9th June 2015

Fannie Mae accused of widespread racial discrimination

The National Fair Housing Alliance and 19 local fair housing organizations are accusing Fannie Mae of widespread racial discrimination, claiming that the GSE maintains and markets its foreclosures in white neighborhoods “consistently better” than in middle- and working-class African American and Latino neighborhoods.

The groups filed a complaint with the Department of Housing and Urban Development, alleging that Fannie Mae’s neglect of foreclosures in minority neighborhoods in 34 metro areas is a violation of the federal Fair Housing Act.

The NFHA said that the complaint is the result of a five-year investigation into the property preservation methods used by Fannie Mae. In a release, the NFHA said that evidence gathered from 2010 through April 2015 shows an “ongoing pattern and practice of discrimination” by Fannie Mae and its asset management contractors.

“Fannie Mae is wreaking havoc on middle- and working-class communities of color nationwide through a pattern of neglect that is frankly appalling,” said Shanna Smith, president and CEO of NFHA.

“Fannie Mae’s failure to take care of its massive foreclosure inventory in African American and Latino neighborhoods further destabilizes the communities hardest hit by the foreclosure crisis, in clear contradiction of its congressional charter, federal fair housing laws, and its obligation to affirmatively further fair housing,” Smith continued. “This systematic failure also creates health and safety hazards, contributes to blight, and places an unfair burden on neighbors and city governments to clean up the problem.”

The complaintant groups (see below for full list) say they investigated 2,106 foreclosures owned by Fannie Mae in 34 metro areas that include 129 cities and found that properties in communities of color had broken doors and windows, unlocked doors and windows allowing access to the home, excessive litter, dead or overgrown lawns, dead animals or live animals on the property, and other major deficiencies.

When contacted about the allegations, Fannie Mae said that it believes the charges are without merit.

“We strongly disagree with these allegations and firmly believe they have no merit,” Fannie Mae said in a statement to HousingWire. “We are confident that our standards ensure that properties in all neighborhoods are treated equally, and we perform rigorous quality control to make sure that is the case. We remain dedicated to neighborhood stabilization efforts across the nation, including with respect to our maintenance of foreclosed properties.”

In the release, the NFHA said that since 2009 it made efforts to work with the GSEs to correct their property preservation practices.

Freddie Mac looked into its practices and made good faith efforts to correct its business model, but Fannie Mae refused to take responsibility for its neglect in communities of color,” Smith said. “The difference between Freddie and Fannie properties is striking. We now rarely find disparities in Freddie Mac’s inventory. Fannie has to take responsibility.”

The groups said that they investigated foreclosed properties for “deficiencies” that would affect the properties’ marketability and visual appeal. Among those deficiencies are broken, boarded or damaged windows and doors; unlocked doors and windows; damaged and obstructed gutters and downspouts; safety hazards; accumulated trash; overgrown lawns and shrubs; lack of “for sale” signs; and others.

According to the result of the groups’ investigation, 49.5% of the foreclosed properties in White communities had fewer than 5 deficiencies, while only 24.4% of the foreclosed properties in communities of color had fewer than 5 deficiencies.

The groups also said that 22.1% of the REO properties in communities of color had 10 or more deficiencies, while only 8% of the REO properties in predominantly White communities had 10 or more deficiencies.

The groups say there neglected properties in the following cities: Hartford, Connecticut; Indianapolis; Greater Palm Beaches, Florida; Grand Rapids and Muskegon, Michigan; Orlando; Vallejo, Richmond and Oakland, California; New Orleans and Baton Rouge, Louisiana; Chicago; Miami; Richmond, Virginia; Atlanta; Milwaukee; Baltimore; Charleston, South Carolina; Kansas City; Las Vegas; Memphis; Minneapolis; Philadelphia; Phoenix; San Diego; Tucson, Arizona; Washington D.C.; Prince George’s County, Maryland; Dallas and Fort Worth, Texas; Gary, Indiana; and Cleveland, Dayton; Toledo and Columbus, Ohio.

“Fannie Mae has not only ignored the problem but has continued to award millions of dollars in new contracts to the same asset management companies that engaged in this discriminatory behavior,” Smith said. “We have filed this complaint after having exhausted every possible means we could think of to get Fannie Mae to abide by the law and work with us to re-stabilize the damaged communities.”

This isn’t the first time that the NFHA has levied serious complaints against Fannie Mae and its contractors.

In July 2014, the NFHA, Housing Opportunities Made Equal, and Fair Housing Continuum filed a discrimination complaint with HUD, alleging that Cyprexx Services, a Fannie Mae contractor, failed to properly maintain real estate owned properties in African American and Latino neighborhoods in Baltimore, Maryland; Kansas City, Missouri; Orlando, Florida; and Richmond, Virginia.

