HR 3044: To Impose 18-month Moratorium on HVCC (!!!!!!!!)

Adam Quinones | Contact or Connect with this Member

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get on the phone people...

Kent Mikkola | Contact or Connect with this Member

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Adam you need to call too!

Paul Floor | Contact or Connect with this Member

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What a shame! This industry had a chance to clean itself up and almost everyone is throwing in the towel before we have given HVCC a fair chance. Inflated values, yah that's exactly what we need right now. Isn't that part (most) of the reason the housing industry is in the mess it is in today? What a pitty!

Mike Gray | Contact or Connect with this Member

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Paul, my appraisal on our home took 6 weeks and nearly killed the deal, not due to value, due to time. It all worked out and we closed yesterday, but when you are dealing with lock windows that the appraiser has no consideration for, and there are no checks and balances to ensure that the appraisal is done in an acceptable standard, by someone who knows the area, in an acceptable time frame, then what are we really accomplishing. HVCC is a bad policy and needs to be redone!

Kent Mikkola | Contact or Connect with this Member

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Paul, any inflated values were the result of unethical appraisers. You can't legislate morality. If you had been an originator for the 12 months prior to the implementation of HVCC, you would realize that inflated appraisals were being denied by lenders who actually were reviewing them. This one measure was the clean up that the industry needed in regard to inflated values.

Michael Becker | Contact or Connect with this Member

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Well said, Kent. Paul obviously doesn't work in the industry and doesn't know the damage that was done by the HVCC. Prior to the HVCC there was no way an inflated appraisal was getting through underwriting with all of the controls lenders put in place to prevent inflated appraisals from being used. The most frustrating thing about the HVCC was that it rewarded a company (eApprasieIt) that started the whole mess.

D Thompson | Contact or Connect with this Member

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What a pitty????????? Are you kidding us here???!!!!! Where have you been???? Have you been paying attention????????? My wife writes as many FHA' as possible and tries to avoid the conventional because you get tired of someone else trying to make the extra buck on someone like the borrower. That's BS!!!! The time frames for theses are a damn joke and then $600-$700 for an appraisal and the appraiser has no clue??? and then possibly having to pay for a second one!!!! I don't think so!!!!! If the underwriters do their jobs there would not be a problem!!! HVCC had their fair chance and its obvious we have some Reps who understand this!!!!!!

Bob Dalsimer | Contact or Connect with this Member

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HVCC has interfered wtih 4 sales this year - The problem has not been overinflated values or coercion - The problem has been completely incompetent appraisals that have been 15% off in value. What is market value? I was always taught - willing buyer and willing seller - In 3 of my HVCC problems there were multiple offers - Yes multiple offers - I am unsure if we are supposed to talk about that - ie more demand then supply? it is a FACT here in certain areas of Southern California - FACT that Orange County has seen price increases in 4 of the last 5 months.... So, get this --- mulitiple offers and 4 of the last 5 month price increases in the county and the HVCC appraiser gave a 15% negative time adjustment because he felt the market is declining by 30%. So, last two sales were 200,000 in Dec and Jan and the HVCC appraiser says the value is 170,000 because of time adjustments - Who is right? The market - ie willing buyers and willing sellers - ie mulitple offers or the HVCC appraiser who insists there is a 30% annual price decrease in orange county, ca -- To make matters worse, I am unable to give accurate FACTUAL data showing the price trend in the last 6 months - I would then be "influencing" the appraiser - Maybe this influence is important because it allows other factors to be introduced. So the deal is being killed by the sword of HVCC -- this will cause further price declines and I guess if every appraiser put 30% annual price decreased in every report, then that will happen. HVCC is flawed - Must be stopped - I am an ethical and professional realtor who is 100% supportive on not having values falsely inflated - so I agree with the premise of HVCC, however, its mechanism is flawed and takes out way too many non-inflated transactions - maybe 1% have been minipulated by unethical brokers and appraiser, however, HVCC is wiping out 20-30% of the good transactions. It would be like going to the doctor and having a cold and having the government force chemo-therapy on you - yes I am sure somehow the cold would go away, yet, so many good cells would be destroyed that you would have been better off with the cold in first place.. Bob

Gary Powell | Contact or Connect with this Member

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So many of these "reforms" are too little too late. Market forces have already resolved the issues and folks like Cuomo and Frank are like generals, constantly trapped in a cycle of fighting the last war, rather than the next one. I laugh at the other reforms that are being put in place to prevent things like "predatory lending." Under the current markets, that's not even possible for 99.9% of loans. They're going to outlaw sub-prime and Option ARM loans? I think the market has already taken care of that or am I missing something here?

D Thompson | Contact or Connect with this Member

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AMEN BOB!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

David Poitier | Contact or Connect with this Member

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This is the best news I heard in a long time.

