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April 29, 2009 Vol. 170 |
Award Winner • Publication Excellence |
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You are receiving
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If you are having
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www.workingre.com/workingre/amc-legislation-passes-three-states.html
New: Comment on this
story at Working RE’s new
Appraiser Talkback blog.
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HVCC
Appraiser Talkback Survey.
HVCC Looms: AMC Legislation Passes in Three States
By David Brauner,
Editor WRE
With HVCC
implementation only days away, anger is turning to
resignation and determination as appraisers seek ways to
cope. One positive development is recently enacted
legislation in three states regulating appraisal management
companies (AMCs). Similar legislation is under consideration
in 14 states. Find more below.
If you are
still formulating your position on HVCC (Home Valuation Code
of Conduct), you will find a critique of the Code from the
National Association of Realtors (NAR) at WorkingRE.com. In a letter to
Fannie Mae, NAR President Charles M. McMillan, CIPS, GRI ,
requests that implementation of the Code be delayed for
several reasons, including what he sees as a lack of
guidance by Fannie/Freddie on how to implement the Code.
“Neither of the government sponsored enterprises (GSE),
Fannie Mae or Freddie Mac, provided substantive guidance on
implementation until weeks before the effective date of the
agreement. The Federal Housing Finance Agency (FHFA) has
been silent on the agreement since the announcement late
last year,” McMillan said.
The letter
sites other grounds for delaying implementation, including
that HVCC does not apply to FHA transactions; AMC regulation
is underway in many states already; HVCC may increase the
cost of real estate transactions; lenders are not prepared
for HVCC and the proposed enforcement agency set up by the
Code is not functioning yet (Independent Valuation
Protection Institute). Find the letter at
WorkingRE.com, Sidebar: NAR's Letter to Delay HVCC.
(story continues below)
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HVCC Talkback Blog
Speaking out on the OREP/WRE Talkback Blog, appraisers
continue to rail against what many see as an unfair intrusion into
their businesses and point out that the “fix” – increased prominence
of AMCs, may worsen the problem HVCC set out to improve- appraisal
quality. Some appraisers, of course, say they like working with AMCs
and support the Code because the unrelenting pressure had to stop.
Some point out that the HVCC is not law but only a private agreement
between the New York State Attorney General and Fannie/Freddie.
Others remind us that appraisers are still eligible for direct
assignments from brokers and non-lenders for FHA assignments.
There is also
activity on the “Appraiser Rater” section of the Blog, where
appraisers provide feedback on working with specific AMCs. The staff
of several defend their companies, insisting that not every AMC
considers low fees first in appraiser selection and not every one
disregards or diminishes the role of appraisers; it's unfair to
paint every AMC with the same brush, they say.
Many appraisers continue to call for
cohesion in the ranks and suggest a nationwide “walk out” to
demonstrate the importance of appraisers in the process. Most
continue to insist that they can not and will not work for half
fees. Find a link to the Talkblock Blog and Survey
below. We encourage every appraiser to make his or her voice
heard by participating in the survey. It is the only way to find out
what is really going on.
(story continues below)
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(story continues)
Unreasonable
User Agreements
To make
hard times harder, appraisers are facing new, more unreasonable user
agreements that attempt to shift liability from the AMC/entity to
the appraiser if anything goes wrong with the loan, no matter who
is at fault. Appraisers must sign these agreements to continue
working with the AMC.
One agreement contains a “buyback” provision where the
appraiser: "agrees that if a mortgage lender
is required to repurchase a mortgage loan for any reason in any way
related to [among other things] . . . any appraisal report submitted
by Appraiser pursuant to this Agreement, Appraiser shall pay [AMC/Entity]
an amount equal to the repurchase price paid by such mortgage lender
to repurchase such mortgage loan." The appraiser is further required
to "pay the reasonable attorney’s fees of [AMC/Entity] incurred in
enforcing Appraiser’s obligations hereunder, including, with [sic]
limitation, the obligation of Appraiser to pay [AMC/Entity] an
amount equal to the repurchase price of a mortgage loan as set forth
above."
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Not much has changed since WRE broke this story last Fall: signing
these agreements does
not abrogate an appraiser’s own E&O insurance
coverage; it remains in place. However, E&O insurance does not
typically provide coverage for third parties, such as an AMC. If an
appraiser agrees to hold an AMC harmless, they will be bearing the
cost out of their own pocket. This makes any such agreement a (very
difficult) business decision; is the continued work from the AMC
worth the increased liability burden? Many appraisers say it is not;
agreements such as this one are potentially “game enders” for
appraisers should they be held to the terms. Even the most careful
appraisers say they will not sign because
it holds them accountable
even if they are not at fault. See FNC-Appraiser Firestorm (Again)
at WorkingRE.com, Library, Volume 20.
Industry Fights Back: AMC Regulation
Legislation to regulate appraiser management companies has been
signed into law in three states (UT, AR, NM), including two Bills
recently passed in Arkansas. The legislation in all three states are
similar in intent (more in the next print edition of WRE).
The Arkansas legislation requires that AMCs register and put up a
bond to ensure that appraisers are paid (Act 628 of 2009). There
also is language prohibiting Broker Price Opinions and making the
coercion of appraisers illegal (Act 413 of 2009). According to Tom
M. Ferstl, MAI, SRA, Executive Secretary of the Arkansas Appraisers
Association, there is strength in numbers, at least in Arkansas.
“With the growth of the Arkansans Appraisers Coalition, we were able
to hire an experienced lobbyist who was able to get the support of
key legislators and point us in the direction we needed,” Ferstl
said. “Thus, with passage of legislation outlawing the use of BPOs
in lieu of real appraisals, we are in a position to reverse the
trend of recent years against the independence of professional
appraisers. If you read the Act closely you will see that we gave
the Licensing Board the option of filing criminal charges against
real estate brokers who even advertise to perform BPOs in the area
of mortgage lending.”
Ferstl says his group fought hard to ensure that the Arkansas Bill
fell under the authority of the Appraiser’s Board and not another
entity that might not have appraisers' best interests in mind. Find
Arkansas Acts 413 (Appraiser Independence) and 628 (AMC Registration
and Regulation) at WorkingRE.com, Sidebars.
In Appraisers Fighting Back (WorkingRE.com, Library, Volume
17) you can read more about a previous
Arkansas bill
which restricts Broker Price Opinions (BPOs)
from being “treated like appraisals.”
New: Comment on this
story at Working RE’s new
Appraiser Talkback
blog.
Take the
HVCC
Appraiser Talkback Survey.
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