April, 2012

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LOCAL EDITION SECONDARY MARKET AGA Petitions Federal Reserve, CFPB CALLING INTO QUESTION NEW LAWS THAT APPEAR TO OPPOSE THE DODD-FRANK ACT, THE APPRAISAL GROUP APPEALS TO GOVERNMENT ORGANIZATIONS. WASHINGTON, D.C. // On Capitol Hill, the American Guild of Appraisers (AGA) is petition- ing the Federal Reserve Board and the Consumer Financial Protection Bureau to overturn a recently adopted rule that stands in opposition to regulations con- tained in the Dodd-Frank Act. The AGA wrote the organiza- tion's plea based on the assertion that the Fed's new rule poses a threat to "the viability of profes- sional appraisal practice and undermines the legitimacy of real estate appraisals." The legislation in question was put in place last year by the Fed, and the regulation allows appraisal management companies (AMCs) to cut fees for apprais- ers. In its petition, the AGA stated that AMCs control up to 80 percent of the appraisal mar- ket and that, by allowing such companies to pay appraisers only a fraction of customary and reasonable fees, the law makes it possible for AMCs to offer fees that are nearly 50 percent below prevailing appraisal rates. Additionally, the AGA asserts the issues the Dodd-Frank Act sought to resolve have worsened, affecting the overall reliability of residential real estate appraisals. Within Dodd-Frank, the apprais- al regulation was vague, calling for rates that were "reasonable and customary." However, the AGA says that AMCs have been put in a posi- tion to abuse the rule. According to the AGA, the original law "specifically prohibits basing fees on the current practices of ap- praisal management companies," but the Fed's regulation provid- ed a loophole for AMCs. Peter Vidi, president of the AGA, noted of the group's petition, "Under the regulation 78 | THE M REPORT Vidi went on to add, "AMCs are often owned or controlled by lenders that make big profits without the borrower's knowl- edge that his fee is an additional profit center for the lender or the subsidiary management company at the expense of the borrower." The AGA petition, which was filed by lawyers Matt Schneider and Ben Lamboitte of Garvey Schubert Barer, also accuses the Fed of failing to comply with the public commentary period that is typically man- dated with any proposed rule. Schneider and the AGA allege the Fed received more than While the AGA hopes that its petition will find an audience in Washington, D.C., Vidi was clear that the group will pursue legal action if it becomes the only alter- native. "Suing the Federal Reserve is not something that the appraisal industry would do lightly, but there may be no other option. This is far too important an issue to appraisers and consumers to simply walk away. We are fight- ing for our livelihood and for the integrity of the work that we do. We ask all appraisers to join with us in this effort," said Vidi. As an affiliate of the American Federation of Labor we are seeking to overturn, the borrower doesn't save a penny but the appraiser gets a fee that is as much as 50 percent less than prevailing rates. What the borrower doesn't know is that perhaps less than half of the fee that they are required to pay is actually going to the appraiser who performs the appraisal. The rest goes to the appraisal man- agement company." 1,400 comments in response to the rule after its adoption, and the organization's legal team stated that "the Fed was obli- gated under the Administrative Procedure Act to provide notice and opportunity for comment prior to adoption of the rule and that the Fed was further required to consider and address comments submitted as part of the rulemaking process." and Congress of Industrial Organizations (AFL-CIO) and the Office of Professional Employees International Union (OPEIU), the AGA represents the interests of appraisers throughout the country. Michael Goodwin, international president for the OPEIU, spoke out in support of the AGA's petition, stating, "We support concerted action by the American Guild of Appraisers to protect the integrity of professional appraisal practice and the profession." BofA Ceases Mortgage Sales to Fannie Mae GSE AND MAJOR BANK WILL NO LONGER COLLABORATE ON REFINANCED MORTGAGES AFTER DISAGREEMENTS ON BUYBACK CLAIMS. NEW YORK // Bank of America announced of late that it will cease making new refinance mortgage sales to Fannie Mae as the mortgage heavyweights tangle over sensitive buyback claims from the financial crisis. The bank will stop selling first-lien refinance loans to the GSE for securitization purposes, it said in a filing with the Securities and Exchange Commission. Bank of America cited "contractual delivery commitments and variances" for a halt in sales against a backdrop of legal wrangling with Fannie Mae that it called "inconsistent" with past statements. Dan Frahm, a spokesman with Bank of America, tells us that the bank's relationship change with Fannie Mae will continue with respect to residen- tial mortgage loan volume. "This decision will not affect the credit available to our customers, and we will rely on other sources of liquidity to continue to ensure we are lending to our customers and supporting the housing market recovery," Frahm says. He tells us that the relationship change will impact SECONDARY MARKET ANALYTICS SERVICING ORIGINATION

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