Appraisal Scoop

Fannie Mae Announcement 09-14 Requires Submission of Electronic Appraisal Reports in MISMO XML Standard

In Announcement 09-14, New Data Delivery Requirements, Fannie Mae announced changes to the loan delivery file and the Uniform Residential Loan Application (Form 1003) to accommodate new data elements required by the Federal Housing Finance Agency (FHFA).

Download Fannie Mae Announcement 09-14-Electronic Appraisal Reports

These changes are intended to result in enhanced identification and accountability of key parties in the mortgage transaction and are another step in Fannie Mae’s ongoing efforts to improve loan quality.

In the coming months, Fannie Mae will announce a series of other policies intended to improve loan quality, including the implementation of a robust collateral valuation analysis process, enhanced credit policy guidance, improvements to Fannie Mae’s quality control processes, and additional guidance on lender quality control activities.

In support of the loan quality initiative, this Announcement includes information about the following:

• Submission of Electronic Appraisal Reports
• Enhancements to the Loan Delivery File Format
• Mortgage Fraud Reporting

 

Sarah Vetault of Tucson, AZ - www.ComplineGroup.com asked on the WinTOTAL Users Group:

"I just got this announcement from Fannie Mae requiring submission of electronic appraisal reports in MISMO XML format by 2010.  I wonder what this means from our end.  Is the good old industry standard emailed PDF going bye-bye, forcing us to use slice/dice/rip-the-data portals for mortgage work?  Or will the lenders rip the data themselves out of our pdf files for submission to FNMA?  We are definitely living in interesting times. "

What are YOUR thoughts?

Bank / AMC Appraisal Conflicts Could Continue Under New HVCC Rules

There's a MUST READ article on "The Mortgage Lender" Implode-O-Meter blog by Teri Buhl that sheds some light on

• What the GSE's knew (and when),
• What changes lenders and AMCs have made (if any) in their appraisal ordering practices
• Secret Blacklists and Whistleblower Traps
• Cuomo's "Chinese Wall"

Teri Buhl is an investigative journalist covering Wall Street who has written for the New York Post Sunday Business, HousingWire and Trader Monthly. Contact her at teribuhl@yahoo.com.

Assuring Accurate Appraisals, Part I: Perennial Pressure Continues

Appraisals have become yet another sticking point on the already viscous road to home ownership because perennial pressure on appraisers is proving bad for business, housing and consumers.

According to Broderick Perkins article Assuring Accurate Appraisals -

"During the height of the housing boom, appraisers were pressured to up the value of homes. Now, during the housing downturn, appraisers are being pressured to lower the value of homes."

Click Here for the full Realty Times article by Broderick Perkins

Next Week: What's a consumer to do? How consumers can play a leading role in the appraisal process.

Sen. Charles Schumer Introduces The Fighting Real Estate Fraud Act of 2009

DA's Don't Have the Resources or Manpower to Fight New Wave of Mortgage Scams Amid Foreclosure Crisis.

New national legislation would send millions to DA's offices in NY and federally funded (2009 Omnibus Appropriations Act) Mortgage Fraud Units in DA offices across the country

The creation of Real Estate Fraud Units will employ staffers who will be able to focus exclusively on real estate crimes that plague homeowners and prosecute scammers for their crimes.

“Housing scams are a nationwide problem and they require a nationwide solution,” Senator Schumer said. “Homeowners in New York and across the country have suffered for too long because of scam artists who feel they can take advantage of people without any repercussions. These fraud units will help protect homeowners from these criminals and ensure that rather than walking away from their crimes, they are prosecuted to the fullest extent of the law.”

The Fighting Real Estate Fraud Act of 2009 establishes a competitive grant program in the Department of Justice for local District Attorney’s offices to fight real estate fraud. Under this bill, real estate fraud includes crimes involving misrepresentations and forgeries to general applications, tax returns, and financial statements, appraisals and valuations, verifications of deposit and employment, escrow and closing documents, and credit reports.

