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S.2860 - Fair Value and Independent Appraisal Act

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.

The proposed Fair Value and Independent Appraisal Act , introduced by Sen. Robert Casey [D-Pa] amends the Truth in Lending Act to prohibit a creditor from extending a mortgage to any consumer without first obtaining a written appraisal of the property to be mortgaged, prepared in accordance with specified requirements. Requires a creditor to provide a copy of each such appraisal to the consumer without charge, at least three days prior to the transaction closing date. Declares unfair or deceptive specified property appraisal practices in the provision of:

(1) mortgage lending services for a consumer credit transaction secured by the consumer & principal dwelling; or

(2) any mortgage brokerage services for such a transaction. Establishes civil monetary penalties for such practices. Directs the Board of Governors of the Federal Reserve System and the Federal Trade Commission to jointly prescribe regulations defining such unfair or deceptive acts or practices.

http://thomas.loc.gov/cgi-bin/query/z?c110:S.2860:

The fact that bills like this are even being suggested appears to be a baby step in the right direction.

If you agree, go to this site and vote for the bill. It is certainly worth getting more voices behind it.

http://www.washingtonwatch.com/bills/show/110_SN_2860.html

After reading the bill, it is straightforward and seems to do what we all want.

Posted by Kenneth Rossman - Long Island, NY CG Appraiser on 07/05/2008 07:44 AM

Comments (8)

s2860 fair value and independent appraisal act, hvcc ivpi, appraiser independence

Post is included in group: Appraisers

8 Comments on S.2860 - Fair Value and Independent Appraisal Act

JUL

2008

It makes sense. I think appraisals have been way more fair in the last few month though.

What about mortgages that don't require appraisals? Now, I guess these consumers will be forced to fork over $350. The red tape continues.

How is giving an appraisal to the consumer 3 days prior solving anything?

Our problem was that the underwriters were accepting crap appraisals and this does nothing to prevent that. The foreclosures and subsequent firing of these underwriters and black listing of rogue appraisers solved everything without the government telling us what we need to do.

How does this diminish predatory lending? Do consumers understand the inner workings of an appraisal?

There were/are very few (mortgage origination) circumstances where an appraisal wasn't/isn't warranted. Maybe very low LTV loans??/

If this proposed act had been in effect as law say 10 years ago with meaningful enforcement and true appraiser independence as the rule rather than the exception, do you really think the sub-prime meltdown would have occurred?

The sub-prime meltdown occurred because lenders permitted loans to be booked with no real scrutiny of the collateral and/or mortgage brokers, commissioned loan officers and RE Brokers with a vested interest in the outcome of the appraisal ordering and overseeing the appraisals with little concern about due diligence/accuracy and tremendous pressure to push/make value and eliminate any comments about any negative conditions or influences.

That sounds sensible, however, I guess we won't know how it affects anything until we've had some experience with it. Excellent talking points. Enjoyed your post, Kenneth.

JUL

2008

How is this proposed law going to change anything? I still fail to see the benefit of giving the borrower a copy and 3 days. For what?

Ken,

The bill looks to be a positive bill and a step in the right direction. Some of the opposition of those who finance Manufactured homes shows some of the reasons manufactured homes have a higher foreclosure rate than traditional homes.

JUL

2008

I'm curious if this 'bill' is law yet? As an appraiser, I would like to see the 'drive-by' go away. AMCs are the worst about them, they try to get an 'appraisal' by getting the cheapest order possible. This would be fine is most areas, but half of Maine (my state) is unorganized. Tax information is difficult to get, and a lot of the properties cannot be seen from the public road (1,000 acres of woods!!)

Thanks

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