commensurate to what the consumer pays for. they are not getting that now. they are getting only a fraction of what they are paying for. because the bulk of the fee is going to a party other than the person that is completing the assignment. the bulk of the fee is going to an organization, a company that adds no value to the transaction. they are strictly a broker, strictly a middle man and despite the claims of the quality control and the adherence of the appraiser, in most cases it is not. it is simply a means of syphoning off money. often the management company is associated with or affiliated with the lender. >> done on a contract basis. >> we have to think that the consumer gets what they are paying for and if the lender

wants to use the services of an appraisal management to broker the service, the claim that they are operating as an agent for the lender. don't make them pay for it. the lender is the one getting the benefit. make them pay for that benefit. >> i'm getting old, but i have been in real estate for over 40 years and i have tremendous respect for appraisers. especially when i made the applications and they relied on the inhouse appraiser to give a fair market appraisal. they were lending me the money. they went out and did what i considered a fair market appraisal. they did a good job. when we bought or sold, we would praise the individual house and based it on the block away and a mile down the road and understood the area.

what we did was overturned the apple cart to such a degree that nobody figured out even though we directed them how to put it back the way it was. government doesn't change rapidly. for some reason they did, but coming back the other way, it's not done a good job. it's where the lenders are no longer having the appraisers and deal with the issues like we did in the past. they can't be used because one person has not paid for it. we created a situation where they put out and whoever gives the best prices is all of them. irrespective of geography. i took notes on what you said earlier. we talked about geography and fully capable and guidance.

every one was followed with an if. it doesn't matter if. fully capable if. provide guidance if. the problem is defining if. if opens up a huge problem that we started and we have got to correct. they are trying to provide this and the mortgage brokers are trying to buy and sell and the appraisers are trying to grant service to everybody. we put them in such a difficult situation, it's just not working. we put them in some areas with the ability to recover and we decimated value in homes out there with this downturn and we are not doing what's necessary that we hit a bottom to build it back up or let it come back on a natural basis. we are stoping it right there

and we mandated things that don't work. we are not happy with what we did. we messed up, but we are also not happy with you not listening to us wanting you to correct what we did wrong. we have to fix it and somebody needs to listen. you have been more than generous. i would yield back my time twice. thank you. >> thank goodness. >> i appreciate your description and appreciate what you said. that's anomalies or hearsay and i heard the stories. >> i didn't mean to do that.

>> i know you wouldn't, but i appreciate that. there is 350 of them and are they all the best and good? no. are there good and great? yes, there. they do indeed provide real value to the process. that's the amc that do help protect the appraiser and they also allow for the types of transactions that you are talking about to be facilitated. other methodologies can be used to check or give a sense of those sorts of tools that are available and used in today's world. i was delighted to see my friend

using an ipad to give her testimony today as you know from your real estate experience. the big technology of the day was the memory card in a typewriter. things have change and things are available today that can help go to the issues. >> what's your opinion on this? >> i think that there a couple of things incumbent on all of us and need to make sure about the change. lenders are held accountable for these appraisals and for the opinions and for their actions. we also need to make sure that and they are well-verse and have a sufficient staff to take care of the problems that are coming and to make sure that what's

happening in the appraisal business is well-maintained and understood as they try to do their job. >> one second. i agree -- i am not disagreeing, but what i was saying is we all make mistakes. we did. congress did. we came back and tried to correct that. what we did was exclude everybody from being able to be involved in participating. use matching appraisals and areas that we think are done wrong and errors made and they happened. they do. it happens in every business. we have taken and excluded that ability to be competitive, comparative and dealing with mistakes just to occur. that is what i'm saying is where we messed up. it's not impugning any appraiser anywhere. it's saying let's get back to a system of accountability and portability and reliability.

that was all i was saying. anywhere in any way took a statement impugning anybody, i am saying we goofed up and other people make mistakes too. let's correct the mistakes and come up with something that is good for everybody. thank you. >> thank you. i will recognize myself for five minutes. in that how would this structure differ from the we have today? >> let me start by talking about what we are proposing is not a self regulatory organization. like some have mentioned. self regulatory organizations involve industry. the national mortgage licensing system is owned and operated by

bank regulators in this case state bank supervisors. the certification and licensure have the standards and professional practice, they would remain unchanged. at a high level as i alluded to before, the current structure assumes that states that are not capable of administering the system of certification creating a specific agency to intervene with the process. the morgue annage licensing administers state certification maintaining a presence out of a last resort. for many years, congress and others have sought a way to advance regulator communication and this mortgage licensing system developed a solution. we understand that they are offering the system to state regulators outside the mortgage loan origination business and as

