New Appraisal Legislation Effective 07/01/2008

[CT Value]

Hi Everyone,
By now I'm sure many of you have heard about the new appraisal legislation that was signed into law by Governor Rell on 06/12/2008 and took effect on 07/01/2008.

A big thank you should go out to Governor Rell, State Legislator and appraiser, John Harkins from Stratford, Legislator Buddy Altobello from Meriden, The Connecticut Attorney General's Office as well as all those appraisers who contributed to the language in the original proposal that eventually led to House Bill 5577 and the new law.

As someone who was instrumental in the Bill's proposal as well as seeing it through to it's passage I would be happy to offer any insight that I may have into the language as well as the intent of the Bill.

Sincerely,
Rob Clermont




http://www.cga.ct.gov:80/2008/TOB/H/2008HB-05577-R00-HB.htm

Sec. 14. (NEW) (Effective July 1, 2008) (a) A mortgage broker is prohibited from influencing residential real estate appraisals. For the purposes of this section, "influencing residential real estate appraisals" includes, but is not limited to: (1) Refusal, or intentional failure, to pay an appraiser for an appraisal made that reflects a fair market value estimate that is less than the sale contract price; or (2) refusal, or intentional failure, to utilize, or encouraging other mortgage brokers not to utilize, an appraiser based solely on the fact that the appraiser provided an appraisal reflecting a fair market value estimate that was less than the sale contract price.

(b) Any person who violates the provisions of subsection (a) of this section shall, upon a verified complaint in writing of any person, provided such complaint, or such complaint together with evidence, documentary or otherwise, presented in connection therewith, make out a prima facie case, to the commissioner, who shall investigate the actions of any mortgage broker. The commissioner shall have the power temporarily to suspend or permanently to revoke any license issued under the provisions of chapter 668 of the general statutes after notice and hearing in accordance with section 36a-24 and chapter 54 of the general statutes. In addition to or in lieu of such suspension or revocation, the commissioner may impose a civil penalty of not more than one thousand dollars for any violation of the provisions of subsection (a) of this section.

Sec. 15. (NEW) (Effective July 1, 2008) (a) A real estate broker or real estate salesperson licensed under chapter 392 of the general statutes is prohibited from influencing residential real estate appraisals. For the purposes of this section, "influencing residential real estate appraisals" includes, but is not limited to, refusal or intentional failure to refer a homebuyer, or encouraging other real estate brokers or real estate agents not to refer a homebuyer, to a mortgage broker or lender based solely on the fact that the mortgage broker or lender is using an appraiser who has provided an appraisal reflecting a fair market value estimate that was less than the sale contract price.

(b) Any person who violates the provisions of subsection (a) of this section shall upon a verified complaint in writing of any person, provided such complaint, or such complaint together with evidence, documentary or otherwise, presented in connection therewith, make out a prima facie case, to the Commissioner of Consumer Protection, who shall investigate the actions of any real estate broker or real estate sales person. The commissioner shall have the power temporarily to suspend or permanently to revoke any license issued under the provisions of chapter 392 of the general statutes after notice and hearing in accordance with chapters 392 and 54 of the general statutes. In addition to or in lieu of such suspension or revocation, the commissioner may impose a civil penalty of not more than one thousand dollars for each offense for any violation of the provisions of subsection (a) of this section.



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The new law essentially does 6 things.

1) It makes it illegal for anyone engaged in the mortgage/banking business to try to influence an appraisers valuation. Some examples may include but are not limited to; requests for comp checks, value checks, appraisal requests that indicate minimum value needed, homeowners estimate of value, etc.

2) It makes it illegal for real estate agents and real estate brokers to try to influence an appraisers valuation.

3) It makes it illegal for mortgage brokers and real estate agents to threaten to blacklist appraisers when the appraised value is less than their expectation of value.

4) It makes it illegal for mortgage companies to withhold payment for appraisal services. Especially when it's because the appraiser arrived at a value that was less than what the mortgage company needed to make their deal work.