Gary Powell | Contact or Connect with this Member

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Bob. good analogy. The cure is definitely worse than the disease.

superhero7 | Contact or Connect with this Member

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The market will take care of itself. Lawmakers are using the HVCC as a way to draw attention to their political cause trying to appease the emotions of the consumer. Consumer are desperate for something to be done to stop the bleeding and us as professionals are just watching and shaking our heads as laws like the HVCC are passed. The inflated values issue does have some merit behind it as we all know who were in the industry more than say two to three years ago, however underwriting was not conducted diligently (as an undertstatement) and borrowers have some responsibility as well. People are trying to compare todays market fallout to the appraisal scam of the S&L crisis of the 80's and they just are not the same. Sadly (because of this diverted focus from the core issue due to political agendas) things are still going to take a long time to heal before we see any market improvement? Agree or disagree? Interested in your comments It's kinda like swinging an ax at a tree sapling. Not the best analogy but it comes to mid.

Jacob Varghese | Contact or Connect with this Member

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Home Valuation Code of Conduct is good. However the timing was wrong!!! 18-month Moratorium on HVCC is the best move in the right direction.

Gary Powell | Contact or Connect with this Member

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super hero, what you fail to understand is that HVCC is not a law. It was never legislated. It came to pass through black mail by the NY state attorney general who threatened to sue Fanne and Freddie if they didn't agree to go along with "his" plan. His timing on this threat had a lot ot do with why they agreed to go along with it. It coincided with the financial collapse and I believe that Fannie and Freddie basically decided to pick their battles and they had other more pressing issues to deal with. The small matter of trying to stay out of bankruptcy was a slightly higher priority at the time. Timing is everything.

CONNECTICUT PROPERTY APPRAISERS | Contact or Connect with this Member

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Wonderful news. Now maybe experienced appraisers and brokers can earn a living again. The good ones never bent under pressure in the 80's or during the last debacle, and we still won't. Diana Nytko

Gary Powell | Contact or Connect with this Member

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subchako, a bad, poorly designed, and not well thought out program at the wrong time is still a bad program. In this case, timing is irrelevant, Why would a "good" program be OK in 18 months and not now?

MisterVA | Contact or Connect with this Member

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Well, if this succeeds, kudos to NAR.

jbogris | Contact or Connect with this Member

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Thank You NAR, the 800lb gorilla got into the act.

Paul Floor | Contact or Connect with this Member

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I love all this "If Paul had any experience" chatter. I have been in the real estate and mortgage industry for over 17 years. When it comes to purchases, I have been pressured from every side to "make the deal work" and before HVCC I had many overinflated transactions fail or go somewhere else because I wouldn't comply. I am in the minority and if the rest of the industry would have done the same, we wouldn't be in this mess. I don't know what AMC you are all using but our mortgage company has ordered about 1000 so far appraisals and had very little trouble. The AMC that we use has been returning appraisals in 3-5 days with a few outlying areas taking 10-12 days. The AMC has been very responsive to a few that we have had problems with and does a good job with our "Reconsideration of Value" requests. They have killed very few deals and the ones they have were all justified. Our AMC provides conventional appraisals at $325 and FHA at $390 nationwide and this is the same or cheaper than what we have always paid for appraisals. Everyone here has had bad experiences with the process (so have I) but let’s talk about the MANY, MANY good ones. Our company keeps getting purchase contracts that are higher than market value and in the last 30 days there have been 30 or so and every one of those except 1 was re-negotiated down to the appraised value. This part of HVCC doesn't seem to get any press at all. These buyers (you know the ones that the real estate agents are supposed to be looking out for) have saved an average of $12,500 per purchase (that's $362K total). The funny part is that no one thought to suggest that the price be re-negotiated. Most of the LO's started arguing the value and when suggested they have the agents re-work the transaction almost every time this worked. Have we put ourselves into such a rut that we overlook the obvious? The argument that HVCC is costing the consumer money is inaccurate. I would gladly spend $50-100 extra on the appraisal and save myself $12,500 (plus interest). HVCC isn't perfect (nothing ever is) but it is a good start. Hundreds of thousands of mortgages have transacted just fine through HVCC. Instead of killing it over a few bad experiences, why don’t we use those experiences and all this energy to improve it? Less than 60 days and everyone is giving up, I just don't get it. It sounds like a lot of the industry is trying to use a few bad experiences with HVCC to revert back to the “good old times” when we could tell the appraiser what the value is instead of the appraiser telling us what the value is. We don’t need to go back to that, it already killed the world economy once.

Mark Wambold | Contact or Connect with this Member

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The only thing that HVCC has done is line the pockets of the AMCs. The appraisers I worked with never did succomb to pressure and never would have. What they did do is save consumers thousands of dollars when they would look at an appraisal request and tell me that it aint going to happen. In todays world the AMC takes the order, returns the poorly done appraisal and wants to get paid. The consumer just spent $500 to get told no. I have access to the MLS, I run AVM's and do everything possible to not waste the consuemrs money but then an appraiser from 100 miles away gets the assignment and .... well I sure you understand. By the way does anybody here think that Paul works for an AMC besides me?

