How to think about the new appraisal rules

Take your pick: A balanced mainstream journalism approach, or a blast of blogospheric rage

By Andrew Leonard
Published July 27, 2009 5:12PM (EDT)

The Wall Street Journal has caught up to the mortgage broker war against the new rules on appraisals -- the Home Valuation Code of Conduct (HVCC). HTWW dipped into this story a month ago, prompting an aggrieved letter from Marc Savitt, the president of the National Association of Mortgage Brokers.

The gist of the story, which the Journal covers reasonably well, giving ample space to both sides of the argument, is that mortgage brokers and realtors are blaming the HVCC for slowing down, and in some cases actually preventing, home sales. It's possible that there may be a grain of truth in their contention. The purpose of the new rules is to break up the cozy relationship between realtors, mortgage brokers and appraisers in which artificially high appraisals benefited everyone -- except the new homeowner. So, sure -- there's now some friction where previously there was a smoothly sliding greasy wheel.

However, the point that exercised my ire a month ago was how brazenly the mortgage brokers and realtors refuse to take any responsibility for the abuses that helped contribute to the housing boom and forced a reappraisal of appraisal rules. To judge by the testimony of industry lobbyists, it's as if everything was working just fine, until the bureaucrats interfered. This is arrant nonsense, and I was prepared to work up a good head of rage blasting it, but Barry Ritholtz at the Big Picture beat me to it, with a rant posted early this morning.

Some choice excerpts, as Ritholtz responds to the results of a survey promoted by the National Association of Realtors (NAR):

"A June survey of NAR members shows 37 percent experienced at least one lost sale as a result of the new Home Valuation Code of Conduct, with seven out of 10 reporting an increased use of out-of-area appraisers. Seventy percent of NAR appraiser members said consumers were paying higher fees, while 85 percent report a perceived reduction in appraisal quality."

What contemptible bilge.

Where TF were these concerned citizens at the NAR when appraisers were engaging in all sorts of funny business, driving prices skyward? They were AWOL. You do not recall any commentary during the boom about the artificial number of sales, or the increased prices that appraisers were causing, because somehow, the greatest bout of appraisal fraud, predatory lending, and irresponsible mortgage underwriting standards the world has ever known managed to escape these ethicsless weasels' notice.

NEVER FORGET THIS: The NAR is a trade group, not a legitimate source of independent data. They are biased, not credible, and to be blunt, essentially behave as PR flacks who will say ANYTHING if they think it will help their members make a quick buck. They are not a credible economic organization, they are not legitimate researchers, they are nothing more than hired guns pushing their members' agenda -- even when it is destructive to America.

Barry Ritholtz has a new book out, "Bailout Nation." So if you like the above rant, you know where to find more.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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