Appraisers have been the target for blame for everything gone wrong in the mortgage lending world. We were blamed for the Savings and Loan collapse, the financial crisis of 2008, and appraisal bias and racial discrimination. Appraisers have even been the target on loans gone bad after several years on payments. Yep, we have been the target and have remained the target. So, when is it enough?
Fannie Mae has recently announced that appraisals are no longer the default option for mortgages. Now every appraiser understands why this is a very poor move in protecting the consumer, but Fannie Mae does not care about the consumer. They only care about risk; their risk.
Appraiser licensing was put into place to protect the public trust. This was a good thing and still is a good thing. Oversight of bad actors was and is needed. The current system has its flaws and even has a few bad actors in it, but overall, the system has worked well. Is there a better way? Or maybe some tweaking of the current system is needed? That is a discussion for another day.
Responding to the 2008 Financial Crisis, Appraisal Management Companies were put in place to protect the consumer. This system clearly has not worked as most appraisal management companies are bad actors, but the intent was to further protect the consumer.
Over the years public trust has eroded, not because of bad actor in the appraisal profession, but because of greed by Fannie, Freddie and the lenders. Mortgage loans are underwritten to investor guidelines. Fannie, Freddie, FHA, VA, and USDA are all investors backed by the American Taxpayer. Right or wrong their guidelines are the norm in today’s mortgage world. The lender and investor have very little risk when loans are sold and off their books. This is even more true when the investors like Fannie and Freddie give the lender a guarantee pass on a loan buy back when loans meet certain criteria. After all, if the loan goes bad, regardless of the reason, appraisers are the targets.
Now Fannie and Freddie, with the green light from FHFA have completely ignored the consumer in what is the largest financial purchase of someone’s lifetime by bypassing the independent appraiser. The appraiser is the only participant in a mortgage transaction that is not compensated based on the loan closing. Even home inspectors know if they find too many issues with a property, they loose referrals from the sales agents.
VaCAP and other appraiser organizations throughout the country have sat down with Fannie, Freddie, FHA, VA and USDA, even the FHFA and discussed our concerns. We have lobbied on the State and Federal levels to protect the consumer. Consumer groups, both private and government agencies are now paying attention to what the GSEs are now doing. They are meeting with appraisers and some representatives are also now listening in disbelief of how far off-track Fannie and Freddie have gone. Common sense and sound judgement are not being utilized by Fannie and Freddie, again with the green light from the FHFA.
When is it enough? The time for every appraiser and consumer to step up is now. This country was founded on the principle of “We the people” The United States is a democracy and lead by the people, not the government agencies. Watch this short video from a previous era as a reminder of how far “We the people” have gone.
VaCAP supports consumer protection and the appraisal profession. Enough is enough and we the people need to redirect the mortgage lending direction. A Change.org petition was started by Hamp Thomas. VaCAP encourages each of you not only to sign the petition, but to share it everywhere.
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ecause every word is true. I should know, after 43 yrs. in the appraisal business, appraising in Washington, DC and surrounding areas of VA and MD, both residential and commercial, I have seen the destruction and suffered for being an “honest” appraiser. AMC’s were a bad idea, raising fees for themselves, banks charging consumers more and all the while, putting their hands into the appraisers pockets resulting in less money for the appraisal community and therefore, eliminating any desire for new people wanting to enter the appraisal profession. Valuation Assurance (VA) gives all the lenders, investors and gov’ts a way to make faster loans and thus more loans which means more profits. Talking to appraisers from around the country, there was not really a shortage of appraisers, just a shortage of appraisers who would accept “lower fees” especially the older and more experienced appraisers, like myself, who gladly give our time and knowledge out to the general public, free of charge when asked to do so. Now, we have to take Bias training because we are now being told we have “inherit bias” and our thinking on comparable sales selection must now change on a number of different levels as well as our vocabulary (good is not “good” anymore) and we “sugar-coat” instead of reporting the truth, whether it be the physical condition of a house and/or building, a building lot or neighborhood description or purposeful information pertaining to a sales contract or other information pertaining to a house sale. “AI” has now taken the place for “appraisal verification” and thus, I find myself, seeing the same mistakes used and printed over and over again, diluting the pool of “good and factual” based information as well as appraisers are no longer having discussions with real estate agents who are a wealth of information “boots on the ground” because the appraisal report has a T-A-T time of two (2) days for completion. Its a race to the bottom in which, our sole position as “Gate keepers” (was also one of “high moral standards”) where telling the truth got you a “gold star” but even today, with all the new rules and regs put in place over the past 43 yrs., lenders, underwriters and amc’s alike, still find a way to eliminate appraisers who are troublesome (values below contract $) and take too long in the eyes of the amc’s (most likely because they are trying to “verify” data) and/or the amc took a few days extra themselves in putting the assignment out to bid in order to find the lowest fee quote in order to fit their profit spread.
Damn right!’