Appraisal Scoop

Veterans Benefits Administration Circular 26-09-4 Announces VA To Require 1004MC in ALL VA Reports

Veterans Benefits Administration

Circular 26-09-4

Department of Veterans Affairs

March 27, 2009 Washington, DC 20420

MARKET CONDITIONS ADDENDUM TO VA APPRAISAL

1. PURPOSE. The purpose of this circular is to announce that, effective no later than April 1, 2009, VA will require appraisers to include Fannie Mae Market Conditions Addendum, Form 1004MC, in all VA appraisal reports.

2. DETAILS. Due to current conditions in the real estate market, Fannie Mae recently announced that it is establishing additional appraisal requirements to supplement the minimum standards set forth in the Uniform Standards of Professional Appraisal Practice. Specifically, Fannie Mae is requiring appraisers to document an overview of neighborhood market conditions and trends in using Fannie Mae Market Conditions Addendum, Form1004MC.

Instructions for completing this form may be found in Fannie Mae s Announcement 08-30, dated November 14, 2008, at https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0830.pdf.

Following suit with the industry, VA will require appraisers to include this form in all VA appraisal reports. VA will monitor the impact of this new industry requirement on appraisal fee and make adjustments as appropriate.

3. RESCISSION: This circular is rescinded January 1, 2012. By Direction of the Under Secretary for Benefits Mark Bologna, Director Loan Guaranty Service

Source: Download 1004MC.eml (7.11 KB)

Video: Neil Cavuto/Fox Business News - Appraisal Segment with Johathan J. Miller of Soapbox.com

According to Jonathan Miller's blog - Soapbox :

"Friday morning I was invited to be a guest to talk about appraisers and how they are impacting the flow of housing sales. I was initially concerned that this would be an appraiser slam piece, blaming our industry for killing sales, causing global warming and low salaries of central bankers but it wasn’t and I think I covered the bases."

• Sellers are generally a year behind the market
• The ranks of good appraisers were decimated by the mortgage boom
• Appraisers have long been the “punching bag” of blown deals
• Lack of data is a huge issue

Connie De Groot, who was the Beverly Hills real estate agent who is a regular on FBN recommended that buyers get an appraisal when pricing their property for sale.

Click here for the full Soapbox.com article.

 

FDIC Testifies before House on Investigating Appraisal Involvement

In testimony last week before the House Financial Services Committee, Federal Deposit Insurance Corporation Vice Chairman Martin Gruenberg called for those responsible for the current housing crisis to be held accountable.

Gruenberg noted that there are currently 4,375 mortgage fraud claims under investigation and an additional 900 civil mortgage fraud lawsuits are expected to be filed over the next three years.

The FDIC representative informed the committee that defendants in civil lawsuit cases have primarily been mortgage brokers, appraisers, closing attorneys and other closing agents, as well as title companies, title insurance companies, and other third parties that participated in mortgage fraud against FDIC-insured banks and thrifts.

Click here for the complete Appraisal Institute story.

To view Gruenberg’s testimony in its entirety, visit: www.house.gov/apps/list/hearing/financialsvcs_dem/fdic_-_gruenberg.pdf.

HUD Mortgagee Letter 2009-09 Adopts Use of 1004MC Market Conditions Addendum

Currently, all Federal Housing Administration (FHA) Roster Appraisers are required to report on housing trends in the Neighborhood section of the applicable property specific appraisal reporting form.

The Uniform Standards of Professional Appraisal Practice (USPAP) mandate that an appraiser maintain documentation necessary to support all analyses, opinions and conclusions for each appraisal assignment in a work file.

In order to ensure greater transparency and accuracy of appraisals performed for FHA-insured financing, FHA will adopt the Market Conditions Addendum (Fannie Mae Form 1004MC/ Freddie Mac Form 71, released November 2008).

For all appraisals of properties that are to be security for FHA-insured mortgages and that are performed on or after April 1, 2009, the appraisal must include the Market Conditions Addendum.

Fannie Mae Announcement 08-30 contains further information and instructions on completing the Addendum and is available online at: 

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0830.pdf  

Mortgagee Letter 2009-09 Source - HUD

Download HUD Mortgagee Letter 09-09ml Word Doc

Download HUD Mortgagee Letter 09-09ml PDF

Top 11 Myths & Realities About The Home Valuation Code of Conduct: (Updated 3/24/2009)

Are they True or False?  Do YOU  know the answers to ALL eleven Top Myths About The HVCC?

Myth: The HVCC requires lenders to use Appraisal Management Companies.

Myth: Mortgage sellers cannot achieve compliance without outsourcing the appraisal function.

Myth: “Loan Correspondents” or “correspondent lenders” are the same as mortgage brokers and they too cannot order appraisals.

Myth: Sellers cannot maintain the appraisal function internally (as an in-house operation), without loan production involvement.

Myth: Loan Production staff is prohibited from communicating with appraisers.

Myth: Outsourcing appraisal functions to an appraisal management company can reduce costs.

Myth: Outsourcing appraisal management to a third party reduces lender risk.

Myth: Use of third party vendors ensures the use of competent appraisers.

