New Home Valuation Code of Conduct

The New Home Valuation Code of Conduct that has been proposed by FNMA
& FHLMC and scheduled to become effective Jan 1, 2009 really misses
the boat for NextGEN Lenders.

Under this code, the requirements look to establish the appraisal
selection process, compensation, conflicts of interest between the
appraiser, broker and lender while providing appraiser independence.

Impact to the consumer:
1. Higher appraisal costs
2. Inability to shop their loan for better rates and fees
3 Can't see the appraisal since the appraisal belongs to the lender.

Impac to the broker:
1. Unable to order an appraisal which I personally agree with due to
conflicts of interest
2. Unable to shop loans which isn't a bad thing for the lenders.
3 Unsatisfied borrower with the broker if the lender denies the loan.
4. Slower new lender submissions and approvals since transfering the
appraisal to a new lender needs approval by lender prior to release.
Impac to the Lender:
1. Responsible for ordering, retaining and paying for the appraisal.
2. Those personnel ordering the appraisal need to be independent of
the lenders loan production staff.
3. Prohibited from bullying the appraisers, but the only time we need
to bully is due to fraudulent appraisal submissions and not because we
want higher value. That usually is done by brokers and borrowers, not
the lenders.
4. Randomly QC at least 10% of appraisals. Being a NextGEN Lender, I
can understand why so many Subprime and Alt-A firms failed taking
appraisals at face value.
5. Provide a toll-free hotline
6. Provide a copy of any appraisal report free of charge within 3
days of closing the loan.

Impac to the appraiser:
1. None since they can charge for each transfer.

Our lending industry missed the boat by not making appraiser more
accountible for their actions and why should an appraisal be different
for a Prime lender vs. Alt-A Lender vs. Subprime Lender vs. NextGEN
(aka Hard Money) Lender? It shouldn't and feel the borrower should be
the one responsible to compensate the appraisal company and be
provided a copy of the appraisal at the same time the lender who
ordered the appraisal receives a copy. If appraisers are immediately
accountable for their appraisal at the time of the appraisal
regardless of who the lender is, it will be at this time fraud
appraisals will stop entering into the mortgage marketplace.

Lenders are accountable for their money at risk and feel that
accountability needs to be even with appraisers and brokers
participating in some of the risk. We all need to work together to
improve our industry and remove those who are dishonest.