VaCAP sent out a “Call to Action” a month ago to comment on the proposed increase in the appraisal threshold to $400,000. As of this writing, only 168 comments have been received.
This is our Future, Please Comment Now!
The OCC, Board, and FDIC (collectively, the agencies) are inviting comment on a proposed rule to amend the agencies’ regulations requiring appraisals for certain real estate-related transactions.
The proposed rule would increase the threshold level at or below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000. Consistent with the requirement for other transactions that fall below applicable thresholds, regulated institutions would be required to obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices. The proposed rule would make conforming changes to add transactions secured by residential property in rural areas that have been exempted from the agencies’ appraisal requirement pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act to the list of exempt transactions. The proposed rule would require evaluations for these exempt transactions. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the proposed rule would amend the agencies’ appraisal regulations to require regulated institutions to subject appraisals for federally related transactions to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice. Read the entire proposal and comment here.
Due to the government shut down, the site may not work on a mobile device. I was able to access and submit a comment from a computer using Google.
Why are we letting the Mortgage Industry trick us into another recession again? We saw the demise of home mortgages with the “liar” loans (No credit-no income verifications) on pumped up collateral values in the 2007. They blamed the appraiser. But I’m pretty sure when I received the appraisal order I did not get the borrower’s credit report on income verifications.
It is the mortgage industry’s business to create new mortgages. New home mortgages applications are down. And the refi market is dead . Anyone capable of (financially) refinancing has done it. So now they want to be able to let greedy, cash strapped homeowners refinance without an appraisal. The home value set by none other than the Lender. How did that work in the past? Not too good you tell you yourself. Most homeowners have enough sense not to bury themselves into becoming house poor. But many will borrow as much as they can get , 110, 120, 125% of value- with the Lender setting values. Isn’t that called the fox in the hen house? That’s what is going to kick us all in the ass when they go bust. And they won’t be able to blame the appraisal.
As far as the higher cost? My fees have been at the same level for the last 10 years. Any fee increase is caused by the Lender’s AMC (Lender’s ownership interest in the AMC). Virginia requires the appraiser to state their fee in the report when an AMC is involved. So when the borrower paid $600 and I was paid less- where did the extra money go? If the Lender needs a change in the report they must contact the AMC who then contacts the appraiser. The correction is made and the procedure reversed. So what in the past would take a five minute phone call or email from a processor can now take 2 days or more!!!! I guarantee you AMC’s were not my idea.
Only loan to value ratios should ever determine appraisal waivers or the type of appraisal completed. Setting a dollar amount on whether an appraisal is required is a blanket mentality Just doesn’t make sense. Every communities mid range home values should be researched to determine at what percentage of home loans would qualify for a waiver or modified reporting process. The example is similar to appraisers qualifications. Capping licensed appraisers to a $1,000,000 cap may identify that complex appraisals are typically over $1,000,000 may be true for one neighborhood, city or state but not others. My guess is The average home sale nationwide is well below $400,000 which would make a $400,000 cap absurd.
Well, there must be a lot of money out there to cavalierly risk loans of $400,000 and less! Seems this opens the door to re-hab fraud…all because it appears the appraisal is detailed and takes time to review, and of course, the expense of the appraisal, of which the lender passes on to the consumer after adding their handling fee and/or the management company fee. LOL, somehow I keep thinking of how happy Tony Soprano would be, if you can recall the episodes of the mob guys and the appraiser (who got beat with his wheel) scamming real estate! Seems the appraiser’s time and fee’s continually lack understanding of context regarding the appraisal cost in time and money, relative to (1) the total cost of settlement (2) suitable development of collateral valuation and protection of loss. Just some quick thoughts, don’t mean to ramble…
Pat (John Patrick Parsons)
[email protected]
District/Metro Appraisals
Virginia License #; 4001012089
Also Licensed in Maryland and Washington, DC
This is and will promote fraudulent transactions within the industry. The appraisal was set up to avoid fraud and have an independent voice to the arms length transaction of the sale. Many real estate representatives and banks will make lots of money and many homeowners with go into default and become homeless if this passes as a new regulation.
This is high risk Profiteering with no concern for consumers, community and our economy. Given the past and even current behavior of #toobigtofail financial institutions this is just opening up the flood gates to remove complete oversight and allow lenders to lie and prey upon consumers. Does no one care that this ultimately hurts families and children. Shame on those that care about little else than the bottom line.
The very people who need protection and sound advice, first time homebuyers (in my market)! Who are the regulators protecting?