Here are the comments on behalf of ACOW regarding the "Department of Commerce's 2011 Strategic Plan regarding Energy Efficiency," directed to Chuck Murray, Department of Commerce:
December 6, 2010
Chuck Murray
Department of Commerce
P.O. Box 42525
Olympia, WA 98504-2525
Re: Public Comment Draft—Department of Commerce 2011 Strategic Plan for Enhancing Energy Efficiency and Reducing Greenhouse Gas Emissions from Homes, Buildings, Districts and Neighborhoods
Dear Mr. Murray:
On behalf of the almost 4,000 real estate appraisers in Washington State, we would like to take this opportunity to provide comments on the issue relating to the valuation of green residential properties highlighted on Page 19 of the Public Comment Draft: Financing—Appraisals.
We applaud your effort to ensure that housing (and our community) is more energy efficient, healthy and environmentally sustainable. As professional appraisers, we are pleased to see attention being paid to the appraisal process by your department.
We are concerned about this proposal for a variety of reasons, 1) Cost doesn’t always equal value, 2) Appraisers need to have the information, and 3) Dictating value adjustments is inappropriate and jeopardizes the independence of the appraisal process. We are also concerned that input from the appraiser community was apparently overlooked in the four work groups, and we hope that this letter will rectify this oversight. It appears the work groups intend to elevate recognition of energy efficient items in the real estate appraisal process. While we support that goal, we believe your department should consider the following:
1. Many home owners or other property owners may not know that appraisers themselves do not establish the market for a property – the appraiser merely reflects and reports on the market, and uses empirical-based market data to estimate the market value of a property.
If the market and market participants (i.e., buyers) do not yet recognize and/or adequately account for the perceived benefits of a “green” building in the way of an enhancement to the market value of the property, then an appraiser cannot simply increase the estimated market value of the property in an appraisal report merely because some developers, builders, or lay persons “believe” or “feel” that the property “should be” worth more. All elements of value must be supported through and based on market activity (i.e., sales, predominantly, or through higher rents for example in commercial properties).
Unfortunately, despite the passion of “green” industry building representatives and advocates, in many or most cases, the greater market has not yet perceived a significant enhancement in the market value of “green” properties, and reflected that enhancement in the form of either higher sale prices and/or higher rents for properties sufficient to cover the added costs of this type of development.
It is critical and important for the lay person to bear in mind that “Cost” does NOT necessarily equal “Value” (i.e., “market value”). This is a fundamental appraisal issue, and that is why appraisers complete a highest and best use and/or feasibility analysis for many properties prior to their development – to answer the question as to whether the costs of a project will be recovered, inclusive of a developer’s profit, based on current market data. Just because a builder spends more money to construct a “green” (“energy-efficient”) home does NOT mean that the market will ultimately compensate for this in the form of a higher price for that home, or a price sufficiently higher to cover all costs (with or without a profit element).
2. We agree that providing information to appraisers “may also increase recognition of the value of the efficiency items”. The builders need to provide this information to the appraiser, and the appraiser needs to make the judgment as to the impact on value as evidenced by the market. An appraiser needs to have all of the information – from builder, realtor, home inspector, etc. – regarding energy efficient features in order to be able to consider this information as part of their analysis.
3. For the Department of Commerce to be coming up with set value adjustments for various energy efficient features is completely inappropriate and borders on inappropriate influence on the appraiser’s independent judgment. As I am sure that you are aware, pressuring appraisers to report values not supported by the market is illegal, and appraisers have been fighting this battle for years. An appraiser is required to be independent, objective, and unbiased. Appraisers are being blamed that – during the good economic times – they too often appraised properties “too high; now that the market has softened, and they are “too low.” With the passing of the Dodd-Frank Act earlier this year, there are sweeping new changes to “Appraisal Independence”; several agencies have recently released updated guidelines and announcements specific to this topic[1].
We would be pleased to meet with you or your staff to discuss alternative language that would achieve the goals of this task force in a way that is consistent with existing rules, regulations, methodologies, and current efforts underway.
