Appraisal Scoop

AMCs vs. Direct Contact Roughly 50/50 Post-HVCC

Nearly six weeks after the Home Valuation Code of Conduct went into effect, technology vendor Global DMS found that the number of lenders ordering appraisals through appraisal management companies was roughly the same percentage as those lenders who ordered appraisals directly from the appraiser.

While Global DMS – which owns and operates Oasis software and e-Trac – reported that there has been a surge in lending institutions ordering valuation services through AMCs, there also have been suggestions that customers of AMC services have been dissatisfied with the results; especially when those results have led to increased fees to the borrower and declining fees to the appraiser.

Click here to read the full article from the Appraisal Institute

Open Letter from a la mode Chairman: Reversing the damage done by the HVCC

To: Our colleagues in the real estate industry

From: David Biggers, Chairman, a la mode, inc.

RE: Reversing the damage done by the HVCC

As many of you are aware, we’ve always been at the forefront of lobbying for and protecting the interests of the profession. That’s why, a little over a year ago, we began the complex and expensive process of trying to educate everyone we could about the little-known dangers of the proposed “HVCC”, or Home Valuation Code of Conduct.

"Unfortunately, as the economic meltdown and our presidential election garnered all the attention in Washington this past year, the HVCC transitioned quietly from a mere proposal into concrete national policy altering the core aspects of virtually all real estate transactions, with devastating effects."

Today, the complications of the HVCC are killing real estate deals in every corner of the country, forcing buyers to pay more in closing costs while receiving less service, eliminating the positive aspects of the business relationships that REALTORS®, mortgage brokers, and appraisers have nurtured for decades, and shifting market value decisions to unfettered and often clueless appraisal management companies located thousands of miles away. Worse, your transactions, in your town, are many times being derailed by night shift hourly workers parading as “appraisal reviewers” in call centers half a world away. That’s not appraisal independence – that’s appraisal insanity, and it’s hurting every one of us.

Our friends at NAMB, the National Association of Mortgage Brokers, are seemingly more aware of that than anyone. They agreed with us from the beginning that the HVCC is not just an appraisal issue and indeed is a threat to the livelihood of thousands of independent small businesses run by their members.

That’s why we’re happy to pass on this Call To Action from NAMB and to encourage you to follow through with the phone calls, e-mails, letters, and visits to everyone you can reach. Getting the reversal of the HVCC back into the national spotlight is achievable if we each take the time to make a difference.

A few minutes is all that’s required, but it could literally save the entire real estate industry from the specter of ill-conceived national policy interfering with inherently local real estate practices and relationships. None of us can afford to let that take root. Please read NAMB’s call to action [click here], and help us all save our industry from this dangerous federal bureaucratic meddling.

NAMB - HVCC Call To Action

To: All Mortgage Brokers, Real Estate Agents, Appraisers, Lenders, Home Builders, Title Agents, and Consumers

From: Marc Savitt, President- National Association of Mortgage Brokers

After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, Director of FHFA (GSE Regulator) James Lockhart, and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.

In order for this “Call to Action” to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing everyday, until advised to stop by NAMB. This will NOT be a one day action!

We have received hundreds of e-mails through the hvcc@namb.org  e-mail address outlining specific cases where the HVCC has created delays and additional costs to consumers. NAMB has categorized and compiled a report of the examples received, which was sent to FHFA Director James Lockhart. Please use your own examples in your conversations with legislators, regulators, or their staff. Also, please visit the NAMB HVCC Resource Center for additional information and documents on the HVCC.

Who will you be contacting?

• 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. Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties.

For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.

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.

Click here to continue reading . . . .

New Appraisal System (HVCC) Impacts Consumers

[The other day Appraisal Scoop posted I'm just an Appraiser. How can I do anything to impact the HVCC? , with permission from Truett D. Neathery, who suggested getting LOCALwith your activism.  I belive the following article provides a good basis for your "Letter to the Editor" or elected official.]

The HVCC or Home Valuation Code of Conduct was recently implemented by Fannie Mae and Freddie Mac as a new system of appraisals in the U.S. Under the rules, many of the appraisals are handled by management companies (some of which are also owned by the lenders themselves). The system is designed to reduce fraud and lower costs with an improved appraisal.

