This is an excerpt from a memo I received from my web hosting president. This truly is one of the most important decisions that will forever effect the way real estate transactions may be done.
With all of the changes in the industry lately this could be the one that will set all of us back for many years and worse off there will be thousands more real estate professionals looking for other forms of employment.
If you have ever had to deal with a "large Lender" and have been unhappy with the service you or your clients have had this is extremely important!
Please take the time to read this memo and go to the link to voice your opinion and stop this from happening.
Thank you all!
"A regulatory call to action, deals with a nearly silently adopted regulation which could very well be the most dangerous restriction ever placed on the mortgage and real estate industry. It literally threatens to eliminate mortgage brokers almost overnight. We have to act now to stop it, because the commentary period on the proposed regulation ends this Wednesday.
The new regulations came out of a lawsuit brought by the New York Attorney General involving coercion of appraisers by large institutions. In the settlement agreement, the GSEs (Fannie Mae and Freddie Mac), and the Office of Federal Housing Enterprise Oversight (OFHEO) agreed to change national appraisal rules - in exchange for the Attorney General's office terminating its investigation of the GSEs.
Unfortunately, while the agreement has the best of intentions, the hastily written embedded regulations (called the "Home Valuation Code of Conduct", or HVCC) do not solve the problem and in fact severely punish agents, mortgage brokers, appraisers, and ultimately consumers. If there ever was a case of the cure being worse than the disease, this is it.
The two portions of the HVCC that most affect you are:
"The lender will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by... mortgage brokers..." and
"...any person... who is compensated on a commission basis upon the successful completion of a loan... shall be forbidden from... any communications with an appraiser"
No, this isn't a bad dream, and those are quotes directly from the regulation's body. Read them again. Mortgage Originators would be banned from ordering appraisals and from even speaking with an appraiser.
Why everyone in Real Estate should be concerned about the proposed HVCC:
- Brokers are specifically singled out as being "the problem", and are banned from even talking to appraisers at all; that's a RESPA "death sentence" for every relationship they have ever built
- It shifts power toward large institutions and away from mortgage brokers, since the lender alone becomes the sole point of contact for the borrower in critical areas
- Your role as one of the prime coordinators of the transaction will be severely damaged, and handed to the lender
- This completely cuts you out of your role as a broker shopping loans, since the consumer has to either lock in with the first lender or pay for separate appraisals for each lender considered - and ultimately, lenders will exploit that to induce consumers to bypass you completely
- Since buyers wind up paying for a separate appraisal for every lender, closing costs go up, competition goes down, and housing affordability plummets even further
- The business relationships that you've spent years building with agents and appraisers are made worthless overnight
- The entire regulation is biased toward the large institutions and against independent appraisers, mortgage brokers, and agents
- If this becomes law, what part of your value-added role will come under attack next?
As you can see, this isn't just about appraisers. The draconian measures in the HVCC will almost single-handedly eliminate the market for mortgage brokers if left unchecked.
Here's what the National Association of Mortgage Brokers (NAMB) said on March 3rd, the day the HVCC came out: "[The HVCC] will create a severe disadvantage to small business mortgage brokers, and prevent them from engaging competitively in the mortgage marketplace ....the National Association of Mortgage Brokers intends to consult with our legal advisors and to take appropriate legal action if necessary." And in a separate call-to-action email on April 25th, from NAMB's president, there's this simple warning as well: "This may be the most important issue facing our industry today."
You can do something to stop it. By every means necessary, you need to contact the powers-that-be and tell them how opposed you are to the HVCC.
You can do so right now by simply visiting our website and using our convenient political action page to make your opposition known instantly. Your voice will have a huge impact on the OFHEO, Fannie, Freddie, and Congress. All you have to do is click here: http://mercury.alamode.com/clicktrack.aspx?adcode=HVCC_Mortgage&url=http://www.alamode.com/HVCC-MB.
Join me in sending a message to Washington, without making any donation or spending any money at all, by just using your mouse. Join us now in sending a clear message by visiting http://mercury.alamode.com/clicktrack.aspx?adcode=HVCC_Mortgage&url=http://www.alamode.com/HVCC-MB.
Thanks for reading this, and thank you in advance for your help.
Shawn Gerhardson
Mortgage Consultant
Mortgages Unlimited MN
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