2008 Appraisal Committee
National Association of REALTORS®
2008 Midyear Legislative Meetings & Trade Expo
Omni Shoreham
Congressional Room, West Conference Center
Wednesday, May 14, 2008
8:00 AM - 10:00 AM

Chair: Richard (Dick) Koestner, Davenport, IA
Vice Chair: Selma (Penny) Triplett, Dover, OH
Committee Liaison: Cindy Chandler, Charlotte, NC
Committee Executive: Carol Kairis, Chicago IL, Jerome Nagy, Washington, DC

Purpose: To serve the specialized needs of those members with an interest in real estate appraisal by: 1) monitoring, reviewing, examining, and analyzing appraisal-related issues for NAR; 2) referring appraisal-related issues to appropriate NAR committees for their consideration; and 3) providing recommendations on appraisal-related issues to the Board of Directors.

I. Call to Order and Introductions - Dick Koestner, Chair

Ownership Disclosure and Conflict of Interest Policy

1. When NAR has an ownership interest in an entity and a member has an ownership interest* in that same entity, such member must disclose the existence of his or her ownership interest prior to speaking to a decision making body on any matter involving that entity.

2. If a member has personal knowledge that NAR is considering doing business with an entity in which a member has any financial interest**, or with an entity in which the member serves in a decision-making capacity*, or wit, then such member must disclose the existence of his or her financial interest or decision making role prior to speaking to a decision making body about the entity.

3. If a member has a financial interest in, or serves in a decision-making capacity for, any entity that the member knows is offering competing products and services as those offered by NAR, then such member must disclose the existence of his or her financial interest or decision-making role prior to speaking to a decision making body about an issue involving those competing products and services.

After making the necessary disclosure, a member may participate in the discussion and vote on the matter unless that member has a conflict of interest as defined below.

Conflict of Interest Policy

A member of any of NAR's decision making bodies will be considered to have a conflict of interest whenever that member:

1. Is a principal, partner or corporate officer of a business providing products or services to NAR or in a business being considered as a provider of products or services (?Business:); or

2. Holds a seat on the board of directors of the Business unless the person's only relationship to the Business is service on such board of directors as NAR's representative; or

3. Holds an ownership interest of more than 1 percent of the Business.

Members with a conflict of interest must immediately disclose their interest at the outset of any discussions by a decision making body pertaining to the Business or any of its products or services. Such members may not participate in the discussion relating to that Business other than to respond to questions asked of them by other members of the body. Furthermore, no member with a conflict of interest may vote on any matter in which the member has a conflict of interest, including votes to block or alter the actions of the body in order to benefit the Business in which they have an interest.
________________________________________
*Ownership interest is defined as the cumulative holdings of the member, the member's spouse, children, siblings and to any trust, corporation or partnership in which any of the foregoing individuals is an officer or director, or owns, in the aggregate, at least 50% of the (a) beneficial interest (if a trust), (b) stock (if a corporation) or (c) partnership interests (if a partnership).

**Financial interest means any interest involving money, investments, credit or contractual rights.

II. Approval of Minutes from Last Meeting - Dick Koestner, Chair

III. New Business

A. Legislative/Regulatory - Jerry Nagy

1. H.R. 2061 "Predatory Mortgage Lending Practices Reduction Act"
H.R. 2061 was introduced by Rep. Jones (D-OH) on April 26, 2007.  H.R. 2061 is currently in the House Committee on Financial Services with 16 cosponsors. 

H.R. 2061 would amend RESPA requirements and prohibit mortgage lenders and brokers from providing subprime mortgage loans unless they are certified by HUD as having been adequately trained regarding subprime loans.  It would also require them to setup plans of practice to ensure RESPA compliance for high cost mortgages.

Additionally, it declares as unenforceable any consumer contract/transaction that requires binding arbitration (not including post-controversy arbitration agreements).  H.R. 2061 would also create grants to nonprofit community development programs to help educate buyers on predatory lending practices.

2. H.R. 3012 "Fair Mortgage Practices Act of 2007"

H.R. 3012 was introduced by Rep. Bachus (R-AL) on July 12, 2007.  H.R. 3012 is currently in the House Committee on Financial Services with 15 cosponsors, including Rep. Gary Miller of California. 

H.R. 3012 would create a national licensing/registry for loan originators and mortgage brokers. You would be required to get a federal license if your state does not currently have a license for loan originators or mortgage brokers.

Additionally, H.R. 3012 would also attempt to simplify disclosure documents, require consumer counseling for homebuyers through HUD-certified programs, require escrow accounts for subprime mortgages, and would not allow a pre-payment penalty on loans that reset from a fixed rate to an ARM.