Adam Tedeschi | Contact or Connect with this Member

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Paul first off, I have not seen any AMC charge less than $400 -450 for appraisals. So if your clients are being charged less, please share the AMC you're using so our borrwers can pay less too. Secondly, there absolutely is no such thing as a ballooned value anymore. Each lender has extensive internal reviews, and field reviews if neccessary. If an appraisal was even close to questionable before HVCC, it got shut down in lthe ast 6 to 12 months. Now b/c of this horrible rule our borrowers our suffering. Purchases are being declined and dragged on and easy refis are being denied. Let me give you an example Paul...I recently got a file denied b/c of the appraisal after the borrower paid $435 to get it done. My client had just refinanced 6 months ago and had his house appraised at 450K, this one came in at 310K. Before you say that the last one was ballooned...his neighbor is UAG now for 440K and the appraiser ignored it. He also decided not to mention 4 other good comparables my realtor pulled up for me. Instead he used two short sales, a home on a major route in the town(subject is in a residential neighborhood), and a bank owned!!!! All comp listings were stated as "priced to sell". Furthermore the appraiser's company is over 90 miles from the subject, when your in MA, that might as well be across the country. The rest of the borrowers profile is 780 score, great job history and DTI in the 20's. It was the perfect deal, but now b/c this new "guideline" he is out $450, and misses out on saving an additional $250 a month in payment. Is that fair Paul and the rest of you nays? That is a real story of someone who has been affected by this and its not right. Because lets remember its about the CUSTOMER, not weeding out bad LOs in our industry!

Jacob Varghese | Contact or Connect with this Member

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Gary Powell: Laws, codes, rules have always been amended. Even the Constitution has been amended!!! HVCC is no exception to the rules of change and amendment. "Everything changes except change."

Dan Clifton | Contact or Connect with this Member

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Paul, we dont have a choice of what AMC to use. each lender we sell to usees their own and we are stuck. Turn times at pitiful. Advertised 3-5 days is bad enough (i used to get 24-48 hours), but they all take at least 7-10 days. value has not been the issue, and yes if it is less people can renegotiate. The problem is time, and then the appraisers unwillingness to address underwriter conditions. i have had multiple instances where the u/w wanted items on the appraisal addressed and the response through the amc from the appraiser was that he/she "supplied an appraisal that meets accepted standards and fulfilled the order so not further work is warranted". basically they are saying we did our job at 1/2 price (remeber the AMC takes half) so get lost, we are onto the next appraisal because we now have to turn 2x as many to make the same amount of money. result is we have to get a new appraisal which costs the buyer more. your argument that there is no increased cost to borrowers is bogus. with refis there is no renegotiation on price, and in all of these cases value was not an issue, is was the shoddy way the appraiser got there. HVCC does not work

jack127 | Contact or Connect with this Member

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People, have you read, Guidance for "Lenders and Appraiser'? go to efanniemae and read the 26 pages. Realtors, ask the lenders for a list of the qualified appraisers approved for your market, and how & why they are qualified to appraise property in that market. Read #23 in the appraisal report. Do you understand what it means. Realtor, don't be lazy give the appraiser all of the market data possible. The market history for the past 2 years, 1 year, 6 months, 3 months. Lists of the active, pending, closed, expired, and canceled listing. What was the market at the time of the subject's sale, what was the median value at that time, what is the median value today. Educate the appraiser. Read Jack Schlenk blog, Review Appraisal, HVCC, and other articles. Jack Schlenk Real Estate; Broker, Certified Appraiser, Consultant

Lea Shaw | Contact or Connect with this Member

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Great comments guys! I hope you all follow up with phone calls, letters and emails to your representatives, and don’t forget contributions to NAMBPAC! They are needed more than ever. HVCC, in it's present form is not the answer. It is rewarding the very same participants that were the target of the investigation, and ensuing legal battle that resulted in HVCC and is eliminating the truly professional and experienced appraisers that were not coerced in to writing inflated appraisals and followed the codes already established by USPAP. Last week I received an appraisal from an AMC that assigned an appraiser from 150 miles away to perform the inspection. The appraiser used 1 commercial comp (the subject property was a SFR in a residential subdivision), the adjustments were not consistent, the addition of the adjustments was not accurate, the data was 6 – 8 months old, the photos were of the house next door and the icing on the cake was appraisers comments, Austin, Texas is a declining market! The AMC was notified of the errors and said that they would request that the appraiser make the necessary corrections. Another 2 weeks passed (the original appraisal report took 4), the buyer had lost his interest rate lock of 4.75%, I could not give the buyer or seller a definitive answer on when the transaction could close, and the listing agent had multiple offers behind this offer. You can guess the rest. This is not an isolated case, just “google” HVCC and the stories are the same everywhere across the nation. Real Estate transactions are blowing up in a economy that is dependent on the recovery of the financial and real estate markets.

