Once again, it is time to elect ACOW representatives.
Ballots are available from:
Appraisers Coalition of Washington
6351 Seaview Avenue NW
Seattle, WA 98107-2664
p: 206.622.8425
f: 206.623.4474
info@acow-wa.org
Friday, December 23, 2011
Friday, December 9, 2011
NAIFA Chapter Xmas Meeting
Our annual Christmas lunch is at the Silverdale Beach Hotel on Wednesday, December 21st, at 12 Noon. Bring a white elephant gift or ornament to exchange.
Michael Imes, IFA
Michael Imes, IFA
USPAP Update Class - Silverdale
2012-2013 USPAP UPDATE
When: Monday, February 10th, 2012
Time: 08:25 am – 04:25 pm
Where: Silverdale Beach Hotel
3073 NW Bucklin Hill Rd, Silverdale
Instructor: Gail Harmon, IFAS
Credit: 7 hrs. CE, WA State
One Day Class (1 - 7 hour class):
NAIFA Ntl. Member (designated) $120.00
NAIFA Ntl. Member (non-designated) $130.00
Non-Member $150.00
A.C.O.W. 2012 Dues (optional): $45.00
PRE-REGISTRATION BY 01/22/2012 IS REQUIRED DUE TO HAVING TO ORDER USPAP BOOKS.
SEND REGISTRATION TO:
Maureen Crawford
1894 SE Sedgwick Rd #104-142 Port Orchard, WA 98366
Email: Maureen dot nwappraisal at gmail dot com
or Fax: 253.857.6817
When: Monday, February 10th, 2012
Time: 08:25 am – 04:25 pm
Where: Silverdale Beach Hotel
3073 NW Bucklin Hill Rd, Silverdale
Instructor: Gail Harmon, IFAS
Credit: 7 hrs. CE, WA State
One Day Class (1 - 7 hour class):
NAIFA Ntl. Member (designated) $120.00
NAIFA Ntl. Member (non-designated) $130.00
Non-Member $150.00
A.C.O.W. 2012 Dues (optional): $45.00
PRE-REGISTRATION BY 01/22/2012 IS REQUIRED DUE TO HAVING TO ORDER USPAP BOOKS.
SEND REGISTRATION TO:
Maureen Crawford
1894 SE Sedgwick Rd #104-142 Port Orchard, WA 98366
Email: Maureen dot nwappraisal at gmail dot com
or Fax: 253.857.6817
Thursday, December 8, 2011
ACOW - Elections
Greetings ACOW members,
It is time to gear up for the ACOW 2012 elections. Election ballots will be sent out soon.
If you would like to elect or volunteer to become either an Organization Representative or an ACOW Board Member please notify us as soon as possible. Attached is a list of current Organization Representative. If you would like to fill the open positions or have knowledge that the current position is changing please let us know.
The following ACOW Board Positions are open:
* President
* Vice President
* Treasurer
* Four Director positions
* ACOW Individual Members’ Representative
Here is how the ACOW elections are conducted:
1. Organizations appoint their Representatives, except for the Individual Members’ Representative.
2. Only the representatives elect the ACOW Board members.
3. The Board then elects the President.
Please note: Ballots are accepted by fax, or by teleconference during the ACOW meeting. Email is not acceptable.
Thank you all for your participation
Appraisers Coalition of Washington
6351 Seaview Avenue NW
Seattle, WA 98107-2664
p: 206.622.8425
f: 206.623.4474
info@acow-wa.org
It is time to gear up for the ACOW 2012 elections. Election ballots will be sent out soon.
If you would like to elect or volunteer to become either an Organization Representative or an ACOW Board Member please notify us as soon as possible. Attached is a list of current Organization Representative. If you would like to fill the open positions or have knowledge that the current position is changing please let us know.
The following ACOW Board Positions are open:
* President
* Vice President
* Treasurer
* Four Director positions
* ACOW Individual Members’ Representative
Here is how the ACOW elections are conducted:
1. Organizations appoint their Representatives, except for the Individual Members’ Representative.
2. Only the representatives elect the ACOW Board members.
3. The Board then elects the President.
Please note: Ballots are accepted by fax, or by teleconference during the ACOW meeting. Email is not acceptable.
Thank you all for your participation
Appraisers Coalition of Washington
6351 Seaview Avenue NW
Seattle, WA 98107-2664
p: 206.622.8425
f: 206.623.4474
info@acow-wa.org
Wednesday, December 7, 2011
Prosecuting Wall Street, Countrywide Whistleblowers
Prosecuting Wall Street, 60 Minutes (CBS) videos
"Two high-ranking financial whistleblowers say they tried to warn their superiors about defective and even fraudulent mortgages. So why haven't the companies or their executives been prosecuted? Steve Kroft reports."
"Two whistleblowers offer a rare window into the root causes of the subprime mortgage meltdown. Eileen Foster, a former senior executive at Countrywide Financial, and Richard Bowen, a former vice president at Citigroup, tell Steve Kroft the companies ignored their repeated warnings about defective, even fraudulent mortgages. The result, experts say, was a cascading wave of mortgage defaults for which virtually no high-ranking Wall Street executives have been prosecuted."
There are also two links to videos (Part 1 & Part 2) of the 60 minutes presentation on this site.
"Two high-ranking financial whistleblowers say they tried to warn their superiors about defective and even fraudulent mortgages. So why haven't the companies or their executives been prosecuted? Steve Kroft reports."
"Two whistleblowers offer a rare window into the root causes of the subprime mortgage meltdown. Eileen Foster, a former senior executive at Countrywide Financial, and Richard Bowen, a former vice president at Citigroup, tell Steve Kroft the companies ignored their repeated warnings about defective, even fraudulent mortgages. The result, experts say, was a cascading wave of mortgage defaults for which virtually no high-ranking Wall Street executives have been prosecuted."
There are also two links to videos (Part 1 & Part 2) of the 60 minutes presentation on this site.
Thursday, December 1, 2011
Important news from ACOW
Dear Washington State Appraisers:
I would like to follow-up with everyone on our last request for additional donations to get through 2011; since I last wrote, we have collected approximately $2,300 in donations for retiring our 2011 lobbyist bill! We currently have an outstanding balance of less than $2,500 and I would like to remind all of those that have not had to the chance to do so, to please consider donating to ACOW now (www.acow-wa.org). And for those that have generously donated, many thanks to you for stepping up and supporting our profession.
In my last letter, we asked appraisers for $100 of which $45 would go towards 2012 ACOW dues and the other $55 would be a donation for 2011; we are extending this request again, now.
As we enter into December, the Washington State Legislature is scheduled to convene for a special session as the state looks to fill the $2B funding gap. Now, more than ever, having our lobbyist to make sure that the appraisers’ dedicated fund is not re-appropriated to the general fund is crucial! Having our lobbyist in Olympia is one way to ensure that our dedicated fund stays with the appraisers.
Additionally, last week I had a meeting with the Washington Environmental Council (www.wecprotects.org), a Washington State-based environmental group that wants to legislate energy‑efficiency amongst real estate professionals (appraisers, agents, and mortgage brokers/ loan originators) in Washington State; they are considering submitting legislation in January 2012 that would require mandatory education (again)!
While there is legislation that was introduced in the national Congress in the S.A.V.E. Act recently that deals with energy-efficiency, this group does not feel that this will happen fast enough and that energy-efficiency consideration in Washington State needs quicker attention. Having met with this group, I was surprised that they are not working with any other industry (akin to the building industry that attempted to legislate “green” education on appraisers in 2009); they simply want to make the environment better (this group is currently in litigation with the Washington State Department of Ecology and is suing them for not enforcing the state’s “Clean Air Act” strong enough with five state oil refineries).
In attempting to legislate this process, they want to dictate which classes Washington State appraisers take for qualifying and continuing education! While it does not appear that this pertains to other “green” movements, they feel that energy-efficiency needs to be considered in every appraisal (both commercial property and residential buildings) assignment. While they recognize the Appraisal Institute’s recently released “Energy-Efficiency Addendum” as a positive step in their quest, they do not believe that real estate professionals understand this concept, or at least are not considering it enough in the industry; they strongly believe that mandatory education will solve all of these problems.
Your ACOW board will be discussing actions to combat this in the coming days and try to offer alternatives to this group to legislation. At our meeting, I also proposed to them that they gather the stakeholders first, to see what is being done, and then if that is not good enough for them, to move ahead—expecting strong opposition from the appraisal profession.
This is where we need your help! As a volunteer organization, most of these legislative battles will be done by our lobbyist, with our input. But, we cannot employ our lobbyist without funding. So please, at this time, consider making a donation to ACOW for 2011 and renewing your membership for 2012. If you already donated to ACOW since my last letter, please consider urging a colleague to donate to the health of our profession.
To contribute to ACOW, use the payment link at www.acow-wa.org or mail a check to:
ACOW
6351 Seaview Ave. NW,
Seattle, WA 98107
Best Personal Regards,
Justin Slack, SRA
2011 President, ACOW Board of Directors
justin.slack@gmail.com
p.s. Annual ACOW elections are coming up so if you have an interest in serving on the board or want to volunteer in any capacity, please be sure to contact us.
I would like to follow-up with everyone on our last request for additional donations to get through 2011; since I last wrote, we have collected approximately $2,300 in donations for retiring our 2011 lobbyist bill! We currently have an outstanding balance of less than $2,500 and I would like to remind all of those that have not had to the chance to do so, to please consider donating to ACOW now (www.acow-wa.org). And for those that have generously donated, many thanks to you for stepping up and supporting our profession.
In my last letter, we asked appraisers for $100 of which $45 would go towards 2012 ACOW dues and the other $55 would be a donation for 2011; we are extending this request again, now.
As we enter into December, the Washington State Legislature is scheduled to convene for a special session as the state looks to fill the $2B funding gap. Now, more than ever, having our lobbyist to make sure that the appraisers’ dedicated fund is not re-appropriated to the general fund is crucial! Having our lobbyist in Olympia is one way to ensure that our dedicated fund stays with the appraisers.
Additionally, last week I had a meeting with the Washington Environmental Council (www.wecprotects.org), a Washington State-based environmental group that wants to legislate energy‑efficiency amongst real estate professionals (appraisers, agents, and mortgage brokers/ loan originators) in Washington State; they are considering submitting legislation in January 2012 that would require mandatory education (again)!
While there is legislation that was introduced in the national Congress in the S.A.V.E. Act recently that deals with energy-efficiency, this group does not feel that this will happen fast enough and that energy-efficiency consideration in Washington State needs quicker attention. Having met with this group, I was surprised that they are not working with any other industry (akin to the building industry that attempted to legislate “green” education on appraisers in 2009); they simply want to make the environment better (this group is currently in litigation with the Washington State Department of Ecology and is suing them for not enforcing the state’s “Clean Air Act” strong enough with five state oil refineries).
In attempting to legislate this process, they want to dictate which classes Washington State appraisers take for qualifying and continuing education! While it does not appear that this pertains to other “green” movements, they feel that energy-efficiency needs to be considered in every appraisal (both commercial property and residential buildings) assignment. While they recognize the Appraisal Institute’s recently released “Energy-Efficiency Addendum” as a positive step in their quest, they do not believe that real estate professionals understand this concept, or at least are not considering it enough in the industry; they strongly believe that mandatory education will solve all of these problems.
Your ACOW board will be discussing actions to combat this in the coming days and try to offer alternatives to this group to legislation. At our meeting, I also proposed to them that they gather the stakeholders first, to see what is being done, and then if that is not good enough for them, to move ahead—expecting strong opposition from the appraisal profession.
This is where we need your help! As a volunteer organization, most of these legislative battles will be done by our lobbyist, with our input. But, we cannot employ our lobbyist without funding. So please, at this time, consider making a donation to ACOW for 2011 and renewing your membership for 2012. If you already donated to ACOW since my last letter, please consider urging a colleague to donate to the health of our profession.
To contribute to ACOW, use the payment link at www.acow-wa.org or mail a check to:
ACOW
6351 Seaview Ave. NW,
Seattle, WA 98107
Best Personal Regards,
Justin Slack, SRA
2011 President, ACOW Board of Directors
justin.slack@gmail.com
p.s. Annual ACOW elections are coming up so if you have an interest in serving on the board or want to volunteer in any capacity, please be sure to contact us.
Wednesday, November 16, 2011
Fraud in Real Estate - "Hide the Concessions"
This is a personal editorial based on my experience as an appraiser.
Here's an example of an illegal practice that still goes on after everything that has happened in the housing market.
This condo is listed for $579,000 in Millbrae, CA. There's a nice little video that tells you that if you (the borrower) sign a contract before November 30, 2011, you can get a $15,000 kickback from the "New Homebuyer Assistance Progam," a brand new Mercedes Benz C300 (approximate value: $38,000) and a 1 carat diamond (approximate value: $7,000)! Flowers are on the table, and soft music is playing. Come on down!
The expectation by everyone involved is that the appraiser will ignore the concessions and submit a signed report to the lender valuing the property approximately $60,000 higher than it is actually worth.
Unfortunately, borrowers are often dazzled by this type of offer, not realizing that they can be charged by their state Attorney General as a party to fraud (it is illegal to value non-real estate items as real estate in mortgage transactions), and that they are immediately under water (in this example by over 10%) in value. In the current declining market, it could take most of a decade to recover that loss, as the condo will only honestly appraise for approximately $515,000 to $520,000.
Put another way, if they have to bribe you with sixty grand to buy it, it is not worth the list price.
