Appraisal Scoop

Thanks To All Those Commenting on Appraisal Scoop's HVCC Comment Petition!

This is the final day for submitting comments to Fannie, Freddie, the OFHEO, and the NY AG Cuomo's office under the 90-Day Comment period.

Thanks to ALL those that took time from their busy schedules, to use the Appraisal Scoop's 90-Day Comment Petition, to leave their suggestions and ideas on how the GSE's could improve the proposed Home Valuation Code of Conduct! 

As promised, I wanted to collect your suggestions and then create a formal petition before the end of the 90-day comment period. 

In order to do that, I closed The Petition Site's 90-Day HVCC Comment petition effective last night.  All contributors to the petition should be receiving an email from The Petition Site notifying them. 

In case you do not receive the notice, you can download a pdf or csv version of the all of the comments here:

Date Created	Expires	Format
4/29/2008	5/29/2008	CSV	HVCC_042908.csv | download file
4/29/2008	5/29/2008	PDF	HVCC_042908.pdf | download file

or you can click here:  Download Home-Valuation-Code-of-Conduct_042908.pdf

Washington State REAC says the existing HVCC "Serves to do significant harm to homeowners and appraisers"

The Washington State RE Appraiser Commissioners have agreed to request that Washington State not endorse this Home Valuation Code of Conduct (HVCC) settlement. They are also encouraging WA State to consider a lawsuit to slow the HVCC process down and allow for more time to discuss and study the proposal.  I personally commend our State Commissioners for this. 

Please read and forward this letter your respective state Commissioners, or however your State establishes it laws.  This can start other States following suite. Cheryl K. Farivar, Chair, has signed it and Ralph Birkedahl, Manager, is expected to sign it on Tuesday (4/29).  Download Washington_HVCCletter.pdf

The following is a copy of the letter. It is posted by permission from Cheryl K. Farivar, Chair, Washington Real Estate Appraiser Commission, Washington Department of Licensing, Appraiser Program. Thanks for taking the time to read this very important issue.

Roger Wells

The Honorable Rob McKenna
Washington State Attorney General
1125 Washington Street SE
P.O. Box 40100
Olympia, WA 98504-40100

April 29, 2008

Dear Mr. McKenna,

It is likely that you are aware of the recent settlement between OFHEO, Fannie Mae, Freddie Mac and the New York Attorney General Andrew Cuomo. A part of this agreement is the adoption of a new document known as the "Home Valuation Code of Conduct, or the HVCC.

It is our considered opinion that the HVCC does little to protect the consumer and/or the banking system and, in fact, serves to do significant harm to homeowners and appraisers across the nation. The HVCC is a document which appears to have been entered into quickly, without an appropriate study and comment period. This agreement requires that all new Fannie Mae and Freddie Mac loans conform to the new HVCC standards beginning January 1, 2009.

The Department of Licensing Appraiser Program, members of the Real Estate Appraiser Commission and other stakeholders are joining together to respectfully request that you reject any request to enter into this proposal on behalf of Washington State until further study is conducted.

Section IV of the HVCC seeks to end lender pressure on appraisers by creating a "firewall" between the lender and the individual appraiser. Under the new rules, home lenders will be prohibited from selecting appraisers; lenders will be prohibited from using their own staff appraisers to conduct appraisals; and, lenders will be banned from using appraisal management companies owned or controlled by the lender.

The agreement seeks to end personal contact between the lender and the appraiser, thereby eliminating lender pressure for higher appraised values. Instead, a "third party entity" will order appraisals on a randomized basis. Although the goal is laudable, and the idea is good in theory, we believe that this agreement does little to attain those goals.

The HVCC, as written, will result in most residential appraisals being ordered through "third party" appraisal management companies, a practice which can only result in creating a new layer of consumer cost and potential delay. Most appraisers are familiar with these AMC's, who typically force appraiser fees down by taking a substantial percentage portion of the typical appraisal fee charged to the client. This practice generally results in a situation where the appraisers willing to conduct appraisals for the reduced fees are less qualified. Thus, the AMC's serve to perpetuate a situation of "appraisal by the lowest bidder". This practice will likely force many of the best appraisers out of business, something the appraisal profession can ill afford.

