NAR Defends Broker Price Opinions for HAFA Valuations
The National Association of Realtors (NAR) is contesting claims, made by the Appraisal Institute last week, against the use of broker price opinions (BPOs) in the upcoming Make Home Affordable Foreclosure Alternatives (HAFA) short sale program. NAR asserts that when it comes to short sale valuations, BPOs are the best option out there. HAFA begins April 5 and provides monetary incentives for borrowers, servicers and lenders to complete a short sale under the program’s terms. In a letter Friday to Treasury Secretary Timothy Geithner and Housing and Urban Development (HUD) Secretary Shaun Donovan, NAR president Vicki Cox Golder said BPOs are a cost-effective alternative to other valuation methods and a better choice to determine values in certain transactions, like short sales through the HAFA incentive program. “BPOs are completed by licensed real estate agents with a detailed knowledge and understanding of real estate pricing and local market trends developed through active participation in the listing, negotiation and sale of properties,” Golder wrote. “This perspective offers a unique viewpoint that supports sound real estate decisions with accurate estimates of the value of real estate.” Last week, the Appraisal Institute wrote Geithner a letter calling for an end to the use of BPOs for Making Home Affordable modifications and refinancings, as well as amending the rules for the upcoming HAFA program to require appraisals to determine value for government-incentivized short sales. “Generally speaking, real estate agents and brokers are not independent or properly trained valuation specialists. They have an inherent bias towards quick results and action which produces a fee for themselves irrespective of whether the lender/services/investor/property owner/borrower gets a fair return on the short sale,” the Appraisal Institute said in its letter. Golder contested those allegations, and said there is no evidence to support the claim that appraisers are more or less likely to engage in mortgage fraud than real estate agents, adding NAR members that perform BPOs must adhere to the association’s ethics code. “While misconceptions in the industry persist, there is no evidence that a BPO exacerbates mortgage fraud or abuse,” Golder wrote. NAR is the second group to publicly challenge the Appraisal Institute’s claims. Last week, the Real Estate Valuation Advocacy Association (REVAA), a year-old trade group representing firms and professionals in the valuations industry, sent Geithner a letter arguing that flexibility in the business helps to reduce costs and make appraisal reports faster. Write to Austin Kilgore. Note: included in the April edition of HousingWire magazine is HW Focus, a new supplemental publication that, in the first edition, explores the valuation industry with expert analysis by staff and insight and perspective from some of the industry’s top professionals. Keep on top and get it here.