Respectfully,
Justin Slack, SRA
President, ACOW
[1] For mortgage transactions secured by a consumer’s principle dwelling, refer to 12 CFR 226.36(b) under Regulation Z (Truth in Lending) through March 31, 2011. Also refer to 12 CFR 226.42, which is mandatory beginning on April 1, 2011. Regulation Z also prohibits a creditor from extending credit when it knows that the appraiser independence standards have been violated, unless the creditor determines that the value of the property is not materially misstated. Page 4 of 45 Footnote 14: Interagency Appraisal and Evaluation Guidelines (December 2, 2010—FDIC)
Wednesday, December 15, 2010
Sunday, December 12, 2010
Help Shape Future of "Customary and Reasonable Fees"
On October 28th, the Board of Governors of the Federal Reserve System published an “Interim Final Rule” amending Regulation Z, Truth in Lending Act, or TILA. This interim rule implements Section 129E of the TILA which was enacted in July as Section 1472 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
As AppraiserNews.com has reported, the “Customary and Reasonable Fees” provision bodes well for appraisers, with this part of the act scheduled to be implemented on April 1, 2011. This “Interim Final Rule” has language that concerns appraisers in regard to whether the provisions related to appraisal fees will be truly enacted and not be a bad April Fool’s joke.
A link to the Fed’s “Interim Final Rule” is found here: Part 226 Truth in Lending: Interim Final Rule
(http://edocket.access.gpo.gov/2010/pdf/2010-26671.pdf)
More importantly, a link where you can register your comments with the Fed is found below. The deadline for comments is December 27th so please take a few minutes to make your voice heard.
Federal Reserve Board: Electronic Comment Form
(http://www.federalreserve.gov/generalinfo/foia/ElectronicCommentForm.cfm?doc_id=R-1394&doc_ver=1&name=Regulation%20Z%20-%20Truth%20In%20Lending%20Act&date=20101018a)
(Thank you, Michael Imes)
As AppraiserNews.com has reported, the “Customary and Reasonable Fees” provision bodes well for appraisers, with this part of the act scheduled to be implemented on April 1, 2011. This “Interim Final Rule” has language that concerns appraisers in regard to whether the provisions related to appraisal fees will be truly enacted and not be a bad April Fool’s joke.
A link to the Fed’s “Interim Final Rule” is found here: Part 226 Truth in Lending: Interim Final Rule
(http://edocket.access.gpo.gov/2010/pdf/2010-26671.pdf)
More importantly, a link where you can register your comments with the Fed is found below. The deadline for comments is December 27th so please take a few minutes to make your voice heard.
Federal Reserve Board: Electronic Comment Form
(http://www.federalreserve.gov/generalinfo/foia/ElectronicCommentForm.cfm?doc_id=R-1394&doc_ver=1&name=Regulation%20Z%20-%20Truth%20In%20Lending%20Act&date=20101018a)
(Thank you, Michael Imes)
Thursday, December 9, 2010
3Q10 FDIC State Profiles
The Third Quarter 2010 FDIC State Profiles are now available on-line. The FDIC State Profiles are formatted as a quarterly data sheet summation of economic and banking conditions for all fifty states, Puerto Rico, and the Virgin Islands .
They are available in both HTML and PDF formats.
They are available in both HTML and PDF formats.
Saturday, December 4, 2010
Interagency Appraisal and Evaluation Guidelines
Joint Release
Board of Governors of the Federal Reserve System
Office of the Comptroller of the Currency
Federal Deposit Insurance Corporation
Office of Thrift Supervision
National Credit Union Administration
Agencies Issue Final Appraisal and Evaluation Guidelines
The federal financial regulatory agencies issued final supervisory guidance today on sound practices by financial institutions for real estate appraisals and evaluations.
Financial institutions use reliable appraisals and evaluations to determine the value of collateral for mortgages and other loans; appraisals and evaluations are integral to institutions' real estate lending. Institutions base credit decisions primarily on borrowers' ability to repay, but institutions also consider the value of real estate collateral as a secondary source of repayment.
The Interagency Appraisal and Evaluation Guidelines, which replace 1994 guidelines, explain the agencies' minimum regulatory standards for appraisals. The guidelines incorporate the agencies' recent supervisory issuances on appraisal practices, address advancements in information technology used in collateral valuation practices, and clarify standards for the industry's appropriate use of analytical methods and technological tools in developing evaluations. Financial institutions should review their appraisal and evaluation programs to ensure they are consistent with the guidelines.
The guidelines emphasize that financial institutions are responsible for selecting appraisers and people performing evaluations based on their competence, experience, and knowledge of the market and type of property being valued. Institutions should demonstrate the independence of their processes for obtaining property values, and adopt standards for appropriate communications and information-sharing with appraisers and people performing evaluations, according to the guidelines.
In promoting sound credit decisions, the guidelines emphasize the importance of institutions maintaining strong internal controls to ensure reliable appraisals and evaluations. Institutions also are responsible for monitoring and periodically updating valuations of collateral for existing real estate loans and for transactions, such as modifications and workouts, according to the guidelines.
