Concerning the new appraisal restrictions imposed by FNMA and FHLMC, the Mortgage Brokers Association is considering legal action to stop the impending implementation of the new standards. If you recall this would take the appraisal selection process out of the hands of the brokers. The MBA maintains that the action by Andrew Cuomo amount to “de facto regulatory action” that avoids the proper regulatory process. I am not sure I agree or disagree not being the lawyer type but I will tell you I don’t blame the MBA for taking such action.
Among other things it will put honest and ethical honest mortgage brokers at a competitive disadvantage and will not in itself make the appraisal selection process fool proof. If you have a lender/wholesaler who does not mind breaking the rules it will be easy to create a network of like minded brokers, lenders and appraisers and beat the intent of the regulation anyway. This is just another play by those who would like to see brokers go away when there is still plenty of room for the good ones in the market. It keeps the big boys more competitive and that is good.
In other news, the U.S District Court for the Eastern District of California has ruled against the Department of Housing and Urban Development’s ban on seller funded down payment assistance. A little background if you don’t know. DPA companies who are “non profit” by definition started providing down payment assistance funds by getting the funds from the seller, sending then through their companies charging a fee in the middle and then sending the money to the buyer of the home. It really just makes 100% financing available on FHA loans which HUD does not like. HUD tried to get rid of it, Nehemiah Corp. sued HUD, won the suit and they among otherS sued HUD again this last round and have won again.
In the HUD reform legislation currently pending HUD is once again trying to disallow DPA programs by regulation so the DPA companies will have another battle on their hands. I personally don’t ever think DPA will go away because it makes home loans available to consumers who can’t get the down payment and who would be good homeowners. (That is very politically correct and that is what matters these days as you know). If you take the abuse out of the system, control those who can inflate appraisals because they control or own the appraisers and underwrite the loans properly DPA can and does work. Our problem is not the program it is the fact that HUD does not regulate the bad guys and the bad guys get away with whatever they want. Of course that would be my opinion wouldn’t it!!!
A better solution tomorrow:
More to come,
Lonny
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