The Attorney General is authorized to make grants on a competitive basis through the Bureau of Justice Assistance to DA’s offices to assist them in investigating and prosecuting real estate fraud. The bill authorizes $100 million in grants for FY2010 and each year through FY2013. These grants will be used for hiring specialized staff to offices in need of specialized resources to combat scams.

Schumer added, “The recent foreclosure and refinancing crisis, following a sharp increase in home values created a perfect storm for these housing scammers to swoop in and fleece homeowners. With this bill, these criminals will be stopped.”

Source: Senatro Charles E. Schumer Press Release

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.

NAMB Files Lawsuit Over Controversial Home Valuation Code of Conduct (HVCC)

McLean, VA – The National Association of Mortgage Brokers (NAMB), with the support of Baker & Hostetler LLP, filed a lawsuit today with the United States District Court for the District of Columbia against the Federal Housing Finance Agency (FHFA) Director James B. Lockhart over the controversial Home Valuation Code of Conduct (HVCC) included in the appraisal agreements between the FHFA, Fannie Mae and Freddie Mac (GSEs), and New York Attorney General Andrew Cuomo.

“The HVCC does nothing but drive up costs for consumers and push small businesses out of the market,” said NAMB President, Marc Savitt. “The HVCC will drastically reduce the ability of mortgage brokers to provide consumers with an efficient and cost-effective means of obtaining a mortgage.”

NAMB strongly supports policy initiatives that seek to ban coercion of appraisers. However, NAMB believes it is critical for mortgage and real estate professionals to maintain an appropriate level of contact with appraisers to ensure appraisal quality and independence. NAMB argues the HVCC is a “de facto” regulation and holds the FHFA in violation of the Administrative Procedures Act of 1992. The HVCC is arbitrary and capricious, contrary to the intent of Congress and in direct conflict with regulations, policies and guidelines regarding appraisal standards already issued.

“Despite strong opposition by numerous industry representatives, the FHFA, GSEs and New York Attorney General fail to consider the unavoidable increase in costs to consumers should the agreements take effect,” said Savitt. “The lawsuit is the only remaining option to protect small businesses mortgage professionals from the severe competitive disadvantages caused by the agreement. The agreements will also have significant negative consequences for consumers.”

  For a copy of the lawsuit, please click here.

The National Association of Mortgage Brokers is the voice of the mortgage broker industry, representing the interests of mortgage brokers and homebuyers since 1973. The Association is committed to promoting the highest degree of professionalism and ethical standards for its members. In addition to mandating members adhere to a professional code of ethics, NAMB provides mortgage brokers with professional education opportunities, and offers rigorous certification programs to recognize members with the highest levels of professional knowledge and education.

Video - Inside the Meltdown: PBS Documentary

Mortgage News Daily (http://www.MortgageNewsDaily.com ) has done a great job of putting together a series of video segments from the PBS Documentary - "Inside The Meltdown"

"Many Americans still don't understand what has happened to the economy," FRONTLINE producer/director Michael Kirk says. "How did it all go so bad so quickly? Who is responsible? How effective has the response from Washington and Wall Street been? Those are the questions at the heart of Inside the Meltdown."

Click here for the video segments by Mortgage News Daily.

Appraiser whose license was suspended for inflating property values has been appointed to the NC state appraisal board

CHARLOTTE, N.C. -- The head of the largest professional organization of real estate appraisers in North Carolina said Monday he was appalled a woman whose license was suspended for inflating property values has been appointed to the state appraisal board.

Hector Ingram said the appointment of Lauriette West-Hoff of Durham to the North Carolina Appraisal Board sends a "very poor message" to home appraisers and the public. He said appraisers have already come under fire for their role in the housing market meltdown.

"Frankly, it's irritated a lot of our members and a lot of other appraisers who are not members of our group," said Ingram, president of the 650-member Appraisal Institute's North Carolina chapter. "At a time when we need to be squeaky clean and above board, you don't appoint someone like that."

