Democratic House/Senate Takeover Will Lead to Focus on Mortgage Fraud, Housing Market Issues

The Appraisal Institute is making no secret of its satisfaction that Democrats have seized control of the House and Senate.

How come? Because key issues such as mortgage fraud and predatory lending will now sit near the top of the agenda for several Congressional committees, according to Bill Garber, director of government affairs for the Appraisal Institute. Garber offered the following insights on how real estate appraisal issues may be addressed during the 110th Congress.

In the House, the Financial Services Committee is set to be chaired by Rep. Barney Frank, D-Mass., an experienced veteran of banking and real estate-related issues.

Frank has expressed concerns about predatory lending and mortgage fraud, both of which were heavily discussed and debated in the 109th Congress in the Financial Services Committee, but not resolved.

“The Appraisal Institute has long held that any attempt to address predatory lending should also address weaknesses in the appraisal regulatory structure established by Congress,” Garber stated. “While problem appraisals are only a small component of the mortgage fraud problem, regulatory weaknesses are contributing to the problems we see in the market today.”

The second-ranking Democrat on the committee is Rep. Paul Kanjorski, D-Penn., prime sponsor of The Responsible Lending Act, H.R. 1295, which advances ideas to improve the way in which real estate appraisers are regulated at the federal and state levels.

Rep. Kanjorski’s district has been besieged by home mortgage fraud in recent years, some of which has involved appraisals, according to Garber.

“Rep. Kanjorski has offered a series of appraisal reforms that we anticipate should garner bipartisan support. Reps. Frank and Kanjorski are expected to work together with members of the committee to craft legislation addressing the rise in predatory lending and mortgage fraud early in 2007.”

In the Senate, the Senate Banking Committee is slated to be chaired by Sen. Christopher Dodd, D-Conn., who co-wrote Title XI of the Financial Institutions Reform, Recovery and Enforcement Act, which set forth state licensing and certification requirements for appraisers in 1989.

According to Garber, Sen. Dodd is expected to address key credit card reform issues early in the 110th Congress, but like the House, the issues of predatory lending and mortgage fraud are likely to be elevated in the committee’s priorities, as well.

In addition, Sen. Jack Reed, D-RI, who is likely to chair the Senate Subcommittee on Housing and Transportation, is expected to be a key leader on appraisal issues.

An attorney by trade, Sen. Reed has a long been a champion of housing market issues and has a great deal of familiarity with real estate appraisal legislation, having been involved in a Title XI oversight hearing in 2004.

Another legislator likely to weigh in on this issue is Senator Barack Obama, D-Ill., who recently introduced legislation to combat mortgage fraud and provide state appraisal regulators resources to conduct oversight over appraisers.