“The American Dream is freedom; not a house”.
Had the best time talking #housing and #finance with Phil, Missy, and Kevin on Monday. Our discussion about zero interest policies were right on time; today is FED day and twitter buzzes with anticipation.
The Glass-Steagall Banking Act of 1933 comprised 37 pages and provided for a safer, more effective use of bank assets, it regulated interbank control, and prevented undue diversion of funds into speculative operations (gambling). In just 37 pages, Glass-Steagall ended Wall Street’s wild and speculative gambles that caused the Great Depression; it kept America’s economy growing for almost 70 years.
In 1994, interstate banking was allowed; in 1999, Glass-Steagall was repealed. It took banks less than five years to destroy America’s economy and put the world economy in a tail spin. Dodd-Frank is 829 pages and tried to address the same issues as Glass-Steagall but has failed to provide solutions; in fact, it’s done just the opposite. In 1933, Congress understood the business of banking and making sound loans to grow the U.S. economy.
When I first received the @PhiladelphiaFed working paper on The Impact of HVCC, I had no expectations. With so much discourse about HVCC, the paper could have gone a thousand different directions. I was on the edge of my seat as I inspected the document word for word. This is of course the first empirical review of the impact of HVCC.
Analyzing the paper revealed my emotions from the chain of events pre and post HVCC are still quite large and powerful; except this time it was different. After the first read, I was rather indifferent to the findings. Low values post HVCC didn’t shock me; they were inevitable. What the report didn’t say specifically was how unregulated HVCC influencers successfully alienated mortgage marketing appraising from neutrality. The unregulated, one sided, industry wide code basically funded and justified this perfect storm.
Focusing on the message over the emotion during the second and third read, it became clear the working paper was quite accurate and mortgage marketing appraisers are directly a source of the symptom. After discussing the working paper with peers, I resolved that we were officially provided an empirical analysis that revealed a specific symptom of the impact of HVCC; low values post code.
One of my favorite appraiser blogger’s @Jonathanmiller provided his analysis of the working paper in an article on @BloombergView called “Guess What’s Holding Back Housing.” My impression of the story line was how pre and post interference of Appraiser Independence by the HVCC shaped the “form fill” appraisal environment and that we have today. Acknowledging mortgage marketing appraisers enabled a forced position of weakness as a result of the HVCC wasn’t necessarily a bad thing. Still, appraiser’s reactions to the article came swift, harsh and high on emotion.
Something I’ve resolved to help manage those intense stressors and drama is to own my part of the journey to defeat.
The bright side of it all……HVCC is gone.
The Dodd-Frank Act, ginormous as it is replaced the unregulated HVCC codes with laws of Appraiser Independence Requirements (AIR) by state enforcement. This is huge and it’s something we didn’t have before. The challenges we face today are completely different than the last decade of the HVCC debacle. This is a new era of discovery for Appraiser’s Independence that in turn provides opportunity but only if it’s taken; both professionally and respectfully.
An important industry detail was lost in translation when the Wall Street Journal reported on March 24th that Regulators Target Home Appraisals, @NAR’s @RealtorMag followed suit on March 26th with Regulator Seek to Raise Qualifications of Appraisers, and on April 4th @HousingWire failed to perform due diligence when reporting Fed Standards will Squeeze Small Appraisers.
The proposed rules presented by the National Credit Union Administration were signed by six federal agencies to establish minimum requirements for Appraisal Management Companies. The proposed rules serve a purpose to uphold Appraiser Independence Rules (AIR). They do NOT however affect appraiser qualifications or business practices in any way. Yet, when one reads any of these articles, it seems the real matters of fact are lost in translation.
Appraisers and AMCs are not one in the same. After all these years, it’s evident that industry observers and participants still aren’t able to distinguish the identifiable difference between Independent Appraisers and Appraisal Management Companies. Layering the two as one all-inclusive entity of the mortgage marketing process isn’t only misleading to consumers, it interferes with Appraiser Independence. AMCs of course benefit from industry related articles with undertones that imply only appraiser related components apply because it diverts attention to their unregulated participation in the mortgage process. So far, the media affords this misrepresentation far too often. The tactic of diverting the attention is noted throughout the last decade of misrepresentation and consumers deserve better than that.
The proposed rules are not an overhaul of the appraisal profession as appraisers have extensive rules in place that function perfectly. It’s the unregulated, third-party interference that’s diluted the performance of quality and therefore, the purpose of the newly proposed minimum for AMCs; including bank owned AMCs.
You may access The Joint Notice of Proposed AMC Rulemaking here: http://www.scribd.com/doc/214197518/Joint-Notice-Proposed-AMC-Rulemaking
What some perceive as a broken system, I perceive as purpose. I believe appraisers are united by serving the purpose of independence and the balance it brings to the mortgage marketing and mortgage servicing process.
Commissioned influences who would like nothing more than our neutrality to go away completely imply that our independence is a negative to the industry and that it keeps us unorganized and ineffective.
Independence doesn’t make appraising a weak and divided profession, it means we all serve the same purpose. The different levels of appraiser expertise covers a variety of unique services. Regardless of the service provided, independence is the core factor that make us a united profession.
Through the years, something has clearly been lost in the translation of appraiser independence when in fact, appraisers own their independence with dignity, against the adversity, and as a group of professionals who serve the greater purpose of neutrality.
Special Note to WV Appraisers: The next scheduled meeting of the Joint Standing Committee on Government Organizations overseeing Appraisal Management Company legislation (draft bill) is scheduled for Tuesday, February 12, from 11 am – noon in the House Chamber. There is no agenda available for review and basically states the meeting will be a summary of the former interim study topics; being AMC legislation.