At the time, a Cyprexx source told HousingWire that the company was not made aware of any complaints and the NFHA, to his knowledge, never reached out.

Cyprexx, for its part, said that it was “extremely disappointed” that the NFHA did not contact it to discuss their concerns before filing the complaint. Cyprexx also said the appeared to be “frivolous, and without reasonable merit.”

After HousingWire posted its first article about the NFHA accusing Cyprexx, more than a dozen commenters responded to the article, with varying degrees of support for Cyprexx or the NFHA’s claims. One commenter said, “Cyprexx (at least in my areas) doesn’t do jack squat with their properties, regardless of what “color” neighborhood it’s in. It’s all the same idea: maintain/pay out as minimal as you can on services, unless it’s an emergency.”

While another said, “This is tantamount to a witch hunt. Anyone in the business knows that maintaining properties in densely populated areas with high percentage of crime/vandalism and often times serious deferred maintenance is a huge challenge. I can assure readers from my first hand experience that banks, vendors and everyone involved does their best to get -0- deficiencies – there is not a higher tolerance for properties in one area getting a higher percentage of deficiencies than another based on neighborhood makeup. The idea that it is racially motivated is nauseating. Our government should get a little more progressive and ask questions instead of blaming.”

The alliance has also targeted big lenders, such as Bank of America, and online real estate market places, such as Zillow and Trulia in the past as well.


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5th June 2015


Editor’s Note: Discovery in an ongoing appraiser lawsuit against a bank and an AMC uncovers troubling evidence pointing to continued pressure on appraisers to “hit value.” (This story is taken from the new print edition of Working RE – in the mail now! Are you a Working RE Subscriber?)

Blacklisting Lawsuit Continues
by Isaac Peck, Associate Editor

In early 2014, North Carolina appraiser Michael J. McSwain filed a lawsuit against Yadkin Valley Bank and the appraisal management company (AMC) StreetLinks Lender Solutions, alleging that he was retaliated against for failing to reach targeted values. (See Smoking Gun Allows Appraiser to Sue Over Blacklisting)

According to the suit, McSwain performed two appraisals for StreetLinks in late 2012, on behalf of Yadkin Valley Bank, both of which failed to “meet value.” The suit cites explicit emails from the branch manager at Yadkin which state: “StreetLinks has sent out a BUTCHER on two of my last refis [sic] … make sure he is not sent out in our county and make sure he is not on the approval list…I thought I would let him do these two just to see. NOW THE DEALS ARE DEAD.”

Yadkin then demanded that StreetLinks remove McSwain from the bank’s Approved Appraiser List and according to new discovery documents that have been made public, McSwain was placed on Yadkin’s Exclusionary List in early 2013. McSwain then filed a lawsuit in February 2014 alleging that both Yadkin and StreetLinks engaged in unfair and deceptive business practices and were engaged in a civil conspiracy to encourage targeted appraisals.

The lawsuit remains ongoing but many of the facts that have come to light during the discovery process will be of interest to appraisers. More than any recent case, McSwain’s suit raises troubling questions regarding appraiser independence: namely, how much has changed since the Dodd-Frank reforms?

Appraiser Panels
At the heart of the issue is whether AMCs should create and maintain their own independent appraiser panels or allow lenders to handpick the appraisers they want used on their loans. In an interview with Working RE, Chuck Mureddu, managing director of AMC Quality Valuation Services (QVS), said that QVS uses its own panel. “We don’t believe in utilizing a lender’s panel because there’s a risk of diluting the independence part of building a fee panel,” said Mureddu.  (See Low Fee Solution: Cost Plus Model)

While independent appraiser panels are not specifically required under Dodd-Frank, many AMCs insist on them in order to safeguard appraiser independence. In fact, StreetLinks’ own Certificate of Compliance, that is issued with every appraisal and is signed by Steve Haslam, StreetLinks’ President and CEO, states that: “Appraiser Selection was performed at the sole discretion of StreetLinks by utilizing a selection methodology designed, maintained, and supervised by licensed real estate appraisers and is based on the criteria of proximity to the Subject Property, availability, and historical quality and performance metrics.”

However, in legal briefs filed as part of the discovery process, StreetLinks states that it “does not decide which appraisers are included on a lender’s exclusionary or preferred list,” writing that such moves are “solely the lender’s internal decision” and that StreetLinks “has no involvement in determining who belongs on the list, or why.”

Loan Production Staff
A central factor in McSwain’s lawsuit is the allegation that both Yadkin and StreetLinks violated appraiser independence by blacklisting McSwain for his failure to “meet value.” So far, Yadkin and StreetLinks deny any wrongdoing, insisting that their actions are completely legal.

