Yesterday we mentioned how the National Association of Realtors, and its chief economist Larry Yun, was complaining about “low-ball” appraisals, saying they were hurting the housing market.
Basically, they’re upset about a new law that requires an objective, third-party appraiser and the use of distressed sale prices (AKA market prices) in determining the value of a home.
Well, Barry Ritholtz has done more digging into this, and suggests that based on the NAR’s activity, you might almost conclude that the NAR is “pro fraud”
He found this letter from the NAR, detailing its effort to thwart the legislation:
TO: State Association Executive Officers
State Association Presidents
FROM: NAR Government Affairs
DATE: 19 June 2009
RE: Fly-In Head’s Up
Please note this notice is going to all state executive officers and state presidents. We will be sending Fly-In details on Monday June 22, 2009 to the states who have Members of Congress and/or United States Senators on the House Financial Services Committee or Senate Banking Committee. (list of states at end of memo)
There is growing concern in the real estate industry over the implementation of the Home Valuation Code of Conduct (HVCC) and its effect on the use of appraisal management companies (AMCs) by lenders.
NAR is taking the following actions: (Target dates in bold)
1. NAR is scheduling meetings with the Director of Federal Housing Finance Agency, Jim Lockhart to raise concerns about implementation of the HVCC and problems with AMCs and ask for an immediate 18 month moratorium. Director Lockhart is the conservator over Fannie and Freddie who entered the consent order with the NY Attorney General. ( June 22, 23, 24, or 25th)
2. Government Affairs will conduct a fly in the week of June 22. Two members from each Association (State AE/State President or FPC as appropriate) to meet with members/staff of the House and Senate Banking/Financial Services Committee. The ask will be to cosponsor the bill (item 3) and to support an 18 month moratorium.
3. Our legislative team will work on getting a bill introduced in Congress asking for a 18 month moratorium. (week of June 22)
4. We will ask the Chair and Ranking Members of the House and Senate Banking [ Reps Frank and Bachus/ Senators Dodd and Shelby] Committees to write Director Lockhart asking him to grant a 18 month moratorium (week of June 22)
5. We will try and get an 18 month moratorium attached to an immediate pending appropriation bill or other similar fast track bill. (June)
6. Staff will talk to the American Bankers Association who heretofore is fine with the AMC system to see if we can negotiate support.(June 19)
NAR will engage a coalition of Appraisal Institute, MBA, Home Builders and other appropriate trade groups.
7. NAR Research is conducting a survey so we have concrete data information to bring to the regulators and the NY Attorney General’s office . The survey will also be run through the State Association. EHS will be released next week and the appraisal issue will be mentioned front and centre in NAR’s release. Survey release June 22
8. NAR is scheduling a meeting with NYS Attorney General Andrew Cuomo and representatives of NYSAR. (June 29. 30)
9. NAR will conduct a Call For Action if we do not get a moratorium in the next week to 10 days
NAR is aware of multiple petitions calling for an end to the HVCC. NAR is taking a more tempered and thoughtful approach of asking for a moratorium during this trouble housing economy.
States with Members of Congress and/or United States Senators on the House Financial Services Committee or Senate Banking Committee: AL, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, KS, KY, LA, MA, MI, MN, MO, MS, MT, NC, NE, NH, NJ, NY, OH, OK,OR
PA, RI, SC, SD, TN,TX, UT, VA, WI, WV
Now, this is what lobbying groups do: They fight legislation that they think will hurt its constituency. And it obviously hurts the NAR’s members if homes aren’t being given generous appraisals. But seeing as dishonest appraisals played a big role in inflating the bubble, and since the bubble proved to be so harmful, and since inflated appraisals hurt buyers, this is a ridiculous fight to be picking.
But then, it’s the NAR. Everyone knows their agenda, and the group has no shortage of critics.
If only a third party could collect some of the stats they do, like existing home sales, there’d be no reason to give the group any attention. As it is, they’ll always get the spotlight when they release this data.