Myth: The licensing of an appraiser ensures his or her competency.

Myth: Professional appraisal designations cannot be used when evaluating the qualifications, education and experience of an appraiser.

Myth: “Comp checks”  which are prohibited under the HVCC without an engaged appraisal assignment - are the only way to determine if there is sufficient value in the collateral before proceeding with a loan application.

Click here for the answers: Download Home Valuation Code of Conduct - Myths & Realities

MBA Calls for Uniform National Regulation of Mortgage Lending - FMRA - Federal Mortgage Regulatory Agency

WASHINGTON, D.C. (March 24, 2009) - The Mortgage Bankers Association (MBA) sent a letter today to the Chairmen and Ranking Members of the House Financial Services and Senate Banking Committees calling for legislation that would establish a tough, new federal regulatory framework for mortgage lending to protect borrowers nationwide. In the letter, MBA offered an outline of proposed legislation, titled the Mortgage Improvement and Regulation Act (MIRA), that would establish new uniform national lending standards to replace the current patchwork of state and federal lending laws and that would also establish a new federal regulator to implement and enforce these standards.

"In order to restore confidence in the housing and mortgage markets, we need to ensure that many of the excesses that led to the current crisis aren't repeated," said John A. Courson, President and CEO of MBA. "For this reason, we are calling on Congress to create a new national regulatory framework to regularize the mortgage market and better protect consumers."

MBA's plan is centered on the creation of new lending standards and a new regulator, the Federal Mortgage Regulatory Agency (FMRA). MIRA would establish, and FMRA would be responsible for implementing and updating, the new mortgage lending and servicing standards as well as regulating independent mortgage bankers and mortgage brokers in partnership with state regulators.

"Under our proposal, we are calling for one federal regulator to implement the standards and oversee all mortgage bankers and brokers," said Courson. "That regulator would work with the appropriate federal and state regulatory bodies to effectively enforce these tough new requirements."

 Among the components that MBA is calling for in the new national lending standard are:

• Many of the recently promulgated HOEPA regulations, including those requiring a determination of a borrower's ability to repay, documentation of income and assets, limits on prepayment penalties and establishment of escrow accounts for borrowers' tax and insurance payments; 
• Improvements to the mortgage origination, servicing and appraisal processes some of which had been included in H.R. 3915 (which passed the House of Representatives in 2007);
• A new duty of care for mortgage bankers and mortgage brokers to assure that consumers get the facts they need to know about the loan options available and the costs of their loan transaction, including compensation to the mortgage broker; and
• A requirement that a borrower affirmatively opt-in, in writing, to a nontraditional mortgage product.

 "MBA has long advocated for uniform national lending standards to protect borrowers coast to coast. One standard for all borrowers to learn and understand, and one standard for all lenders to follow will offer much better protection to consumers in every state and will help to lower costs. It will also significantly cut down on the confusing and often contradictory patchwork of state laws and regulations," added Courson.

As part of MIRA, HUD and the Federal Reserve would be required to work together in consultation with the new regulator to develop greatly simplified consumer disclosure forms, including combining Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures to help consumers better navigate the mortgage process. Additionally, MIRA would increase resources for investigating and prosecuting mortgage fraud and establish a national financial literacy and counseling program. As part of that program, MBA suggests there should be pre-purchase counseling required on certain mortgage products, primarily for first-time homebuyers.

A copy of the letter and an executive summary of the bill, as well as a more detailed outline, can be found at http://www.mortgagebankers.org/MIRA

Source: MBA Calls for Uniform National Regulation of Mortgage Lending

FNC lawsuit over national database of information using appraisers' data has been delayed by federal judge

According to an Associated Press article (3/24/2009):

A lawsuit filed against an Internet-based real estate listing company accusing it of improperly listing properties has been delayed by a federal judge.

The case stems from a 2007 complaint by residential real estate appraisers in Maryland, Oklahoma and Virginia.

They claimed Oxford-based FNC Inc. built a national database of information about properties using appraisers' information, and now competes with them at their own expense with an Internet-based system.

A trial in U.S. District Court in Greenville had been scheduled for Wednesday. It was indefinitely delayed this past week by U.S. District Judge Glen Davidson. No new trial date was set.

Click here for the complete Forbes.com article

Letter: National Association of Mortgage Brokers CONTINUES to seek injunction to block the HVCC

Dear NAMB Member,

As you know, on February 23, 2009, NAMB filed a lawsuit against the Federal Housing Finance Agency (FHFA) over the controversial HVCC included in agreements between New York Attorney General Andrew Cuomo, Fannie Mae and Freddie Mac (GSEs), and their regulator, the FHFA.  Click here for a copy of the lawsuit.

This week, the litigation took a major step forward as NAMB filed its initial brief outlining why the HVCC is unlawful and should be disallowed. The 45 page document was supported by numerous affidavits, exhibits, and other materials which demonstrated the grave problems created by the HVCC. NAMB is asking the U.S. District Court for the District of Columbia to take any one of several actions that would invalidate the HVCC.