The Dodd-Frank Wall Street Financial Reform and Consumer Protection Act of 2010 underscores the importance of sound real estate lending decisions; future revisions to the appraisal guidelines may be necessary after regulations are adopted to implement the Act.
DOCUMENT HERE
Respectfully,
Michael Imes, IFA
Board of Governors of the Federal Reserve System
Office of the Comptroller of the Currency
Federal Deposit Insurance Corporation
Office of Thrift Supervision
National Credit Union Administration
Agencies Issue Final Appraisal and Evaluation Guidelines
The federal financial regulatory agencies issued final supervisory guidance today on sound practices by financial institutions for real estate appraisals and evaluations.
Financial institutions use reliable appraisals and evaluations to determine the value of collateral for mortgages and other loans; appraisals and evaluations are integral to institutions' real estate lending. Institutions base credit decisions primarily on borrowers' ability to repay, but institutions also consider the value of real estate collateral as a secondary source of repayment.
The Interagency Appraisal and Evaluation Guidelines, which replace 1994 guidelines, explain the agencies' minimum regulatory standards for appraisals. The guidelines incorporate the agencies' recent supervisory issuances on appraisal practices, address advancements in information technology used in collateral valuation practices, and clarify standards for the industry's appropriate use of analytical methods and technological tools in developing evaluations. Financial institutions should review their appraisal and evaluation programs to ensure they are consistent with the guidelines.
The guidelines emphasize that financial institutions are responsible for selecting appraisers and people performing evaluations based on their competence, experience, and knowledge of the market and type of property being valued. Institutions should demonstrate the independence of their processes for obtaining property values, and adopt standards for appropriate communications and information-sharing with appraisers and people performing evaluations, according to the guidelines.
In promoting sound credit decisions, the guidelines emphasize the importance of institutions maintaining strong internal controls to ensure reliable appraisals and evaluations. Institutions also are responsible for monitoring and periodically updating valuations of collateral for existing real estate loans and for transactions, such as modifications and workouts, according to the guidelines.
The Dodd-Frank Wall Street Financial Reform and Consumer Protection Act of 2010 underscores the importance of sound real estate lending decisions; future revisions to the appraisal guidelines may be necessary after regulations are adopted to implement the Act.
DOCUMENT HERE
Respectfully,
Michael Imes, IFA
Friday, December 3, 2010
Home photos pulled from Island County website
By JESSIE STENSLAND
Whidbey News Times Assistant editor
Responding the concerns about privacy and safety, Island County Assessor Dave Mattens decided to take down photographs of homes from the office's online database.
It's not the best or even a permanent solution, he said, but "a temporary stopgap measure."
"It didn't solve the problem, but just shifted the problem," Mattens said. "It's going to make some people happy, but it will upset other people."
Mattens spearheaded the acquisition this year of new software for the assessor and treasurer's office. When the mountains of data were transferred over to the new system, all of the photos that the appraisers had taken of houses ended up on the searchable online database.
A number of people in the community complained about the photos of their houses being online; they were especially concerned about images taken from backyards and places not visible from public areas.
Full Article HERE
Whidbey News Times Assistant editor
Responding the concerns about privacy and safety, Island County Assessor Dave Mattens decided to take down photographs of homes from the office's online database.
It's not the best or even a permanent solution, he said, but "a temporary stopgap measure."
"It didn't solve the problem, but just shifted the problem," Mattens said. "It's going to make some people happy, but it will upset other people."
Mattens spearheaded the acquisition this year of new software for the assessor and treasurer's office. When the mountains of data were transferred over to the new system, all of the photos that the appraisers had taken of houses ended up on the searchable online database.
A number of people in the community complained about the photos of their houses being online; they were especially concerned about images taken from backyards and places not visible from public areas.
Full Article HERE
Wednesday, December 1, 2010
NAR says agents still reporting sale failures due to low appraisals
“NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., clarified that several factors are restraining a housing recovery, even with great affordability conditions. “We’ll likely see some impact from the foreclosure moratorium in the months ahead, but overly-tight credit is making it difficult for some creditworthy borrowers to qualify for a mortgage, and we are continuing to deal with a notable share of appraisals coming in below a price negotiated between a buyer and seller,” he said.
“A return to common sense loan underwriting standards would go a long way toward achieving responsible, sustainable homeownership. In addition, all home valuations should be made by competent professionals with local expertise and full access to market data — there remains an elevated level of appraisals that fail to provide accurate valuation, which is causing a steady level of sales to be cancelled or postponed,” Phipps said.
