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RANDY P
2826 Posts |
 Posted - 03/07/2008 : 8:19:21 PM
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http://www.freddiemac.com/singlefamily/20080303_advisory.html
Important Information about Home Valuation Code of Conduct
March 3, 2008 Advisory Email Message to Seller/Servicers
On March 3, Freddie Mac announced that we would join with the New York State Attorney General and our regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), to implement the Home Valuation Code of Conduct. We share the New York State Attorney General's goal of enhancing the independence of appraisers to protect the integrity of the appraisal process. To accomplish this on an industry-wide level, with the guidance and at the direction of our regulator, OFHEO, we joined with OFHEO and the New York Attorney General in this agreement to implement and require Freddie Mac Seller/Servicers to adopt the Home Valuation Code of Conduct.
In addition, we will be working with these and other industry participants, including Fannie Mae, to establish and fund the Independent Valuation Protection Institute, an independent entity that will be established to develop, implement, monitor and study the integrity of home valuation processes.
The agreement signed on March 3 includes terms that essentially require, among other things, that the appraisal process be independent from the lender in all respects. As a result:
A lender will no longer be allowed to sell Freddie Mac a loan if the appraisal was done by an in-house appraiser, a subsidiary or affiliate of the lender (except under certain conditions as noted below), ordered by a mortgage broker, or an entity that offers any other services other than appraisals.
Beginning January 1, 2009, Freddie Mac will require that lenders represent and warrant that appraisals prepared in connection with mortgages originated on and after January 1, 2009 conform to the Code, and that the appraisal report was obtained in a manner consistent with the Code.
After January 1, 2009 we will no longer purchase mortgages from originators that do not agree to adopt the Code with respect to loans that are delivered to Freddie Mac.
It is important that you review this document in full, as it includes additional details and responsibilities for lenders, including:
Prohibiting lenders and third parties from influencing the development or result of an appraisal.
Prohibiting the sale of mortgages to Freddie Mac where there is use of appraisal reports in underwriting prepared by the lender, an affiliate of the lender, a parent company or subsidiary company of the lender, an entity that is owned in whole or in part by the lender, a real estate settlement services provider or an entity owned in whole or part by a settlement services provider. Lenders may use in-house staff appraisers to order appraisals, conduct pre- and post-funding appraisal reviews and quality control, develop, deploy or use internal automated valuation models, and prepare appraisals for non-origination transactions, such as loan workouts. Lenders cannot use any appraisal report obtained through their own or affiliated appraisal management company, except where the lender:
Has an ownership interest of 20% or less
Has no involvement in the day-to-day operations of the appraisal management company, and the company operates independently
Has no role in the selection of individual appraisers or panel of appraisers used by the appraisal management company
Requiring lenders to ensure that borrowers are provided a free copy of the appraisal report immediately upon completion, and no less than three days before the borrower's closing. Borrowers may waive this three-day requirement, and lenders may require borrowers to reimburse them for the cost of the appraisal.
Requiring lenders or a third-party specifically authorized by the lender (including appraisal management companies and correspondent lenders) to be responsible for selecting, retaining and providing for payment of all compensation to the appraiser. Lenders will be prohibited from accepting appraisal reports completed by an appraiser selected, retained or compensated by any other third party, including mortgage brokers and real estate agents.
Requiring absolute lines of independence within a lender's organization for the selection and management of appraisers for appraisal assignments and communication with the appraiser and:
Requiring employees of appraisal management companies tasked with selecting appraisers to be appropriately trained and qualified in the area of real estate and appraisals*
Requiring lenders to clearly demonstrate safeguards to isolate collateral evaluation from influencing loan production processes when absolute lines of independence cannot be achieved as a result of the lender's small size or limited staff
Requiring lenders to establish and distribute telephone hotlines and email addresses to receive any complaints from appraisers, individuals or any other entities related to improperly influencing appraisers or the appraisal process, and requiring a follow-up investigation of those hotline calls. This includes requiring lenders to notify borrowers of the telephone and email addresses as part of the cover letter of their appraisal. The hotline and email address shall be attended only by a member of the Office of the General Counsel, Chief Compliance Officer or other independent officer.
Requiring lenders to perform a quality control review of a randomly selected 10 percent (or other statistically significant percentage) of the appraisals, valuations or evaluations that are used by the lender, including the results of automated valuation models, brokers price opinions or "desktop" evaluations. Lenders must report the results of quality control testing to the Independent Valuation Protection Institute.
Requiring lenders to report illegal or unethical conduct by appraisers to the Independent Valuation Institute and state certifying and licensing agency.
