Category Archives: Lending

Louisiana asks FTC to pause regulatory action while state repeals controversial appraisal laws

The state of Louisiana may have taken action to directly respond to the Federal Trade Commission’s claim that the regulatory body that oversees property appraisals in the state stifled price competition by requiring appraisal management companies to follow the state’s established polices for the fees that AMCs pay to appraisers, but that doesn’t mean that the FTC is ready to drop the case entirely.

Recently, Louisiana Gov. John Bel Edwards issued an executive order that will lead to the law that dictated how AMCs pay appraisers being repealed.

That was followed shortly by the Louisiana Real Estate Appraisers Board issuing a resolution stating that it planned to repeal the controversial law and develop a new method to ensure that AMCs pay appraisers “reasonable and customary” fees, as they are required to do under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In light of those actions, the Louisiana Real Estate Appraisers Board is now asking the FTC to stay its action against the regulatory body and allow the state to fully implement its new policies.

As HousingWire reported earlier this week, LREAB’s resolution states that the rule on how AMCs pay appraisers will be repealed and replaced.

The rule in question is the state’s AMC Law, also called Rule 31101.

Rule 31101 stipulates that AMCs must compensate appraisers at a rate determined by one of three methods:

  • An AMC may use a survey of fees recently paid by lenders in the relevant geographic area
  • An AMC may use a fee schedule established by the Board
  • An AMC may identify recently paid fees and adjust this base rate using six specified factors: the type of property; the scope of work; the time in which the appraisal must be performed; the appraiser’s qualifications; the appraiser’s experience and professional record; and the appraiser’s work quality

In its complaint, the FTC said that Rule 31101 “unlawfully restrains competition on its face by prohibiting AMCs from arriving at an appraisal fee through the operation of the free market.”

The LREAB resolution calls for the “repeal and replacement” of Rule 31101.

After issuing that resolution, the LREAB asked the FTC to pause its proceedings for 120 days so the state can put its new policies into place.

“These State acts substantially change the factual and legal basis of this proceeding, by confirming state action immunity with respect to any current and prospective actions of the Board, and addressing the retroactive and prospective relief sought in the Complaint,” the LREAB said in its request to the FTC.

“Respondent therefore requests a 120-day stay to give the State time to implement the Governor’s and Board’s directives, and allow the parties time to consider the impact of these new requirements on this proceeding,” the request continues.

According to the LREAB, the stay will “conserve resources, avoid unnecessary burdens on the parties and third parties, and promote the public interest in enforcement of Louisiana law.”

The LREAB states that the Edwards’ executive order alone “fundamentally alters the factual and legal underpinnings of this proceeding.”

Additional action by the state and the LREAB will “further reshape the landscape” on which the FTC’s complaint is based.

The LREAB adds that by granting the stay, the FTC will be “allowing Louisiana to continue to maintain the integrity of its residential appraisal market, as envisioned by the Dodd-Frank Act.”

Without the stay, official state functions “would be impeded or delayed to the detriment of the public interest in a sound residential real estate appraisal market,” the LREAB said.

HousingWire contacted the FTC for comment on this issue, but as of publication, has not received a response. This article will be updated should the FTC respond.

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Former Ginnie Mae president Ted Tozer joining PennyMac Financial Services board

Ted Tozer stepped down as president of Ginnie Mae in January after serving seven years, and while the agency has still not found a permanent replacement, Tozer has found a new position.

PennyMac Financial Services, a mortgage lender and servicer, announced Wednesday that Tozer is joining the company’s board of directors, effective Aug. 1, 2017.

Prior to joining Ginnie Mae, Tozer spent more than 30 years in the financial services industry.

Earlier in his career, Tozer served as senior vice president of capital markets at National City Mortgage Company. He also served as a member of the National Lender Advisory Boards of Fannie Mae and Freddie Mac, and as chairman of the Capital Markets Committee of the Mortgage Bankers Association.

“I am thrilled that Ted Tozer has been elected to our Board of Directors,” PennyMac Financial Services Executive Chairman Stanford Kurland said. “Ted is a veteran of the mortgage banking industry who brings a wealth of experience and a deep understanding of all aspects of housing finance in America. On behalf of my fellow directors, I enthusiastically welcome his arrival.”

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Federal judge rules Quicken Loans wrongly influenced home appraisals

A judge slapped Quicken Loans with nearly an $11 million penalty after it found the nonbank guilty of allegedly and wrongly influencing home appraisal values during the time leading up to the financial crisis.

But Quicken Loans is quick to fight the ruling, stating it, along with its affiliated company Title Source, will appeal the rulings issued by the Federal District Court in West Virginia in the class-action case of Alig et al. v. Quicken Loans and Title Source.

The case dates back to homeowners in West Virginia who refinanced with Quicken Loans and had an appraisal ordered between Oct. 18, 2004 and April 10, 2009.

According to an article in the Miami Herald by Kenneth Harney:

“Quicken allegedly provided appraisers advance ‘estimates’ of property values in assignments on home financings, effectively communicating the amounts Quicken needed to fund the loan. Plaintiffs in a class action suit affecting 2,770 homeowners said appraisers working for Quicken had overstated the market worth of their properties, putting them underwater on their loans from the start. One home-owning couple said in the original complaint that Quicken’s appraiser had reported their property was worth $151,000, significantly higher than its actual value of $115,500. The court determined that Quicken’s practices constituted ‘unconscionable’ conduct under the West Virginia Consumer Credit and Protection Act.”

“U.S. District Court Judge John Preston Bailey called Quicken’s conduct ‘truly egregious’ in that it ‘flew in the face of prudent lending practices for the benefit of Quicken’s bottom line.’”

Quicken Loans highly contested the claims, telling HousingWire: “This case is the latest example of predatory plaintiff law firms, this time Bordas Bordas and Bailey Glasser, manipulating our nation’s legal system by inventing a class of so-called ‘aggrieved’ plaintiffs to enrich themselves financially at the expense of lenders thereby, driving up the costs of financing to homeowners and future homebuyers.”

A Quicken Loans spokesperson stated that it’s irrational to conclude that the customary practice in the 2004 to 2009 timeframe where homeowners willingly provided their estimate of their homes value to the appraiser could somehow result in a judgment against lenders for damages.

Instead, the spokesperson said, “If any party would be aggrieved by appraisers assessing a higher-than-market value to the homes that serve as collateral for loans, it is the lenders who would be damaged by this inadequate collateral.”

The Miami Herald also quoted Dave Stevens, who is the president and CEO of the Mortgage Bankers Association, the largest trade association representing lenders, defended Quicken Loans and argued that “it was a common industry practice during the time these loans were made to provide [an] owner’s estimate of value to appraisers, until the law changed nationwide in 2009.”


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