Senate discussion of 2452 today.

[timd354]

So what is your solution then?

The solution is not to be found on the appraiser side. The solution is to hold the lenders and mortgage brokers accountable for the appraisal process. Appraisers would not push values, etc if they had no incentive to do so from the lenders. Thats why licensing of appraisers is such a sham......licensing and regulation of appraisers does not solve the problem since you cannot license ethics. Just make all mortgage brokers and lenders responsible for the appraisal throughout the life of the loan. If the appraisal is found to be deficient in the case of a loan default, make the lenders and mortgage brokers have to purchase the loan back from Fannie, Freddie, Ginnie Mae, or who ever the ultimate mortgage backed securities investors are. Since the lenders and mortgage brokers are making thousands of dollars on each transaction as opposed to the pittance made by the appraiser, require that they purchase a large bond to cover the potential buybacks. If you required this, then licensing of appraisers would not even be necessary as the lenders and brokers would be damned sure that their appraisers would be competent. Better yet, just get rid of Fannie Mae, Freddie Mac, Ginnie Mae, the VA and FHA. The presence of government entities and government sponsored enterprises just distorts the market since investors in mortgage backed securities issued and/or guaranteed by the government sponsored entities know that the government will likely bail out their bad investments. If all mortgage money had to be raised in the private markets, then issuers of mortgage backed securities and bonds would damned sure to get legitimate appraisals so that they would be able to sell their paper. Any entities that failed to do so would find that their source of funds would quickly evaporate and they would be gone from the market. This would also help reign in the ridiculous underwriting standards and the stupid mortgage programs that led to the real estate bubble and meltdown. Raising private money would require actual sound credit standards and risk management. Additionally, this way if any entities did get stupid and melted down, then at least the American tax payer would not be on the hook.

 

[James R]

I like it, but the chances of that happening are slim to none.

 

[Elliott]

Solution?

1) Too many appraisers. Figure a way of reducing the number that can be trusted
with real money / federal related mortgages. All licensed/certified appraisers are
not equal.

2) Production side of lending can't talk to appraisers (Verboten). Worked great after
S&L Bailout I, until it was eliminated because Lenders whined. Worked much better
than licensing.

 

[timd354]

I like it, but the chances of that happening are slim to none.

Sadly, by giving "slim" any chance, you are being a bit optimistic. The chances of any meaningful reform that does anything but sh*t on appraisers is slim to none......the mortgage bankers and the realtors have many lobbyists and lots of cash to throw around Washington. The appraiser have nothing, and, as a result, the fix is in.

 

[moh malekpour]

Currently there are 6 following bills in the senate banking committee with provision on appraisers or appraisals. They may merge them all together or discuss them separately.

S.1222
S.1299
S.1386
S.2452
S.2860
HR.3915

 

[xmusienb]

Talking Points on the Appraisal Amendment

On March 3, 2008, Fannie Mae and Freddie Mac signed agreements with the Attorney General of New York to adopt a Home Valuation Protection Code, which was crafted by the Attorney General’s Office and approved by OFHEO, in consultation with the Enterprises and other market entities. The Code establishes requirements governing appraisal selection, solicitation, compensation, conflicts of interest and corporate independence, among other things.

The Code's concept of appraiser independence and accuracy should be endorsed. These concepts are important to a safe and sound process that is properly structured, regardless of whether lenders use third-party, affiliated, or in-house staff appraisers.

However, the Code leans heavily towards inconsistent and potentially counterproductive regulation of the lending industry. Lenders would essentially be required to be regulated by the New York Attorney General or suffer serious impairment of liquidity. In addition, the role of the New York Attorney General in promulgating the Code is misplaced and an attempted exercise of one state’s regulatory authority over federally and other state regulated lenders.

Bank mortgage lending practices are subject to multiple layers of regulatory oversight and quality control. They receive guidance from regulators and have regular on-site monitoring and examinations. Corporate audit, compliance and credit risk personnel also monitor appraisal processes for safety and soundness. The resulting processes have firewalls to ensure independence of the appraisal process as well as a comprehensive and consistent quality control examination of every appraisal report.