Of course, realtors, builders and loan officers will scream long and loud, accusing a resistant appraiser of "killing the deal," or "undervaluing" the property, or being "too conservative." Appraisers who refuse to go along risk being blacklisted. Sometimes this takes the passive aggressive form of simply not getting any more work from that client. Other appraisers have experienced blistering, hateful diatribes from abusive clients demanding capitulation. Some appraisers have even been threatened with physical harm to themselves or their families.
A great deal of press has been devoted to blaming appraisers for failed real estate deals, and comparitively speaking, almost nothing has been said about the role that realtors and lenders have played in coercing appraisers and perpetuating illegal practices.
Here's an example of an illegal practice that still goes on after everything that has happened in the housing market.
This condo is listed for $579,000 in Millbrae, CA. There's a nice little video that tells you that if you (the borrower) sign a contract before November 30, 2011, you can get a $15,000 kickback from the "New Homebuyer Assistance Progam," a brand new Mercedes Benz C300 (approximate value: $38,000) and a 1 carat diamond (approximate value: $7,000)! Flowers are on the table, and soft music is playing. Come on down!
The expectation by everyone involved is that the appraiser will ignore the concessions and submit a signed report to the lender valuing the property approximately $60,000 higher than it is actually worth.
Unfortunately, borrowers are often dazzled by this type of offer, not realizing that they can be charged by their state Attorney General as a party to fraud (it is illegal to value non-real estate items as real estate in mortgage transactions), and that they are immediately under water (in this example by over 10%) in value. In the current declining market, it could take most of a decade to recover that loss, as the condo will only honestly appraise for approximately $515,000 to $520,000.
Put another way, if they have to bribe you with sixty grand to buy it, it is not worth the list price.
Of course, realtors, builders and loan officers will scream long and loud, accusing a resistant appraiser of "killing the deal," or "undervaluing" the property, or being "too conservative." Appraisers who refuse to go along risk being blacklisted. Sometimes this takes the passive aggressive form of simply not getting any more work from that client. Other appraisers have experienced blistering, hateful diatribes from abusive clients demanding capitulation. Some appraisers have even been threatened with physical harm to themselves or their families.
A great deal of press has been devoted to blaming appraisers for failed real estate deals, and comparitively speaking, almost nothing has been said about the role that realtors and lenders have played in coercing appraisers and perpetuating illegal practices.
GAO on Residential Appraisals
I scanned, but did not read this 60-page report. It appears to be a presentation of data gathered by the GAO, with no meaningful recommendations for actions, beyond telling various governmental agencies that they need to talk to each other about this topic.
Yes, this is old-ish news, as the report was published last July. I just stumbled across it and thought it might be useful to have posted here.
Excerpt:
“Other lenders and industry groups are having fee studies done in order to comply. Because these studies cannot include the fees AMCs pay to appraisers, some industry participants, including some AMC officials, expect them to demonstrate that appraiser fees should be higher than what AMCs are currently paying.
If that is the case, these lenders would require AMCs to increase the fees they pay to appraisers to a rate consistent with the findings of those studies. The expected result would be an increase in appraisal costs for consumers, as well as potential improvements in appraisal quality.
However, some lenders are evaluating the possibility of no longer using AMCs and managing their own panels of appraisers, which would eliminate the AMC administration fee from the appraisal fee that consumers pay.
Some regulatory officials and lenders told us that lenders can still recover the cost of managing the appraisal process from the consumer in other ways—for example, through higher application fees, origination fees, or interest rates.”
Residential Appraisals: Opportunities to Enhance Oversight of an Evolving Industry
Summary
Full Report (pdf)
Tuesday, November 15, 2011
'Middleman' appraisers spur concerns
In the wake of AppraiserLoft stiffing appraisers for tens of thousands of dollars, and CoreLogic announcing they are bailing out of AMC ownership, it is good to see AMCs described a little more accurately and thereby getting some of the scrutiny they have long deserved.
Nothing new to appraisers in this article, but consumers should have a more accurate accounting of what they are actually paying for, and more publicity is one way for that to happen:
'Middleman' appraisers spur concerns
Excerpt:
Once borrowers pay the appraisal fee, the lender sends the order to the middleman company that’s tasked to find an appraiser. What happens afterward could reveal a lot about the quality of the valuation, insiders say. Some companies release single proposals to individuals. But some also follow this format: A blast is sent out by email and text message to contact pools as large as 50, “depending on their database,” said Lowe, the appraiser from Carlsbad.
“...The appraiser would start the work, then it would be canceled because they found someone cheaper,” said Vidi, of the appraisers guild. “So the consumer is really not aware of the shenanigans involved.”
...More experienced appraisers are leaving the industry as appraisal fees trend lower. ...The departure of experienced appraisers from the field has made way for novices who are willing to travel longer distances to fulfill orders and likely cram more into their schedules to make up for lower rates, several appraisers have told the Union-Tribune.
Nothing new to appraisers in this article, but consumers should have a more accurate accounting of what they are actually paying for, and more publicity is one way for that to happen:
'Middleman' appraisers spur concerns
Excerpt:
Once borrowers pay the appraisal fee, the lender sends the order to the middleman company that’s tasked to find an appraiser. What happens afterward could reveal a lot about the quality of the valuation, insiders say. Some companies release single proposals to individuals. But some also follow this format: A blast is sent out by email and text message to contact pools as large as 50, “depending on their database,” said Lowe, the appraiser from Carlsbad.
“...The appraiser would start the work, then it would be canceled because they found someone cheaper,” said Vidi, of the appraisers guild. “So the consumer is really not aware of the shenanigans involved.”
...More experienced appraisers are leaving the industry as appraisal fees trend lower. ...The departure of experienced appraisers from the field has made way for novices who are willing to travel longer distances to fulfill orders and likely cram more into their schedules to make up for lower rates, several appraisers have told the Union-Tribune.
Monday, November 14, 2011
American Guild of Appraisers Fights Federal Regulations
American Guild of Appraisers Fights to Overturn Federal Regulations that Dramatically Cut Fees and Threaten Profession
Excerpt
The American Guild of Appraisers (AGA), a national organization of real estate appraisers that is an affiliate of the AFL-CIO's Office and Professional Employees International Union (OPEIU), announced today it has retained a law firm as part of a broad-reaching effort to overturn recent federal regulations that dramatically cut the fees that appraisers are paid to perform appraisals, and threaten the viability of professional appraisal practice and the reliability of appraisals used in real estate transactions.
The full article is here.
ABOUT THE AMERICAN GUILD OF APPRAISERS/OPEIU GUILD 44
The American Guild of Appraisers/OPEIU Guild 44 seeks to represent the interests of appraisers, developing a strong presence before the U.S. Congress and each of the state legislatures. By working closely and exchanging dialog with other like-minded organizations, the AGA works to educate consumers about the appraisers' non bias, independent role in the value process, while ensuring the accountability of both the appraisal profession and the financial institutions with which the appraiser provides services.
Additional viewpoint from Appraiser Scoop
Excerpt
The American Guild of Appraisers (AGA), a national organization of real estate appraisers that is an affiliate of the AFL-CIO's Office and Professional Employees International Union (OPEIU), announced today it has retained a law firm as part of a broad-reaching effort to overturn recent federal regulations that dramatically cut the fees that appraisers are paid to perform appraisals, and threaten the viability of professional appraisal practice and the reliability of appraisals used in real estate transactions.
The full article is here.
ABOUT THE AMERICAN GUILD OF APPRAISERS/OPEIU GUILD 44
The American Guild of Appraisers/OPEIU Guild 44 seeks to represent the interests of appraisers, developing a strong presence before the U.S. Congress and each of the state legislatures. By working closely and exchanging dialog with other like-minded organizations, the AGA works to educate consumers about the appraisers' non bias, independent role in the value process, while ensuring the accountability of both the appraisal profession and the financial institutions with which the appraiser provides services.Additional viewpoint from Appraiser Scoop
Friday, November 11, 2011
Important ACOW News for all Appraisers
Dear Washington State Appraisers:
As ACOW nears the end of the 2011 calendar year, I want to make sure that we appraisers do not forget that there is a special session starting up in the next few weeks and that we need to be cognizant of what can happen to WA State appraisers when politics are involved!
ACOW had to fight really hard this year for the continuance of REAC, getting the new AMC Law rules in place, as well as not increasing our license fees in successive years.
Achievements that ACOW accomplished this year have included:
• In January, I had the opportunity to offer comments at a House Committee hearing about the elimination of the Real Estate Appraiser Commission (REAC), this was the third year our commission was slated for elimination by the Governor’s office and the third year that ACOW has lobbied against the legislation. We quickly got the REAC removed from the bill, but along the way, it got renamed to the Real Estate Appraiser Advisory Committee (REAAC); something that ACOW fought for 16 years ago in changing the original advisory committee to a commission we have today. Along with this name change, the appointment process would be moving to the Director of Licensing rather than from the Governor. ACOW kept at it and with our lobbyist’s efforts, finally got a sponsor to keep the commission as is, but with the Director’s appointment, in the Special Session. I am happy to report that the Commission has been kept as is, with only the appointments coming from DOL. A new appointee recently has been accepted and will begin a term beginning in December 2011 meaning that there will now be six commissioners with the seventh appointment hopefully coming in December 2012.
• Additionally, in the midst of this year’s budget process, a 484-page document this session, our lobbyist recognized one line that was left over from the prior budget: the ability to raise appraiser license fees! From prior discussions with the Appraiser Program Director at DOL, this was something that caught us off guard. Calling the DOL frantically to find out whom asked and why this was to be included in the budget, their response was “we didn’t ask for any increase!” A day later, I received a callback indicating that this was merely a mistake, left over from the prior budget language in 2009 and that the budget writer was new(er) and it was only an oversight—though a potentially costly one to appraisers, especially given that are license fees increased 30% last year. Hearing that, ACOW took a two-pronged approach: One was to talk to the policy-makers and explain the problem; the other, have our members call our respective legislators and ask them to remove this from the bill. After a week of calls and conversations from and with several appraisers across the state, I am also happy to report that this language was recognized as a mistake and it too, was removed from the bill!
• Another item that has been in recent news is the rule making process for implementing our state’s new AMC law. As you may recall, in March 2010, Washington State became the ninth or tenth state in the country to pass an AMC law; this was several months prior to the Dodd-Frank Act and shows how successful our organization has been for appraisers. In late 2010, the REAC created a rule-making work group to help DOL write the rules for the AMC law; three ACOW board members were on the work group and the draft has been sent to DOL to work through the language. We only found out yesterday afternoon that the AMC Law rule making hearing is today, November 8th, in Olympia. Rest assured that ACOW will be down there at 10:00 am to make sure appraisers’ voices are represented.
ACOW still has an outstanding balance of $4,375 owed to TK Bentler, our lobbyist, due to the limited number of Washington state appraiser ACOW members. I am hopeful that we can raise enough over the next two weeks to retire our 2011 lobbying debts and assure that we can retain the services of our lobbyist in 2012…this is where you come in!
The Olympic Peninsula Chapter of NAIFA, with approximately 20 members, recently sent out a challenge: they mailed ACOW a $2,000 check to help with our lobbying expense; on a per capita basis, this amounted to roughly $100 per chapter member. They are hoping that other chapters or individuals will rise up and contribute an additional $100 for the 2011 campaign!
What ACOW is asking is that appraisers will make a $100 contribution with $55 going towards retiring the 2011 debt and the other $45 going towards your 2012 membership.
At "The Summit" in August, TK mentioned that the AMC’s now have a full-time lobbyist in Olympia looking out for their interests. With January 2012 shortly upon us and the beginning of Washington’s AMC registrations taking effect, we will want to pay special attention to what transpires. With situations like the recent Appraisal Loft debacle, we want to make sure the bond requirement that the AMC Law calls for remains intact and possibly look to strengthen the language to make sure that if any AMC that is licensed in Washington State does something similar to what Appraisal Loft did, that appraisers will have some recourse in collecting on their unpaid debts (For those that are not aware of what happened, Appraisal Loft recently shut its doors with a reported $3 million in outstanding appraisal fees due to appraisers that they have already collected from their clients).
Looking into 2012, ACOW is taking a different approach than what we have done in recent years. ACOW will become a more "all volunteer organization" and limit our administrative costs paid out to Seattle Operating Support. We already have had several board members and other appraisers indicate that they will commit to more of the administrative work to cut costs and we will be looking for more volunteers in the weeks and months to come.
So please, consider contributing now to ACOW to help retire our 2011 debt and continue your membership in our state's coalition for 2012. With your help ACOW will continue to have a strong voice in Olympia for all Washington State Appraisers!
To contribute to ACOW, use the payment link at www.acow-wa.org or mail a check to:
ACOW
6351 Seaview Ave. NW,
Seattle, WA 98107
Best Personal Regards,
Justin Slack, SRA
2011 President, ACOW Board of Directors
P.S. Annual ACOW elections are coming up so if you have an interest in serving on the board or want to volunteer in any capacity, please be sure to contact us.
As ACOW nears the end of the 2011 calendar year, I want to make sure that we appraisers do not forget that there is a special session starting up in the next few weeks and that we need to be cognizant of what can happen to WA State appraisers when politics are involved!
ACOW had to fight really hard this year for the continuance of REAC, getting the new AMC Law rules in place, as well as not increasing our license fees in successive years.
