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Will lenders get the message?

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USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
I wonder if mortgae and appraisal law suits will be the next CASH COW for our lawyer friends?


FEDERAL MORTGAGE e-ALERT©
(1-1-03)

HUD DELEGATES AUTHORITY TO SUE BROKERS
FOR CIVIL MONEY PENALTIES WHEN FHA REGULATIONS ARE VIOLATED

Assistant Secretary for Housing-Federal Housing Commissioner has delegated authority to the General Counsel of HUD to take civil money penalty actions against participants in mortgages or loans insured under the National Housing Act for certain violations, along with the power to redelegate that authority. (Docket No. FR-4572-D-21). General Counsel redelegates this authority to Director of the HUD Departmental Enforcement Center (DEC). (FR-4572-D-22). This includes suing brokers that do not timely file their annual financial statements. (FR-4572-D-23; )

MORAL

What does this mean to you? It means in addition to withdrawal of approval, or other penalties local HUD enforcement centers can sue anyone, and I do mean anyone, for violation of FHA rules under 30 CFR §30.36 to collect money penalties you individually and your corporation will not protect you against this liability..

Remember, if you have problems with HUD, FHA, the local home ownership center or worse yet the Mortgagee Review Board give us a call. We now have an Audit Compliance section for checking your HUD/FHA files for completion and VOE compliance. If you would like more information contact [email protected]
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Bob,

A few days ago I recieved a brochure in my business mail that at first glance looked like advertising for CE classes.
In big letters on the front it said, "How to Litigate Claims of Undisclosed Defects in Real Estate Transactions in Colorado". Upon closer examination I discovered that it was sent by the National Business Institute and is a course that offers 7 hours of approved credit for general Colorado continuing LEGAL education.
There were other courses offered as well, but I found it somewhat ominous that this would be the course that they clearly were marketing the hardest and that such a brochure, designed for lawyers, would be mailed to an appraisal business. Apparently this may just be the next 'Cash Cow' for the legal profession.

Dee Dee
 

BenLuby

Senior Member
Joined
May 28, 2002
Professional Status
Certified Residential Appraiser
State
Georgia
Speculation from the peanut gallery:
Is it possible that the real force behind this is all the foreclosings, and that the FHA is trying to blame the appraisers, so, therefore, declare open season on them?
The other side of the coin, interesting. Looks like the brokers can get ripped, and the appraiser. What about the loan originator, or are they simply considered innocent... again?
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
You guys are right on tract. It is coming and coming fast. Let me explain how the system works: The first thing you have to do to make the system work is to have a cash cow to milk. Which appraiser can you name that could fork over $50,000 in damages? Probably very few, and the ones that can know enough to protect themselves anyway. So, how do they create a cash cow? The answer is E & O Insurance. Using this insurance they can force all appraisers to pool their funds in huge chunks of cash and then they can sue a few poor appraisers for millions. The same thing has happened in almost every business in this country. First comes the insurance then come the suits.
The next question is why are the Realtors and appraisers coming under the ax at this particular time? The answer is the government bureaucracy and lawyer racketeers are suffering from a serious lack of funding which threatens their existence. They need deep pockets to survive. What profession with deep insurance pockets that has not been tapped comes to mind? I will give you a clue: Most people don’t like them anyway. You guessed it! Are Realtors and appraisers vulnerable? You better believe it. You could take the local MLS book and keep every lawyer within 200 miles busy for the next ten years suing for fraud because of incorrect GLA reporting alone. Appraisers are even more vulnerable. The banking regulatory authorities dictate the definition of market value as an estimate of the most probable price, while at the same time the appraisal regulators enforce appraisal methods and practices under which it is mathematically impossible to answer the question asked in the definition of market value. I will bet that 95% of appraisers swear by matched pairing sales analysis and for years have based results on these analyses. There is a record a mile long by scholars and leaders in this field going back I know 20 years that totally discredits match pairing techniques. I could get you many more examples. It is a pot of gold just waiting to be mined. What jury could refute such evidence? What argument do we have to counter that argument? When rats get hungry, they start eating each other, and lawyers and government bureaucrats are hungry rats right now.
 
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