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What happened? The silence is deafening. Anybody heard anything except OTC is aginit?

GSE Appraisal Pact May Be Back in Play
American Banker | Friday, September 12, 2008
By Cheyenne Hopkins
WASHINGTON — Now that Fannie Mae and Freddie Mac have been seized by federal regulators, the financial services industry is pushing to undo an agreement that created new appraisal standards for the two government-sponsored enterprises.
In March the GSEs agreed to demands by New York Attorney General Andrew Cuomo that they significantly toughen the appraisal process, including barring the use of in-house staff or an affiliated company to conduct appraisals. But industry representatives, who have opposed the new standards, said Fannie and Freddie no longer legally have to follow the agreement.
"The bottom line is the status of the GSEs and the landscape is different, and therefore issues such as this are very much back in play," said Steve O'Connor, the Mortgage Bankers Association's senior vice president of government affairs.
Several bank lawyers said conservatorship law allows the Federal Housing Finance Agency, which now controls Fannie and Freddie, to void an agreement that has not taken effect yet. The agreement with Mr. Cuomo is not scheduled to take effect until Jan. 1.
Whether the agency will void it is another matter. The Office of Federal Housing Enterprise Oversight and its director, James Lockhart, agreed to the new standards when they were signed. Mr. Lockhart now runs the Finance Agency, the GSE regulator created in July.
It is not clear whether he would be willing to reverse course. A source close to the parties involved said they were committed to moving ahead with the new appraisal code but had made changes to it.
"Regardless of what the legal parameters are on the contract issues, FHFA has agreed with the attorney general that the agreement will go on as planned," the source said. "There is no change. This is part of the business as usual that agreements are being honored."
The GSEs, the FHFA, and Mr. Cuomo's office would not comment for this story.
The GSEs committed to the new agreement to end an appraisal fraud investigation begun by Mr. Cuomo. According to sources, the GSEs said they wanted to avoid a legal fight with the attorney general and a potential drop in their stock price that could result.
There remains a small legal risk for the GSEs. If they were to pull out of the agreement, in theory, Mr. Cuomo could sue them for breach of the agreement — though any lawsuit would put the state of New York in a legal fight with the federal government, making it more difficult for him to prevail.
The Finance Agency would likely have support from other banking regulators to void the agreement. The Office of the Comptroller of the Currency wrote in a comment letter to OFHEO in May that the standards would disrupt the mortgage market. The OCC also said the agreement could be illegal, since it was reached behind closed doors without input from outsiders.
Some said Mr. Lockhart would be unlikely to reverse himself, but others said it would be easy for him to argue that circumstances had changed.
Gil Schwartz, a partner at Schwartz & Ballen LLP and a former Fed lawyer, said Mr. Lockhart could say the agreement is too burdensome for the GSEs to implement.
"This is a legitimate … [argument] that the conservator could make, especially since it didn't go into effect," Mr. Schwartz said. If the GSEs or their regulator "say having to implement this agreement will cost X amount of money, no court in the world would not declare this a burdensome contract."
Under the agreement, the GSEs must form an "Independent Valuation Protection Institute" that would implement and monitor the new appraisal standards. The institute was to be funded with $24 million from Fannie and Freddie.
Some said if the Finance Agency kept the appraisal agreement in place, the takeover would give the agency more leeway to make it more flexible. For example, it could keep a prohibition on appraisal coercion but remove its most controversial element: the ban on in-house appraisals.
Industry lobbyists said the Finance Agency has some time before the standards are due to be implemented, though it must be dealt with. "It's still an outstanding issue. It has to be resolved in some manner over time," Mr. O'Connor said.
Roy DeLoach, a lobbyist for the National Mortgage Brokers Association, which opposes the agreement, said his group is already considering what flexibility the GSEs now have in conservatorship. "I think it could be voided and could not take effect," Mr. DeLoach said. "It's a good question and maybe one a court could look at."

Edd Gillespie wrote:What happened? The silence is deafening. Anybody heard anything except OTC is aginit?

Whatever happens, it is a safe bet that it won't be very palatable to appraisers.

Some new info on this...

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Steve Owen wrote:Some new info on this...

http://appraisalnewsonline.typepad.com/ ... ement.html

(i love the hand puppet!)

Typical S&L deal - blame the appraiser instead of the one's who wrote the rules and the ones who made the loans - While I know there are some out there that will "hit the number" the greatest majority of us report it as is and what is.

Unfortunately, it only takes a few bad apples to ruin the whole barrel. One of the figures I heard was that only 17 percent of sub-prime mortgages are in default. If only ten or fifteen percent of appraisers are Skippies it can do a lot of damage.

And if only 15% of MBs or LOs are "skippies" (haven't used that term in years) then they can do a HELL of a lot more damage than the bad appraisers.

Probably, with MB's the percentage is more like 90 percent. However, most of the stupid MB tricks require the services of an incompetent or crooked appraiser.