Ricky Sticky | Contact or Connect with this Member

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Let's not all get too excited. Remember we need the democrats to pass this. I"m not so sure they would pass this, and even if they did they would probably just replace it with something else. Dems = regulation

Bob Hill | Contact or Connect with this Member

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Jack127, if anyone involved in the transaction (realtor, loan officer, mortgage company, processor) contacts the appraiser for any reason, the appraisal is invalid according to the HVCC. The only contact any party involved can have is through the management company themselves. Experience so far with AMC's is nothing short of horrendous. They are in way over their heads right now and are being deluged with problems. Is spent over 2 hours on hold with an AMC just to try and get a square footage error corrected.....and then it took the appraiser 5 days to send the corrected report........Paul, it's nice to know that AMC's can work as intended. However, you are at the extreme minority here. Just because it is not interfering with your company's business model does not mean that it is not a complete disaster for the vast majority of the industry. It is not working as intended. The NAMB, NAR, and even some of the biggest lenders in the country are completely against it. The industry self regulated more than 12 months ago and the HVCC as designed is just plain bad for everyone.........Ricky, DEMs=Regulation is only when the regulation = more votes from the general public. This regulation is going to cost votes. The complaints from the consumer are stacking up quick and will only get worse. Sure the NAMB and NAR are fighting it but the real results will come when the powers in charge realize that the general public is being hurt and they are pissed about it.......Final thought, the biggest economic problem that everyone in DC is trying to fix is the housing slump. The HVCC is already and will continue to impede the housing recovery. Just watch Rep. Manzullo drill Lockhart in a Senate hearing. Lockhart has zero clue about what the code actually does. He looked like a fool and this is the man who is overseeing the GSE's? LOL- what a joke.

Robert Rippy | Contact or Connect with this Member

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I haven't had alot of problems personally with HVCC. However, I do have issues with it. If I am an appraiser with several years experience and have built a substantial client base, I am being penalized in a big way. Let's say that I have 5 mortgage offices sending me orders almost exclusively because of the quality of work I do. For argument sake lets also say that I am making $100,000 a year off these referrals. One of my competitors has been in the business for one year and makes about $20,000 a year. Now myself, the previoulsy referenced appraiser and three more appraisers sign up with a particular AMC. That AMC is going to rotate appraisal request between the five of us. My income from those 5 mortgage offices is now reduced to $20,000 a year and the competitor is now making $20,000 a year from that company he was never getting a dime from before. Actually, my income is less than that because my the AMC is going to charge $400 and ask me to do the appraisal for $275. As a mortgage professional, how would you feel if the lender you broker too had the borrower contact them directly and distributed the loan applications out to all of their brokers evenly. Thereby rendering all your experience and time spent building relationships with realtors mute. You are not going to get more applications because you have built a reputation for doing a great job. Also, your income will decline because the lender charges the borrower a 1% origination fee and tells you they will pay you .75%. That is exactly what is happening to the appraisers. By the way, doesn't anyone see anything unethical about companies like Wells owning their own AMC?

Mark Forman | Contact or Connect with this Member

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If any of you people want to be informed please read below. And to get really informed go the the Appraisal Instutite and read all the myths about the HVCC, As an appraiser I do not agree with the HVCC but it is a hell of a lot better then having a Mortgage Broker or Realtor shop the loan or sale for the most dishonest Appraiser. You Brokers and Realtors know whom I am refering to. Myth: Loan Production staff is prohibited from communicating with appraisers. Reality: Loan production staff may communicate with the appraisers, but they cannot be involved in selecting, retaining, recommending or influencing the selection of any appraiser for a particular appraisal assignment. Further, loan production staff cannot have any “substantive communications with an appraiser or appraisal management company relating to or having an impact on valuation, including ordering or managing an appraisal assignment.” Myth: Outsourcing appraisal functions to an appraisal management company can reduce costs. Reality: Given the diversity in the size and structure of lending institutions, it is difficult to conclude that outsourcing necessarily will reduce costs. Lenders incur costs for appraisal risk management whether done in-house or outsourced. Lenders should consider all the costs of compliance, including the costs associated with ensuring appraiser competence and appraisal quality, before making a decision to outsource their risk management functions. Myth: Outsourcing appraisal management to a third party reduces lender risk. Reality: Federal bank regulatory agencies have cautioned against reliance on third-party relationships by reaffirming that such relationships may significantly increase a bank’s risk profile, notably its strategic, reputation, compliance and transaction risks1. According to federal banking guidelines, “Increased risk most often arises from poor planning, oversight and control on the part of the bank and inferior performance or service on the part of the third party, and may result in legal costs or loss of business. To control these risks, management and the board must exercise appropriate due diligence prior to entering the third-party relationship and effective oversight and controls afterward.” Myth: Use of third party vendors ensures the use of competent appraisers. Reality: Lenders traditionally have been responsible for ensuring the competency of the appraisers and reliability of the appraisals they use for credit decisions. However, the competency of an appraiser is not measured by scoring compliance with seller servicer guidelines. Processing appraisal orders is a separate function that does not specifically include a review of competency. The function of competency review is best performed by individuals with significant education in appraisal standards and theory.

janne | Contact or Connect with this Member

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Bank of America bought the lender formally known as Countrywide who owns LandSafe. Do you think there is anything wrong with a Full Price offer of $450K and two back up offers within the first week and the "LandSafe" appraiser who has a Bank of America email coming back at $410K? I do.

