New Housing Bill/FHA Loans

[Marcia Langley]

I thought it was the combination of less focus on credit scores and much lower down payments for what amounts to a mortgage insurance program requiring more diligence in property analysis as a means of mitigating losses from claims.

So what's changed?

Good question. It's clear FHA want's to be considered "no different" than conventional.

In the general industry it seems they can't focus on more than one underwriting standard at a time. During the run-up it was all credit score with plausible deniability on ability to repay and asset valuation. That was because credit score was fast, easy, and cheap. And manipulation of credit score could be handled directly with the consumer, no third parties to fight with (much).

Now it seems ability to repay is getting all the attention from congress and the regulators. The general market is moving towards bigger down payments as a "simple" way to account for over appraised properties.

I guess real diligence is just too complicated, time consuming, and expensive.

But congress has decided to give advance tax rebates to FHA borrowers for down payment assistance. It seems that would necessitate more diligence on property analysis than expected in the general market.

That's not necessarily FHA's fault, or not their sole fault. Congress and the regulators are run by Wall Street. FHA will have to follow the regs given to them.

The fact that Wall Street runs congress is my fault. It's your fault, and every voter's fault. You'd think this meltdown in the security of both Main Street and Wall Street would be causing an uprising.

 

[Doug Wegener]

Open letter to my Congressman

Once the President signs this bill, this will be the new requirements for FHA:

The text from the bill awaiting signature follows:

SEC. 1404. REVISED STANDARDS FOR FHA APPRAISERS. 7
Section 202(e) of the National Housing Act (12 8
U.S.C. 1708(e)) is amended by adding at the end the fol- 9
lowing: 10
‘‘(5) ADDITIONAL APPRAISER STANDARDS.— 11
Beginning on the date of enactment of the Federal 12
Housing Finance Regulatory Reform Act of 2008, 13
any appraiser chosen or approved to conduct ap- 14
praisals for mortgages under this title shall— 15
‘‘(A) be certified— 16
‘‘(i) by the State in which the prop- 17
erty to be appraised is located; or 18
‘‘(ii) by a nationally recognized profes- 19
sional appraisal organization; and 20
‘‘(B) have demonstrated verifiable edu- 21
cation in the appraisal requirements established 22
by the Federal Housing Administration under 23
this subsection.’’.

Here is a link to the full bill:

http://www.house.gov/apps/list/press/financialsvcs_dem/hr3221_bill_text.pdf

Dear Congressman Issa:

I am writing about recently passed legislation, H.R. 3221, which you voted against. I am a California Licensed Appraiser in your District who is also currently on the FHA Panel.

One of the provisions of the new law is as follows:


SEC. 1404. REVISED STANDARDS FOR FHA APPRAISERS. 7
Section 202(e) of the National Housing Act (12 8
U.S.C. 1708(e)) is amended by adding at the end the fol- 9
lowing: 10
‘‘(5) ADDITIONAL APPRAISER STANDARDS.— 11
Beginning on the date of enactment of the Federal 12
Housing Finance Regulatory Reform Act of 2008, 13
any appraiser chosen or approved to conduct ap- 14
praisals for mortgages under this title shall— 15
‘‘(A) be certified— 16
‘‘(i) by the State in which the prop- 17
erty to be appraised is located; or 18
‘‘(ii) by a nationally recognized profes- 19
sional appraisal organization; and 20
‘‘(B) have demonstrated verifiable edu- 21
cation in the appraisal requirements established 22
by the Federal Housing Administration under 23
this subsection.’’.

The law as written is very unclear. In fact, my understanding is that HUD attorneys are currently studying it and do not know what it means. My questions are multiple.

1) Was the intention of Congress to remove all licensed appraisers on the current FHA roster or was it to have any newly approved appraisers after the date of enactment to be certified? Nobody, including HUD, seems to know whether currently licensed appraisers on the panel will be “grandfathered”

2) What did Congress mean by “Nationally recognized professional appraisal organization”. There are many national organizations. Which ones are included and which ones are not? Does it mean only those appraisal organizations that are members of the Appraisal Foundation? Or does it mean something else?

3) What did Congress mean by “Certified” by a National recognized professional organization? As far as I know, no appraisal orginaztion currently “certifies” their members. There are several that issue “Designations” to their members but not ‘Certifications”. Does the certification language actually mean designation?


As you can imagine, this is an issue of concern to me. Removing Licensed appraiser who have the experience and qualifications from the rooster will impact me and many others. Perhaps you can have a staff person research the answers to my questions and get back to me.

Thank You

Ted “Doug” Wegener
California Licensed Appraiser

 

[Couch Potato]

Good.

Another thing the new law illustrates is that the Appraisal Institute and Naifa do not have the best interest of appraisers in general at heart. They are well aware that their are plenty of competent Licensed appraisers doing FHA work. Maybe Congress wasnt but they were.


I think the law shows their interest is only for their membership.

As it should be.

 

[Hiker]

Doug,

Do you have a list of those nay and aye for HR 3221..thanks

 

[Doug Wegener]

http://clerk.house.gov/evs/2007/roll832.xml

 

[Couch Potato]

Here is the Senate vote.

 

[BRCJR]

Official FHA Position as of 8-11-2008

Thank you for contacting the FHA Resource Center. Below is a summary
of your request and our response.

Response (Alan Lang) - 08/11/2008 08:42 AM
We are currently working with our attorneys to interpret this provision and
therefore do not have a definitive answer at this time as to whether or not
licensed appraisers will continue to qualify for the Roster. FHA guidance will
be issued in the near future.

 

[Greg Bell]

HUD contracts for review work states Licensed/Certified to qualify.So it's OK to be a Licensed appraiser to do reviews...what a mess..

 

[Lloyd Bonafide]

Doug,

Do you have a list of those nay and aye for HR 3221..thanks

How about a list of congressmen that read the bill before they voted on it?

 

[Doug Wegener]

Thats easy:

1)
2)
3)
4)
etc.