FTC Attorneys Response to AGA
Is the FTC asserting that FNMA is exempt from antitrust laws?
I don’t think of myself as being obtuse, nor do I think those that know me well would consider me to be particularly slow of wit or comprehension.
Despite this, I’m truly confused by the Federal Trade Commission (FTC) attorneys response to the American Guild of Appraiser (AGA) email letter we sent them.
The first sentence states
“The federal antitrust laws prohibit anticompetitive mergers and business practices that seek to prevent hard-driving competition, such as monopolistic conduct, attempts to monopolize, and conspiracies and combinations that harm competition and consumers.”
Well, as far as I know there is no great push for appraiser mergers now in America EXCEPT those being driven or directed by Appraisal Management Companies (AMC) seeking to suppress individual fee appraisers abilities to compete in the market place at all.
Certainly most states as well as the federal government have recognized that these NON APPRAISER players comprised of some of Americas largest financial institutions and insurance companies have inserted themselves into the appraisal ordering process even though they have ZERO expertise in the field of real estate appraisal. Some of these seem to be stereotype models of monopolies (First American family of companies & CoreLogic).
Similarly, they have not caused consumers to benefit from REDUCED cost fees. In fact it is the opposite. Consumers that used to pay $450± for a non-complex, conforming Fannie Mae (FNMA) guideline appraisal now typically pay $600 to $650 for that appraisal, and have no say in the selection of which professional represents them.
Certainly the national banking industry, FNMA, our federal ‘regulators’ and these non-appraiser parasitic firms have conspired to deprive appraisers of the ability to earn a living beyond that of economic serfdom by selective legislative carve outs, turning a blind eye to monopolistic trends (First American / ACI / CoreLogic), and failing to enforce provisions of Dodd Frank that REQUIRE reasonable fee payments in order to preserve the integrity and trust in appraisals in America today.
WorkingRE (OREP) published an informative article on what may have lead the FTC to believe they should be involved in the Louisiana Real Estate Appraisers Board (LREAB) case, but they missed the most salient point. Real Estate Appraisers engaged in federally regulated transactions are not governed only by the actions of state boards. Above and beyond that we are required and obligated under federal law (FIRREA 1989, as well as Dodd Frank) to be licensed or certified in accordance with specific minimum federal standards of education, specific testing and federal registration. The states are no more than stewards appointed by the feds to assure the requirements of FIRREA are being carried out, IF they wish to be able to benefit from federally regulated lending operations in their states. Operations for which the American Taxpayers remain liable to guarantee solvency for.
With all respect to Isaac Peck (WorkingRE/OREP), there is a huge difference between the encroachment of teeth whitening services into areas traditionally performed by dentists, but not already obligated under law to be done by them and the circumstances affecting appraisers. Appraisers did not have FIRREA passed to limit competition. The United States Congress passed FIRREA to protect the American Consumers and taxpayers from erratic and unscrupulous appraisals and unscrupulous lending.
As for having Boards comprised of members of the regulated (licensed) class this simply makes good sense. A Board that knows nothing of the profession is hardly capable of regulating it. About half the states allow licensed appraisers to sit on boards and still practice. The other half don’t allow them to practice due to the potential for unfair influence against perceived competitors. There are strong arguments for both approaches. An unlicensed Board member makes no sense at all. They would lack fundamental competency. A state Board comprised of licensed but non practicing appraisers similarly lacks current market competency (such as California’s Bureau where senior investigators have not performed an appraisal in nearly two decades). Uniform Standards of Professional Appraisal Practice (USPAP) requires PEER review to assure compliance – not purely regulatory review by non-appraisers. The metrics are different.
On the opposite side of the coin, there IS the issue of conflict of interest. Such conflicts have been alleged in Georgia and Texas, and in years past in Arizona. While there may be no perfect solution, to argue that a system is unfair because it excludes NON PROFESSIONALS from Board service, is simply disingenuous.