A parallel NAR practitioner survey shows 10 percent of Realtors in October report they had a contract cancelled as a result of a low appraisal, and 13 percent report they had a contract delayed; 16 percent said a contract was negotiated to a lower sales price as a result of a low appraisal.”
According to FHFA, Fannie- and Freddie-backed mortgages that were recently originated show an outstanding performance, even better than during the pre-housing bubble years.
“A review of recently originated loans suggests that they have overly stringent underwriting standards, with only the highest creditworthy borrowers able to tap into historically low mortgage interest rates. There could be an upside surprise to sales activity if credit availability is opened to more qualified home buyers who are willing to stay well within budget,” Yun added.
Full article HERE.
“A return to common sense loan underwriting standards would go a long way toward achieving responsible, sustainable homeownership. In addition, all home valuations should be made by competent professionals with local expertise and full access to market data — there remains an elevated level of appraisals that fail to provide accurate valuation, which is causing a steady level of sales to be cancelled or postponed,” Phipps said.
A parallel NAR practitioner survey shows 10 percent of Realtors in October report they had a contract cancelled as a result of a low appraisal, and 13 percent report they had a contract delayed; 16 percent said a contract was negotiated to a lower sales price as a result of a low appraisal.”
According to FHFA, Fannie- and Freddie-backed mortgages that were recently originated show an outstanding performance, even better than during the pre-housing bubble years.
“A review of recently originated loans suggests that they have overly stringent underwriting standards, with only the highest creditworthy borrowers able to tap into historically low mortgage interest rates. There could be an upside surprise to sales activity if credit availability is opened to more qualified home buyers who are willing to stay well within budget,” Yun added.
Full article HERE.
Friday, November 19, 2010
FDIC Brings Second Action
FDIC brings second action against directors or officers of failed banks
Thomas P. Vartanian, Robert H. Ledig and Lawrence K. Nesbitt
Industry observers have been waiting to see when bank failures arising out of the recent financial crisis would produce a wave of Federal Deposit Insurance Corporation (“FDIC”) litigation similar to that seen in the early 1990s after the savings and loan crisis. With its second suit in recent months, the FDIC has shown that it will aggressively pursue claims against directors and officers in connection with failed depository institutions.
The FDIC has significantly increased its legal staff in the last few years and has engaged outside law firms to perform professional liability investigations and to conduct litigation in connection with recently failed institutions. Moreover, an FDIC spokesman recently stated that the FDIC has authorized legal actions against seventy former directors and officers of failed banking institutions in an effort to recoup more than $2 billion in losses...
The S&L crisis in the late 1980s brought into sharp focus the potential liability of directors and officers when an insured depository institution fails. The FDIC has stated that it and the Resolution Trust Corporation recovered approximately $6.1 billion from professional liability claims and brought claims against directors and officers in approximately 25% of all bank failures during the S&L crisis period.
Source (via Dave Towne)
Thomas P. Vartanian, Robert H. Ledig and Lawrence K. Nesbitt
Industry observers have been waiting to see when bank failures arising out of the recent financial crisis would produce a wave of Federal Deposit Insurance Corporation (“FDIC”) litigation similar to that seen in the early 1990s after the savings and loan crisis. With its second suit in recent months, the FDIC has shown that it will aggressively pursue claims against directors and officers in connection with failed depository institutions.
The FDIC has significantly increased its legal staff in the last few years and has engaged outside law firms to perform professional liability investigations and to conduct litigation in connection with recently failed institutions. Moreover, an FDIC spokesman recently stated that the FDIC has authorized legal actions against seventy former directors and officers of failed banking institutions in an effort to recoup more than $2 billion in losses...
The S&L crisis in the late 1980s brought into sharp focus the potential liability of directors and officers when an insured depository institution fails. The FDIC has stated that it and the Resolution Trust Corporation recovered approximately $6.1 billion from professional liability claims and brought claims against directors and officers in approximately 25% of all bank failures during the S&L crisis period.
Source (via Dave Towne)
Thursday, November 18, 2010
ACOW on Facebook!
If you all are on Facebook, you can now link to ACOW:
http://www.facebook.com/pages/ACOW-Appraisers-Coalition-of-Washington/128168493907081
Stay in touch and informed. ACOW works for all appraisers in Washington and without your help, you will not have a voice in Olympia. Renewal for membership is coming up, and we have many financial needs to meet. Please go to the ACOW webpage, www.acow-wa.org and renew using the PayPal link, or send in your check. We appreciate your support, but remember, it’s for you, not us.
