Las Vegas real estate, mortgage, appraisal blog

In a letter dated April 30, 2008 eight major mortgage lenders sent a letter expressing their concerns over the inconsistencies and at times confusing issues that the HVCC has laid out as their plan to combat fraud. These lenders are now claiming that the plan is violating the Administrative Procedure Act as well as affect many more provisions and standards already in place.

The Agreement would deprive the most dynamic sector of the appraisal services market of a vital source of capital. Investments by lenders and by diversified service providers have facilitated the development of new valuation products and technology that allows real estate to be valued more accurately and efficiently. They also allow appraisal service companies to guarantee – with real capital – the integrity of the appraisal, which is not feasible for an individual appraiser. Thus, prohibiting such investments does not advance OFHEO’s goal of enhancing the safety and soundness of the GSEs.

Forcing the dismissal of thousands of highly-skilled appraisal professionals because they are employed by lenders or appraisal management companies would be irresponsible at a time when there is a critical need for their services. These and other provisions of the Code would impose a structural solution when there is little or no evidence of a structural problem, while failing to address real problems in the industry such as the lack of effective state regulation of appraisals in loans that are not purchased by the GSEs and are not subject to the FIRREA provisions on federally related transactions.

The letter finishes with the following statement after discussing all of the reasons the HVCC is not only a poor choice but will not solve the problems it purports to but will instead only cause more:

Because the adoption of the Agreement has grave procedural defects, is inconsistent with the interests of the housing market and other aspects of sound public policy, we urge OFHEO to withdraw its assent to the Agreement, to not permit the GSEs to implement the Agreement, and take steps to assure that this type of rulemaking by settlement does not occur in the future.