HVCC Appraisal Regulations Bad For Real Estate
The big, bad Mortgage Brokers will no longer be able to manipulate value and appraisers will be held accountable to a higher power by big brother. What a crock 1 Let us look at why truly moving the conflict of interest from the Mortgage Broker to the Banks is really not as solid a decision as we would like to believe.
The Banks will provide a more accurate value measure.
In reality, the bank will always look for a lower value than fair market value because it is always in their best interest to do so. Leverage on a lower value will always benefit the bank – not the consumer. Why on earth would anybody think Banks, as credible as they have not been would do an about face on practices and take better care of the consumer? The true reality of the situation is that the Bank has a major conflict of interest when it controls value and may use it to it’s best advantage as it feels the need .
How Else Might The Bank Use This Leveraged Position of Value?
A few ways immediately come to mind and I will share them with you. Lending in the real world is automated through either a Fannie, Freddie or FHA Approval that will give a borrower based on the information provided an approval. Banks and Wholesale Lenders will now have the ability to use the appraisal as a reason to decline an approved loan based on value. Will a Bank effect value on an appraisal. You bet they will if it is in their best interest to do so. Banks can now get back into predatory lending and appraisal fee increases to the detriment of the consumer, but a major profit generator for them. The war cry has been – “Get rid of the mortgage broker and we can then get lending back to profitability by not having to compete for business.” For example, a bank charges the consumer 425.00 for an appraisal and the lender in turn pays the appraiser 225.00 – who gets the difference? You guessed it – the bank!! If you ask barney frank and the boys up at capitol hill they will all tell you hogwash -however when was the last time any of these gentlemen told the truth about anything and truly how many of the players in this game are not rewarded by the bank lobby? And for this discussion let us bring up one last topic – Discriminatory Lending – now the banks can fall back on the appraisal and say – Gee Mr. and Mrs. Jones – We just do not have the ability to get value on this property so your loan is declined!
Anti Trust Law Suits
This one is coming soon from the appraisers lobby. The banks have now truly destroyed a reputable appraisers business because every business relationship that the appraisal company has nurtured over the years in the business no longer matters. How would you like to be told that your 20 year business is being chopped up and a portion of it is now being given to under qualified appraisal services. What a tough sell this is. Now that is consumer protection at it’s finest folks.
The Senate and Sub Committees – These guys might be the most uninformed morons on the planet. They no absolutely nothing about real estate and mortgages, however they want to be involved in the decision making process. That is as effective and logical as talking to a Country Club board about the business side of golf and believing they understood a word of what you said. The ego gets in the way of the brain as a general rule and Washington has alot of egos. We are in the mortgage mess because of these morons – not because they tried to stop bad practices. Hey, wait a minute, let’s give them more authority to ruin, oh wait protect the consumer.
By Thomas Brewer
Over 15 years of experience in the Real Estate and Mortgage industry with an MBA from Georgia State University. I have 2 teen age children and enjoy a good game of golf.