Now What?

[Terrel L. Shields]

Ok, Freddy Fannie are on the ropes....what happens now? what should happen? What won't happen?

It looks to me like the industry ought to take stock of the Fannie/freddy appraisal paradigm and argue to congress that TAF (pitiful as they might be at it) ought be dictating the forms to the appraisers, not Fannie and Freddy. Clearly, the forms were meant to CYA at FanFred, not to accurately appraise property...a decidedly secondary objective in the first place.

In other words, it is time to abolish all Fannie-Freddy dictated forms...all of them. ditto for FHA which is even more upside down.

Let TAF thru the standards board create forms which comply with all requirements of USPAP and which create the certifications which are justified. If you have filled out the forms without lying or omitting a field, then it should be regarded as "compliant" form, if not function.

"Reviewing" per se should be abolished. If the lender challenges the appraisal, then TAF or some interagency intermediary should appoint the old style referees (many states still use) by appointing 3 appraisers to confer, examine the appraisal, inspect the property, and arrive at a value decision.

BTW, I noticed that Oklahoma, which once allowed certified appraisers to substitute for the 3 member system of estate appraisal has reinstituted the 3 designated appraisers. Obviously, they could not trust the numbers that they were seeing.

Such a system will never happen of course. But I am convinced that if peer review were to take place with 3 appointed appraisers, they are less likely to inflate an appraisal.

Secondly, the banks should be bankers. They should not have a deal turn on the value of the appraisal. That ought to be only part of the solution. And absolute but finally, no financing by a corporate or regulated bank, hedge, etc. should occur that includes more than 95% of the value of the property period. Nevertheless, the banker when confronted with a valuation that is $3000 short of his guideline of 80% or 90% ought be given the leaway to make a sensible decision using other factors (credit history, score, etc.) A small difference in the appraisal and the loan amount should not be a deal killer and the appraiser should not be given grief over what their values are..

of course, that is all pie in the sky and will never happen. We are too handy as scapegoats.

 

[PropertyEconomics]

Ok, Freddy Fannie are on the ropes....what happens now? what should happen? What won't happen?

It looks to me like the industry ought to take stock of the Fannie/freddy appraisal paradigm and argue to congress that TAF (pitiful as they might be at it) ought be dictating the forms to the appraisers, not Fannie and Freddy. Clearly, the forms were meant to CYA at FanFred, not to accurately appraise property...a decidedly secondary objective in the first place.

In other words, it is time to abolish all Fannie-Freddy dictated forms...all of them. ditto for FHA which is even more upside down.

Let TAF thru the standards board create forms which comply with all requirements of USPAP and which create the certifications which are justified. If you have filled out the forms without lying or omitting a field, then it should be regarded as "compliant" form, if not function.

"Reviewing" per se should be abolished. If the lender challenges the appraisal, then TAF or some interagency intermediary should appoint the old style referees (many states still use) by appointing 3 appraisers to confer, examine the appraisal, inspect the property, and arrive at a value decision.

BTW, I noticed that Oklahoma, which once allowed certified appraisers to substitute for the 3 member system of estate appraisal has reinstituted the 3 designated appraisers. Obviously, they could not trust the numbers that they were seeing.

Such a system will never happen of course. But I am convinced that if peer review were to take place with 3 appointed appraisers, they are less likely to inflate an appraisal.

Secondly, the banks should be bankers. They should not have a deal turn on the value of the appraisal. That ought to be only part of the solution. And absolute but finally, no financing by a corporate or regulated bank, hedge, etc. should occur that includes more than 95% of the value of the property period. Nevertheless, the banker when confronted with a valuation that is $3000 short of his guideline of 80% or 90% ought be given the leaway to make a sensible decision using other factors (credit history, score, etc.) A small difference in the appraisal and the loan amount should not be a deal killer and the appraiser should not be given grief over what their values are..

of course, that is all pie in the sky and will never happen. We are too handy as scapegoats.

I dont think TAF has any interest in the appraisers. I suggest abolishing the whole thing and starting over. Its time for the industry as a whole to be completely overhauled and for honest men to be put in charge. They are out there let them fix the issue.
How about we put Mitt Romney in charge of solving the mortgage crisis? Hes a financial genius. Hed do it honestly. It would be fixed.

 

[RSW]

The new men would only be honest until they get their hands in the cookie jar.

 

[robert higgins]

Terrel,
I pretty much agree with what you say, but it won’t happen. Because they do not know what they are doing, they just pull what they think is the right, out of their azz, and make it policy.

Instead of injecting billions if not trillion of dollars to correct (keeping afloat) the problems the industry is facing today, they should abolish every agency and policy and write a new one from scratch that will work and protect the public for years to come.

What America needs today are people in government, like our Founding Fathers, who can write a policy without collapsing the country in 10, 20 or 30 years. You think in today’s era someone can write a document or policy that can stand the test of time against a document like the Declaration of Independence, Constitution, or the bill of rights.

It just blows my mind that the leaders of this country can not implement a structured entity or written policies with out interference of lobbyist, greed, personal gain, or corruption.

Image if we lived in a new country (America) and or government had to write the Constitution today, how F’ed we would be, this country would not last very long.

It just pizzes me off that the heads of this great country do not put the People and the health and welfare of our Nation of years to come first, instead, they think of themselves, personal gain, and what they get out of it first.

 

[Offshore]

What happens now? A good question. Already the “notables” of this business are in major damage control mode behind the scenes. Who are they? They’re the ones who don’t care about the industry, but do care about lining their own pockets through the software business, AMCs and continuing education courses they offer. They’ve been visibly silent for the last few weeks. Maybe, just maybe decisions will be made on high which will shine a light on the incompetence and cronyism of the “notables” which contributed to the current fiasco.

 

[Terrel L. Shields]

The new men would only be honest until they get their hands in the cookie jar.

DeToqueville said as much 170 years ago about America only with the sort of elegance that only a frenchman could say. Roughly translated it went like this "democracy works so long as people do not discover they can vote themselves largess from the treasury..."

OS - I concur that vested interests want to promote the current system. PE - I, too, think starting over is the best way, but short of a total collapse of the system, I doubt that it would and in part Offshore hits on the problem. Even if government is willing to change and appraisers are willing to change, you would have to buck those who profit from us - the AMCs, the AVMs, the Software Vendors, those who control us like Freddy and Fannie.....all those have vested time and money into the current system.

 

[Couch Potato]

The Times says its likely the Treasury is going to give Fannie and Freddie $15 billion dollars on Monday.

 

[Caterina Platt]

Robert,

You sound like you're on the same plane I've been dabbling in mentally. Chuck it all, from top to bottom. Is it time for a Progressive movement? It's so corrupt from every angle, that I don't think anything outside radical changes and reforms would provide a lasting result.

 

[dobie]

In other words, it is time to abolish all Fannie-Freddy dictated forms...all of them. ditto for FHA which is even more upside down.

A great idea and for that reason alone it does not stand a chance.

 

[Lawrence R.]

My guess is.

Once the gov't has bought a significant amount of FNMA and Freddie stock, it will then begin to do what the government always does...Install redundancy and waste into an already crippled business model.

And from there, things will start to go wrong. It may be good for appraisers, though, as the gov't is not likely to admit that its "fix" for the last bailout didn't work....

Look for Mortgage brokers to take it on the chin very very soon.

Look for amendments to FIRREA.

Look for an expansion of TAF and other's regulatory scope.

Look for a few big time appraiser hacks to do some...big time.

Look for Cuomo's proposals to take a back seat to what big brother will propose himself very soon.

Look for more speculation from appraisers saying that it is the end of the business. But it won't be.