Petition to Restore Credibility and Sensibility to America’s Residential Valuation System
THANK YOU FOR YOUR SUPPORT.
The deadline to sign this petition has passed. Stay tuned to the NAIHP web site for details.
Purpose: To restore credibility and sensibility to the home valuation system in America.
Background: On May 1, 2009, the Federal Housing Finance Agency (FHFA), along with the GSE’s, adopted the Home Valuation Code of Conduct (HVCC), in an agreement with the NY Attorney General. HVCC has crippled the residential valuation system, created massive business failures and unemployment, and caused consumer costs to increase by over 2.8 billion dollars. HVCC was implemented to reduce conflicts of interests and the potential for fraud. However, numerous reports from widely respected organizations have all shown, since the implementation of HVCC, valuation fraud has increased substantially, while appraisal quality has decreased.
In late 2009, the House of Representatives passed HR 4173, which contained an amendment to correct the problems created by HVCC. One of the most important provisions called for the restoration of loan originators to the appraisal ordering process. Unfortunately, that provision was stripped out by the Senate during the Financial Reform Bill’s conference committee. Passage of that provision, would have restored long term, established business relationships between originators and "local" appraisers, thus preventing further employment erosion within the housing industry and reducing consumer costs to affordable levels.
Despite rumors that HVCC would have sunset automatically in November 2010 and/or HR 4173 creates its sunset within 90 days of enactment, HVCC will continue, only by another name.
The final version of HR 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act (passed by both the House and Senate), calls for "Portability" of appraisals, along with "Reasonable and Customary" fees for appraisers. The housing industry understands, like HVCC, these objectives will fail. The only way to restore portability and re-create reasonable and customary fees for appraisers is to allow originators back in to the appraisal ordering process.
Petition
The undersigned consumers and housing industry professionals hereby request the Federal Reserve Board (FRB), who will be writing the interim appraiser independence rules; adopt the following, or similar language in said interim rules:
- Restore and expand language contained in HR 4173, specifically section 4312, which reads in part: (1) shall not prohibit lenders, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Veterans Administration, HUD or the USDA from accepting any appraisal report completed by an appraiser selected, retained, or compensated in any manner by a NMLS licensed mortgage loan originator.
- Prohibit any entity, (including their subsidiaries), engaged in the origination of residential mortgage loans, from ownership in Appraisal Management Companies (AMC’s), regardless of percentage of ownership.
The New York Attorney General recognized this conflict of interest in his 2007 investigation of appraisal fraud and sought to eliminate it. In fact, the first draft of HVCC restricted this practice.
Taken from the Attorney General’s official website: "In 2007, Cuomo also announced an investigation into widespread appraisal fraud within the mortgage industry, examining practices used by some of the country's largest banks of pressuring appraisers to artificially inflate the value of homes. As a result of these investigations, Fannie Mae and Freddie Mac, the largest purchasers of home loans, agreed to abide by new appraisal guidelines defined by the Attorney General and to fund an Independent Valuation Protection Institute to implement and monitor those guidelines."
Sign Here: (Individual Housing Professionals, Trade Associations and Consumers)