There
has been a lot of appraisal news in recent weeks, the most important perhaps
being that six government agencies issued a proposed rule that would
implement minimum requirements for state registration and supervision of
appraisal management companies (AMCs). Just so we're clear, an AMC is an
entity that serves as an intermediary between appraisers and lenders and
provides appraisal management services. In accordance with section 1124 of
Title XI of the Financial Institution Reform, Recovery, and Enforcement Act of
1989, as added by section 1473 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, the minimum requirements in the proposed rule would
apply to states that elect to establish an appraiser certifying and licensing
agency with the authority to register and supervise AMCs.
The
proposed rule would not compel a state to establish an AMC registration and
supervision program, and there is no penalty imposed on a state that does not
establish a regulatory structure for AMCs. However, an AMC is barred by Section
1124 from providing appraisal management services for federally related
transactions in a state that has not established such a regulatory structure.
Under the proposed rule, participating states would require that an AMC
register in the state and be subject to its supervision, use only
state-certified or licensed appraisers for federally related transactions, such
as real estate-related financial transactions overseen by a federal financial
institution regulatory agency that require appraiser services, require that
appraisals comply with the Uniform Standards of Professional Appraisal
Practice, and so on - over a dozen more requirements.
The
proposed rule would provide participating states 36 months after its effective
date to implement the minimum requirements. It certainly has some heavy-weight
backers: 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 Consumer Financial Protection Bureau (CFPB), the
Federal Housing Finance Agency (FHFA), and the National Credit Union
Administration (NCUA). The public will have 60 days to review and comment on
the proposal. Publication of the proposal in the Federal Register is expected
shortly, but for more visit AMCChanges.
Mike
Ousley with Direct Valuation Solutions writes,
"In the original Dodd-Frank Act there were provisions that generally
followed the new proposed rule for participating states to register AMCs,
however, it was generally perceived that the states had 36 months to establish
a supervision program that would comply with Dodd-Frank. What's
interesting about this proposed rule is the following: 'The proposed rule
would not compel a state to establish an AMC registration and supervision
program, and there is no penalty imposed on a state that does not establish a
regulatory structure for AMCs. However, an AMC is barred by section 1124 from
providing appraisal management services for federally related transactions in a
state that has not established such a regulatory structure.' One could
theorize that certain state appraisal regulatory agencies, many that are run by
independent appraisers upset that AMCs even exist, would push to have their
state opt out of AMC regulation and supervision, thus barring AMCs from all
federally related transactions within their state. Lenders active in those
states that had relied upon AMCs to manage the appraisal assignment and
management process would then be forced to either establish an affiliate AMC
and deal with the CFPB rules on affiliate charges as related to qualified
mortgages and the 3% points and fees calculation, or contract directly with
appraisers within those states by utilizing a platform such as Direct Valuation
Solutions to assign, track and deliver appraisals for federally related
transactions. The AMCs that fought the original registration and
supervision by states may now be forced to actually embrace and push for more
state level oversight of their activities in order to not get left out
entirely."
Mike Simmons, with Axis Appraisal Management, wrote, "Kudos
for noting one of the standout provisions that allows states, without penalty,
to opt out of establishing an AMC registration and supervision program. What's
noteworthy is that while those states that elect that path won't be penalized,
their citizenry will. Since AMC's will be proscribed under Section 1124 from
providing management services, borrowers will either be limited in their
choices of loans and lenders, or face increase costs from having a shorter list
of lenders invest in building and managing their own panels in what will be a
small number of states. Since there are 38 states that currently have AMC laws,
perhaps this an elliptical way for the rule to encourage 100% participation?
Given the fact that states benefit financially from the fees levied on AMC's
for maintaining such oversight, and that they can and often do impose higher
standards versus the new federal rule, we'd be surprised at less than full
participation. For those of us who truly embody service in this era of
increased regulation, the contribution we add to lenders, appraisers, consumers
and their communities is both significant and valuable."
Hey,
what company would rather do 4 loans for $200k each or 1 loan for $800k? It is
easy to make the argument that doing one loan for the same amount as the others
combined requires less time and cost, and limits the odds of future problems.
That debate aside, independent mortgage LOs continuing to
"complain" about the rates offered by banks like Wells Fargo on their
jumbo loans - but hey, if I am a bank, I'd rather only service one $800k loan
than four $200k loans with lower rates. And research staffs are cutting
their estimates of the total jumbo biz for 2014, which is really too bad for
the scores of hedge funds and money managers investing money into thinking
they're going to be next coolest thing in jumbo loans. "Demand from banks
for jumbo loans prompted JPMorgan Chase & Co. analysts this month to lower their forecast for
2014 issuance of non-agency, or private label, securities to $5 billion to
$10 billion, from about $20 billion." And just to bring you up to date,
Redwood Trust issued a new MBS for $342 million.
Flood
insurance legislation has been in the news, and now the FBI is investigating
flood maps.
Darren M. contributes, "Interesting recent research into FEMA flood map changes."
Here we are, on the last day of
the first quarter, staring at a new week of economic news - and who knows what
might happen overseas! Today is the Chicago Purchasing Manager's Survey,
tomorrow is the ISM Manufacturing Index (from purchasing managers of 300
manufacturing firms about general trends) and Construction Spending, Wednesday
are the ADP employment numbers (always of questionable predictive ability for
Friday's employment data) and Factory Orders. Thursday we'll find have Initial
Jobless Claims and some trade balance figures. On Friday, April 4th,
we'll have the usual series of employment data, arguably the most important
U.S. data of the month. For numbers in the early going, the 10-yr closed
Friday at a yield of 2.71% but this morning is up to 2.75% and agency MBS
prices are worse about .125.
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