MORTGAGE BLOG!

Attorney General Cuomo, FANNIEMAE and FREDDIEMAC (housing authorities), entered into an agreement in March of this year called the "Home Valuation Code of Conduct". This "code" does several things, but the most damaging point is stopping Mortgage Brokers from choosing the appraiser or having any contact with the appraiser during the loan process. This "code" say's that the appraisal process will be at the sole discretion of the end lender (yes, the big guys). Let's explore why this is bad for Mortgage Brokers, Appraiser's, Realtors and MOST OF ALL CONSUMERS!

1-Appraiser's will have to join AMC's (Appraisal Management Companies), and give 40% of their fee for the privilege of being included in the AMC. We will be at the mercy of time frames, costs and appraisal procedures of these AMC's. This will end the existence of independent appraiser's! The appraiser's that "play ball" with the lender have work, those that do not, are out of business. At present, if we do not receive prompt and professional service from our appraiser's we can call another one. THE AMERICAN WAY of FREE ENTERPRISE!! Also, forcing appraiser's to join and pay these AMC's, closely resembles a "union" type setup. This will most certainly drive the cost of appraisals up!

2-This "code" also "traps" our borrowers into that particular lender unless they want to pay for ANOTHER APPRAISAL! Currently, we, the Mortgage Brokers, order and own the appraisal during the loan process. Often times, we may switch lenders in the middle of this process, if another lender offer's a better incentive, rate or lower fees. AGAIN, FREE ENTERPRISE! This is why clients come to "BROKER'S", because we "shop" lenders for them. We are not "trapped" into one lender's rates, fee's or otherwise. As Mortgage Broker's, if we do not order and therefore, do not own the appraisal, the whole loan process becomes less competitive and the BORROWERS lose the most. Because a new appraisal would be required to change lenders, borrowers would be discouraged from shopping for the best mortgage deal. Currently, we have the ability to reassign the appraisal to a new lender with no extra cost.

3-Lastly, the large institution lenders gain Power and this creates bias. The large lenders will have the ability to choose which appraiser's stay in business and which ones don't!! Again, talk about breeding corruption! This almost seems like an organized crime structure where a few people at the top call the shots.

WOW!!! PLEASE STOP THIS “CODE”! I understand the theory behind this proposal in that it is believed that as Mortgage Broker’s we may be able to exert undue influence of home valuations on the appraiser’s that we have built relationships with. But certainly there are far more appropriate safeguards against this that protect free enterprise and preserve independent appraisals. This can only foster competition and lower costs for borrowers.

Foreclosures are at an all time high! Many consumers are “trapped” in a mortgage payment that has or will adjust to an amount they cannot manage. Does this mean there is no way they could qualify for another home loan or refinance. Derogatory items on your credit report, while unfortunate, do not eliminate the possibility of obtaining a mortgage loan. Many people have experienced credit problems at some level in recent years.

In response to the growing number of potential borrowers with credit problems many lenders have now made available loan programs to assist those individuals with getting back on track and still be able to enjoy home ownership or refinance existing mortgages?