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
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