Take a look at this law firm’s webpage:

http://www.hbsslaw.com:80/homeowners_release

This is a major lawfirm; not a fly by night outfit.

I believe this lawsuit may very well be the first crack in the HVCC eggshell.
If Countrywide admits wrongdoing (racketeering) then the AMC business model (in it’s current format) is undeniably a racketeering model.

I recommend you keep a close eye on this one.

Must be nice to have all those lobby dollars.

McLean, V.A. – December 24, 2008 – The National Association of Mortgage Brokers (NAMB) today announced its disappointment with New York Attorney General Andrew Cuomo, Government Sponsored Enterprises Fannie Mae and Freddie Mac (GSEs) and the Federal Housing Finance Agency (FHFA) for issuing its revised Agreement on the Home Valuation Code of Conduct (HVCC) for appraisals. This agreement, in response to an initial investigation into business practices conducted between Washington Mutual and appraisal management company E-AppraiserIT, once again fails to address the appraiser fraud problem. NAMB today issued the following statement from NAMB President Marc Savitt:

“This agreement amounts to a de facto regulatory action which avoids the appropriate process. The law provides for a process to implement regulatory and policy changes such as those contemplated and specified in this agreement.

This agreement will increase costs to consumers and remove thousands of small business competitors from the marketplace. This will create a severe disadvantage to small business mortgage brokers, and prevent them from engaging competitively in the mortgage marketplace.

The Attorney General and GSEs disregarded many letters submitted by industry associations citing numerous laws and regulations already in place and for failing to make the necessary revisions in the new agreement to accurately address the problem of appraiser fraud. The solution to appraiser fraud is to hold responsible those that commit the fraudulent acts: appraisers. Regulators have failed to reprimand appraisers committing similar acts to those committed during the Savings and Loan Crisis, and instead held small business mortgage brokers accountable.

As always, we are ready to work with these agencies to achieve the objective of eliminating appraiser fraud without disrupting the marketplace or hurting consumers. As it stands now, the National Association of Mortgage Brokers intends to consult with our legal advisors and to take appropriate legal action if necessary.”

I was going to write a post about this yesterday but I prefer to wait and have clear info. That memo I read (we both linked to) made my head hurt.

Happy Holidays!

Here is the source directive.

http://www.ofheo.gov/media/news%20releases/HVCCFinalCODE122308.pdf

I am reading (and re-reading) the 6 page directive, and I am arriving at new conclusions.

While it does not force lenders to use outside appraisal management companies, it DOES prohibit mortgage brokers and loan originators from using independent appraisers.

1. It looks as if specifically mortgage brokers and loan originators cannot order appraisals directly, but correspondent lenders can. Mortgage brokers would have to order the appraisal THROUGH the lender selected.

2. It has a means of allowing appraisals to be transferrable to new lenders.

In both cases, it severely limits the interaction (such as selecting an appraiser) between an appraiser and any of the following entities:

a loan originator, a loan processor, a mortgage broker, a lender, a correspondent lender, and employees or people working under the direction of any of the above.

“…employees in the sales or loan production functions of the lender are not allowed to have any substantive communications with an appraiser, appraisal company, or appraisal management company relating to or having an impact on valuation or to be provided information about which appraiser has been given a particular appraisal assignment before completion of that assignment;…”

It also specifically prohibits realtors from ordering appraisals (at least for the purpose of getting the loan).

My thinking is that this spells the end of the independent appraiser, once again essentially forcing them all to work for Appraisal Management Companies.

That is NOT good news for anyone, BUT APCs.

I would love to hear your interpretation as well.

I think I’m trying to read too much between the lines… I look forward to receiving Fannie/Freddie’s info in early January.

Christmas comes early for independent appraisers!

There have been significant changes (and I think improvements) to the appraisers rule that was to go into effect in a few months.

The original proposed rules would have eliminated independent appraisers entirely, forcing all to work under appraisal management companies.

“it no longer looks to force lenders to use outside appraisal management firms,”…

http://www.housingwire.com/2008/12/24/a-kindler-gentler-appraisal-reform/

Read on!

At last, a little good news, and common sense.