Editor’s Note: To many, mortgage brokers and appraisers are like oil and water- they just don’t mix. In this story appraiser Linda Morgenroth takes us inside the recent suit filed by the National Association of Mortgage Brokers (NAMB) to stop the HVCC and explains why joining that organization has been key to the current success of her appraisal practice.
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Appraiser’s Inside Report: Mortgage Brokers File Suit to Stop HVCC
By Cary Barker, Assistant Editor WRE
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The National Association of Mortgage Brokers (NAMB) filed a complaint against the Federal Housing Finance Agency in February 2009 regarding the Home Valuation Code of Conduct (HVCC), claiming the HVCC will force mortgage brokers to rely on lenders and their affiliates to obtain appraisals for customers, drastically reducing the ability of brokers to provide consumers with an efficient cost-effective means of obtaining a mortgage.
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The suit claims this will disrupt the established business practice of mortgage brokers, decreasing the efficiency of the marketplace and increasing costs to consumers.
Linda Morgenroth, a California Certified Independent residential appraiser and NAMB Affiliate, attended a meeting in Washington D.C. last month with numerous Congressmen regarding the HVCC. “No one I met with on Capitol Hill liked the idea of Andrew Cuomo dictating policy for the entire U.S. mortgage market from New York state,†Morgenroth said. “The aide of one of our Congressional representatives offered to help us draft a proposed congressional resolution denouncing the HVCC.â€
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Morgenroth, who joined NAMB as an Affiliate five years ago as part of her marketing plan, is now on the Board of Directors for her chapter (Los Angeles)
and is currently President-Elect. “Each February NAMB members from around the country meet in Washington and spend two days on Capitol Hill meeting with Congressman and/or their legislative aides to voice concerns for the mortgage industry,†Morgenroth said. “This year, one of the paramount issues on the agenda was the HVCC. My chapter’s Board of Directors felt it was so important to have an appraiser’s voice included in these meetings that they voted to reimburse the lion’s share of my travel costs in order for me to attend.â€
Oil and Water: Appraiser’s Perspective
NAMB has a category of membership for affiliates which includes appraisers, escrow and title representatives, wholesale lender reps, attorneys and other real estate professionals. Morgenroth says since joining as an Affiliate, she has gained a wealth of information. “I now see the client’s perspective instead of just seeing that of the appraiser,†she says.
“I find that the CAMB/NAMB (California Association of Mortgage Brokers) originators on the whole to be the cream of the crop. They are the decent, ethical long-term professional originators who appraisers seek out as clients. These are not the short-term, fly-by-night, make-a-quick-buck types, so I rarely face issues of pressure for inflated valuations. And my monthly volume of appraisals is as high as I can possibly handle, even in this market. Joining CAMB and NAMB has been key to the success of my appraisal practice,†she said. Â
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NAMB is the only national trade association that represents the mortgage broker industry, about 70,000 mortgage broker professionals. NAMB also represents the interest of homebuyers and advocates for public policies that serve the mortgage consumer by promoting competition, facilitating homeownership and ensuring quality service.
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You can read the entire suit at WorkingRE.com, in Sidebars: NAMB vs. FHFA Lawsuit.
12 responses so far ↓
1 Curious Appraiser // Mar 4, 2009 at 4:16 am
What the story did not reveal, was how long Linda has been in the business. I’ve been in the business nearly 20 years. The first 5 were my most successful, because I too offered my services to brokers. Around year 6, I realized I didn’t know what I didn’t know. Many appraisers don’t realize they are being “pressured” in the beginning, because they don’t comprehend the simple fact, that even “stretching” a value by $5K is stretching. When it comes into doctoring the numbers by only $3K-$10K, they buy into the lie of “they are not that good”.
The fact is, when you change the value $1 to fit the needs of your client (estimated value), you have become an advocate for your client (who wants to close the deal) and for yourself (you want to keep the client).
USPAP is simple. The conduct section of the ethics rule is black and white:
*An appraiser must perform assignments with impartiality, objectivity, and independence,and without accommodation of personal interests.
*An appraiser must not advocate the cause or interest of any party or issue.
*An appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions.
