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Moving on to your home and the home valuation code of conduct was designed to protect home -- from bad appraisals.
But my next guest says -- behind -- 50% increase.
In appraisal fraud.
Mark savage president.
The national association of independent housing professional.
He joins us from Washington mark how is that possible that this code of calls to -- -- fraud.
Well there's a lot of factors involved first of all there is a serious.
Erosion of of quality of -- appraisals -- what happened is.
This if you're remembered going -- the beginning back in in 2007 the attorney general of New York Andrew Cuomo.
Began investigation of some of the country's largest banks and he found that there was fraud involved between.
Washington Mutual federal savings bank and also an appraisal management company called your -- it he found there were conflicts of interest which led to the fraud.
So he came up with what he calls the -- home valuation code of conduct for better known as HB CC.
But what happened is in the second version of the draft that was sent out on HB CC the final version.
They took out the the prohibition where banks could have ownership in the AMC's the appraisal.
-- companies so this is what's led to -- we still have the the fox in charge of the hen house here.
We also have because mortgage brokers can no longer -- appraisals.
As of may first of 2009.
We the we have to go for a lenders -- there's supposedly pressure now coming from.
The the ANC's to the appraisers we -- the biggest problem from this code.
Is that it is harm small business it's hurting the consumer it's causing erosion of equity.
In just about everybody's home across this country just like a foreclosure does.
It's putting appraisers and mortgage brokers out of business by the tens of thousands -- costing causing rather massive unemployment.
If it's so.
Horrible though mark then why is the housing market recovering another have been incentives.
But we had a decline in foreclosures.
For the first time in over five years we've had stability in home prices.
So that the situation is is Betty as you portray.
Into -- the housing market able to recover.
Well the housing market is recovering but is recovering very slowly and it wouldn't start to recover very long time ago and greater speed if we didn't have -- BCC.
Even though the market is recovering we still have a problem with appraisal fraud and we have a massive problem with -- if appraisals.
Many homes and I've seen personally.
Where the houses were actually worth much more than they were appraised there were re appraisals afterwards after the transaction close these -- purchases.
And what happened was because those homes actually.
When -- When the -- closed it created new comparable that comparable is now the benchmark for that neighborhood that.
Market that has.
Fraud why -- it prosecuted.
Absolutely I asked I fed as you know.
Five meetings with the attorney general's office in new York and every one of those meetings I asked then one of -- just.
Prosecute -- -- they just enforce the laws they've already got on their books every state has fraud statutes every state has consumer protection laws.
And they said there's a problem with revenue saw in the meantime they came -- with this code is -- -- that does absolutely nothing.
To stop fraud it increases fraud and it it causes erosion of equity and as I mentioned before it also.
Cause us to have poor quality appraisals which harms the market and it harms the consumer and of course the overall economy what about nullifying nullifying -- Well that's the good news there is a an amendment in house resolution 4173.
That the house -- representatives passed.
Back in December that does nullify the code.
We just learned two days ago that senator Casey from Pennsylvania will be offering a an amendment on the senate side.
That will do pretty much the same things we haven't seen it yet but we're told that it will be offered.
Either today or tomorrow.
Mark thank you for being here mark savage president of the national association of independent housing professionals take care.
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