Kudos to Congressman Member Jeb Hensarling! House Financial Services Committee Chairman Jeb Hensarling (R-TX) is one of the few federal watchdogs that ‘gets it’ on Fannie Mae’s & all GSE’s operations.
All appraisers that have watched Fannie Mae’s changes in policies over the past 3+ years knew it was only a matter of time before they would need another taxpayer bailout.
What we didn’t know was that it would be this soon. Most of us assumed it would be after the next crash that their reckless policies trigger.
Reading the recent press release from the House Financial Services Committee, my take is that Director Watt simply mislead the Congress and members of the public about the financial strength of Fannie Mae back in 2014. What Fannie Mae leadership’s reasons were for painting a deceptive picture is for Congress to determine.
Representative Hensarling is right. Complete comprehensive overhaul going back to the provisions of FIRREA that allow ‘Evaluations’ as alternative collateral verification methods need to be reconsidered and strengthened.
All hybrid ‘appraisal’ models need to be rejected for the fraudulent processes that they are. We have already seen what is delivered in the marketplace is vastly inferior to what is postulated before federal financial regulatory boards and agencies.
What was the point of federally regulated minimum appraisal standards if they are not going to be uniformly enforced?
The admission that so many “hybrid appraisals” are simply sent to India for completion is evidence that ‘the market’ has no intention or incentive to uphold appraisal integrity. It is exactly that same ‘market’ that taxpayers need to be protected from.
Craigslist advertising for evaluation / hybrid ‘picture takers’ at $10 to $15 per assignment in lieu of a professional appraisers field analysis is another sign that ‘the market’ deliberately seeks to bypass sound, generally accepted appraisal practices as well as prudent lending policies whenever possible. Why shouldn’t it? “The Market” no longer has skin in the game. Everything is either insured or guaranteed by Uncle Sugar directly or indirectly.
Personally, I think the solutions on appraisal issues is to have the Feds take control over all appraisal licensing (as in the NMLS) and enforcement. States have proven they are incapable of it. There are dozens of benefits to doing this, and only a few drawbacks.
I think we can definitively show the benefits outweigh the drawbacks in Feds such as ASC taking over all appraisal regulatory responsibilities.
Fellow appraisers please send your views to Member Hensarling via firstname.lastname@example.org
Hensarling Criticizes Fannie Mae Bailout Request
WASHINGTON – House Financial Services Committee Chairman Jeb Hensarling (R-TX) released the following statement harshly criticizing Fannie Mae’s request for bailout funds from Treasury and calling on FHFA Director Mel Watt to stand by his word and immediately suspend payments to the Housing Trust Fund.
“Today’s announcement that Fannie Mae has once again run out of money to pay its own bills is the latest example of why we need to repeal the GSEs’ government charters once and for all. After footing the bill for the costliest bailout in history, taxpayers are sick and tired of getting ripped off by Fannie and Freddie and then scolded by GSE apologists when they complain. Americans deserve better. That’s why Congress can and should enact comprehensive housing finance reform this year to create a sustainable housing system.”
“The even more troubling aspect of the GSEs financial crisis is FHFA Director Mel Watt’s continued insistence to siphon taxpayer dollars to prop up payments to the Housing Trust Fund that the GSEs cannot afford to make. If the GSEs don’t have the money to pay their own bills, they should not be making optional payments to outside entities. That was an essential part of Director Watt’s 2014 unilateral decision to force Fannie and Freddie to make Housing Trust Fund payments. Director Watt personally guaranteed these rules in his 2015 congressional testimony: ‘If we ever have a draw on the Treasury, that would automatically stop the funding of the Housing Trust Fund.’ I call on Director Watt to do his duty, stand by his word, and immediately suspend these payments.”
Due to the GSEs clear undercapitalized status that led to their placement into conservatorship in 2008, their payments to the Housing Trust Fund were suspended under Section 4567 of the Housing and Economic Recovery Act. However, in his letter of December 11, 2014 to Fannie Mae and Freddie Mac informing the GSEs that he had made a unilateral decision – unsupported by any provision in statute and contrary to prudent safety and soundness regulation – Director Watt stated that FHFA would be “terminating the temporary suspension” of Housing Trust Fund payments “in accordance with the following terms and conditions.” Those conditions, that he himself set, include:
- Each GSE shall make payments to the Housing Trust Fund “unless during such fiscal year [it] has made a draw from the Department of the Treasury under the terms of the Senior Preferred Stock Purchase Agreement.”
- If a GSE “has made a draw from the Department of the Treasury under the terms of the [Preferred Stock Purchase Agreement] during [a] fiscal year,” then that GSE “will make no allocation or transfer pursuant to Section 4567(a)(2)(B) for the fiscal year for which the draw was made.”
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