Achievements that ACOW accomplished this year have included:
• In January, I had the opportunity to offer comments at a House Committee hearing about the elimination of the Real Estate Appraiser Commission (REAC), this was the third year our commission was slated for elimination by the Governor’s office and the third year that ACOW has lobbied against the legislation. We quickly got the REAC removed from the bill, but along the way, it got renamed to the Real Estate Appraiser Advisory Committee (REAAC); something that ACOW fought for 16 years ago in changing the original advisory committee to a commission we have today. Along with this name change, the appointment process would be moving to the Director of Licensing rather than from the Governor. ACOW kept at it and with our lobbyist’s efforts, finally got a sponsor to keep the commission as is, but with the Director’s appointment, in the Special Session. I am happy to report that the Commission has been kept as is, with only the appointments coming from DOL. A new appointee recently has been accepted and will begin a term beginning in December 2011 meaning that there will now be six commissioners with the seventh appointment hopefully coming in December 2012.
• Additionally, in the midst of this year’s budget process, a 484-page document this session, our lobbyist recognized one line that was left over from the prior budget: the ability to raise appraiser license fees! From prior discussions with the Appraiser Program Director at DOL, this was something that caught us off guard. Calling the DOL frantically to find out whom asked and why this was to be included in the budget, their response was “we didn’t ask for any increase!” A day later, I received a callback indicating that this was merely a mistake, left over from the prior budget language in 2009 and that the budget writer was new(er) and it was only an oversight—though a potentially costly one to appraisers, especially given that are license fees increased 30% last year. Hearing that, ACOW took a two-pronged approach: One was to talk to the policy-makers and explain the problem; the other, have our members call our respective legislators and ask them to remove this from the bill. After a week of calls and conversations from and with several appraisers across the state, I am also happy to report that this language was recognized as a mistake and it too, was removed from the bill!
• Another item that has been in recent news is the rule making process for implementing our state’s new AMC law. As you may recall, in March 2010, Washington State became the ninth or tenth state in the country to pass an AMC law; this was several months prior to the Dodd-Frank Act and shows how successful our organization has been for appraisers. In late 2010, the REAC created a rule-making work group to help DOL write the rules for the AMC law; three ACOW board members were on the work group and the draft has been sent to DOL to work through the language. We only found out yesterday afternoon that the AMC Law rule making hearing is today, November 8th, in Olympia. Rest assured that ACOW will be down there at 10:00 am to make sure appraisers’ voices are represented.
ACOW still has an outstanding balance of $4,375 owed to TK Bentler, our lobbyist, due to the limited number of Washington state appraiser ACOW members. I am hopeful that we can raise enough over the next two weeks to retire our 2011 lobbying debts and assure that we can retain the services of our lobbyist in 2012…this is where you come in!
The Olympic Peninsula Chapter of NAIFA, with approximately 20 members, recently sent out a challenge: they mailed ACOW a $2,000 check to help with our lobbying expense; on a per capita basis, this amounted to roughly $100 per chapter member. They are hoping that other chapters or individuals will rise up and contribute an additional $100 for the 2011 campaign!
What ACOW is asking is that appraisers will make a $100 contribution with $55 going towards retiring the 2011 debt and the other $45 going towards your 2012 membership.
At "The Summit" in August, TK mentioned that the AMC’s now have a full-time lobbyist in Olympia looking out for their interests. With January 2012 shortly upon us and the beginning of Washington’s AMC registrations taking effect, we will want to pay special attention to what transpires. With situations like the recent Appraisal Loft debacle, we want to make sure the bond requirement that the AMC Law calls for remains intact and possibly look to strengthen the language to make sure that if any AMC that is licensed in Washington State does something similar to what Appraisal Loft did, that appraisers will have some recourse in collecting on their unpaid debts (For those that are not aware of what happened, Appraisal Loft recently shut its doors with a reported $3 million in outstanding appraisal fees due to appraisers that they have already collected from their clients).
Looking into 2012, ACOW is taking a different approach than what we have done in recent years. ACOW will become a more "all volunteer organization" and limit our administrative costs paid out to Seattle Operating Support. We already have had several board members and other appraisers indicate that they will commit to more of the administrative work to cut costs and we will be looking for more volunteers in the weeks and months to come.
So please, consider contributing now to ACOW to help retire our 2011 debt and continue your membership in our state's coalition for 2012. With your help ACOW will continue to have a strong voice in Olympia for all Washington State Appraisers!
To contribute to ACOW, use the payment link at www.acow-wa.org or mail a check to:
ACOW
6351 Seaview Ave. NW,
Seattle, WA 98107
Best Personal Regards,
Justin Slack, SRA
2011 President, ACOW Board of Directors
P.S. Annual ACOW elections are coming up so if you have an interest in serving on the board or want to volunteer in any capacity, please be sure to contact us.
Thursday, November 10, 2011
Corelogic Sells AMC Business
Excerpt:
"During the third quarter, CoreLogic sold five business units and reported them as discontinued, including its appraisal management business, several consumer credit units and its marketing services."
Source
Press release from CoreLogic
"During the third quarter, CoreLogic sold five business units and reported them as discontinued, including its appraisal management business, several consumer credit units and its marketing services."
Source
Press release from CoreLogic
Friday, November 4, 2011
Seller Concession in Listings
Excerpted from an email by Dave Towne:
"Appraisers have [a] legal obligation to report any known Comparable Property seller sales concessions on the Fannie/Freddie forms.
However, the attorney for the Washington Association of Realtors has advised Realtor members that they have ‘no obligation to disclose’ concession information if an appraiser calls an Agent for that information. They are treating that as confidential information between seller and buyer as a way to protect the ‘selling price’ of the property. The attorney has also stated that individual Brokerages can establish their own disclosure policy if they so choose.
If an appraiser suspects that there might be a sales concession (to a comparable property), makes a call to the Agent, but the Agent refuses to disclose, the appraiser can include a statement in the report about this, to include the Agent name, Brokerage name, and phone number. This can even be done when the sale info is verified with the listing or sales Agent, even though it appears that no concession was used.
This is the only way I know of for how to protect ourselves. If Agents refuse to cooperate, we have the right to disclose who we talked with to try to obtain information to meet our legal obligation."
Thursday, November 3, 2011
Board of Directors Meeting – Preliminary Agenda
Thursday, November 3, 2011, 6:00 p.m. – Please Plan to Begin Promptly
Lamb Hanson Lamb Office – Seattle
4025 Delridge Way SW, Suite 530
Seattle, WA 98106 (206.903.1500)
For the Lamb Hanson Lamb Office, the building elevators close at 5:30pm; for the Lamb Hanson Lamb offices at 5:30pm.
If attending and plan to arrive after this time, please call ahead of time to arrange for access
(For directions, go to: http://acow-wa.org/MtgDates.html)
To attend the meeting via phone conference: -dial 1.218.339.4300 -when prompted dial access code: 872158#
Board of Directors Meeting – Preliminary Agenda
More on ACOW here.
Lamb Hanson Lamb Office – Seattle
4025 Delridge Way SW, Suite 530
Seattle, WA 98106 (206.903.1500)
For the Lamb Hanson Lamb Office, the building elevators close at 5:30pm; for the Lamb Hanson Lamb offices at 5:30pm.
If attending and plan to arrive after this time, please call ahead of time to arrange for access
(For directions, go to: http://acow-wa.org/MtgDates.html)
To attend the meeting via phone conference: -dial 1.218.339.4300 -when prompted dial access code: 872158#
Board of Directors Meeting – Preliminary Agenda
Call to Order
1. Establish Quorum: Justin Slack, President
2. Approval of Agenda: Justin Slack, President
3. Approval of Prior Meeting Minutes: Justin Slack, President
Officer Reports
1. President’s Report: Justin Slack, President
2. Treasurer’s Report: Joe Creech, Treasurer
a. Monthly and Current YTD Status
Committee Reports
Old Business:
1. Administrative Topics:
a. TK’s remaining 2011 fee
b. ACOW beyond 2011
i. George Nervick Research
ii. TK discussions
New Business:
1. 2012 ACOW Elections planning/ discussions (Board Members/ President)
Announcements:
1. Next ACOW Meeting Date:
Adjournment: Justin Slack, President
Board of Directors
Justin Slack, President
Mark Noble, Vice President
Joe Creech, Treasurer
Michael Imes, Secretary
Jodi Standaert, Director
Barry Wilson, Director
George Nervik, Director
ACOW Administration
Appraisers Coalition of Washington
6351 Seaview Avenue NW
Seattle, WA 98107-2664
p: 206.622.8425
f: 206.623.4474
More on ACOW here.
Friday, October 28, 2011
Appraisal Independence Requirements
From Dave Towne:
It must be said very simply: the appraiser is the one who controls report content. But it’s also incumbent on appraisers to include relevant details and plenty of commentary to justify their opinions, and of course, the final opinion of value. I think this is where some appraisers hang themselves. But others do it well, and still get asked to make changes. That is not necessarily appropriate.
Despite negative comments about the Dodd-Frank law and some movement to repeal it, it has a section devoted to Appraisal Independence Requirements. ...I recommend that you read it, print it and keep it next to your computer, and also save it to your computer so that you can send it to entities who use inappropriate tactics against you.
Note that the wording of the AIR has this:
No one connected to the property in any way “shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner…”
Per the law, clients, etc., are allowed to request that the appraiser provide ‘additional comments’ about the information within a report, and to provide more explanation. They can also send you additional properties to consider, ...but many overlook the specific wording that states those ‘comps’ must be “APPROPRIATELY COMPARABLE.”
The mere fact that those properties magically have sale prices close to the desired appraisal value is no coincidence, but that fact alone does not make them ‘appropriately comparable.’
Your defense & preservation is knowledge of the law, writing good reports with enough CYA and other relevant comments, and crafting responses that define and demand your independence in the mortgage lending process when inappropriate requests are made.
Dave Towne
It must be said very simply: the appraiser is the one who controls report content. But it’s also incumbent on appraisers to include relevant details and plenty of commentary to justify their opinions, and of course, the final opinion of value. I think this is where some appraisers hang themselves. But others do it well, and still get asked to make changes. That is not necessarily appropriate.
Despite negative comments about the Dodd-Frank law and some movement to repeal it, it has a section devoted to Appraisal Independence Requirements. ...I recommend that you read it, print it and keep it next to your computer, and also save it to your computer so that you can send it to entities who use inappropriate tactics against you.
Note that the wording of the AIR has this:
No one connected to the property in any way “shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner…”
Per the law, clients, etc., are allowed to request that the appraiser provide ‘additional comments’ about the information within a report, and to provide more explanation. They can also send you additional properties to consider, ...but many overlook the specific wording that states those ‘comps’ must be “APPROPRIATELY COMPARABLE.”
The mere fact that those properties magically have sale prices close to the desired appraisal value is no coincidence, but that fact alone does not make them ‘appropriately comparable.’
Your defense & preservation is knowledge of the law, writing good reports with enough CYA and other relevant comments, and crafting responses that define and demand your independence in the mortgage lending process when inappropriate requests are made.
Dave Towne
Thursday, October 27, 2011
Appraising Green Homes -- CE
From Chris Mayou:
We had a great response to our first Appraising Green Homes training in Kitsap County. Due to the high turnout at the first class, the agencies involved in funding this course think it's possible to train close to 100% of the appraisers who work in Kitsap County! So, another training date has been added.
This course is designed to build participants' knowledge of green building and will provide an introduction to all phases of green residential construction, from proper siting of a home to finish material selection. Participants will analyze valuation studies and cost data for green residential projects and will engage in appraising green homes through case studies.
Questions? Contact Chris Mayou at cmayou@earthadvantage.org or 503.968.7160 x18
Date & Time: November 15 & 16, 2011 - 8:30a.m.- 4:30p.m.
Location: Silverdale Community Center- Evergreen Room 1
9729 Silverdale Way NW 1 Silverdale, WA 98311
Cost: $50 (Regular admission $349)
CEUs: 14 clock hours;
Washington approved provider: Watkins and Associates
Register NOW!
We had a great response to our first Appraising Green Homes training in Kitsap County. Due to the high turnout at the first class, the agencies involved in funding this course think it's possible to train close to 100% of the appraisers who work in Kitsap County! So, another training date has been added.
This course is designed to build participants' knowledge of green building and will provide an introduction to all phases of green residential construction, from proper siting of a home to finish material selection. Participants will analyze valuation studies and cost data for green residential projects and will engage in appraising green homes through case studies.
Questions? Contact Chris Mayou at cmayou@earthadvantage.org or 503.968.7160 x18
Date & Time: November 15 & 16, 2011 - 8:30a.m.- 4:30p.m.
Location: Silverdale Community Center- Evergreen Room 1
9729 Silverdale Way NW 1 Silverdale, WA 98311
Cost: $50 (Regular admission $349)
CEUs: 14 clock hours;
Washington approved provider: Watkins and Associates
Register NOW!
Tuesday, October 25, 2011
CA Appraiser Guilty in Mortgage Fraud Scam
Excerpt:
"Lila Rizk was a licensed real estate appraiser based in Orange County, California. She did business with Mark Abrams, a mortgage broker, and his business partner Charles Elliott Fitzgerald, a real estate developer. Between July 2000 and January 2003, Abrams, Fitzgerald, and others associated with them initiated and carried out a scheme to defraud mortgage lenders.
Losses to these lenders in total exceeded $40 million."
The court opinion is here.
"Lila Rizk was a licensed real estate appraiser based in Orange County, California. She did business with Mark Abrams, a mortgage broker, and his business partner Charles Elliott Fitzgerald, a real estate developer. Between July 2000 and January 2003, Abrams, Fitzgerald, and others associated with them initiated and carried out a scheme to defraud mortgage lenders.
Losses to these lenders in total exceeded $40 million."
The court opinion is here.