3. S. 1222 "STOP FRAUD Act"

S. 1222 was introduced by Sen. Obama (D-IL) on April 25, 2007.

S. 1222 is currently in the Senate Committee on Banking, Housing, & Urban Affairs with one (1) cosponsor. 

S. 1222 makes it a federal offense for a mortgage professional to defraud a homebuyer or to falsely obtain financing for property.  It would also create a federal registry of loan originators and mortgage brokers and allow access to see if a broker or originator has committed fraud in other states.

Additionally, S. 1222 would provide for further HUD counseling to homebuyers and would provide grants for states to strengthen their regulations of appraisers in order to make sure they are ethical and acting independent from the real estate agent or broker.

4. S. 1299 "Borrower's Protection Act of 2007"
S. 1299 was introduced by Sen. Schumer (D-NY) on May 3, 2007.

S. 1299 is currently in the Senate Committee on Banking, Housing, & Urban Affairs with six (6) cosponsors, including Senator Boxer. 

S. 1299 states that in the case of a home mortgage loan, a mortgage broker has a fiduciary duty to the consumer and is subject to all federal and state requirements for fiduciaries.

S. 1299 would also require that a mortgage originator be able to verify that the buyer would be able to afford the loan, taxes, and insurance premiums currently and if the loan resets.  The lender would be liable for acts, omissions, and representations of a broker in connection with Yield Spread Premium.

Additionally, a mortgage originator cannot steer a consumer into a loan with a rate, charges, principal, or prepayment terms that are not reasonably advantageous to the consumer.

S. 1299 prohibits a mortgage originator to enter into a home mortgage if there is reason to believe the appraiser did not act in good faith. S. 1299 also prohibits an originator from trying to influence an appraiser and a copy of the appraisal must be provided to the applicant, whether or not the loan is granted or denied.

5. Kanjorski Bill

H.R. 3837 was introduced by Rep. Kanjorski (D-PA) on October 16, 2007.  H.R. 3838, known as the "Escrow, Appraisal, and Mortgage Servicing Improvements Act", is currently in the House Committee on Financial Services with 13 cosponsors, including Joe Baca (D-CA).

H.R. 3837 would have mortgage originators create an impound account for homebuyers.  Additionally, it states that an appraiser would have to physically visit the property, interior included, before an appraisal can be accepted.  The appraisal must be by a certified appraiser and the report must be provided to the consumer whether the loan is granted or denied.  H.R. 3837 defines what it means to be an independent appraiser and that the originator can in no way influence the position of the appraiser. 

6. S.2452 Mortgage Reform

S. 2452 was introduced by Senator Dodd (D-CT) on December 12, 2007.  S. 2452, known as the "Home Ownership Preservation and Protection Act of 2007", is currently in the Senate Committee on Banking, Housing, and Urban Affairs with 19 cosponsors, including both Senator Feinstein (D-CA) and Senator Boxer (D-CA).

S. 2452 would amend the Truth in Lending Act to redefine high-cost mortgages and would prohibit: (1) prepayment penalties; (2) balloon payments; (3) yield spread premiums; (4) acceleration of debt; (5) evasions, structuring of transactions, and reciprocal arrangements; and (6) modification and deferral fees.

S. 2452 would additionally require that any refinancing of an existing home mortgage loan have a net tangible benefit to the consumer.  It would also require prerequisites for subprime and nontraditional home loans, including: (1) an assessment of ability to pay; (2) a requirement of tax and insurance escrows; and (3) prohibition of prepayment penalties and yield-spread premiums.  S. 2452 also imposes a duty of care and a duty of good faith and fair dealing upon mortgage brokers, appraisers, and lenders and loan servicers.

7. GSE-Cuomo Agreement
See attached C.A.R.  Comment Letter

B. Fannie Mae Speaker - Ezzard Alves, Director of Credit Policy
Q&A Session as time permits

IV. Reports

A. NAR/AI Affiliation Update - Dick Koestner, Chair

B. Appraisal Foundation Public Hearing on USPAP 2008 - Dick Koestner, Chair

C. Appraisal Foundation Trustee Report - Joe Traynor

D. The Appraisal Foundation Advisory Council (TAFAC) - Arnie Tesh

E. Association of Appraiser Regulatory Officials Report - Jerry Nagy

V. Other Business

A. Emerging Issues Discussion - Penny Triplett, Vice Chair

B. Next Meeting: Friday, November 7, 2008 2:00PM  - 4:00 PM
NAR Annual Convention

VI. Final Comments and Adjournment