Click here to continue reading . . .

Make Your Voice Heard - Join Together To STOP the "Existing" HVCC Agreement! Here's HOW!

Click here to get started:    http://www.alamode.com/action

By now many of you have already received a direct email from Dave Biggers, the Chairman of a la mode, inc. (click here) announcing their political action initiative to stop the Home Valuation Code of Conduct (HVCC) in its tracks by focusing their considerable resources in Washington to hire top-flight lobbyists, law firms, and marketing and PR firms solely to defeat the HVCC and protect our business.

Dave Biggers said: "The results have been overwhelming and it's just now started to go out -- over 1000 appraisers in the first hour, and that's even with the fact that Mondays are actually bad for email responsiveness since so many people are out in the field."

Who did the email get sent to?  The email went out to:

• 68,000 unique appraiser mailboxes 
• We also sent a variation of the letter to 55,000 mortgage brokers, and
• 263,000 real estate agents in the a la mode marketing databases

"Some appraisers may wonder why we'd ask agents and mortgage brokers to help defeat the HVCC, but the answer is simple, said Dave Biggers.  At this point, we have a common enemy and we need all the allies we can get.  We'll sort out differences AFTER the HVCC is defeated, in a manner where we as appraisers have a say in the outcome.  And with licensing and enforcement on the way for mortgage brokers just as it exists for appraisers and agents, there are better ways to solve the coercion problem than a blanket elimination of the relationships that appraisers have with tens of thousands of mortgage brokers and agents."

We must act together, immediately, to prevent the current Home Valuation Code of Conduct from becoming federal policy. The deadline for submitting feedback on the HVCC is Wednesday, April 30th.

We must let the parties involved know that the terms of the HVCC virtually eliminate the appraisal industry as a thriving collection of independent small businesses, by practically mandating that AMCs be used and by systematically driving lenders to AVMs and BPOs to avoid legal liabilities and transparency.

a la mode, inc. has made it easy for you to take immediate action.  It’ll take you less than sixty seconds to help save your business.  Just go to their political action page and we'll send your comments directly to the powers-that-be. 

Click here to get started:    http://www.alamode.com/action

According to their political action page:  "In addition to passing your comments on electronically, we will actually print each of your letters on paper and physically deliver all of them to the OFHEO, Fannie Mae, Freddie Mac, the New York State Attorney General, and others, on the Wednesday, April 30th commentary deadline.  A few days from now is too late.  That’s why we need your action right now. 

They've provided an additional comments box also, but their lawyers and lobbyists in Washington have told them repeatedly that “heated rants” are typically disregarded and take away from the message they'll be sending. So, please, try to avoid that. Clarity and focus on a unified message is most effective. Now is not the time to split hairs over small issues. The industry is under assault and we must stand united behind a short, easily communicated, achievable set of objectives.

"It’s vital to our industry and the American public that we stand together in opposition of the HVCC as it currently stands. We thank you in advance for your support, and for asking every appraiser you know to visit this web page and lend their support as well", according to a la mode, inc.

Dave Biggers said: "The process of eliminating an appraiser's ability to choose his or her own clients just leads to the next logical conclusion and the worst consequence of the HVCC: the near-universal mandate that lenders must use AMCs for all ordering and management of appraisals.  It's insane. 

It takes literally billions of dollars out of the pockets of independent small businesspeople and shifts half or more of it to a handful of large AMCs.  Any member of Congress who doesn't have a massive AMC in their backyard should be incensed."

Click here to get started:    http://www.alamode.com/action

IVPI Appraisal & Review System: A Working Blueprint for Appraisal Ordering, Delivery & Review

About the author:  Charles Baker is a president of AppraisalPros.com, Inc. based in Pasadena, CA.  He is a certified-residential appraiser in Pasadena, CA, and specializes in high-end & custom residential property throughout Southern California.  He has been practicing for over 20 years as an independent fee appraiser as well as staff & contract review appraiser for Foster-Ousley, Appraisal Enhancement Services, Hansen Quality and others.   

Capitalizing on the vision of the Dodd/Crowley IVPI Proposal, this paper sets forth a working blueprint, an operational model for appraisal ordering, delivery, review and oversight.   