Mike @ Serve-U-Best Mortgage | Contact or Connect with this Member

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Mark, what do you mean, "you people"? Your response is a bunch of myth. Are you living in the REAL world where honest reputalble, lenders, originators are working in each day trying to make a living? HVCC other then higher rates has been the # 1 culprit in the reduction of not only originator income due to inexperienced appraisers truning in drech but also the leading cause in deals crumbling based on crap appraisals. Ask ANY Realtor. Prior to 5/1 I worked with many great reputable appraisers, most of them have either retired, or were put out of business by HVCC. It really galls the crap out of me to read your diatribe attempting to defend a system that has put some many great guys/gals out of work. Based on your response, I could see that perhaps you needed HVCC to get some additional work. Myth, HVCC is great just go the Appraisal Institute sight and read all about it, fact, "If you pay peanuts, you get monkeys."

Martin Straka | Contact or Connect with this Member

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Paul, Your comments are well thought and for the most part, right on the money. The biggest challenge with the HVCC is that it allows virtually no interaction with the appraiser and regretfully, there are some AMCs out there that are sending appraisers over 50 miles from their home markets into areas the appraiser knows nothing about. Reading closed MLS data is not enough to give a true indication of a market. You need to know the area you are appraising. A major problem, and the real reason for the 18 month moratorium is for appraisals on refinances, where there is no "let's renegotiate" option. The borrower ends up losing the option to refiance because the values are off and "not renegotiable" unless you can "prove appraisal information is inaccurate". This means the appraiser can pick the three lowest comps even if there are ten quality comps available, and we as the lender or originator can't do anything to defend the proper market value. I personally have had two recent appraisals where the comps used were rediculous and quality comps were completely ignored. In one case the appraiser lived over 60 miles away and got lost both in going to the home and when leaving. I'm sure that put him in just such a great attitude about the home.

John W | Contact or Connect with this Member

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Paul tou are an IDIOT! your last comment, We already ruined the world economy once. How stupid are you? Do you honestly feel that a few dishonest lenders and a few dishonest appraisers crumbled our worls economy with inflated values? you need to go back to high school and take a basic economics class. our world economic problems are far deeper that home values!!!! you should not even be allowed to call yourself a broker. your ignorance and the fact that you are that misinformed is almost as much of a disservice to your clients then what HVCC has caused to clients across the U.S. in the above mentioned scenarios. YOU SUCK!!!!

Bob Dalsimer | Contact or Connect with this Member

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Paul, what do you recommend when there are inaccurate appraisals - not something we want to overinflate, just inaccurate data? for example, appraiser says that Dataquick reports 30% decline over 12 months in subject zip code. Reality is 1) comps used were 6 months old, 2) last 6 months from same Dataquick report show 3.5% decline, not 15% used in his report, 3) median price could be a shift in market mix, not simply same house decline (ie if people were buyering larger homes and now are buying smaller homes, the median price would drop regardless of any real price declines) 4) last month this Dataquick report showed a price increase 5) multiple offers in 1st couple days on the market and 6) different City/market area for comps 1&2 - When we put these items in a rebuttal we were told we were influencing value - even a Realist sheet showing the accurate closing date was rejected. So, our entire rebuttal was we were able to put the comp # of what we were challenging (no remarks allowed) and 2) give new comps. The problem is the time adjustment was a huge deal breaker. This is where the appraisal is 15% off.... Craziness -- And by the way, LSI has been involved in all 4 of my "problem appraisals" and the rebuttal goes back to the appraiser and they simply say "no" their value is right and its over -- The last problem we had - the buyer cancelled at their 200k offer when the appraisal came in at 170 - we put the home back on the market and recieved 4 offers in days between 194-197 - we took the 195 loan becuase it was FHA and they didnt have to go thru HVCC - it closed at 195k and was exactly the same as the 30 day old 195 comp that was a model match.. however, my seller lost 5k and the origional buyer lost $750 because of home inspection and appraisal.. HVCC is flawed and the moratorium is critical - lets get it passed quickly so we can get back to resolving the challenges of the marketplace...

son trinh | Contact or Connect with this Member

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Martin wrote "This means the appraiser can pick the three lowest comps even if there are ten quality comps available." If what you said was true based on the experience and with proof, then you should send that appraiser's report along with your proof to the OREA and file a complaint against this incompetent appraisal work. And, yes, you can "prove appraisal information is inaccurate." To proof that the appraisal was poor and incompetent, there are few things you can check yourself to see if the report has basically and properly done as follows: 1) Were the 3 comps are within the desirable range of the subject's gross living area (0-10% is best, if no comps avalable, then the gla can expand up from 10-20%, if still no comps available then comps' gla can be increased up to 20-30%) comparing to the other 10. However, appraisers must explained logically and reasonably why these oversized comps were selected and utilized. 2) Were the 3 comps the latest closed sale comparing to the other 10 comps? 3) Were the distance of the 3 comps located closer to the subject's immediate block comparing to the other 10? 4) Were the conditions and upgrades of the other unselected 10 comps more similar to that of the subject than the selected 3 comps? Were there any adjustments made accordingly 5) Are the ages of the 3 comps somewhat similar to that of the subject comparing to the other 10? (0-5 years). If not, did the appraisal report explain why those 3 were preferred over other 10? Were there any adjustments made accordingly 6) Were the market condition statistical analysis made based on the MLS database to show the market trend of the subject's neighborhood. These are basic things that an appraiser must go by as required under a sale comparable approach according to the law of substitution, an important economic principle cannot be ignored in any appraisal process. Further careful analyses and diligent researches to support the appraisal opnion are to follows thereafter. Statistically speaking (without involving any details of appraisal analysis), if you have 13 comps, 10 of them share the subject's similarities and have similar market price while the other 3 are way below off chart, then the 10 apparently may dictate the market trend and may be more reliable to work with. On the other hand, if the 3 comps are way too high, then one must find out why. Such as was there a cash paid off to these 3 (in this case market pricemay not be the market value)? Were there greater adjustments due to upgrades? If there were, then were these upgrades considered "over upgrades (regression law), hence overvalued? If you find any appraisal report contradicts the aforementioned points above, you may have a case of appraisal incompetency. In my opinion, HVCC "officially" sounds good, BUT "practically" works terrible. Many good appraisers have stayed out of AMC, and left the incompetent appraisers or trainees do the works with AMC. In stead of giving the fair market value and willing to make rebuttal when audited, these AMC's incompetent appraisers will play SAFE by pushing the appraisal value lower than the actual market value. The actual loss is on the borrower if he's rejeted by the either the seller or the by the lenders. Borrowers already paid for the appraisal report. If the borrowers go with another lender, then they may have (most likely) to pay for another appraisal opinion.....More costs, more time wastes, interest rate locks may increase....

