AMCO's board draws big names.

AMCO, AN INDEPENDENT VALUATIONS SOLUTION COMPANY BASED IN Cleveland, substantially beefed up its board in October. AMCO's advisory board now boasts Andrew M. Cuomo, former Secretary of the Department of Housing and Urban Development (HUD); William C. Apgar, former commissioner of the Federal Housing Administration (FHA); and Jack F. Kemp, former Secretary of HUD, congressman and vice presidential nominee. This impressive group was interviewed recently by Mortgage Banking about their new roles on AMCO's board. We will feature interviews with each of these leading housing policy-makers in a special three-part series.

First in the series is our interview with Apgar, who joined AMCO's board on Oct. 5, 2004. We asked what attracted him to serve on AMCO's board. He cited his experience at HUD, where he administered the FHA single-family and multifamily mortgage insurance funds, multifamily rental assistance programs, and grants for the construction of housing for the elderly and disabled populations. In addition, he referred to his current experience as a senior scholar at Harvard University's Joint Center for Housing Studies and Kennedy School of Government. "I have done a lot of work on the broad topic of mortgage fraud, specifically the role of appraisal fraud," said Apgar. "When I was introduced to AMCO, it seemed like they had the experience and resources that could tackle this topic."

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One of the top issues Apgar is concerned about is the increased pressure appraisers are experiencing from all parties involved in the home-buying process. "We have a housing system in which there is a lot of temptation to change the appraisals to meet the demands of mortgage lenders and Realtors. Honest people in the appraisal business would say to me when I was doing research on FHA appraisal reform that they could make a noble stance, but if they did that someone else would get the business."

As a former commissioner of FHA, Apgar said that the FHA program has more challenges than private mortgage insurers. "Unlike insurers operating in the conventional market, FHA has limited capacity to monitor its appraisers, and the pressure on appraisers to modify FHA appraisals can be intense. It is very difficult for the FHA to stop bad appraisers who participate in FHA programs, because of the legal requirement that lenders are allowed to select the appraiser," said Apgar. However, he said, FHA has made great progress on holding everyone involved in the process more accountable. But there is a lot of work still to be done on getting the bad actors out of FHA, he said. Outsourcing the appraisal function to an independent and objective partner would make sense, according to Apgar. "The FHA marketplace will embrace this outsourced solution if there are no legal barriers placed in the way," he said.