HVCC Is Dead-HR3221 Is Law

[George Hatch]

Those MBs will not send all their loans through the GSEs.

I think that if/when the AMC model becomes dominant appraisers will retain the freedom of association to work for the co-op AMC that some of our forumites are putting together. The key to that model is appraisers contributing time rather than cash to operate certain critical functions like QC.

This supertanker we refer to as the residential mortgage business is not even halfway finished in reversing it's course. I wouldn't be making assumptions about the environment staying the way it is right now. All of these AMCs are already facing some pressure from some of the lenders about their quality.

The biggest pressure an AMC faces is its overhead vs. its volume. Much of their overhead is fixed, meaning they still have to pay it even when the volumes are down. That's why they have to take an increasingly larger portion of the fee even while that fee is under pressure due to competition.

The co-op AMC can work and it can put most of it's competition out of business, but in order for that to happen appraisers have to come to the conclusion that basing their business model on working directly for the lenders or the MBs is no longer an option. If indeed that's what ends up happening.

It doesn't make any difference whether the AMC model thrives because of GSE demands on the loan originators or because of lender preference. The result is the same - larger and larger percentages of assignments being funneled through those parasites.

At whatever point the appraisers come to the conclusion that it has become an AMC world, they'll decide that the better option is to sacrifice a little of their autonomy on the fees and do the unpaid work it will take to run a co-op AMC on an extremely lean basis. That point is obviously yet a ways off. Most appraisers still believe they have options and they won't give up on the dream until the futility is branded into their brain.

The one thing I really like about the HVCC was the requirement for outside review, completely independent of either the lenders or the GSEs. Depending on how well that was run it could really deny the slop artists the ability to pump out a dozen $175 URARs a week. That will return the "excess" assignments back into the pool for other appraisers to perform and would also force an increase on fees in order for the appraiser to get by. Even skippy will like that outcome - the same amount of money for fewer assignments.

 

[Marcia Langley]

Kevin Mc:

I am sorry there are those out there that do not believe such folks exist(they are indeed rare) but they do.

...

So for you to say "Phooey" is presumptuous.

Kevin,

I've read your posts enough to know that we don't disagree on much and I don't think we do now.


I never meant to say that I don't think ethical MBs (or any other catagory of ethical client) exist. I know that they do.

My Phooey was for the idea that preserving the status quo was good policy for the industry in general or for appraiser independence in general. And I don't think the vast numbers of appraisers voted that way because they believed that most MBs were ethical.

IMO even an individual appraiser who only has the most excellent and ethical clients should still vote for the removal of commissioned and profit driven entities from appraiser selection. Else they are only voting for their own immediate and personal advantage rather than what is good for them in the long term or good for the public trust.

And they are voting just like the banks, the realtors, and everyone else.

Granted, it is a logical thing that people will strive to preserve their business. I'm just peeved that there isn't more idealism in the general population of appraisers.

I most likely will lose these clients (they constitute about 30% on my business) somewhere down the line when all lenders decide they should control every aspect of the process. So the few legitimate MBs along with the few legitimate appraisers left in this business (who refuse to bow down to AMCs) will be taken out of the system. This will all be done in the name of keeping things "honest". Please.

I'm in the same boat as you. I see this happening with or without reform in appraiser selection.

 

[Kevin Mc]

George, I think most of us have our fingers crossed that everything you posted will pan out.

 

[RSW]

Licensing individual loan originators will work only to the extent that the rules are enforced. If the government doesn't do a whole lot better with the legion vast of loan originators - some of whom really are crooked - than they did with the measly 100,000 appraisers then I'm afraid it will all be a waste of time, money and effort. A whitewash intended solely for the purpose of enabling the next cycle of abuse and fraud.

Licensing loan originators is perhaps a little better than nothing, but it won't address the root cause of overvalued collateral. If you guys are depending on LO licensing to solve your problems with loan originators then you're deluding yourselves.

But not to worry. You guys will still be able to keep your MB relationships, and after all, that's the only thing that matters here. Right?

I agree. Also, do you think that the appraisers that are getting calls from the MBs are going to turn them in? I don't think so!

It will be the same SOP for MBs and Skippy appraisers.

 

[TJSum]

Marcia, while I agree with most of your post there are some things I take exception to. I currently list 3 MBs as clients. I have had relationships with these clients for 20 years. Two of them were salaried bank LOs prior to striking out on their own in the early 90s. There is zero coercion. 100% of their deals are A paper. All of their sales have significant down payments and impeccable credit. I am sorry there are those out there that do not believe such folks exist(they are indeed rare) but they do. They all live by the "it is what it is rule" because $$$ is not a problem with their client base. So for you to say "Phooey" is presumptuous. I most likely will lose these clients (they constitute about 30% on my business) somewhere down the line when all lenders decide they should control every aspect of the process. So the few legitimate MBs along with the few legitimate appraisers left in this business (who refuse to bow down to AMCs) will be taken out of the system. This will all be done in the name of keeping things "honest". Please.

I could not agree more. Many of us old vets have established decades long relationships with the honest clients we could find. Over my 18 years I have fired just as many potential clients, that have fired me because they were not looking to do "honest" loans. There are honest MB out there, the main reason they are brokers is because they wanted to be able to offer the best interest rates available to their borrowers, not just the one in-house product of most lenders. And others are just small one or two man companies, because they wanted to be on their own, just like us appraisers who wish to remain independent and not become hen pecked to an AMC or as a staff appraiser.

The honest client is the only option for mortgage lending work for the honest appraiser, those that want to downplay or find other motives for us who scream bloody murder when this freedom to work with who we want, and have established relationships with, are dreaming about some type of political power that appraisers just don't have and never will. Once that option is taken away from the honest appraiser, we are pretty much done when it comes to mortgage lending.