Respectfully,
Michael Imes
http://www.facebook.com/pages/ACOW-Appraisers-Coalition-of-Washington/128168493907081
Stay in touch and informed. ACOW works for all appraisers in Washington and without your help, you will not have a voice in Olympia. Renewal for membership is coming up, and we have many financial needs to meet. Please go to the ACOW webpage, www.acow-wa.org and renew using the PayPal link, or send in your check. We appreciate your support, but remember, it’s for you, not us.
Respectfully,
Michael Imes
Monday, November 8, 2010
Trouble Getting Paid?
Are you having trouble getting paid by federally regulated lenders?
If so, I would recommend contacting Che (a staffer) through Sen. Cantwell’s Seattle office. I have filed a congressional complaint against several federally regulated institutions due to having outstanding invoices and not responding to payment demands or not paying late fees etc. Just like we are required to do when we don’t pay our CCs or Mortgages.
She asked if I knew of others that were having similar problems. I told her I could only speak for myself, but I am sure if it is happening to me, it is happening to others.
Respectfully,
Michael Imes, IFA
If so, I would recommend contacting Che (a staffer) through Sen. Cantwell’s Seattle office. I have filed a congressional complaint against several federally regulated institutions due to having outstanding invoices and not responding to payment demands or not paying late fees etc. Just like we are required to do when we don’t pay our CCs or Mortgages.
She asked if I knew of others that were having similar problems. I told her I could only speak for myself, but I am sure if it is happening to me, it is happening to others.
Respectfully,
Michael Imes, IFA
Saturday, November 6, 2010
Marshall & Swift/Boeckh: Sold
Dear Valued Customer:
I am pleased to announce that MacDonald Dettwiler and Associates (MDA) has signed definitive agreements to sell Marshall & Swift/Boeckh (MSB) to TPG Capital (TPG) - a well known global investment firm with $47 billion in assets under management and with strong experience supporting companies in the insurance and financial services marketspace. The transaction is slated to close in late 2010 or early 2011, subject to customary approvals.
As part of this agreement, no changes to management, core initiatives, business direction or product roadmaps are expected to occur at MSB. TPG is fully supportive of and in total congruence with our business and strategic plans. We will maintain our long-standing commitment to you and your organization, continuing to serve you with industry-leading property solutions, thought leadership and the years of experience our people provide. Our employees will also continue to deliver the same exceptional customer service we are known for and you have come to expect.
Over the course of the next few months, MSB will keep you informed on our progress.
Sincerely,
Salil Donde
Chief Executive Officer
Marshall & Swift/Boeckh
I am pleased to announce that MacDonald Dettwiler and Associates (MDA) has signed definitive agreements to sell Marshall & Swift/Boeckh (MSB) to TPG Capital (TPG) - a well known global investment firm with $47 billion in assets under management and with strong experience supporting companies in the insurance and financial services marketspace. The transaction is slated to close in late 2010 or early 2011, subject to customary approvals.
As part of this agreement, no changes to management, core initiatives, business direction or product roadmaps are expected to occur at MSB. TPG is fully supportive of and in total congruence with our business and strategic plans. We will maintain our long-standing commitment to you and your organization, continuing to serve you with industry-leading property solutions, thought leadership and the years of experience our people provide. Our employees will also continue to deliver the same exceptional customer service we are known for and you have come to expect.
Over the course of the next few months, MSB will keep you informed on our progress.
Sincerely,
Salil Donde
Chief Executive Officer
Marshall & Swift/Boeckh
Appraiser Independence Deadline: IFR comments
The Interim Final Regulations on Appraisal Independence were published in the Federal Register on Oct. 27.
Deadline for comments back to the Federal Reserve Board is Dec. 27, 2010.
Submit comments, identified by Docket No. R- 1394 and RIN No. AD-7100-56, by any of the following methods:
Δ Agency Web Site: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Δ Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for
submitting comments.
Δ E-mail: regs.comments@federalreserve.gov. Include the docket number in the subject
line of the message.
Δ Fax: (202) 452-3819 or (202) 452-3102.
Δ Mail: Address to Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, DC 20551.
All public comments will be made available on the Board’s web site at
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, comments will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room MP-500 of the Board’s Martin Building (20th and C Streets, N.W.) between 9:00 a.m. and 5:00 p.m. on weekdays.
Michael Imes
Dave Towne
Deadline for comments back to the Federal Reserve Board is Dec. 27, 2010.
Submit comments, identified by Docket No. R- 1394 and RIN No. AD-7100-56, by any of the following methods:
Δ Agency Web Site: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Δ Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for
submitting comments.
