Fannie Mae and Freddie Mac to Require Identifiers on Mortgage Applications

From the FHFA:

Washington, DC – James B. Lockhart, Director of the Federal Housing Finance Agency, announced today that, effective with mortgage applications taken on or after Jan. 1, 2010, Freddie Mac and Fannie Mae are required to obtain loan-level identifiers for the loan originator, loan origination company, field appraiser and supervisory appraiser. …

“This represents a major industry change. Requiring identifiers allows the Enterprises to identify loan originators and appraisers at the loan-level, and to monitor performance and trends of their loans,” said Lockhart. “If originators or appraisers have contributed to the incidences of mortgage fraud, these identifiers allow the Enterprises to get to the root of the problem and address the issues.”

The purpose of FHFA’s requirement is to prevent fraud and predatory lending, to ensure mortgages owned and guaranteed by the Enterprises are originated by individuals who have complied with applicable licensing and education requirements under the S.A.F.E. Mortgage Licensing Act, and to restore confidence and transparency in the credit markets. In addition, the Enterprises will use the data collected to identify, measure, monitor and control risks associated with originators’ and appraisers’ performance, negligence and fraud.

To implement the requirement, FHFA has been working with the Conference of State Bank Supervisors (CSBS) and the FFIEC Appraisal Subcommittee. Within the next 30 days, both Fannie Mae and Freddie Mac will be issuing guidance related to implementation of the requirement.

I guess this adds greater accountability to the mortgage market. However, I’m not sure how much it will actually impact appraisers. Appraisers are already highly regulated and they already have unique ID numbers. I suspect it’s impact will be much greater on loan officers and mortgage brokers, who aren’t under the same type of regulatory structure as appraisers.

(Hat Tip: Calculated Risk)

  1. Stanley L. Reaney

    I am an appraiser who is not liked by mortgage orginators because I do my job, and really do not care if a loan is made. If I am pressured by the originator who can I speak to to report this? I have been appraising for the past 20 + years, and have seen many laws and regulations put in place, but nothin happends. In my opionin, both Fannie and Freddie should have been thrown into the garbage can where all of their paper is… Put some teeth into this law or regulation,and start burning some people, then, and only then, we MAY see something change.

  2. Tony Powell

    I’m a 30+ year Residential Appraiser. Until law enforcement acknowledges and acts on Appraiser reports of improper influence by Lenders, nothing will change. We still get those inappropriate phone calls from large established Lenders and AMCs. To make money, they have to make loans. To make loans the appraisal HAS TO COME IN AT VALUE! It’s REALLY not that complicated. “If you don’t get me the value, I’ll find an appraiser who will!” NOTHING HAS CHANGED!

  3. Ditto! The two previous posts are on the money. All this government oversight, along with the regulations and guidelines are for the honest, the underhanded always find a way to beat the system. Nothing has changed.

  4. Jen Broida

    I’m sorry to say, but not all mortgage originator are like this. I’ve had a one appraiser I’ve used the past several years and if the value is not there, then the loan is not done. There are still bad appraisers out there that do their work without pressure. I just turned a loan down last week because the value of the home has depreciated. The clients did not understand seeing how their neighbor just refinanced and they value was fine. I asked for a copy of the appraisal and he changed to comps that sold in 2007 to 2008 to get the value. This was done directly with a bank. Bottom line, just say NO and do your job with integrity!

  5. John Mc Donald

    Ask that all conversations about the appraisal be in writing via e-mail. Do not have verbal conversations regards values or conclusions except in writing. This does away with “pressure”

  6. Daryl Dinkla

    This holier than thou comments by the appraisers make me want to puke. They do what they need to do to get and keep the business they have. I see them repeatedly adjust to what is needed by county assessors and also to banks desires. There is plenty of blame to go around and they deserve the same share as anyone else.

  7. Jim Haase

    To J. Broida: Please turn the appraisal that had comp dates changed from 2007 to 2008 into your State Appraisal Board. Fraudulent appraisers need to realize the consequences of their actions!

  8. What do you mean Holier than thou attitude. Most good appraisers have NO desire to lose their license, get fined, go to jail or some other punishment, for a lousy fee that is far below all the other fees paid in this industry. STOP threatening appraisers and the problem goes away. We have no power; The law was designed by loan originators for originators. We report history and the messenger gets shot. Swear us in a law enforcement officers and make it a CRIME to bribe, harass or pressure us in anyway and see what happens. We tell the loan orignator that we must follow USPAP and some have responded by saying that they wipe their bottom with USPAP. Myself and a former Chair of TFAC wrote an ethics course for FNMA that required lenders to have to take and pass. FNMA threw out the course, saying ” We don’t want lenders to have this requirement” FNMA is just as much a problem as anyone. They are the ones who wanted AVMs and pushed the heck out of them; why are we not speaking about this item that was never used in our history… Look at the FACTS

  9. Clark Riel

    If we could all get back to doing the right thing this could all go away. I as a one time mortgage loan originator and now real estate sales person beleive in the concept of “positive integrity.” “Do the right thing even when on one is looking.” It sounds pretty flowery, but if we all keep in mind it could make a world of difference.

