[Poll] HR 3044: To Impose 18 Month Moratorium on HVCC

Yay or Nay?

Would the 11% of you that voted no, please give some insight as to why?

Perhaps had i take the time to read the entire bill i may have felt different.  But i doubt it. My personal concern as an "old fashioned (31 years) originator" is the common reference that a "LOCAL EXPERIENCE" appraiser no longer has the ability to pick up a deal.  Fine, unless you are talking about the LOCAL EXPERIENCED FLUFFER.  I personally have seen literally hundreds if not more appraisals that were "made to order" and served as the tool for the eventual non performing loan. 

In the home buying you may not ignore prior credit performance,  the verified ability of the borrower to repay the debt or an accurate valuation of the collatoral.   Every market is different.  Locally, the HVCC rule, in addition to other restrictions brought about by this mortgage mess, has had a positive effect in purging people from lending, real estate sales and the appraisal corp that would never been a part of this industry without the proliferation of subprime lending.  I am for any process that will better screen originators, appraisers, title agent and real estate agents, barring participation in an industry that only functions when the OVERWHELMING majority of the participants are, well honest.  WITH the changes, new restrictions AND HVCC, this industry, believe it or not, is more FIXED today than it has been since grahm leech bliley in 1999.

If you want to get rid of something, get rid of credit scores as a determination of pricing and product.  Then you would at least have to train an originator how to read a credit report instead of looking at a number that is inaccurate more that 50% of the time.

Can't use "bring em in Bill" to do your valuation?  Then both of you should find another job.  This is a serious business and apparently an entire economy depends on finding people that will do it the right way.  HVCC is not well thought out in principle or practice but may serve it's purpose if it just gets the crooks gone.  Suspending the implementation of HVCC may only serve to kick the inevitable can down the long road a little bit longer. 

Dennis, HVCC is good intention but poorly thought out.  Appraisers are now getting paid 50% of what they used to earn per appraisal.  the result is that many of them, including good honest appraisers, have packed their bags and moved on.  those that are left are bitter.  i have had 6 HVCC appraisals where the u/w has had conditions for the appraiser to address.  We have to corrdinate through the AMC.  The appraiser in each case has refused and the response back in each case is that the appraiser has completed an appraisal that meets guidelines and that now further work or explanation is warranted.

Result is either the deal is dead or we we have to order another appraisal.  This costs the borrower more money.  Who wins here?

These appraisals are not portable, no matter what lenders will tell you, because they all use different AMC's.  if you have to move a loan, for any reason, you need a new appraisal.  who wins here?

I have another order that has been in process for over 2 weeks.  the AMC keeps re-assigning the appraisal b/c the assigned appraiser cannot deliver the appraisal "in an appropriate tiome frame"  My client cant understand why i cant get an appraisal done.  Who wins here?

The fact is the HVCC has forced out good appraisers and we get shoddy work and it ends up costing the comsumer more.  HVCC needs to be re-thought   

Dennis,

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Your accusation is that most Originators are crooks. That Sir is far from the truth. The banks are in charge of the “Havoc” (HVCC) and are keeping most of the money charged for the appraisal (another Profit Center for the Lender). That sir is dishonest and unfair to the Appraisers that does the work. The Lenders are charging more for the Appraisal then the former Appraisers were that is dishonest and an additional burden for the client. If anything these lenders are dishonest for coercing the New so call inexperienced appraisers to under valuing the properties. If you want to clean up this business and rid it from dishonesty new regulation may be necessary. In CA I would suggest that all originators be Licensed only by the Dept. of Real Estate and not by the Dept of Corporations. Most of the dishonesty is found with the Dept of Corporations Brokers and their unlicensed originators, and that is where you will find the fraud. Lender would like to see the end of Independent Brokers so that they will have less competition at the cost of the Home Borrower. Wake up Dennis and see this for what it is Big Banks want you out of business and the Havoc, (HVCC) is just the beginning. Interest Rates are still too high to balance the Real Estate economy. The Lenders are making record profits because their yield spread has increase to record levels, while cutting overhead and services. The Banks are the ones that set the guide lines for lending money to clients and originators follow those guide lines and the Lenders must decline or approve the transaction, so stop blaming everything on the originators.

I would like to see who is controlling the MBS and these higher inertest rates, you may find the lenders are purchasing and selling these instruments to create a better profit for themselves. Most of the Lenders today are flush with money. Wake up Dennis it starts at the top not at the bottom.

Hey i'm not trying to pick a fight, certainly not with someone that i've never met but after reading and rereading the end of your comment I may make an exception in your case. I feel allowances are in order simply because of the pickle you must be in where you are.  I do agree that HVCC is poorly thought out AND implemented.  Non portablility is only one issue that i shake my head about.  I do not think most orignators are crooks and certainly did not say nor imply that.  I do, however believe most of the originators in my neck of the woods were untrained and showed nothing to me that i would look for in an originator as an employee, in many cases i would have no qualms about nominating them for cell block 221.  I might add that i share this opinion with a number of their former customers that i have had the pleasure of explaining indexes and margins to, 2 years after they got their loans.

