I just read Friday's Appraisal Scoop article Subprime Mortgage Lending Regs Need to Stress Appraisals. I just love the way Brian edits his blog! All these fancy links to get to things.
I've downloaded and read both the inter-agency proposed underwriting guidelines directed to the sub prime market and the joint appraisal organizations letter of response.
The Inter-agency guideline letter is right on target in my opinion. Well done. I don't see anything to change. I probably won't even comment...who needs to read "I agree!" comments...
The joint appraisal organization letter is another matter.Download Here(247.0K) I don't agree. They want to insert an emphasis on the importance of the appraiser in the sub prime market. The letter brings up fraud, and undue pressure on appraisers. HUMBUG!
I've commented before...I've been watching the sub prime melt down crescendo. Not one agency, or the congress, is trying to blame it on appraisers. Not one!
Geeze Guys!!!! Can't you leave well enough alone?! We ain't to blame here. But you "Appraisal Organization" guys keep bringing this up, trying to push your pet positions, trying to pin the tail on some part of the donkey's anatomy.
In pushing your agenda (appraiser pressure....which I don't agree with, by the way) in order to argue for proposing that lenders only use designated members to supply their needed appraisals, you risk bringing all us innocent appraisers (designated and non) into the blame game for sub prime...a game in which we are not even a participant! Get outta there!!!
Click below to continue reading . . .
However, the joint letter does have one interesting fact source...
"At least 80 percent of subprime loans are now originated by these unregulated entities, according to Scott Polakoff, Deputy Director of the Office of Thrift Supervision."
I have wondered about that number...I've seen it bandied about for several months....but not in this more narrow context. The one I've been trying to confirm or shoot down is a frequent statement that 80 percent of all mortgage loans are generated by unregulated mortgage brokers.
Joan Trice of AppraisalBuzz was the most recent one to throw that factoid out. That always seemed a gross exaggeration in my view; when I asked Joan the source, she said that's what she had always heard....I wonder; Is this is the garbled source of that misstatement?
I can buy the idea that 80 percent of sub prime is coming from unregulated entities. I can buy the idea that a lot of appraiser pressure is generated there. What I can't buy is the extrapolation of that factoid to regulated entities and the folks they deal with. That simply doesn't jibe with my company's experience.
We do very little business with unregulated entities. We do that by design. One of the reasons we chose to avoid that market niche is because of the appraiser pressure....not because of the pressure itself, but because it is an inefficient and risky business niche in our view.
Now let me be clear here. If we were in that niche...it would be our choice. We'd accept the additional appraiser pressure and WE'D DEAL WITH IT. Wouldn't change one iota our response to that pressure....as professional and ethical appraisers under USPAP, our response can't change. But we'd accept dealing with the pressure and the other risks and inefficiencies of that niche and incorporate that into our business model.
Acorn deals with regulated institutions and their agents. We do that by design. Because it is the most efficient niche which allows us to employ our considerate talents and skills to our competitive advantage and maximize our profit while serving our cherished clients honorably and ethically.
Appraisal Organizations, don't put negative labels on those undeserving of those slurs . Don't try to fix what ain't broke. Leave the good clients out of the broad brush picture you are trying to paint. Focus on the sub prime and the unregulated entities if you think it appropriate. But focus clearly on that niche. Stay away from me and mine.
Thankyouverymuch.
The author is the owner of Acorn Appraisal Associates, a 21 year old firm offering a wide range of quality appraisal services to the Financial and Business Communities in the greater Houston SMSA
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