This new system has numerous flaws and has been widely criticized from both the Appraisal Institute (which represents over 20,000 appraisers nationwide), and the National Association of Realtors.

Some of the major criticisms include:

Homeowners don't choose who they want to complete the appraisal of their home or how they calculate the value. The appraisal management companies are actually unregulated and the quality of their appraisals may be inferior to those of an established professional appraiser.

The costs are actually increased since the appraisal management companies charge extra for their role. Typically, an appraiser charges approximately $325, but when consigned by the management company they only receive about $200. The customer is charged $400 and must pay up front for the appraisal instead of during closing. If the deal doesn't go through, the consumer absorbs the cost and the management company still pockets the extra charge.

There doesn't seem to be any fee management and the costs for appraisals have increased dramatically. As reported by the National Association of Mortgage Brokers, one lender, EverBank, advertised its fees as follows: $465 for GHA appraisals and $390 for standard single family appraisals. Flat fees in Hawaii are a hefty $700.

The new system is being extended to FHA mortgages, even though they are not included under the new code of rules.

This new regulation increases the overall closing time and the waiting time before the customer can receive funds.

Appraisal portability is also decreased since each lender will require a new appraisal.

Small business appraisers will be squeezed out even though they may have a better knowledge of the area and may be considerably more qualified than the employees of the designated unregulated appraisal management company. This removes competition and equitable pricing guidelines for the consumer. The larger management companies will distribute orders through a central area which may be located hundreds of miles from the property being appraised. The chances of the consumer of receiving a below standard appraisal by employees who are not familiar with the area are increased.

The HVCC was never required to pass through the Administrative Procedures Act, the regulatory Flexibility Act or any other procedural filter generally required by a federal agency. There are some that consider the HVCC code invalid and unenforceable due to its failure to comply to the Administrative Procedures Act.

The Real Estate Settlement Procedures Act (RESPA) regulates the the way lenders and mortgage brokers close a sale and do business. The HVCC is in violation of rules against up-charging and fee-splitting. Every lender could leave themselves open to a possible HUD lawsuit on each loan they issue.

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Author Resource:  Work with a qualified, dedicated agent for your next Foxhall DC condo purchase. Justin Lee will help you find the perfect home in Washington D.C.

Article From Real Estate Pro Articles

I'm just an Appraiser. How can I do anything to impact the HVCC?

Re-blogged with permission from Truett D. Neathery - Real Estate Appraiser - neatheryt@sbcglobal.net originally posted on the Inland CA Appraisers Forum .

Everyone on this forum [blog] lives where there is a newspaper. Every newspaper has a Real Estate section, as that is where the major part of their revenues come from, now that the Auto section has shrunken to one page. Real Estate sections are hungry for content, as is the regular Letters to the Editor page.   [Click Here for tips on Writing For Real Estate Editors.]

If everyone here would take a few minutes this weekend to write, by letter or by e-mail, to your local newspaper explaining what the Home Valuation Code of Conduct (HVCC) has done to borrowers, real estate agents, loan agents, insurance agents, home inspection companies, etc., as has been stated here in this forum [blog], we might get some action.

Yesterday I was confronted by an agent at a large [55 agent] real estate brokerage firm, suggesting it is the appraisal community that is causing increased fees and longer processing times to get their deals closed.

Maybe a copy of your letter could be sent to the larger real estate agencies, as well, with the suggestion that the agents send letters in too. The agencies could even tout themselves as champions of the consumer again.

Perhaps some of them could explain to the populace that they are attempting to work down the inventory of bank-owned and short-sale signs in their neighborhoods, but are being thwarted by HVCC.

You can pick up the name and address of your local newspaper at your local coffee house, there's always one there if you don't care to buy one.

All effective political action starts at the local level, not in the state capitol or Washington DC.

AUTHOR:Truett D. Neathery - Real Estate Appraiser - neatheryt@sbcglobal.net originally posted on the Inland CA Appraisers Forum .

HAVE YOU WRITTEN A LETTER?  LET ME KNOW! - Send a copy of you letter to me at bjdavis@OurAppraisal.com and I'll create a link to it here on Appraisal Scoop.

