Circulation 80,000 | Advertise | Subscribe

Published by OREP, E&O Insurance Experts | Feb. 1, 2012 | Vol. 243

> Click to Read
Current Issue

> Working RE
Archives

> Surveys
C&R Fee/C&R Fee Results
HVCC Talkback
HVCC One Year On

> Blogs
Challenging Low Fees
AMC Rater
HVCC Talkback

 

> Leave Comments Below

> Click to Print


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.


Other webinars, including Maximize AMC Orders and Income, can be found on Working RE's Webinar Page.

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.

 

HTML Comment Box is loading comments...

        

ATTENTION: You are receiving WRE Online News because you opted in at WorkingRE.com or purchased E&O insurance from OREP. WRE Online News Edition provides news-oriented content twice a month. The content for WRE Special Offer Editions is provided by paid sponsors. If you no longer wish to receive these emails from Working RE, please use the link found at the bottom of this newsletter to be removed from our mailing list.