Senate discussion of 2452 today.

[timd354]

Always fun to speculate on something that is totally new with no track record.
I think to apply for Dodd Bond Insurance you'll have to give them a list of
all the appraisals you did last year or for 3 years and then you'll probably
have to update them ever 3 months. Oh, and of course, there will be a
provision if any of the information you submit has any error then you are
considered to be fraudelent and misleading and all benefits, payments, and
disbursements from said policy are void and non-payable, go directly to
jail in accordance with criminal code.

The bill is not calling for insurance. It is calling for a bond....there is a huge difference. I have E&O insurance with $1,000,000/$2,000,000 coverage limits which costs $641 per year. A $1,000,000 bond would likely cost $40,000-$50,000 per year. Additionally, a claimant does not have to go court to get a piece of the bond, they only have to file a claim with the bonding company....the bonding company can then choose to pay the claim without even consulting with me and then come after me for the amount of money that they paid out on the claim since when you buy a bond you contractually are made obligate yourself to reimburse the bonding company for any losses they suffer on the bond.

 

[timd354]

You are correct it doesn't change anything about the AMCs. They are two different issues and two different bills. They are considering both of them not considering the bond instead of using AMCs.

I agree that the status quo does stink, but I do not agree that anything is better than nothing. We do need something that is for sure, but it has to be the right thing.

Please reread my post....I agree with you that a lot of things could be a whole lot worse than doing nothing.

 

[lisagruhot]

Please reread my post....I agree with you that a lot of things could be a whole lot worse than doing nothing.

Oh, I know. I was agreeing with you, but also responding to someone who said something was better than nothing.

 

[rcsone]

I doubt an attorney would agree with you. The bonding requirement says what it says .. if you seek payment for your services they have to be bonded.

......."...the bond shall inure first to the benefit of the homeowners who have claims against the appraiser under this title or any other applicable provision of law, and second to the benefit of originating creditors that complied with their duty of good faith and fair dealing in accordance with this title; and (B) any assignee or subsequent transferee or trustee shall ba a beneficiary of the bond, only if the originating creditor qualified for such treatment.". Then under (c) Duties of Appraisers-(2) BOND REQUIREMENT-No appraiser may charge, seek, or receive compensation for an appraisal unless the appraisal is covered by a qualifying bond.".........this is for conversation and not conversion to my opinions......it means to me you would have to have access to a bond and its resulting costs if a mortgage RESULTS from an assignment. But it does not say you have to pay a bond on every dollar of appraisal. They have mentioned elsewhere of a 10%+ or - factor of appraisal dollar quality value judgement. Could the bond amount be based of a maximum 10% of loan amount which would lower cost estimates by two decimal places? So that the 1 to 3 or 6% figures quoted on the Forum would be adjusted accordingly? Which would come back to a minimum suggested figure of $1 per $10,000 and not $1 per $100 for premium calculation. I offer consideration of my thoughts and not a solution of understanding or expertise. Afterall how many Senators and Representatives really could explain much or any of these questions and possible solutions?.......we are this close to a decision being made about all this in the Senate and later this week in the House and it may be too late to alter our fate......or even to try and currently understand what is happening...... THE SENATE VOTE COULD HAPPEN TOMORROW MORNING ON CSPAN II...........and the House by Friday........best to all............rs

 

[Elliott]

timd said, "...the bonding company can then choose to pay the claim without even consulting with me and then come after me for the amount of money that they paid out on the claim since when you buy a bond you contractually are made obligate yourself to reimburse the bonding company for any losses they suffer on the bond."


I mis-spoke, I should have only said, "Dodd Bond". So what happens if you submit
a claim for a bond and they deny the claim? What does the 'claimant' do then?

 

[timd354]

timd said, "...the bonding company can then choose to pay the claim without even consulting with me and then come after me for the amount of money that they paid out on the claim since when you buy a bond you contractually are made obligate yourself to reimburse the bonding company for any losses they suffer on the bond."


I mis-spoke, I should have only said, "Dodd Bond". So what happens if you submit
a claim for a bond and they deny the claim? What does the 'claimant' do then?

Then the claimant has the right to sue both you and the bonding company. The problem is that the bonding company has no reason to deny a claim if they can get the money out of you. The terms of the bond also typically specify that if the bonding company does deny a claim and has to pay legal fees to defend against the resulting lawsuit, the bonded person(or entity) must reimburse the bonding company fors its legal fees. Additionally, if the bond company suffers any damages as a result of the bond, including moneys paid out, legal fees, etc., then the bonded person is required to pay those damages upon demand to the bond company. The terms of the bond also typically specify that if the bonded person does not pay up and the bond company has to sue, the bonded person has to pay the bond company's legal fees. That's why this is so pernicious and that is also why, in order to get the best rates on a bond, it is necessary for someone to show a net worth that covers amount of the bond.

The bonding requirement is a very perncious requirement that will drive many of us out of business or cause us to find a way around bonding as I discussed in my prior posts.

Why don't they just require E&O coverage in a mandated amount (such as $1,000,000/$2,000,000 coverage limts which costs me currently $641 per year?

 

[rcsone]

....."......Any action by a borrower for a failure to comply with the requirements of this section may be brought in any United States district court, or in any other court of competent jurisdiction, not later than 3 years from the date of such violation.".....
"....Any appraiser who fails to comply with any requirement.....is liable to the borrower as a result of this failure; (A) any actual damages..... (B) an amount not less than $5,000; or (C) in the case of any successful action to enforce....costs of the action, together with a reasonable attorney's fee as determined by the court."...
such is written...................maybe these parts which are not in the House version will be changed or dismissed, but I doubt it, due to the percentage of passage so far of all the parts of the Senate and House versions.........also there is a mutitude of other issues "piggy-backing" or "pork-barreling" in this bill.......hard to turn down 98% for the 2%, so I think it is a go with or without the President's veto threat....I will expect today or tomorrow he will announce acceptance due to "changes" if not, prior historys on the parts dictate over-ride.......we may know all by the end of the week and the Senate tomorrow......best to all.........rs.....ps: please remember the bankers that create and profit also dictate results and this is necessary legislation to save the weak to be safely devoured by the "inheritors".....

 

[moh malekpour]

The name of the Bill S. 2452 is "The Home Ownership Preservation and Protection Act". It is hard to argue against home ownership preservation and protection Act but it is also a hardship on appraisers to carry the cost of bond because there are some skippies amongst us.
The solution is to require lenders to carry an appaisal bond. Any company, mortgage broker, bank or originator who orders an appraisal should post an appraisal bond and take a financial responsibility for that appraisal.

 

[rcsone]

....not to wear this thread out, but OUR bill hits the Senate floor at 10:00 Eastern time per Senator Reid's mouth a few minutes ago.....with or without bonding, a major appraisal event............best to all even after tomorrow's results are known.....rs

 

[timd354]

The name of the Bill S. 2452 is "The Home Ownership Preservation and Protection Act". It is hard to argue against home ownership preservation and protection Act but it is also a hardship on appraisers to carry the cost of bond because there are some skippies amongst us.
The solution is to require lenders to carry an appaisal bond. Any company, mortgage broker, bank or originator who orders an appraisal should post an appraisal bond and take a financial responsibility for that appraisal.

A very intelligent suggestion indeed. Its too bad that the bankers have a huge lobby and lots on influence in Washington and appraisers have little or no influence, so we get shafted once again.