be construed as prohibiting a mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, or any other person with an interest in a real estate transaction from asking an appraiser to provide 1 or more of the following services:
    • `(A) Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal.
      `(B) Provide further detail, substantiation, or explanation for the appraiser's value conclusion.
      `(C) Correct errors in the appraisal report.
    `(3) CIVIL MONETARY PENALTIES- The Secretary may impose a civil money penalty for any knowing and material violation of paragraph (1) under the same terms and conditions as are authorized in section 536(a) of this Act.
  `(h) Limitation on Aggregate Insurance Authority- The aggregate original principal obligation of all mortgages insured under this section may not exceed $300,000,000,000.
  
  ------------------------------------------------
  
  SEC. 229. CIVIL MONEY PENALTIES FOR IMPROPERLY INFLUENCING APPRAISALS.
  • Paragraph (2) of section 536(b) of the National Housing Act (12 U.S.C. 1735f-14(b)(2)) is amended--
    • (1) in subparagraph (B), by striking `or' at the end;
      (2) in subparagraph (C), by striking the period at the end and inserting `; or'; and
      (3) by adding at the end the following new subparagraph:
      • `(D) in the case of an insured mortgage under title II for a 1- to 4-family residence, compensating, instructing, inducing, coercing, or intimidating any person who conducts an appraisal of the property in connection with such mortgage, or attempting to compensate, instruct, induce, coerce, or intimidate such a person, for the purpose of causing the appraised value assigned to the property under the appraisal to be based on any other factor other than the independent judgment of such person exercised in accordance with applicable professional standards.'.

 

[Bama Bayou]

Your math skills are excellent!

OP's post: "The cost of such a bond for appraisers would be 1% of the aggregate value of all homes appraised. Estimates for the cost of such a bond are between $10,000 and $40,000 per year for appraisers."

Based on the above, they anticipate the aggregate annual value of all homes by an appraiser at $1,000,000 to $4,000,000 which seems very very low. That would be a slow to average week here.

I have done over 10M in one day. NAR will not let this pass.

 

[Couch Potato]

The original language of the bill had some real entertaining language. It would have limited FHA appraisals to 'Certified appraisers, that didn't last long. Overall I think it is a decent bill.

 

[Elliott]

CP,
Unless there is a trojan horse, it all sounds okay to me too. I think
the $300 billion is a bailout, but as far as appraisers are concerned,
its okay. I wished I were more trusting, but I'm just skeptical.

 

[Marcia Langley]

The part that applies to appraiser coercion is decent. It has stronger language than other bills have had. Not as comprehensive as the HVCC but better than other bills.

 

[rcsone]

......S2452 says, ".....(1) REQUIRED MODIFICATION-if a retrospective appraisal determines that the appraisal upon which the home loan was based exceeded the true market value by 10 percent or more, the holder of the loan shall modify the loan and recast the loan ab initio to a loan amount that is at the same loan-to-value which the original loan purported to be....". Would not the required bonding relate to this 10% "liability" of judgement for the appraiser? . . . . best to all. . . . . . rs

 

[Marcia Langley]

......S2452 says, ".....(1) REQUIRED MODIFICATION-if a retrospective appraisal determines that the appraisal upon which the home loan was based exceeded the true market value by 10 percent or more, the holder of the loan shall modify the loan and recast the loan ab initio to a loan amount that is at the same loan-to-value which the original loan purported to be....". Would not the required bonding relate to this 10% "liability" of judgement for the appraiser? . . . . best to all. . . . . . rs

rcsone,

I'm not sure of the context of your question but yes, regarding claims against the bond that 10%-related liability is one potential claim against the bond but there are also other potential claims against the bond.

And that 10%-related liability is a potential claim against the bond, not the formula by which the appraisers' cost to be bonded would be calculated. That formula is based on the appraiser's previous year's opinions of value all added up.

Even so, the bonding item isn't even in the bills that are at the forefront right now. S.2452 is still in committee and hasn't even been debated.

 

[Couch Potato]

CP,
Unless there is a trojan horse, it all sounds okay to me too. I think the $300 billion is a bailout, but as far as appraisers are concerned, its okay. I wished I were more trusting, but I'm just skeptical.

No doubt about it. There is a bailout component to the bill. As bailout ideas go, it is by far the most reasonable. It only applies to primary residences, and there is the potential for recovery of the money through sharing of future equity. It is not a "free lunch." The homeowner also is responsible for paying the FHA insurance fee. In reality the bailout simply moves the risk from the FDIC paying for bank failure to HUD paying for bad loans. Either way the taxpayers get the bill, but this way there is at least the potential for a partial rebate in the future.

It is never final until it's final. One of the amendments that may yet find its way into the bill is a requirement for Mortgage Brokers to be licensed. It already contains provisions requiring studies of MB participation in transaction, so at the very least a pile of paper will be produced on the matter of MB behavior.

......S2452 says,

S.2452 is a dead bill, so what does it matter what it says.