5) The Bill also empowers the Department of Consumer Protection as well as the Department of Banking to impose a fine in the amount up to $1,000 per occurrence for each violation of the law.

6) The Bill also empowers the Department of Banking as well as the Department of Consumer Protection to suspend a mortgage broker and or realtor/real estate brokers license upon receiving a complaint.

All complaints regarding lenders and or mortgage brokers should be sent to Michael Buchas at the Connecticut Department of Banking. Michael.Buchas@ct.gov

 

[Fred]

2) refusal, or intentional failure, to utilize, or encouraging other mortgage brokers not to utilize, an appraiser based solely on the fact that the appraiser provided an appraisal reflecting a fair market value estimate that was less than the sale contract price.

That was only 99.9% of it. :icon_lol:

 

[OSU Beavers]

Sounds like it could work,

in theory.

 

[Lawrence R.]

No mention of Refinance transactions whatsoever. How did everyone miss that?

There is no contract price on a refi.


Oops.

 

[CT Value]

No mention of Refinance transactions whatsoever. How did everyone miss that?

There is no contract price on a refi.


Oops.

You're right! We will need to tighten up the languge on that.

Rob

 

[robert higgins]

refusal, or intentional failure, to utilize, or encouraging other mortgage brokers not to utilize, an appraiser based solely on the fact that the appraiser provided an appraisal reflecting a fair market value estimate that was less than the sale contract price.

I do not know what it is, but it just does not sit right with me, IMHO leaves a big hole.

You're right! We will need to tighten up the languge on that.

I think it needs to be more straight forward.

1) It makes it illegal for anyone engaged in the mortgage/banking business to try to influence an appraisers valuation. Some examples may include but are not limited to; requests for comp checks, value checks, appraisal requests that indicate minimum value needed, homeowners estimate of value, etc.

2) It makes it illegal for real estate agents and real estate brokers to try to influence an appraisers valuation.

3) It makes it illegal for mortgage brokers and real estate agents to threaten to blacklist appraisers when the appraised value is less than their expectation of value.

4) It makes it illegal for mortgage companies to withhold payment for appraisal services. Especially when it's because the appraiser arrived at a value that was less than what the mortgage company needed to make their deal work.

5) The Bill also empowers the Department of Consumer Protection as well as the Department of Banking to impose a fine in the amount up to $1,000 per occurrence for each violation of the law.

6) The Bill also empowers the Department of Banking as well as the Department of Consumer Protection to suspend a mortgage broker and or realtor/real estate brokers license upon receiving a complaint.


This is more straight forward, no holes.

 

[CT Value]

Hi Robert,

The language about withholding payment for appraisals was not included in the original proposal. It actually came from The Department of Banking as well as Consumer Protection as one of the primary complaints made by appraisers to both departments was that mortgage companies would withhold payments for appraisals when they didn't get the value needed to make their loan work. When both state agencies looked back at the complaints they may have seen that most center red around purchases and not refinances which is why the new law makes reference to the sale contract price. The language could certainly be tightened up to include refinances.

Rob

 

[Lawrence R.]

Listen, it is a step in the right direction, and there aren't nearly as many refi's out there right now...

But somebody screwed the pooch here.

My guess is that everyone was so excited to get SOMETHING, that they didn't want to look a gift horse in the mouth.

But. There was a pooch, and it got screwed.

 

[Renee Healion]

Somebody did something. Thanks to Rob for the initiative and perseverance. The language can be refined in time. At least the law is in place.

 

[Mike Kennedy]

Hi Everyone,
By now I'm sure many of you have heard about the new appraisal legislation that was signed into law by Governor Rell on 06/12/2008 and took effect on 07/01/2008.

A big thank you should go out to Governor Rell, State Legislator and appraiser, John Harkins from Stratford, Legislator Buddy Altobello from Meriden, The Connecticut Attorney General's Office as well as all those appraisers who contributed to the language in the original proposal that eventually led to House Bill 5577 and the new law.

