Working RE magazine has a good story about altered reports through the appraisal portals and and conversion programs that is interesting and scary. It talks about the lose of pages, data, added data, pictures etc. It means that your client may not be getting everything you sent them. USPAP says that you are responsible to keep a complete copy of what you sent so be especially careful when transmitting via a website or conversion software. Just remember that even a PDF can easily be opened and altered so keep good records.

ACI has acquired the Day One, Appraisal.com and United systems as part of the effort by Zaio to work its way through its problems. It was reported recently that Zaio had filed for Bankruptcy protection in the United States and is now trying to sell assets as part of its attempt to shift its attention to its core issues. Check your vendor for special deals to convert.

Last updated October 16, 2008 10:00 p.m. PT

Plaintiff claims appraisers blacklisted by Countrywide

By AUBREY COHEN
P-I REPORTER

Countrywide Financial blackballed home appraisers who refused to make valuations meet agreed selling prices, according to a lawsuit filed Thursday.

Capitol West Appraisals of Boise, Idaho, says in a lawsuit filed in U.S. District Court in Seattle that Countrywide loan officers pressured its appraisers to increase valuations or otherwise compromise appraisal standards in three loan transactions and, when the company refused, Countrywide put Capitol West on its "Field Review List."

Countrywide, the nation's largest home mortgage lender, doesn't accept reviews from appraisers on the Field Review List unless they're accompanied by a second review from someone else, the lawsuit says. That means brokers won't use the appraisers at all, since brokers won't pay for two reviews, Countrywide is such a major player and brokers do not necessarily know which lender they will use when they order an appraisal, the lawsuit alleges.

"Countrywide is in a position to force out of the business honest appraisers," said Steve Berman, the lead lawyer in the case and managing partner at Hagens Berman Sobol Shapiro in Seattle. "They can use their market power to basically blackball these people."

Eloise Hale, spokeswoman for Bank of America, which bought Countrywide in July, did not have a response Wednesday.

"We have not had a chance to review the lawsuit and would not be able to comment," she said.

Capitol West's monthly revenues fell by $8,000 as a result of being on the Field Review List and a Countrywide employee told the business it will remain on the list for at least a year, the lawsuit says.

As of Aug. 28, more than 2,000 appraisers were on the Field Review List and some have stayed on for more than four years, according to the complaint. The list includes more than 50 appraisers in Washington, Berman said.

The lawsuit seeks class-action status to take in all affected appraisers nationwide and compensatory damages, but does not name an amount. It alleges that any appraisal submitted to Countrywide from a Field Review List appraiser automatically went to Countrywide subsidiary LandSafe, which then "shoots holes" in the evaluation in order to further discredit the appraiser.

The role of an appraiser is to assure lenders that homes are worth what borrowers are proposing to pay.

P-I reporter Aubrey Cohen can be reached at 206-448-8362 or aubreycohen@seattlepi.com. Read his Real Estate News blog at blog.seattlepi.com/realestatenews.

There is big news on the financial market as the buyout of WAMU by JP Morgan eases many peoples fears of a major bailout of a mammoth savings and loan. Meanwhile the saga of Fannie and Freddie starts to play out with a $700B rescue package being fought over in congress. Meanwhile the HVCC is being postponed for 1-3 months while the appraisal associations and others try to hammer out some rewording of the agreement.

The infamous Fannie and Freddie show has progressed to its next logical step as the US government has stepped and taken over the shows as the new directors. The cast of characters apparently won't change in the short run but they have been given permission to get much larger and handle much more of our money. The twins appear to be in control of about 1/2 of the nations mortgages or $5 trillion (that's 5,000,000,000,000). to read more about it follow This link to Yahoo Finance News I wonder how this will affect the HVCC.

Appraisalport has issued new contract that says that they are not responsible for anything and if they get sued then you will also. The advise I am hearing is to run it past your E&O before signing it as it may greatly expand your liability. Your E&O will not likely cover third party agreements. I have spoken to my attorney and he has advised me not to sign it as it passes a lot of liability to you that the E&O company will probably not pay for. Check with you E&O company for their thoughts before signing it and let your clients know of your concerns. Appraisalport has suspended the new contract for now pending vendor confusion.

HR3221 has passed and is causing all kinds of questions. This not only addresses appraiser independence but also FHA appraiser requirements and loan limits. This package is several hundred pages long but if you really want to read it all you can go to the federal legislative tab for this site and look it up. There is a lot of analysis going on as to what certified appraiser means and other issues that are being sorted out. I will update this as soon as I hear more concrete answers. The unconfirmed rumors are that hud will accept only certified level appraisers for their list with no grandfathering of licensees. Its a good time to upgrade.

There has been some news recently about radiation issues in the very popular granite counters. here is a link to a website that talks about the issue at thedailygreen.com There is a counter argument in an article on the marbleinstitute.com website.