HVCC, "Red Flag" and new disclosure guidelines coming up will do little to "help" the consumer except to "flag" the originators that continually try to figure out ways to cram square pegs into round holes.  These originators, although in the minority were give free reign for several years.  Not "masterminds" by even the loosest standards were meerly lackeys for the "Masters of the CDOs", Bear and Lehman et al.  Going forward there is nothing gonna be easy. Accept what you cannot change, comply with whatever they throw at you and you will come out the other end. 

I would like to see the HVCC in its present form abolished completely. Don't get me wrong. I believe that changes are needed, but the system that was set up mirrored the same setup that WAMU had with AMCs - the exact same setup Attorney General Andrew Cuomo of NY said caused this mess and who then crammed down our throats. I won't get into all the reasons why it should be abolished - I think we all already know.

I propose that we go back to the old way of doing business but with a proviso - that a section be added to the appraisal report where the appraiser is to note whether or not he was unduly coerced or influenced by a lender or real estate estate agent into coming up with any certain value for a property. FNMA, Freddie Mac, HUD, USDA and the VA should have underwriting requirements imposed that state that if the appraiser notes undue coercion in any way, shape or form from a lender and/or real estate agent and/or home buyer and/or home owner, then that particular appraisal is not to be accepted. Period. End of discussion. Get another appraiser and keep your mouth shut if you to purchase, refinance or sell your home or get paid on the loan or get paid on the transaction. It will certainly be an expensive lesson if you didn't keep your mouth shut the first time around.

However, nothing should preclude a real estate agent or home owner from presenting comps (by way of a comparative market analysis or CMA) to give to the appraiser so as to show how they may have arrived at their estimate of value PROVIDED that they do not in any other way try to influence or coerce the appraiser on his expert opinion as to the home's present market value. The appraiser should be free to consider in whole or in part, or to reject completely, the comps provided.

For home owners looking to refinance, home buyers looking to purchase, and home owners looking to sell, they should be required to sign a disclosure (yeah, I know, yet another disclosure, but such are the times we live in) that they attest that they have not nor will in any way attempt to influence or coerce an appraiser to assign any particular value on the property.

As we're all licensed (at least all appraisers and real estate agents, and soon all loan officers - no matter who they're employed by (including federally chartered banks) or what state they're located in), the regulators who have jurisdiction over each respective license can institute an enforcement hearing looking impose penalties that may include a written admonishment, civil penalties, suspension of license and revocation of license (depending on the nature of coercion and/or the number of times involved in such coercion) and the same shall be made part of their permanent license record.

Loan officers and real estate agents should still be permitted to select the appraisers whom they have established working relationships with, and who otherwise do good work and who are resposive to their customers. And, just as licensed loan officers and real estate agents are to be held accountable for their actions, so should the appraisers. Appraisers, as well as loan officers, should be required to take courses in ethics and attend periodic refreshers and exams in same as real estate agents must do as member of the National Assocation of Realtors (NAR).

Just my 2 cents worth....

As an appraier I don't like the system the way it is, but I do appreciate not be coerced. I always tell real estate agents to bring comp, even though I have my own.  I don't set out to kill  a deal but lets be honest there are still foreclosures that are driving the market down.  It is funny no one complained when appraisers where hitting the "number", and I believe that is one of the reasons we are in this mess now. 

Judith Ward:

As an appraier I don't like the system the way it is, but I do appreciate not be coerced.

I don't understand how you were coerced?  I know that appraisers have said that if they didn't "hit the number", that they would not get the business from certain companies.  Why would you want business from those companies anyway, if that is the way they did business? 

As an originator, I have had customers ask me to do a loan as owner occupied even after the customer told me they were going to rent out the property.  The loan would have fit in the box and could have easily been done that way,but I turned them down.  They probably had someone else do the loan; possibly without admitting that they would rent it out.  Isn't that similar to being asked to come in with a certain value?

Judith Ward:

It is funny no one complained when appraisers where hitting the "number", and I believe that is one of the reasons we are in this mess now. 

Inflated appraisals is definately one of the reasons, but I believe the lack of true appraisal reviews is the bigger issue.  If the appraised value were unrealistic, it most likely would have been caught if the appraisal were reviewed properly.

We are now dealing with a third party with little to no expeirience in the field auctioning the appraisal to the lowest bidder.  I have had appraisers from 50-70 miles away that have no idea the differences between school districts that can occur from one block to another.  I have also seen HVCC appraisers that seem to think that a town home and a condo were good comps for an estate home because they were within 1 mile from subject... The appraisers from outside the area do not seem to know that some homes are being sold outside of the MLS system.  Yes, there were some appraisers that did appraisals fit to order, I have been avoiding them for almost 20 years.  Being forced to charge the borrower more money for a lesser product that takes longer to produce is not the answer...