  Click here for the complete article!

BusinessWeek: "Appraisers rubber-stamped inflated home prices"

BusinessWeek - January 18, 2009 - "The appraisal industry has justifiably come under fire for its role in the great housing bust. Property appraisals, required by lenders before a loan is made, are supposed to provide an independent assessment of the home's value. But during the boom, appraisers routinely signed off on a doubling or tripling of home values, sometimes racked up in just a matter of months. Investment properties were appraised at prices that made no investment sense. And homeowners were charged a pretty penny for what often amounted to rubber-stamp service."

  Click here for the complete BusinessWeek article

FHFA Announces New Mortgage Data Requirements - Tracks "Appraisers' Performance, Negligence and Fraud" at the loan level

Washington, DC – James B. Lockhart, Director of the Federal Housing Finance Agency, announced today that, effective with mortgage applications taken on or after Jan. 1, 2010, Freddie Mac and Fannie Mae are required to obtain loan-level identifiers for the loan originator, loan origination company, field appraiser and supervisory appraiser.  Click here.

Director Lockhart communicated this requirement to Fannie Mae CEO Herbert Allison and Freddie Mac CEO David Moffett in letters dated October 8, 2008.

FHFA’s requirement is consistent with Title V of the Housing and Economic Recovery Act of 2008, the S.A.F.E. Mortgage Licensing Act, enacted July 30. With that Act, Congress required the creation of a Nationwide Mortgage Licensing System and Registry. In prior years, both Enterprises worked with the Mortgage Bankers Association of America (MBAA) and the National Association of Mortgage Brokers (NAMB) on a similar initiative. However, that effort was thwarted due to the absence of a national registration and identification system. With enactment of the S.A.F.E. Mortgage Licensing Act, identifiers will now be available for each individual loan originator.

“This represents a major industry change. Requiring identifiers allows the Enterprises to identify loan originators and appraisers at the loan-level, and to monitor performance and trends of their loans,” said Lockhart. “If originators or appraisers have contributed to the incidences of mortgage fraud, these identifiers allow the Enterprises to get to the root of the problem and address the issues.”

The purpose of FHFA’s requirement is to prevent fraud and predatory lending, to ensure mortgages owned and guaranteed by the Enterprises are originated by individuals who have complied with applicable licensing and education requirements under the S.A.F.E. Mortgage Licensing Act, and to restore confidence and transparency in the credit markets. In addition, the Enterprises will use the data collected to identify, measure, monitor and control risks associated with originators’ and appraisers’ performance, negligence and fraud.

A licensing system owned and operated by State Regulatory Registry LLC will be used to license and register loan originators. The Conference of State Bank Supervisors (CSBS) in cooperation with the American Association of Residential Mortgage Regulators (AARMR) established the State Regulatory Registry LLC (SRR) in 2006 with the intent of creating a National Mortgage Licensing System. The system is intended to enhance each state’s ability to protect consumers; improve supervision and enforcement of licensed entities; and streamline licensing and other processes for state agencies and the industry through the use of modern technology and centralizing redundant state agency operations.

 To implement the requirement, FHFA has been working with the Conference of State Bank Supervisors (CSBS) and the FFIEC Appraisal Subcommittee. Within the next 30 days, both Fannie Mae and Freddie Mac will be issuing guidance related to implementation of the requirement. Links to Letter to Fannie Mae Letter to Freddie Mac H.R. 3221, Title V, the S.A.F.E. Mortgage Licensing Act National Mortgage Licensing System (NMLS) Conference of State Bank Supervisors (CSBS)

Links:

• Letter to Fannie Mae - Click here
• Letter to Freddie Mac - Click here
• H.R. 3221, Title V, the S.A.F.E Mortgage Licensing Act - Click here
• National Mortgage Licensing System (NMLS) - Click here
• Conference of State Bank Supervisors (CSBS) - Click here