I read one of Pat Egger's articles up here a few weeks ago and it had a Marvel Comics image and spoke of appraisers picking a side. The Homeownership Preservation and Protection act seems to be at face value, a good thing.
Here is a break down using the Library of Congresses Thomas system:
The following summary is provided by the Congressional Research Service, which is a nonpartisan government entity that serves Congress and is run by the Library of Congress. The summary is taken from the official website THOMAS. This is the date introduced to the committee. It is still in its very beginning stages.
Home Ownership Preservation and Protection Act of 2007 - Amends the Truth in Lending Act to redefine high-cost mortgages and attendant lending practices. Sets forth a new formula for points and fees for open-end loans, and provides for bona fide discount points.
Sounds harmless at this point, like most things written by politicians you have to dig into the meat of the bill to see who is at the short end of the stick.
Prohibits: (1) prepayment penalties; (2) balloon payments; (3) yield spread premiums; (4) acceleration or debt; (5) evasions, structuring of transactions, and reciprocal arrangements; and (6) modification and deferral fees.
Here again, sounds like it has the consumer at heart. God knows the entire home owning public was set out to dry with these types of problems.
Prohibits creditors from financing, in connection with a high-cost mortgage, any prepayment fee or penalty, or any points or fees.
Since many homeowners are not savvy enough to catch these things, I can see why this would be a good thing. It will result in lower profit margins for the lenders, but they make excessively much money as it is.
Prohibits an originator from making or arranging a high-cost mortgage loan that involves a refinancing of a prior existing home mortgage loan unless the new loan will provide a net tangible benefit to the consumer.
It is sad that common sense like this is required of a bill, but obviously lenders are predatory and one sided in regards to profit
Sets forth prerequisites for sub-prime and nontraditional home loans, including: (1) an assessment of ability to pay; (2) a requirement of tax and insurance escrows; (3) prohibition of prepayment penalties and yield-spread premiums; and (4) a requirement of net tangible benefit to the consumer in the case of a sub-prime or nontraditional mortgage loan transaction that involves refinancing of an existing home mortgage. Imposes a duty of care and a duty of good faith and fair dealing upon mortgage brokers and lenders, appraisers, and lenders and loan servicers.
No surprises or disagreement here. We are all aware of the abuses by the sub-prime mortgage brokers. These people were ordering from me with no idea what they were doing. Often times not even understanding the idea of what a retainer/engagement letter was.
Empowers state Attorneys General to enforce this Act.
They need to set up a licensing and regulation department with each State. There should be a financial special investigator from the FBI that oversees other agents for this type of enforcement.
Subjects lenders, loan servicers, creditors and mortgage brokers to civil liability for violations of this Act. Increases the amount of the penalty that may be awarded.
At every level to include personal liability to the originators, Under Writers and branch management. With that in place you are looking at professionals really trying to recommend only consumer beneficial scenarios for their consumers.
Amends the Real Estate Settlement Procedures Act of 1974 to require a transferor of loan servicing before the transfer to notify the borrower of the status of the account and its full payment history. Amends the Housing and Urban Development Act of 1968 to revise requirements for foreclosure prevention counseling.
Requiring the consumer to be fully informed is a great step. They should also show complete and transparent fee reporting. This would allow that all management and settlement service providers are itemized so the borrower can understand that they were charged for improper valuation. That way when an AVM is used they know that they paid 75 dollars for a computer to value their home. It should also require written literature to the disadvantage s of that valuation process.
Amends the Truth in Lending Act to expand from three to six years an obligor's right of rescission.
Imposes liability for monetary damages upon assignees of sub-prime or nontraditional loans for violations of this Act.
No comment on this one, as I do not fully understand the benefit to the consumer.
Sets forth a remedy in lieu of rescission violations. Prohibits mandatory arbitration. Subjects a lender to liability actions, omissions, and representations made by a mortgage broker in connection with a high-cost mortgage, a sub-prime mortgage, or a nontraditional mortgage.
Hopefully these will include the abuse and pressure of appraisers and the request of pre-valuing at all. I could see allowing an appraiser to do a limited desk analysis based on accepted USPAP rules, as long as there is a fair fee and limited liability to the appraiser.