Thursday, October 20, 2011
Tuesday, October 18, 2011
New IRS Voluntary Compliance Initiative
New IRS Voluntary Compliance Initiative for Misclassified Independent Contractors
Excerpt:
On September 21, 2011, the IRS introduced an extremely favorable settlement program for those who have misclassified employees as independent contractors to reclassify them and eliminate the tax exposure.
This favorable program includes audit protection for prior years and abatement of interest and penalties.
Ann O'Rourke(Appraisal Today): Misclassifying appraisers as independent contractors, not employees, can be very, very expensive.
Source
Excerpt:
On September 21, 2011, the IRS introduced an extremely favorable settlement program for those who have misclassified employees as independent contractors to reclassify them and eliminate the tax exposure.
This favorable program includes audit protection for prior years and abatement of interest and penalties.
Ann O'Rourke(Appraisal Today): Misclassifying appraisers as independent contractors, not employees, can be very, very expensive.
Source
Friday, October 14, 2011
iAppraisal Advantage attempts to legitimize BPOs
From Dave Towne, the following emails:
Subject: iAppraisal Advantage-- We have work in WASHINGTON, ARE YOU SIGNED UP FOR THIS PRODUCT?
From: Stephanie Eckes
Sent: Wed, Oct 12, 2011 6:31 pm
Hello,
We have a client who is ready to start placing orders for the new iAppraisal Advantage report in your area. Please let me know if you are interested in completing this product and what your fee will be.
Most of the vendors completing this product for us today are charging in the $20.00-$35.00 range. They have said that the first report takes approximately 45 minutes to complete but once you are familiar with the form and the process that each order takes approximately 20 to 30 minutes.
Sent: Thursday, October 13, 2011 10:11 AM
To: Stephanie Eckes
Let me see if I understand this correctly. This "new product" is a BPO sent to me an appraiser. I'm to review the BPO's opinion and data. Pull my own research, review my research against the BPO, then render an estimated market value as an Appraiser on the subject based on a desk review of a BPO and my verification of the BPO is that about right?
James.
Sent: Thu, Oct 13, 2011 7:17 am
From: Stephanie Eckes
You got it.
Sent: Thursday, October 13, 2011
To: Stephanie Eckes
Good Morning Stephanie!!
Thought so. This will give total credibility to a broker's opinion of value. It will in the end legitimize Brokers to bankers/lenders of what their estimation of what market value is by establishing a track record and in the end, I cut my own throat. I hope every appraiser turns you down.
I shall not be part of it.
James.
Subject: iAppraisal Advantage-- We have work in WASHINGTON, ARE YOU SIGNED UP FOR THIS PRODUCT?
From: Stephanie Eckes
Hello,
We have a client who is ready to start placing orders for the new iAppraisal Advantage report in your area. Please let me know if you are interested in completing this product and what your fee will be.
Most of the vendors completing this product for us today are charging in the $20.00-$35.00 range. They have said that the first report takes approximately 45 minutes to complete but once you are familiar with the form and the process that each order takes approximately 20 to 30 minutes.
Sent: Thursday, October 13, 2011 10:11 AM
To: Stephanie Eckes
Let me see if I understand this correctly. This "new product" is a BPO sent to me an appraiser. I'm to review the BPO's opinion and data. Pull my own research, review my research against the BPO, then render an estimated market value as an Appraiser on the subject based on a desk review of a BPO and my verification of the BPO is that about right?
James.
Sent: Thu, Oct 13, 2011 7:17 am
From: Stephanie Eckes
You got it.
Sent: Thursday, October 13, 2011
To: Stephanie Eckes
Good Morning Stephanie!!
Thought so. This will give total credibility to a broker's opinion of value. It will in the end legitimize Brokers to bankers/lenders of what their estimation of what market value is by establishing a track record and in the end, I cut my own throat. I hope every appraiser turns you down.
I shall not be part of it.
James.
Saturday, October 8, 2011
Understanding State Board Enforcement
By Timothy C Andersen, MAI
Excerpt:
"It is interesting to note that to violate a state's appraiser certification law is not a crime, per se. It is not illegal, either, which means it is not "breaking the law." It is unlawful, however, which means to do something in a manner the law does not authorize. Since violation of a state's appraiser certification law is not a crime, the protection of our Federal Constitution- "innocent until proven guilty," does not apply.
When the state sends a letter it informs you that you are guilty of a violation of USPAP and/or state law. There are no hearings, no trial, no judge, no jury. You are guilty. You can defend yourself and the state may even drop some of the charges. However, you are guilty of something for no other reason than the state says you are."
Source
Excerpt:
"It is interesting to note that to violate a state's appraiser certification law is not a crime, per se. It is not illegal, either, which means it is not "breaking the law." It is unlawful, however, which means to do something in a manner the law does not authorize. Since violation of a state's appraiser certification law is not a crime, the protection of our Federal Constitution- "innocent until proven guilty," does not apply.
When the state sends a letter it informs you that you are guilty of a violation of USPAP and/or state law. There are no hearings, no trial, no judge, no jury. You are guilty. You can defend yourself and the state may even drop some of the charges. However, you are guilty of something for no other reason than the state says you are."
Source
Monday, October 3, 2011
Appraiser Goes to Jail
Excerpt:
"John F. Hochrek, Jr., 50, Spring Grove, Illinois, was sentenced by United States District Judge Lynn S. Adelman to 6 months in prison for his role in a mortgage fraud scheme involving at least 44 residential properties and millions of dollars of loss."
"Hochrek participated in the scheme as a licensed appraiser (doing business as Tri-County Appraisals in Wisconsin and Illinois) and as a real estate agent. Hochrek provided inflated appraisals for approximately 37 properties and negotiated sales contracts for approximately 15 of the properties, knowing that their values would be falsely inflated."
Source
[Ed.: Hmm. 37 appraisals at, let's say, $350 each... He traded his livelihood for a felony conviction and $12,950. I'll bet he was telling everyone, "Hey! [I] need money to feed [my] kids and [I'm] over a barrel!" Or something like that.]
"John F. Hochrek, Jr., 50, Spring Grove, Illinois, was sentenced by United States District Judge Lynn S. Adelman to 6 months in prison for his role in a mortgage fraud scheme involving at least 44 residential properties and millions of dollars of loss."
"Hochrek participated in the scheme as a licensed appraiser (doing business as Tri-County Appraisals in Wisconsin and Illinois) and as a real estate agent. Hochrek provided inflated appraisals for approximately 37 properties and negotiated sales contracts for approximately 15 of the properties, knowing that their values would be falsely inflated."
Source
[Ed.: Hmm. 37 appraisals at, let's say, $350 each... He traded his livelihood for a felony conviction and $12,950. I'll bet he was telling everyone, "Hey! [I] need money to feed [my] kids and [I'm] over a barrel!" Or something like that.]
Sunday, October 2, 2011
MERS Wins One
Electronic mortgage-registry firm wins in appeal
A three-judge panel rules the plaintiffs did not show that the alleged illegalities associated with the MERS system injured them or violated state law.
By Karen Gullo - Bloomberg News
Mortgage Electronic Registration Systems (MERS), the operator of an electronic registry of mortgages, and lenders won a U.S. appeals-court ruling upholding dismissal of claims by Arizona borrowers challenging their lending and foreclosure procedures.
The federal court in San Francisco ruled Wednesday that a district court properly threw out a lawsuit filed by three borrowers alleging conspiracy and fraud.
In addition to MERS, defendants included Bank of America and JPMorgan Chase.
"The plaintiffs' claims that focus on the operation of the MERS system ultimately fail because the plaintiffs have not shown that the alleged illegalities associated with the MERS system injured them or violated state law," the three-judge appeals panel said.
MERS, a unit of Reston, Va.-based Merscorp, bills itself as a provider of "support services to the mortgage industry," specifically tracking the servicing rights and ownership interests in mortgage loans.
The company lets banks electronically register their sales of home loans so they can avoid trudging down to the county records office.[Ed: Seriously? NOBODY trudges down to the Courthouse any more. Haven't these people heard of the "Internets?"]
The Arizona borrowers, who are Hispanic and didn't speak or read English, had executed deeds naming MERS as the "beneficiary" and "nominee" for the lender.
After the borrowers defaulted on the loans, MERS recorded documents assigning its interest in the deeds to a bank appointed by the lender as trustee to foreclose on the properties, which were sold at auction, the ruling says.
The borrowers sued, alleging that MERS members conspired to commit fraud by using the registry as a sham beneficiary, promoting predatory lending practices and making it impossible for borrowers or regulators to track when their loans changed hands.
The Arizona district court dismissed the case without giving the plaintiffs an opportunity to amend the suit to add wrongful foreclosure claims related to MERS' procedures.
"This is a very good opinion for MERS," said Janis Smith, a company spokeswoman.
"The court found that borrowers were in no way injured by any action taken by MERS," Smith said.
Robert Hager, a Reno, Nev.-based lawyer for the borrowers, said that while "these particular plaintiffs were denied relief because of the particular facts and because they're in Arizona, there's a great deal of good analysis and law about MERS and the recording system in general that will help" other plaintiffs in the San Francisco-based appeals court.
Dozens of lawsuits claiming MERS itself is a fraud have been consolidated for pretrial proceedings in federal court in Phoenix.
Source
A three-judge panel rules the plaintiffs did not show that the alleged illegalities associated with the MERS system injured them or violated state law.
By Karen Gullo - Bloomberg News
Mortgage Electronic Registration Systems (MERS), the operator of an electronic registry of mortgages, and lenders won a U.S. appeals-court ruling upholding dismissal of claims by Arizona borrowers challenging their lending and foreclosure procedures.
The federal court in San Francisco ruled Wednesday that a district court properly threw out a lawsuit filed by three borrowers alleging conspiracy and fraud.
In addition to MERS, defendants included Bank of America and JPMorgan Chase.
"The plaintiffs' claims that focus on the operation of the MERS system ultimately fail because the plaintiffs have not shown that the alleged illegalities associated with the MERS system injured them or violated state law," the three-judge appeals panel said.
MERS, a unit of Reston, Va.-based Merscorp, bills itself as a provider of "support services to the mortgage industry," specifically tracking the servicing rights and ownership interests in mortgage loans.
The company lets banks electronically register their sales of home loans so they can avoid trudging down to the county records office.[Ed: Seriously? NOBODY trudges down to the Courthouse any more. Haven't these people heard of the "Internets?"]
The Arizona borrowers, who are Hispanic and didn't speak or read English, had executed deeds naming MERS as the "beneficiary" and "nominee" for the lender.
After the borrowers defaulted on the loans, MERS recorded documents assigning its interest in the deeds to a bank appointed by the lender as trustee to foreclose on the properties, which were sold at auction, the ruling says.
The borrowers sued, alleging that MERS members conspired to commit fraud by using the registry as a sham beneficiary, promoting predatory lending practices and making it impossible for borrowers or regulators to track when their loans changed hands.
The Arizona district court dismissed the case without giving the plaintiffs an opportunity to amend the suit to add wrongful foreclosure claims related to MERS' procedures.
"This is a very good opinion for MERS," said Janis Smith, a company spokeswoman.
"The court found that borrowers were in no way injured by any action taken by MERS," Smith said.
Robert Hager, a Reno, Nev.-based lawyer for the borrowers, said that while "these particular plaintiffs were denied relief because of the particular facts and because they're in Arizona, there's a great deal of good analysis and law about MERS and the recording system in general that will help" other plaintiffs in the San Francisco-based appeals court.
Dozens of lawsuits claiming MERS itself is a fraud have been consolidated for pretrial proceedings in federal court in Phoenix.
Source
LiveValuation Publisher Resigns
From Ann O'Rourke, MAI, SRA (Appraisal Today):
San Diego, California- the Publisher of LiveValuation Magazine resigned on Tuesday, October 11, 2011 after last-minute negotiations to purchase the magazine failed. Ernest W. Durbin II was the publisher of the national monthly valuation magazine since its inception in May of 2009. The sole owner of the publication is Aman S. Makkar who recently closed his Appraisal Management Company AppraiserLoft. The magazine was a separate entity.
LiveValuation Magazine launched in May of 2009 featuring articles written by leaders in the residential real estate valuation industry. The magazine has been well received and is known for its creative design and thought-provoking content. Durbin attempted to purchase the assets of the magazine and continue publishing it with its current staff, when terms could not be negotiated; he resigned as publisher earlier this week.
Durbin states, "I have really enjoyed the publication space. Many of the authors and advertisers are my friends or have become my friends. I can't speak to the longevity of LiveValuation Magazine but as publisher I was surrounded by real thought leaders in valuation. I trust that the authors I worked with will find other avenues for their valuable insights."
San Diego, California- the Publisher of LiveValuation Magazine resigned on Tuesday, October 11, 2011 after last-minute negotiations to purchase the magazine failed. Ernest W. Durbin II was the publisher of the national monthly valuation magazine since its inception in May of 2009. The sole owner of the publication is Aman S. Makkar who recently closed his Appraisal Management Company AppraiserLoft. The magazine was a separate entity.
LiveValuation Magazine launched in May of 2009 featuring articles written by leaders in the residential real estate valuation industry. The magazine has been well received and is known for its creative design and thought-provoking content. Durbin attempted to purchase the assets of the magazine and continue publishing it with its current staff, when terms could not be negotiated; he resigned as publisher earlier this week.
Durbin states, "I have really enjoyed the publication space. Many of the authors and advertisers are my friends or have become my friends. I can't speak to the longevity of LiveValuation Magazine but as publisher I was surrounded by real thought leaders in valuation. I trust that the authors I worked with will find other avenues for their valuable insights."