The Appraiser Management Services Agreement between StreetLinks and Yadkin states “the lender panel will be delivered by Customer to StreetLinks…and MUST be sent by the Customer’s operations or compliance department directly from the Customer’s corporate office. StreetLinks will not be required to accept Lender Panel information from Customer’s production or sales staff.”

However, the initial suit filed by McSwain cites emails written by Yadkin’s Branch Manager, and a loan officer, which seem to indicate that direct input on the appraiser panel was made by the sales and production staff. The initial email that refers to McSwain as a “BUTCHER” and demands that he be removed from the approved list for “killing deals,” was sent by Yadkin’s Branch Manager, but it was a Mortgage Loan Assistant who ultimately contacted StreetLinks and instructed them to remove McSwain from the approved list. After confirmation that McSwain had been removed, Yadkin’s Branch Manager then forwarded the email chain to several other loan officers with the message: “FYI, I have had two cut deeply by appraiser,” according to the suit.

According to federal regulations, Yadkin is allowed to manage its own appraiser panel, but influence from sales and loan production staff is expressly forbidden. The Interagency Guidelines specifically address this point, stating that the “collateral valuation program is an integral component of the credit underwriting process and, therefore, should be isolated from influence by the institution’s loan production staff” and “the person who selects or oversees the selection of appraisers should be independent from the loan production area.”

Secret Blacklisting
McSwain’s experience is shared by many appraisers across the country who, without warning, suddenly stop receiving work from a client after a “low” appraisal is submitted. The internal emails from Yadkin provide a rare, behind-the-scenes record of what actually happens when a lender is unhappy enough with a missed value to retaliate against the appraiser.

In legal briefs filed as part of discovery, StreetLinks does not address the removal of McSwain from Yadkin’s approved list, but admits that McSwain was placed on Yadkin’s exclusionary list in January 2013 and that StreetLinks did not notify McSwain that he was placed on any exclusionary list. McSwain’s suit alleges that StreetLinks’ failure to notify him of his removal from “its list of qualified appraisers” is against both North Carolina AMC regulations, as well as rules adopted by the North Carolina Appraisal Board, which indicate that AMCs are prohibited from influencing a real estate appraisal by “allowing the removal of a real estate appraiser from a list of qualified appraisers used by any entity without prior written notice to the appraiser” (N.C. Gen. Stat. 93E-2-7 and 21 N.C. Admin Code 57D.0311a). In its discovery answers, StreetLinks expressly denies any obligation to notify appraisers that they are being placed on a lender’s exclusionary list and admits that StreetLinks “has not notified any appraiser that he/she was placed on a lender’s exclusionary list in North Carolina.

It also appears that Yadkin gave StreetLinks instructions to NOT place McSwain on the exclusionary list, but instead to simply remove him from the approved list. However, as part of the discovery process, StreetLinks actually submitted Yadkin’s exclusionary list and it appears that Michael McSwain is on the list.

Regulators Silent
The case remains ongoing in the Gaston County Superior Court and McSwain continues to seek damages from both Yadkin and StreetLinks. It remains to be seen if and when state and federal regulators will become involved in the case. Dodd-Frank defines a violation of appraiser independence as any instance where “A person with an interest in the underlying transaction…attempts to compensate, coerce, extort, collude, instruct, induce, bribe, or intimidate such a person, for the purpose of causing the appraised value assigned, under the appraisal, to the property to be based on any factor other than the independent judgment of the appraiser.”

StreetLinks’ discovery responses seem to provide supporting evidence for McSwain’s contention that he was placed on Yadkin’s Exclusionary List shortly after a Yadkin branch manager referred to him as a BUTCHER and blamed him for two failed deals. According to the suit, Yadkin did not review McSwain’s appraisals for errors or poor judgment and no complaint was ever filed against McSwain for bad appraisal work, nor was McSwain ever notified that he was being removed from an approved list or placed on an exclusionary list. Instead, Yadkin hired other appraisers who submitted appraisals that allowed the two deals to close.

Many appraisers see this case as a clear violation of appraiser independence but so far no state or federal regulators have shown interest in the case. Dodd-Frank mandates a penalty of up to $10,000 per day that the loan exists, so if this case is ever pursued by federal regulators, StreetLinks and Yadkin may each face fines in the millions, since the loans in question were funded in February and March of 2013.


Upcoming Live Webinars:
Bulletproof Appraising: Fannie Mae, Due Diligence and Your State Board – (Two-Part Webinar)
Presented by Tim Andersen, MAI
Part 1: May 12th, 10 – 11:30 a.m. PST
Part 2: May 19th, 10 – 11:30 a.m. PST

Are you prepared to successfully defend your work against inquiries from Fannie Mae, your state board and your AMC/lender clients? This webinar is designed to share an expert’s knowledge of what it takes to protect yourself. Gained through years of defending appraisers before their state boards, over real-life reporting issues, USPAP expert Tim Andersen, MAI helps you fill in any experience or knowledge gaps in your practice so you can appraise confidently and successfully. Learn More/ Sign Up Now!

