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Monday Morning Cup of Coffee: Appraisers may not get paid as CoesterVMS runs out of money

Housing industry responds to Kraninger’s Senate confirmation to lead CFPB

Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on larger issues.

Last week, rumors began to circulate that appraisal management company CoesterVMS may be going out of business after FVC Bank announced it was shutting down a $700,000 line of credit to the AMC. However, owner Brian Coester denied that the company was in trouble and told HousingWire that he was getting what the bank did corrected.

But now, it seems that CoesterVMS is, in fact, running out of money. So much so that some appraisers may not get paid what they’re owed in the process. A letter was recently sent out by International Fidelity Insurance Company that CoesterVMS’ penal limit of its bond is $25,000, but that it received claims in excess of that amount.

The surety bond is meant to cover when a business can't pay its vendors. But because the surety doesn’t cover the total amount owed, the letter explained it will pay claims on the bond on a pro rata basis according to the amount of each party’s established claim.

From the letter:

The Surety requests that all potential claimants, that have not already done so, file their claim by sending correspondence and supporting documentation to the addressed or e-mail listed above no later than December 30, 2018. Please note that after December 30, 2018 the Surety will proceed with pro rata distributions to all valid perfected claimants. However, after the penal limit has been exhausted, all claims received after that time will be advised the penal limit has been reached and the bond has been released.

A source also informed HousingWire that this is being sent out from CoesterVMS:

“Due to financial difficulties, all payments on orders completed prior to 11/15/2018 cannot be paid at this time, our BK attorneys will be in contact with all creditors. Coester can guarantee payment next day on all orders completed on or after 11/16/2018. We apologize for any inconvenience.”

Things don’t seem to be looking up for CoesterVMS – or the appraisers who are owed money by the AMC. HousingWire will continue to follow this developing story.

Thursday, in what amounted to an anticlimactic vote in a nearly empty Senate chamber, the Senate approved Kathy Kraninger as the next director of the Consumer Financial Protection Bureau.

Kraninger will replace Mick Mulvaney, who’s served as CFPB acting director after former CFPB Director Richard Cordray stepped down last year to unsuccessfully run for governor of Ohio.

And the housing industry couldn’t be more pleased.

The National Association of Federally Insured Credit Unions expressed its hope that the CFPB will continue its strict enforcement of “Wall Street banks” without added extra regulatory burdens on small credit unions.

“NAFCU is consistently engaged with the bureau on issues critical to the credit union industry and we look forward to working with Director Kraninger to ensure a healthy regulatory environment in which credit unions can grow, thrive and successfully serve their membership,” NAFCU President and CEO Dan Berger said. “Additionally, we will continue to advocate for a tailoring of regulation at the bureau to reign in unscrupulous behavior by Wall Street banks and bad marketplace actors while exempting credit unions from burdensome regulations that will simultaneously raise costs on their members.”

The Community Home Lenders Association voiced similar sentiments, calling on Kraninger to create regulations in respect to a lender’s size.

“CHLA commends the Senate for approving the nomination of Kathy Kraninger to be a full-time CFPB Director and renews its call for CFPB to fully implement the Dodd-Frank requirement for regulation tiered by size, to address the regulatory burden on small IMBs,” CHLA Executive Director Scott Olson said.

The National Association of Realtors applauded Kraninger’s nomination, and said the bureau will protect consumers under her leadership.

“The National Association of Realtors applauds the Senate’s confirmation of Kathleen Kraninger to lead the Bureau of Consumer Financial Protection – the agency tasked to ensure consumers’ financial interests are protected,” said Shannon McGahn, NAR senior vice president of govermnet affairs.

“America’s 1.3 million Realtors recognize the critical role the Bureau plays in maintaining the integrity of significant financial transactions like home purchases,” McGahn said. “Under Ms. Kraninger’s leadership, we believe the Bureau will properly protect consumers and support businesses that help more individuals achieve the American Dream of homeownership.”

No Democrats voted for Kraninger, but upon her nomination, Ranking Member of the House Committee on Financial Services Maxine Waters, D-Calif., encouraged her to put consumers first by rolling back the “anti-consumer” actions made by Mulvaney.

“The Consumer Financial Protection Bureau was specifically designed by Congress to be an independent watchdog for America’s consumers and I am committed to ensuring its statutorily mandated mission is not undermined,” Waters said. “Mick Mulvaney took a series of actions to weaken the agency’s ability to carry out its important mission, while benefitting the predatory actors the agency is designed to police.”

“He has done everything in his power to roll back consumer protections, strip the agency of its resources and compromise its independence,” she said. “Now that Mulvaney is no longer at the helm, I call on Director Kraninger to put consumers first by rolling back the anti-consumer actions taken by her predecessor and allowing the Consumer Bureau to resume its work of protecting hardworking Americans from unfair, deceptive or abusive practices.”

Not much is known about Kraninger, or how she plans to run the bureau. The coming weeks and months could be very revealing, but most suspect she will follow in Mulvaney’s footsteps.

After hitting several record highs, tappable equity, the amount available for homeowners with mortgages to borrow against before hitting a maximum 80% combined loan-to-value, ratio fell for the first time since the housing recovery began, according to the latest Mortgage Monitor report from Black Knight.

Tappable equity decreased by $140 billion in the third quarter, and now 43.6 million homeowners with mortgage have tappable equity, down by 272,000 from the second quarter, Black Knight’s report showed.

The average homeowner with at least 20% equity has $136,000 available to tap, about $2,300 less than in the second quarter.

Black Knight explained that the decline was driven by softening – and in some cases, falling – home prices in some of the nation’s most expensive and equity-rich markets. California alone accounted for nearly 75% of the total decline. Just four metro areas – San Jose, San Francisco, Los Angeles and Seattle – made up two-thirds of the net reduction in tappable equity.

In fact, on an annual basis, tappable equity is still up in 98% of major metro areas.

Finally, at the end of last week, the Senate Committee on Banking, Housing and Urban Affairs introduced a flood of new bills.

S. 3726: A bill to amend the Economic Growth, Regulatory Relief and Consumer Protection Act to clarify seasoning requirements for certain refinanced mortgage loans and for other purposes. This bill was introduced by Sen. Amy Klobuchar, D-Minn.

S. 3717: A bill to amend the Truth in Lending Act to prohibit certain unfair credit practices, and for other purposes. This bill was introduced by Sen. Sherrod Brown, D-Ohio.

S. 3731: A bill to provide regulator relief to charitable organizations that provide housing assistance, and for other purposes. This bill was introduced by Sen. Deb Fischer, R-Neb.

S. 3722: A bill to amend the Financial Stability Act of 2010 to provide a criminal penalty for unauthorized disclosures by officers or employees of a Federal agency of certain living will and stress test determinations. This bill was introduced by Sen. John Kennedy, R-La.

S. 3723: A bill to amend the Securities Exchange Act of 1934 to allow for the registration of venture exchanges, and for other purposes. This bill was introduced by Sen. Kennedy, R-La.

We will keep you updated if any of these bills are advanced to the full Senate.

Nominations for HW’s Tech100 opened last week, so make sure you register now under the early bird pricing.

Have a great week!

3d rendering of a row of luxury townhouses along a street

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