Requiring lenders to warrant that the appraisal report was obtained in accordance with the Code of Conduct.
The agreement signed by Freddie Mac allows for the initiation of a comment period during which we will collect and report back to OFHEO information and comments submitted by Freddie Mac Seller/Servicers. We will notify you shortly on the specific details of this comment period, and how and when you should submit information to Freddie Mac.
We recognize that implementing the Home Valuation Code of Conduct will require significant changes in appraisal practices and operational requirements for Freddie Mac Seller/Servicers, and may require a change in some lenders' business models. We have not yet determined the operational, systems and applicable Single-Family Seller/Servicer Guide changes that will be necessary to implement the Code, but will work with you to do so as efficiently and with as little disruption as possible. We will communicate specific changes, and add greater clarity where needed, when available. In the meantime, should you have immediate questions, please contact your Freddie Mac Account Manager or representative.
View the current version of the Home Valuation Code of Conduct agreed to on March 3 [PDF 23K].
*In our March 3 Single-Family Advisory email to customers, we incorrectly stated that employees tasked with selecting appraisers were required to be licensed and certified appraisers.
© 2008 Freddie Mac
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Scrooge McDuck
8733 Posts |
Posted - 03/07/2008 : 9:26:13 PM
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| thank you wamu and eappraisae it... |
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RANDY P
2826 Posts |
Posted - 03/07/2008 : 9:29:17 PM
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no one wants to fess up and admit WAMU isn't as dumb as they claim to be.
With all their crap to check comps, review appraisals, AVM's they still chose to ignore the obvious. No one is bringing attention to that fact in the press.
WAMU deserves to die for this.
rjp |
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rsaunders
324 Posts |
Posted - 03/07/2008 : 10:09:04 PM
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Didn't anyone bother to notice that the trouble for WAMU started AFTER they got rid of their in-house appraisal department? Why did they do that? So they could apply pressure to an outside vendor because they were no longer capturing a large market share because their in-house appraisal staff was reporting the TRUTH?
After having extensive experience as both a staff and fee appraiser, I can honestly say that Fannie/Freddie are barking up the wrong tree.
Staff appraisers are held to much higher standards than any fee shop I've worked in and the pressure for value is non-existent.
IMO the problem is the appraisers who are too stupid to realize that a $300 fee isn't a reason to lie.
Personally, I think it's a cop-out for appraisers to say that "if I wasn't pressured I wouldn'tve misrepresented the property or inflated the value."
The bottom line is that it doesn't matter who is in charge of ordering the appraisal; the value of the property is the same. If all appraisers just F***ing appraised all properties for what they were worth and ignored the interested parties 'peanut gallery' comments - none of this would be happening.
Thanks, spineless appraisers - YOU are the problem.
Boiler-room mortgage brokers I can deal with - the AZDFI loves those tips!  Worthless appraisers turn my stomach!
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racerx
11438 Posts |
Posted - 03/07/2008 : 10:12:22 PM
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quote:
Originally posted by rsaunders
IMO the problem is the appraisers who are too stupid to realize that a $300 fee isn't a reason to lie.
Personally, I think it's a cop-out for appraisers to say that "if I wasn't pressured I wouldn'tve misrepresented the property or inflated the value."
The bottom line is that it doesn't matter who is in charge of ordering the appraisal; the value of the property is the same. If all appraisers just F***ing appraised all properties for what they were worth and ignored the interested parties 'peanut gallery' comments - none of this would be happening.
Thanks, spineless appraisers - YOU are the problem.
Boiler-room mortgage brokers I can deal with - the AZDFI loves those tips! Worthless appraisers turn my stomach!
Wow. I'm impressed. |
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flbrokerman
42 Posts |
Posted - 03/07/2008 : 11:41:07 PM
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The NY AG finds an AMC and a lender in bed together committing fraud. So instead of kicking them out of bed, he has them married to continue what they're already doing.
WTF!?! |
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RANDY P
2826 Posts |
Posted - 03/07/2008 : 11:47:14 PM
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WAMU was thinking they could buy a fall guy in the event something went wrong. Eappraiseit figured if WAMU wanted it, it must be OK...
Now we're all screwed. It's WAMU's fault for being dumb enough to put forth emails requesting this company is good for pushing values. Another thing is, it isn't just WAMU but also LBMC's paper- that lender intentionally allowed pushed values through.
Anyone with any time in the biz knows that pushing a value really is a dead end. You may get your value on paper, but it will be cut to shreds by the lender and their review team. You're wasting your time to beat an appraiser. That is something that only rookies do.