JUNE: How to Support and Prove Your Adjustments – A Closer Look
Presented by Richard Hagar, SRA
Part 1: June 4th, 10 – 12:00 p.m. PST
Part 2: June 11th, 10 – 12:00 p.m. PST

It was a great webinar, now I need to redo all my reports for the last 30 years!” – Sharon

Updated and expanded, Hagar shows you how to properly support your adjustments- the foundation of good appraising! Regulations state that appraisal adjustments cannot be based upon an appraiser’s opinion. Failure to provide proper proof and analysis to support your adjustments means a rough road ahead: state board complaints, panel removal, lawsuits, even license revocation. Fannie Mae cites “the use of adjustments that do not reflect market reaction” as the number one reason an appraiser can be “blacklisted.” This training is critical in helping appraisers avoid catastrophic appraisal failures. Learn More/ Sign Up Now!

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1st June 2015

Webinar on how to get more non-lender and AMC work

This Free Appraiser Training Will Teach You…

-> How to make your appraisal business STAND OUT!
-> The best appraisal management companies to work with
-> How to do marketing for non-lender work
-> How to be found in your local area online… and why that’s so important
-> Websites: How to set yours up so you can get found in the search engines
-> The right way to build your list and do follow-up (and how to automate a huge percentage of it!)
-> How to build relationships that will send you an endless stream of leads
-> How to use direct mail effectively (i.e. without losing money!)
-> The fastest and easiest way to get #1 rankings in Google (just wait until you see what we were able to accomplish for other appraisers!)
-> One way to reach your list within minutes… and all but guarantee they see your message
-> How you doing LESS work can actually grow your business 10x faster
-> And much, much more!

Register Now For The Next Webinar – we’ll see you there!

Bryan Knowlton

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27th May 2015

2015 National Appraiser Survey Results

Find out what appraisers think in this wrap-up of survey responses to our 2015 National Appraiser Survey.

This survey is widely read by regulators, lenders, AMCs and vendors. Thank you to all who helped participate in this and ensuring that your voice is heard.


You can download it here:


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24th May 2015

Appraisal Management Company Solidifi Purchases Southwest Financial Services Ltd.

Solidifi, an independent real estate appraisal management company (AMC), has acquired Southwest Financial Services Ltd., a national, independent provider of outsourced services to home equity lenders.

Cincinnati-based Southwest Financial Services Ltd. delivers title, valuation and flood determination services for many lending institutions, processing more than 5,000 transactions a day.

The acquisition was made with the AMC’s existing cash resources. Solidifi’s parent company, Real Matters, raised $60 million in financing to maintain the company’s balance sheet and to pursue further strategic opportunities.

The company has invested more than $30 million to date in its technology platform that will further enhance appraisal and title transaction performance for Solidifi and Southwest Financial Services customers.

Berkery Noyes was an advisor for the transaction.

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22nd May 2015

2015 Appraisal Management Company Directory Now Available

Hey Fellow Appraisers! The newly updated 2015 AMC Directory is now available! After spending months editing the last update from July 2014, I have added over 30 new AMCs, removed some of the bad ones or the companies that have gone out of business and reformatted the top of the list to include the top 40 AMCs that are currently my best clients.

2015 Appraisal Management Company DirectoryI also updated and added a new chapter on how to use the AMC Directory to sign up only to companies listed in your state. That should save you a bunch of time when applying to the appraisal management companies.

And finally, this list not only includes the top companies that I recommend all appraisers to sign up to due to pay, turn around time or other factors, but for more than 99% of the companies listed, I have already done the research and found the direct link to their online applications. You won’t believe how much time that is going to save you in the registration process.

This isn’t just a list of appraisal management companies with phone numbers and maybe a website listing. I spend the time to get the contact information for each of the companies, find their online applications and more. If they don’t have an online application, they don’t get on my list. If they appear to be another appraiser looking to sign up other appraisers for a fee split, I don’t add them to my list either. If they are known not to pay their appraisers or have had problems paying appraisers in the past, they definitely don’t make it on my list. I have even tried to note as much as possible which companies state they have commercial work as well. I have registered with most of the companies in my directory except for some of the latest entries and when they have good work, they get moved up to the top of the list.

With interest rates still at an all time low and talks of softening lending practices, 2015 could possibly be your best year ever working with the appraisal management companies. But you won’t get ANY work from them if you don’t sign up to them.

