New Home Valuation "Code of Conduct"

[Matthew Schwartz]

RE: .....The fight centers on an unusual agreement reached in March among Fannie Mae, Freddie Mac, their federal regulator and New York Attorney General Andrew M. Cuomo. The agreement took the form of an out-of-court settlement under which Cuomo terminated an investigation of the mortgage finance giants' appraisal practices in exchange for their adoption of a far-reaching "home valuation code of conduct" covering all loans they purchase or securitize.
The code, which is scheduled to take effect Jan. 1, would shake up the entire appraisal system. For instance:

--Mortgage brokers, who originate roughly 60 percent of all new loans, no longer would be allowed to select or pay appraisers. That could force some mortgage shoppers to pay for multiple appraisals rather than just one.


-OK, SO WHO SELECTS THE APPRAISER THEN? HOW DOES THIS NOW WORK?


--In-house appraisers at banks and mortgage firms no longer would be permitted to do appraisals for loans to be funded by their organizations.
-YAY!

--Lenders couldn't use appraisals generated by management companies, firms that contract with networks of appraisers nationwide, if they have a significant financial stake in the management company.

EVEN BIGGER YAY!

 

[c w d]

Don't celebrate yet. The HVCC only shifted the burden of those extorting the appraisers to make value for repeat business from MBs to another entity. Do a search on the forum for HVCC. This has been discussed at extraordinary length.

 

[PropertyEconomics]

RE: .....The fight centers on an unusual agreement reached in March among Fannie Mae, Freddie Mac, their federal regulator and New York Attorney General Andrew M. Cuomo. The agreement took the form of an out-of-court settlement under which Cuomo terminated an investigation of the mortgage finance giants' appraisal practices in exchange for their adoption of a far-reaching "home valuation code of conduct" covering all loans they purchase or securitize.
The code, which is scheduled to take effect Jan. 1, would shake up the entire appraisal system. For instance:

--Mortgage brokers, who originate roughly 60 percent of all new loans, no longer would be allowed to select or pay appraisers. That could force some mortgage shoppers to pay for multiple appraisals rather than just one.


-OK, SO WHO SELECTS THE APPRAISER THEN? HOW DOES THIS NOW WORK?


--In-house appraisers at banks and mortgage firms no longer would be permitted to do appraisals for loans to be funded by their organizations.
-YAY!

--Lenders couldn't use appraisals generated by management companies, firms that contract with networks of appraisers nationwide, if they have a significant financial stake in the management company.

EVEN BIGGER YAY!

Welcome back Rip Van Winkle ... nice to see you have awaken from your sleep .....

 

[moh malekpour]

RE: .....The fight centers on an unusual agreement reached in March among Fannie Mae, Freddie Mac, their federal regulator and New York Attorney General Andrew M. Cuomo. The agreement took the form of an out-of-court settlement under which Cuomo terminated an investigation of the mortgage finance giants' appraisal practices in exchange for their adoption of a far-reaching "home valuation code of conduct" covering all loans they purchase or securitize.
The code, which is scheduled to take effect Jan. 1, would shake up the entire appraisal system. For instance:

--Mortgage brokers, who originate roughly 60 percent of all new loans, no longer would be allowed to select or pay appraisers. That could force some mortgage shoppers to pay for multiple appraisals rather than just one.


-OK, SO WHO SELECTS THE APPRAISER THEN? HOW DOES THIS NOW WORK?


--In-house appraisers at banks and mortgage firms no longer would be permitted to do appraisals for loans to be funded by their organizations.
-YAY!

--Lenders couldn't use appraisals generated by management companies, firms that contract with networks of appraisers nationwide, if they have a significant financial stake in the management company.

EVEN BIGGER YAY!

Suppose you are a mortgage broker working on loan for refi or purchase. You do your homework such as interviewing the borrower, getting the borrowers credit scores, have the borrower to fill out all required forms and select the lender who is going to fund that particular loan. At this stage, you may get an AVM if you wish to get an idea about the subject property value but you cannot call any appraiser for comp or value check. When you done with your homework, you send your loan package to your selected lender or funder which could be a bank or saving & thrift and let them to select the appraiser. You even don't know who the appraiser is going to be and have no need to contact the appraiser.
If the loan was not funded by the lender that you selected, you need to take the loan package to another lender and again let that second lender to make a decision on the appraisal. it is going to be up to the second lender to accept that appraisal which is already in the file or reject it and ask for a new appraisal. The second lender may accept that appraisal with the name of other lender on it as a client or may decide to contact the appraiser of that appraisal and request for update or a new appraisal with a discount. It is up to that lender and the appraiser.
The disturbing part is that the lender is going to select the AMC instead of the appraiser and then the AMC is going to select the appraiser. This part of the agreement is going to be problematic for appraisers and needs to be resolved.

 

[Brad Ellis]

Matthew,

...and appraisers then must work for management companies who will take half the fee from them and reduce the appraiser's net income to well less than half of what it was...

...and then every borrower who does not like your value opinion will turn you in to the IVPI...

Still saying "Yay" ?

Brad

 

[hovious]

The proposed Senate/House Bills being tossed around, in my opinion, will trump the HVCC. I think the HVCC will never come into play..Just my opinion.

 

[moh malekpour]

Matthew,

...and appraisers then must work for management companies who will take half the fee from them and reduce the appraiser's net income to well less than half of what it was...

...and then every borrower who does not like your value opinion will turn you in to the IVPI...

Still saying "Yay" ?

Brad

Brad,
Are you trying to say that separating appraisers for the brokers yoke is a bad idea? When the broker sends the loan package to your bank which needs an appraisal, please request from your bank underwriter to contact an appraiser instead of contacting the AMC. Problem solved.

 

[Brad Ellis]

Moh,

Not at all- and yes I support the money guys getting the appraisal vs. the commission guys.

This was just a message to our OP to "be careful what you wish for"

Brad

 

[moh malekpour]

Moh,

Not at all- and yes I support the money guys getting the appraisal vs. the commission guys.

This was just a message to our OP to "be careful what you wish for"

Brad

We wish to get rid of brokers coercion and their games that thy have played and we rely on chief appraisers like yourself in big institutions to have sympathy and cooperation with their fellow appraisers to convince the bank decision makers that it is in their best interest, financially, morally and quality wise to select independent appraisers rather than going through an AMC who has the same game playing and coercion on appraisers. I hope it is not too much to ask.

 

[Matthew Schwartz]

Yes, the role of the AMC in all this is problematic. I wish they would all just fade. Ultimate nightmare: It all becomes broadcast appraisal orders.