there common problem that all state regulators face. it would not be elite to participate in this system. thank you. >> one last question. on page two of your testimony, you call it stunning and inappropriate, a rule on customary and reasonable fees as required by dodd frank. you mentioned that this rule creates a loophole. you can expound on these points? >> let me catch up with you here. >> it creates a loophole where as the amc was allowed to go out and check customary fees, but within the scope of their fees,

we feel it should be outside of the amc realm from the general market place. for instance, va, fha, appraisals done for other purposes. whether it's for dissolution or state work to. get an idea of where the fee is for an appraiser in the field trying to make a living in their small business. >> mr. kelly, do you have a response to that? >> yes, i do. they have always been set by the market. a supply and demand equation quite frankly.

appraisers deserve reasonable customary fee. they want to be paid for the services provided. the notion that amcs are somehow driving down fees for fees and we don't set the fees. we work for lenders where the agents were doing the risk assessment pieces of what the lenders have done. we provide as i indicated in the testimony services for lenders and for appraisers. one of the things i have been told in the years i was with them is the largest cost for appraisers was marketing. that in addition to the risk and you know insurance and warranties and those types of things are costs for appraisers and doing retail assignments.

much if not all that was has been off loaded to the amcs and there is a share and the risk and duties are no longer done by the appraiser and the consequent fee they get is one they agree to and had been negotiated with to say will do you this assignment on 123 maple. it's a 1004. what is your fee? $300 or whatever it might be. there may be anomalies on that like we have talked about on traveling. those are truly anomalies. >> anybody else like to comment on that? >> i think it's very important to distinguish the experience of what happened over the past eight years. at the height of the market, 60%

of mortgages were originate and the majority were professional lenders. we all know that we saw many subprime loans and they were overvaluing properties. the intend of the code was to assure that arm's length transaction. the reality is some of the unintended consequences of efforts to improve performance. appraisers tell us with regard to accuracy issue, they would have a day to produce an appraisal for a lender. today they expect them to do two to in the same time period. the fact is appraisers are leaving the practice in droves because they can't make ends

meet. that's not a product of quality. these appraisers are committed to providing quality products, but it is a product of a changing market place and what we are not seeing and i hope we do see that we do see the subcommittee working with the regulators to ensure safety and soundness and the return of robust lending. thank you. >> thank you. i would like to thank all of the witnesses today. i have to add to the record the following material into the record. june 28, 2012 recognition and june 28, 2012 and statement from the american build and the statement from the mortgage

banker's association and june 28, 2012 statement from the dallas ford worth association of mortgage brokers and june 28, 2012 statement from the leading builders of america. with that the chair notes that members may have additional questions that they may wish to submit in writing and remain open for 30 days for members to commit questions to the witnesses and to place their responses in the record. with that i would like to thank you and thank you for your expertise that you brought this panel and to help us as we move forward and so i thank you all for being here. this hearing is adjourned.

here's a look at the prime

time. vice president joe biden and his wife dr. jill biden at the national education association's annual meeting today in washington. on c-span 2, prime time with a look at pedestrian beginning with michael duffy's examination of the world's most exclusive club from hoover through obama. on c-span 3, american history in prime time with oral history interviews with key congressional staff charged with investigating president nixon. that's all tonight on the c-span networks. watch 24 hours of american history tv here on c-span 3. starting at 8:00 a.m., the war of 1812, a little known conflict that bolstered america's international credibility that airs at 4:00 p.m. eastern. at noon and 8:00 p.m., how president johnson viewed the

role of government and his great society efforts to institute social reform. it's george mcgovern and walter mondale. a key address from robert caro. at 2:00 and 10:00 p.m., the writings and observations of french aristocrat and his conceptions of liberty, equality and community and commentator michael barone. american history tv wednesday july 4th on c-span 3. >> the life of a sailor included scrubbing a deck and working on the sails and climbing the lost. the gun drill practice and by the end of the day, you are ready for rest. you don't get a full eight hours of sleep. it's four hours on, four hours off. >> this weekend on american history tv, the life of an

enlisted man on the uss constitution during the war of 1812. >> the sailor lived in fear over being whipped. it was always carried by a petty officer in a bag and the thing a sailor never wanted to see was petty officer getting ready for a nothinging. it's a phrase we still use today. don't let the cat out of the bag. we don't want to see them coming out of the bag. >> that's sunday at 7:00 p.m. eastern and specific. more from the contenders. our series on key political figure who is ran for president and lost, but changed political history. sunday, 1928 democratic presidential candidate and former new york governor al smith. >> all of our spending falls at the same time. this is the kind of stuff that we are supposed to know.

