Letter to Congress

   The Honorable Mike Crapo Chairman Committee on Banking, Housing and Urban Affairs    

   534 Dirksen Senate Office Building

   Washington, DC 20510


   The Honorable Sherrod Brown Ranking Member Committee on Banking, Housing and Urban Affairs

   534 Dirksen Senate Office Building

   Washington, DC 20510


  Dear Chairman Crapo and Ranking Member Brown


       We are contacting the Committee on Banking, Housing, and Urban Affairs to raise concern regarding Senate Bill 2155.  S. 2155  is not          needed and puts an unbearable risk on both homeowner and taxpayers.

       On the first line of this bill it clear states. “To promote economic growth, provide tailored regulatory relief, and enhance consumer            protections, and for other purposes”.  This bill promotes the complete opposite.  Implementing a waiver of appraisals for all properties        under $400,000.00 in rural areas is irresponsible and negligent.   

      First, how does this bill support economic growth?  The growth for who, the lending institutes and banks?  Does new this new               regulation apply to FHA and VA loans as well?  And if so, why should the average taxpayer, support a bill that is likely to start the next       housing meltdown?  Did we not learn anything from the 2008 Subprime Mortgage Crisis?  The long-term effects of this S.2155 have not   been examined carefully. 

       The cause of the “housing bubble” was associated with the sharp rise and then drop in home prices over   the period 1998–2008 has     been the focus of significant policy and research attention. The dramatic   increase in subprime lending during this period has been  broadly blamed for these market dynamics. 


        Gentleman, the fox can not be in-charge of the hen house.  If S.2115 is allowed, an epidemic, that could rival what happened in   Detroit, where abandoned homes became almost as plentiful as occupied ones, will most certainly follow in these small towns and     communities.  Defaults, w most likely increase.  Without the work of a geographically competent, state certified appraiser, who’s to say     the home that just sold for say $90,000.00 is only worth $72,000.00, that a 20 percent difference.  If it an FHA or VA default the

 average   taxpayer takes the loss.  Multiply that by 10,000, that a loss of $180,000,000.00 dollars, that taxpayers will be on the hook for.    

       Problem two, in a recent report published by Core-Logic the national rate dropped 15.8 percent between the period of April 2015 to         April 2016.  This was the 54th consecutive month with a year-to-year decline.  

       If no appraisals will be needed on these rural homes the sub-prime market will explode.  It already   happening.  A recent report     published by the Federal Reserve Bank of Cleveland examined peer-to-peer   lending, finding that this market is a growing alternative for   consumers.  This will only increase and add   more Sub-Prime lenders to this volatile market.  The Fed found that often the interest rate   obtained through peer-to-peer lending (P2P) is not better than that of a credit card--one of the lines of credit P2P proponents claim their     loans help with.

     “Based on these findings, one can argue that P2P loans resemble predatory loans in terms of the segment of the consumer market they   serve and their effect on individual borrowers’ financial stability.  The 2007-2008 financial crisis illustrated the importance of consumer   finance and the stability of consumer balance sheets. … The overall performance of P2P loans strikingly resembles that of the subprime mortgage market before the 2007 subprime mortgage crisis,” the Fed concluded.


       Issue three, “SEC. 1127. Exemption from appraisals of real estate located in rural areas.  Section (a) has contacted not fewer than 3     State certified appraisers or State licensed appraisers, as applicable; and (b) has documented that no State certified appraiser or State   licensed appraiser, as applicable, was available within a reasonable amount of time, as determined by the Federal financial institutions   regulatory agency with oversight of the mortgage originator, to perform the appraisal in connection with the federally related transaction;   Can we, (the taxpayer) thrust the lenders and banks to do this the correct way, I don’t think so, the 2007-2008 foreclosure market   correction is evidence for that.


     And last point.  There are many appraisers located in small rural communities who specialize in appraiser properties in these locations.   If we permit S.2115 to pass as written many of these appraisers will be out of business.


      For these reasons, we ask you to stop S.2118 now, from implementing the appraisal waiver program until it can demonstrate that they   are consistent with safe and sound business practices and proceeds.  Further, as your committee develops housing finance reform   legislation, we ask that any legislation ensures that appraisal requirements, otherwise S.2118 poses great potential risks to taxpayers and   homeowners.


      Thank you for your consideration of this matter.  If you should have any questions or would like additional information or resources from our organizations, please contact any of the individuals listed in the attached document.  




Executive Director

Don L Ross

Urban Coalition of Appraisal Professionals