FDIC Says NO to Appraisals
The FDIC voted to increase the minimum appraisal threshold to $400,000 for residential appraisals, despite the overwhelming opposition. The vote was quietly supported by the Consumer Financial Protection Bureau (CFPB). Maxine Waters and The Appraisal Foundation condemn the actions of the FDIC.
See The Appraisal Foundations response below.
(Washington, DC) August 20, 2019 – The Appraisal Foundation President David Bunton issued the following statement after the final rule exempting residential real estate transaction of $400,000 or less from appraisal requirements was approved by the Federal Deposit Insurance Corporation.
“When the proposed rule was announced in November 2018, The Appraisal Foundation sent a letter strongly encouraging the FDIC to not adopt any action. Since November, our position has only hardened. The Appraisal Foundation believes that increasing the appraisal threshold level will negatively affect safety and soundness in real estate lending practices. It will likely prompt many financial institutions to significantly reduce attention to collateral risk management. This position is supported by the Government Accountability Office (GAO) report from January 2012, where no support was found to raise the current threshold amount. In fact, that GAO report reflected stakeholder support to reduce or eliminate the current threshold. The past nine months has proven the findings of the GAO report were with merit as the wide spread opposition to the proposed rule significantly outweighed support for the rule.
“It is sad that we are celebrating the 30th anniversary of Title XI of Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) this month, which was created to protect the deposit insurance fund, yet this is also the same month when another major exemption is finalized, which continues to hollow out the teeth of FIRREA.
“The Appraisal Foundation remains steadfast in its belief that an appraisal performed by a licensed or certified appraiser that complies with the Uniform Standards of Professional Appraisal Practice is a lynchpin in the proper evaluation of real estate collateral.”
The FDIC also voted to reduce the protections under the Volcker Rule. See Maxine Waters Public statement condemning their “senseless” actions below:
“The Volcker Rule is a cornerstone of Wall Street reform that Congress passed in the wake of the 2008 financial crisis to prevent federally-insured, deposit-taking banks from engaging in risky, speculative activities, like owning hedge funds and private equity funds, on the backs of the American taxpayers. I am deeply concerned by today’s FDIC and OCC actions, and potential additional votes by other regulators, to weaken this critically important rule.
“Doing so will not only put the U.S. economy at risk of another devastating financial crisis, but it could potentially leave taxpayers at risk of having to once again foot the bill for unnecessary and burdensome bank bailouts. The final rule published today would curtail prohibitions in a manner that Congress never intended and allow Wall Street megabanks to gamble with the same types of risky loan securitizations that turned toxic in 2008, at a time when these risky products are once again on the rise. These actions are clearly intended to carry out the reckless deregulatory agenda of President Trump and his Administration.
“I call on the FDIC, OCC, and other regulators to reconsider this senseless decision, especially given the significant changes made from the initial proposal, and take the time to give the public a full and fair chance to comment.” Read more »
Watch Brian Stevens video on the subject: FDIC says no to appraisals?
Rob Chrisman Reports Appraiser Connections Closes it Doors.
It is with great sadness that I must inform everyone that effective immediately Appraiser Connections is shutting down. All orders in the system will be complete, just no new orders. Retail loan officers will be given new user IDs for the new AMC that will be taking over and for Wholesale LOs, just make sure you select a different AMC. Thank you all very much for your years of support and business. Kathleen and I will miss you all very much.
This is all the information we have at this time. VaCAP will keep you posted, but encourages everyone to watch their receivables.
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Rob Chrisman IS nothing more than an opportunistic AMC SELLOUT.
Sells advertising and referrals on his blog.
Promotes constant lies to demean appraisers.
Why you might ask?
AXIS Appraisal Management Solutions announced it added Rob Chrisman, publisher of Daily Mortgage News and Commentary, to its Board of Directors.
I hope that all appraisers with any unpaid invoices take steps to get paid in advance of delivery or withhold the appraisals. AMCs that pay in arrears will have no ability to pay for anything in the pipeline when they cut off new work.
No one has any obligation whatsoever to complete any assignments they have until new payment arrangements are made. If the company you contracted with (the lender’s agent) shuts down, THEY are the ones that have the obligation to the borrower – not the appraiser.
Be open to negotiating directly with the originating lender-client or bank but get an ironclad promise to pay before delivering anything.
We’ve all seen how little integrity banks have when appraisers go back to them because their agents failed to pay. Get written promises to pay up front at a minimum. I’d be asking for the money though.
Amc appraisers deserve whatever losses their masters bid them. An entire industry of persons whom crossed the picket line. I don’t feel sorry for them, they knew it would happen eventually. There is a price to be paid for colluding with another company to defraud borrowers.
Maybe, just maybe my letter to Maxine Waters helped her take this position. Lowering the threshold for appraisals by a professional and hybrids disguised as “modernization” are going to crash the economy, and the investor class will own more homes and former homeowners will become renters once again, in large numbers!
The primary problem is not politics or deregulation. The primary problem is government backed insurability, and the fed which promotes risky practices. Risk management is simply a de escalated concern when you know nobody will ever go to jail, and the taxpayers will be forced to cover for risky or even illegal activity. The government will never be capable of regulating in an honest approach. However, if companies and individuals are held to account for their activities, actually risk taking personal losses, they have an interesting way of shaping up and regulating themselves better. If the primary concern is taxpayers taking losses, why not simply remove that safety net? The invisible hand will go from idle, to being hard at work. Lenders are apparently engaging in questionable activity, again… What’s new?
I would advise my buyers to get an independent appraisal.
This is terrible and presents so much risk to buyers. I will recommend that my buyers get an appraisal if the lender is not going to get one.
This makes no sense. Only a fool would enter into an agreement without an appraisal contingency!
I doubt that banks will buy into a fully automated value system. Too risky!! Besides, buyers pay for the appraisal anyway so why wouldn’t banks want it done?
Banks using their own money, or those banks concerned with regulatory compliance would normally want correct asset valuation.
It is the commissioned loan officers and vice presidents who are compensated based on loan volume written and sold; & who believe they will never get ‘caught up’ in a crash-or at least one attributable to their actions that think appraisals are obstructions.
Include virtually ALL mortgage companies in that category. Their sole reason for existing is to package less than premium quality / low risk loans into something ‘doable’. Especially government insured or guaranteed loans.