AP: Monitoring of appraisers ineffective
System born from savings and loan crisis not working
By Inman News, Monday, August 18, 2008.A nationwide system set up to monitor appraisers in the wake of the savings and loan crisis did little to prevent appraisers, real estate agents and mortgage brokers from colluding to inflate home prices during the housing boom, the Associated Press said in reporting the results of a six-month investigation.
An independent federal agency authorized by Congress in 1989, the Appraisal Subcommittee, is charged with conducting field reviews and audits of appraisers. But the Appraisal Subcommittee has only four auditors and has not had a permanent director since the end of last year, AP said.
The Appraisal Subcommittee is charged with keeping records to aid state appraisal boards in identifying and disciplining rule breakers. But many state appraisal boards have failed to conduct timely investigations or resolve complaints, and federal regulators are effectively powerless over the states, AP concluded.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989 recommended that states license appraisers. A private group, The Appraisal Foundation, drew up rules governing appraisers, but eight states still don't require appraisers to be licensed or certified, AP said.
The AP questioned the effectiveness of an agreement governing appraisals by lenders working with Fannie Mae and Freddie Mac that was negotiated by New York Attorney General Andrew Cuomo (see Inman News story). The agreement, which takes effect Jan. 1, duplicates regulations already in place and lacks enforcement provisions, AP said.
A bill passed by the House last year would give the Appraisal Subcommittee a consumer protection mandate, and more authority to monitor the performance of state appraisal agencies. HR 3915, Mortgage Reform and Anti-Predatory Lending Act of 2007, would penalize attempts to influence the independent judgment of an appraiser through collusion, coercion and instruction, and punish appraisers who have direct or indirect interest in a property or transaction.
The bill, which also includes controversial provisions governing mortgage originations, has been stalled in the Senate Banking Committee since it was passed by the House on Nov. 15 in a 291-127 vote. Sen. Bob Casey, D-Pa., told the AP in a follow-up story Monday that he would renew a push to move the bill forward.
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Submitted by Wenceslao Fernandez Jr, BS, Realtor, CDPE on August 19, 2008 - 9:52am.
Makes you wonder if we've learned anything that will help us this time around, avoid yet another fiasco next time our real estate market booms.
www.MiamiRealEstateKing.com
Certified Distressed Property Expert
Miami-Dade County, Florida.
Submitted by Michael LittleBig on August 19, 2008 - 10:54am.
In 2003 Am Trust Bank who at that time held my mortgage of 2-1/2 years required an appraisal of the property for a refinance with no new money to lower the interest rate. The banks staff appraiser who was an Ohio state licensed appraiser of 12 years performed the appraisal. The bank denied the refinance request based on the appraiser's market value. The bank stated in essence that the property was not worth what was owed on it.
On September 2006 I filed a complaint with the Ohio Division of Real Estate citing a flawed appraisal of 4 violations. The State after a year discounted my 4 violations but charged the appraiser with 5 violations of state law and the American Standards Board (USPAP)It should be noted that the State did not investigate 5 years back on this Appraiser. Appraisals are required to be held for 5 years.
In September2007, the banks attorney and the state behind closed doors made a deal. The settlement agreement was made it said in writing to save “time and money” The appraiser pleaded guilty for two violations. The punishment for the appraiser was an additional 14 hours of real estate education. This appraisal was the catalyst for the foreclosure and sale of my home of 7 years.I often wonder if this bank appraiser in 12 years performed other flawed appraisals for this same bank.The flawed appraisal violations also triggered violations of federal regulation Title 12 CFR564-Appraisals and violated the Am Trust Bank’s Board of Directors written Appraisal Policy.
I fought the States settlement agreement with contact to my State Senator Dale Miller, Steve Stivers and Governor Strickland. There was no response. The Ohio Attorney Generals office represented the State in the Settlement Agreement. The Congressional Appraisal Sub Committee told me that they audited the States for appraisal compliance, but there was nothing they could do regarding my flawed appraisal. The Office of Thrift Supervision said that there was no violation of federal regulation 12 CFR 564 even though the appraisal was cited by the State of Ohio. The Inspector General of the Treasury agreed with the OTS. There was no response from my elected Congressional Senators.
The State of Ohio and the Federal government have no credibility with their appraisal regulations and laws. The federal regulators are pathetic.
I read that the projected foreclosures by 2008 year end will be 4 million and by 2009 year end
6 million. Out of 6 million foreclosures how many have flawed appraisals? Of those homeowners who have lost their homes through foreclosure due to a flawed appraisal, who is accountable? Of the 6 million foreclosures with the States and the Federal Regulators inability to perform their duties, how many foreclosed homeowners even know that their appraisal was flawed?
As more of the American public are educated they will begin to realize that property appraisals are now questionable. That those federal and state officials that are accountable to maintain the integrity of the appraisal standards have been negligent in their responsibilities.
It is frightening to even think that the entire real estate system of buying, selling and financing
appears to be collapsing because of negligence and arrogance.
From my standpoint a property appraisal in the State of Ohio is questionable at best, and the Ohio system to maintain the integrity of the appraisal is non existent.
Michael LittleBig
POB 16588
Rocky River OH 44116- 3065
Submitted by Commercial Mortgage Loans - Privately Funded - MasterPlan Capital LLC on August 19, 2008 - 12:25pm.
No homeowners? Only appraisers, agents and brokers? Why is it borrowers never share in the responsibility?
MasterPlan Capital LLC
Commercial Real Estate Investment Bankers
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Submitted by Traci Gregory on August 19, 2008 - 5:36pm.
"...did little to prevent appraisers, real estate agents and mortgage brokers from colluding to inflate home prices?..."
I'm tired of hearing that we (mortgage brokers and real estate agents) made appraisers do bad appraisals. Are there no appraisers with integrity, or moral fortitude who did good appraisals and have a voice in this country? None who stood up to people who “coerced” them into the value they came up with?
I went through some bad appraisers - the ones who gave unbelievably high value, until I found appraisers who were well trained, conscientious and honest.
And I sold to lenders who were tough on appraisals . . .
We colluded?
Traci Gregory
Financier
www.pallasfinancier.com
www.tracigregory.com