Amends the Federal Trade Commission Act to require the federal banking agencies and the National Credit Union Administration Board each to establish a separate division of consumer affairs protection and regulations with respect to depository institutions and federal credit unions.
Authorizes appropriations to employ additional agents of the Federal Bureau of Investigation and additional dedicated prosecutors at the Department of Justice to coordinate prosecution of mortgage fraud efforts with the offices of the U.S. Attorneys.
Sounds harmless and within reason.
What I want to know is why there is no mention in the above summation regarding the bonding requirements on appraisers? They are asking that we purchase bonds equal to 1% of the previous years fee work. This may result in $10,000-$40,000 in additional costs to appraisers per year.
Here we are an industry that is constantly being forced into lower or flat fees by the lenders, we never get inflation raises for our fees, and they want to strap an additional expense like this on us? The bill reads as a way to fix the mortgage problem. I wonder why we have to be directly punished for something we did not cause.
TITLE IV--GOOD FAITH AND FAIR DEALING IN APPRAISALS
SEC. 401. DUTIES OF APPRAISERS.
(2) QUALIFYING BOND- The term `qualifying bond' means a bond equal to not less than 1 percent of the aggregate value of all homes appraised by an appraiser of real property in connection with a home mortgage loan in the calendar year preceding the date of the transaction, with respect to which--
(A) the bond shall inure first to the benefit of the homeowners who have claims against the appraiser under this title or any other applicable provision of law, and second to the benefit of originating creditors that complied with their duty of good faith and fair dealing in accordance with this title; and
(B) any assignee or subsequent transferee or trustee shall be a beneficiary of the bond, only if the originating creditor qualified for such treatment.
One of our biggest gross domestic products is the housing market. We are asked to look after that for the public good. We can barely get a decent rate of fee for what we need to do. We are one of the largest small business industries out there. We benefit from being independent and self sufficient, but we loose out because with that independence as we do not band together well enough. Big business eats us alive as we only have the Appraisal Institute to lobby for us.
Bill Garber at the Institute’s Government Affairs Committee is fighting for us. I have spoken with him, been at a presentation he gave, and have followed what they are doing. They are fighting this particular Bill handily.
We do need to fight these Senators off, at least on the bond issue. If you live any of these states, it is YOUR responsibility to let them know how you feel about it. Get on the phone and make appointments with your Congress People and with the Senators Dave Biggers and a la mode, INC have a web page for you to use.
The page is setup right now for the HVCC, but you can also use the info to get started. http://alamode.com/action
Do not stop with that, we all know that a Presidential race is on. Paint these two candidates out to be anti-American and anti-small business. I hope that we can get some public momentum from a media agency to take a deeper look at our problems. If it has to be fueled by the party interests of one side or the other, we need to follow their suit and serve our best interests. Whether it is used to attack a candidate or defend a candidate, we need to use what we can to expose these frauds for what they are allowing to happen. Its one thing for them to read a bill and not understand it well enough on a vote, but all these Senators are co-sponsoring it, and they are all Democrats. It is a sad exposure of what they really stand for.
The Republican side is just as bad, but McCain is not currently sponsoring anything that will take food out of my mouth. It appears that our would-be leaders have no real intentions of really trying to understand the issues at hand. I do hope that we can make a big enough noise for Capital Hill to hear our cries. It would be even better if they would allow us to be included in the process, and not just organizations of appraisers that half-heartedly represent the best interests of residential appraisers. I guess it is as many of us have been saying: get involved as fast as you can!
Author: Woody Fincham - http://www.fmava.com/ - Woody is one of the founders and managing appraiser for FM & Associates. He has recently become an instructor with a local real estate school, teaching broker pre-licensing and real estate agent pre-licensing. Woody is a Certified Residential Appraiser in Virginia, as well as North Carolina. Woody is also a Member of the a la mode labs project
The Appraisal Institute requests all members to immediately contact their Senators in support of H.R. 3915, in addition to speaking out against the appraiser bonding requirement found in S. 2452.
CLICK HERE to add your comments on the WashingtonWatch.com blog's for the S. 2452, The Home Ownership Preservation and Protection Act of 2007
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