Lender Pressure: Business as Usual?
With respect to lender pressure, many appraisers complain it’s “business as usual” despite the myriad state and federal legislation recently enacted to protect their independence, including the looming Home Valuation Code of Conduct- the centerpiece of the Fannie-Cuomo deal, and the recently passed National Housing Act, which also includes strong provisions to protect the integrity of the valuation process (National Housing Act – What Appraisers Need to Know).
The fact that there seems to be little respite from lender pressure, however, is no reason to dismiss the major shift for the better that has occurred. Instead of being ignored on this issue, as appraisers were for years, the problem of lender pressure is finding legislative redress “thanks” to the sub prime collapse and lending crunch. And there is some evidence that recently passed laws are beginning to bite.
Consider the story (Appraiser Board Turns Table on Broker) about an appraisal board that turned the tables on a mortgage broker who filed a complaint against an appraiser for “not hitting a number.” (Yes, it’s true.) Without a recently passed law in that state and a new mindset, the story would have had a much different ending. Many newly-minted state and federal laws are on the books now and the old ones are getting a fresh read. While not a significant event, the Board’s action against the broker may be a hint of things to come. If you doubt change has occurred, consider the story in the context of the refinance boom, several years ago, when the prevailing industry opinion was that appraisers were ill-tempered speed bumps on the road to expanding home ownership- too expensive, too slow, no more accurate than AVMs and certainly much less objective. Remember?
Back then, nobody was listening about the dangers of reckless lending: even fellow appraisers scoffed at those who railed against the inaccuracy of AVMs, illegal pressure or the potentially catastrophic consequences of laissez-faire lending. Remember? Consider whether Fannie Mae and Freddie Mac would have capitulated to New York Attorney General Cuomo in their heyday. The AG would never have been able to demand that these (ex) lending giants pay attention to appraiser concerns, had not the lending shenanigans that appraisers complained about for years been revealed as a result of the WAMU-eAppraiseIT investigation. The appraisers who complained, reported their grievances, and held fast to their integrity were right. There will be more struggles ahead, no doubt, but never doubt that change can happen. It just did.
As this is the last print issue of 2008, we hope it’s not too early for the staff of Working RE and OREP to wish you and yours happy holidays and a prosperous New Year! If you haven’t shopped E&O lately, you owe it to yourself to visit the E&O experts at OREP.org!