This amendment would require the Director of OFHEO to issue a regulation establishing appraisal standards for mortgages purchased or guaranteed by Fannie Mae and Freddie Mac. It would ensure that mortgages purchased or secured by Fannie Mae and Freddie Mac are collateralized by properties subject to fair and accurate appraisals, which is necessary to maintain the integrity of the mortgage process, improve the safety and soundness of the enterprises, and reduce the potential for mortgage fraud.

This amendment will also ensure the establishment of a common set of appraisal standards governing mortgage lenders that are federally supervised and regulated. This includes requiring the process controls necessary to ensure independence, avoid improper influences, and avoid overvaluation.

Although OFHEO was involved in making substantive changes to the Code, including requiring an informal comment process, the Code is not consistent with the appraisal regulations and guidelines issued by the federal banking agencies (the Office of Thrift Supervision, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the National Credit Union Administration). Further, the agreement violates the Administrative Procedures Act, which requires an agency to publish a notice of proposed rulemaking, solicit and consider public comments, and publish a final regulation that explains the basis and purpose of the regulation, and the agency’s consideration of public comments. The agreement entered into by OFHEO is clearly an agency statement of general applicability and future effect designed to implement, interpret, or prescribe law or policy.

This amendment will ensure consistency with the concepts of the Code, the regulations and guidelines of federal banking agencies, and the requirements of the Administrative Procedures Act.

 

[Elliott]

The reality of this legislation is its a Christmas Tree for housing.
Its not about real estate, appraising, or anything else. Its about
a title and special interest legislation that was bought and paid for
by lobbyist from the realtors, mortgage bankers, and lots of other
people who have money and self-interests and can run circles around
us. Some smartie bought CW stock 2 weeks ago and will walk away
with a $10 million profit because he got special legislation passed in
this bill. And what really happened, the good faith and credit of the
american taxpayer and worker just got capitalized by the mistakes
of financial types. The only ones that profit are the ones that have
the sure deal. Ever notice how the rich always seem to have money?

 

[timd354]

The reality of this legislation is its a Christmas Tree for housing.
Its not about real estate, appraising, or anything else. Its about
a title and special interest legislation that was bought and paid for
by lobbyist from the realtors, mortgage bankers, and lots of other
people who have money and self-interests and can run circles around
us. Some smartie bought CW stock 2 weeks ago and will walk away
with a $10 million profit because he got special legislation passed in
this bill. And what really happened, the good faith and credit of the
american taxpayer and worker just got capitalized by the mistakes
of financial types. The only ones that profit are the ones that have
the sure deal. Ever notice how the rich always seem to have money?

That is exactly correct sir.......the game is rigged and unless one hashighly paid lobbyists throwing money around Capitol Hill, one is simply out of luck. That's why appraisers always get the shaft.

Too many naive people, I mean sheep, mistake out form of government as being a democracy, when, in actuality, it is a kleptocracy.

 

[Deleted member 77547]

The reality of this legislation is its a Christmas Tree for housing.
Its not about real estate, appraising, or anything else. Its about
a title and special interest legislation that was bought and paid for
by lobbyist from the realtors, mortgage bankers, and lots of other
people who have money and self-interests and can run circles around
us. Some smartie bought CW stock 2 weeks ago and will walk away
with a $10 million profit because he got special legislation passed in
this bill. And what really happened, the good faith and credit of the
american taxpayer and worker just got capitalized by the mistakes
of financial types. The only ones that profit are the ones that have
the sure deal. Ever notice how the rich always seem to have money?

http://www.youtube.com/watch?v=9KReZyAZLI0
(contains strong language)

 

[rcsone]

.....missed most of the first part?......seems the majority of the action is due to start at 2:15 Eastern.....with a vote to send for concilation with the House afterwards?...best to all......rs