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News Release: Dole Applauds FHFA Decision to Deny Golden Parachutes for Ousted Fannie, Freddie Execs

September 17th, 2008 10:48 PM

U.S. Senator Elizabeth Dole

United States Senate w Washington, DC 20510

News Release

For Immediate Release: September 15, 2008 Contact: Katie Hallaway, 202-224-2999

Wes Climer, 202-224-7905

Stuart Ramsey, 202-228-0722

Dole Applauds FHFA Decision to Deny Golden Parachutes for Ousted Fannie, Freddie Execs

Washington, D.C. – Today, U.S. Sen. Elizabeth Dole applauded the Federal Housing Finance Agency’s (FHFA) decision to prevent the payment of multi-million dollar compensation packages to ousted Fannie Mae and Freddie Mac executives.

“I was not about to stand for golden parachutes for these irresponsible executives,” said Dole. “I welcome this decision. It’s about time that common sense prevailed at Fannie and Freddie.”

According to several published accounts, the top executives at Fannie and Freddie were set to receive a combined $24 million in severance pay after gross mismanagement effectively drove their companies into the ground, spurring a government takeover that has exposed American taxpayers to tremendous liabilities.

Under the Housing and Economic Recovery Act of 2008, FHFA was given the power to permit or prohibit these payouts on a case-by-case basis. Last week, Dole helped introduce legislation, S. 3458, to explicitly require that the FHFA use its authority to prohibit the former executives from receiving any such severance package. Sunday, FHFA announced that it would exercise its authority to deny the payment of golden parachute packages to the former executives of Fannie Mae and Freddie Mac.

Additionally, Dole helped introduce legislation last week to impose a permanent ban on Fannie Mae and Freddie Mac’s questionable lobbying practices, which played a significant role in the companies’ recent collapse. Specifically, the legislation will prohibit Fannie Mae and Freddie Mac from making lobbying expenditures, political donations and contributions to 501(c) organizations.

Background

In 2003, after it was revealed that Freddie Mac had misstated its earnings, Dole helped introduce legislation to strengthen oversight of the Government Sponsored Enterprises (GSEs). Fannie Mae and Freddie Mac responded in full force, dispatching an army of lobbyists to Capitol Hill to oppose the bill. In 2004, their lobbying tab totaled $26 million, and in 2005, it exceeded $24 million.

Dole helped reintroduce the GSE reform bill in the 109th Congress, and in July 2005 it was approved by the Senate Banking Committee but never considered by the full Senate. In the 110th Congress, Dole reintroduced the bill again with Sens. Chuck Hagel, Mel Martinez and John Sununu.

In response to the housing and mortgage crisis, Congress approved and the President signed into law in July 2008 a housing bill that created a stronger GSE regulator and provided the Treasury Department the authority to place Fannie and Freddie under conservatorship. Recently, the Treasury Department used its new authority, and Fannie and Freddie are effectively under new leadership and have ceased lobbying activities, and their respective Foundations’ assets are under review.

Posted by Amanda Rivera on September 17th, 2008 10:48 PMPost a Comment (0)

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TIPS FOR ADDITIONAL APPRAISAL INCOME

September 26th, 2008 11:42 AM

The down turn in the economy and the utilization of management companies by lenders have drastically slowed orders for most appraisers. Many of us are experiencing appraisal volume that it the lowest it has been in the past 10 years. In these tough times we might need to look at other sources of appraisal income to help sustain our businesses. I have a few suggestions that might be of help. These suggestions will not replace the income from lender orders but might help keep the wolf from the door. Consider “good” real estate agents. Many top agents prepare very good competitive market analysis and in some cases rely on appraisers for unique or difficult assignments. Associate yourself with these agents and let them know you are available if needed. Another group to consider would be financial planners. Financial planners often need real estate appraisals for estate settlements or estate planning. Attorneys are another good source of potential income. Divorce is up! Take advantage of it. An overlooked source of appraisal income is religious organizations. Members often will or exchange their estates to their respective religious organization for gifts or retirement purposes. Appraisals are needed for these transactions. Insurance companies rely on appraisals when homes are destroyed by fire or natural disasters. Establish a good relationship with your local agents. Their suggestions for an appraiser can go along way with the powers that be when an appraisal is needed. Finally, if you have though about hiring a trainee now is the perfect time. I know this might seem a little out there given what is going on with our industry. But think about it. You probably have more time for training and with demonstration appraisals being use for points is all makes good sense. I recently hired a new trainee. We have an agreement. I will provide the training in exchange for time she will spend working in the office. I am out no money just my time and I will have a well trained appraiser when things pick up. Hopefully, you can use these ideas. I encourage all of you to view these bad times with a positive outlook. Our profession has had down turns before and has survived. I have no doubt it will do it again.

