Since many of the abuses occurring with the recent cases of predatory lending and loan flipping involve high-cost loans and fraudulent appraisals, it would be beneficial to introduce qualified appraisers loans for bad credit in Rhode Island into the Home Ownership and Equity Protection Act (HOEPA) arena. With this, the requirement for a licensed or certified appraiser should be extended to a property that is intended to secure a HOEPA loan.
Many appraisers have become increasingly concerned about this pressure, so much so that in January the Appraisal Institute requested Congress to conduct an investigation into the phenomenon because we have seen evidence that it can contribute to mortgage fraud. The Appraisal Institute is aware of cases of client pressure where an appraiser acting under duress has inflated the value of a home in order for a loan to be made that is greater than the actual value of the house.
In these circumstances, a homeowner will enter the home with a negative equity position, which later can lead to an assortment of problems, including default. Such a cycle of ever escalating values adds unnecessary risk to our mortgage finance system. The letter also stated Kentucky signature loans that appraisers believe they have nowhere to turn when productive communication between client and appraiser devolves into threats to withhold future work and other coercive tactics. Following the letter to Congress, the Appraisal Institute continued to study the issue, reaching out to appraisal clients to discuss these complaints. Federal regulators and 473 congressional investigative committees were also contacted From March to May this year, the Appraisal Institute met with banking community trade associations to discuss how our organizations could work together to address the issue of client pressure on appraisers. The loans for bad credit in Rhode Island meetings were the first step in an effort to solve the problem of client pressure internally, without new legislation or regulation. The groups agreed to publish educational materials in their respective membership publications.
However, there are lines that, if crossed by the client, make that communication illegal, unethical or fraudulent. However, blackballing, ostracism and defamation of an appraiser who fails to meet a predetermined value of a client should be prohibited. FIRREA requires the independence of an appraiser in a mortgage transaction. However, our members say that lenders, brokers and realty agents often pressure them to meet predetermined values to help finalize a mortgage transaction.
If an appraiser fails to meet the predetermined value, he or she may not receive future work from that lender and can face ostracism from others in the marketplace. Appraisers can report instances of this type of pressure to state banking regulators or to any of the five federal financial regulators when it involves officials within a lending institution, such as a loan officer. However, the appraiser must report tire instance in writing and it must be addressed to the correct regulatory agency. Because of the myriad of federal and state regulators, determining which agency to report the instance of client pressure can be a daunting task. The Appraisal Institute understands that this pressure can come not only from loan officers or hank officials but also from other parties involved in the transaction, such as a mortgage broker, realty agent or even a consumer. The client pressure problem does not 474 always necessarily come from the "lender" who orders the report or connected with the underwriting of the loan, but rather someone connected with the "loans for bad credit in Rhode Island production side" bad credit loans Louisiana of the lending process, e. These parties are not regulated the same way as banks, thrifts and other financial institutions. Their production staff has incentives to produce deals. In many cases they are the underwriter of the loan as well. For these reasons, regulations could be amended to require separate loans for bad credit in Rhode Island individuals with different reporting structures handle the production and underwriting functions. In the end, it is important that someone who has no incentives on loan volume order the appraisal. Unfortunately, there are no mechanisms in place for appraisers to report instances of client pressure when it comes from a broker, a realty agent or even buyers and sellers. One single location should be established to receive these types of complaints. In addition, a reporting mechanism should be established to accept complaints against brokers and realty agents. The Appraisal Institute supports the intent of loans for bad credit in Rhode Island a legislative provision contained in H. It is this risk that will keep most appraisers silent.
Recognizing the need for industry consensus, and realizing that a federal prohibition of client pressure will likely not halt its occurrences, the Appraisal Institute has reached out to mortgage banking, mortgage broker and other banking associations to plan a coordinated response to this challenge. The Appraisal Institute hopes to have a best practices statement completed in the fall of 200 1. Nevertheless, it would be beneficial for loans for bad credit in Rhode Island Congress to review the extent of this activity through hearings or through consideration of the Schakowsky client pressure provision in H.
Greater uniformity among state appraisal licensure standards As indicated earlier in the testimony, there is no requirement that all appraisers performing appraisal work be state-licensed or certified. This is evident in facts uncovered through testimony given by the Federal Bureau of Investigation at a hearing on predatory lending held by Senator Barbara Mikulski, D-Md,, in Baltimore in March 2000.
While Maryland ranks fifth in the nation in mortgage fraud. New York, California, Florida and Illinois have larger problems in this area. The Appraisal Institute believes that licensing of all real estate appraisers doing business in the state must be mandatory. This will put all real estate appraisers doing business in a state under USPAP standards and make them liable to state appraiser regulatory agencies. These state regulatory agencies should be encouraged to adopt uniform licensure requirements to help address the problem of unqualified appraisers performing appraisals. Greater uniformity among the states would solidify standards within the profession and decrease the probability of unqualified individuals performing appraisals, and hence, potentially damaging consumers. Model state appraiser laws Currently, the Appraisal Subcommittee has a reserve fund with the U.
The Appraisal Institute, in reviewing how that money might be used for greater benefit, recommends that the ASC use a portion of those fluids to conduct a study to foster the development of model state laws for registration, licensing and regulation of appraisers.