Sitting On The front Porch

by 10 May 2010
Brokers, Realtors, Appraisal Management Companies (AMCs), Banking/Lending Institutions, Fannie Mae, Freddie Mac, title/insurance companies, underwriters, Wall Street, Economists, the Government, FDIC, Real Estate Appraisers, media and who knows who else economically participated in the financial crisis. There have been those on top and there have been those at the bottom ? that is capitalism. However, some of the above did display an act of ?showing off,? showcasing an ability to take the ?unattainable? at moments, which is referred to as greed! Even-so, we still have to make an effort to make beneficial choices! The mortgage industry, proposed by many, claim to have been attacked! This is not true; in my opinion. The mortgage industry is not under attack. The mortgage industry is simply being re-organized; so undue influence of any type will not hinder and/or adversely affect property value and the interests. The Home Valuation Code of Conduct (HVCC) addresses this issue by legally ?parting? commissioned professionals from the Real Estate Appraiser during the loan process (select and retain) The changes that pertain are well deserved: Estimate shopping, inefficient rules, comparable checking, horrific underwriting, reluctance to pay for services rendered, and blacklisting Independent Real Estate Appraisers are several spotlights mirroring a lack of economic proficiency, and professionalism. Many worked hard eliminating ?incentive? commissioned professionals from selecting and influencing the Real Estate Appraiser. The confrontation will continue toward an Independent Real Estate Appraisal Process -- sincere Independent Real Estate Market -- for capitalism to breathe accordingly. I am pro HVCC and I am anti AMC/AVM; - and; - completely against Mortgage Brokers and Realtors selecting and influencing the Real Estate Appraiser. I don't doubt there are good professionals out there, but when enough is enough by God -enough IS enough! Pity partying over selecting the real estate appraiser, ?for pennies on the dollar,? is simply old and lacks a strong showing for market Independence. That goes for AMCs, too! Appraisal Management Companies (AMCs) are no better than Brokers - selecting and retaining. Real Estate Appraisers are not made to be a herd of cats - they are - by nature, Independent Professionals who provides an economic study which holds property economic principles and/or guidance to an answer. It is not a service, the human capital to perform as a competent appraiser goes beyond a service. And, the data and information contained in confidence is not economically built for a monopoly ? it is what it is! There is NO enforcement (laughing ? as if that is all I can do?) Value Shopping and the NAR are still going strong - government programs. This reminds me of the illegal immigrant problem in the United States. Who exactly is the valuation expert? AMCs assist Automatic Valuation Models (AVMs) with data, whether it is from an Appraisal, BPO, CMA, or another form ?not yet invented.? Automatic Valuations (AVMs) are becoming liquid, as well as. AVMs? are financial drugs that look to be abused. On the funny, but serious side side: there appears to be illegal immigrants that can be found in the real estate appraisal process/course of business. There should be no doubt - Independent Real Estate Appraisers are the appropriate professional for all property evaluations! At all times! They are defined, they have a purpose, and they have use. To all homeowners: retain your own Independent Real Estate Appraiser after you have found a good venue for financing ? financing is important. You will be able to be the client and receive full Appraisal privileges, become a knowledgeable buyer and seller. There are pro-general public Appraisers in the market, and they do, care! (The general public must be responsible) Larry Benjamin "Benji" Brossette Louisiana Licensed Real Estate Appraiser Trainee (#1925)


  • by Brian | 5/11/2010 10:06:00 AM

    I have no doubt your intentions are good but you really should discover all the facts in order to understand the big picture, then determine if a specific 'fix' is appropriate, or even necessary. Obviously, being a trainee you weren't in the industry to witness the events that led us here so here are the facts you should know;
    In my capacity getting an appraisal out the door is not the end, but only one step in a complicated, many step process. Therefore I see first hand all the negative ways the current appraisal process is affecting consumers and the industry through the financing process. It creates inefficiencies, needless expense, and drains the resources of other areas of our industry. No doubt you are aware that roughly 40% of all mortgage applications are being denied. Not all of them for appraisal issues but a too conservative appraisal is just as bad as an inflated appraisal. This creates needless expense and stress for consumers (time, appraisals, inspections), real estate agents, mortgage originators, attorneys,
    and title companies. These increased costs are eventually paid by the consumer. All these areas of the industry are affected except the appraisal company which always get their fee ? and is collected for them by the mortgage originator.
    The big problem is making the case that unscrupulous appraisers throughout the nation either colluded, or all became
    unethical at the same time as to cause a national housing bubble and bust on a national scale. If you have any proof
    or link proving this I would be very interested in seeing it. I do not believe any evidence exists to support this premise. Therefore, an attempt to ?fix? this will do little to prevent a housing bubble and bust from happening again.
    The only possible cause, affecting every nook and cranny of every housing market in the United States was exceedingly low rates for an extended period of time. This caused the rush to housing, the bubble, and triggered the chain of events
    that came after it. As rate rose throughout 2005 the appreciated values corresponding to low interest rates could not be sustained as affordability is a function of sales price and rate, and the median buyer was no longer able to afford housing, hence the bust. Low rates also masked fundamental weakness in the economy that compounded the problem as rates rose, exacerbating the bust. Without that extended period of exceedingly low rates the housing bubble never would have happened. It wasn?t a few bad appraisers, mortgage originators, or real estate agents, (which of course there are always a few), no, it was something that had impact on a much broader scale, that could penetrate every market in the US, mortgage rates.
    Even the Dallas FED Chief admitted rates were at least .5% lower than they should have been in that time frame. Look up the definition of the FED and you will see it is nothing more than a cartel of banks. Here?s a brief definition from the web;

