Today's post is an update to the Black List series. Things are happening. Good things, and they need to be reported!
- This column will discuss Countrywide's recent announcement of a Do Not Use List, a real step forward by a major player.
- Also, Fannie Mae will be announcing a similar Do Not Use List later this year. Both of these announcements represent Do Not Use Lists (a good thing for both the lending industry and for the appraisal profession).
- Steps have been taken to create a class action suit against Black Listing. Any who wish can contact the originator and join the suit. How's that for progress?!
The Countrywide and Fannie Mae announcements qualify for the good label because:
- They notify the appraiser that there is a problem and they will be included
- They provide the opportunity for the appraiser to appeal the inclusion by defending his report, his actions.
Notification and due process! That's all we ask!
FIRST - COUNTRYWIDE
A recent letter to their vendors states in part:
Appraisers Requiring Additional Review List (ARAR)
Accessing the Appraisers Requiring Additional Review List (ARAR)
In accordance with market standards, Countrywide maintains a list of appraisers with whom we have experienced losses or improper valuations. Although some lenders refuse to accept loans with work done by certain appraisers, Countrywide provides our customers with maximum flexibility by merely requiring that some additional review be performed. This has always been internal policy, but as a service to our Sellers the ARAR will now be posted on Platinum and updated with each monthly bulletin so that Sellers are aware of any additional review that may be required. Links to the ARAR and ARAR FAQs can be found on Platinum by following the "Sales Training & Tools" link and then clicking on the "Resources" tab. The FAQs are in the "Frequently Asked Questions" section, and the ARAR is in the "Other" section.
[certain paragraphs deleted as not relevant to our point]
Recommended Monitoring Frequency
Sellers should download the current ARAR updated with each monthly bulletin and then check the ARAR before ordering appraisals and again prior to closing.
Countrywide’s and Sellers’ Responsibilities
For closed loans delivered to Countrywide on or before August 15, 2007, Countrywide will obtain and pay for all ARAR-related reviews. Beginning August 16, 2007, Sellers will be responsible for obtaining and paying for such reviews if the appraiser was on the ARAR as of the closing date. ARAR-related reviews may not be waived.
ARAR Confidentiality In order to protect the privacy of appraisers and not share their confidential information with third parties, Countrywide will not answer any questions regarding the reasons appraisers are included. However, appraisers who want to inquire about why they appear on the ARAR may email [email protected] with "ARAR" included in the subject line. The emails should include their full addresses, license numbers, and all contact information.
That's great news! Countrywide has moved from a Black List to a "Do Not Use" List.
Only two points we'd make to Countrywide. We suggest they:
- Formally notify the appraiser that they are to be included, don't just put them on the list only to have the appraiser find out later that it happened.
- Give the appraiser a period of time to respond with his side of the story.
Add those two things and we are with you all the way Countrywide!
Brian Davis, Editor of Appraisal Scoop, attended an Illinois ICAP presentation last month, where Debra Brown, Manager of Fannie Mae's Mortgage Fraud Division spoke.
Brian asked: "Does Fannie Mae maintained an Appraisers "Do Not Use" list?" and got an answer that included these points:
- Fannie has never HAD a "Do Not Use List" (DNU) - like Freddie has – prior to an upcoming initiative.
- The Fannie Mae Real Estate Fraud Division has only been in place for two-years.
- Fannie Mae has a proposed DNU list in development, to become effective toward the end of this year.
- Fannie Mae's program will notify appraisers, inspectors, and other vendors, prior to being placed on the DNU list, by certified letter.
- The vendor will then have twenty-one days to respond to Fannie Mae's letter
- The DNU list will be used internally by Fannie Mae and shared with their lenders (not other agencies, Freddie, etc.)
- Announcement of the "Do Not Use List" is to be made at http://www.efanniemae.com
- Focus On...Preventing, Detecting & Reporting Mortgage Fraud
(.pdf, 80K, 6 pages) This special report summarizes the most common types of fraud and provides questions and answers from a Fannie Mae fraud expert.
[Wow! What a Scoop for Appraisal Scoop! You heard the Fannie Mae Do Not Use List announcement first here!]
(We contacted Debra Brown, the Fannie Mae representative for comment. She agreed with Brian's note points and also agreed that Do Not Use Lists with formal notification and recourse is the only fair way to handle this issue.)
Again, like Countrywide: Congratulations Fannie Mae!
