Dear representative, waiving/eliminating property appraisal for lending purposes is wanton recklessness.
Fannie Mae’s decision to waive/eliminate property appraisal for lending purposes is nothing more than wanton recklessness that could have serious repercussions in the future.
The truth of the matter is that appraisals are an essential part of any mortgage transaction and should not be taken lightly or eliminated without due consideration. Without them, there can be no assurance as to whether a homebuyer will get what they pay for or if lenders will make bad investments with their money.
In short, waiving/eliminating property appraisal requirements puts everyone at risk – from buyers and sellers to lenders and investors alike. That’s why it’s important for all stakeholders in the industry – including real estate professionals – to speak up now by sending letters of protest directly to our representatives!
We urge everyone to take action and speak up on behalf of our industry. It won’t take long: just personalize one of these five pre-written letters below and send it out today! We must stand united against this reckless decision by Fannie Mae. So let your voice be heard now before it’s too late!
Pat Turner, VaCAP President, has prepared 4 pre-written letters.
Fannie Mae has just taken a giant step that will endanger the safety and soundness of the United States Financial system.
As of April 1, 2023 they will actively encourage and promote the complete abolition for the need of appraisals for residential mortgages.
This action is irresponsible and perhaps even illegal under Dodd-Frank Act. The action will only worsen the public’s current uneasiness regarding our banking and lending systems. How can Fannie do this and still be under conservatorship?
Please look into this immediately.
Being a real estate appraiser for the last ___ years in Virginia, I have witnessed many, many changes in our lending practices in residential properties.
However, the latest maneuver by Fannie Mae is so dangerous that it will threaten the safety and soundness of the financial stability of the United States.
Their recent move takes effect on April 1 per their announcement just released on March 1, 2023. Fannie Mae is to do away with the requirement for appraisals for federally related residential real estate loans. This move is more than dangerous, it is reckless beyond words. It completely defies LOGIC.
Fannie Mae is still under conservatorship. Why hasn’t Congress been informed or participated in this undertaking? It has just been 15 years ago that Fannie Mae lied to the world and caused the Great Recession.
Please step in and restrain this insanity.
The mortgage market of the United States of America has seen many ups and downs.
Over the last several years there has been unprecedented volumes of sales and refinance activity in the residential sector. That frenzy has dissipated.
However, Fannie Mae is determined to endanger the system’s security by doing away with property appraisals. It is scheduled to do so as of April 1, 2023. This is a so-called cure for delays of the recent market frenzy. That frenzy was a once in a lifetime occurrence.
The purchase of a home is the largest investment an American citizen undertakes in his/her life. We have history that proves mortgage brokers gamed the system on numerous occasions. If we remove the appraisal, we have removed the referee from the game. All rules can and will be broken. Appraisals are also important to the financial stability of the United States.
This dangerous step puts the American economy at risk, very similar to 2006-2009. When the American public learns that this recklessness has been allowed, there will be unpleasant backlash, as they will not understand how this could happen again.
Please look into this issue as soon as possible.
Being a real estate appraiser for over ___ years in Virginia has afforded me the opportunities to live through numerous business cycles, some good and some bad.
In my judgement Fannie Mae has stepped across all bounds of propriety and responsibility with the new Fannie Mae Selling Guidelines. (March 1, 2023)
As you recognize, the last three years (+/_) seen a shortage of housing. That demand fueled property prices to rise at figures near or above the run-up in 2006-2008. Demand for all services in the real estate field stretched the servicers beyond their capabilities. Prices were bid up, many times to unreasonable levels. Sheer volume choked the system.
Fannie Mae’s solution is to do away with appraisals, lower credit scores, and relax all lending criteria. This is 2005-2007 all over again. This action provides more and more opportunities for mortgage fraud. Additionally, the results will be less and less affordable housing in America.
Fannie Mae has grossly overstepped its authority because the government has been asleep during their conservatorship. Abolishing appraisals for purchase and refinance purposes?
When the everyday American learns of this the backlash will be enormous. And guess what? Who are you going to blame? It will not be the professional real estate appraisers.
Please investigate this dangerously irresponsible action.