Why appraisers can not absorb this simple process is beyond me. Actually it is not. I understand completely. It is easier to make money in this business when you can keep a client happy. Keeping your client happy, means giving them what they want 95% of the time. Based on the current mortgage meltdown, this obviously does not protect the public interest. Many of the homeowers who purchased homes they now can not afford and are going into foreclosure, where because appraisers enabled the seller to pull equity out of thin air, to pass along to the uninformed buyers for downpayment or downpayment assistance. Looks like the $5K at a time “streches” times 30,000,000 loans has contributed to the multi billion dollar problems.
If you will not do an appraisal for a family member, because it “might be perceived that you have an interest as an appraiser”, then please explain to me how you can perform unbiased appraisals for a client that sends you 30%, 50% or even 80% of your income? Explain that one to a judge and jury, should you ever find yourself having to defend yourself someday.
Appraisers have complained for years that the part of this job they hate the most is the pressure they receive. HVCC addresses that pressure, and now it appears most appraisers are complaining that their ball has been taken away. What I haven’t heard, is an appraiser come up with better solutions to address this VERY serious problem. The NAMB’s “ethics” provision is a joke. You show me a mortgage broker who doesn’t ask you to “reconsider” your appraised value, for the simple reason that it is killing the loan, and I will let you ride my unicorn.
2 Coastal Insight // Mar 4, 2009 at 6:32 am
Curious Appraisal- covered my comments to a “T”.
Wait until appraisers start filling out that doggone form on market trend. That is certainly a time-wasting dud. The trend that should be shown is the whole city and use Excel to create a chart for inclusion in the report. Since underwriters can’t read or, at least, refuse to comprehend, maybe a chart would help them visualize a trend.
3 bubba diamonds // Mar 4, 2009 at 7:04 am
Curious Appraiser said it all very well. I have also had a twenty year career in appraisal. It has been very unsatisfying for the most part. If I had known what I know now about appraisal I would have never gotten into this business. “Lender pressure” to make the deal work is very rarely expressed literally. In reality it comes from knowing that the mortgage broker(s) that enable you to earn $8,000 per month can turn off the money valve any time they want for any reason they want, including the fact that they disagree with the value on a single appraisal. This conflict of interest is systemic and must be addressed. Perhaps the HVCC is not the way to go, but it is all we have right now.
My business has changed in the last two or three years. Now I only do work for AMCs. If the sales price is $151,000 and an analysis of the market indicates $150,000 then guess what, my final value estimate is going to be $150,000. This happens quite frequently. When I tell my appraiser friends this that work in offices where most of the work comes from mortgage brokers they are incredulous. On refinances there is no loan amount, target value, owner’s estimate of value, etc. The AMCs I work for prohibit any communication between the appraiser and loan officer and processor. At last I can call them like I see them without having some long argument over comp selection and adjustments with a non-appraiser. I don’t make as much money as I did ten years ago, but I am a better appraiser.
4 Carol Mooney // Mar 4, 2009 at 7:15 am
I am happy to hear that California has such honest, non pressuring Mtg. Brokers. We have not found that to be the case in Florida and it was such a problem with every single Broker we attempted to work for that we too started working only for AMC’s 8-10 years ago. IN addition the Brokers would often end up not paying one way or the other. The AMC’s pay less but there is absolutely no pressure and you are always paid. I would have to think that if the brokers were so wonderful as stated in the article that we would never had this HVCC issue come up.
5 Michael // Mar 4, 2009 at 8:40 am
In my world Brokers have displaced the proverbial used car salesman and ambulance chasing lawyer at the bottom of the food chain. I refuse to do business with them even now that I can use the income.
First they promise to give me all their business but fail to mention if they had any in my area or who their appraiser was in the past.
They completely understand my market despite calling from miles or states away.
They usually want a value before I get the order, what a joke.
If I had to depend on business from Brokers I rather be a greeter at Wal-Mart or get a job asking people if they’d like that Supersized. I enjoy the lifestyle appraising affords, not necessarily the money these days but the flexibility of schedule is nice. I don’t think I could punch a clock anymore nor do I want to. I would like to punch the parties responsible for the current state of the market, but I’d need the strength of Popeye and I don’t thing there’s enough spinnach in the world to get that job done.