By design, this blueprint seeks to accomplish the following: 

• Establish a universal appraisal ordering & delivery gateway
• Reward quality 
• Punish coercion
• Establish an effective rating system
• Provide flexibility in appraiser/client interaction
• Incorporate regulatory oversight, and
• Ensure compliance with the HVCC to “promote and preserve the Public Trust inherent in professional appraisal practice.”

The Home Valuation Code of Conduct as promulgated by the NYAG/GSE Agreement dated March 3, 2008 sets forth the establishment of the Independent Valuation Protection Institute (IVPI).  By now, most appraisers have familiarized themselves with the HVCC agreement and the IVPI and have read and/or participated in the discussion. 

I believe the mandate of the IVPI is to ensure compliance with the HVCC; to establish a framework and set of guidelines for appraiser-client interactions, appraisal ordering & delivery and regulatory oversight. 

Bottom line, the IVPI can and should govern as a universal set of principals for all appraisers and end-users, whether they be GSE’s, private equity, estate, tax, or personal use. 

As envisioned, an IVPI Certified Appraisal Report (ICA) will be the “gold standard” for HVCC compliance all the way through the supply chain from ordering to delivery.

The opinions expressed here are my own.   My intention here is to get appraisers thinking about the mechanics of a solution . . . to put a "handle" on what so far is a nebulous and "slippery" concept and move the debate forward. 

So, let’s take a look under the hood . . . .Read On!

CMPS Institute Wary of OFHEO's New Appraisal Guidelines

The CMPS Institute, which serves as a training and certification hub for financial professionals working in the mortgage industry, sent feedback rejecting some of the proposals in the Home Valuation Code of Conduct to regulators this week.  Download CMPSCommentOnAppraisalRules.pdf

CMPS says the Code will be broad-sweeping forcing virtually every significant lending platform to adhere to the GSE's guidelines, while also creating an environment that potentially hurts borrowers.

“It's about time the industry got serious about tackling this very real problem,” said Gibran Nicholas, chairman of the CMPS Institute. “However, a few of the policy changes go overboard, and these should be modified to better protect homeowners.”

One of Nicholas's main concerns is the fact that borrowers buying homes could potentially be prevented from retrieving old data or from the pursuit of finding their own independent appraisers.

Nicholas added, “For example, lenders and brokers won't be able to give appraisers any old appraisals, helpful data, or any other estimate of what a home is anticipated to be worth at the time the appraisal is ordered or at any other time prior to the completion of the appraisal. This would drive up consumer costs as appraisers would be forced to redundantly analyze data that may have already been paid for by the consumer or analyzed by another appraiser in the past.”

CMPS also criticized the appraisal code for prohibiting communication between mortgage brokers and agents and the appraisers who are in the process of assessing a home's value. Nicholas believes this lack of communication would only prove to frustrate borrowers, while also prolonging the process and increasing related expenses.

• Article Source: DSNews.com
• Download CMPSCommentOnAppraisalRules.pdf

Reference Sources:

Fannie Mae Agreement

Freddie Mac Agreement

Home Valuation Code of Conduct

Zaio CEO Offers Specific Recommendations On How To Overcome Unintended Consequences In The HVCC Proposal

The following letter was sent to the director of the Office of Federal Housing Enterprise Oversight (OFHEO) to comment on the proposed Home Valuation Code of Conduct (HVCC). Comments were also sent to officers at Fannie Mae and Freddie Mac.

April 25, 2008

James B. Lockhart III

Director

Office of Federal Housing Enterprise Oversight (OFHEO)

1700 G Street, NW 4th Floor

Washington, DC 20552

Re:  Comments on Home Valuation Code of Conduct (HVCC)

Dear Mr. Lockhart:

Our company has partnered with approximately 10,000 independent appraisers throughout the United States who cumulatively serve more than 500 mortgage lenders and financial institutions.  We agree there is a structural conflict of interest that has compromised the independence of appraisers.  Thus, we applaud and are supportive of the efforts to secure the objectivity and independence of appraisers.

