The Brainerd Real Estate Blog

To:     All agents and REALTORS®
Re:    New regulation we need to stop
From: David Biggers, Chairman, a la mode, inc.

The last time I sent a memo to all the agents in the country was when we were soliciting matching donations to our $250,000 pledge in the wake of Hurricane Katrina.  You responded wonderfully. Today’s reason for this memo, a regulatory call to action, is just as significant.  In the same way that a hurricane destroys a broad swath indiscriminately, there are new regulations being handed down from Washington which will wreak havoc on a wide scale in the real estate industry, and real estate agents will be directly harmed.  Like with Katrina, I hope you’ll respond again, and help me stop this damage to our businesses.

The new regulations came out of a lawsuit brought by the New York Attorney General involving coercion of appraisers by large institutions.  In the settlement agreement, the GSEs (Fannie Mae and Freddie Mac), and the Office of Federal Housing Enterprise Oversight (OFHEO) agreed to change national appraisal rules — in exchange for the Attorney General’s office terminating its investigation of the GSEs.

Unfortunately, while we believe the agreement has the best of intentions, the hastily written embedded regulations (called the “Home Valuation Code of Conduct”, or HVCC) do not solve the problem and in fact severely punish agents, mortgage brokers, appraisers, and ultimately consumers.    If there ever was a case of the cure being worse than the disease, this is it.

The two portions of the HVCC that most affect you are:

“The lender will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by… mortgage brokers and real estate agents…” and

“…any person… who is compensated on a commission basis upon the successful completion of a loan… shall be forbidden from… any communications with an appraiser”

Why every agent should be concerned about the proposed HVCC:

• Agents are specifically singled out as being “the problem”, and are banned from even talking to appraisers at all; that’s a RESPA “death sentence” for every relationship you’ve ever built
• It shifts power toward large institutions and away from agents, since the lender alone becomes the sole point of contact for the borrower in critical areas
• Your role as the prime coordinator of the transaction will be severely damaged, and handed to the lender
• Buyers will wind up paying for a separate appraisal for every potential lender, driving up closing costs, reducing competition, and ultimately pushing housing affordability even lower — directly affecting your homebuyers
• The business relationships that you’ve spent years building with mortgage brokers are made worthless overnight, as borrowers will be forced to lock in with one lender almost immediately
• The entire regulation is biased toward the large institutions and against independent appraisers, mortgage brokers, and agents
• If this becomes law, what part of your value-added role will come under attack next?

As you can see, this isn’t just about appraisers.  The draconian measures in the HVCC absolutely exclude you from properly assisting buyers and sellers during the appraisal, one of the most important (and stressful) areas of the transaction.  As the market slows down and you’re under fee pressure, is this the time to find that you’ve had the core of what you do — guiding and counseling buyers and sellers through your industry knowledge and business contacts — taken away from you in the dark of the night?

I don’t think so.   That’s why the whole industry needs your help.  And you can do it with just a few clicks and perhaps a phone call or two.

It would be easy to think that this is an appraisal issue, and appraisers can deal with it themselves.  I think I’ve shown above that it’s very damaging to agents specifically, but I believe also that there’s a bigger issue here.   Back when I first personally donated $150,000 to the REALTOR® Relief Fund (click here for the news story), we had just entered the agent software market, having spent 20 years serving appraisers.  The money that went to benefit agents and their families in the affected areas ultimately came from appraisers, and those same appraisers stepped up to the plate again in matching my additional $250,000 challenge. 

You can return the favor to those appraisers — and safeguard your own career — by simply visiting our website and using our convenient form to send your comments to the powers-that-be.  Agents outnumber appraisers roughly 10-to-1, and your voice will have a huge impact on the OFHEO, Fannie, Freddie, and Congress.  All you have to do is visit our political action page by clicking here:  http://www.alamode.com/HVCC-RE.   (Remember:  If left unchanged, it harms you too.) 

I mentioned that we were comparative newcomers to the sales side of the real estate business in 2005.  But today, over 35,000 agents use our websites and tools.  And all told, over 100,000 agents, appraisers, and mortgage brokers use our products.  Unfortunately, all the software in the world won’t make this latest problem go away.  But 100,000 people collectively voicing their opposition to poor regulations — now that can indeed make a difference.  Join me in sending a message to Washington, without making any donation or spending any money at all, by just using your mouse.  Join us now in sending a clear message by visiting http://www.alamode.com/HVCC-RE.

Thanks for reading this, and thank you in advance for your help.

I have been really busy the last couple of weeks showing property of all kinds to buyers that are truly looking to buy which is different than in the recent past where the buyers were looking but not real serious about buying. I am sure that not all areas in the northern part of Minnesota are going through the same things that are happening here but hopefully that will change and all areas will pick up. I am thinking that with the rates as they are and the slower market in the past couple of years that the time for buying might be this year for a lot of folks. Listings have picked up and sales have gotten stronger. All things seem to be on the rise. 2008 could be a banner year for the Brainerd area time will tell but for now it seems things are headed down the right road.

The Gateway, a real estate information portal envisioned by a National Association of Realtors advisory group, has been re-branded — at least temporarily — as The Real Estate Channel.

An interim report of NAR’s Gateway Presidential Advisory Group, released in late March at the blog site of David R. Phillips, CEO for the 1,200-member Charlottesville Area Association of Realtors in Virginia, states that The Real Estate Channel, or TREC, “will enable the real estate community to continually expand the breadth, depth, immediacy and power of trusted real estate information available to Realtors.”

The interim report sheds more light on previously announced plans to study the feasibility of a national — and eventually international — property database with richly detailed information about all types of properties, including for-sale properties.

A “Statement of Inevitability” at the top of the report states that “consumer-focused real estate Web sites are gathering more and more information,” and “without convenient, immediate access to information to analyze/interpret for their clients and customers, Realtors will no longer be at the center of real estate transactions.”

The Real Estate Channel and its acronym, which are working titles subject to change, will provide access to a national database of property information, be “based on the collaborative efforts of Realtors and the real estate community, including (multiple listing services),” drive the development and implementation of data standards and definitions, expand the scope and content of information available to real estate professionals, and will afford economies of scale “to purchase information needed to populate its database,” the report states. Read the rest of this entry »

PHILADELPHIA – A judge on Thursday temporarily blocked the city from enforcing five gun-control ordinances pending a challenge from the National Rifle Association.

The NRA argues that state law prevents Pennsylvania municipalities from regulating guns, a view that even the city’s crime-weary district attorney shares.

“The city has no basis to pass any of these gun-control ordinances and they know it,” lawyer C. Scott Shields argued on the NRA’s behalf.

City lawyers contend that Philadelphia can pass gun-control ordinances if the laws are outside the scope of state measures. As an example, lawyer Mark Zecca told the judge that one Pennsylvania county had banned guns at its courthouse.

Among other things, the five city ordinances passed April 10 ban the sale of assault weapons; require owners to report a lost or stolen gun within 24 hours; and limit firearms purchases to one a month.

They came in response to the city’s one-a-day murder rate and its reputation for being a weapons source for criminals in New York and other states with strict gun laws.

The judge scheduled arguments for April 28. She said she would rule very quickly, although her decision is sure to be appealed by the losing side.

Mayor Michael Nutter, who declared a “crime emergency” shortly after taking office in January, quickly signed the City Council bills into law _ despite still-pending litigation over earlier gun-control efforts.

Maybe we should just pass out kleenex

NEW YORK – Citigroup Inc. lost $5.1 billion during the first quarter and will eliminate about 9,000 more jobs, as poor bets on mortgages and leveraged loans lopped billions of dollars from its investment portfolio. Read the rest of this entry »