Buy the new 2015 AMC Directory and start signing up today. I have been completely swamped with AMC work for years now, giving me the ability to cherry pick the best work available from a variety of companies and never get paid less than my customary and reasonable fees. I average over $450 per order, the lowest fee I have accepted in the past year was $325 and the highest $2000. Get your copy today.

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22nd May 2015

Three of the nation’s top housing experts give their take on the market, the economy and what the rest of 2015 has in store

A strengthening labor market, low interest rates, improving mortgage availability and growing, pent-up demand are predicted to significantly boost single-family housing production in 2015. But what else can builders and suppliers expect through the rest of the year?

NAHB Spring Construction Forecast Webinar

Three of the nation’s top housing experts will give their take on the market, the economy and what the rest of 2015 has in store. The panel will discuss, among other topics:

  • Housing’s potential and most likely path for 2015 and 2016
  • Recovery hurdles like labor shortages and tight credit
  • Tailwinds pushing housing such as demographics and pent-up demand
  • Future Federal Reserve actions and their impacts

Additionally, they’ll give a state-by-state analysis of areas that affect your business such as housing prices, employment and housing starts.


  • David Crowe, PhD, NAHB Chief Economist and Senior Vice President, NAHB.Crowe is responsible for NAHB’s forecast of housing and economic trends, survey research and analysis of the industry and consumer preferences as well as microeconomic analysis of government policies that affect housing.
  • Sam Khater, Deputy Chief Economist, CoreLogic. CoreLogic is America’s largest provider of advanced property and ownership information, analytics and services. Khater is responsible for analysis and commentary on the real estate and mortgage markets.
  • Robert Denk, Assistant Vice President for Forecasting and Analysis, NAHB. Denk develops econometric models of national, state and metropolitan area housing activity, long-term projections of housing demand, and ad-hoc analyses on a range of housing sector issues.

NAHB members pay $29.95; non-members $49.95. The registration deadline is  April 21. Register now at nahb.org/CFW. And as always, participants are encouraged to type in their questions as the event unfolds. The webinar will be available in the NAHB archives to all registrants for on-demand viewing.

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21st May 2015

Here’s why Illinois appraisals came to a dead stop

[Update 1: Updated on May 20 with new list of state-approved AMCs. The new list is dated May 18.]

While the rest of us were going about our business this week, appraisals in the state of Illinois came to a dead stop after the Illinois Department of Financial and Professional Regulation revoked the licenses of 70 of the state’s major appraisal management companies due to non-compliance with the state’s bonding requirements.

The cancellation of the AMCs’ licenses set off a firestorm that left appraisers prohibited from working with the suddenly unlicensed AMCs.

According to sources inside the industry, many of the affected AMCs said they were caught completely off guard by the cancellation of their licenses.

The state, on the other hand, claims that AMCs were fully aware of the situation.

In the May issue of the IllinoisAppraiser newsletter issued by the Department of Financial and Professional Regulation’s Division of Real Estate, the state’s appraisal management company coordinator writes that the vast majority of the state’s AMCs were not in compliance.

In a section titled “AMCs and Compliance,” author Brian Weaver, AMC coordinator for the Division of Real Estate, said that the state’s AMCs were “astonishingly poor” at complying with the state’s rules.

“Some AMCs, like some appraisers, are better at compliance than others,” Weaver writes.

Weaver then presents a copy of the state’s bonding requirements, which reads as such:

Section 1452.80 Bonding Requirements

The bond required by Section 50 of the Act shall be fora term concurrent with the term of the registration, commencing with registrations issued by the Division with an expiration date of December 31, 2014 and concurrent with the 2-year term of each renewed registration thereafter. This provision does not prohibit the registrant from maintaining a continuing bond during any registration term. Failure to maintain the bond and to provide the Department with written proof of the bond, upon request, shall result in cancellation of the license without hearing.

Weaver goes on to say that the AMCs bonds were “set to expire all over the calendar,” and that only nine of the AMCs operating in the state were able to comply with the bonding rule.

“It became so problematic that I finally had to send 150+ letters to the remaining AMCs that they needed to comply or face cancellation,” Weaver writes. “Compliance at a rate of of 9 out of 165 is astonishingly poor.”

Click here to read the IllinoisAppraiser May newsletter in full.

But sources tell HousingWire that many of the state’s AMCs, including several large operators, did not receive those letters and had their licenses canceled on Monday without any other warning or the possibility of a hearing.

In the wake of the cancellation, the Illinois Coalition of Appraisal Professionals sent an email to its members that the state had canceled the licenses of 70 AMCs, saying that the state had asked the Coalition to notify its membership that they were now prohibited from accepting work from the unlicensed AMCs.

