HVCC FREAB Teleconference

[Deuce of Spades]

What was the general feeling in regards to AMCs? Are they moving forward towards some form of regulation? Even discussed?

 

[Francois K. Gregoire]

Sorry to have missed the call, but I was in the air over the Gulf of Mexico at the time. After arriving in Texas, Joni provided a firsthand account of the call. DRE is working on a draft comment letter.

It appears as though both the FREAB and DRE want to find a way to regulate AMCs. It's not clear if that can be accomplished under the current statute.

 

[Pamela Crowley (Florida)]

I'm going to guess that many that wanted to comment forgot to unmute their phone.

It was very well done, even though the public comment time was exceptionally short.

* Susan Dailey, User Board Member of FREAB, Fraud manager at Chase:
Lenders want mortgage brokers out of appraisal ordering.
Thinks AMCs are OK.
Thinks the IVPI is bad an unnecessary.
Thinks lender hotiles to report appraiser is good.

* Jay Small, Consumer Board Member of FREAB, Practicing attorney in real estate takings and has represented appraisers:
He is very worried about the additional appraiser liability with the HVCC, especially with borrowers who don't really understand it all. Mentioned Florida Statutes, Section 552 (I haven't looked that up yet).

* Mike Rogers, MAI, Cert. General Appraiser Board Member of FREAB, Practicing commercial appraiser in Pensacola:
Spent these past couple of weeks talking to residential appraisers (50+/-) about what's really going on in the residential mortgage lending appraisal world and this is what he said he found out:
Pressures on appraisers from AMCs is just as bad as from mortgage brokers.
The fees paid by AMCs encourage bad/poor appraising, are beyond insulting, and need to be fully disclosed to all. ( woohoo ) !
AMCs need strong regulation.
Wants to expand Chapter 475 Part II to include AMC personnel. ( woohoo ) !
Wants to see Lenders Bonds for Loan Performance ( woohoo ) !
Wants forced external audits of AMCs (mentioned Enron did their own)
Wants AMCs defined.
Wants Florida Appraiser Mandatory Education increased.
( woohoo ) !


Timothy O'Bryant, Director, Division of Real Estate:
IVPI concerns him because the FREAB might be overwhelmed with complaints, some of which might not apply or might have conflicts with Florida Statutes or Rules.

Joni Herndon, SRA, Residential Appraiser Board Member, Practicing Residential Appraiser, almost nothing for mortgage lending though and does not deal with mortgage brokers - has never dealt with an AMC, in Tampa area:
"Appraisers must lean to just say, "No"."
Likes mortgage brokers not being able to order appraisals.
IVPI part of HVCC is a waste of funds and resources.
Enforce what is already on the books.
IVPI part of HVCC circumvents States duties and Rights.
WHO would run a Hotline?
Some appraiser/lender rela6tionships are good.
AMCs need to disclose exactly what was paid to the appraiser to ALL, including the borrowers.


I think we all own Mike Rogers the biggest KUDDOS we can give. Please contact him to say Thank You!!!!!


My own comments:

BIG kuddos and Thank You to Mike Rogers!!!!!
Regulate the AMCs and pile on the liability for what they are doing!
Force full disclosure to all regarding the fee splits!

I held back and used only about 60 seconds of time, so didn't get out a few more items I think are important. This was a good thing and I hope we will have more.

 

[Michael Tipton]

I would prefer to see AMCs regulated by either state or federal financial industry regulators. They are performing a banking/lending function under contract. Additionally, I also support the concept of bonding the AMCs for their contracted services, which should include due diligence.

 

[Wendy]

I agree wholeheartedly with Mike Rogers. I think he clearly sees where some of the biggest problems are.

Joni Herndon has some good points, but has missed the mark with "Appraiser's must learn to just say, "No!". That is no more going to happen than kids are going to limit themselves to 1 candy on Halloween. Low barriers to entry and rampant pressure has build a whole group of appraisers who have thrived on saying yes. Close the barn door, but realize that the damage has already happened and something must done to clean it up.

Timothy O'Bryant - I would not take his job for a million bucks (ok maybe for a million - but you get my point.) His concerns about resources are well-founded.