    S: (n) Federal Reserve System, Federal Reserve, Fed, FRS (the central bank of the United States; incorporates 12 Federal Reserve branch banks and all national banks and state-chartered commercial banks and some trust companies) "the Fed seeks to control the United States economy by raising and lowering short-term interest rates and the money supply"
    You see it?s right there in the definition ?control the economy?. There is no other force that has the power to affect the entire economy to such an extent. This is where focus to prevent another bubble should be put. Anything else is just window dressing. Unfortunately big banks have an incredibly strong lobbying presence in Washington. And through the many mergers as of late, they have become even bigger, more consolidated, and stronger than ever, so changing this will take a Herculean effort from our legislators which I do not see happening. Therefore focus will be put on appraisers, originators, real estate agents and ?financial reform? (which may help), so legislators can say they fixed the problem.
    In 2004 Greenspan was asked if he was concerned with the housing bubble and he said ?No, the Fed is only concerned about inflation, which is in check at this time?.
    There was no secret about what was happening and even though the word housing bubble was a household word as early as 2002, it was business as usual for everyone that could have effected a change.
    This is the undeniable reason for the bubble and bust. A few bad appraisers did not have the power to affect the National Housing Market on such a scale, to claim so is ludicrous. The process in place to addresses this as a ?cause? is only hurting the industry and consumers.
    The current appraisal process:
    Costs the consumer too much.
    Discourages consumers from seeking financing.
    Limits consumer flexibility in seeking financing.
    Increases complexity and time frames for the completion of financing to the detriment of the consumer.
    Reduces careers of licensed, highly trained, skilled professionals to that of order takers.
    Eliminates the ability of appraisers to compete on price or service.
    Hurts the consumer by not allowing appraisers to compete for business.
    Lowers quality of appraisals.
    Lowers service levels.
    For these reasons and others the current process should be reversed. I believe overall that appraisers have the backbone to be ethical.
    If they don?t they are simply in the wrong business.
    In addition, the best and only way to identify poor appraisals is through better underwriting. Without better underwriting to identify bad appraisals bad mortgage decisions will still be made based on them, but this will take a commitment from the banks.
    These are my beliefs with supporting information which I hope you can adopt as your own.

  • by BenjiBrossette | 5/11/2010 12:37:13 PM

    Hi Brian, you're post is noted. I think we can both agree there appears to be centralized behavior. Interest rates play a supporting role in my opinion.

    Yes; I am a Trainee. It does not bother me - I handle it <em>as it goes</em>...(maybe I should write a lengthy bio)

    Brian, if I may ask, are you a Real Estate Appraiser?


  • by Cory | 5/13/2010 8:16:38 AM

    I'd say by the looks of it, he's a mortgage officer.

    Brian hit it right on the head. I apologize Benji, but I'm am going to go out on a limb and say you haven't seen the full spectrum. I'm sure all you've heard is how mortgage officers put pressure on appraiser's. Sure, they are some out there.What about the people that spent years building referral relationships and could portray to each other about their concerns about a property before spending a customer's money?

    I am sure to you, HVCC makes sense. You are probably gaining from getting trained by an AMC. Unfortunatley, AMC's hire the inexperienced appraisers in many cases because they will work cheap and want to bang out as many reports as possible. Unfortunatley that leaves the consumer with inferior work. I'm not trying to imply that you aren't any good, I have never seen your work. I also am not from Louisianna and I wouldn't have enough experience in lending there, just like you wouldn't know how to accuratley depict value in Wisconsin. There are differences in regions that require different approaches.

    In the end, you get paid anyway. I might add that your are getting much less than your AMC's are charging to "manage" you.

    If you saw the other side and positioned yourself with the right lenders I am sure you'd feel otherwise. You'd also see more business, but you have to have the experience to earn it. Not because it was handed to you. I understand the illusion of fairness is ideal, but that doesn't motivate anyone to go above and beyond and provide something that the others won't.


Should CFPB have more supervision over credit agencies?