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HUD has removed a web search feature that allowed consumers, lenders, and brokers to rank FHA appraisers on the basis of Claim and Default Rates. Once found at https://entp.hud.gov/idapp/html/appr_search.cfm, that URL no longer leads to the appraiser search feature.

The search engine disappeared as it came, without fanfare or notice, just before the installation of the new Administration.

Under the HUD system, a "default" meant that a mortgage had gone unpaid for at least 90 days while a "claim" meant that a property had been put up for foreclosure.

However, "defaults" and "claims" relate to the mortgage underwriting process, not to the issue of whether or not a property was correctly valued by an appraiser. Appraisers do not qualify borrowers, underwrite loans or collect monthly mortgage payments, thus have no way to know if homeowners qualified to buy or if they are current or behind with their payments. As well, the HUD system provided no opportunity for appraisers to contest their rankings, appeal the posting of their names, or comment on the rankings.

"Some how," said HUD in an e-mail dated January 19th, "the 'Appraiser Claim and Default Rates' function was released before HUD approved it's (sic) release. A request was then submitted to remove the link to the function and to remove the files to run that function. The link and most of the files were removed except for the search page."

Whether the search page will return is an open question. According to the HUD e-mail, "as for when it will be available, that will be annonced (sic) in a future mortgagee letter."

Appraisers, says Francois K.Gregoire, an appraiser in St. Petersburg, FL and a member of the state regulatory Appraisal Board, should not be graded on the basis of borrower performance unless they have a chance to participate in the lending process and have the right to "veto the decision to fund a mortgage loan."

Not only should the claims and default ratings page not re-appear, says Gregoire, such information should not be maintained "unless there is some specific, documented causal reslationshiip shown between the Claim and Default rate of an individual appraiser and his or her adherance to HUD/FHA Guidelines."

"As a state regulator," said Gregoire, "I have no problem with the posting or publishing the names of individuals having been found not in compliance with HUD/FHA Appraisal Standards or unethical conduct and sanctioned by HUD/FHA. Any public notice or posting must be after the complaint or allegation is settled and the appraiser has been afforded lawful due process to defend themselves against the charge or allegation, and the individual is found not in compliance. The notice should include the allegation as well as the penalty imposed."

"In the event HUD/FHA is aware of unlawful conduct by one of their approved appraisers," says Gregoire, "it should be standard practice to refer the allegations to the appropriate State Regulatory Board for their normal complaint and diciplinary procedure."

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