Saturday, October 1, 2011
CNBC Video on "Too Big to Fail"
Another video for those of you who have not seen it, or would like to direct it to others.
"Has the too big to fail, bailout nation policies left us doomed to repeat the same old mistakes? Insight with Josh Rosner, Graham Fisher & Co. and Gretchen Morgenson, The New York Times."
Click here to view
Wednesday, September 28, 2011
CBS 60 Minutes Video on Robo-signing
For those of you who missed it the first time, or have heard about it and didn't know where to find it, here is the infamous video showing how lenders hired people to forge signatures in order to re-create lost documents.
Click here to view
Thanks to Joyce Potts for this good link!!
Click here to view
Thanks to Joyce Potts for this good link!!
Tuesday, September 27, 2011
Countrywide protected fraudsters by silencing whistleblowers
Excerpt:
"The mortgage market was struggling in March 2007 when Countrywide promoted Eileen Foster to executive vice president and tapped her to take over the company's mortgage fraud unit.""
"A former loan-underwriting manager in northern California, for example, claimed Countrywide retaliated against her after she sent an email to the company's founder and chief executive, Angelo Mozilo, about questionable lending practices. The ex-manager, Enid Thompson, warned Mozilo in March 2007 that "greedy unethical people" were pressuring workers to approve loans without regard for borrowers' ability to pay, according to a lawsuit in Contra Costa Superior Court."
"Within 12 hours, Thompson claimed, Countrywide executives began a campaign of reprisal, reducing her duties and transferring staffers off her team. Corporate minions, she charged, ransacked her desk, broke her computer and removed her printer and personal things. "
Click here to read part 1
Click here for part 2
"The mortgage market was struggling in March 2007 when Countrywide promoted Eileen Foster to executive vice president and tapped her to take over the company's mortgage fraud unit.""
"A former loan-underwriting manager in northern California, for example, claimed Countrywide retaliated against her after she sent an email to the company's founder and chief executive, Angelo Mozilo, about questionable lending practices. The ex-manager, Enid Thompson, warned Mozilo in March 2007 that "greedy unethical people" were pressuring workers to approve loans without regard for borrowers' ability to pay, according to a lawsuit in Contra Costa Superior Court."
"Within 12 hours, Thompson claimed, Countrywide executives began a campaign of reprisal, reducing her duties and transferring staffers off her team. Corporate minions, she charged, ransacked her desk, broke her computer and removed her printer and personal things. "
Click here to read part 1
Click here for part 2
Sunday, September 25, 2011
Appraisers Speak at Washington Hearing
Hearing entitled "Mortgage Origination: The Impact of Recent Changes on Homeowners and Businesses"
Wednesday, July 13, 2011
House Committee on Financial Services
Subcommittee on Insurance, Housing and Community Opportunity
Excerpt from Sara Stephens:
"...we believe the work of appraisers is vastly underutilized by mortgage lenders today, and facing severe strain as a result of a conflicted and burdensome regulatory environment. Real estate appraisers are professional analysts of real property markets. They are trained to research and investigate the behaviors of buyers and sellers in the market. An appraisal is a professional service. It is not like a flood certification, which can be generated by a click of a button. Credible appraisals require research, analysis, inspection and rigorous training. They require competence, independence, and ethics.
However, many mortgage lenders, and sadly, some government agency officials, fail to recognize this distinction, helping to promote commoditization of appraisals, as if they were all the same or created equally "
Her testimony is here.
All testimony is here.
Ed: I realize this is old news, but I am posting it here so it can be referred to easily by anyone who wishes to.
Wednesday, July 13, 2011
House Committee on Financial Services
Subcommittee on Insurance, Housing and Community Opportunity
Excerpt from Sara Stephens:
"...we believe the work of appraisers is vastly underutilized by mortgage lenders today, and facing severe strain as a result of a conflicted and burdensome regulatory environment. Real estate appraisers are professional analysts of real property markets. They are trained to research and investigate the behaviors of buyers and sellers in the market. An appraisal is a professional service. It is not like a flood certification, which can be generated by a click of a button. Credible appraisals require research, analysis, inspection and rigorous training. They require competence, independence, and ethics.
However, many mortgage lenders, and sadly, some government agency officials, fail to recognize this distinction, helping to promote commoditization of appraisals, as if they were all the same or created equally "
Her testimony is here.
All testimony is here.
Ed: I realize this is old news, but I am posting it here so it can be referred to easily by anyone who wishes to.
Friday, September 9, 2011
Feds say Bank of America worse than Countrywide
Excerpt:
Bank of America Corp.’s story has long been that Countrywide did it. But a lawsuit filed last week by the Federal Housing Finance Agency tells a different tale.
The lawsuit claims that when former Countrywide Financial Corp. CEO Angelo Mozilo marveled at the dizzying recklessness of the mortgage-lending business, he was in fact looking at Charlotte-based Bank of America.
This is perhaps one of the most insulting claims ever leveled in a mortgage-fraud lawsuit. Bank of America would probably feel outraged if it weren’t so overwhelmed with its nauseating plunge on the stock market.
Mozilo has easily eclipsed Enron’s brass as one of the most-hated executives of all time. He has become the poster child for the fraudulent mortgage-lending practices that torpedoed the U.S. banking system and the entire global economy.
Source
Richard Hagar:
"Imagine that. Bank of America doing mortgage deals that even Mozilo found shocking."
Bank of America Corp.’s story has long been that Countrywide did it. But a lawsuit filed last week by the Federal Housing Finance Agency tells a different tale.
The lawsuit claims that when former Countrywide Financial Corp. CEO Angelo Mozilo marveled at the dizzying recklessness of the mortgage-lending business, he was in fact looking at Charlotte-based Bank of America.
This is perhaps one of the most insulting claims ever leveled in a mortgage-fraud lawsuit. Bank of America would probably feel outraged if it weren’t so overwhelmed with its nauseating plunge on the stock market.
Mozilo has easily eclipsed Enron’s brass as one of the most-hated executives of all time. He has become the poster child for the fraudulent mortgage-lending practices that torpedoed the U.S. banking system and the entire global economy.
Source
Richard Hagar:
"Imagine that. Bank of America doing mortgage deals that even Mozilo found shocking."
Monday, September 5, 2011
US sues 17 banks over MBS sold to Fannie, Freddie
Excerpt:
The FHFA alleges these institutions, their executives and some lead underwriters violated federal securities laws, violated common law, failed to conduct proper due diligence and provided allegedly false information when selling these products.
What the FHFA seeks in recovery will not equal what the GSEs paid for the MBS sold. However, in each suit, the FHFA disclosed how much Fannie and Freddie bought from each particular bank and subsidiary in the case of BofA.
* JPMorgan Chase: $33 billion
* RBS: $30.4 billion
* Countrywide: $26.6 billion
* Merrill Lynch: $24.8 billion
* Deutsche Bank: $14.2 billion
* Credit Suisse: $14.1 billion
* Goldman: $11.1 billion
* Morgan Stanley: $10.5 billion
* HSBC: $6.2 billion
* Bank of America: $6 billion
* BarCap: $4.9 billion
* Citi: $3.5 billion
* Nomura: $2 billion
* Société Générale: $1.3 billion
* First Horizon: $883 million
Source
The FHFA alleges these institutions, their executives and some lead underwriters violated federal securities laws, violated common law, failed to conduct proper due diligence and provided allegedly false information when selling these products.
What the FHFA seeks in recovery will not equal what the GSEs paid for the MBS sold. However, in each suit, the FHFA disclosed how much Fannie and Freddie bought from each particular bank and subsidiary in the case of BofA.
* JPMorgan Chase: $33 billion
* RBS: $30.4 billion
* Countrywide: $26.6 billion
* Merrill Lynch: $24.8 billion
* Deutsche Bank: $14.2 billion
* Credit Suisse: $14.1 billion
* Goldman: $11.1 billion
* Morgan Stanley: $10.5 billion
* HSBC: $6.2 billion
* Bank of America: $6 billion
* BarCap: $4.9 billion
* Citi: $3.5 billion
* Nomura: $2 billion
* Société Générale: $1.3 billion
* First Horizon: $883 million
Source
Thursday, August 25, 2011
Openings on the Real Estate Appraiser Commission
At this time there are two vacancies on the Real Estate Appraiser Commission.
If you are interested in applying for one of these positions please provide a letter of interest that outlines your background and experience in the appraising profession including:
The number of years you have conducted real property appraisals.
The names of any professional organizations to which you belong.
The name and type of any additional professional licenses you currently possess.
A brief description of what you could contribute to the Commission as a member.
Please include a copy of your current resume; mail or email your application documents to:
Ralph C. Birkedahl, Program Manager
Real Estate Appraiser Program
PO Box 9021
Olympia, WA 98507-9021
or
rbirkedahl@dol.wa.gov
If you are interested in applying for one of these positions please provide a letter of interest that outlines your background and experience in the appraising profession including:
The number of years you have conducted real property appraisals.
The names of any professional organizations to which you belong.
The name and type of any additional professional licenses you currently possess.
A brief description of what you could contribute to the Commission as a member.
Please include a copy of your current resume; mail or email your application documents to:
Ralph C. Birkedahl, Program Manager
Real Estate Appraiser Program
PO Box 9021
Olympia, WA 98507-9021
or
rbirkedahl@dol.wa.gov
Wednesday, August 24, 2011
UAD Deadlines
1. September 1, 2011 (appraisal effective date): Appraisals must comply with the UAD data standardization requirements
2. December 1, 2011 (loan application date): Lenders must deliver full UAD-compliant electronic appraisal report data (if appraisal required) and expanded loan delivery data
3. March 19, 2012 (loan delivery date): Lenders must deliver full UAD-compliant electronic appraisal report data (if appraisal required), and loan delivery data must be provided in industry-standard ULDD format (unless manually entered in Loan Delivery)
For more info: https://www.efanniemae.com/sf/lqi/umdp/#backreq
Tuesday, August 23, 2011
UAD Updates
Appendix D (as of Aug. 11): https://www.efanniemae.com/sf/lqi/umdp/pdf/uadreqsforlenders.pdf
FAQ’s (as of June 2011): https://www.efanniemae.com/sf/lqi/umdp/pdf/uadfaqs.pdf
The Appraisal Foundation (TAF) released a free video recently previewing the 2012-13 changes to the Uniform Standards of Professional Appraisal Practice (USPAP). The 23 minute video includes:
- revisions to the definitions of "Client", "Extraordinary Assumptions",Hypothetical Condition", and a new definition of "Exposure Time"
- Creation of a new RECORD KEEPING RULE and related edits to the Conduct Section of the ETHICS RULE
- Revisions to Advisory Opinion 21
- Revisions to STANDARDS 7 & 8
http://www.globalpres.com/mediasite/Viewer/?peid=ae8192ef41804f23a498bf7b30458189
FAQ’s (as of June 2011): https://www.efanniemae.com/sf/lqi/umdp/pdf/uadfaqs.pdf
The Appraisal Foundation (TAF) released a free video recently previewing the 2012-13 changes to the Uniform Standards of Professional Appraisal Practice (USPAP). The 23 minute video includes:
- revisions to the definitions of "Client", "Extraordinary Assumptions",Hypothetical Condition", and a new definition of "Exposure Time"
- Creation of a new RECORD KEEPING RULE and related edits to the Conduct Section of the ETHICS RULE
- Revisions to Advisory Opinion 21
- Revisions to STANDARDS 7 & 8
http://www.globalpres.com/mediasite/Viewer/?peid=ae8192ef41804f23a498bf7b30458189
Tuesday, August 16, 2011
NAR Encourages Bar of AMC Indemnification Clauses
In a letter to the heads of the Department of Housing and Urban Development, Federal Financial Institutions Examination Council, Veteran's Administration and the Federal Housing Finance Agency, NAR President, Ron Phipps, encourages the bar of indemnification clauses used by Appraisal Management Companies (AMCs).
An excerpt:
"Appraisers provide an independent and impartial analysis of the market, and acredible opinion of the value of real property. This analysis is a critical component of the mortgage transaction and, in recent months, has become thesubject of unnecessary pressure. The mounting use of indemnification clauses by AMCs may be interfering with the appraiser’s independence and objectivity. In many cases, appraisers are asked to sign contracts that include language to indemnify and hold harmless the AMC against any suit, threat, or claim on any work product or service provided as part of the contract agreement. In some instances, the appraiser is even required to indemnify the lender and the AMC for amounts equal to their costs in repurchasing a mortgage loan, regardless of any proof of culpability on the part of the appraiser."
Source
An excerpt:
"Appraisers provide an independent and impartial analysis of the market, and acredible opinion of the value of real property. This analysis is a critical component of the mortgage transaction and, in recent months, has become thesubject of unnecessary pressure. The mounting use of indemnification clauses by AMCs may be interfering with the appraiser’s independence and objectivity. In many cases, appraisers are asked to sign contracts that include language to indemnify and hold harmless the AMC against any suit, threat, or claim on any work product or service provided as part of the contract agreement. In some instances, the appraiser is even required to indemnify the lender and the AMC for amounts equal to their costs in repurchasing a mortgage loan, regardless of any proof of culpability on the part of the appraiser."
Source
Monday, August 15, 2011
Appraising in a fallen housing market
Letter to the Editor, Seattle Times, August 10, 2011
Discrepancy in Article
In response to “The age of appraisal aggravation” [Real Estate, July 31], as a professional appraiser, I wanted to point out a discrepancy in the article.