  10. John Carlson

    More regulations, lower fees, management companies, higher maintence, higher expenses, and now an additional form to type on residential appraisals. Now the possibility of sales tax in California on appraisals. We are mostly hardworking small business owners trying to make a living. How can one do an appraisal for $200 and feed their family. We need to turn down the low fee assignments and these management companies would be in trouble. A few bad apples is all it takes to cause this to continue.

  11. An appraiser gets paid $350 – $450 for a 1004 no matter what the loan amount is or the value of the property. The broker, lender or agents make their money on a percentage or the amount of the loan. It’s they who make the big bucks dependent on the loan amount or the sales price. What does it matter to the appraiser? Not a hell of a lot since the appraiser gets his $350 – $450 no matter what the value is. Who has pressured the appraiser? The broker, lender or agent is to blame for ‘pushing value’. If Fannie and Freddie want a firewall between the appraiser and the one ordering the appraisal shouldn’t the fees should be paid by the broker, lender or agent for the AMC since they are the ones who have been influencing the appraiser?! I don’t understand why the appraiser should pay for this service. It just does not make any sense. The broker, lender or agent has a lot more interest in the value amount then the appraiser. Appraisers need to start addressing this issue and suggest that the fees be paid by the other party involved not the appraiser. The AMC fee should not be the appraiser’s responsibility!

  12. JDOANE

    Pressure is also made on BPO providing brokers.
    BPO companies need to be regulated as well!
    Also: REO companies & asset management companies should be forced to follow the laws of the states they are doing business in as well as being required to use the state’s listing and selling agreements.

  13. Armando A. Malanga

    I believe most of the comments I read are valid. I’m a broker for 36 years and appraiser for 32. I believe no one, and I mean NO ONE, is serious about fixing all aspects of lending regulation. It’s business as usual, like the S&L debacle of 1980’s.

  14. Renee Crouse

    We as appraisers have no major orginization that will stand up for us.I just found out that AMC’s are not regulated by anyone and we stand a chance of not getting paid if we do work for them. At least now we can go to the banking commission. And having to accept lower fees when we already are the low man on the totem pole is ridiculous. I hope every appraiser stands firm and refuses to do discounted appraisals. Maybe then we will have some power.

  15. Anonymous

    If the government really want to make an impact on the mortgage industry make commission based Loan Officers a thing of the past. It might not be practical but it would stop most of the lender pressure on appraiser.

  16. merv conlan

    I would like everybody to read Mr. Ginsberg’s comments carefully. Very, very intelligent observation and one I have not found anywhere else.

  17. Connie McLean

    I am a real estate broker with 8 yrs under my belt. I recommend to my buyer clients (but don’t force them to use) a local, reputable family-owned and operated mortgage lender. The owners do not tolerate their loan officers coercing appraisers and real estate agents. They don’t give out mortgages to those who truly DO NOT QUALIFY for that mortgage amount, don’t have reserve funds, and who don’t fall into the usual 28-29/41-43 debt ratios. Unfortunately, no matter what kind of “checks and balances” one could place on any lender (large or small), appraiser, or real estate estate, there will always be those out there breaking the rules for the all mighty buck in their pocket. It is US who need to report those we suspect of wrongdoing.
    Another thing that amazes me is stories I read about how home buyers are more sophisticated and intelligent because of the internet. In most instances, they arn’t because the vast majority do not know how to comprehend all the information that is out there. They really don’t what is fact, what is fiction, and, what is “the truth-just stretched a little”. The truth-just-stretched-a-little is how the current situation came about to begin with.
    The sad part of the whole situation seems to be the BIG guys are getting away with all of it – and then being rewarded on top of it. Some lenders need closing down; but, they’ll just open out again under another name.

  18. Francesca Gaul

    350-400 an appraisal is a thing of the past- I called one management company to inquire why I was not getting work- the reply was that they had appraisers from another county willing to do the work for 1/2 my price. I’ve reviewed a few of these appraisals and found them to be -to put it plainly- shit. Yet in order to get work I have to work for 1/2 what I made 8 years ago because mangement companies want quantity, fast work, rather than quality.

  19. Many good points.
    Appraisers for the most part are structured by area comps, and factual supportive values. This new “enforcement act” should place further pressure on the needed “crooked” lending industry and the transparent consulting that has lacked in the financial business (for the most part). We all, brokers, lenders, appraisers need to place one thing as priority…clients objectives, not “paying the bills” through unethical business transactions focused on a “pay check”.

  20. If FNMA & Freddie are dictataing the appraisal channel, fees should be based on the areas average fee, just like FHA requires. Than a mandatory appraisal management fee gets added to the loan process so the borrower knows who is receiving each of the fees they are required to pay (you know the AMC’s would fight tooth and nail on that one). Of course we still need to deal with the many bad AMC’s that don’t pay the appraiser their invoice. Maybe start sending the invoices to them since they are requiring all this.

  21. Anonymous

    The only way it would work as far as I’m concerned is to let FNMA and/or Freddie Mac be responsible for the appraisal fees. Fees could be added to the HUD statement for those that close and FNMA or Freddie can collect on those that did not close easier than the independant appraiser can. Any loses would be a whole lot cheaper than what they have accrued so far.

  22. kmyers

    Concerned about appraisal fees? Stop basing fees on the “form ordered” and start basing them on the scope of work and difficulty of the assignment. We need to get away from the “standardized fee structure”. AMCs will continue to prosper until appraisers stop devaluing their profession.