In that email, which was obtained by HousingWire, the ICAP includes a state-provided list of non-compliant AMCs in a PDF file. The PDF file was hosted on the Illinois Department of Financial and Professional Regulation’s website, but the link to the PDF file is now dead.

The ICAP email also included a copy of a letter purportedly sent by the state to all AMCs who hadn’t provided their updated bond information when they renewed their license for 2015.

The ICAP email states that the letter to AMCs was sent on March 30 and warns the AMCs that they must comply with the state’s rules by May 1 or risk cancellation of their license.

A link to a copy of that letter was also included. The link was a PDF file hosed on the Illinois Department of Financial and Professional Regulation’s website, but the link to the PDF file is also now dead.

In many cases, the AMCs learned of their license cancellations from appraisers who told them they would be unable to fulfill their contracts.

In the subsequent days, AMCs from all over the country began bombarding the Division of Real Estate’s office with their bonding requirements, but with many of the state’s largest AMCs unable to fulfill contracts, appraisals in the state came to a screeching halt.

On Tuesday, just one day after suspending the licenses of 70 AMCs, Weaver and the Division of Real Estate posted the following on the state’s website (text presented exactly as in Weaver’s letter, italicization included):

Given that most of the AMCs have been overnighting packages with original documentation to Springfield, we will be repopulating and re-posting the List as AMC entities are verified as compliant.

The License Look-up shows ALL 170+ AMCs as active and appraisers are free to receive and work their assignments.

Given the anticipated volume of documentation being received in Springfield, it may be until the end of next week before we can tell precisely who has complied.

Click here to read Weaver’s letter in full.

The state also posted a list of compliant AMCs on Thursday, but a comparison between the May 14 list and a similar list from June 2014 shows many AMCs removed from the licensed list, although as Weaver’s letter states, all of the AMCs that were licensed before Monday are still allowed to operate in the state while the Division of Real Estate sorts through the AMCs’ bonding materials.

Click here to see the May 14 list of approved AMCs. And click here to see the list of AMCs licensed as of June 2014.

HousingWire reviewed the state’s website again on May 20 and found an updated list of approved AMCs, dated May 18. The new list shows several more AMCs that are now approved by the state. Click here to the see the May 18 list.

Despite the licensing issue being resolved with two days, that didn’t prevent hundreds or perhaps thousands of appraisals from being delayed.

HousingWire attempted to contact Weaver via email to discuss the situation, but received an out of office reply, indicating that Weaver would return to work on Friday.

HousingWire also sent an email to the Division of Real Estate about the issue but did not receive a response.

HousingWire also voicemails with Luisa Rivera, the administrative assistant for the state’s appraisal board and Mary Bates, the board’s liaison, but, as of press time, has not received a response from either.



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19th May 2015

Syracuse appraiser avoids prison after plea in $1 million real estate fraud case

Syracuse, NY — A Syracuse appraiser will be sentenced to 5 years’ probation after he admitted his role in a $1 million scheme to defraud families and banks during the Great Recession.

Steven Essig pleaded guilty to a felony today for participating in the scheme with Fabius real estate agent Theresa Sanders. They, along with others, would buy dilapidated homes from the government, inflate their worth and then entice inexperienced homebuyers to sign rent-to-own agreements, said the state Attorney General’s Office.

Based on the inflated home values, the ring secured refinanced mortgages from lenders, who wired money believing they were paying off old mortgages. Instead, the money went to accounts controlled by the ring.

Sanders, the ringleader, pleaded guilty in January and will be sentenced to 2 1/3 to 7 years in prison. Because she has been in jail since 2013, she’s due to be released soon.

Essig helped the group by filing fake appraisals, the AG’s office said. He pleaded guilty today to a specific case involving 225 Hazelhurst Ave., in Syracuse. In that case, he claimed that the property had been sold for $84,000 in 2007. In reality, the house had been sold in 2005 for $37,800, the AG said.

That inflated value allowed the ring to obtain a $61,257 mortgage for their benefit.

Besides Sanders, three other players also pleaded guilty for their participation:

• Tracie Clark pleaded guilty to felony residential mortgage fraud in March 2014.

• Paul Sakowski pleaded guilty to felony scheme to defraud in October 2013.

• Lawyer Michelle Powers pleaded guilty to scheme to defraud in October 2013.

Syracuse.com wrote about allegations against the ring in 2009.