Susan Dailey definitely sees things from the lender's side of the coin; as is her job & reason for being on the board. I don't dislike the idea of a hotline for lenders to report bad appraisers, but how about we add a hotline for appraisers to report pressure? I'd also like to know how she feels about regulating AMCs - We know she likes them, but it seems that she does not fully realize the damage they have done and sees only their convenience to lenders. It's understandable as she has not been in the trenches so-to-speak. What this tells me is that most people do not realize the realties that are destroying the mortgage lending portion of our profession. I wonder if it will survive?

Jay Small - I agree with him. I like nothing that increases appraiser liability - we have a enough as is.

Overall - I am happy that that FREAB has the sense to see the HVCC for the farce that it is. Hopefully we will see some real progress toward correcting ills that plague us.

 

[Pamela Crowley (Florida)]

Mike Rogers was truly great in this conference. I would like to thank each and every residential appraiser that told him what's really going on also. Near the end he did add something like, "Appraisers that just say no get no more orders." That is so very true and that is why the incompetent and unethical residential appraisers now run the show.

 

[Mike Seward]

Pam, good summary.
I didn't see it in your summary, and I forgot who said it, but, with an AMC adding an additional layer, how are we going to discuss SOW with the client/intended user?

 

[Pamela Crowley (Florida)]

I did miss that note in my notes and that was Mike Rogers. This was about the AMC personnel having no clue and not being able to find the answers.

Really, when it comes to appraising for mortgage lending using the Fannie/Freddie forms, there isn't much Scope of Work to be discussed.

And:
The other thing I and others have found is that a Hotline that is run by a lender or GSE or AMC does absolutely no good for appraisers. It appears to have become a way to week out more of the honest appraisers that would dare to use that hotline.

 

[Mike Phillips]

Jay Small - I agree with him. I like nothing that increases appraiser liability - we have a enough as is.

I strongly disagree with that. Actually, the reverse is true - there is no liability and/or even the perception of liability. Furthermore, there is no evidence that appraisers are being held liable for anything.

Let's remember, we live in the foreclosure capital of the US. When will all this liability surface in the form of lawsuits against appraisers? When will we hear reports about E&O firms going bankrupt because they have had to defend lawsuits and/or pay damages? It ain't happening and I don't think it is going to happen.

Moreover, we can split hairs and draw a distinction between liability and consequences for incompetent behavior. Are we experiencing record numbers of appraiser license suspensions, revocations and fines? If so, I sure haven't heard about it. I'm not talking about an uptick; I'm talking numbers consistent with current business conditions.

I don't think one needs a college degree to figure out that human behavior will not approach the ideal unless there are consequences for not doing so. Given a lack of liability and/or consequences what will happen is that human behavior will revert to what the market demands. Reverting to what the market demands is exactly what has happened - it has turned in to "what can appraisers get away with?"

Remove the speed limits in residential neighborhoods and see what happens. What exactly does everyone think would happen if human beings were left to their own judgement about how fast they can safely travel.

I don't know how in the world FREAB and/or DBPR hope to regulate the AMCs. And I don't have much faith in the Florida legislature providing funding to make it happen. As a taxpayer, why do I care if Countrywide experiences HUGE loan losses? Did appraisers contribute to their problem? If so, who hired the appraisers? I guaran-damn-tee-ya they didn't get any inflated values from me. Personally, I'm more concerned that Florida ranks near the bottom nationwide in public education and health care for children. I expect the regulation of appraisers must rank well below 10th on the typical Florida legislator's list of priorities.

The residential housing market and preventing excess in same are a national priority. Appraiser regulation should be a national priority - get it out of the hands of the states. The feds needs to tell state appraisal boards and or their respective DsBPR when, what and how to investigate - in accordance with federal priorities - in exchange for the fed's backing of mortgage loans. If the states don't have the funds then they need to take it out of the state budget or raise license fees. End of conversation.

 

[Wendy]

Mike -

I would welcome it if the additional liability resulted in fair and even punishment for violations. But only if that liability came with protection from unwarranted and frivolous actions. Under our current system, I fear additional liability would just result in appraisers getting sued - and not necessarily the bad ones.

I understand and respect your argument. I just feel a bit different.