As someone who was instrumental in the Bill's proposal as well as seeing it through to it's passage I would be happy to offer any insight that I may have into the language as well as the intent of the Bill.

Sincerely,
Rob Clermont




http://www.cga.ct.gov:80/2008/TOB/H/2008HB-05577-R00-HB.htm

Sec. 14. (NEW) (Effective July 1, 2008) (a) A mortgage broker is prohibited from influencing residential real estate appraisals. For the purposes of this section, "influencing residential real estate appraisals" includes, but is not limited to: (1) Refusal, or intentional failure, to pay an appraiser for an appraisal made that reflects a fair market value estimate that is less than the sale contract price; or (2) refusal, or intentional failure, to utilize, or encouraging other mortgage brokers not to utilize, an appraiser based solely on the fact that the appraiser provided an appraisal reflecting a fair market value estimate that was less than the sale contract price.

(b) Any person who violates the provisions of subsection (a) of this section shall, upon a verified complaint in writing of any person, provided such complaint, or such complaint together with evidence, documentary or otherwise, presented in connection therewith, make out a prima facie case, to the commissioner, who shall investigate the actions of any mortgage broker. The commissioner shall have the power temporarily to suspend or permanently to revoke any license issued under the provisions of chapter 668 of the general statutes after notice and hearing in accordance with section 36a-24 and chapter 54 of the general statutes. In addition to or in lieu of such suspension or revocation, the commissioner may impose a civil penalty of not more than one thousand dollars for any violation of the provisions of subsection (a) of this section.

Sec. 15. (NEW) (Effective July 1, 2008) (a) A real estate broker or real estate salesperson licensed under chapter 392 of the general statutes is prohibited from influencing residential real estate appraisals. For the purposes of this section, "influencing residential real estate appraisals" includes, but is not limited to, refusal or intentional failure to refer a homebuyer, or encouraging other real estate brokers or real estate agents not to refer a homebuyer, to a mortgage broker or lender based solely on the fact that the mortgage broker or lender is using an appraiser who has provided an appraisal reflecting a fair market value estimate that was less than the sale contract price.

(b) Any person who violates the provisions of subsection (a) of this section shall upon a verified complaint in writing of any person, provided such complaint, or such complaint together with evidence, documentary or otherwise, presented in connection therewith, make out a prima facie case, to the Commissioner of Consumer Protection, who shall investigate the actions of any real estate broker or real estate sales person. The commissioner shall have the power temporarily to suspend or permanently to revoke any license issued under the provisions of chapter 392 of the general statutes after notice and hearing in accordance with chapters 392 and 54 of the general statutes. In addition to or in lieu of such suspension or revocation, the commissioner may impose a civil penalty of not more than one thousand dollars for each offense for any violation of the provisions of subsection (a) of this section.



--------------------------------------------------------------------------------------



The new law essentially does 6 things.

1) It makes it illegal for anyone engaged in the mortgage/banking business to try to influence an appraisers valuation. Some examples may include but are not limited to; requests for comp checks, value checks, appraisal requests that indicate minimum value needed, homeowners estimate of value, etc.

2) It makes it illegal for real estate agents and real estate brokers to try to influence an appraisers valuation.

3) It makes it illegal for mortgage brokers and real estate agents to threaten to blacklist appraisers when the appraised value is less than their expectation of value.

4) It makes it illegal for mortgage companies to withhold payment for appraisal services. Especially when it's because the appraiser arrived at a value that was less than what the mortgage company needed to make their deal work.

5) The Bill also empowers the Department of Consumer Protection as well as the Department of Banking to impose a fine in the amount up to $1,000 per occurrence for each violation of the law.

6) The Bill also empowers the Department of Banking as well as the Department of Consumer Protection to suspend a mortgage broker and or realtor/real estate brokers license upon receiving a complaint.

All complaints regarding lenders and or mortgage brokers should be sent to Michael Buchas at the Connecticut Department of Banking. Michael.Buchas@ct.gov

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ROB - is the bold section above specifically stated in the law or as an addendum in writing ANYwhere?