Bob Dalsimer | Contact or Connect with this Member

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I wonder what % were "inflated" appraisals vs what % are deals "killed" by HVCC????? My guess is 1% were inflated appraisals by unethical brokers/appraisers and 20-30% are good deals killed by HVCC -- what do others guess are the #'s??

Bob Dalsimer | Contact or Connect with this Member

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son - you say...you can "prove appraisal information is inaccurate." - however, the AMC has removed our ability to say anything other then the comp # and new comp - See above 2-3 posts where we were rejected to comment on the appraisers Dataquick report - he was right stating that MEDIAN values in the zip code had decreased 30% year to year. However, my counter arguement is within the past 6 months (the two best comps were in the subject develpement in Dec/Jan) the decline was only 3.5% and there was an increase in prices in the last month - This is the same report - just different interpretations - both are factually correct - I believe any logical person would say 6 month old comps should be looked at with the 6 month history vs past 12 months - anyway, we were REQUIRED to delete this from our appraisal rebuttal as we would be influencing value. I dont have anything against AMC's or HVCC, just have something against not being able to get a quality appraisal in a reasonable time frame - when I have 3 appraisals on 3 deals that are 15% off, that is a huge problem -

son trinh | Contact or Connect with this Member

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Bob. I didn't see you comment prior to my posting. Per my opinion, your buyer can file a complain with OREA or at least using all the proofs and take it to a small claim court with a help of an appraiser as expert-witness to recover all the loss. Dataquick should not be the only source to rely on. In my opinion, putting other required aspects aside, technically speaking only, an appraiser must be competent in understanding and putting statistic to work with strong logical reasoning. Real Estate market is known an elastic market. Therefore, more samples for statistic, the more accuracy the appraiser can get for his/her opinion of value. The market conditions cannot be based soly on the zip codes. Even a only a block away can make a difference in value. To have a reliable opinion on the value, an appraiser should dig well into the MLS database of sales and other appraisal databases if possible. Comparing it with realist.com (I like Realist.com for its 97% accuracy comparing to data from the NDC database). 1004MC is used to show the past trend of the market, and "likely, possibly" it will continue on that trend. BUT an appraiser must know how to use this 1004MC properly and unbiasly---incorrect data in - incorrect data out. The best of 1004MC to interpret the market trend within the subject is when collecting comparable data within the subject's 4-5 miles radius (the more comps available within the subject, the narrower perimeter/boundary should be used). AND using the latest comps within the last 3 months is most preferred. Dataquick should only be used as reference because of its general statistical analysis without concerning of the building living Areas where value changes significantly due to preference of bldg's living area (while smaller GLA depreciates in value, an ideal "just right" GLA may appreciate otherwise). Time adjustments would be more preferrable if there are available model matches within the last 6 months sale. And if you take the properies with desirable range of GLA for analysis, time adjustment rate between the GLA would also fluctuate. Probably it would be a stronger case for you if the complaint was from the borrower than from you. It all boils down to the appraiser's ethics in doing his/her works properly and competently as required by the USPAP. But again it now has to do with the willingness of doing the appraisal competently. If a good appraiser follow USPAP requirements strictly on the appraisal fee subject (fee must be based on the level of difficulties of the assignment, not on anything else) then AMC ripped off 40% from the appraiser without being responsible for anything can only do more harms to the HVCC than good. Not all AMC appraisers are incompetent; but few good appraisers in the AMC will be overloaded with their works, and the remaining works are left with incompetent ones. Therefore, I think the moratorium of the HVCC is a good sign. Especially, there are already many good laws, rules, and regulations out there.

mike vand | Contact or Connect with this Member

on

I built a 17 year successful firm on relationships...the HVCC killed that. If you, as an Appraiser, cannot stand up to "pressure" then that is a YOU problem and you'll be run out sooner rather then later. ' I propose that instead of this rediculous measure, we police our own. Make the Lenders order an independent desk and/or field review. Keeps Appraisers working and we police our own.