While many of the people interviewed for the article stated that appraisers have been responsible for providing valuations that do not support sale prices, appraisals completed for mortgage transactions are not technically provided to confirm or support a sales price; they are used to assist lenders in making underwriting decisions.
Credible and realistic value opinions help to stabilize real-estate loans and investments, which promotes socially desirable real-estate development. Appraisers are particularly valuable because they are an objective and unbiased source of real-estate information. Unlike some other real-estate professionals, the appraiser performs a professional service for a fee rather than for a commission contingent on the value conclusion, the approval of a loan or the eventual sale of the property.
One buyer interviewed even stated that the appraisal “protected me from buying a home whose price was grossly overvalued.” It was a shame that this quote was the last line of the article, because while the sale didn’t transpire at this price, the lender (and buyer) learned the market value of the property.
— Justin Slack, president, Appraisers’ Coalition of Washington, Seattle
Source
Discrepancy in Article
In response to “The age of appraisal aggravation” [Real Estate, July 31], as a professional appraiser, I wanted to point out a discrepancy in the article.
While many of the people interviewed for the article stated that appraisers have been responsible for providing valuations that do not support sale prices, appraisals completed for mortgage transactions are not technically provided to confirm or support a sales price; they are used to assist lenders in making underwriting decisions.
Credible and realistic value opinions help to stabilize real-estate loans and investments, which promotes socially desirable real-estate development. Appraisers are particularly valuable because they are an objective and unbiased source of real-estate information. Unlike some other real-estate professionals, the appraiser performs a professional service for a fee rather than for a commission contingent on the value conclusion, the approval of a loan or the eventual sale of the property.
One buyer interviewed even stated that the appraisal “protected me from buying a home whose price was grossly overvalued.” It was a shame that this quote was the last line of the article, because while the sale didn’t transpire at this price, the lender (and buyer) learned the market value of the property.
— Justin Slack, president, Appraisers’ Coalition of Washington, Seattle
Source
Sunday, August 7, 2011
America's 10 Sickest Housing Markets
From Wall Street 24/7 Complete article here: SOURCE
These are America's ten sickest housing markets.
1. Tucson, AZ
Homeowner vacancy rates: 6.8% (1st)
Rental vacancy rates: 15.9% (6th)
Total housing units: 440,909
Unemployment: 7.8%
2. Indianapolis, IN
Homeowner vacancy rates: 5.2% (5th)
Rental vacancy rates: 13.5% (10th)
Total housing units: 757,441
Unemployment: 7.8%
3. Memphis, TN
Homeowner vacancy rates: 4% (9th)
Rental vacancy rates: 13.5% (11th)
Total housing units: 550,896
Unemployment: 10.1%
4. Atlanta, GA
Homeowner vacancy rates: 5.4% (4th)
Rental vacancy rates: 11.8% (17th)
Total housing units: 2,165,495
Unemployment: 9.7%
5. Baton Rouge, LA
Homeowner vacancy rates: 3.9% (11th)
Rental vacancy rates: 13% (12th)
Total housing units: 329,729
Unemployment: 8.4%
6. Dayton, OH
Homeowner vacancy rates: 4.7% (7th)
Rental vacancy rates: 10.7% (23rd)
Total housing units: 385,160
Unemployment: 9.3%
7. Detroit, MI (Tied for 8th)
Homeowner vacancy rates: 2.4% (32nd)
Rental vacancy rates: 17.2% (3rd)
Total housing units: 1,886,537
Unemployment: 11.6%
8. Kansas City, MO (Tied for 8th)
Homeowner vacancy rates: 3.7% (13th)
Rental vacancy rates: 11% (22nd)
Total housing units: 883,099
Unemployment: 8.4%
9. St. Louis, MO
Homeowner vacancy rates: 3.3% (19th)
Rental vacancy rates: 11.4% (18th)
Total housing units: 1,236,222
Unemployment: 8.6%
10. Oklahoma City, OK
Homeowner vacancy rates: 5.2% (6th)
Rental vacancy rates: 9.6% (34th)
Total housing units: 539,077
Unemployment: 4.9%
These are America's ten sickest housing markets.
1. Tucson, AZ
Homeowner vacancy rates: 6.8% (1st)
Rental vacancy rates: 15.9% (6th)
Total housing units: 440,909
Unemployment: 7.8%
2. Indianapolis, IN
Homeowner vacancy rates: 5.2% (5th)
Rental vacancy rates: 13.5% (10th)
Total housing units: 757,441
Unemployment: 7.8%
3. Memphis, TN
Homeowner vacancy rates: 4% (9th)
Rental vacancy rates: 13.5% (11th)
Total housing units: 550,896
Unemployment: 10.1%
4. Atlanta, GA
Homeowner vacancy rates: 5.4% (4th)
Rental vacancy rates: 11.8% (17th)
Total housing units: 2,165,495
Unemployment: 9.7%
5. Baton Rouge, LA
Homeowner vacancy rates: 3.9% (11th)
Rental vacancy rates: 13% (12th)
Total housing units: 329,729
Unemployment: 8.4%
6. Dayton, OH
Homeowner vacancy rates: 4.7% (7th)
Rental vacancy rates: 10.7% (23rd)
Total housing units: 385,160
Unemployment: 9.3%
7. Detroit, MI (Tied for 8th)
Homeowner vacancy rates: 2.4% (32nd)
Rental vacancy rates: 17.2% (3rd)
Total housing units: 1,886,537
Unemployment: 11.6%
8. Kansas City, MO (Tied for 8th)
Homeowner vacancy rates: 3.7% (13th)
Rental vacancy rates: 11% (22nd)
Total housing units: 883,099
Unemployment: 8.4%
9. St. Louis, MO
Homeowner vacancy rates: 3.3% (19th)
Rental vacancy rates: 11.4% (18th)
Total housing units: 1,236,222
Unemployment: 8.6%
10. Oklahoma City, OK
Homeowner vacancy rates: 5.2% (6th)
Rental vacancy rates: 9.6% (34th)
Total housing units: 539,077
Unemployment: 4.9%
Monday, August 1, 2011
Consumers and Appraisers – Republicans Filibuster
The senate is in charge and are holding up any nominee to head the Consumer Financial Protection Bureau.
From Mike Konzal:
"...[The three] major strengths [of the the Dodd-Frank Act ] a director, funding and accountability with a focus on consumer protection — are exactly what the Republicans want to dismantle. No doubt they are trying to stall and annoy the implementation of Dodd-Frank and prevent the CFPB from doing all its work — of course they are — but if there were three critical points where they could significantly weaken what the CFPB can do, these would be those three.
They are essentially violating their oath of office by promising to keep anyone from running the agency unless some changes are made."
So what does this mean to appraisers?
Nothing new and nothing being done about the ‘Customary and Reasonable Fee” provision enacted by Dodd-Frank.
As usual we are in another waiting game with our hands tied.
Again, I urge you to get involved. Stay up to date with the news and join your local appraiser coalitions! Contact your state licensing agency, congress and other regulators. Only together can we win this battle against the appraisal management companies that are destroying our industry.
Bryan Knowlton
California Real Estate Appraiser
The entire blog post is here: Source
From Mike Konzal:
"...[The three] major strengths [of the the Dodd-Frank Act ] a director, funding and accountability with a focus on consumer protection — are exactly what the Republicans want to dismantle. No doubt they are trying to stall and annoy the implementation of Dodd-Frank and prevent the CFPB from doing all its work — of course they are — but if there were three critical points where they could significantly weaken what the CFPB can do, these would be those three.
They are essentially violating their oath of office by promising to keep anyone from running the agency unless some changes are made."
So what does this mean to appraisers?
Nothing new and nothing being done about the ‘Customary and Reasonable Fee” provision enacted by Dodd-Frank.
As usual we are in another waiting game with our hands tied.
Again, I urge you to get involved. Stay up to date with the news and join your local appraiser coalitions! Contact your state licensing agency, congress and other regulators. Only together can we win this battle against the appraisal management companies that are destroying our industry.
Bryan Knowlton
California Real Estate Appraiser
The entire blog post is here: Source
Wednesday, July 27, 2011
FDIC sues former IndyMac CEO
by KERRI PANCHUK
Monday, July 11th, 2011, 9:26 am
Excerpt:
The Federal Deposit Insurance Corp. filed a negligence lawsuit against former IndyMac CEO Michael Perry last week, accusing the executive of producing risky home mortgages that eventually soured, causing more than $600 million in losses.
In the complaint, the federal regulator, which took over IndyMac after the bank's failure in 2008, accuses Perry of putting the bank at risk by failing to end the "production of a pool of more than $10 billion in risky, residential loans intended for sale into a secondary market." The FDIC claims Perry knew production of the loans was occurring at a time when the secondary market was becoming unstable and illiquid due to ongoing concerns over credit quality.
The FDIC claims Perry knew his actions were risky, quoting him in the lawsuit saying, "Clearly, our risk offices are not to blame for the situation INIB finds itself in. This time the losses are 1000/0 operating management's fault (from me on down), there is no substitute for experience, good common sense and business judgment."
The suit cites another quote from Perry where he allegedly states, "Look, we've had lousy performance and the buck stops with the CEO … I'm a big believer in being held to account."
Benjamin Razi, one of Perry attorneys wrote in a statement, "the FDIC’s claim is that Mr. Perry should have foreseen the financial crisis — even though nobody else did. Not the FDIC. And not any of the other regulators responsible for supervising IndyMac. Of course, the complaint neglects to mention that the FDIC’s own Chairman, Sheila Bair, acknowledged that 'few saw all the risks' in the conditions leading up to the crisis."
Source
Monday, July 11th, 2011, 9:26 am
Excerpt:
The Federal Deposit Insurance Corp. filed a negligence lawsuit against former IndyMac CEO Michael Perry last week, accusing the executive of producing risky home mortgages that eventually soured, causing more than $600 million in losses.
In the complaint, the federal regulator, which took over IndyMac after the bank's failure in 2008, accuses Perry of putting the bank at risk by failing to end the "production of a pool of more than $10 billion in risky, residential loans intended for sale into a secondary market." The FDIC claims Perry knew production of the loans was occurring at a time when the secondary market was becoming unstable and illiquid due to ongoing concerns over credit quality.
The FDIC claims Perry knew his actions were risky, quoting him in the lawsuit saying, "Clearly, our risk offices are not to blame for the situation INIB finds itself in. This time the losses are 1000/0 operating management's fault (from me on down), there is no substitute for experience, good common sense and business judgment."
The suit cites another quote from Perry where he allegedly states, "Look, we've had lousy performance and the buck stops with the CEO … I'm a big believer in being held to account."
Benjamin Razi, one of Perry attorneys wrote in a statement, "the FDIC’s claim is that Mr. Perry should have foreseen the financial crisis — even though nobody else did. Not the FDIC. And not any of the other regulators responsible for supervising IndyMac. Of course, the complaint neglects to mention that the FDIC’s own Chairman, Sheila Bair, acknowledged that 'few saw all the risks' in the conditions leading up to the crisis."
Source
Sunday, July 17, 2011
FDIC sues former IndyMac CEO
by KERRI PANCHUK
Monday, July 11th, 2011, 9:26 am
The Federal Deposit Insurance Corp. filed a negligence lawsuit against former IndyMac CEO Michael Perry last week, accusing the executive of producing risky home mortgages that eventually soured, causing more than $600 million in losses.
In the complaint, the federal regulator, which took over IndyMac after the bank's failure in 2008, accuses Perry of putting the bank at risk by failing to end the "production of a pool of more than $10 billion in risky, residential loans intended for sale into a secondary market." The FDIC claims Perry knew production of the loans was occurring at a time when the secondary market was becoming unstable and illiquid due to ongoing concerns over credit quality.
The FDIC claims Perry knew his actions were risky, quoting him in the lawsuit saying, "Clearly, our risk offices are not to blame for the situation INIB finds itself in. This time the losses are 1000/0 operating management's fault (from me on down), there is no substitute for experience, good common sense and business judgment."
The suit cites another quote from Perry where he allegedly states, "Look, we've had lousy performance and the buck stops with the CEO … I'm a big believer in being held to account."
Benjamin Razi, one of Perry attorneys wrote in a statement, "the FDIC’s claim is that Mr. Perry should have foreseen the financial crisis — even though nobody else did. Not the FDIC. And not any of the other regulators responsible for supervising IndyMac. Of course, the complaint neglects to mention that the FDIC’s own Chairman, Sheila Bair, acknowledged that 'few saw all the risks' in the conditions leading up to the crisis."
Source
Monday, July 11th, 2011, 9:26 am
The Federal Deposit Insurance Corp. filed a negligence lawsuit against former IndyMac CEO Michael Perry last week, accusing the executive of producing risky home mortgages that eventually soured, causing more than $600 million in losses.
In the complaint, the federal regulator, which took over IndyMac after the bank's failure in 2008, accuses Perry of putting the bank at risk by failing to end the "production of a pool of more than $10 billion in risky, residential loans intended for sale into a secondary market." The FDIC claims Perry knew production of the loans was occurring at a time when the secondary market was becoming unstable and illiquid due to ongoing concerns over credit quality.
The FDIC claims Perry knew his actions were risky, quoting him in the lawsuit saying, "Clearly, our risk offices are not to blame for the situation INIB finds itself in. This time the losses are 1000/0 operating management's fault (from me on down), there is no substitute for experience, good common sense and business judgment."
The suit cites another quote from Perry where he allegedly states, "Look, we've had lousy performance and the buck stops with the CEO … I'm a big believer in being held to account."
