JENIFFERW
Member
- Joined
- Nov 26, 2007
- Professional Status
- Licensed Appraiser
- State
- California
My opinion is humble. I know many of you are more experienced and educated than I am. I am relatively new to the Forum, but I have been learning and soaking in everything I read. I have always recognized the inherently flawed nature of mortgage appraisal assignment system we currently work under. I've been reading the debates both pro and con regarding appraiser pool assignment concepts. It appears to be that both sides of the argument have valid points. So, an idea came to me that I would like to share and get feedback from you on. How about both free market and a pool working in conjunction? Here is what I mean-
What if mortgage appraisal ordering stayed exactly the same as it is now, however there were a supervised and regulated pool of review appraisers? What if regulation was enacted that mandated any mortgage broker, bank that sells the loans on the secondary market, or AMC to have the original appraisal reviewed by a randomly chosen review appraiser from a supervised rotating pool? The review would be mandated based on who the client is. Portfolio lenders would not have to have a review done because they police themselves. Mortgage brokers and AMC's would definitely be mandated to have a review done though. The review opinion of value is what they would have to use, unless a new appraisal was the reviewer's recommendation.
Since budgets are tight and current regulatory agencies aren't that good at enforcement and oversight now, how about FNMA to oversee the pool of review appraisers? Make the original client pay FNMA the review fee plus administrative costs COD up front. FNMA could set criteria for the review appraiser panel selection, like maybe minimum 5 years experience, Certification requirement, testing, etc. If the original client has a grievance with the 1st review done, he could pay for a 2nd review with the same COD requirement. If the original appraisal, 1st, and 2nd review don't satisfy the original client, they are out of luck. The review appraisers could police themselves, because if the 1st review was not done properly, the 2nd review appraiser could be required to report it to FNMA staff to look into it. Original and review appraisers could have rebuttal options available if any controversy erupts. Many details would have to be worked out, but I think the concept in general is good and the details could be worked out.
The way I see it, this would actually create more appraisal work, pressure the original appraiser to be honest in the first place, provide another layer of protection to the public (borrower), as well as the investor of a mortgage backed security. The only people that would have a problem with this system as far as I can see, is corrupt mortgage brokers, lenders, AMC's, and appraisers that don't know what they are doing. It wouldn't cost the public anything. The client will say it costs too much or it takes too much time, but the cost would be relatively low considering how much other loan fees are already, and what's an extra few days for a desk review (or field review) and an extra few hundred dollars if it protects the integrity of the lending industry. They will really be more mad about having to give up their control over the appraisal process.
I suspect some will say we can't get this accomplished because mortgage brokers, lenders, and AMC's have lots of money and will fight it, but I bet the public would support it, and maybe the government needs to show some good faith at this point and actually try to fix the currently flawed system in place.
OK, so now I challenge you to poke my idea full of holes. I want your feedback. Ideas that are better, great...I think there has to be a solution. Maybe there is no perfect one, but I think we can certainly try and make changes that can make things better than they are now. What do you think?
What if mortgage appraisal ordering stayed exactly the same as it is now, however there were a supervised and regulated pool of review appraisers? What if regulation was enacted that mandated any mortgage broker, bank that sells the loans on the secondary market, or AMC to have the original appraisal reviewed by a randomly chosen review appraiser from a supervised rotating pool? The review would be mandated based on who the client is. Portfolio lenders would not have to have a review done because they police themselves. Mortgage brokers and AMC's would definitely be mandated to have a review done though. The review opinion of value is what they would have to use, unless a new appraisal was the reviewer's recommendation.
Since budgets are tight and current regulatory agencies aren't that good at enforcement and oversight now, how about FNMA to oversee the pool of review appraisers? Make the original client pay FNMA the review fee plus administrative costs COD up front. FNMA could set criteria for the review appraiser panel selection, like maybe minimum 5 years experience, Certification requirement, testing, etc. If the original client has a grievance with the 1st review done, he could pay for a 2nd review with the same COD requirement. If the original appraisal, 1st, and 2nd review don't satisfy the original client, they are out of luck. The review appraisers could police themselves, because if the 1st review was not done properly, the 2nd review appraiser could be required to report it to FNMA staff to look into it. Original and review appraisers could have rebuttal options available if any controversy erupts. Many details would have to be worked out, but I think the concept in general is good and the details could be worked out.
The way I see it, this would actually create more appraisal work, pressure the original appraiser to be honest in the first place, provide another layer of protection to the public (borrower), as well as the investor of a mortgage backed security. The only people that would have a problem with this system as far as I can see, is corrupt mortgage brokers, lenders, AMC's, and appraisers that don't know what they are doing. It wouldn't cost the public anything. The client will say it costs too much or it takes too much time, but the cost would be relatively low considering how much other loan fees are already, and what's an extra few days for a desk review (or field review) and an extra few hundred dollars if it protects the integrity of the lending industry. They will really be more mad about having to give up their control over the appraisal process.
I suspect some will say we can't get this accomplished because mortgage brokers, lenders, and AMC's have lots of money and will fight it, but I bet the public would support it, and maybe the government needs to show some good faith at this point and actually try to fix the currently flawed system in place.
OK, so now I challenge you to poke my idea full of holes. I want your feedback. Ideas that are better, great...I think there has to be a solution. Maybe there is no perfect one, but I think we can certainly try and make changes that can make things better than they are now. What do you think?
C'mon, it's not that far out there is it? I think the average voter would support this idea.