The cities of Palmdale and Lancaster have passed new laws about neglected and abandoned houses that could impact your clients. It would be wise to perhaps inform them of these rules. I simply put a link in my appraisal to the law that applies to that city. The city of Palmdale requires all rentals and vacant houses to be registered with the city and are subject to code enforcement policing and city contracted repairs. I am sure that many of other municipalities are doing similar programs and you would be doing your clients a favor by warning them before the fines and liens start piling up. They are also proposing some expensive requirements for water conservation that could cost $6k-$10k per house when they sell and require significant money for everybody else to meet the new rules. Check with GAVAR or the city websites for the details.

valuation review. story regarding foreclosure rates in California Nevada and Florida. This is an interesting magazine but is mostly by subscription.

This bill was passed in October 2007 and it can be used to help you behave independently.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. Section 11323 of the Business and Professions Code is
amended to read:
11323. No licensee shall engage in any appraisal activity in
connection with the purchase, sale, transfer, financing, or
development of real property if his or her compensation is dependent
on or affected by the value conclusion generated by the appraisal.
SEC. 2. Article 7 (commencing with Section 1090.5) is added to
Chapter 1 of Title 4 of Part 4 of Division 2 of the Civil Code, to
read:

Article 7. Unlawful Influence of Appraisers

1090.5. (a) No person with an interest in a real estate
transaction involving an appraisal shall improperly influence or
attempt to improperly influence, through coercion, extortion, or
bribery, the development, reporting, result, or review of a real
estate appraisal sought in connection with a mortgage loan.
(b) Subdivision (a) does not prohibit a person with an interest in
a real estate transaction from asking an appraiser to do any of the
following:
(1) Consider additional, appropriate property information.
(2) Provide further detail, substantiation, or explanation for the
appraiser's value conclusion.
(3) Correct errors in the appraisal report.
(c) If a person who violates this section is licensed under any
state licensing law and the violation occurs within the course and
scope of the person's duties as a licensee, the violation shall be
deemed a violation of that state licensing law.
(d) Nothing in this section shall be construed to authorize
communications that are otherwise prohibited under existing law.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
SEC. 4. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to take immediate steps to bring credibility to mortgage
lending in California, and to protect consumers and other
participants in mortgage transactions from fraudulent and deceitful
practices, it is necessary that this act take effect immediately.

This is a Bill you may want to write your US senator about getting through. It provides protection for appraisers from undue influence.

Fair Value and Independent Appraisal Act (Introduced in Senate)

S 2860 IS

110th CONGRESS

2d Session

S. 2860
To diminish predatory lending by enhancing appraisal quality and standards, to improve appraisal oversight, to ensure mortgage appraiser independence, to provide for enhanced remedies and enforcement, and for other purposes.

IN THE SENATE OF THE UNITED STATES

April 15, 2008
Mr. CASEY (for himself and Mr. MARTINEZ) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

--------------------------------------------------------------------------------

A BILL
To diminish predatory lending by enhancing appraisal quality and standards, to improve appraisal oversight, to ensure mortgage appraiser independence, to provide for enhanced remedies and enforcement, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Fair Value and Independent Appraisal Act'.

SEC. 2. PROPERTY APPRAISAL REQUIREMENTS.

(a) In General- Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by adding at the end the following new subsection:

`(m) Property Appraisal Requirements-

`(1) IN GENERAL- A creditor may not extend credit in the form of a mortgage referred to in section 103(aa) to any consumer, without first obtaining a written appraisal of the property to be mortgaged, prepared in accordance with the requirements of this subsection.

`(2) APPRAISAL REQUIREMENTS-

`(A) PHYSICAL PROPERTY VISIT- An appraisal of property to be secured by a mortgage referred to in section 103(aa) does not meet the requirements of this subsection unless it is performed by a qualified appraiser who conducts a physical property visit of the interior of the mortgaged property.

`(B) SECOND APPRAISAL UNDER CERTAIN CIRCUMSTANCES-

`(i) IN GENERAL- If the purpose of a mortgage referred to in section 103(aa) is to finance the purchase or acquisition of the mortgaged property from a person within 180 days of the date of purchase or acquisition of such property by that person at a price that was lower than the current sale price of the property, the creditor shall obtain a second appraisal from a different qualified appraiser . The second appraisal shall include an analysis of the difference in sale prices, changes in market conditions, and any improvements made to the property between the date of the previous sale and the current sale.

`(ii) NO COST TO CONSUMER- The cost of any second appraisal required under clause (i) may not be charged to the consumer.

`(C) QUALIFIED APPRAISER DEFINED- For purposes of this subsection, the term `qualified appraiser' means a person who--

`(i) is certified or licensed by the State in which the property to be appraised is located; and

`(ii) performs each appraisal in conformity with the Uniform Standards of Professional Appraisal Practice and title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, and the regulations prescribed under such title, as in effect on the date of the appraisal.

`(3) FREE COPY OF APPRAISAL- A creditor shall provide 1 copy of each appraisal conducted in accordance with this subsection in connection with a mortgage referred to in section 103(aa) to the consumer without charge, at least 3 days prior to the transaction closing date.

