According to Marc Savitt, CRMS, Director of NAIHP, the recent “working”
meeting with Cordray and staff was lively and informative, and like several
before it, successful at communicating to regulators issues facing “street
level” appraisers, brokers and other real estate professionals.
Editor’s Note: Appraisers can be certain their issues are being heard at the
highest levels in Washington, D.C. and that there is some room for optimism.
Appraisers Heard at Highest Levels in Washington, D.C.
By David Brauner, Editor
According to a handful of appraisers and officials from the National Association
of Independent Housing Professionals (NAIHP), who attended a high-level meeting
in late January with Richard Cordray, Director of the new Consumer Finance
Protection Bureau and his staff, many of the issues adversely effecting
appraisers and consumers are being heard loud and clear by those in a position
to effect change – so stay tuned.
“Our goal is for appraisers (and mortgage brokers) to gain back control of our
businesses,” said North Carolina appraiser Peter Gallo. Gallo, Director of
Membership for the North Carolina Ass. of Realtors Appraisers Section and Vice
President of NAIHP, says he has not been able to compete for business based on
the quality of his appraisal work in over two years, thanks to the Home
Valuation Code of Conduct (HVCC), which removed mortgage brokers from the
process and allowed appraiser management companies (AMCs) to fill the void.
“This is the only profession we can think of where there are two licensed
professionals in the mix- appraisers and mortgage brokers (licensed under the
Safe Act), who are not trusted to work with each other and instead, where the
business is turned over to unregistered middlemen.”
According to Marc Savitt, CRMS, Director of NAIHP, the recent “working”
meeting with Cordray and staff was lively and informative, and like several
before it, successful at communicating to regulators issues facing “street
level” appraisers, brokers and other real estate professionals. Savitt, past
President of the National Association of Mortgage Brokers, said Cordray and his
staff seem “to get it.”
According to Pat Turner, SRPA, SRA, one of the appraisers present, about 35
minutes out of the hour and 45 minute meeting was devoted to appraiser issues,
including onerous indemnification clauses demanded by AMCs and the lack of
transparency with respect to appraiser fees. Transparency also is at issue,
thanks to the Uniform Appraiser Dataset, which Turner and others believe makes
appraisals harder to understand for consumers. Also mentioned were AMC contracts
which prohibit appraisers from making their fees known to consumers and which
force appraisers to give up ownership rights to their own work product- if they
want to work at all.
Exhibits one and two, according to Turner, were contracts from two “big box”
AMCs: one with an onerous indemnification clause and the other, containing
language barring appraisers from discussing or divulging fees to borrowers or
agents, including prohibiting them from attaching an invoice to the appraisal
report. Exhibit three was a letter from an angry and confused consumer demanding
a post-closing refund from the appraiser who he believed had jacked up the
appraisal fee after the fact: no, the appraiser explained, the higher fee was
billed by the AMC.
“The documents clearly show that certain AMCs are asking us to be a party to
fraud,” said Turner. According to Turner, one of the CFPB staffers wondered out
loud whether prohibitions against transparency are a violation of the Real
Estate Settlement Procedures Act (RESPA). Appraisers have been saying so for
years.
Another issue raised by appraisers over the years and discussed with Cordray is
the ownership interest many lenders have in the AMCs they order appraisals from,
a practice which seems to be in violation of Interagency Guidelines.
Savitt says he also presented evidence of the negative effects of HVCC;
appraisal quality is down, fraud is up and consumers are paying higher prices
for appraisals.
The Interim Final rule’s convoluted interpretation of the Customary and
Reasonable Fee requirement in Dodd-Frank also was addressed but Savitt says the
issue of reasonable fees becomes moot once independence is restored to the
profession and appraisers can compete for business again.
Look for important announcements in the next few months.
Thanks to Richard Hagar, SRA who sent this story to Working RE. Hagar is
presenter of the upcoming Webinar, 1,000 Appraisals a Year: Realities of Appraiser Liability. This webinar
is designed to help every appraiser provide better quality appraisals and keep
safe from the increasing threat of lawsuits. The goals are better quality
appraisals and lower liability. To learn more and sign up for Richard's Webinar,
click here.
About the Author David Brauner is Editor of Working RE magazine and Senior Broker at
OREP.org, a leading
provider of E&O Insurance for appraisers, inspectors and other real estate
professionals in 49 states. He has covered the appraisal profession for over
20 years. He can be contacted at dbrauner@orep.org
or (888) 347-5273. Calif. Insurance Lic. #0C89873.
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