Emmett Dempsey | Contact or Connect with this Member

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OK let me throw my hat in the ring here. Bottom line is HVCC is bad for many reasons. The root cause is the belief that inflated appraisals caused the bubble and crash. Basically it blames independent small business appraisals yet exonerates the big Wall Street firms who bought paper from stated loans, no credit score loans, 100% financing loans, etc then created all these retarded derivaties that sank the system. Where is the HVCC for Wall Street? Another discussion... As for me, I currently work in a wholesale shop, but I started in this busines with Countrywide in 2007 and they use an AMC called Landsafe. We had to go through the same thing as now....Undercut values, no relationship with appraisers, horrible appraisals that you can't fight because the appraisers cover their own. Prices for appraisals have pretty much stayed the same, but guess what....appraisers have taken a pay cut. The AMCs are raking it in and screwing the individual appraiser. They are making half of what they made, so what incentive is there to actually do good comp work for you? My story this month is I had a DU Refi Plus loan for a customer we did his loan back in December 2008. Back then his home in St Pete, FL appraised for $530,000 (which was extensively desk reviewed and had a 2nd confirming appraisal done). This month, 6 months later it came in at $360,000. All I needed was $400,000, which is still an unrealistic drop, to make it work at 105%. All her comps were 5 miles away, and she used all short sales as comps. Fought it at the AMC, and GUESS WHAT....the desk reviewer supported the appraiser...gee big suprise! The AE at my lender saw it and agreed with me, and escalated it to his management. Hopefully we can at least get another AMC to redo it, but this is just a taste of how bad HVCC is. HVCC needs to go away. It does nothing but line the pockets of the AMCs, hurts small business appraisers, and ultimately screws customers.

Tina lee | Contact or Connect with this Member

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Perhaps, Paul works for either an AMC or a "Bank" NOT(HAHAHAH) making a mint off of the HVCC. I know as an appraiser, the HVCC is has been a huge disaster for those of us trying to make an honest living, but being dictated to by the A.G. Cumo.

egmaldonado | Contact or Connect with this Member

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Tina I think you may be right. If Paul were in the trenches with the rest of us, he'd be singing another tune. All I know, is that the only one's benefiting from this are the AMCs. Appraisers aren't getting paid, mortgage brokers in some cases end up paying for inaccurate and incomplete appraisals, and have no recourse. So not only do we not get the deal through, we get to pay for the privilege of ordering an appraisal done by someone who either doesn't care, is lazy, or incompetent. The borrowers certainly don't win in this scenario, or the sellers, or the realtors, or the lenders for that matter. I only see one winner is this situation. I think just by the furor Paul's statement caused is truly evidence of frustration. And by implication, he is accusing those of us feel that this system doesn't work, that we are crooks who caused the economy to falter.

George Chamberlain | Contact or Connect with this Member

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Paul, you obviously monitor this blog, so you can now see this is one of the most commented on blog in recent history. Any idea why? Mortgage PROFESSIONALS like me are passionate about this subject. Most of my colleagues ( see comments above ) disagree with the HVCC ( not even regulated by ANYONE ) as do I. Borrowers literally choking me through the phone due to values being GROSSLY undervalued, and the borrower, AMC and the appraiser know it! I had used LSI and 75% of my deals were dead as a result, coincidence, I think not! We have lost enough good people already in the appraisal business, I will bet you there is not eally anyone out there right now aspiring to get into the appraisal biz. This Home Valuation Code of Crap needs to end now! I, like what I believe to be good originators on this site, still have integrity and do the right thing for our borrowers. We can not continue to be AMBUSHED by the HVCC appraisals and haing our deals die due to no fault of our own.

Joy Morris | Contact or Connect with this Member

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Here's a classic example of the problem with the HVCC. I had a refi client whose construction loan I financed a year earlier. The cost of the construction including the lot was $900,000, they had $300,000 into the deal. Considering the loss in value we expected an appraisal at $750,000. The HVCC came back at $475,000, that is not a typo. The customer then had a change in circumstance and put home on market for sale. They received multiple offers and sole the home for $750,000. The second HVCC appraisal came back at $750,000. Color me puzzled.

George Chamberlain | Contact or Connect with this Member

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Shocking I am sure, huh Joy? What a joke, eh? And yet there are people out there that will defend the HVCC! AMC's jumping on the band wagon to make $$ off of our borrowers, shorting the appraisers on their usual fee, appraisal's not coming in at value, AMC says, sorry, can't help you, that's the value, incompetent apprasiser still getting paid along with AMC and borrower get's short end of the stick, out $450, t find out they can not do anything, and then take it out on US!! Cuomo needs to hang out with Madoff

Don Ward | Contact or Connect with this Member

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The problem is the AMC's are now paying appraiser's 1/2 or less of what they have been making for 20 years. It is a real shame but, i getting the sense that appraisers are giving the level of service that they are getting paid for. The AMC's have taken an upper hand in the business, do as we say, for how much we tell you to do it for, or we will go to the next starving appraiser in the bread line.

tbbealle | Contact or Connect with this Member

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The HVCC has caused more abuses than it was intended to eliminate.