`(4) CONSUMER NOTIFICATION- At the time of the initial mortgage application, the consumer shall be provided with a statement by the creditor that any appraisal prepared for the mortgage is for the sole use of the creditor, and that the consumer may choose to have a separate appraisal conducted at their own expense.

`(5) VIOLATIONS- In addition to any other liability to any person under this title, a creditor found to have willfully failed to obtain an appraisal as required in this subsection shall be liable to the consumer for the sum of $2,000.'.

(b) Equal Credit Opportunity Act Amendment- Section 701(e) of the Equal Credit Opportunity Act (15 U.S.C. 1691(e)) is amended to read as follows:

`(e) Copies Furnished to Applicants-

`(1) IN GENERAL- Each creditor shall furnish to an applicant, a copy of all appraisal reports and valuations developed in connection with the applicant's application for a loan that is or would have been secured by a lien on residential real property.

`(2) PROCEDURES- Appraisal reports shall be furnished under this subsection upon written request by the applicant, made within a reasonable period of time of the application and before closing.

`(3) REIMBURSEMENT- The creditor may require the applicant to pay a reasonable fee for the provision of copies of appraisal reports under this subsection.

`(4) NOTIFICATION TO CONSUMERS- The creditor shall notify (pursuant to regulations prescribed by the Board) an applicant in writing of the right to receive a copy of each appraisal report, under this subsection.'.

(c) Unfair and Deceptive Acts and Practices Relating to Certain Consumer Credit Transactions- Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting after section 129 the following new section:

`SEC. 129A. UNFAIR AND DECEPTIVE ACTS AND PRACTICES RELATING TO CERTAIN CONSUMER CREDIT TRANSACTIONS.

`(a) In General- It shall be unlawful, in providing any mortgage lending services for a consumer credit transaction secured by the principal dwelling of the consumer or any mortgage brokerage services for such a transaction, to engage in any unfair or deceptive act or practice.

`(b) Appraisal Independence- For purposes of subsection (a), unfair and deceptive acts or practices shall include--

`(1) any appraisal of a property offered as security for repayment of the consumer credit transaction that is conducted in connection with such transaction, in which a person with an interest in the underlying transaction coerces, bribes, extorts, colludes, or otherwise improperly influences a person conducting or involved in an appraisal, or attempts to coerce, bribe, extort, collude, or otherwise improperly influence such a person, for the purpose of causing the appraised value assigned under the appraisal to the property to be based on any factor other than the independent judgment of the appraiser ;

`(2) mischaracterizing or suborning any mischaracterization of, the appraised value of the property securing the extension of credit;

`(3) seeking to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing of the transaction; and

`(4) failing to timely compensate an appraiser for a completed appraisal, regardless of whether the transaction closes.

`(c) Exceptions- The requirements of subsection (b) may not be construed as prohibiting a mortgage lender, mortgage broker, mortgage banker, real estate broker, or any other person with an interest in a real estate transaction from asking an appraiser to correct errors in the appraisal report.

`(d) Rulemaking Proceedings- The Board and the Federal Trade Commission--

`(1) shall jointly prescribe regulations defining with specificity acts or practices which are unfair or deceptive in the provision of mortgage lending services for a consumer credit transaction secured by the principal dwelling of the consumer or mortgage brokerage services for such a transaction, within the meaning of subsections (a), (b), and (c); and

`(2) may jointly issue interpretive guidelines and general statements of policy with respect to unfair or deceptive acts or practices in the provision of mortgage lending services for a consumer credit transaction secured by the principal dwelling of the consumer and mortgage brokerage services for such a transaction, within the meaning of subsections (a), (b), and (c).

`(e) Definitions- For purposes of this section--

`(1) the terms `mortgage brokerage services' and `mortgage lending services', have the meanings given such terms in section 13(f) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2611(f)); and

`(2) the term `improperly influence' means any attempt to manipulate, through coercion, extortion, collusion, intimidation, non-payment for services rendered, direct or indirect compensation, or bribery, the development, reporting, result, or review of a property appraisal.

`(f) Penalties-

`(1) FIRST VIOLATION- In addition to the enforcement provisions referred to in section 130, each person who violates this section shall forfeit and pay a civil penalty of not more than $10,000 for each day during which any such violation continues.

`(2) SUBSEQUENT VIOLATIONS- In the case of any person on whom a civil penalty has been imposed under paragraph (1), paragraph (1) shall be applied by substituting `$20,000' for `$10,000' with respect to all subsequent violations.

`(3) ASSESSMENT- The agency referred to in subsection (a) or (c) of section 108 with respect to any person described in paragraph (1) shall assess any penalty under this subsection to which such person is subject.'.

(d) Clerical Amendment- The table of sections for chapter 2 of the Truth in Lending Act is amended by inserting after the item relating to section 129 the following new item:

`Sec. 129A. Unfair and deceptive practices and acts relating to certain consumer credit transactions.'.