From: Link  http://www.petitiononline.com/hvcc/petition.html

To:  New York Attorney General, Freddie Mac, Fannie Mae and the Office of Federal Housing Enterprise Oversight

The Home Valuation Code of Conduct ("HVCC") stands to be an important step forward for consumers and the Real Estate industry, but in its current form there are some important changes that require your attention.

In its current form, Consumers have a great deal at stake as HVCC will not only require consumers to buy a new appraisal if they decide to change brokers or lenders, but will have to pay for longer rate locks as HVCC will extend the time it takes to close mortgage loans and deprive mortgage brokers and agents of the control that is fundamental in closing mortgage loans efficiently. Ultimately, this means costs are increased for consumers and there is less incentive for consumers to exercise their right to shop for the best deal when acquiring a mortgage as doing so requires purchasing an entirely new appraisal.

The HVCC is also discriminatory against mortgage brokers, appraisers, and real estate agents. The HVCC stands to eliminate independent Appraisers overnight by requiring them to join Appraisal Management Companies (AMC's) in order to continue doing business. After joining an AMC appraiser will be disgorged of 40% or more of their income as a fee required by AMC's. This not only means the end of the Independent Appraiser as we know them, but means that virutally half of Appraiser's incomes will be shifted to unregulated entities, AMC's.

HVCC has great potential, but only if careful consideration is given to the existing flaws that will only serve to hurt consumers, brokers, agents, and appraisers. We humbly ask for your help in helping HVCC live up to its true potential. Thank you.

Sincerely,

 

The Undersigned

 

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I'm sure that Mr. Hummel changed his tune a little after his firm (Forsyth Appraisals) got stuck with $55K worth of unpaid bills when HomeGate Settlement Services (and its parent, AHM, who collected for appraisals upfront from its customers via credit card) bit the dust six months after the cited article was published. 

If an appraiser, like Mr. Hummel and his fellow survey respondents, feel "pressured" to bend over for an individual loan officer or real estate agent who might have the power to withhold a handful of appraisal assignments, it follows that the same appraiser will not only bend over, but also spread his/her cheeks (accept assignments on an "invoiced" basis) for an AMC (like HomeGate or eAppraiseIT)  Such individuals --who were probably willing to work on credit because their eyes got really big and their tongues and tails started wagging at the thought of doing big business with a national AMC--  deserved the "ram"-ifications (holding the bag on $55K of worthless invoices).  Now, appraisal firms --like the employer of the individual quoted in the article you reference-- are no longer subject to the "undue influence" of an individual loan officer who might control a small piece of a market; instead, they are subject to the influence of an AMC, which controls a substantially more significant part thereof.

It's funny because Cuomo --who was quoted in a Forbes article (link below) as saying that "[t]he independence of the appraiser is essential to maintaining the integrity of the mortgage industry"-- came up with a solution that makes appraisers beholden to the AMC's.  What's more, the pressure exerted by an AMC over an appraiser is systemic, making it much more dangerous than the ad hoc efforts of a broker who "dials for value,"

By the way, having some "skin in the game" didn't stop WAMU and eAppraiseIT from engaging in the type of behavior that triggered the lawsuit in the first place.

http://www.forbes.com/2007/11/01/washington-mutual-cuomo-markets-equities-cx_cg_1101markets25.html

http://bakersfieldbubble.blogspot.com/2007/11/whole-system-is-corrupt.html

From yahoo news:

ALBANY, N.Y. (AP) -- New York Attorney General Andrew Cuomo said Thursday a major real estate appraisal company colluded with the nation's largest savings and loan companies to inflate the values of homes, contributing to the subprime mortgage crisis.

"This is a case we believe is indicative of an industry-wide problem," Cuomo said in a news conference.

Cuomo announced a lawsuit against eAppraiseIT that accuses the First American Corp. subsidiary of caving in to pressure from Washington Mutual Inc. to use a list of "proven appraisers" who he claims inflated home appraisals.

Driven by a hungry market for bonds backed by home loans, mortgage lenders expanded subprime lending dramatically in 2005 and 2006. In many cases, they made loans to people at low initial "teaser" rates, which reset substantially higher one to three years later at levels some borrowers couldn't afford.

