In February, the National Association of Home Builders released its Blueprint for Appraisal Reform, a thorough examination of the nation’s appraisal system. The blueprint, also known as a white paper, will be used by the NAHB in its advocacy efforts with Congress, regulators and the appraiser community.
But not everyone agrees with what NAHB has to say. Alice Sorenson, CIO of LRES, says the blueprint is merely an effort by NAHB to convince its readers to take a stance in changing the overall framework for appraisals. In short, it's a start that may not go far enough.
"When anybody writes a white paper, they are trying to convince someone to think their way, move their way, go their way, do their way… it’s a persuasive paper. It’s trying to sway someone over to their side of thinking," said Sorenson.
Sorenson notes that the paper leads off by saying there are serious problems with the appraisal process in the United States, that it’s dysfunctional and that it’s a major impediment to any kind of stabilized housing market.
"This isn’t new news," said Sorenson.
"If we do have serious problems and if the processes are dysfunctional, it’s not just because of the appraisal process. The whole lending process in general in the United States has serious problems," Sorenson added. "It needs to be looked at as a whole, but we need to stop doing the same thing over and over again."
Sorenson notes that she does agree that enforcing the rules and regulations that we have in place is absolutely necessary. However, she says she doesn’t have a solution as to how to cement that enforcement.
"I don’t know that we need more rules, I just know that the rules we have need to be enforced," Sorenson said.
She notes that the results of the last six years are indicative that we don’t have the proper oversight and we don’t have the proper punitive actions for when bad behavior is identified.
"Rather than adding more regulation, which is what NAHB is suggesting, I would rather enforce what we’ve got and make sure there’s an appropriate punitive action when it’s identified that something fraudulent or illegal has taken place," said Sorenson.
Stricter enforcement of existing regulation? It's not likely many mortgage lenders will jump to Sorenson's side on this. But the LRES CIO has a good point. If there are looming problems for mortgage lending, they need to be fixed.
One way or another.