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)

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

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

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

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

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"

"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

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)

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

URGENT - Please Sign Petition TODAY

USPAP EXPOSURE DRAFT 2 LETTER

Today is the deadline: MIDNIGHT

If you have responded to the ASB concerning the new USPAP for 2012-2013, I thank you for your proactive involvement in the profession.

If you have not. In as brief a fashion as I can, I'll tell you it is very bad.

It will mean more work for you, incorporates a new way to get comp checks and APOs without calling them reports and without benefit of an engagement letter, and hiding the fact by not calling it a report.

More confusion for the industry.

Has zero concern for public trust.

Will increase your costs to produce an appraisal and your liabilities.

Further convolutes the process and practice of appraising leaving gaping holes that you will be liable for, which probably will impact your E&O insurance.

Please sign the letter we have prepared or send your own letter tonight.

Sign the letter at the below link, or write your own.

http://www.appraisersforindependence.com/index.php?option=com_petitions&view=petition&id=38&Itemid=73

Thank you,

Marion

(Via Michael Imes)

FBI's 2009 Mortgage Fraud Report "Year in Review"

FBI's 2009 Mortgage Fraud Report "Year in Review"

An excerpt regarding HVCC Fraud:

"Lenders are circumventing the Home Valuation Code of Conduct (HVCC) by using other non-commission employees to order appraisals. The HVCC agreement between the FHFA and the New York Attorney General's Office was intended to govern the way appraisals were ordered for all single-family mortgage loans (excluding government-insured loans such as FHA and VA) sold to Fannie Mae and Freddie Mac. In the fashion of a true arms-length transaction, all appraisals are to be ordered through a third-party appraisal management company to eliminate collusion between the appraiser and those who earn an income from loan closings (e.g., mortgage loan officers, brokers)."

The report is here.

REAC Meeting 8-27-2010

The next Real Estate Appraiser Commission Meeting has been rescheduled to the following:

AUGUST 27, 2010 9:00 AM

Department of Labor and Industries

7273 Linderson Way SE
Room S117
Tumwater, WA 98501

Attendees will receive CE credit for attendance at the Commission meeting. However, you may only use attendance at one meeting for any renewal.

ACOW Summit and REAC Meeting

Well, I have tried as hard as I could this past week to get approval for the REAC meeting to be held once again at the ACOW Summit, but without success (this is now final as far as I am concerned).

So, as I understand it, the REAC meeting is being rescheduled for the following week, in Tumwater, and now we will just have to make other arrangements for Friday morning at the Summit (I am working on options, and anticipate bringing a proposal to the ACOW Board’s attention sometime before this week is over – look for it).

I think it’s too bad that the DOL has taken this position, but that’s the way things have turned out…..

Thx.

Stan Sidor, President
ACOW - Appraiser's Coalition of Washington

HVCC's Sunset and Other Appraisal Reforms on the Horizon

An interesting read from K&L Gates, LLP:

HVCC's Sunset and Other Appraisal Reforms on the Horizon

Congress is poised to eliminate the contentious Home Valuation Code of Conduct, (the “HVCC”), and with the HVCC set to sunset, more expansive (and expensive) appraisal reforms are on the horizon.

Tucked within the massive Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) are provisions that will strengthen appraiser independence and enforcement, regulate the use of broker price opinions (“BPOs”), set standards for pricing of appraisals and appraiser valuation model products (“AVMs”), and subject appraisal management companies (“AMCs”) to potential federal and state oversight.

While the HVCC may be fading into the sunset, don’t expect the same fate for AMCs, AVMs, and BPOs.

To view the complete alert online, click here.

We Need Your Help!

We Need Your Help: Urge the Senate to Support the Conference Report on Financial Reform Bill

Dear Seattle Chapter Members:

Please see the note below from the Appraisal Institute’s Washington DC office. New legislation, the Restoring American Financial Security Act of 2010, is now being discussed in Congress and would have a positive effect on many appraisers.

We request that as many Seattle Chapter members as possible take a few minutes to write a short note to our Senator Maria Cantwell encouraging her support on a Conference Report that will be coming in front of the Senate shortly.

You can use the following link to contact Senator Cantwell: http://capwiz.com/appraisal/issues/alert/?alertid=15219341.

Your help is greatly appreciated – thank you!

Jessica Frazier

* * * * * * * * * * * * * * * * * * * *

Dear Chapter Leaders,

As you know, we’re on the “goal line” as far as financial reform is concerned. The House has voted to enact H.R. 4173, the “Restoring American Financial Security Act of 2010”, and in the next few weeks, the Senate is expected to bring the Conference Report to the Senate floor for a vote. This is where we need your help.

We have been approached by Senate Banking Committee staff to target specific Senators who are undecided on how they will vote. They are from your States. The Senators are:

Sen. Scott Brown (R-MA)

Sen. George Voinovich (R-OH)

Sen. Olympia Snow (R-ME)

Sen. Susan Collins (R-ME)- She has recently said she will support the bill, but we should still include her to be sure.

Sen. Maria Cantwell (D-WA)-Same as above.

Sen. Ben Nelson (D-NE)

Sen. Chuck Grassley (R-IA)

Sen. Richard Lugar (R-IN)

The Appraisal Institute’s Washington Office of Government Affairs asks that you send this email to all members in your State, and ask them to use the link below to contact their targeted Senator(s).

http://capwiz.com/appraisal/issues/alert/?alertid=15219341

If you have any questions, please don’t hesitate to contact me.

Thanks,

Brian A. Rodgers
Manager of Federal Affairs
Appraisal Institute