With WAMU / LBMC they knew the values were bad so they just bent the rules to allow them to fit. It's a joke what they let into as established value.
In summary, a pushed value coupled with a policy allowing a large variance against established comps and AVM value determination is a large part of WAMU's problem. Like I said, it's WAMU's fault.
rjp |
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csmgcorp
619 Posts |
Posted - 03/07/2008 : 11:54:44 PM
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quote:
Originally posted by rsaunders
Didn't anyone bother to notice that the trouble for WAMU started AFTER they got rid of their in-house appraisal department? Why did they do that? So they could apply pressure to an outside vendor because they were no longer capturing a large market share because their in-house appraisal staff was reporting the TRUTH?
After having extensive experience as both a staff and fee appraiser, I can honestly say that Fannie/Freddie are barking up the wrong tree.
Staff appraisers are held to much higher standards than any fee shop I've worked in and the pressure for value is non-existent.
IMO the problem is the appraisers who are too stupid to realize that a $300 fee isn't a reason to lie.
Personally, I think it's a cop-out for appraisers to say that "if I wasn't pressured I wouldn'tve misrepresented the property or inflated the value."
The bottom line is that it doesn't matter who is in charge of ordering the appraisal; the value of the property is the same. If all appraisers just F***ing appraised all properties for what they were worth and ignored the interested parties 'peanut gallery' comments - none of this would be happening.
Thanks, spineless appraisers - YOU are the problem.
Boiler-room mortgage brokers I can deal with - the AZDFI loves those tips! Worthless appraisers turn my stomach!
You are my new hero |
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darkstar
18057 Posts |
Posted - 03/08/2008 : 06:53:54 AM
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| BofA is using AVMs that in CA have come in 50-80K higher than appraisal, I lost 2 deals over it that I know of...Both occurred right after payoff request was initiated, clients received unsolicited docs in mail showing value much higher and rate much lower than I could compete with... |
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benjamin
2188 Posts |
Posted - 03/08/2008 : 09:00:52 AM
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One of my concerns about the new appraisal BS is similar to what has happened to you. After ordering the appraisal which is low enough to our kill deal,what prevents lender from turning file over to retail , getting another appraisal or AVM similar to what Darkstar experienced, closing loan?
Will AVM's be outlawed? |
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darkstar
18057 Posts |
Posted - 03/08/2008 : 09:44:53 AM
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| It must be easy when you can basically set the value(reminds me of Ameriquest)... |
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Hopland
2071 Posts |
Posted - 03/08/2008 : 10:00:32 AM
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| The issue with eApeIT (and LSI which is another AMC WaMu was using) is not so much that there was any evidence of value pushing. These AMC's never put estimated values or loan amounts on the order forms they send to appraisers. But they did pressure appraisers for the lowest fees and quickets turn times. This resulted in a large percentage of the appraisers they used being very inexperienced, newly licensed or working on split fees with appraiser mills or sweat shops. Miserable quality reports were delivered to WaMu who wasn't used to seeing miserable reports. How could they really know if the value was genuinely low or if it was just a matter of a poorly trained, incompetent appraiser. They pressured eappraiseit to use thier former staff appraisers instead of eappraiseit selected appraisers. eappraiseit knew that was wrong but did it anyway because they wanted WaMu's business. |
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RANDY P
2826 Posts |
Posted - 03/08/2008 : 10:03:52 AM
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Must've been the 10% over AVM =OK value and endless appraisal exceptions that LBMC was doing for a long, long time.
I don't think it was as much as the appraisers fault. Shoot, give me access to FASTWEB and an appraisal and I'll tell you myself (an uneducated LO out in the field) if the appraisal is pushed.
WAMU chose to ignore the obvious. If I can see a pushed value, anyone can.
rjp |
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flbrokerman
42 Posts |
Posted - 03/08/2008 : 6:58:04 PM
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quote:
Originally posted by Hopland
The issue with eApeIT (and LSI which is another AMC WaMu was using) is not so much that there was any evidence of value pushing. These AMC's never put estimated values or loan amounts on the order forms they send to appraisers. But they did pressure appraisers for the lowest fees and quickets turn times. This resulted in a large percentage of the appraisers they used being very inexperienced, newly licensed or working on split fees with appraiser mills or sweat shops. Miserable quality reports were delivered to WaMu who wasn't used to seeing miserable reports. How could they really know if the value was genuinely low or if it was just a matter of a poorly trained, incompetent appraiser. They pressured eappraiseit to use thier former staff appraisers instead of eappraiseit selected appraisers. eappraiseit knew that was wrong but did it anyway because they wanted WaMu's business.