Abuses occurring during the last mortgage crisis from 1980 to 1995 when 2,912 financial institutions with $924 billion in assets failed involved compromises of the independent role of appraisers.  Our observation is that with today’s crisis, the appraiser independence problem is even worse. 

We believe the compromise of appraiser independence has seriously threatened and will continue to threaten the safety and soundness of our nation’s financial institutions, as it has eroded investor confidence and has led to the current mortgage liquidity problems. 

We agree the time for action is now and that the HVCC policies are an important first step.

We anticipate that some lenders and mortgage brokers will resist the proposals and request significant changes.  We strongly urge you to stand firm and not weaken the proposals nor delay their implementation. 

Independent Valuation Protection Institute (Institute)

We believe there are eleven specific unintended consequences associated primarily with the establishment of the Institute that would impede successful implementation of the HVCC. 

Among our proposals is to assign the important tasks of the Institute to the Appraisal Foundation, which is currently the sole organization recognized by Congress and authorized to issue official industry-wide national appraisal standards.

It is important to note that various government agencies, lender related organizations, the public, state appraisal boards, and appraisal organizations are all represented at the Appraisal Foundation.  We believe much of the criticism of the HVCC will stem from the lack of industry input in its development and further evolution. 

Conversely, since the Appraisal Foundation has existing procedures to develop policies and receive feedback and consideration from all industry participants, we believe it would be the appropriate organization to be aligned with implementing the HVCC and supporting the Institute.

Following are our specific recommendations on how to overcome unintended consequences in this proposal.

a la mode's Chief Counsel Translates The HVCC Issues - Proposes Changes!

Author: Jennifer Sides is Executive VP and Chief Counsel at a la mode and works in their Washington, DC office. Sides’ background in intellectual property law has made her an industry leading expert on copyrighting appraisal reports and protecting ones’ creative rights.

As a la mode's in-house Chief Counsel, it is my task to translate the issues a la mode sees in the Home Valuation Code of Conduct (HVCC) as it currently stands into proposed changes to the language of the HVCC. If you have not already read Dave Bigger's, Chairman a la mode, article, click here to do so now to better understand the "why" behind the "what" in our proposed HVCC.

Reference Sources:

Fannie Mae Agreement

Freddie Mac Agreement

Home Valuation Code of Conduct

Before we get into the meat of the changes, it is important to note the process regarding the revision which will best serve the industry. Our proposed changes here are by no means carved in stone, but we do all need to be mindful of the old adage about picking our battles wisely.

We tried to stay within the overall framework of the HVCC, and stuck to the five general issues Dave outlined, click here so that the general document still feels familiar to the parties involved in its first draft.

One could start with a clean sheet approach, but in our nation's capital (where I live), issues are typically negotiated from a starting position already staked out.

The commentary period to the OFHEO comes to a close at the end of April. It is our intention to submit what we have here, while also incorporating the best suggestions from readers and customers such as you.

Again, we have to limit what we change to increase our chances of influencing the outcome, and we also have to show compromise and unity as an industry.

We will be circulating this draft now for suggestions (via e-mail and this publication). The more appraisers we unite behind one document, the more likely we are to effect change.

To see the a la mode proposed revised language to the actual agreement, click Download Proposed_HVCC_Changes_alamode.pdf

Click Here For A Section-By-Section Analysis of the HVCC Proposal

HUD Goes Paperless! - New On-Line Procedures for Applying for Placement on the FHA Appraiser Roster

On May 5, 2008 FHA plans to launch an online appraiser application process that will replace the existing paper applications. In preparation for the transition, the cut off date for submitting paper applications is April 22, 2008. Applications postmarked or time dated by other delivery services after April 22 will not be processed.

Currently, processing of paper applications takes 7 to 8 weeks from the time the application is received.

Therefore, appraisers are encouraged to wait until May 5 to apply online to the Roster rather than rush to submit a paper application prior to the April 22 cutoff.

Appraisers who have already submitted paper applications do not need to reapply online.

Interested parties are encouraged to check in the coming weeks for updates that will be posted on FHA’s web pages at:

• http://www.hud.gov/groups/appraisers.cfm and
• http://www.hud.gov/offices/hsg/sfh/appr/apr_rost.cfm

If you have questions about the application process, please call 202-402-2041and leave a message stating your name, phone number and a brief message with your question.