The inability of many of those borrowers to cover loan payments once they reset led to the credit crisis. More than 50 lenders have gone out of business this year, tens of thousands of people have lost their jobs in the industry, foreclosures have soared nationwide and it has become more difficult for home buyers to get home loans.

"The independence of the appraiser is essential to maintaining the integrity of the mortgage industry," Cuomo said, citing several e-mails between the companies' executives.

"First American and eAppraiseIT violated that independence when Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike," he said. "The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market.

"By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion," Cuomo said.
Neither company responded to messages left Thursday morning.

Cuomo said eAppraiseIT and the parent company knew its actions were illegal, citing an April 17, 2007 e-mail from eAppraiseIT's president to First American that said, "We view this as a violation of the OCC, OTS, FDIC and USPAP influencing regulation."

"This is another example where the federal government is asleep at the switch," Cuomo told reporters.

http://www.eappraiseit.com/

First American eAppraiseIT

You have to evaluate HVCC in comparison to the satus quo.  Overall, will consumers and lenders be better off because of HVCC?  I would say they will not be, for the reasons already covered.  There is no need to provide additional alternatives.

There is no evidence that there currently is a problem with the values that lenders are accepting.  Lenders have been diligent with their appraisal review process for over a year now. 

I believe that you are living in the past Catherine.  Haven't you noticed a change in the appraisal review process that your lenders go through? 

I am confused as to why you seem to have sucha singular focus on the HVCC issue?  You don't seem to post on other topics.  Is there a reason for you to put all of your energy into this one issue?

http://bakersfieldbubble.blogspot.com/2007/11/whole-system-is-corrupt.html

"First American and eAppraiseIT violated that independence when (The Lender) Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike," he said. "The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market.

http://www.eappraiseit.com
First American / eAppraiseIT All one big happy family

Also it would be a good idea for ALL parties to see The Business Definition for: full disclosure

http://www.allbusiness.com/glossaries/full-disclosure/4951493-1.html

Juan Boldizsar:

Now, appraisal firms --like the employer of the individual quoted in the article you reference-- are no longer subject to the "undue influence" of an individual loan officer who might control a small piece of a market; instead, they are subject to the influence of an AMC, which controls a substantially more significant part thereof.

That's exactly right !!

Stephen Ames:

Catherine, do you know Pam Crowley?...You remind me of her...That's a compliment BTW...

I know Pamela and there is no comparrision, not even close.

Catherine Coy:

The pressure, if any, exerted on appraisers by AMCs isn't VALUE pressure--an important distinction.  The AMC doesn't care what the value comes in at.

OH!!!   YOU ARE WAY OFF ON THAT STATEMENT!!!  

The AMCs sure do care about what the value comes in at.  It' their job to provide the lender with what they want and need regardless of how it is done.  Like I stated before - the AMCs are not regulated and take on the tasks of doing the dirty work (pressure, coersion, blacklisting, value assurance, etc) so the lenders can APPEAR compliant with the code.

Gary Smith:

Anyone know if Cuomo has some type of prior connection to the AMC's.

It was reported on another forum that he did and still does have a vested interest in a major long standing amc.  The info was never verified as far as I know.

If the best solution was now then wew would not have the pleasure of this debate........I do agree however, that if we were able to order appraisals more like the VA method that it might help......the current plan is not like the VA method....it may be simular...currently if you order a VA appraisal it can be assigned fairly simply.....since there are vairous ways that the lenders will adopt in regards to the ability of trnasferring an appraisal this is where it will cost the consumer......some lenders will only trnasfer IF a file is declined or does not fit their guidelines.....not for rate.....

in regards to if you find a rate that is acceptable then just lock it and go forward.......this can be a big problem.....I would love it to be that simple....I can give many examples but I am sure you all kow what I mean......

I also am not saying that HVCC is not needed or some sort of oversight..I am saying the way they currently have it planned will create havoc and will be a disaster.......however, I will hope this will be known soon and changes will be made to what is coming....

Question - If the HVCC idea came out well over a year ago (maybe two); we had our chance for open forum and had a chance to have our opinions noted to the people that can make a difference. Why make it such a big issue now when we had the chance to do something about it and didn't?