Below is another example written by Carl Schneider:
FHFA increased Fannie Mae and Freddie Mac single family loan limits up to $1,089,300 in certain high-cost areas in the United States and $726,200 in the rest of the country for 2023. Crossing the million-dollar threshold should cause Congress and all stakeholders to actively consider how our housing finance system operates today. In addition to the FHFA announcement Fannie Mae announced March 1, 2023 “Value Acceptance” raising key concerns for:
Excessively high loan limits exacerbating the affordability crisis. House prices have grown much faster than household income, in large part due to supply constraints and low-cost financing. Taxpayer backing of ever-increasing loan sizes provides a subsidy that results in slightly lower mortgage rates which, in turn, encourages people to buy more expensive homes. Ultimately, such backing feeds the runup in house prices, exacerbating the affordability challenges we face in today’s supply-constrained marketplace.
Over reliance on government-backing. Per data from the Urban Institute, when Fannie Mae and Freddie Mac went into conservatorship more than fourteen years ago, 45 percent of the outstanding mortgage market was funded through Ginnie Mae, Fannie Mae, and Freddie Mac. Today, the government backs 67 percent of outstanding mortgages through securitization by these three entities. This is an enormous increase in the reliance upon government-and taxpayer-backing.
Waiving/eliminating property appraisal for lending purposes is wanton recklessness. Value Acceptance, through Desktop Underwriter® (DU®) and powered by Collateral Underwriter® (CU®). Are offers by Fannie Mae to waive the appraisal for eligible single-family transactions under $1 million. A program dismissing the most fundamental element for securing banking and mortgage real estate lending – a[n] traditional appraisal.
“The property value the lender enters in DU may be based on:
the lender’s estimate of value, determined at the discretion of the lender, or
History must not be repeated. 2007 New York Attorney General, Andrew Cuomo, issued probe of the home mortgage industry. In its mortgage investigation, the New York attorney general’s office issued hundreds of subpoenas uncovering “fundamental flaws” in two areas of the market — appraisals and securitization of mortgage loans. Fannie Mae was taken over by the Federal Housing Finance Agency (FHFA) in September 2008 due to its illiquid bond market during the mortgage crisis. A time also labelled “The Great Recession” the economic downturn was the longest since World War II! The Cuomo investigation resulted in settlement with Fannie Mae and Freddie Mac creating the Home Valuation Code of Conduct (HVCC) subsequently sunset by the Dodd-Frank Act in 2011. In January 2013 the Government Accountability Office (GAO) published a study “…suggest[ing] losses associated with the recent crisis could range from a few trillion dollars to over $10 trillion.” Estimates since that time report as high as $12.3 trillion. Per Susan M. Wachter, the Albert Sussman Professor of Real Estate, and Professor of Finance at The Wharton School of the University of Pennsylvania. “…a big mistake that fueled the housing bubble was the rush to lend money to home buyers regardless of their ability to pay…”
FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT; Title III of National Housing Act, 12 U.S.C. 1716 et seq. As amended through July 25, 2019; SEC. 301. DECLARATION OF PURPOSES OF TITLE
The Congress declares that the purposes of this title are to establish secondary market facilities for residential mortgages, to provide that the operations thereof shall be financed by private capital to the maximum extent feasible, and to authorize such facilities to—
provide stability in the secondary market for residential mortgages;
respond appropriately the private capital market;
provide ongoing assistance to the secondary market for residential mortgages (including activities relating to mortgages on housing for low-and moderate-income families involving a reasonable economic return that may be less than the return earned on other activities) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for residential mortgage financing.
promote access to mortgage credit throughout the Nation (including central cities, rural areas, and underserved area) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for residential mortgage financing; and
manage and liquidate federally owned mortgage portfolios in an orderly manner, with a minimum of adverse effect upon the residential mortgage market and minimum loss to the Federal Government.
The question of appropriate governmental role in housing finance systems has gone unanswered for more than fourteen years. Amidst most recent bank failures, inflation, and increasing mortgage delinquencies. Fannie Mae in my opinion is pursuing a “rush” to fund loans. And without traditional appraisal a destabilizing step likely to bring about adverse effect in the residential mortgage market and losses to the Federal Government. Therefore; as constituent I request your Office, Esteemed Colleagues, Congressional Committees on Banking, Finance and Urban Affairs of the House of Representatives, the Committee on Banking, Housing and Urban Affairs of the Senate, and the Director of the Federal Housing Finance Agency take up these questions reviewing FHFA oversight of Fannie Mae in exceeding intent and scope of the Federal National Mortgage Association Act; Title III of National Housing Act, 12 U.S.C. 1716 et seq. And for other than streamline refinance loans (simple interest rate reduction) adding prohibition for Fannie Mae funding of any mortgage loan without a[n] traditional appraisal.
Should you have any questions or wish to discuss my concerns and request do not hesitate to contact me.