As expected, the court declined to rule immediately that the HVCC should be withdrawn without first permitting FHFA to present its arguments, and thus the court has denied NAMB's request for an immediate Temporary Restraining Order. However, in doing so, the court expressly reserved judgment on the merits of NAMB's position, which the court has yet to address.  Download Motion for Preliminary Injunction filed 3 19 09

What does this mean?

The District Court may block implementation of the HVCC through an immediate Temporary Restraining Order (TRO), a Temporary Injunction, or a Permanent Injunction. A TRO is rarely granted—it requires a showing that a party faces immediate and irreparable harm if a TRO is not granted and, when granted, typically is in effect only for a matter of days. Because the District Court did not find that there would be immediate and irreparable harm done to appraisers or mortgage brokers within the next few days if a TRO was not granted, the court ruled that a TRO was not appropriate.

That decision does NOT mean that the District Court denied NAMB's claim. To the contrary, the litigation is now proceeding to the next stage, when NAMB will have an opportunity to present its case to the court, which will then make a ruling.

NAMB has requested an expedited hearing process given the close proximity of the HVCC effective date. NAMB continues to seek both a temporary injunction and permanent injunction blocking implementation of the HVCC, and is seeking resolution of the matter in the coming weeks.

Despite the initial good news, there is much more to be done! NAMB is so grateful for your support thus far, but we still need your help! Please continue to circulate the donation letters to appraisers and real estate agents, and contact your fellow NAMB members and urge them to contribute. More than ever, the time to act is NOW.

If you have any questions, please send an email to GovernmentAffairs@namb.org.

Sincerely, Marc Savitt, CRMS NAMB President

Source: The Inland CA Appraisers Forum

Black Listing - Law Firm Investigating if RELS is Pressuring Appraisers Illegaly

Many appraisers blacklisted as a result of not complying with RELS demands

SEATTLE. March 20, 2009. In addition to the investigation that RELS has illegally rigged the appraisal process to boost their profits, the law firm of Hagens Berman Sobol Shapiro is alsoinvestigating if Wells Fargo Bank (through their appraisal management company RELS) has been pressuring independent appraisers to comply with unethical or illegal demands. Of particular importance is the tactic of blacklisting appraisers if they refuse to comply.

Many appraisers have related to the law firm that they have been blacklisted, suspended or otherwise punished for not complying with demands by Wells Fargo and RELS personnel that would result in breaking USPAP or state appraisal laws.

Since Wells Fargo/RELS controls all the appraisal assignments for homeowners, blacklisting results in substantial damage to the independent appraisers business.

Additionally, the appraiser’s name that appears on the RELS blacklist will also be blacklisted by other AMCs and lenders, since RELS shares this list with them.

Hagens Berman needs to hear your story.If you have been pressured by RELS/Wells Fargo personnel to break the laws of USPAP, state appraisal laws, or good appraisal practices please contact the law firm and tell your story. If you have even been threatened with blacklisting for not complying, or if you are currently blacklisted or suspect you are blacklisted, please contact the firm for inclusion in the investigation.

When emailing, please reference “Wells Fargo/RELS Blacklisted Appraiser”

• Contact: Genessa Stout, Attorney at Law: genessa@hbsslaw.com  
• Larry Kunzler, Investigator: larry@hbsslaw.com

Contributed by Don Pearsall

Additional Resources:

• Hagens Berman Files Class Action Against Wells Fargo and Rels Valuation
• Press Release : Wells Fargo Homeowners
• Black Listing - Appraisal Scoop.com

FHFA - "Examining the Making Home Affordable Plan" - Net Present Value Model

FHFA has just released the "Examining the Making Home Affordable Plan" testimony by Patrick J. Lawler, Chief Economist for the FHFA.   

Mr. Lawler said in his opening remarks,

"The Making Home Affordable plan is a critical component of President Obama’s financial stability plan. The affordability plan reaches out to millions of American homeowners who are trying to keep their homes in these difficult economic times to help them refinance or modify their mortgages so that they will have more affordable mortgage payments. My testimony today will summarize the prominent role of Fannie Mae and Freddie Mac in this plan and progress made in implementing the plan."

In a later section Lawler said,

"If we are going to stabilize the housing market, we have to address that 50 percent, which comprises mostly subprime and alt-A loans. We believe Fannie Mae and Freddie Mac must be leaders in improving, promoting, and enforcing industry standards and best practices for all mortgages, and their roles in Making Home Affordable reflect that"

The section of his testimony that might be of most interest to appraisers is under the heading "Implementation of the Making Home Affordable Plan".    There, they use the terms:

• Net Present Value model
• Acceptable discount rates
• property valuation methodologies (government-speak for AVMs?)
• house price appreciation assumptions

The other section that I find interesting deals with the "Incentives" that are paid to "Servicers"for modifying these troubled loans.    Are they rewarding bad lending practices by paying incentives to the same people (Servicers) that made the bad loan in the first place?  

How kewl is THAT?!  I'm sure appraisers would like to be paid an "incentive" to re-appraise properties that people now claim were "Over-valued".    Nope . . .Instead they create the HVCC that effectively institutionalizes the need for AMC middle-men which hack appraiser's fees to the bone!

Click here for the complete testimony.