Hi, Dan, I have been in the mortgage business for 23 years and have always selected fee appraiser with utmost intergrity and diligence in their appraisals.  I have to say, because of that, the appraisals that we sent to the lenders and reviewed by the lenders' appraisal departments had never given us any problems.  We had screened the good appraisers from the bad ones.

Since HVCC implementation, we have to order appraisals from these Appraisal Management companies.  I think because the appraisers are just on the roster and get assigned to the cases, there is not any quality control.  One of my client had to pay for an appraisal for $400.00 and additional $200.00 for field review because the 1st appraisal was so poorly done.  Mind you, these 2 appraisals are ordered from the same Appraisal Management company. 

At the end, the consumers are ripped off and the good appraisers are being raped by these Management companies.  As you mentioned, the appraisers are getting only half of the fees collected from the consumers.  I have been a Broker for a long time. To maintain our licensing and certifications, we have to go through the renewal examinations and such.  But do you know the initial education requirement and apprenticeship for the appraisers, continuing educations courses and certifications, E & O insurance, software costs, data costs and licenses are much harder to get and more costly to the appraisers?  AND, most importantly, even their opinion and evaluations are so important in all aspects of the real estate industry, they get paid the least amount for compensation ( from $300.00 to $450.00 for a regular appraisal. )

There are always bad apples in all industries, the apprasiers again are made scape goats.  We need to abolish this bad policy.  Ultimately, the policy makers don't know the facts and make bad decisions because they are led by one-sighted people who don't understand the process.

Okay, you hear crazy things every day, This one would be another for the abuse that the appraisers are getting from HVCC and the continuous rape of the Appraisal Management Company...I have an appraiser who has been in the real estate appraisal business for 30 years.  He got 20 orders from an Appraisal Management company which he was forced to register(  Go with the flow, right?) .  The assignments were for "Drive-by" appraisals for multi-million-dollar-homes between Santa Barbara and San Diego.  His task was assigned on Wednesday, the due date for all 20 of them had to be Friday. Yes, I am saying that this is to be done in 2 days.  Let's say driving through different Counties in a day and giving an opinion on the values on Friday on the report form.  He was to make $250.00 per Drive-by appraisal.  The math works?  No!!! He rejected all the orders because you cannot do " Drive-by" Appraisals for all these unique properties.  He simply said," it is not worth for me to lose my license for ridiculous assignments like this.  After all, I am a professional."  I admire that...

Going back to the core of being fair and impartial, how many appraisers  would have to comply and accept the assignment because that is the LAW and we have to succumb to the regulation.  This is Facism and "un-American."  In the mean time, the AMC is receiving $250.00 for 20 Drive-by appraisals that they have not done, nor have they invested t time in their educations, licensing, keeping up with E & O insurance, pass the examinations, etc., the lists go on and on. 

I don't understand why you, the Professionals, the Appraisers, the integral part of this industry, have not stood up and say, " Don't rape us any more, we are not sinners like all the uneducated people who assume that  we are all guilty because of some bad practices done by a few appraisers."

Well, the bill is sponsored by Dem Travis Childers out of MS and co-sponsored by Rep Gary Miller from California. We have to hope it makes it out of Committee and to a vote in the House. Of course, Barney Frank will have to give the nod. Do Frank and Cuoumo like each other? I have no idea. Let's not forget that it has to make it past Pelosi and Dodd before Obama makes the final call.

If the clear message can be factually brought to the table that the HVCC is truly hurting the housing recovery, then we stand a pretty good chance. Long way to go but at least it didn't get tossed like old leftovers in the fridge like the NAMB efforts.

Sorry, my fellow readers, I made a mistake;  My Apprasier friend told me that it was $200.00 per "drive-by" appraisal for these multi-million dollar homes that he was offered. Not $250.00.

Today, I got another complaint from another great client of ours.  We are doing a no cash-out refinance for this great couple.  Our loan-to-value was only 45%.  Of course we ordered the appraisal though the AMC.  She received a copy and was outraged.   Finding out that she was mad at the wrong sketch of the floor plan and the Appraiser used comps tat were not even in her neighbourhood.  She was mad because she spent $450.00 for a bad appraisal.  She demanded to talk to the appraiser for him to correct the appraisal.  We had to tell her that we don't even get to talk to the appraiser...

The quality control is absolutely not there.  Whatever the appraisers provide, regardless if it a bad or good report, we have no say about that.  So, the lender that has approved their loan is not happy with the comparables and asked for another field-review, costs $200.00. 

This really gets old and we ony have implementation of this HVCC for 2 months.  Can we afford to let the mistake keep going?