Δ E-mail: regs.comments@federalreserve.gov. Include the docket number in the subject
line of the message.
Δ Fax: (202) 452-3819 or (202) 452-3102.
Δ Mail: Address to Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, DC 20551.
All public comments will be made available on the Board’s web site at
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, comments will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room MP-500 of the Board’s Martin Building (20th and C Streets, N.W.) between 9:00 a.m. and 5:00 p.m. on weekdays.
Michael Imes
Dave Towne
Wednesday, October 27, 2010
C2C AMC - "Watch out for these jerks!!"
I got this message from a colleague back east, and am passing it along to all of you as yet another caveat about yet another clueless AMC:
"There is an AMC by the name of C2C from California that ordered an FHA appraisal from us last evening at a $350 fee.
"We wrote them back a decline with the fee we would accept. They reordered that appraisal this morning and less than 2 hours later they wrote they assigned to another 'vendor'. Well you should see their stips…..4 closed sales, 1 listing, 1 pending, complete the cost approach, 1004 MC form, etc. , etc., etc.
"You guys know me…I called California…got their phone monkey who said I would have to speak to his 'manager'. Well this clown sounded all of 18 years old.
"I informed him that they may have broken Virginia law…..I informed them of reasonable and customary fees….They are even so stupid as to put on the order a fee that was within $5 of our fee. I asked why they reassigned and the answer was they found another vendor who was cheaper at the R & C fee. I told them to take us off of their list…….NOW!
"Keep in mind I had already called the agent and set up the appointment. I cannot wait to find out who takes this assignment….and believe me, I will. The agent is an OLD friend of mine.
"This young punk said oh no we are not breaking any law….I said well we will just see about it….our Attorney General will get this….and we will now cost you more than you could ever save on cheap ass appraisal fees. Then this REAL HIGHLY TRAINED PROFESSIONAL hung up on me!
Pat
P. E. Turner (Pat), Jr., SRPA, SRA
P. E. Turner & Co., LTD.
Henrico, VA"
"There is an AMC by the name of C2C from California that ordered an FHA appraisal from us last evening at a $350 fee.
"We wrote them back a decline with the fee we would accept. They reordered that appraisal this morning and less than 2 hours later they wrote they assigned to another 'vendor'. Well you should see their stips…..4 closed sales, 1 listing, 1 pending, complete the cost approach, 1004 MC form, etc. , etc., etc.
"You guys know me…I called California…got their phone monkey who said I would have to speak to his 'manager'. Well this clown sounded all of 18 years old.
"I informed him that they may have broken Virginia law…..I informed them of reasonable and customary fees….They are even so stupid as to put on the order a fee that was within $5 of our fee. I asked why they reassigned and the answer was they found another vendor who was cheaper at the R & C fee. I told them to take us off of their list…….NOW!
"Keep in mind I had already called the agent and set up the appointment. I cannot wait to find out who takes this assignment….and believe me, I will. The agent is an OLD friend of mine.
"This young punk said oh no we are not breaking any law….I said well we will just see about it….our Attorney General will get this….and we will now cost you more than you could ever save on cheap ass appraisal fees. Then this REAL HIGHLY TRAINED PROFESSIONAL hung up on me!
Pat
P. E. Turner (Pat), Jr., SRPA, SRA
P. E. Turner & Co., LTD.
Henrico, VA"
Tuesday, October 19, 2010
"Customary and Reasonable" fee regulations
Dave Biggers, Chairman of alamode has written an op-ed that might be of interest to all of you. This is an excerpted version:
As many of you may know, the Federal Reserve issued 132 pages of “interim final regulations” yesterday on the hot-button issue of “customary and reasonable” fees – and more – as mandated by the Dodd-Frank Act. Since I was preparing a broader memo on a wide variety of other timely topics anyway, I decided to combine a first look at the new regs with the other information, and so here you have it all together. It's a little long as a result, but there's a lot to cover, so bear with me.
First Look at the Dodd-Frank Act (or “DFA”) Regs
There's one bombshell hidden in here aside from what we expected. Everyone knew that the HVCC was being eliminated and that the issue of customary and reasonable fees would be covered, but I for one wasn't expecting the Fed to take the position that even though the DFA refers to “appraiser” and “appraisal”, the logical approach is to make the regulations include any person performing “valuations” and make them subject to the same rules.
So, under the new regs, BPOs and agents are subject to the same restrictions regarding coercion and direct or indirect interests as appraisals and appraisers. It doesn't mean agents have to abide by USPAP, but it does mean that incenting them with a shot at a listing (real or implied) when doing a BPO would be a violation, as would telling them to hit predetermined numbers.
