Ameriquest Allowed Production To Dictate Values
thehousingbubble2.blogspot.com
Edward Davidson has this editorial at Realty Times. "Ameriquest's recent announcement that they have set aside $325 million dollars to settle predatory lending and appraisal inflation charges..is a sign of changing times within the mortgage loan industry. This settlement will force lenders, real estate agents, mortgage brokers, title companies and appraisers to break old habits that have been breaking laws."
"By the year 2005 well over 8,000 appraisers signed a petition claiming that lenders and others involved in the mortgage loan process were pressing them to 'hit the number' on properties sold in communities all across the country. In 2003, 500 appraisers said over half of them had been pressured to inflate values by up to 10 percent, at the request of someone who stood to gain from the increased price."
"In 2003..regulators told lenders: Ensure that the people setting the price are not influenced by those people who benefit from a higher-priced loan. In response, Ameriquest, like many lenders, did little more than allow production to dictate valuation practices, and while many of those ill-gotten practices have been covered-up by a rapidly increasing real estate market, in a declining market they will lead to disaster."
"I have worked in the appraisal business for over three decades and strongly urge all of us in the mortgage, real estate and appraisal industries to do the following: Create appraisal processes that are managed and audited..by the Chief Financial Officer, or the Compliance Officer. Create a 'Brick Wall' between appraisal staffs and production, mortgage brokers or real estate agents. The use of appraisal vendors that also receive thousands of dollars from title premiums, only if the loan is made, must be monitored. Selection of valuation products should not compromise the safety and soundness of lending practices."
"House prices are declining in many cities across the country. As a result, homeowners are losing equity in their homes. Given increasing concerns about rising defaults and foreclosures in 2006, especially on homes highly leveraged by home equity loans or financed with zero-down/interest only mortgages, it is time to finally take real action to stop improper valuation practices. Every Chief Financial Officer, Chief Compliance Officer, General Counsel and Auditor need take notice and action, using Ameriquest as their bellwether." |
