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A recent ruling from Fannie Mae and Freddie Mac requiring brokers to order appraisals through third party appraisal management companies (AMCs) has been challenged by legislation that was introduced in Congress last week.
The new legislation would call for an 18-month moratorium on the rule known as the Home Valuation Code of Conduct (HVCC).
The rule came out of an agreement between the New York State Attorney General Andrew Cuomo and the government-sponsored entities of Fannie Mae and Freddie Mac, the largest purchasers of residential mortgages.
But the National Association of Mortgage Bankers estimates the cost of HVCC to homeowners and small business to be a conservative $2.8 billion dollars due to faulty appraisals, loans being unable to close, costs incurred for second or third appraisals and brokers and realtors being unable to conduct normal business.
Marc Savitt, president of the NAMB, in a letter to Salon magazine, wrote: “The New York Attorney General found evidence of fraud between a federally chartered bank and an appraisal management company. Yet the attorney general's solution to the problem of fraud is to allow banks and AMCs to control the process.”
“The attorney general is looking for appraisal independence,” Savitt continued. “Then why does his Home Valuation Code of Conduct allow banks to own up to 20 percent of the AMCs? How do you obtain ‘independence' when they are in a partnership?”
Savitt described Fannie Mae and Freddie Mac as “rolling over” to avoid further investigation and alluded the banking industry was behind the push for HVCC.
“Appraisers have stated for years everyone tries to influence them. Banks, savings and loans, credit unions, lenders, brokers, realtors and the consumer. Why are just brokers barred from participating in the process? Because banks are in control,” Savitt wrote.
The National Association of Home Builders and National Association of Realtors recently joined the fight to reveres this rule.
The National Association of Realtors chief economist Lawrence Yun said a 2.4 percent increase in existing home sales in May “is less than expected because poor appraisals are stalling transactions.” Further, he claimed contracts fall through due to “faulty valuations” that prevent buyers from obtaining the loan.
The new legislation would call for an 18-month moratorium on the rule known as the Home Valuation Code of Conduct (HVCC).
The rule came out of an agreement between the New York State Attorney General Andrew Cuomo and the government-sponsored entities of Fannie Mae and Freddie Mac, the largest purchasers of residential mortgages.
But the National Association of Mortgage Bankers estimates the cost of HVCC to homeowners and small business to be a conservative $2.8 billion dollars due to faulty appraisals, loans being unable to close, costs incurred for second or third appraisals and brokers and realtors being unable to conduct normal business.
Marc Savitt, president of the NAMB, in a letter to Salon magazine, wrote: “The New York Attorney General found evidence of fraud between a federally chartered bank and an appraisal management company. Yet the attorney general's solution to the problem of fraud is to allow banks and AMCs to control the process.”
“The attorney general is looking for appraisal independence,” Savitt continued. “Then why does his Home Valuation Code of Conduct allow banks to own up to 20 percent of the AMCs? How do you obtain ‘independence' when they are in a partnership?”
Savitt described Fannie Mae and Freddie Mac as “rolling over” to avoid further investigation and alluded the banking industry was behind the push for HVCC.
“Appraisers have stated for years everyone tries to influence them. Banks, savings and loans, credit unions, lenders, brokers, realtors and the consumer. Why are just brokers barred from participating in the process? Because banks are in control,” Savitt wrote.
The National Association of Home Builders and National Association of Realtors recently joined the fight to reveres this rule.
The National Association of Realtors chief economist Lawrence Yun said a 2.4 percent increase in existing home sales in May “is less than expected because poor appraisals are stalling transactions.” Further, he claimed contracts fall through due to “faulty valuations” that prevent buyers from obtaining the loan.
Jeff Kuns is the owner of Nevada City lender Mortgage Advisors Group and co-authored “Borrow Smart, Retire Rich.” Contact him at (530) 478-1271 or www.thewealthsteps.com.