Among the other issues that stand out:
• The big one, customary and reasonable fees, is a mixed bag. On the one hand, it seems that they bowed to AMC pressure and essentially made it “customary OR reasonable” fees, not customary AND reasonable. On the other hand, they seemed to signal to the legal community that there was more safety in advising lenders to follow a third party reasonable standard than just hide behind customary AMC fees.
• The crux of the fee issue comes down to allowing AMCs to include their own fees (seemingly in contradiction to the DFA's intent) in their determination of what are the recent market fees being paid to appraisers, and to have that be one of the two separate and alternative presumptions of compliance, so long as the AMC did not engage in anticompetitive behavior as defined by the Sherman Antitrust Act.
• The second presumption of compliance, using third party data, provides more shelter to the lender – avoiding $10,000 per day fines – than does the first, which the regulators signal by expressly defining what sort of evidence would not be sufficient to overcome the presumption of compliance. In other words, a lender using third party studies which eliminate the AMC fees will almost always win in court if someone challenges them and will almost never be fined, because simply using the fee studies or surveys is considered de facto compliance with the law. Trotting out a different third party study showing higher fees isn't enough on its own to overturn the fact that the lender used sufficient best efforts by relying on non-AMC third party data in the first place. That's great, and will provide the necessary added protection for many risk-averse lenders to refuse to allow AMC-tainted fees to be the basis of their customary and reasonable legal strategy.
• The HVCC is eliminated as expected. However, realize that the firewall restrictions of the HVCC are not eliminated, because they were nearly identically encoded in the 2008 Appraisal Independence Rules (often referred to as the “Interagency Rules”), and the interim final rule enshrines the Interagency Rules virtually unmodified as part of the new law. The chief distinction is that the Interagency Rules do not bar particular people (mortgage brokers, agents, etc.) from expressly engaging in the process of engaging or communicating with appraisers as the HVCC did in blanket fashion, but rather bar anyone – regardless of their position – from influencing the appraiser in a manner intended to materially mischaracterize the value of the consumer's residence.
• The Fed invalidated the fee stipulations that many AMCs have demanded appraisers sign, exactly as we've argued. In crystal clear language, they showed that one appraiser being forced to agree to a fee does not mean that appraiser has abdicated protection under the statute, nor has the appraiser given safe harbor to the AMC, since the appraiser cannot attest on his or her own as to what a customary and reasonable fee would be under the statute: “the Board understands that some AMCs have begun requiring fee appraisers to agree that the fee is customary and reasonable as a condition of obtaining the appraisal assignment. In these situations, the Board believes that an appraiser’s agreement that a fee is customary and reasonable is an unreliable measure of whether the fee in fact meets the statutory standard.”
This is just the quick summary. Meanwhile, you can and should read the regulations yourself at:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20101018a1.pdf
As many of you may know, the Federal Reserve issued 132 pages of “interim final regulations” yesterday on the hot-button issue of “customary and reasonable” fees – and more – as mandated by the Dodd-Frank Act. Since I was preparing a broader memo on a wide variety of other timely topics anyway, I decided to combine a first look at the new regs with the other information, and so here you have it all together. It's a little long as a result, but there's a lot to cover, so bear with me.
First Look at the Dodd-Frank Act (or “DFA”) Regs
There's one bombshell hidden in here aside from what we expected. Everyone knew that the HVCC was being eliminated and that the issue of customary and reasonable fees would be covered, but I for one wasn't expecting the Fed to take the position that even though the DFA refers to “appraiser” and “appraisal”, the logical approach is to make the regulations include any person performing “valuations” and make them subject to the same rules.
So, under the new regs, BPOs and agents are subject to the same restrictions regarding coercion and direct or indirect interests as appraisals and appraisers. It doesn't mean agents have to abide by USPAP, but it does mean that incenting them with a shot at a listing (real or implied) when doing a BPO would be a violation, as would telling them to hit predetermined numbers.
Among the other issues that stand out:
• The big one, customary and reasonable fees, is a mixed bag. On the one hand, it seems that they bowed to AMC pressure and essentially made it “customary OR reasonable” fees, not customary AND reasonable. On the other hand, they seemed to signal to the legal community that there was more safety in advising lenders to follow a third party reasonable standard than just hide behind customary AMC fees.
• The crux of the fee issue comes down to allowing AMCs to include their own fees (seemingly in contradiction to the DFA's intent) in their determination of what are the recent market fees being paid to appraisers, and to have that be one of the two separate and alternative presumptions of compliance, so long as the AMC did not engage in anticompetitive behavior as defined by the Sherman Antitrust Act.