No, this does not clean up the entire Mortgage Lending industry, but the real fixes are at the top, starting with the Lenders, not the appraiser, so until the industry shows us they are serious about addressing the real problems at the top, we better fight to hang onto our honest clients and the right to work with them. I am not going to agree to any sacrifice of an appraisers freedom especially when all the proposed changes so far have basically been lip service and are NOT changes to the system, but rather enable the system to get back to business as usual.

For those who think this is too cynical, look how much the Dodd/Crowley IVPI proposal has impressed the powers to be, they are ignoring it. Even if it were put in place, those with the money, the lenders/politicans would have run the show anyway, and the appraiser still would have been screwed.

 

[TC]

Granted, it is a logical thing that people will strive to preserve their business. I'm just peeved that there isn't more idealism in the general population of appraisers.

.

What can I say, idealism don't pay the bills.

I tend to be on the side of Mr. Sum and K Mc.

TC

 

[Marcia Langley]

No, this does not clean up the entire Mortgage Lending industry, but the real fixes are at the top, starting with the Lenders, not the appraiser

TJ,

I can certainly agree with that.

 

[Diego Lopez]

Those MBs will not send all their loans through the GSEs.

I think that if/when the AMC model becomes dominant appraisers will retain the freedom of association to work for the co-op AMC that some of our forumites are putting together. The key to that model is appraisers contributing time rather than cash to operate certain critical functions like QC.

.

Im about ready to sign up. Let us know when is up and running and if there is anything that I can do to help.

 

[Greenback]

Kevin,

One of the biggest failures of concerned appraisers has been to fail in the attempt to expose the appraiser coercion that exists within the AMC system.

IMO AMCs, MBs, and banks' commissioned LOs are roughly equal in their ethics (lack of) regarding appraiser selection.

The financial industry has succeeded in making the MBs the scapegoats.

And the banks are still getting away with portraying the AMCs as a coercion-free solution even after Cuomo exposed the rot.

At least with bank los and MBs the appraiser can control their own ethics one assignment at a time. With AMCs there is a contractural arrangement and a depersonalization that takes much of that control away from appraisers.

But the only solution is and always has been to take appraiser/appraisal selection/ordering away from any entity that has a financial interest in the outcome. That includes bank LOs, AMCs, and MBs.

As long as the banks continue to get their way and continue to hold this sort of economic power over appraisers there will be coercion and caving in to coercion.

But appraisers cast their votes in overwhelming numbers to preserve the ability for LOs to coerce them. They call it "protecting my ethical client relationships I have built up over the years."

Phooey.

My single biggest disappointment this year was the vast numbers of appraisers who signed the AlaMode petition. I have very high regard for Mr. Biggers and believe deeply that he has the financial success of his appraisers at heart and that he also is highly concerned about the ability of appraisers to perform ethically.

But his petition reflected what the vast majority of the appraisers wanted and that was to preserve the status quo of the coercion/caving paradigm.

Appraisers voted on the same side as the banks, AMCs, MBs, RE agents, congress, etc. That vote was:

"Please do not eliminate appraiser coercion, that is the only way I can make any money."

And that appraiser vote far outnumbered the signatures on our forum petition which simply calls for removal of comissioned entities from the process. Appraisers have proven that as a group they are no mre concerned about coercion than the clients are.

People can villify Cuomo all they want but there are some real appraiser independence protections in the HVCC. No, it's not perfect and yes, the obvious effort to drive business into AMCs was present.

But it also removed two groups of commissioned based appraiser selection and added specific accountability to AMCs, similar to what it placed on banks.

And, again, the MBs disappearance predates Cuomo's work and continues to escalate because it is the strategy of the banks. That was not the sole idea of Cuomo. That was the idea of the banks.

So the majority of all the participants are getting what they want. Including appraisers.

But the appraisers will end up with the thing they feared most. That being the driving of almost all the work to AMCs. Only without the potential protections spelled out in the HVCC.

I agree. I agree. I agree. I agree. I agree.

Thank you..

 

[timd354]

I could not agree more. Many of us old vets have established decades long relationships with the honest clients we could find. Over my 18 years I have fired just as many potential clients, that have fired me because they were not looking to do "honest" loans. There are honest MB out there, the main reason they are brokers is because they wanted to be able to offer the best interest rates available to their borrowers, not just the one in-house product of most lenders. And others are just small one or two man companies, because they wanted to be on their own, just like us appraisers who wish to remain independent and not become hen pecked to an AMC or as a staff appraiser.

The honest client is the only option for mortgage lending work for the honest appraiser, those that want to downplay or find other motives for us who scream bloody murder when this freedom to work with who we want, and have established relationships with, are dreaming about some type of political power that appraisers just don't have and never will. Once that option is taken away from the honest appraiser, we are pretty much done when it comes to mortgage lending.

No, this does not clean up the entire Mortgage Lending industry, but the real fixes are at the top, starting with the Lenders, not the appraiser, so until the industry shows us they are serious about addressing the real problems at the top, we better fight to hang onto our honest clients and the right to work with them. I am not going to agree to any sacrifice of an appraisers freedom especially when all the proposed changes so far have basically been lip service and are NOT changes to the system, but rather enable the system to get back to business as usual.

For those who think this is too cynical, look how much the Dodd/Crowley IVPI proposal has impressed the powers to be, they are ignoring it. Even if it were put in place, those with the money, the lenders/politicans would have run the show anyway, and the appraiser still would have been screwed.

TJ, this is the single most outstanding post that I have ever seen on AF. What you say is exactly correct.