Benjamin Razi, one of Perry attorneys wrote in a statement, "the FDIC’s claim is that Mr. Perry should have foreseen the financial crisis — even though nobody else did. Not the FDIC. And not any of the other regulators responsible for supervising IndyMac. Of course, the complaint neglects to mention that the FDIC’s own Chairman, Sheila Bair, acknowledged that 'few saw all the risks' in the conditions leading up to the crisis."
Source
Sunday, July 10, 2011
ACOW Board of Directors Meeting – Preliminary Agenda
NOTICE:
ACOW At the Summit XIII is August 18 & 19.
Registration is now open! For more information go to: http://acow-wa.org/201108_summit.html
Board of Directors Meeting – Preliminary Agenda
Thursday, July 7, 2011, 6:00 p.m. – Please Plan to Begin Promptly
Lamb Hanson Lamb Office – Seattle
4025 Delridge Way SW, Suite 530
Seattle, WA 98106 (206.903.1500)
For the Lamb Hanson Lamb Office, the building elevators close at 5:30pm; for the Lamb Hanson Lamb offices at 5:30pm. If attending and plan to arrive after this time, please call ahead of time to arrange for access. (For directions, go to: http://acow-wa.org/MtgDates.html) To attend the meeting via phone conference: -dial 1.218.339.4300 -when prompted dial access code: 872158#
Call to Order
1. Establish Quorum: Justin Slack, President
2. Approval of Agenda: Justin Slack, President
3. Approval of Prior Meeting Minutes: Justin Slack, President
* March 2011
* June 2011
Officer Reports
1. President’s Report: Justin Slack, President
2. Treasurer’s Report: Joe Creech, Treasurer
a. Monthly and Current YTD Status
Committee Reports
Summit Progress: Dave Towne
Old Business:
1. Legislative/ Regulatory Issues:
a. Trainee Experience Credit
b. License level status (should these be tabled until August Mtg given that
REAC meets in August???)
2. Administrative Topics:
a. Viable funding source for remainder of 2011 & beyond
i. TK’s remaining fee
b. Member organization e-mail lists
c. E-mail/ Contact Management System
New Business:
1. Legislative/ Regulatory Issues:
2. Administrative Topics:
a. ACOW in 2012
i. Brought up by Debra Bogrand, IFA, President of South Puget Sound
Chapter of the IFA
Announcements:
1. Next ACOW Meeting Date: August 4 ???
Adjournment: Justin Slack, President
For more on ACOW, click: www.acow-wa.org
Board of Directors
Justin Slack, President
Mark Noble, Vice President
Joe Creech, Treasurer
Michael Imes, Secretary
Jodi Standaert, Director
Barry Wilson, Director
George Nervik, Director
ACOW Administration
Appraisers Coalition of Washington
6351 Seaview Avenue NW
Seattle, WA 98107-2664
p: 206.622.8425
f: 206.623.4474
info@acow-wa.org
ACOW At the Summit XIII is August 18 & 19.
Registration is now open! For more information go to: http://acow-wa.org/201108_summit.html
Board of Directors Meeting – Preliminary Agenda
Thursday, July 7, 2011, 6:00 p.m. – Please Plan to Begin Promptly
Lamb Hanson Lamb Office – Seattle
4025 Delridge Way SW, Suite 530
Seattle, WA 98106 (206.903.1500)
For the Lamb Hanson Lamb Office, the building elevators close at 5:30pm; for the Lamb Hanson Lamb offices at 5:30pm. If attending and plan to arrive after this time, please call ahead of time to arrange for access. (For directions, go to: http://acow-wa.org/MtgDates.html) To attend the meeting via phone conference: -dial 1.218.339.4300 -when prompted dial access code: 872158#
Call to Order
1. Establish Quorum: Justin Slack, President
2. Approval of Agenda: Justin Slack, President
3. Approval of Prior Meeting Minutes: Justin Slack, President
* March 2011
* June 2011
Officer Reports
1. President’s Report: Justin Slack, President
2. Treasurer’s Report: Joe Creech, Treasurer
a. Monthly and Current YTD Status
Committee Reports
Summit Progress: Dave Towne
Old Business:
1. Legislative/ Regulatory Issues:
a. Trainee Experience Credit
b. License level status (should these be tabled until August Mtg given that
REAC meets in August???)
2. Administrative Topics:
a. Viable funding source for remainder of 2011 & beyond
i. TK’s remaining fee
b. Member organization e-mail lists
c. E-mail/ Contact Management System
New Business:
1. Legislative/ Regulatory Issues:
2. Administrative Topics:
a. ACOW in 2012
i. Brought up by Debra Bogrand, IFA, President of South Puget Sound
Chapter of the IFA
Announcements:
1. Next ACOW Meeting Date: August 4 ???
Adjournment: Justin Slack, President
For more on ACOW, click: www.acow-wa.org
Board of Directors
Justin Slack, President
Mark Noble, Vice President
Joe Creech, Treasurer
Michael Imes, Secretary
Jodi Standaert, Director
Barry Wilson, Director
George Nervik, Director
ACOW Administration
Appraisers Coalition of Washington
6351 Seaview Avenue NW
Seattle, WA 98107-2664
p: 206.622.8425
f: 206.623.4474
info@acow-wa.org
Saturday, July 9, 2011
Your Action Needed - New Loan Disclosure Form
There is a proposed new Good Faith Estimate (GFE) from the new Consumer Finance Protection Bureau (CFPB), which will be given to mortgage loan applicants. A separate HUD-1 form will be used at closing.
This proposed GFE form does not break out the separate ‘appraiser’ and ‘appraisal management’ fees.
In the interest of full disclosure, the different fees should be disclosed to the borrower on this form.
Please take a moment and send a comment to the CFPB and ask that the appraisal fee be noted separately from the appraisal management fee.
Send your comment to: http://www.consumerfinance.gov/contact-us/
For more information: http://www.consumerfinance.gov/knowbeforeyouowe
Thanks for your assistance with this action notice.
Respectfully,
Michael Imes, IFA
This proposed GFE form does not break out the separate ‘appraiser’ and ‘appraisal management’ fees.
In the interest of full disclosure, the different fees should be disclosed to the borrower on this form.
Please take a moment and send a comment to the CFPB and ask that the appraisal fee be noted separately from the appraisal management fee.
Send your comment to: http://www.consumerfinance.gov/contact-us/
For more information: http://www.consumerfinance.gov/knowbeforeyouowe
Thanks for your assistance with this action notice.
Respectfully,
Michael Imes, IFA
Thursday, July 7, 2011
ACOW at the Summit XIII - 11 hours of CE credit
ACOW at the Summit XIII - Earn 11 hours of CE credit.
Thursday & Friday, August 18th & 19th, 2011
Summit Lodge at Snoqualmie Pass - Interstate 90
Phone: 425-434-6300 — Special Room Rates available
Thursday Schedule: [Reg. open at 8am]
8:30 — 11:30a - 3 hr CE
Valuing Corridors
Instructor: Stan Sidor, MAI
Especially for Certified General’s for assignments where determining the value of a corridor is essential
1:00 — 4:00p - 3hr CE
Medley of Appraiser Issues
Panel Presentation with Q&A:
Topics - ACOW’s ‘11 leg. activity, the WA AMC law, Appraiser Qualifications Board info, FRB Final Rules/Interagency Guidelines, and state REAC issues
Friday Schedule: [Reg. open at 8:30am]
9:00 — 12:00n - 3 Hr CE
The Art of Appraisal Adjustments
Instructor: Richard Hagar, SRA
Adjustments are a necessary evil in reports! Learn how to make adjustments based on market data—facts, not opinion!
1:30 — 3:30 - 2 hr CE
USPAP & Fannie/Freddie Forms Compliance Issues & Comment Suggestions
Instructor: Dave Towne, Cert. Res.
Learn how to insure your form reports are in compliance with USPAP. Includes
commentary you can add to your reports.
11 hrs of CE total!
More information:
ACOW
6351 Seaview Ave NW
Seattle, WA 98107
Phone: 206-622-8425
www.acow-wa.org
Thursday & Friday, August 18th & 19th, 2011
Summit Lodge at Snoqualmie Pass - Interstate 90
Phone: 425-434-6300 — Special Room Rates available
Thursday Schedule: [Reg. open at 8am]
8:30 — 11:30a - 3 hr CE
Valuing Corridors
Instructor: Stan Sidor, MAI
Especially for Certified General’s for assignments where determining the value of a corridor is essential
1:00 — 4:00p - 3hr CE
Medley of Appraiser Issues
Panel Presentation with Q&A:
Topics - ACOW’s ‘11 leg. activity, the WA AMC law, Appraiser Qualifications Board info, FRB Final Rules/Interagency Guidelines, and state REAC issues
Friday Schedule: [Reg. open at 8:30am]
9:00 — 12:00n - 3 Hr CE
The Art of Appraisal Adjustments
Instructor: Richard Hagar, SRA
Adjustments are a necessary evil in reports! Learn how to make adjustments based on market data—facts, not opinion!
1:30 — 3:30 - 2 hr CE
USPAP & Fannie/Freddie Forms Compliance Issues & Comment Suggestions
Instructor: Dave Towne, Cert. Res.
Learn how to insure your form reports are in compliance with USPAP. Includes
commentary you can add to your reports.
11 hrs of CE total!
More information:
ACOW
6351 Seaview Ave NW
Seattle, WA 98107
Phone: 206-622-8425
www.acow-wa.org
Tuesday, July 5, 2011
FDIC Settlement Talks With Ex-Washington Mutual Officers Fail
Kerry Killinger, former Chief Operating Officer Stephen Rotella and David Schneider, WaMu’s former home-loans president, asked a judge to dismiss the FDIC’s suit after the negotiations failed, according to Barry Ostrager, a lawyer for Rotella and Schneider.
The FDIC sued the Washington Mutual Inc. officials in March, claiming they took extreme risks with the bank unit’s home-loans portfolio, causing billions of dollars in losses. The FDIC accused the executives of disregarding the bank’s long-term safety and fixating on rewarding themselves. The men received more than $95 million in compensation from January 2005 to September 2008, the FDIC said.
“The FDIC is essentially suing my clients for making business decisions that were fully disclosed, monitored, approved and transparent to the FDIC,” Ostrager said in the e- mail. “There is no legal basis for seeking to retroactively impose financial liability upon bank executives for making business decisions of a type that were common and unobjectionable at the time.”
In its lawsuit, the FDIC “says nothing about the worldwide economic crisis that would have led to the failures of virtually all large banks but for unprecedented government intervention that was not extended to WaMu,” lawyers for Killinger wrote.
David Barr, an FDIC spokesman, said the agency declined to comment.
The case is FDIC v. Killinger, 11-00459, U.S. District Court, Western District of Washington (Seattle). http://www.blogger.com/img/blank.gif
To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
Source
Saturday, June 11, 2011
Former TBW execs get prison time for roles in fraud
Two former senior Taylor, Bean & Whitaker Mortgage Corp executives were sentenced on Friday to several years in prison for their roles in a nearly $3 billion fraud that took down the big lender and a major bank.
The fraud ran more than seven years until August 2009 when TBW collapsed after the the U.S. housing market imploded, taking Colonial BancGroup Inc's (CBCDQ.PK) Colonial Bank with it and putting hundreds of people at the firm out of work.
Company and bank officials were accused of trying to cover up enormous losses by moving money between accounts at Colonial Bank and selling mortgage loans that did not exist, were worthless or already had been sold.
…It is one of the few cases in which prosecutors have been able to penetrate the executive suites of a major firm in the wake of the 2008 global financial crisis. Most prosecutions have involved lower-level employees or much smaller firms.
Desiree Brown, TBW's former treasurer, was sentenced by District Judge Leonie Brinkema to six years in prison after she tearfully acknowledged her wrongdoing. She pleaded to one count of conspiracy to commit bank, wire and securities fraud.
Brinkema also sentenced TBW's former president, Raymond Bowman, to 30 months in prison. He had pleaded guilty to a conspiracy fraud charge as well as for lying to investigators when they raided the mortgage firm two years ago.
[Ed.: Notice - 6 years for one count, 30 months for two counts, inversely proportional to responsibility.]
Brinkema gave lower sentences than sought by prosecutors. One prosecutor, Charles Connolly, urged the stiff penalties be imposed because "there needs to be a message sent to the Street" that the conduct was unacceptable.
The cases are: USA v. Bowman, No. 11-cr-118 and USA v. Brown, No. 11-cr-84 in U.S. District Court for the Eastern District of Virginia.
Author: Jeremy Pelofsky
Source: http://www.reuters.com/article/2011/06/10/mortgage-fraud-idUSN1022679620110610
The fraud ran more than seven years until August 2009 when TBW collapsed after the the U.S. housing market imploded, taking Colonial BancGroup Inc's (CBCDQ.PK) Colonial Bank with it and putting hundreds of people at the firm out of work.
Company and bank officials were accused of trying to cover up enormous losses by moving money between accounts at Colonial Bank and selling mortgage loans that did not exist, were worthless or already had been sold.
…It is one of the few cases in which prosecutors have been able to penetrate the executive suites of a major firm in the wake of the 2008 global financial crisis. Most prosecutions have involved lower-level employees or much smaller firms.
Desiree Brown, TBW's former treasurer, was sentenced by District Judge Leonie Brinkema to six years in prison after she tearfully acknowledged her wrongdoing. She pleaded to one count of conspiracy to commit bank, wire and securities fraud.
Brinkema also sentenced TBW's former president, Raymond Bowman, to 30 months in prison. He had pleaded guilty to a conspiracy fraud charge as well as for lying to investigators when they raided the mortgage firm two years ago.
