Oct. 19, 2007 - New RESPA requirements proposed

Proposed Bill tightens mortgage lender/appraiser rules

Tuesday, Representative Paul Kanjorski (D-PA) introduced H.R. 3837, The Escrow, Appraisal, and Mortgage Servicing Improvements Act of 2007. As reported in Inman News, H.R. 3837 is aimed at protecting consumers and financial institutions by addressing shortcomings in the appraisal regulatory structure, among other things. The proposed legislation includes provisions that will ensure an independent appraisal process, strengthen regulatory authority over bad actors and recognize the importance of professional designations when selecting an appraiser. The bill also creates new standards within the Truth in Lending Act (TILA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

The standards would penalize parties involved in a real estate transaction for attempting 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. Don Kelly of the Appraisal Institute said, "We are particularly pleased to see that H.R. 3837 promotes appraiser independence because an independent appraiser is best able to help ensure the integrity of the lending process for the benefit of the consumer and the financial institutions involved."

The Escrow, Appraisal, and Mortgage Servicing Improvements Act would update the Real Estate Settlement Procedures Act (RESPA) to create new requirements for mortgage servicers. This bill would require escrow accounts on high-cost loans to be used to make property tax and insurance payments, place restrictions on "force-placed" insurance, and require loan servicers to respond more quickly when borrowers report errors in their payment histories.

The National Community Reinvestment Coalition welcomed the new regulations, saying borrowers without escrow accounts are often surprised when property taxes and insurance are due and haven't budgeted for them. And borrowers can end up in default or foreclosure if abusive loan servicers don't correct errors in their payment histories, the group said.

Source: Appraisal Scoop, Inman News

Nov. 2, 2007 - RE: New RESPA requirements proposed

I am getting worried about these BPO's and AVM products.

I see on the internet offers to " Get a Free Appraisal" & " Find Your home value Free" . BPOs and AVMs acting like real appraisers, Acting like they can produce some type of Value- Without the license. This sounds Illegal to me... Why is it tollerated.

Also Realtors are doing BPO's, which include inside inspections, comparables, and a BPO form that states a value. I know of Realtors doing REO BPO's because they do it for around $60.

To put an opinion of value in writing, and accept a fee for it. YOU SHOULD BE A LICENSED APPRAISER ! Isnt that what I went to school for????

I spent a lot of time and money to become a Certified Appraiser.

These BPO's and Realtors, and AVMs are advertizing Appraisal Services, yet they are not appraisers. This is not right and I wonder I how Appraisers are to seperate them selves from Realtors to fight this. We are forced in many states to join their board to gain access to MLS. i believe that is also WRONG.

Appraisers are the only licensed and accountable professional in most lending transactions.  It is offenseve to me that AVM's and BPO's are allowed to exist at all.

Also this issue of Vendor management companies taking part of our fee. To take part of a Realtor Fee, you need to be a Realtor, To take part of an attorney fee, you must be an attorney. To take part of a Loan officer fee, you need to be licensed, or at least work for someone who is licensed. To take part of an Appraisers fee, you need NOTHING but the ear of the Lender. How effective is this towards the goal of seperating lenders from appraisers... NOT AT ALL. In fact it promotes the exact types of relationships we dont want. The Best way to solve this is a vendor management company that uses a simnple rotation, and allows any LICENSED appraiser, in the proper area onto the list.

LSI, LandSafe, and many of the other largest management companies are NOT taking new appraisers...

Countrywide owns Landsafe... This seems that the staff appraisers simply went over to Landsafe.

As long as a way to give work to the appraisers who will knowingly bend the rules, it will happen.

The Lender/broker should have absolutly no ability to choose the appraiser. No waypush value if you dont pick the appraiser.This is the only way to insure an unbiased report.

The vendor management companies should only use a rotation, and include all licensed appraisers that apply.

Thats so simple ! How many third graders would it take to figure this out ?  It is obvious that Large lenders still have absolute control over who does the appraisal.........

Small brokers are still allowed to pick any appraiser they might want, with NO accountability and in many cases no license.....

Both their income is dependant on an Appraisal that will allow the funding of the loans, where they make money. They cannot have influence because they have an interest........ HOW simple is that???

Dec. 4, 2007 - RE: New RESPA requirements proposed

appraisers are pressured to it a value implicitly, they work for the bank and the bank only.  If an appraiser gets 10 appraisals from local bank X and 2 of those come in low, Bank X reviews numbers at the end of the month and say that appraiser killed 20% of the deals we gave them.  No more orders from bank x.  The system is flawed and appraisers that say they are impartial are fooling themselves.  The system is flawed in that it makes an appraiser an interested party to stay on the "approved appraiser list".

Now Broker price opinions are usually broadcast to many agents and the first to grab it gets it.  They get paid the fee upon completion.  There is no pressure to hit a list price or sale price as long it is supported by comps.  Now lets say an agent provides a very optimistic listing price, thay may very well get the listing and spending the next 90 days explaining why they were so wrong.  Then that agent may be removed from the roster. 

I think the assignments of tomorrow will be a similar broadcast and the first licensed appraiser to accept gets it, without knowing the bank, getting a copy of the contract, or other details.  Just a straight up value. No pressure to hit a number or lose a bank as a client.

Now as for liability issues, appraisers have very little, the appraisal states it is an opinion of value at at that time, one second later it is no longer that time.  Now as agent I have 1,000,000 E&O policy 1,000,000 administrative and judicial, 1,000,000 enviromental (i did not see that mold behind he drywall) , and 1,000,000 for discrimination (which mind you only needs to be suggested by an individual, then not for profit agencies are quick to file civil suits, not criminal, because of the lower threshold for guilt. and prospect of judgement or settlement). In a real estate deal gone bad the appraiser is rarely if ever included in the suit , why, the above disclaimer, and the fact that their work is locked up in files and cannot be seen by the general public.  In fact, a bad guy appraiser is so difficult to catch because of the inability by the public and law enforcement to see the appraisal  for a specific deal.  Chasing down the paperwork by each deal is almost  impossible and probably impossible to aggregate without a mountain of subpoenas..