What has happened is that powerful financial interests with NO APPRAISAL EXPERIENCE originally set up management services at the instigation of Andrew Cuomo and regulators that ‘wanted to be seen as doing something’ (anything!) during and immediately after the Great Recession and Real Estate Collapse of 2008-2009. These interests initially lead legislative and regulatory machinations to virtually eliminate traditional lender processing systems by appearing to mandate use of Home Valuation Code of Conduct (HVCC) third party ordering services so that they would have no alternative but to adopt AMC controlled appraisal ordering and appraiser selection systems.
Neither the consumer not the appraiser had any input into this. AMCs were and are not seeking to provide ancillary services appraisers may have performed, but which do not require specific licenses. They are instead seeking to (1) control the pay rate for those professional services that DO require licenses; and (2) to change both federal and state laws to circumvent the Congressionally passed FIRREA 1989 so that THEY CAN then offer services that the federal government established license requirements for over twenty five years ago.
Dave Towne, Isaac Peck and other respected writers on this topic are right about one thing though… this is exceptionally serious. It has the potential if not defeated, the probability of completely destroying the federally mandated real estate appraisal standards for federally regulated transactions.
If LREAB does not prevail against this erroneous interpretation of the FTC as to where their mandate lies, then quite simply there will be no more licensed appraisers to do federally regulated transactions in ten years. Who would stay in a profession in which inexperienced, untrained individuals with clearly demonstrated suspect ethics dictate policy and practice under the guise of “competitive free trade or free enterprise”?
Let’s return to the FTC attorney’s explanation though.
“Generally speaking, the FTC’s antitrust authority encompasses state regulatory board actions only when the antitrust state action doctrine does not apply, and federal government instrumentalities are exempt from the federal antitrust laws.”
“Huh?”
So, ‘generally’ IF the antitrust state action doctrine does NOT apply AND the ‘federal government instrumentalities’ (Government-Sponsored Enterprise (GSE)?) are exempt from the federal antitrust laws the FTC WILL get involved??? Is the FTC asserting that FNMA is exempt from antitrust laws?
Say WHAT, what?
Help me out bloggers. Your view and opinions are sought prior to AGA drafting a follow up inquiry to the FTC attorney. We don’t want to waste the FTC’s time, or our own going in circles on an issue that affects over 73,000 licensed and certified appraisers or millions of American consumers and taxpayers.
Respectfully Submitted for Peer Review and Response,
Mike Ford
Postscript – Letter of FTC Attorney to Mike Ford
From: Friedman, Alan J.
Sent: Monday, June 05, 2017 6:51 PM
To: Mike Ford
Subject: RE: Restraint of Trade InvestigationDear Mr. Ford,
Thank you for your email.
The federal antitrust laws prohibit anticompetitive mergers and business practices that seek to prevent hard-driving competition, such as monopolistic conduct, attempts to monopolize, and conspiracies and combinations that harm competition and consumers. The Bureau of Competition investigates potential law violations under the FTC’s antitrust enforcement authority and seeks legal remedies in federal court or before the FTC’s administrative law judges.
Generally speaking, the FTC’s antitrust authority encompasses state regulatory board actions only when the antitrust state action doctrine does not apply, and federal government instrumentalities are exempt from the federal antitrust laws.
[Mike Ford]
In that regard, you may wish to review “FTC Staff Guidance on Active Supervision of State Regulatory Boards Controlled by Market Participants”:If you have any questions about the federal antitrust laws, please feel free to contact me. Thank you again for contacting the Federal Trade Commission.
Sincerely,
Alan Friedman
Attorney
Office of Policy and Coordination
Bureau of Competition
202-326-2742
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Well said!
Thank you as always Mike Ford for your insightful and knowledgeable reply.
What would the assessment be per member of AGA to set you up in Washington, DC for the next 2 years and hammer this out for us?? 😉 I wish you could.
