Here is the deal: The Obama stimulus package includes loan re modifications across this country if you are "under water" meaning your mortgage is higher than your home is worth. Lenders, Fannie and Freddie are planning to and already do use Brokers Price Opinions (BPO's) to determine value for the homes in question or those that will qualify for this program.
In the state of Georgia as well as about 23 other states per the Legislators that were speaking at our meeting yesterday, this activity is against the law. WHY? Because Realtors and Brokers are acting as appraisers in the valuation of the property in question. In other words they are engaging in unlicensed practice of appraising.
This practice is also in violation of FIRREA (Financial Institutions Reform Recovery and Enforcement Act of 1989). Appraisers cannot list and sell homes without a Realtors license, so Realtors should not be allowed to value property without an Appraiser's license.
BPO's by law are only legal when they are used to determine a list price on a property....PERIOD. So check your states laws on this as you may be breaking the law!
Also of note in the State of Georgia and likely many other states it is against the law and in violation of FIRREA for Appraisal Management Companies (AMC's) to order appraisals from appraisers as they are NOT the CLIENT. Appraisal orders should be coming directly from the client or in this case THE BANKS!
I urge every Lender and Realtor to check the laws in your state to see if you are in compliance with FIRREA and state laws regarding BPO's.
I urge every Appraiser to contact your local appraiser boards to find out if AMC's (appraisal management companies) doing business in your state are allowed to send you orders. I don't know about you, but AMC's are a lose/lose for everyone. They cut our fees in half, they use those appraisers who will do it the fastest and the cheapest without regard to expertise and they charge the LENDERS more than what we charge them for the typical appraisal report!
Another thing everyone should know is the AMC's have ZERO regulatory oversight. In a nutshell they can do what they want with no legal repercussions. Same thing with BPO's they do not have any regulations like we do (USPAP) to ensure that they are producing credible information and if the banks are allowed to accept BPO's as valuations for home, this is a major source of concern for everyone!
Realtors are pros at listing and selling properties and providing an idea as to what the home will sell for but they are not trained to value homes for banks, Fannie, Freddie or HUD. They are not trained to know what adjustments should be made for the numerous amenities a property may have. I get asked all the time from Realtors what adjustments I make for basements, pools, garages, etc. etc.
One other very important point: If Realtors are conducting BPO's for lenders for a potential listing of the home, they now have a VESTED interest in that home, therefore this makes for an unbiased opinion of its worth. As appraisers we are not allowed to appraise property that we have an interest in unless we fully disclose our interest and quite frankly I would reject this assignment and most banks would reject appraisers doing appraisals on properties in which they have an interest.
Many issues here and with the horrible state of affairs that we are facing in the housing market, now more than ever we need proper valuations of these homes so that they can be sold or re modified.
As I stated in my last featured post, about foreclosures and the appraisal process, if we are left to do the jobs for which we are trained, we will provide accurate valuation services for Banks or anyone else. There is no reason not to!
We cannot afford to put ourselves in further hot water here, we must follow the laws and utilize those people that are best suited for the job at hand....Appraisers.
I ask everyone here to write to your commissioners and advise that Lenders need NOT take the easiest and cheapest way out here when it comes to the loan re-modification process or foreclosures or we will suffer further loss. Lenders are losing big bucks and they want to save money, but using people who are not trained to provide opinions of value is salt in the wound and promotes further risk and losses to these lending institutions. I DO hope you agree!
Realtors: Do you even like doing these BPO's? What I hear from our local Realtors is they hate them, the lenders want them yesterday and they want them CHEAP for all the work you do on them. You are in business to SELL real estate, not do desk top evaluations/ BPO's all day for lenders.
Let's put this valuation where it belongs...with the Appraisers.
Please re post and pass this along to as many people as you can! I am contacting TV stations, local government officials and I intend to write a letter to Obama himself. His stimulus package is supposed to create jobs and in effect he is putting many appraisers out of business!! I know Realtors are suffering big time too, but PLEASE make sure you are not violating the law in order to put some money in your pocket and creating further issues down the road.
Thank you for your efforts and past support of my posts here.