[Ed.: Notice - 6 years for one count, 30 months for two counts, inversely proportional to responsibility.]
Brinkema gave lower sentences than sought by prosecutors. One prosecutor, Charles Connolly, urged the stiff penalties be imposed because "there needs to be a message sent to the Street" that the conduct was unacceptable.
The cases are: USA v. Bowman, No. 11-cr-118 and USA v. Brown, No. 11-cr-84 in U.S. District Court for the Eastern District of Virginia.
Author: Jeremy Pelofsky
Source: http://www.reuters.com/article/2011/06/10/mortgage-fraud-idUSN1022679620110610
Friday, June 10, 2011
Loss Mitigation Update
There are about 10 seats left. If you haven’t sent in your reg please do so, so we can have your name for your certificates. Names will be sent in later today. If you sign up at the door or send in after today, there will be a delay in your certificate arrival. You can’t beat 4 hours of ed for $20 and the information that will help you stay away from civil action!
Michael Imes
When: Monday, June 13th, 2011 – 08:00 am
Where: Silverdale Beach Hotel 3073 NW Bucklin Hill Rd, Silverdale
Instructor: Peter Christensen
Credit: 4 hours each CE, WA State Appraisers
Class Description: The presenter of the CE seminar is Peter Christensen, LIA’s general counsel and director of LIA’s liability prevention resource READI – readimember.org.
The seminar addresses legal claims and issues affecting residential and commercial real estate appraisers. The information is based on actual claims and lawsuits filed against appraisers, including specific cases in Washington. In addition to the interesting facts involved in many of the cases, the seminar provides specific instruction about how appraisers can minimize their risk of being sued and about how to be prepared for such an event if it occurs.
We will also discuss the spike in FDIC litigation and other current appraiser liability problems.
Thursday, May 19, 2011
The Next Fraud Trend
From the Appraiser Buzz:
Interview with Ann Fulmer, Vice President Business Relations - Interthinx
Excerpted:
FULMER: Fraud schemes are always mutating to take advantage of opportunities presented by the economy and lenders' operational processes. Now that lenders require fully documented applications there’s been a big increase in forged and fabricated documents relating to the borrower’s income and assets. There’s also been an increase in misrepresentations relating to occupancy as investors begin to move back into the market or try to obtain refinancing. The predominant for-profit schemes are default related and center on underwater borrowers and distressed properties. That’s why the biggest pain point for lenders today is short sale "flopping."
Flopping occurs when participants in a short sale withhold material information and/or manipulate the property’s exposure to the market in order to induce the note holder to accept a below-market price. In a for-profit flop, the motive is to increase the profit margin when the property is quickly resold at actual market value with minimal or no improvements. Here’s an example: Let’s say that the amount due on a note is $100,000, that the actual market value of the property is $80,000, and that the note holder is fraudulently induced to believe that the value is only $60,000. If the short sale goes through at the manipulated price, the seller’s deficiency and the holder’s loss are both increased by $20,000. The crook walks away with that amount as his profit.
BUZZ: What is the anatomy of a short sale fraud and what do appraisers need to look for?
FULMER: Flopping occurs in two phases. The first phase (A to B) is the acquisition of the property. Appraisers are not likely to be involved at this point because collateral value is usually established with a broker price opinion. Appraisers get involved at the B to C stage when they're asked to value the property for the end buyer (C). Red flags to look for include:
• Seller is not the owner of record
• Owner of record (distressed borrower) is the seller but he/she is not actively involved with the sale or no longer occupies the property (may indicate an unrecorded sale)
• Previous owner of record (the distressed borrower) remains in the property after the short sale
• Subject transaction is set to close less than 90 days after short sale with no apparent improvements or repairs to justify the higher resale price
• Liens or judgments were filed shortly before or after the short sale but there’s no evidence of repair
• Second mortgage (satisfied during the short sale) was back-dated and filed after notice of default
• Seller is a land trust (especially where transfer into trust occurred shortly before the short sale)
• Seller is an LLC
• The transaction is non-arms length (seller is a corporate entity/LLC owned by the real estate agent or broker or another participant in the transaction; seller and real estate agent or settlement agent have an on-going undisclosed business relationship; end buyer is a friend or relative of the seller, etc.)
• The same real estate and settlement agents are involved in the short and end buyer transactions
• The purchase contract:
- predates the short sale
- shows an excessive real estate commission, or a commission that is based on an amount that is significantly less than the purchase price (may indicate that the real estate agent is uncomfortable with the stated contract price)
- shows substantial fees are to be paid to a “negotiator” or “facilitator,” or for referral or management of the property
• The short sale was never listed in MLS
• The short sale was listed but the history (pre-short sale) shows only token exposure to the market:
- No photo, or only one photo that makes property appear very unattractive
- Minimal property description
- Listing was immediately marked “pending” or “under contract”
- Listing was “office exclusive” (only agents from listing office can bring offers)
- Property was coded for a different (usually inferior) neighborhood
- Property was listed in the wrong city
- List price was significantly lower than sale and list prices for comparable properties
• Comparable sales show signs of flopping/flipping and/or involve the same parties as in the subject transaction.
From http://www.appraisalbuzz.com/ email No direct link available for this content.
Related article in LA Times
Interview with Ann Fulmer, Vice President Business Relations - Interthinx
Excerpted:
FULMER: Fraud schemes are always mutating to take advantage of opportunities presented by the economy and lenders' operational processes. Now that lenders require fully documented applications there’s been a big increase in forged and fabricated documents relating to the borrower’s income and assets. There’s also been an increase in misrepresentations relating to occupancy as investors begin to move back into the market or try to obtain refinancing. The predominant for-profit schemes are default related and center on underwater borrowers and distressed properties. That’s why the biggest pain point for lenders today is short sale "flopping."
Flopping occurs when participants in a short sale withhold material information and/or manipulate the property’s exposure to the market in order to induce the note holder to accept a below-market price. In a for-profit flop, the motive is to increase the profit margin when the property is quickly resold at actual market value with minimal or no improvements. Here’s an example: Let’s say that the amount due on a note is $100,000, that the actual market value of the property is $80,000, and that the note holder is fraudulently induced to believe that the value is only $60,000. If the short sale goes through at the manipulated price, the seller’s deficiency and the holder’s loss are both increased by $20,000. The crook walks away with that amount as his profit.
BUZZ: What is the anatomy of a short sale fraud and what do appraisers need to look for?
FULMER: Flopping occurs in two phases. The first phase (A to B) is the acquisition of the property. Appraisers are not likely to be involved at this point because collateral value is usually established with a broker price opinion. Appraisers get involved at the B to C stage when they're asked to value the property for the end buyer (C). Red flags to look for include:
• Seller is not the owner of record
• Owner of record (distressed borrower) is the seller but he/she is not actively involved with the sale or no longer occupies the property (may indicate an unrecorded sale)
• Previous owner of record (the distressed borrower) remains in the property after the short sale
• Subject transaction is set to close less than 90 days after short sale with no apparent improvements or repairs to justify the higher resale price
• Liens or judgments were filed shortly before or after the short sale but there’s no evidence of repair
• Second mortgage (satisfied during the short sale) was back-dated and filed after notice of default
• Seller is a land trust (especially where transfer into trust occurred shortly before the short sale)
• Seller is an LLC
• The transaction is non-arms length (seller is a corporate entity/LLC owned by the real estate agent or broker or another participant in the transaction; seller and real estate agent or settlement agent have an on-going undisclosed business relationship; end buyer is a friend or relative of the seller, etc.)
• The same real estate and settlement agents are involved in the short and end buyer transactions
• The purchase contract:
- predates the short sale
- shows an excessive real estate commission, or a commission that is based on an amount that is significantly less than the purchase price (may indicate that the real estate agent is uncomfortable with the stated contract price)
- shows substantial fees are to be paid to a “negotiator” or “facilitator,” or for referral or management of the property
• The short sale was never listed in MLS
• The short sale was listed but the history (pre-short sale) shows only token exposure to the market:
- No photo, or only one photo that makes property appear very unattractive
- Minimal property description
- Listing was immediately marked “pending” or “under contract”
- Listing was “office exclusive” (only agents from listing office can bring offers)
- Property was coded for a different (usually inferior) neighborhood
- Property was listed in the wrong city
- List price was significantly lower than sale and list prices for comparable properties
• Comparable sales show signs of flopping/flipping and/or involve the same parties as in the subject transaction.
From http://www.appraisalbuzz.com/ email No direct link available for this content.
Related article in LA Times
Maybe 10 Years of "Tail Insurance" Is A Good Idea
Excerpt from the Appraiser Law Blog:
"How is it that the FDIC can be suing about appraisals delivered 5 or more years ago?
"First, when the FDIC sells off the assets of a failed lender for which it has been appointed receiver, the FDIC typically retains for itself the right to claims against parties like professionals and officers and directors whom it can blame for losses of the failed lender. The standard language included in FDIC asset sale agreements is shown to the right.
"Second, under its interpretation of the Federal Deposit Insurance Act, the FDIC receives an extension of any state statutes of limitations -- an additional three years for tort claims (e.g., negligence) and six years for breach of contract claims, running from the date of the FDIC's appointment as receiver."
The entire article is here. (This excerpt is about halfway down the post.)
While we're on the topic, Peter Christensen has more valuable information:
The FDIC's Use of its Pre-Claim Investigation Powers
"Unlike private lenders or other private parties, even before the FDIC files or threatens a lawsuit, the FDIC has broad investigatory powers that it tries to use in some cases to essentially shake the file cabinets of a professional upside down to find something that may support claims against the professional who worked for or rendered services to one of the 350+ failed lenders that the FDIC has taken over since 2007.
With respect to appraisers specifically, the FDIC has subpoenaed appraisers to produce five or six years worth of appraisal work files for a failed bank -- so that the FDIC can comb through the appraisals and work files for potential claims."
[Ed.: In most other contexts, this would be referred to as a "fishing expedition."]
How to Determine if an Appraiser E&O Policy Excludes FDIC or Other Regulatory Agency Claims
Excerpt:
"The best way is to read the policy including all of its relevant endorsements and, if more clarification is needed, ask the broker offering you that policy. If the appraiser is considering new insurance, it is advisable for the appraiser to ask for a complete copy of the policy and all proposed endorsements before binding coverage. Exclusion of coverage for FDIC claims is just one concern in this current liability environment, but it is a big one for appraisers who performed any appraisals for loans (mainly between 2004-2008) made by or sold to any of the 350+ failed lenders taken over by the FDIC since 2007."
Appraisers: Be Sure Your E&O Covers FDIC Complaints
"In state insurance filings, GenStar has now indicated that future E&O policies effective after 6/1/2011 for appraisers needing insurance for work before August 2008 will contain an exclusion for damages alleged by the FDIC. Most insurers are making this move because of the FDIC's hyper-aggressive litigation tactics against individual appraisers -- insurance premiums that most appraisers can afford are just not enough to cover the FDIC's view that appraisals are a form of mortgage insurance."
Thanks to Peter Christensen from the Appraiser Law Blog.
"How is it that the FDIC can be suing about appraisals delivered 5 or more years ago?
"First, when the FDIC sells off the assets of a failed lender for which it has been appointed receiver, the FDIC typically retains for itself the right to claims against parties like professionals and officers and directors whom it can blame for losses of the failed lender. The standard language included in FDIC asset sale agreements is shown to the right.
"Second, under its interpretation of the Federal Deposit Insurance Act, the FDIC receives an extension of any state statutes of limitations -- an additional three years for tort claims (e.g., negligence) and six years for breach of contract claims, running from the date of the FDIC's appointment as receiver."
The entire article is here. (This excerpt is about halfway down the post.)
While we're on the topic, Peter Christensen has more valuable information:
The FDIC's Use of its Pre-Claim Investigation Powers
"Unlike private lenders or other private parties, even before the FDIC files or threatens a lawsuit, the FDIC has broad investigatory powers that it tries to use in some cases to essentially shake the file cabinets of a professional upside down to find something that may support claims against the professional who worked for or rendered services to one of the 350+ failed lenders that the FDIC has taken over since 2007.
With respect to appraisers specifically, the FDIC has subpoenaed appraisers to produce five or six years worth of appraisal work files for a failed bank -- so that the FDIC can comb through the appraisals and work files for potential claims."
[Ed.: In most other contexts, this would be referred to as a "fishing expedition."]
How to Determine if an Appraiser E&O Policy Excludes FDIC or Other Regulatory Agency Claims
Excerpt:
"The best way is to read the policy including all of its relevant endorsements and, if more clarification is needed, ask the broker offering you that policy. If the appraiser is considering new insurance, it is advisable for the appraiser to ask for a complete copy of the policy and all proposed endorsements before binding coverage. Exclusion of coverage for FDIC claims is just one concern in this current liability environment, but it is a big one for appraisers who performed any appraisals for loans (mainly between 2004-2008) made by or sold to any of the 350+ failed lenders taken over by the FDIC since 2007."
Appraisers: Be Sure Your E&O Covers FDIC Complaints
"In state insurance filings, GenStar has now indicated that future E&O policies effective after 6/1/2011 for appraisers needing insurance for work before August 2008 will contain an exclusion for damages alleged by the FDIC. Most insurers are making this move because of the FDIC's hyper-aggressive litigation tactics against individual appraisers -- insurance premiums that most appraisers can afford are just not enough to cover the FDIC's view that appraisals are a form of mortgage insurance."
Thanks to Peter Christensen from the Appraiser Law Blog.
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