Dale Smathers

Vice President NCPAC

Posted by Amanda Rivera on September 26th, 2008 11:42 AMPost a Comment (0)

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Appraisal Standards Board issues September USPAP Q&A

September 25th, 2008 5:40 PM

The latest Q&A column addresses how to handle sales histories for new construction, rules for appraiser coercion, confidentiality guidelines for the appraisal review process and what to do when clients request a copy of an appraiser’s state license in each report.

(9/25/2008)

The Appraisal Standards Board (ASB) of The Appraisal Foundation has issued its September Q&A column for the Uniform Standards of Professional Appraisal Practice (USPAP).

The board develops, interprets and amends USPAP on behalf of appraisers and users of appraisal services. Its Q&A column is a form of guidance with responses to questions raised by appraisers, enforcement officials, users of appraisal services and the public to illustrate the applicability of USPAP in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems.

Sales History for New Construction

Question: I have received an assignment to appraise a property with newly constructed improvements. Because the property includes new construction, there is no prior sales history of the property as it now exists. However, I do have information pertaining to a prior sale of the site (without the improvements). Does Standards Rule 1-5(b) require me to analyze this prior sale of the site?

Response: Yes. The goal of USPAP is to promote public trust in the appraisal profession. Standards Rule 1-5 provides for a research and analysis requirement for information that is judged to be important to the credibility of the appraisal process. To be consistent with the purpose of USPAP as well as the intent of SR 1-5, an appraiser is required to analyze all prior sales that include the subject property. This includes: 1) prior sales of a property that includes the subject property; and 2) prior sales of a portion of the subject property.

In this case, the analysis of the prior sale of the unimproved site would be necessary to comply with Standards Rule 1-5(b). The site in this instance is a component of the subject property.

Another example might be the appraisal of a leased fee interest in a property. The appraiser must research and analyze prior sales of the subject, even if these sales include a fee simple interest in the property.

An additional example might be the appraisal of 20 acres subdivided from a 200-acre parcel. The appraiser must research and analyze prior sales of the subject, even if these sales include the 200-acre site in its entirety.

Appraiser Coercion

Question: Does USPAP require an appraiser to certify in the appraisal report that he or she has not been coerced to provide predetermined results?

Response: No. However, such a statement would be consistent with the requirements of USPAP. Standards Rule 2-3 essentially requires the appraiser to certify that he or she has not been coerced, without specifically using that term. SR 2-3 requires the appraiser to certify, among other things, that:

my engagement in this assignment was not contingent upon developing or reporting predetermined results.

An appraiser would be unethical to affirm this statement in the certification if the appraiser had been coerced into providing predetermined assignment results.

Confidentiality and Review Appraisers

Question: A few weeks ago I performed an appraisal for a lender client. I was recently contacted by an individual who claims that she is a review appraiser that has been hired by the lender, and wanted to ask me some questions about my appraisal. Can I discuss my appraisal with her?

Response: Yes, if you receive authorization from the client. The Confidentiality section of the ETHICS RULE states, in part:

An appraiser must protect the confidential nature of the appraiser-client relationship.

Appraisers may disclose confidential information or assignment results relating to an assignment to:

…the client and persons specifically authorized by the client; state enforcement agencies and such third parties as may be authorized by due process of law; and a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation. (Bold added for emphasis)

Copy of License in Appraisal Report

Question: I have several clients that request I include a copy of my state appraisal license in each appraisal report I perform. Does USPAP permit me to do this?

Response: USPAP does not directly address issues of appraiser licensing or credentials. However, some licensing jurisdictions have laws that govern the circumstances under which a licensee may provide a copy of his or her license. If so, appraisers are required to comply with such laws in order to comply with USPAP.

Posted by Amanda Rivera on September 25th, 2008 5:40 PMPost a Comment (0)

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How is the market in Raleigh?

September 19th, 2008 11:56 AM

Every day I get phone calls about "How is the market in Raleigh (or Louisburg, or Zebulon, or Apex) ?" and "Are you guys making it okay?" My answer is always the same. The market is what it is; and we do the best with it that we can. Since the data we have, is the data we have to use, you just do it.

Unfortunately, to support "value" we have to have sales, and the sales are just not great in some instances. It may not be what the home could sell for, but it is what we can support and prove. Lately with the comps that are on the market and people dumping their homes, that is realistically all we can hope for.

I tell people if your loan goes through and you get what you need, be thankful. A lot of other people are not getting what they need and are stuck, and it really limits their options. And we appraisers are the bad guys, and I am cool with that. But it is really a reflection of the market and the times, so I don't take it personally.

Posted by Amanda Rivera on September 19th, 2008 11:56 AMPost a Comment (0)

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Say No to the Political Tax- RRAR Realtors fight back!

September 19th, 2008 11:30 AM

Say NO to the Political Tax

Raleigh Realtors!

Are you upset about the extra $50 fee ($70 after October 1) that you are forced to pay to maintain MLS access? Do you think your trade organizations, NCAR and RRAR, should have consulted you before they made this decision? Do you want to pay higher dues year after year to finance political campaigns? Did this extra expense hit you at the hardest economic time? Do you think too much money is being spent on political causes? Do you pay dues ONLY to access the MLS?