If you are currently on the FHA Appraiser Roster and have a question, please spell your last name and clearly state your license or certification number along with your message. Calls are answered in the order in which they are received.

Thanks to Ann O'Rourke of Appraisal Today for the story tip!

• For additional FHA/HUD stories - Click Here.
• Related Newsletter from OurAppraisal.com - Click Here

Runt Rants - AMC "Additional Comp" Request - Pressure or Good Business?

AUTHOR: Ken Verrett is the owner of Acorn Appraisal Associates, a 22 year old firm offering a wide range of quality appraisal services to the Financial and Business Communities in the greater Houston SMSA.  Read all Runt Rants on Appraisal Scoop.

I had an interesting discussion with an appraiser in last week regarding AMCs. I thought we'd all benefit from his situation his view of the market, and his business decisions. Robert D. Mims IV owns 30-A Appraisal group, Inc. in Florida. He sent me the following email.

Ken -

I've read your articles and actually submitted to you an email last year from a broker that was pretty nasty. I subsequently passed it along to New York District Attorney. I was mentored by an MAI, I do commercial with an MAI, and take my SRA designation class in September.

Below is an email I received from an XXX rep when I asked for an additional $50 to consider two additional sales - after gridding 3 sales, 1 pending, and 2 actives for a total of 6 comps.

What alarms me is not that XXX is willing to pay additional $$$ for the additional scope of work, but that she said SSS will pretty much request additional consideration of sales whenever the purchase price is not met. So regardless of the quality, the number of comparables, Certification #7, etc. there will be an automatic request to consider additional sales to try and meet the purchase price?

Before I respond to XXX, I want your take. Am I overreacting here by interpreting this email as pressure to influence value? And a subtle threat that if I don't they'll will simply assign the work to other appraisers?

Here's XXX's response to the fee increase request I sent. What say you?

Click here for the REST of the story . . .

Webinar 4/18/2008 - Mobile Appraisers Answer Your Tablet PC Questions!

WEBINAR UPDATE:   The webinar on Friday went well and John was able to recorded it for anyone who didn't get to attend.  Many thanks to Greg Davenport for bringing his unique perspective and for the attendees who asked such relevant, thoughtful questions. 

You can see stream it here and download it here.

To help show some of the differences between operating systems and tablets, John Hill of of Tablet PC News at TabletPCBuzz, is going to host a webinar tomorrow (April 18th), at 2pm EASTERN STANDARD TIME.  It will absolutely NOT be any kind of sales pitch.  It is intended to be a forum where people can ask questions and get answers from other appraisers.

If you are an appraiser and Tablet PC owner who would like to be answering questions, please email John at john@alltp.com.  This will allow him to identify you and unmute your call so you can share your expertise.

If this goes according to plan, John won't even talk except to repeat questions to the appraiser experts.  His only shameless plug will be to tell you about their Tablet PC demo program which you can read about on his website - Click here.

Here is the meeting information - please add it to your calendar:

Topic: Appraiser's Tablet Questions
Date: Friday, April 18, 2008
Time: 2:00 pm, Eastern Daylight Time
Meeting Number: 559 076 182
Meeting Password: tablet

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To join the online meeting
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1. Go to https://alltp.webex.com/alltp/j.php?ED=96320107&UID=0
2. Enter your name and email address.
3. Enter the meeting password: tablet
4. Click "Join".

Call-in toll number (US/Canada):          1-650-429-3300      

To add this meeting to your calendar program (for example Microsoft Outlook), click this link:
https://alltp.webex.com/alltp/j.php?ED=96320107&UID=0&ICS=MI&LD=1&RD=2&ST=1&SHA2=5IWVHl7NYT-AfVAHj1SVwC0YFvBv7ZMsezPeAJ2mk/Q=


John will attempt to record this meeting (sometimes it works and sometimes not) for later viewing/listening.

Author: John Hill - Enjoy the best source for Tablet PC News at TabletPCBuzz    Visit our Tablet PC Store .  If you have any questions, email me at john@alltp.com

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