• The second presumption of compliance, using third party data, provides more shelter to the lender – avoiding $10,000 per day fines – than does the first, which the regulators signal by expressly defining what sort of evidence would not be sufficient to overcome the presumption of compliance. In other words, a lender using third party studies which eliminate the AMC fees will almost always win in court if someone challenges them and will almost never be fined, because simply using the fee studies or surveys is considered de facto compliance with the law. Trotting out a different third party study showing higher fees isn't enough on its own to overturn the fact that the lender used sufficient best efforts by relying on non-AMC third party data in the first place. That's great, and will provide the necessary added protection for many risk-averse lenders to refuse to allow AMC-tainted fees to be the basis of their customary and reasonable legal strategy.
• The HVCC is eliminated as expected. However, realize that the firewall restrictions of the HVCC are not eliminated, because they were nearly identically encoded in the 2008 Appraisal Independence Rules (often referred to as the “Interagency Rules”), and the interim final rule enshrines the Interagency Rules virtually unmodified as part of the new law. The chief distinction is that the Interagency Rules do not bar particular people (mortgage brokers, agents, etc.) from expressly engaging in the process of engaging or communicating with appraisers as the HVCC did in blanket fashion, but rather bar anyone – regardless of their position – from influencing the appraiser in a manner intended to materially mischaracterize the value of the consumer's residence.
• The Fed invalidated the fee stipulations that many AMCs have demanded appraisers sign, exactly as we've argued. In crystal clear language, they showed that one appraiser being forced to agree to a fee does not mean that appraiser has abdicated protection under the statute, nor has the appraiser given safe harbor to the AMC, since the appraiser cannot attest on his or her own as to what a customary and reasonable fee would be under the statute: “the Board understands that some AMCs have begun requiring fee appraisers to agree that the fee is customary and reasonable as a condition of obtaining the appraisal assignment. In these situations, the Board believes that an appraiser’s agreement that a fee is customary and reasonable is an unreliable measure of whether the fee in fact meets the statutory standard.”
This is just the quick summary. Meanwhile, you can and should read the regulations yourself at:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20101018a1.pdf
Monday, October 18, 2010
Appraisal Port and FNC Oral Arguments
Appraisal Port and FNC are being sued due to their “alleged” misrepresentation to appraisers regarding the skimming of information from appraisal reports. The FNC oral argument was recorded and is available for download.
The link is http://www.ca5.uscourts.gov/OralArgumentRecordings.aspx
It is Docket No. 09-60804.
(Thanks to Richard Hagar SRA)
The link is http://www.ca5.uscourts.gov/OralArgumentRecordings.aspx
It is Docket No. 09-60804.
(Thanks to Richard Hagar SRA)
Monday, September 20, 2010
FRB Contact person for new regulations
I apologize for the delay in making this post. MT
From Dave Towne, the direct contact person at the Federal Reserve Board where you can send a letter to discuss your personal AMC and Customary and Reasonable Fee situations, or anything else having to do with appraiser independence.
Please do so in the next few days, as new appraisal regulations are being drafted now, with implementation set for October, or perhaps sooner.
Here is the contact information for the person at the Fed that is handling the Interim rulemaking on appraiser independence (including customary & reasonable fees):
Ms. Sandra Braunstein
Director
Division of Consumer and Community Affairs
Federal Reserve Board
1709 New York Avenue, NW
Washington, DC 20006
I strongly suggest you provide your own letter in your own words, rather than rely on ‘template’ content from another source. Keep it short and to the point.
The FRB needs to hear from as many ‘boots on the ground’ appraisers as possible.
Dave Towne
From Dave Towne, the direct contact person at the Federal Reserve Board where you can send a letter to discuss your personal AMC and Customary and Reasonable Fee situations, or anything else having to do with appraiser independence.
Please do so in the next few days, as new appraisal regulations are being drafted now, with implementation set for October, or perhaps sooner.
Here is the contact information for the person at the Fed that is handling the Interim rulemaking on appraiser independence (including customary & reasonable fees):
Ms. Sandra Braunstein
Director
Division of Consumer and Community Affairs
Federal Reserve Board
1709 New York Avenue, NW
Washington, DC 20006
I strongly suggest you provide your own letter in your own words, rather than rely on ‘template’ content from another source. Keep it short and to the point.
The FRB needs to hear from as many ‘boots on the ground’ appraisers as possible.
Dave Towne
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