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18th May 2015

Attorney on Quicken’s Lawsuit; Fixing Appraisal System; Final Rules on AMCs

Many lenders are watching this battle of industry frustration from the sidelines: Quicken vs. the DOJ, and vice versa. Prior to the government suing Quicken, Matthew Schwartz, a former federal prosecutor who is now a partner at Boies, Schiller & Flexner in New York, wrote, “Quicken Loan’s decision to sue the Government over what it has alleged is arbitrary and capricious conduct related to the investigation of Quicken’s lending practices is unconventional, to say the least. The lawsuit itself is a legal long shot. The government generally has immunity and great discretion where it doesn’t, over how it conducts its investigations or settles enforcement actions. But the lawsuit gives voice to an increasingly popular sentiment among financial institutions: that the government is, for political reasons, extracting hundreds of millions, if not billions, of dollars in settlements for what are at best technically and immaterially incorrect claims. While the government will probably win this lawsuit, if Quicken’s allegations are correct, it may be forced to explain its conduct in a way that will undermine the law enforcement effect of this and other recent enforcement actions.”

Appraisals are a hot topic. (Just ask the New Mexico Mortgage Lenders Association – it is having a lunch on the subject Thursday, May 14.)

The MBA reports that an interagency group (the Federal Reserve Board, FDIC, FHFA, CFPB, NCUA and OCC) has issued a final rule establishing minimum requirements for appraisal management companies (AMCs).The rule establishes standards for both federally regulated and non-federally regulated AMCs. Beginning 36 months from the effective date of the rule, an AMC that oversees an appraiser panel of more than 15 state-certified or state-licensed appraisers in a state, or 25 or more appraisers in two or more states, in a calendar year may not provide appraisal services for a federally-related transaction in a state unless the AMC is registered with the state or is subject to oversight by a federal financial institution’s regulatory agency through its ownership and control by a federally regulated insured depository institution. The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council may provide an additional 12 months for a state to comply if the ASC finds that a state is making a good faith effort to establish an AMC registry.

It is important to note that the rule does not require states to implement standards for non-federally regulated AMCs. Consequently, non-federally regulated AMCs would be prevented from providing appraisal management services for many transactions in states where such AMC regulatory structures are not adopted. MBA is continuing to analyze the rule and state laws to understand what states have already adopted AMC rules that meet the minimum requirements.

I received this note. “Rob, one of my borrowers had their property appraised the other day. She mentioned that the appraiser looked like he was 85 years old and a hermit, could barely shuffle around the property, and seemed almost inconvenienced to be there. It reminded me that with all the talk about the average age of LOs and Realtors, no one talks about the aging appraiser population. As I understand it, it is almost as if the appraisal business has the odds stacked against it. No one goes through high school or college wanting to be an appraiser. The national group – whether it is NAIFA or the Appraisal Institute – doesn’t seem very strong. Appraisers need 3,500 hours of appraisal time and 200 class hours – what advantage do appraisers have to train someone and pay them? In the past banks had staff appraisers, and training could occur – but that is no longer the case. Is anyone out there making recommendations about how the industry can bring in new blood in a cost-effective, efficient, and prudent manner?”

Michael Simmons with AXIS AMC wrote, “It is accurate that the average age for appraisers is rising. Depending on who’s calculating, it’s estimated to be in the mid to high 50’s (similar Realtors and loan originators). Recently I was in New Orleans at an appraisal symposium put on by the Collateral Risk Network. Some of the industry’s best thought leaders shared their perspectives on what the future holds for appraising and what steps we should take to best serve our constituency; appraisers, lenders, and communities alike.  One of the topics was on the very issue of ‘growing’ new appraisers. Rick Langdon, Chief Appraiser for one of the country’s largest banks (and largest mortgage lender), announced an initiative to bring on and train 10 appraisal trainees. Historically, the big banks were instrumental in being a training ground for new appraisers – and I think Rick was attempting to challenge all of us, banks and AMCs alike, to join in a movement to ‘replenish the herd’. It was encouraging.

“Here at AXIS, we’re about to ‘graduate’ our 1st trainee after a 2 year and 2500 hour experience requirement for Certified Appraiser Classification here in California. We currently have 2 others in training and look to increase our efforts. We’ve found that bright kids with technological skills coming out of college and paired with experienced appraisers (almost in the tradition of the old Guild system) make a perfect complement. And we believe that the natural attrition in the appraiser ranks will open up true career opportunities for those with 21stcentury skills infused with the tribal knowledge of their elders.

As for the barriers to entry for the profession, I personally agree with your reader, they’re inhibiting. We are living with a generation where instant gratification often takes too long. So the new threshold that requires an appraiser as of Jan 1, 2015 to have a BA Degree plus 2500 hours of experience over no less than 24 months and 200 hours of appraisal course education (which can vary a bit by state) is imposing. Given that neither Realtors nor loan officers have to demonstrate anywhere near that level of education or experience, it does seem disproportionate. That said, there is some movement to accelerate the training aspect and perhaps institute a series of testing protocols to shorten the timeline.