this is stuff that we have known since the 1930s. the attempt of everybody to slash spending at the same time because they think they have too much debt. it's self-defeating. >> who is going to tell them the truth. we have to tell them the truth. if we don't tell them the truth, our country fails. we must succeed in this and we will succeed in this. we will reach them through the media and through politics and through pop culture. pop culture. we shouldn't be afraid to get out there and quit preaching to the choir and be influencer, right? in pop culture. >> the c-span networks covered the panels with paul and elizabeth warren and online discussions with michelle malkin and sarah palin. watch them online at the c-span video library. coming up next, the senate foreign relations committee

hears testimony on the law of the sea treaty. that's the un law that defines the rights and responsibilities of nations in international waters. witnesses include the presidents of the u.s. chamber of commerce and petroleum association and the national association of manufacturers as well as verizon's chair and ceo. john kerry said he will not bring the law of the sea up for a senate vote until after the november election to avoid politicizing the debate. this is about two hours. . >> capitol hill is filled with anticipation and we can continue to do the nation's business not with standing that anticipation. and we have this panel of business leaders here this

morning to talk about further help and evaluating and think about the law of the sea treaty. and put into perspective of why we are here. i have been accused in many reasons, i read something the other day about why this why they got it wrong so far. i was out to dinner with tom donahue maybe a year and a half ago or so. we were talking about a number of things on the agenda and the energy policy. at the end of the dinner, by the way, when are you going to get this law done? i was completely taken aback and that was the last thing i expected to hear about it at the

dinner. i said why are you bringing that up? why is that a concern? he said are you kidding? i have a bunch of members who are desperate to get this thing done so they can go out and explore and do what's necessary to produce energy for america. so that's what really flagged it for me. i came back and talked to my staff. that's a promise that i would in fact look into it and give it a good faith effort. that's what brought us here. i met with various representatives of those industries and became convinced that american competitiveness and jobs were at stake. we are not here because of any political agenda and not here because the administration decided this was the moment. this is really coming from america's business community.

i think people will hear that here this morning. there is an urgency here to it. that's what we will examine today. we heard already from the nation's top military leaders. the first sitting secretary of defense and we heard from the every past secretary of state and republican and democrat a wlik is have signed an op ed they wrote which has been reproduced and regarding this treaty. we heard from treaty experts and we are here and not finished on that leader. we have supported the treaty for more than two decades now. some have argued that we should prefer to rely on the law to

protect our navigational freedom. most of the national security community completely disagrees with that and does not believe that we should leave our national security to an unwritten set of rules. subject to change at any point in time. that provides uncertainty and as we hear again and again up here, nothing is more damaging to long-term plans and investments than a lack of certainty about the rules of the road. the focus to our energy and economic security. we are going to hear from letter who is combined, represent millions of businesses and jobs.

our companies want this treaty quite simply bottom line because it tskts their bottom lines. joining the law of the sea will provide benefits to u.s. business and industry not available through any other means. gist a quick few examples. telegrun occasions industry. we have vast under sea cable networks and they provide a backbone for the world's voice and data network. when there is a problem, if a country were to seek to block a company from laying a cable or impeding the repair of damaged cables, the law of the sea provides redress, a party to the treaty can bring suit on behalf of companies within the context of the agreement. since the u.s. is on the outside of that agreement today, we cannot take advantage of this

legal road map. our companies have to piggy back on efforts by governments that are a party to the convention. instead of standing up for our company when is they need our help, our failure to join forces them to look elsewhere. greater expense and greater uncertainty and lack of protection of american sovereignty. the status quo is not acceptable. adam of verizon and the ceo who i am please side here today will go into some of the details regarding that. all you have to do is listen to at&t and the telecommunications industry and others, all of whom urge a session to this treaty. on the energy security, people come to the same conclusion. the united states is blessed with hundreds of thousands of square miles of extended continental shelf. we can literally add the -- double the size of the united

states in effect from what is under sea and available to us for exclusive jurisdiction and that will be critical to our energy security for years to come. the only way to maximize the legal certainty and establish clear title over the extended shelf is through recognition by the shelf commission. we are shutout from this process. we are shutting ourselves out and this makes a critical difference to the energy companies as we will hear. they want and need certainty to invest the billion was dollars required to develop energy in the chefl especially the arctic with the chinese and the russians that are already laying claims. instead of doing what we can do to encourage environmentally sound exploration in the areas, our failure to join the law of the sea is deterring it