 

 

Bank / AMC Appraisal Conflicts Could Continue Under New HVCC Rules

There's a MUST READ article on "The Mortgage Lender" Implode-O-Meter blog by Teri Buhl that sheds some light on

• What the GSE's knew (and when),
• What changes lenders and AMCs have made (if any) in their appraisal ordering practices
• Secret Blacklists and Whistleblower Traps
• Cuomo's "Chinese Wall"

Teri Buhl is an investigative journalist covering Wall Street who has written for the New York Post Sunday Business, HousingWire and Trader Monthly. Contact her at teribuhl@yahoo.com.

Post-HVCC Implementation: Are you still feeling the pressure?

As most of you know by now, the Home Valuation Code of Conduct went into effect on May 1st. Its primary purpose is to insulate the appraiser from outside influences that would apply pressure to the appraiser to inflate values.

Unfortunately, I have been receiving complaints from our members (ICAP) regarding lenders and AMC’s asking appraisers to reconsider their values. Some of the lenders and AMC’s have even created a form for this purpose. It appears that these forms are being completed by lenders agent or the borrower in most instances. Clearly the borrower is unhappy with the value conclusion and they are looking for a higher value.

QUESTION: HOW IS THIS NOT PRESSURE

ANSWER: IT IS!

The HVCC allows the homeowner to now receive a copy of the appraisal before the closing.  I’m afraid this has added fuel to the fire. In some instances, the homeowner has a legitimate complaint if they feel the appraiser made an error or omission regarding the improvements, but others are going so far as to rewrite the appraiser’s sales comparison analysis to show the appraiser how to get a higher value. Although as appraisers we appreciate all the help we can get when gathering data, this is going a little too far.

I am also being told that certain AMC's are sending the appraiser a list of sales, calling them comparables, and asking the appraiser to write an explanation as to why they did not use any of these in the appraisal. This list usual shows up after the appraisal has been completed not before, so it is not part of the original scope of work, such as in relocation appraisals.

I have been corresponding with Fannie Mae regarding some of the new problems that the HVCC has created.I would like to provide them with examples of this latest form of pressure aimed at appraisers. I can only assume that lenders are trying to skirt around the requirements of the HVCC by having their agents or their clients (the borrower) engage the appraiser. In politics this is known as plausible deniability.

The lender should be filtering this information and determining what should be passed along to the appraiser. Requests to an appraiser for corrections, additional comments, more explanation and additional market data in the form of sales, listings, etc. has always been acceptable practice.

However, I am concerned about the lender, AMC or homeowner who is sending the appraiser sales data and asking the appraiser to consider using them in the appraisal and if not, provide an explanation as to why the appraiser did not use these sales instead of those reported in the appraisal.

Please email any value dispute/reconsideration of value forms you have received to tj@tjmccarthy.com  and I will pass them along to Fannie Mae. We need to work together as an industry to stop this before it gets out of hand.

AUTHOR: TJ McCarthy, SRA - Tim (TJ) McCarthy serves on the Illinois Real Estate Appraisal Board This email was originally sent to members of the Illinois Coalition of Appraisal Professionals – ICAP.

Update on HVCC's Independent Valuation Protection Institute (IVPI)

We are reminding you that the Home Valuation Code of Conduct (Code) goes into effect today, May 1, 2009, and Freddie Mac will no longer purchase mortgages from Sellers who have not adopted the Code. Additionally, for all mortgages with application dates on or after today you must represent and warrant that all appraisal reports are obtained in a manner consistent with the Code.

If you have any questions regarding the Code, please submit them through our online form and we will respond as quickly as possible.

Update on Independent Valuation Protection Institute

Plans for creating the Independent Valuation Protection Institute (IVPI) are ongoing and we will keep you informed on the timing for its establishment.

The IVPI will offer, among other services, a telephone and e-mail hotline to receive and process complaints from appraisers, individuals and entities on noncompliance with the Code. Until the IVPI assumes this responsibility, we will provide an interim solution for reporting and registering complaints from individuals and entities. We will provide information on this process in an upcoming announcement. 

Until the IVPI is established, the provisions regarding it in the Code are not effective.