“I think most industries go through shifts that challenge their structure and roles. The more data we accumulate, the more imperative it is that we have skilled professionals to dissect and translate that data. Appraisers are only going to be more valuable and in growing demand if we are to meet the challenges in front of us.”

“If I was going to provide a solution it would be to first allow trainees to inspect the properties instead of requiring supervisors to do so at all times in federally related transitions, second it would be to allow working at a review position or staff appraiser position for an AMC or lender to be counted as field experience hours towards obtaining full licenses and finally establish some type of state wide minimum fee for appraisals so that lenders don’t have to compete on appraisal price at all times like they do now. If these 3 changes were made you would start seeing the industry be re-born very quickly. Without them you are dealing with an appraisal industry that isplaying not to lose rather than playing to win.”

Lastly, Mike Ousley with Direct Valuation said, “This topic has been a huge source of consternation not only for appraisers but lenders as well. I attend appraiser conferences where the numbers of appraisers are dwindling and there does not appear to be any way for new appraisers to get into the profession.

“Here are the facts: To become a licensed appraiser (and many lenders will only accept certified residential or certified general levels and you MUST hold a certified level licensed to be on the HUD-FHA roster) there is 150 hours of education and 2,000 hours of experience in no fewer than 12 months. So not only does an individual have to take courses, but then work for a minimum of a year BEFORE they can sit for their test to become licensed. For certified residential it is 200 hours of education and 2,500 hours of experience (along with at least an AA degree or 21 semester credits in specific subjects) and for certified general it is 300 hours of education, 3,000 hours of experience and a Bachelor’s degree or higher. Many lenders require, at a minimum, certified residential licensure or FHA Roster status in order to be an approved appraiser. So – this is akin to a companyONLY hiring folks with 10 years of experience or more. Other than a few appraisal companies around the country, I don’t know of any way for a new appraiser to get the required experience and enter the profession – I wish I had a more positive answer. Back when I started in appraising, many banks and savings & loans maintained staff appraiser positions and had trainee positions to bring in new talent – that just doesn’t seem to be the case these days.”

On the subject of appraisals Gerry Glavey with LoanLogics writes, “On HUD’s latest conference call it was stated that the primary role of an FHA Roster appraiser is to, ‘Observe, Analyze and Report’ what he/she encounters during their on-site visit to a property. There were a number of specific examples cited in which the HUD staff presenter indicated that the appraiser has effectively completed their assignment when they have documented and reported their concerns to the lender or underwriter. The problem, however, is that no specific guidance was provided to the lenders & underwriters as to how to deal with the problems reported by the appraiser. In fact, the draft 4000.1 Handbook has many examples of this dilemma and needs to be modified before it is implemented.

“One topic discussed was, ‘Appraisers must now make a statement as to whether or not the subject property can be legally rebuilt if destroyed when the property has a legal non-conforming zoning designation.’ However, what about situations in which the property cannot be rebuilt if it is more than 75% destroyed?  Should the underwriter reject the property for mortgage insurance although the borrower’s will be required to have adequate hazard insurance coverage?  No guidance is provided in the Handbook or on the call.

Another topic was, ‘Appraisers will report to the lender if they could not observe the roof surface.’ Should a lender then require a roofing certification, a roofing warranty or would a hold-harmless letter from the borrower be acceptable? No guidance is provided in the Handbook or on the call.

“‘An Appraiser must report whenever he/she cannot gain access to the attic area and state why it is not readily accessible.’ The underwriter will be required to make a decision as to what actions (if any) are deemed necessary to close the loan transaction.  No guidance is provided in the Handbook or on the call. In fact, an underwriter on the conference call stated that she had a recent case in which the appraiser stated that he could not gain access to the attic area but observed no signs of problems with the roof shingles or any evidence of roof leaks on 2nd floor ceilings. This underwriter documented the file accordingly but received an Indemnification Agreement request from HUD subsequent to the loan closing.

“And, ‘Appraisers must perform a highest & best use analysis and let the lender know when it is determined that the subject property has Surplus Land.’ Specific guidelines, however, have not been provided to lenders as to how to deal with a transaction in which the Appraisers determine if there is Surplus Land.

“To access the draft Handbook [meant to consolidate much of HUD’s efforts] go to the www.hud.gov website and type in 4000.1 Handbook in the Search Box. NOTE: On April 22, 2015, HUD/FHA Headquarters staff conducted a follow-up industry conference call to discuss the recently published new Section of the draft “Origination Through Post-Closing/Endorsement” Handbook (4000.1) dealing with Appraiser and Property Requirements. This Handbook will ultimately serve as a single reference point for FHA underwriting and appraisal policies & procedures and is targeted to be effective for all transactions in which the FHA case number was assigned on and after June 15, 2015.”

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