That's the best of the best in terms of what we've been saying needed to be done. You see, the Fannie Mae policy includes the following important points:
Notification - don't keep this important information from the appraiser...his business will be effected, and he deserves the right to know
Appeal - provides the information in the notification as to who and how to plead his defense
Due Process - allows a sufficient time BEFORE the final decision is made for the case to be defended
Privacy - the list will be used internally and shared with their lenders (that's fair, the lenders need to know) but will not be broadcast to the rest of the industry.
This is a model for all Do Not Use Lists. Well done Fannie Mae!
Now, isn't it time for Freddie Mac to follow suit? They currently have a Black List. Had it for years evidently. Why not move to the light Freddie? Why not abolish the Black List and create a Do Not Use List as Fannie Mae has? The lending industry and the appraisal profession will be better for it if you do!
ANTI-BLACKLISTING CLASS ACTION SUIT FORMING
For those lenders who continue to maintain Black Lists, who choose not to follow Countrywide's and Fannie Mae's lead, for those lenders action is also being taken. Jim Mackleburg had corresponded with me privately from the beginning of the Black List series. After the fourth installment he wrote the following comment to that column.
I have decided to start a class action lawsuit against all lenders with blacklists or do not use lists. I have met with my lawyer here in Los Angeles. I am paying the money upfront to get this started and getting all my information ready for him.We are first going to sue Cxxx along with Lxxx appraisal services. After we get certain information we will then proceed with with the class action for All the banks; Dxxx Savings, Cxxx CxxxMortgage, Ixxx Bank, and etc......
If anyone is interested in being part of this effort and Cost, please let me know.
(If appraisers can pay $10,000 for a Zaio zone, then they can help out ($$) in a class action lawsuit) I have been an appraiser for 20 years with three professional designations. Been on the Board of Directors of the AI, and etc..., However now I am just sick of the way the banks just roll over all of us appraisers with no consideration to the laws of the US or due process.
I guess in the United States it is just FINE and (Legal) for Banks and Lenders to commit ;;;
Fraud Negligence, Negligent Misrepresentation, Malicious Prosecution, Tortuous Interference with Contract, Interference with Prospective Economic Advantage, Intentional Interference with the Right to Pursue a Lawful Business, Trade Libel, Unfair Competition, Conspiracy to Induce Breach of Contract, and Civil Conspiracy
Against appraisers without any regarding to current laws here in the US. Maybe they just get a free pass??? Well I think Not. If you want to help with this major problem let me know.
Jim Mackelburg, SRA, ASA, IFA.
Congratulations Jim! Someone is taking a leadership role to GET SOMETHING DONE! Anyone interested in joining his class action, here's your chance. His email address is [email protected].
ON RELATED FRONTS
Some of the respondents to the Black Listing series have suggested a Appraisal Standards Board or State Regulatory solution to this problem.
The idea being that the state regulators have experienced investigator staffs who can properly address complaints and take action. Some lenders have reported to me that they do in fact pass problem appraisals over to the State Regulators. While the idea is certainly better than Black Lists, there can be problems with a governmental solution to the problem. Take the following case as an example.
CASE 22 from yet another wronged appraiser
From another responder to my request for Black List examples:
The state of SSS issued a summary suspension to me. It was sent to the AQB which in turned posted it on their web site. At that point every lender in the country put me on their do not use list or black list. Twenty days later the ALJ reversed the state saying they had no grounds for the suspension. No one ever told the lenders that I have been reinstated hence no business after nearly 5 months of being reinstated. I have no way or knowledge of how to reach all the lenders.
That's an incredible story! The problem with the State Regulatory agencies is that they are understaffed with a case backlog to deal with. Good people with good intentions in my personal experience. However, the power they have is akin to police power .... huge wrongs can be worked with no recourse, such as what happened to the appraiser who sent me Case 22.
Do we want that kind of solution? Only as the last resort in my view.
The solutions are simple, within the powers and responsibilities of the lending industry. Countrywide and Fannie Mae have shown the way just this month. Mackleburg's Marauders are taking on the lenders who insist on using Black Lists.
Black Lists are bad for the lending industry, bad for the appraisal profession. Do Not Use Lists, with notification, recourse and due process are good for the lending industry, good for the appraisal profession. Progress is being made, leaders are stepping forward.
Good things are happening folks! Can you sense the momentum building?
Now's the time ! Let's eliminate Black Lists once and for all!
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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