We think the assessment is WRONG!

WRONG because it's a tax for political political causes

WRONG because the membership was not consulted

WRONG because political contributions should be voluntary!

What Can You Do About the Tax?

1. Write or call your ELECTED leaders (who all voted for the assessment). Tell them your association, NCAR, is not working for YOU. Here are the names:

         Mary Biathrow                        Eddie Brown
            Suzanne Burton                      Kelly Cobb
            Mark Conner                           Parker Creech
            Mary Erazim                           Marshall Gay
            Dana Jones                              Joey Robbins
            Linda Trevor                           Mary Edna Williams
            Donna Parker                          Tom Smith

Here is the email list to cut and paste.

marybiathrow@ysuhomes.com;ebrown@fmrealty.com; suzanne.burton@century21.com; kelly@relo-expert.com; parker@parkercreech.com; parker@parkercreech.com; marshallgay@realtor.com; RobbinsJ@hpw.com; homes@lindatrevor.com; mconnor@fmrealty.com ; danajones@ysuhomes.com; maryedna@capitalrealtync.com; dparker@fmrealty.com; Tom.Smith@prucarolinas.com

2. Do not pay the assessment online. Send your check with a protest letter to:

Ray Larcher, Exec VP

Raleigh Regional Assn of Realtors

111 Realtor Way

Cary, NC 27513

3. Visit www.ncarnow.info. Read more about how NCAR is spending your mandatory dues. Post on the blog. Connect with other Realtors who oppose the assessment. You will see that we have statewide support!

4. Contact the candidates for RRAR and NCAR Board positions. Tell them you support more consultation and lower dues. Tell them money for ballot measures or political campaigns should come from VOLUNTARY contributions.

4. Spread the word. Talk to other Realtors. Forward this email to your friends.

5. JOIN US! Respond to this email and join our crusade for lower dues and more accountability!

Bob Mulder, Umstead Realty

Carlton Brown, Re/Max United

Posted by Amanda Rivera on September 19th, 2008 11:30 AMPost a Comment (0)

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Fannie Mae has announced new guidelines

September 19th, 2008 11:28 AM

Fannie Mae has announced new guidelines concerning the omission of the borrower's current PITI in the debt ratio if their current residence is under contract and the borrower has sufficient reserves. This new guideline should help borrowers in scheduling closing. I have listed the guideline below.

Fannie Mae Announcement 08-22 Page 8

Principal Residences Pending Sale

In Announcement 08-16, Fannie Mae provided guidance on how to qualify a borrower under three different scenarios:

the current principal residence is pending sale but the transaction will not close (with title transfer to the new owner) prior to the new transaction,

conversion of a current principal residence to a second home, and

conversion of a current principal residence to an investment property.

Fannie Mae is clarifying the first scenario – when a current principal residence is pending sale but will not close prior to the new transaction.

If the borrower’s current principal residence is pending sale, and he or she is purchasing a new principal residence, both the current and proposed mortgage payments must be used in qualifying the borrower for the new mortgage loan. In addition, Fannie Mae will now require minimum reserves of 6 months principal, interest, taxes, and insurance (PITI) for both properties, but will allow a reduction to 2 months if 30 percent equity in the existing principal residence is documented with a current appraisal, broker price opinion, or automated property valuation.

Fannie Mae will not require the current principal residence’s PITI to be used in qualifying the borrower as long as the 6 months of reserves (or 2 months with documented equity) for both properties are documented and the following additional documentation is provided:

the executed sales contract for the current residence; and

confirmation that any financing contingencies have been cleared.

Posted by Amanda Rivera on September 19th, 2008 11:28 AMPost a Comment (0)

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Do appaisers have to carry E and O insurance?

September 11th, 2008 11:15 AM

USPAP Q&A

Vol. 10, No. 8 August 2008

The Appraisal Standards Board (ASB) of The Appraisal Foundation develops, interprets, and amends the Uniform Standards of Professional Appraisal Practice (USPAP) on behalf of appraisers and users of appraisal services. The USPAP Q&A is a form of guidance issued by the ASB to respond to questions raised by appraisers, enforcement officials, users of appraisal services and the public to illustrate the applicability of USPAP in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems. The USPAP Q&A may not represent the only possible solution to the issues discussed nor may the advice provided be applied equally to seemingly similar situations. USPAP Q&A does not establish new standards or interpret existing standards. USPAP Q&A is not part of USPAP and is approved by the ASB without public exposure and comment.

Errors and Omissions Insurance

Question:

Does USPAP require appraisers to be covered by Errors and Omissions (E&O) insurance?

Response:

USPAP does not address E&O insurance. However, if an appraiser is required to have E&O insurance as a matter of law or regulation, he or she must comply with that requirement under the COMPETENCY RULE which requires recognition of, and compliance with, laws and regulations that apply to the appraiser or the assignment.

Posted by Amanda Rivera on September 11th, 2008 11:15 AMPost a Comment (0)

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