New appraisal rules STINK | hurts borrowers
There’s a new sheriff in appraisal town and the name is HVCC. Home Valuation Code of Conduct.
The HVCC,which was implemented May 1 by Fannie Mae and Freddie Mac, was meant to make appraisals less susceptible to undue influence by loan officers, real estate agents and others, and thus more accurate and reliable
Whether the HVCC will, on balance, be a benefit to homebuyers remains to be seen and so far has been a nightmare.
Ironically, the genesis of the code of conduct was not HUD or Fannie Mae and Freddie Mac, but New York State Attorney General Andrew Cuomo. Cuomo settled a lawsuit against the two mortgage giants for faulty appraisals with their agreement to adopt the code.
For one thing, it is making appraisals substantially more costly for consumers. In some cases $525 upfront instead of the $350 it used to cost. Appraisals are sometimes taking 30+ days to complete!! Previously we could turn an appraisal in few days when needed, definitely within a week.
The clear winners are appraisal management companies (AMCs), because they are the easiest way for lenders to comply with HVCC rules requiring separation between loan production workers and risk management.
The certain losers, are independent appraisers, who can no longer count on the patronage of satisfied local lenders. Most will be forced to dance to the tune of the AMCs or starve. And they are being asked to work for less, even as the AMCs are charging borrowers more!
The AMCs are charging more per appraisal and adding extra charges. Plus, appraisals previously could be paid at settlement; now they must be paid up front on a credit or debit card. And should you change lenders before closing, you may have to pay for a new appraisal at additional cost.
THANKFULLY, FHA has not adopted the HVCC, so it is not requiring lenders to use the AMCs. Nevertheless, many FHA lenders are using AMCs anyway and charging even more for the privilege than for Fannie and Freddie loans!
Undue influence can be just as easily exerted by the AMCs as by any other group. And there is no guarantee that the appraisers willing to work for the AMCs lower rates will be as knowledgeable or skilled in the local market. In fact, we used to be able to use LOCAL appraisers who know the market.. NOW, we end up having to use big national companies who order the appraisal.
It isn’t uncommon for them to have a Baltimore Appraiser appraise something down here in Montgomery County!! What a joke. These UNlocal appraisers have come in literally 200,000 low… They don’t care. They aren’t held accountable to anyone, and they’ve already been paid upfront peanuts for doing their work. These INCORRECT values either affect the rate on a loan OR kill the loan completely. © 2007, Real Estate Information Services, Capitol Assets & Choice Finance®
It is shameful.
HVCC/the new appraisal rules are bad for borrowers
Please share your thoughts
Tags: HVCC appraisal rules
September 3rd, 2009 at 12:06 pm
[...] problems all started with the Home Valuation Code of Conduct, which was implemented May 1 by Fannie Mae and Freddie Mac. The HVCC was created to settle a [...]
July 5th, 2009 at 7:40 pm
GREAT video on HVCC and how it is not only hurting borrowers, but how the big Appraisal companies being used are Joint Ventures with the Big Banks.. the exact reason HVCC was supposedly put in place!
http://www.thinkbigworksmall.com/mypage/player/tbws/11895/1029222
July 5th, 2009 at 1:31 am
35offsuit,
I would LOVE to know what you do for a living or how you claim to know what massive fraud is being used by EVERYONE in the business on both the appraisal and loan officer industry. Why don’t you try and back up your claims with some facts!! I have a dozen stories of appraisers from out of the area where the house is and rushing thru becuase they are getting paid about half of what they used to for more work. Who do you think likes that? The bottom line is there is no accountability to do a good job because they will still have the same amount of work. I have homes that are tax assesed at 1.3 million coming in at 995k. The client told me the guy was rude and basically said he didn’t want to listen to them on the upgrades to the house. I looked up a house that went one street over two weeks ago that sold for 950k and was 23% smaller. Now if you know ANYTHING about what I do you would know those numbers are way off base. The smaller house has a tax value of 1.1 and sold for 950k. Again the spread on the numbers is wrong, anyone in the industry can see that. This will hurt everyone in the process, banks, loan officers, appraisers and most importantly the American consumer. When we have come out of a recession the housing market leads the way. It won’t happen this time if this stupid law doesn’t get junked and I mean junked now.
I can’t even see the appraisal to see if he did a good job. You think that is the right way to conduct business? I can talk to EVERYONE in the loan process but not the appraiser. Makes no sense.
There are many way to combat appraisal/loan officer fraud and it starts with the banks. You could also fine the appraisers and loan officers who are determined to do the wrong thing. Why do we have underwriters if they can’t look at an appraisal and say it’s not any good? It starts there, don’t blame the guys at the bottom of the food chain. Your attack was pathetic and just trotted out the same old crap that I will not listen to anymore. Get serious and get a clue. I can’t wait to you have to buy or sell a home. Why do you think that NO ONE likes the system? If it was so good appraisers would love it. Check out this blog last year when I first raised the warning flag. Appraisers were in love with it and did nothing but attack and threaten me. Once they wised up when they understood. There may still be time for someone like you but I’m not holding my breath.
July 3rd, 2009 at 5:01 am
This is a bunch of whining from loan officers and appraisers who have engaged in a fraudulent symbiotic relationship for years to manufacture fictitiously high values to write loans that never should have been written.
These loan officers and appraisers want to go back to the “old days” when loan officers could direct appraisals to their golfing buddy appraiser to get the value they need.
Nobody, with an IQ above 80, doesn’t realize that when appraiser and loan officer are friends, and when loan officers need high appraised values to make deals work, that values won’t be stretched.
