My New Blog

Kenneth Harney’s column in Saturday’s Washington Post caught my attention, “Fighting Back Against Corrupt Appraisals”. I expected another simplistic blaming tirade against the appraiser’s role in the current housing downturn. I was pleasantly surprised that he presented a fairly balanced report on the illegal influence that some loan officers had put on appraisers to “hit the number”.

The bulk of the article was about the new proposed guidelines from Fannie and Freddie for appraisals. Harney notes five keys components of the guidelines:

• Lenders must guarantee that the property valuations they use are free from influence or pressure and conform to a new national code of ethics.

• Appraisers and consumers will have a complaint hotline to report any impropriety by loan officers, real estate agents or others.

• Lenders that have in-house appraisal staffs or financial interest in appraisal management firms won’t be allowed to use valuations generated by these companies.

• Mortgage brokers will be cut out of the appraiser selection process altogether.

• A new “Independent Protection Institute” will be developed the oversee appraisers and monitor the accuracy of home appraisals and automated valuations. They will also mediate complaints.

These guidelines are supposed to go into effect January 1, 2009, pending comment from the public and the Mortgage Industry.

Cary Barker, Assistant Editor, Working RE, www.workingre.com, reports in his article “Turning Tide, Appraiser Independence” that “Nine states have also passed legislation that will protect appraisers from being influenced by brokers and lenders. Many other House bills and state bills are pending.”

So what does this mean to you and me? Is it the end to the personal relationship and service that independent appraisers like me provide to loan officers all over the area? Will everyone in the housing industry now be under ‘Big Brothers’ increased scrutiny and control? Who will be in control of the “Independent Protection Institute”, appraisers, lenders, government bureaucrats?

Before we all panic, let’s take a breath and pause. The tough market that we have been dealing with for the past 2 years has made all of us a ‘little’ stressed. We all know many people that were in the industry 2 years ago that have moved onto other careers. All of our jobs have become more difficult. How many of these proposals become actual practice and what modifications are added after all the review and political maneuvering we will have to wait and see.

Here’s what we do know. People want to buy and re-finance houses. Banks need to lend money to make money. Someone needs to facilitate the loan and valuation process. Our jobs may be changing, but if we remain flexible and alert we can adapt to the new world of real estate and be successful.

What can we do? Contact our national and local professional organizations to lobby for our positions and for input into the final decision making process. We must speak out and add our ‘common sense’ experience to the bureaucratic thinking.

The next year will be really interesting!

To read the whole article by Harney here’s the link: http://www.washingtonpost.com/wp-dyn/content/article/2008/03/14/AR2008031402007.html