Appraisal Scope

We’ve spent so much time and energy focusing on “the Code” that other changes to the industry have received little to no attention. So I thought I’d devote this blog to how SAFE, coupled with a new FHFA requirement, affects many of our broker clients as well as appraisers.

1. Nationwide Mortgage Licensing System

While in California, brokers are already licensed, I was surprised that this is not the case in every state. Currently licensed mortgage loan originators (MLOs) have to comply with SAFE licensing by January 2011 and non-licensed MLOs must comply by July 31, 2010, although each state may choose deadlines that are before this national mandate. These requirements include background checks, testing, education, and several other components.

2. Registry System

As part of licensing, identifiers will be given to each individual mortgage loan originator.

3. FHFA Announces New Mortgage Data Requirements

Beginning January 1, 2010, Freddie Mac and Fannie Mae will be required to “obtain loan-level identifiers for the individual loan originator, loan originator company, field appraiser, and supervisory appraiser.” As a result of this change, FHFA will be able to monitor performance and trends in loans by appraiser and by loan originator. As Director Lockhardt stated in the press release, “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.”

So what does this mean and how will it look on a day-to-day basis? Again we are on the wait-and-see path. The goal of both the legislation and the FHFA mandate is to prevent fraud and restore confidence and transparency in the credit markets. I wonder if it will also address loans approved solely on data from AVMs and BPOs? Hope to hear from some of you on how this might impact our industry.