Exactly, and when the market finally turns around, the AMCs will stop asking for their "additional requirements" because the lenders will relax their requirements. The AMCs will use the appraisers who "seem" to appraise higher than the average appraiser. They will be the AMCs new "go to guy" and we'll be back to being pressured for the higher values since the AMC isn't going to want to lose their client. Business as usual.
After all, everyone knows the real estate market crashing had nothing to do with mortgage fraud and appraisal fraud, it's just a good scapegoat. |
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Chris Clark
5966 Posts |
Posted - 03/08/2008 : 7:04:04 PM
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| no offense, but how many times is this same topic going to be posted here? |
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mikkitf
88 Posts |
Posted - 03/08/2008 : 8:28:20 PM
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| I have not heard FHA opting for this measure. Has anyone heard differently? God, I hope not! |
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oldmlb
138 Posts |
Posted - 03/08/2008 : 9:04:24 PM
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Thank you Comerade Cuomo. Thank you spineless GSE's. Thank you pandering politicians. All these "problem solvers" are doing is walking up and down the halls with their hands in their pockets, "whuddayathink?", "I dunno", they're just kickin the can. Sorry folks, the horse is outta the barn, its a runaway train, may as well just let the toilet get flushed.
Here's something to think about:
Credit comes from the Latin credo—meaning "I believe."
The fact is that “The Press” and Ben Bernanke & His Elfin Band have sucked the "I believe" out of the national psyche.
“The Press”, or as I like to call them, the “If there isn’t a crisis, then we’ll create one crowd”, has beaten the “Real Estate Bubble, the Subprime Meltdown, and now, the “Inflation! Inflation! Drum” for well over five years. After all, “What do we have to talk about after we blew up the Dotcoms?” When in need, they simply whip out their “jawbone of an ass” and get to work (BTW, those of you in the commercial real estate market had better get ready to duck, the jawbone of an ass is headed your way, ditto for the commodities markets). What do you call an institution that measures its’ success by the amount of alarm and misery it creates?
Now, Ben Bernanke & Company are not supposed to be a group of ingénues. They are supposed to be an astute and savvy bunch of people with high horsepower under their domes, chrome or otherwise. Their late realization that the foundation of all this financial chaos is “I believe” does not speak well of this group of supposed MENSA Members. Perhaps ‘deer in the headlights” is a more apt descriptor of their collective wisdom. My Father-in-Law, a grizzled old Cattle Rancher, may he rest in peace, would have called this group “a bunch of educated idiots”.
Say what you like (all you graying long haired financial columnists) about the most recent FED Chairman, Alan Greenspan. Go ahead. Try and blame him for the current situation. Whine about him keeping interest rates at 1% for too long. Go ahead. Accuse him of being asleep at the switch. Sorry, your criticism simply doesn’t wash.
The fact is that he was dealing with “the conundrum”. Let’s not forget that under his direction the FED Funds Rate was increased at 17 consecutive FED meetings. With an eight to twelve month lag time for those increases to actually impact the markets empirically, well, you do the math.
Chairman Greenspan was “boiling the frog”. Gradually and incrementally, he was orchestrating the leveling off of a too-hot (Greenspan called it “frothy”) market. They have not called him “Maestro” for nothing.
Alan Greenspan understands what the FED can and can not accomplish with its somewhat limited bag of tools in a diverse, complex, and interrelated financial landscape. Alan Greenspan understands the numbers and econometrics, and, by the way, loves them. Greenspan understands the world and the increased effect of a globalized economy on what we have to deal with as a cog (albeit a large cog) in that new system. Alan Greenspan understands risk and the financial markets’ search for Alpha (excess yield). Over time, his worst “best guesses” have been profoundly insightful and put to shame most supposed “Experts” commenting from the peanut gallery.
Alan Greenspan has “The Mojo”. He possesses that “secret something”, that “gift of knowledge” that the current crowd just can’t seem to get their heads around.
Perhaps they have taken it out of the curriculum in the Ivory Towers, or perhaps, dropped it from the economic textbooks and the literature available for review. Maybe “It” was just too simple, juvenile, academically unchallenging, or uninteresting a concept to merit any further study.
Somehow, Alan Greenspan was able to capture and put into practical application, both quickly and effectively, the conceptual essence of this mysterious “secret something” and impart it to the world.
Yes, yes, he knows the secret. Are you ready? Lean closer now and he will whisper the “magic secret” in your ear -
“I Believe”.
Thank you Uncle Alan.
MW
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benjamin
2188 Posts |
Posted - 03/10/2008 : 12:08:42 PM
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| Is Coumo part of the Prostitution ring? |
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