Now that a loan officer can’t direct an appraisal – they are furious. The NONSENSE that is being put forth here is pure garbage.
What Americans are now getting are ACCURATE appraisals. The INFLATED values that contributed to one of the most destructive asset bubbles in human history are a thing of the past.
Don’t believe the hype people. The posters here are only concerned with one thing – THEIR OWN PAYCHECKS. They don’t give a damn about the constant, unending, overvalution of your homes. They want your deal to close so they can earn a commission – period – end of story.
Don’t be snowed America. This fraud has come to an end because of HVCC. Don’t let the lies bring it back.
June 10th, 2009 at 3:19 pm
Please take the time to contact the following:
NY Attorney General Andrew Cuomo’s Office: (212) 416-8000, Internet Complaint
Federal Housing Finance Agency (FHFA): (866) 796-5595, director@fhfa.gov
Fannie Mae: (202) 752-7000, headquarters@fanniemae.com
Freddie Mac: (703) 903-2000, Internet Complaint
Senators, Representatives and Governors: Click here for contact information
Also, please contact your local TV and Newspaper outlets.
TALKING POINTS:
1. NAMB conservatively estimates (breakdown below) that the HVCC is costing consumers over 2.8 BILLION dollars a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.
2. Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.
3. AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.
4. HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo’s investigation.
5. No Portability! Consumers are “trapped” with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.
June 5th, 2009 at 9:46 pm
http://www.hvccpetition.com
sign it
June 4th, 2009 at 11:58 am
Make phone calls, more importantly, WRITE your congressmen:
SENATORS
Benjamin L. Cardin (D)
Phone Number:
DC: 202-224-4524 Fax: 202-224-1651
District: 410-962-4436
E Mail:
http://cardin.senate.gov/contact/
Address:
509 Hart Senate Office Building Washington, DC 20510
Barbara Mikulski (D)
Phone Number:
DC: 202-224-4654 Fax: 202-224-8858
District: 410-263-1805
E Mail:
senator@mikulski.senate.gov
Address:
709 Hart Senate Office Building
US REPRESENTATIVES
District 1:
Frank Kratovil (D)
Phone Number:
DC: 202-225-5311
Fax: 202-225-0254
District: 443-262 -9136
E Mail:
https://forms.house.gov/kratovil/contact-form.shtml
Address:
314 Cannon House Office Building Washington, DC 20515
District 2:
C.A. Dutch Ruppersberger (D)
Phone Number:
DC: 202-225-3061
Fax: 202-225-3094
District: 410-628-2701
E Mail:
http://dutch.house.gov/writedutch_za.shtml
Address:
2453 Rayburn House Office Building Washington, DC 20515
District 3:
John P Sarbanes (D)
Phone Number:
DC: 202-225-4016
Fax: 202-225-9219
District: 410-832-8890
E Mail:
http://sarbanes.house.gov/free_details.asp?id=69
Address:
426 Cannon House Office Building Washington, DC 20515
District 4:
Donna F Edwards (D)
Phone Number:
DC: 202-225-8699
Fax: 202-225-8714
District: 301-562-7960
E Mail:
4mdHill@mail.house.gov
Address:
318 Cannon House Office Building Washington, DC 20515
District 5:
Steny H. Hoyer (D)
Phone Number:
DC: 202-225-4131
Fax: 202-225-4300
District: 301-843-1577
E Mail:
http://www.hoyer.house.gov/contact/email.asp
Address:
1705 Longworth House Office
District 6:
Roscoe G. Bartlett (R)
Phone Number:
DC: 202-225-2721
Fax: 202-225-2193
District: 301-694-3030
E Mail:
http://www.house.gov/writerep/
Address:
2412 Rayburn House Office Building Washington, DC 20515
District 7:
Elijah E. Cummings (D)
Phone Number:
DC: 202-225-4741
Fax: 202-225-3178
District: 410-685-9199
E Mail:
https://writerep.house.gov/writerep/welcome.shtml
Address:
2235 Rayburn House Office Building Washington, DC 20515
District 8:
Chris Van Hollen (D)
Phone Number:
DC: 202-225-5341
Fax: 202-225-0375
District: 301-424-3501
E Mail:
http://vanhollen.house.gov/HoR/MD08/Contact+Information/Web+Contact/Contact+Form.htm
Address:
1707 Longworth House Office Building
June 3rd, 2009 at 3:05 pm
Link to petition HVCC, http://www.petitiononline.com/hvcc/petition.html
June 3rd, 2009 at 2:56 pm
Sorry to hear your story but again not one bit surprised. Remember I hear that Senator Chris Dodd from CT has a bill in to suspend the HVCC for a year. Call your Senators and urge them to support this bill as soon as you have a few minutes. The Hill switchboard is 202-225-3121.
We have appraisers coming in 200k short on appraisals because they are from Mass instead of MD and more importantly have no responsibility to deliver accurate numbers in a timely fashion. The accountability to give a good appraisal is unrelated to them getting more work. I wish as a loan officer that loans would just be assigned to me and they have no choice but to use me and my company no matter how we perform. Can you imagine the outcry? Actually I wouldn’t want that but I remember a year ago when I warned people against this system I had MANY appraisers praising it to high heavens and how they couldn’t wait for it to be the law. I have a feeling that many of them have now changed their tune once they realized what it actually meant. Bottom line this has been terrible for the homeowner trying to refinance and save money or purchase a home. To anyone in the business this is exactly what we suspected the result would be. Once again it sounds great on paper but is simply not workable in reality.