Between the Dentist Bill, Cuomo and ALL the other convoluted crap our State Boards are more impotent than ever.
We need Simplicity and Accountability
We need less Barney Frank and more Barney Fife!!
I will hammer out my opinion and some personal experience in the next day or so and thanks again.
H.A. (& Kathy), thank you both for the kind words.
H.A. I lived outside DC both inside and outside The Beltway from 1974-1980 when I worked for the nation’s largest Federal Credit Union out of Washington Navy Yard; and then later in Vienna, VA. I was even honored by a modest discharge ceremony held at Headquarters Marine Corps after I jokingly told a Marine CU member thankful for good service that he could help me find my missing discharge.
I LIKE DC but I don’t want to be a lobbyist there. Isn’t it ‘bad’ enough that as a Republican I find myself being a union organizer? (Kidding aside, it’s been a positive eye opener. I have greater respect for honorable organized labor than ever before).
It took me over ten years to acquire the background to become a real estate appraiser. I wanted to be an appraiser more than anything I could think of from 1980-1986. I still want to be an appraiser. Subject to health issues, I plan to work well into my seventies.
When all goes right, there is no more fascinating job in the world to me. I even got to develop a process for a New York Law Firm to provide for real estate appraisals in Delhi India. A process intended to be replicated throughout portions of Asia where the fundamental concepts of market value and a truly ‘open market’ are very different than what we are used to. I ‘ve been invited to bid on jobs in the Caribbean and have been sent across country here in the USA to analyze pending industrial business entity purchases.
My point is that we ALL really wanted to be appraisers. We did not ‘accidently’ find ourselves in this profession. It took a lot of effort. I’ll not voluntarily give that up without a fight. Especially not to be a full time paid lobbyist.
What I WILL do is gladly join with ANY of my peers in supporting OUR combined efforts to address our challenges.
Please provide a link to, or copy of, the AGA’s email to the FTC and also to the FTC’s response.
AGA’s email to the FTC was published last week: Restraint of Trade Investigation
As for FTC’s response, we do have a copy of the email. However, since it was addressed to Mike Ford, we’ll let him post it.
Gosh Des, I meant for anything I sent you to be included. I should have authorized it specifically. I apologize for any inconvenience and certainly am authorizing it to be published. I think the wording of the FTC attorney is important for our fellow appraisers to read for themselves.
Wasn’t sure about the letter of the FTC attorney. Anyhow, it’s been added at the end of your article. Thanks Mike!
Amc’s are institutionalized racketeering. They meet in groups, share lists, and actively suppress the majority of appraisers whom participate in mortgage lending. Colluding and conspiring through shared software programs for ways to force appraisers fees down, while never returning cost savings to consumers. They are monopolies to themselves, paying unearned moneys back to lenders to retain contracts, do not disclose to consumers, and violate junk fee, unearned fee, and customary and reasonable federal fee regulations daily and hourly, on a legal loophole via their definition as an ancillary participant. We need an ethics lawyer in here, it’s obvious when a vital industry like appraisal loses 100k appraisers, literally half of it’s populace, there is anti competitive influence effecting us. Audit every single amc in the state, prior to making decisions on this, the evidence of antitrust and most likely also fraud is certainly there somewhere. Amc’s have gotten away with murder, they’ve behaved above the law without consequence for 10 straight years now, directly crushing the futures of an estimated 200,000 professionally licensed American individuals, probably many more than that all told. The ‘jobs’ created by appraisal management companies are not specialty jobs, they don’t lead to a more robust regulatory structure, but quite the opposite.
I see Corelogic as an anti-trust case right now. Buying up AMCs demanding low fees. Making appraisers pay to send reports through AppraisalPort, which is a company they own. They download your data for free. They also own many MLS’, own Marshal and Swift, mapping software. You have to pay to use those programs. Corelogic is on its way to controlling the real estate industry. How can they not be an anti-trust violator?