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Subprime Lender Becomes AMC

Here is a fascinating article from Business Week, revealing how a former Subprime Lender went bust and then transformed itself into an AMC:

Take NovaStar Financial (NFI) in Kansas City, Mo. A large subprime lender during the housing boom, NovaStar was disciplined by three states—Massachusetts, Nevada, and Washington—for such infractions as employing unlicensed brokers and charging unlawful fees. Without admitting wrongdoing, the company paid $5.1 million in 2007 to settle similar allegations in a class action brought on behalf of borrowers. After its mortgage business collapsed, NovaStar morphed into an AMC last year by acquiring another company and renaming it StreetLinks National Appraisal Services.

Steve Haslam, NovaStar’s former chief of retail lending, is now CEO of StreetLinks. He defends NovaStar’s past lending as legitimate, noting that the company avoided bankruptcy proceedings, unlike many of its rivals. “We have gone through the fire and come out better for it,” he says. His 100-employee AMC will contract with independent appraisers, Haslam says, paying them generous fees, and will issue a “Certificate of Noninfluence” with every appraisal. “This assures Wall Street and lenders that this appraisal was conducted in an independent fashion,” Haslam says.

Fair pay and no pressure; seems almost too good to be true?

Comments
  1. Stanley L. Reaney

    Will NAR take any action regarding the actions of Steve Haslam? Will NRA take any action on Fannie Mae regarding them trying to lower the credit standards so more people can afford a home? For the record, I was AGAINST the bail-out of both Fannie & Freddie. I think Chris Dodd, Barney Frank, and the executives of both Fannie & Freddie belong behind bars.
    What am I paying dues for??
    Please e-mail me an answer.
    Thank You,
    Stanley L. Reaney
    NRDS # 440000211

  2. Bill

    Stanley, you are right on!

  3. Justin Morton

    Stanley, I have emailed you.

  4. Ron Hill

    So what is the answer to the question…Will NAR take action? and what action will NAR take?

  5. Justin Morton

    NAR is working with the Federal Government and Fannie MAE and Freddie MAC to ensure that the mortgage market stabilizes and our economy gets back on track.

  6. Randy Roberts

    If anyone thinks this will remotely “fix” this enormious problem is living in a fog. Where do you think the preasure is coming from? I can issue a “Certificate of Noninfluence” too. Until there is an avenue for an appraiser to report a lender for such activities, and punishment follows, nothing will change. If you do not meet their number, you simply will not get the business. Personally, they can keep their business. I will not work for 1/2 my normal fee only for them to collect for harrassing me. This is studip and NAR and AI should be ashamed for letting this happen. I guess Cummo scared them to death. I would also like an answer to why am I paying dues!

  7. Tim Cornelison

    The Real Estate community was an active participant in the actions of the Steve Haslam’s of the World so your outrage, which may be personally sincere, is misdirected. NAR is an association formed primarily for political action to increase opportunities for profit in the real estate business.
    I know very few (actually 0) Realtors who refused the commission on sales closed with sub-prime mortgages. As the Bible says, let he who is without sin cast the first stone.
    NAR has no cause for action against Haslam. He did nothing to harm the NAR. The majority of the complaints about Fannie Mae and Freddie Mac ring very hollow in my ears because NAR pushes and is still pushing for initiatives that will benefit members in the short run and devestate homeowners in the long run. Pay close attention to initiatives for $15,000 tax credits which are inflationary to real values as an example.

  8. Doug

    Anyone can start an AMC. No licensing. No regulation. No accountability. This HVCC will just create another monster. What we need is enforcement that’s already on the books, and not a whole new middleman. This situation is just proof that crooks will look for anyway to make a buck of the back of appraisers.

  9. bmeahl

    something to consider, why aren`t amc`s regulated like we are? why aren`t underwriters licenesed, they have FINAL SAY on a loan packge , not licensed, with little or no schooling.

  10. The AMC’s are killing the appraisal business. As an appraiser I am looking for other avenues of income. I make less money doing appraisals now being certified than I did when I was a trainee. The AMC’s are literally raping our fees and there is no licensing or regulattions for them. By the time the AMC takes 50% of the fee they are charging the homeowner, then the appraiser I work with takes a percentage from that for giving me the order. Then the AMC now wants 6 comps and two active listings for the same small fee. I might as well go work at Burger King. Appraisers are compensated by the time involved and the difficulty of the assignment. And the AMC’s will not accept an appraisal done by a trainee, if the appraisal is not back to them within 48 hours, the appraiser is bombarded by phone calls and e mails and possible pay deduction. This whole industry is being flushed down the toilet.

