Rise of the Rentals

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 20 of 67

Th e M Rep o RT | 19 Feature T he appraisal space has gone through numerous changes in the past five years. The implementation of the Home Valuation Code of Conduct (HVCC) in 2009 really kicked off what became a flurry of constantly changing rules, regulations, and guidelines for lenders operating in the residential appraisal space. While it's technically no longer in existence— President Obama ended up eliminating the HVCC in 2010—we still have significant remnants in the Dodd- Frank legislation concerning appraiser independence that must be adhered to. The Dodd-Frank Act was dif- ficult to manage independently with more than 25,000 pages to contend with, but the addi- tion of the Consumer Financial Protection Bureau (CFPB) and the prospect of a potential audit, GSE compliance requirements, investor-specific guidelines, and constantly changing federal and state-based regulations, lenders are struggling now more than ever to keep their heads above water. There are so many aspects of compliance that lending organiza- tions must stay on top of or they risk making errors and being out of compliance, which can slow the appraisal process, increase costs, and result in steep fines. More Appraisal Rules T he appraisal space now has another round of regula- tions surfacing over apprais- als being heavily policed and scrutinized. This time, appraisal management companies (AMCs) are the focus of a new rule that has been jointly proposed by six federal agencies. While good intentions are at the root of the new rule, there are serious questions as to its need and the long-term negative ramifications for AMCs. For the record, an AMC is an appraisal management company that is defined as being any business entity that utilizes an appraisal panel and performs appraisal management services on behalf of a lender. An appraisal panel is a network of licensed or certified appraisers who are independent contractors to the appraisal management company. An AMC would be subject to the new joint proposed rule if, in a given year, it oversees an appraiser panel of more than 15 state-certified or state-licensed appraisers in a state or 25 or more state-certified or state-licensed ap- praisers in two or more states. The 2010 Dodd-Frank law required bank regulators to estab- lish minimum standards for state- led regulation of AMCs hired by lenders to manage the appraisal process. As a result, most states have already passed or proposed model legislation regarding AMC registration and regulation. On March 24, the CFPB along with five other federal agencies issued a joint proposed rule regarding AMCs as required by section 1473 of the Dodd-Frank Act. Involvement of the Federal Agencies T he six federal agencies that have banded together to drive the proposed rule include the CFPB, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Fed- eral Housing Finance Agency (FHFA), and the National Credit Union Administration. Under the proposed rule, states would need to require that an AMC register with or obtain a license from the state and be subject to its regulatory supervi- sion; contract with or employ only state-certified or licensed appraisers for federally related transactions; require that apprais- als comply with the USPA; and establish policies and procedures to ensure compliance with the appraisal independence standards Regulators Aim Joint Proposed Rule at AMCs Raising concerns and questions of effectiveness and fairness, a new rule driven by six federal agencies could have far-reaching implications for AMCs. By Vladimir Bien-Aime'

Articles in this issue

Archives of this issue

view archives of TheMReport - Rise of the Rentals