National Association of Independent Housing Professionals

601 Pennsylvania Ave. NW • South Building, Suite 900 • Washington, DC 20004

Support Appraisal Independence Requirements
and Sunset of HVCC

May 24, 2010

Dear Member of Congress:

We, the undersigned national and state housing industry trade associations, join the NAIHP in requesting your support of the inclusion of Sec. 4312 of HR 4173, the "Wall Street Reform and Consumer Protection Act of 2009," in the final House/Senate negotiated version of Financial Reform.

This bipartisan amendment includes strong language for appraisal independence requirements, specifically making it "unlawful for a mortgage loan originator to make any payment, threat, or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property..."

The amendment also calls for a "Negotiated Rulemaking Committee under the Federal Advisory Committee Act and the Negotiated Rulemaking Act to promulgate appraisal independence requirements for residential loan purposes..." Furthermore, once appraisal independence requirements have been promulgated, the Home Valuation Code of Conduct, will sunset and have no further force or effect.

The Home Valuation Code of Conduct (HVCC) has been ineffective in combating conflicts of interest or reducing valuation fraud. In fact, an April 2010 report on mortgage fraud by the Mortgage Asset Research Institute (MARI) concluded, appraisal fraud increased by 33% in 2009, and was on the rise. The report also stated appraisal quality had dropped significantly in 2009. HVCC was implemented on May 1, 2009.

HVCC has been directly attributed to massive business failures and widespread unemployment within the housing industry, as well as numerous other "unintended consequences." The code allows banks and other lenders to cileate joint ventures or partnerships with unregulated Appraisal Management Companies (AMC's), sustaining the same conflicts of interest found in the N.Y. Attorney General's 2007 investigation of appraisal fraud.

Please support consumers and housing industry professionals by voting to include this section in the final version of Financial Reform.

Sincerely,

National Association of Independent Housing Professionals (NAIHP). Montana Association of Mortgage Brokers
West Virginia Association of Mortgage Brokers