  11. Jerry

    This is just the beginning…
    As an appraiser it would behoove you to get designated with the Appraisal Institute sooner rather than later. If you aren’t on the FHA roster you won’t be doing much work other than AMC work…and we all know what that entails
    Once all parties (ie realtors, appraisers, loan originators and yes the AMC companies) are all regulated state and federal; there will a lot more of the same scenarios regarding professional accountability and government oversight

  12. Justin Morton

    I would like to add that NAR also offers Appraisal Designations: for Residential, the RAA Designation and for Commercial, the GAA Designation.
    You can access the application by clicking on the link here:
    http://www.realtor.org/appraisal/appraisal/designationinformation

  13. Ken

    Personally, I beleive AMC’s should not be a part of the Appraisal process. They have no knowledge of the business therefore they are dangerous. The AMC’s still pressure appraisers for higher appraisals for their clients just like the banks did, who decided to take all their appraisals in house. I guess they got tired of overiding the accurate appraisals to make loans. If we are going to be stuck with AMC’s then a fair fee to they for only processing should be a miximum of 10%. They can make no demands on time or quality, if they do, they should be prosecuted. All appriasals should be completed by an Independent Appraiser. I just read the Home Vaue Protection Program. Who would beleive this? The melt down was caused 99% by the banks, FNMA and FHLMC. The brokers only supplied these entities with loans for the programs they wanted. Giving AMC’s this ability to fleece the Appraisal Industry is like forgetting to close the hen-house door. No one in their right mind can beleive these changes will correct any issues for lending. Enforcement of the current rules should be the first step to the correction. As far as I know no appraiser in CA has lost their license. That’s either great appraising or weak enforcement.

  14. RON MATTHEWS

    I will never understand wanting to save fannie and freddie, they should of been broke up and sold years ago. Why would you go to the problem to look for a fix?

  15. AMCs will be the HMOs of the appraisal industry, and we all know how well they worked for healthcare. When will the powers to be wake up and address the real problems, instead of creating a new industry that will drive experienced, ethical appraisers to a new career?

  16. There is another way! Get listed on our free directory and custom search engine. A Public Service of the Harris Company REA/C.

  17. I believe that the best thing that people can do is make sure that the appraiser they hire is licensed and certified. This is the best way to make sure that valuations are accurate and fair.
    I, too, have to say that I strongly disagree with bail-outs in general. It seems to be in direct opposition to free enterprise and we, as a country, seems to be heading down a very slippery slope.

  18. Concerned

    I am a former employee of Streetlinks. I come from a loan processing/underwriting background. I can assure you things are not on the up and up with these guys as information is still passed from lender to the appraiser but it is done in a fashion as to not alert suspicion. 30+ people have been let go from streetlinks within the last month so things are not looking up…. Haslam is not getting the business he was hoping for and the company is hemorrhaging! Majority of the employees have banking and loan experience they also have some licensed appraisers on staff.

  19. LV Appraiser

    You think the business model of Mortgage Brokers was totally disrupted? When are the “professionals” who are trying to figure out the solutions to this mess, figure out that the appraisal industry has been targeted openly, and it’s “all about the money! We are told we are to work for 50% or less of our fees!! The AMC fees should be collected from the end users of the appraisal, if they want the AMCs in place. But instead, the end users of the appraisals have dictated that the AMCs are to be in place, by law now, and the APPRAISERS will pay for it! HA! The process will never be fixed until the free market forces are allowed to run in the appraisal business. The laws that were on the books prior to HVCC were effective, they just needed to be enforced! With teeth! But now we’re stuck with a fleecing of the appraisal industry, and we’re told to live with it. Because we’re one of the most under-represented facets of the entire real estate industry, it happens, and no one seems to notice. But wait, I’ll bet 90% of us appraisers are members of NAR! And absolutely NO REPRESENTATION in this matter by NAR. If our suppression is affecting the real estate sales industry, figure it our NAR! We need help! Our entire business model has been taken over, by AMCs. This Street Links guy can spout all day long about independence and separation, but the raping of our fees continues. I’ll bet few appraisers would have a problem with the AMC model, if we weren’t required to pay for it also. If any other facet of the real estate process were to be fleeced financially like the appraisal industry has, there would be a revolt by NAR. It’s the money folks! It’s not the separation, it’s not the independence, it’s not the “bullying”! All of that has been legally and ethically wrong all along. It is the money that we have to give up to the AMCs. Very simply. We do this to make a living, and we’ve been heavily targeted!

  20. fred vander wal

    Amen LV Appraiser!
    We’ve been the whipping boys for Realtors forever….if they had their way every deal they write no matter how preposturous would fly.
    The VP of NAR even said in essence: hey, we have a purchase agreement between a willing buyer and seller and the Appraiser came in way below value!
    Maybe because your Buyer is an idiot?
    Maybe because there were no comps to justify your Purchase price offer?
    Maybe your 5-7% commission is clouding your vision?
    The future? I’m LMAO because I’ve seen what’s happened with the FHA appraisal process. Within 6 months the fallout from the poor appraisals/the “coherced appraised values” will hit the fan and make the subprime fiasco look like a tea party.
    And yes, ladies and gentlemen, Those calls to us from FHA lenders are pressuring us to once again “hit a value”.

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