6 Regalcat // Mar 4, 2009 at 3:08 pm
I agree with the thought that mortgage brokers can’t be trusted but what about the AMC’s that charge the homeowner $350 to $400 dollars and tell the appraiser that if you don’t work for $130 per order you won’t get any work from them. That happened in St Louis last month.
7 Jason Argo // Mar 4, 2009 at 4:18 pm
When I hear an appraiser from California tell me that the mortgage brokers there are among the most ethical, I just want to puke. Some people will never get it, even in the face of real estate values plummeting as a result of so many fluffed appraisals in California. Keep telling yourself that your relationship with these crooks is an honest one while the rest of us just continue to laugh.
8 Michael // Mar 4, 2009 at 8:07 pm
If I had to work strictly for AMC’s, I’d rather go to Wal-Mart. I guess I’m lucky I’m in a small market and have 4-5 banks that use me and like my work.
I’m not getting rich but I’m not going to have a grabber any time soon either. I do a few Home Inspections and radon tests in between appraisals and I’m happy.
Michael
9 California Appraiser // Mar 22, 2009 at 11:39 am
“I find that the CAMB/NAMB (California Association of Mortgage Brokers) originators on the whole to be the cream of the crop. They are the decent, ethical long-term professional originators who appraisers seek out as clients. ”
Hahahahaha - do you have a flying pig you want to try and sell me too? this Morgenroth is obviously a disgusting, lying, money grubbing crook. In ten years every mortgage broker or loan officer client I ever tried to work with always expected me to provide or accept an “estimated value” before I even got the assignment and eventually all would haggle me for value or ask me to remove unflattering statements on the condition of a house. I stopped dealing with them entirely more than three years ago as the whole corrupt nature of the broker/appraiser relationship became undeniably obvious. Those who accept orders from mortgage brokers and commission earning loan officers are clearly ethically challenged and corrupt. The HVCC is a godsend and will at least make significant steps towards ensuring unbiased evaluations. To all of you crooks complaining about the HVCC - your “full fee” has included payola for making the deal slide through and for being in the commission earning sales person’s back pocket. It has not been because the mortgage broker thinks you are such a competent and honest appraiser. Get a freaking clue. Having to pay the “honesty tax” by accepting orders from AMC’s while some crook does the comp check for the broker, agrees to a value before going out to the home and makes 30% or 40% more than I do makes my blood boil but it looks like maybe this economy destroying scam between appraisers and mortgage brokers might just be ending finally. Hopefully this judge will not buy the total BS being sprayed out by NAMBA and their crooked crony appraiser buddies.
10 Kris Heiser // Apr 1, 2009 at 6:30 am
You AMC guys are NUTS! Who got busted? An AMC! That is what started this thing. As an appraiser in Florida, I get more pressure from the one AMC we do work for than ANY mortgage broker.
If you choose to work for crumbs, then fine, America is supposed to work on capitalism. To each their own. But do not tell me how much I can earn and who I have to work for….rediculous or Socialism?
11 bubba31 // Apr 1, 2009 at 1:26 pm
The notion that some of you appraisers are happy to settle for AMC work is as ridiculous as those that claim there is no coerscion from brokers.
in theory, the HVCC is sensible. In practice however, the squeezing of appraisers will eliminate many reputable and established shops.
we live in an america today where govt dictates how much we can make. look no further than bank execs or the top dog at GM.
If govt intends to involve AMC’s in the new HVCC, then govt should have the authority to “cap” what the AMC can make per deal
If the AMC takes 10-15%, passing on the rest to us, I can live with that.
12 Gina // Jul 6, 2009 at 8:20 pm
I work for a veteran AMC that was in business way before HVCC. You all make a great points and I too agree that AMC’s should be regulated. Our company works hard to build great relationships not just with our clients but with our appraiser’s. If you’re an appraiser who wants to work for an reputable AMC please contact us at nationalvendorsource.com or pass our information on to the current lenders you’re working for and tell them to use NAN! -Gina (813-749-8841×209)
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