Citing concerns about increased mortgage fraud, four organizations representing real estate appraisers have voiced their opposition to the Obama administration's Home Affordable Foreclosure Alternatives (HAFA) program, which takes effect April 5.
The groups – the Appraisal Institute, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers – object to the HAFA guidelines, which allow servicers to use broker price opinionsÂ (BPOs) to determine the value of properties to establish a minimum offer of a short sale.
‘We strongly believe continuing to allow BPOs in the property valuation component will not adequately protect the public interest or the interests of the various parties to the loan and is likely to exacerbate mortgage fraud,’ the organizations wrote in a March 8 letter to Treasury Secretary Timothy Geithner.
The groups urge the Treasury to revise the program's guidelines to prohibit the use of BPOs for property valuation requirements.
The appraiser organizations' letter notes that law enforcement officials have highlighted loan modification fraud – including fraud involving short sales – as a new form of mortgage fraud.
‘We believe that such conflicts can and should be mitigated by implementing basic requirements reestablishing independence and competency in the valuation process,’ the letter says.
SOURCE: Appraisal Institute