Get More Information

• Review the Code.
• Find answers to frequently asked questions on our Web site.
• Visit the Learning Center for courses and educational resources on the Code.

 

 

HVCC Appraiser Talkback Survey: What’s Really Going On?

According to David Brauner, Editor, WRE and Senior Broker, OREP, The HVCC Appraiser Talkback Survey has been posted about two weeks and so far appraisers have provided some pretty interesting results (see below).

"Our Survey Says (so far) In our Working RE/OREP Appraiser Talkback Blog (and elsewhere), many appraisers predict that the profession can not continue to attract competent professionals, capable of producing reliable reports, given the relentless pressure for lower fees and faster turn times from appraiser management companies (AMCs): the most competent and talented will migrate to professions that are more profitable and satisfying, goes the prediction"

Do most appraisers really believe that there is no future for them in this profession? And if so, what does this portend for the future of honest lending? 

Here are some early results:

• 57 percent who responded say they expect to be appraising full time five years from now. What do you say?
• Over 65 percent respond that they are satisfied working with appraiser management companies (AMCs) at least some of the time (35 percent respond “never” satisfied).
• Over 79 percent of respondents report that, at least some of the time, pressure for a fast turn around time results in a product that is less reliable for the end user, compared to a report where adequate time had been allowed (only 21 percent say this never happens).
• 85 percent say being able to copyright or register ownership of the intellectual property contained in their appraisal reports is an important issue. Isn’t this interesting?

What’s your experience? Complete the survey and let us know.

Lenders, as well as the regulators who are charged with protecting the public, might be interested to know what percentage of appraisers feel that low fees and fast turn times make their reports less reliable.

Discouraged appraisers might be interested to learn whether a silent majority of their colleagues have figured out how to make a profitable and satisfying living from AMC work without the hassles associated with mortgage brokers. Maybe we all can learn something from the survey and follow up stories in Working RE Magazine.

Why is it important for you to participate?

First, the absence of comprehensive survey data makes it impossible for industry leaders to formulate and promote the appraiser-friendly agenda that is long overdue. Lobbyists will tell you that finding a consensus on anything among appraisers has long been a stumbling block to progress. A much stronger case can be made to regulators with hard data in hand.

The absence of feedback from colleagues also makes it impossible to assess your own experience relative to others and to learn from their mistakes and successes. Fill out the survey and we’ll bring you the stories.

Finally, there is this:  Appraisers predicted the lending collapse years before it happened; those who complained about reckless lending, inflated values, lender pressure and the imprudent use of AVMs, were labeled anti-progress, shortsighted, incompetent…and worse.

No one paid much attention to the “Chicken Little” appraisers, except to mock them, but this time, the sky really did fall.

Here’s a chance for appraisers to come together as a group, speak with one voice and be heard. If you've already taken the survey, you may want to go back to weigh in on several new questions suggested by readers (Additional Questions Suggested by Survey Takers).

You can find a link to the HVCC Appraisers Talkback Survey at www.orep.org  or www.workingre.com  or click: www.surveymonkey.com/s.aspx?sm=1drQU6WrYbQ73E4wH2vKVw_3d_3d   

Visit our blog at http://www.orep.org/wordpress-2.7/wordpress/  Working RE Home

NAR Calls for 1-Year Delay on HVCC - Letters to Fannie Mae & Freddie Mac

 

Download Williams Fannie Mae HVCC Delay 04202009

Download Koskinen Freddie Mac HVCC Delay 04202009

This is a Call to Action! Please contact your Senators and Representatives TODAY and urge them to STOP or DELAY (for at least 12 months) the implementation of the Home Valuation Code of Conduct ("HVCC") which is de facto regulation, forced on Freddie Mac and Fannie Mae by New York Attorney General Cuomo.  The file below contains a list of key talking points to bring to the attention of your legislators.

Please contact your legislators today at their in-district offices, as Congress is currently in recess. You can access the contact information for your legislator here. We encourage you to keep trying to contact them if you are not initially successful. It is vital to the overall effectiveness of this call.

Please forward the Call To Action pdf below to your mortgage broker and appraiser contacts.

Download CAMB Call To Action