What If? And How To?

[twinkle]

I'm sure someone has had this idea, but I haven't heard discussion about it. And I'm guessing I'm missing some very obvious problem to my suggestion that I know you all won't hesitate to tell me! But, if it has merit, how does the change get implemented?

Wouldn't the following help to avoid a repeat housing economic melt down in the future?

Borrowers should pay mortgage broker's fees, not lenders.

That's it, simple and for me, intuitive. When I purchased my first home, I assumed I was paying my broker and it was somewhere in those wonderful closing fees. Sure, it sucks for borrowers, but sellers pay Real Estate Broker/Salesperson fees, why wouldn't a borrower pay their mortgage broker for a service rendered!!?

Then, Mortgage Brokers (M.B.) would/should have to follow the same fiduciary relationship guidelines as R.E. Salespersons and their client would now be the borrower, not the lender. Hence, the M.B. would have the best interests of the borrower in mind (theory of course), which, in my opinion, is what many borrowers assume entering in the transaction/situation anyway!!

Just like paying R.E. salesperson/broker to market and negotiate the sale of my home, I would gladly pay for the services of a M.B. that was investigating the BEST loan options for ME based on my financial qualifications. Versus the M.B. actually getting incentives to screw the borrower, in essence, with the highest interest, crappy loans they could bull**** the borrower into. (Incidentally, I believe a large lender is being sued for providing these incentives to brokers).

'Washington' continues to not properly regulate the financial industry, since they lobby and have moohlah, let the free capital market reign. This change could have a natural domino affect to increase the qualifications of the mortgage brokers, including licensing or certification, via the powers of competition, marketing etc..i.e. Wouldn't you want to give you business to the certified M.B?

To exemplify further, if the borrower pays a M.B. for his/her services and two years later can't pay the loan, because of the LOAN terms, what will obviously happen to the M.B.? Out of business, bad reputation, etc...It will be in the M.B.'s best interest to keep their clients, the BORROWER, happy. Hence, now everyone is actually working for the best interests of the borrower, what a concept! Just like a R.E. Salesperson/Broker, even though they could make a bigger commission, do not want their client in a home they can't afford, it will hurt their word of mouth business if the client is dissatisfied or feels screwed by a professional they were suppose to be able to trust help them make a complicated decision!!

AND as a result, isn't it possible less appraiser pressure will result? Let's face it, it will never go away, and sure there are R.E. salespersons pushing a more expensive home to get the bigger commission...but, give me a break, it's theory and maybe a better step forward than the probable issues with the HVCC, which may never see the light of day anyway.

STOP THE MADNESS OF APPRAISAL LEGISLATION! Something needs to change at the mortgage broker/lender industry level. I'm pretty sure it's already been written that they aren't suppose pressure appraisers...so, maybe if we keep writing it it will come true, come on!

Again, if this idea has any merit, how could we make the change happen?

Thanks for you patience in getting through this and your comments!

 

[George W Dodd]

twinkle,

Laws and rules without enforcement are just lip service. The banks either knew or should have know what the MBs were doing, and it could be augured that they encouraged it. The GSEs either knew or should have known what the lenders and MBs were doing. The Fed's bailout of the GSEs says they do not have to pay the price for their bad decisions. In the end it's always just smoke and mirrors.

The only way things will change is if Appraisers unite and realize that our obligation is to the Public Trust and not just to lenders, GSEs, and other users.

 

[Terrel L. Shields]

only way things will change is if Appraisers unite and realize that our obligation is to the Public Trust

can it change before the power of the GSE to dictate forms is broken? Can it change before the lenders cannot coerce appraisers? Can it change before AMCs cannot twist super low fees out of appraisers?

I fear not.

 

[George W Dodd]

Terrel,

There is still a window of opportunity before the bottom hits and it is a chance to get some changes made.
Appraisers need to use the State Boards to enact rules that protect the public trust. Why isn't your state regulating AMCs? Why are appraisers allowing themselves to be coerced? Why do the users dictate forms?
Basically because we as residential appraisers have not worked together to change these problems. We need an organization that is only for residential appraisers. A way to organize and be effective and make it impossible to be ignored.

 

[Tim Hicks (Texas)]

It is already too late. They can have all the legislation and rules they want, it will not stop the madness. Many appraisers somehow think it is their job to hit the number for their clients. All new rules and legislation will do is make them hide their actions more. They will continue to operate they way they do now with a wink and aknowledgment from the appraiser. The only cure is to remove the ordering process from the brokers. It is the only cure that will actually work.

 

[PropertyEconomics]

twinkle,

Laws and rules without enforcement are just lip service. The banks either knew or should have know what the MBs were doing, and it could be augured that they encouraged it. The GSEs either knew or should have known what the lenders and MBs were doing. The Fed's bailout of the GSEs says they do not have to pay the price for their bad decisions. In the end it's always just smoke and mirrors.

The only way things will change is if Appraisers unite and realize that our obligation is to the Public Trust and not just to lenders, GSEs, and other users.

George, I have to disagree with you. Lenders are the ones that use our service as do the GSEs. Until THEY demand honesty and integrity from lenders then nothing will change. Appraisers can unite all they wish, but if lenders / brokers are dishonest then we can change nothing.
Unethical lenders and brokers will find a way to finally get rid of all of us .. which I frankly think will happen for the most part.
But we have no control over banking and lending and that is where the issues lie. If no one orders an unethical appraisal then it is highly likely none will be done because it simply wont be necessary.

 

[George W Dodd]

PE,

I think we are saying the same thing. If we as residential appraisers united and effectively policied our own then we would be better at dealing with these issues. We can not change what they do directly but indirectly by the way we respond to it. If as a group we decided to never do comp checks then it would be a waste of time for them to ask for one. Etc.

 

[PropertyEconomics]

PE,

I think we are saying the same thing. If we as residential appraisers united and effectively policied our own then we would be better at dealing with these issues. We can not change what they do directly but indirectly by the way we respond to it. If as a group we decided to never do comp checks then it would be a waste of time for them to ask for one. Etc.

We will never change them George. The tail wont wag the dog. Hasnt the past history shown us appraisers have adapted to how they had to wag based upon what the dog told them to do?

 

[George W Dodd]

Only because the majority let the minority promote our interests. It's time to take these issues to the Appraisal Boards and get the needed changes.

 

[PropertyEconomics]

Only because the majority let the minority promote our interests. It's time to take these issues to the Appraisal Boards and get the needed changes.

George WE are the minority thats whats so interesting in your argument. We cant TELL them what to do. We have no control over them. Until those with the control MAKE them behave like good dogs ... we can do nothing.