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Comment on Financial Reform Implementation
August 14, 2010
One of the worst aspects of the HVCC was that most lenders and mortgage brokers were not able to order an appraisal directly from independent appraisers. This has decimated the business of most appraisers and brokers and enriched appraiser management companies. This has had the opposite effect of what the HVCC intended. Instead, appraiser management companies, most of which were owned by the big banks, siphoned fees from the independent appraisers, and made them quasi employees. The fees that would have gone to the independent businessman now has gone to the banks, further enriching them and putting them in charge of the appraisal business. The AMC have manipulated these appraisers to produce appraisal reports that are far less independent and accurate than pre-HVCC.
The result has been that experienced, honest, and ethical appraisers went out of business and only inexperienced and unethical appraisers worked for the AMCs. The HVCC has put the fox in charge of the hen house, just as the housing market is trying to recover.
The new regulations must allow the best honest and ethical appraisers to be selected by lenders and brokers without the requirement to go through an AMC. This is the only way that lenders can get unbiased and accurate appraisals. Allow the independent businessman to thrive.
Client ordering of appraisal services is very simple and easy to accomplish while still allowing the appraiser to be independent and produce unbiased and accurate appraisal reports. Underwriters need to be better trained to read appraisals and scan for accuracy. This was the only weak spot in the appraisal review process pre-HVCC. If underwriters are trained in appraisal report reading, then appraisers will be able to produce a better product.
If these things are allowed to happen, the housing crises will be over much sooner than if the elements of the HVCC are continued.
|Last Updated 9/2/2010||FinReformComments@fdic.gov|