Tougher regulation of appraisers urged
Apr 16, 2008
Palm Beach Post--April 16, 2008
By GERRY SHIH
Palm Beach Post Washington Bureau
WASHINGTON — Sen. Mel Martinez, R-Fla., introduced legislation on Tuesday to clamp down on the home appraisal industry that lawmakers say contributed to severe mortgage woes.
The bill, co-authored by Sen. Bob Casey, D-Pa., targets what legislators described as mortgage fraud and "house-flipping schemes," where appraisers collude with mortgage brokers to inflate the price of a home.
The Casey-Martinez bill requires mortgage originators to conduct a second independent appraisal if a home is being resold within 180 days and to make all appraisal valuations available to the credit applicant at least three days before transactions close. Appraisers also must hold proper qualifications and physically visit properties.
Violators of the provision initially would be fined $10,000 and then $20,000 on a second offense.
"As former housing secretary, one of the problems we faced was flippers who were in fact flipping houses with the assistance and collusion of appraisers," Martinez said.
The co-authors expressed confidence that the bill could be passed within this legislative session. Casey and Martinez touted their bicameral, bipartisan support as House representatives from both parties joined them for a briefing on Capitol Hill.
"This is one of several good, bipartisan proposals that could be enacted now," said Rep. Judy Biggert, R-Ill. Biggert expected the "noncontroversial bill" to dodge the usual political snags, saying that it "does not discourage investment or waste taxpayer money to bail out those who engaged in inappropriate or recklessly irresponsible behavior."
Also on Tuesday, Martinez, President Bush’s first housing secretary until 2003, defended his successor, Alphonso Jackson, who resigned this month amid criticism that his inadequate oversight resulted in the housing meltdown.
When asked what role Jackson played in the unfolding crisis, Martinez replied: "None whatsoever."