Dennis Norman
07/17/10-Correction – This past week Congress passed H.R. 4173, the Wall Street Reform and Consumer Protection Act which is the most comprehensive reform to the banking industry since the Great Depression. The bill now awaits President Obamas signature which is expected to happen in the coming week.
This is a very comprehensive bill and I’m not sure even the Congressmen that passed it know everything that is in it, so I’m certainly not going to even pretend to know that much about the bill, but the one thing I do know is the Home Valuation Code of Conduct (HVCC) is dead. It’s been a while since I have written about HVCC but to refresh everyone’s memory HVCC is something has wreaked havoc with home buyers, REALTORS and appraisers. HVCC, which went into effect on May 1, 2009, has caused issues and confusion in the real estate industry and among professionals in the industry. Killing HVCC will be, in my opinion, be a positive thing for the real estate market.
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Hi Dennis,
Great job writing this article! Obama is expected to sign it this week, so does this mean that banks can contact the appraiser’s directly again and appraiser’s can receive their full fee and not have to work like slaves for the Appraisal Management companies anymore for a reduced fee?
I really would appreciate your insight into this. Also, would mortgage brokers be able to order with us again?
Thank you so much sir. Keep up the good work.
Regards,
JD
Hey JD, thanks for the comment!
Unfortunately, as you can see from some of the other comments from appraisers, it appears that many appraisers don’t see a lot of benefit from this, other than officially sunsetting HVCC….It’s my unerstanding that lenders can currently order appraisals outside of an AMC it’s just a lot are resorting to AMC’s….I think there is some optimism out there over a new Fannie Mae rule that goes into effect Sept 1 that prevents a lender from changing an appraisers value…. Dennis
Hey Dennnis
Answer the question!!!!!!!
Thanks
Jim Leonard – appraiser
Hey Jim,
I’m not sure what question I’m supposed to answer? Am I missing something?
Thanks
Dennis
i think the question is, will brokers and loan officers be able to order directly from the appraiser? u remember the good old days.
I do remember the old days….we had a couple of local appraisers we knew that were good, responsive and knew the market…it we could order an appraissel directly, were allowed to have lunch with the appraiser, heck I even remember playing golf with appraisers that did work for us…I guess today that may be frowned upon…..ugh, can you “over-regulated”?
The good ole days of direct communication and the new day we are “living” with both have the same problem. Appraisers are not a valued part of the process because there are no consequences for bad lending decisions. The last time a bank valued a competent appraiser was when the local bank kept the paper and was responsible for collecting and foreclosing if that loan went bad. A real and legitimate understanding of the actual value of a property played a part in a thoughtful consideration of the overall loan application. (It even included the capacity and willingness of the borrower to repay the loan! What a concept!)
Today the loan industry requires an appraiser to rubber stamp a deal so that they can fit things into a checkbox for the underwriters and secondary market folks. If there are no REAL consequences for bad decisions on the part of a lender, why does anything beyond the officially licensed status of an appraiser make any difference? It doesn’t. This has lead to AMCs, fee over competence decisions, “get the report in” over “is there data to support your conclusions” and other things that cause the ever shrinking population of appraisers who are competent to do something beyond fill out the form to leave the industry. (Retirement, death-we’re getting old as a group, good sense.) When is the last time that you had to develop a narrative report? How often do you actually walk through the 6 assignment conditions and make changes to the language in the report based on the results of your initial scope of work decisions? Or do you get an order, inspect the property, clone an old report, swap a few comps, pop in some new info, sign and submit?
A question for some of my fellow appraisers, how many times have you had reports kicked back because the adjustments failed to fit the 10%-15%-25% guideline? Did it matter to the “reviewer” that these adjustments were necessary to account for the differences in the actual marketing conditions related to the comparable sales? Wouldn’t it have been easier to just cave and reduce the adjustment? Would the fact that the new adjustment was inaccurate and lead to the generation of a misleading report have made any difference at all? How many “reviewers” at the clients-AMC or otherwise-actually know enough to understand the comments explaining the logic and math based analysis of market data you include in the addendum? How many of them READ the addendum?
What market based incentive is there to raise the bar in our profession when the clients have no incentive to care beyond license level? I think that without real, tangible consequences for bad decision leading to a market driven change in the value of appraisers in the process there will never be any meaningful changes made in the way appraisers and the entire loan industry functions-or doesn’t. Any change or fix that fails to address the consequences for people who drive the loan industry and impacts the demand for minimal licensure and mindless form filling is a band-aid approach and will not be successful in anything beyond further complicating an already beleaguered profession.
[...] By Paul Collins, on August 18th, 2010 Editor’s note – Last month we published an article about HVCC which drew quite a few comments and responses….one such response was from veteran appraiser [...]
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