Miguel Chairez | Contact or Connect with this Member

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I am an ethical OREA/LAWSUIT fearing real estate appraiser and I have always been forthcoming with my clients regarding values. In addition, I always submit a supportable value. As a professional appraiser I am heavily regulated, reviewed, and monitored by more governing bodies than I can count; ASB, OREA, FHA, AQB, review appraisers, underwriters with hundreds of different banks/lenders. Over the years I have learned to adapt and conform to many different standards in order to stay competitive. I have to work very hard to obtain my fees and I have cultivated and bent over backwards to keep my business relationships in good standing. Robert Rippy makes one of many good points, banks owning any percentage of an AMC is a major red flag and an ethics violation. The governing body that is designed to oversee the HVCC has yet to be establised how could the HVCC be put into effect without such basic measures. A unregulated power grab by the banking industry is what the HVCC amounts to from my perspective.

Cindy Allen | Contact or Connect with this Member

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Well, all of you clearly have a vested interest in making sure sales go through. The HVCC was designed to prevent the massive fraud that was going on during the giant Ponzi scheme also known as the housing boom. If appraisers are now erring on the side of caution, well, that makes sense. The pendulum has swung the other way. Isn't it just remotely possible that these appraised values are right on, considering that home prices are still dropping in most markets? As a regular old consumer, I am in favor of honest, objective appraisals, and I do not want to buy a house that is overvalued. Many sellers have not adjusted to the new reality and refuse to believe that their home values have declined to the extent that they have. Paul's post is the only intelligent one on this board. It is also the only one not replete with typos. Many of you do not sound very reasoned. You sound like people who are unhappy that things are not going your way. I pray that that bill goes nowhere.

DONALD SPENCER | Contact or Connect with this Member

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As an appraiser the HVCC has had a negative effect on my business. I am as independent as it gets. I work for myself in a home office. Since May 1st my work load has been cut in half with all of my work being FHA appraisals only (no AMC work, $200 is a slap in the face). I am not surprised by the poor quality of work coming from the AMC's. Very few experienced appraisers would be willing to take a 50% cut in pay and get paid the same as an appraiser with 1 year of experience. You get what you pay for. At $200 per appraisal are any of you surprised that you can not get conditions fulfilled? When the HVCC first was proposed I thought this could be a good thing with some logical changes. But instead what we got was very one sided which seems to favor the banks. Why is the appraiser being blamed for the housing collapse? At what point did the bank tell the underwriter to stop doing their job and fund everything no matter what. Yes there are unprofessional appraisers out there but shouldn't their work be caught by the underwriter or the banks appraisal review department? I am just a little guy who is trying to make a living through hard work while producing a good, reliable and trustworthy appraisal. I hope that one of the goals behind the HVCC is NOT to eliminate the mortgage broker. Most of the mortgage brokers I have worked with seem to work hard for the borrower getting them the best rate with what ever banks works best for their situation. Do we really need the HVCC? Aren't there regulations already in place to police the mortgage industry? When will the banks take some responsibility?

Paul Earley | Contact or Connect with this Member

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I am an appraiser. I lost business because I did not over inflate values. I like the HVCC. I have not had 1 request for value check. Above comment suggest appraiser should work for free by providing a value check so the consumer doesnt lose out on $300. Wow! I feel real sorry for the consumer. What a bunch of bull that thought and comment is. Do you like to work for frww and besides it is illeagal to do value checks. I will address any real estate agents thoughts on appraisers not using GOOD comparables. First, the under writing guidelines are that the report should have the first three comparables not over 1 mile or a closed date of 90 days. How many reports do you think fit that guide line-not many. Appraisers do not kill deals, under writing guidelines do for some BUT MOST OF ALL WE ARE IN A DECLING MARKET. Ypou got to be kidding me with this blog talk. I have personally appraised 6 purchases in the last month that appraised for under the purchase price with a few re-negotiated. I guess I am not doing my job because I lost the real estate agent commisions because he/she does not know how to run a comparitive market analysis in the real world of a decling market. All of thesre horror stories are a few-very few examples of gross negligence on the appraisal process of appraising out of the area. These examples happened before this crisis but favored the real estate market and no one cared but you do now. Oh that is right, you are losing money. Greed is all I read here and how the poor consumer is paying for it. I hope the consumer pays for it and not me.

Paul Earley | Contact or Connect with this Member

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I do think the HVCC is not the best model but it is better than what we had. It does need reworking. Another thought on the bashing of the HVCC. The consumer pays for a service. No one should have to work for free. Is the fee to high-yes. Are real estate commisions to high-yes. Are 1.5 percent yield spreads on mortages to high-yes. Are $300 appraisal fees to high-yes. By the way, I am insulted at the comment made above that it is a slap in the face to receive $200 for an appraisal. Come to Detroit and tell that to an unemployed worker that you are insulted by that wage. That will go over real well. Again greed. The whole real estate process needs an over haul. The whole process needs to be as independant as possible and with as many hands that are fearful they will not get paid if a transaction falls through (real estate agents-mortgage officers and appraiser fearing losing future work) the process will never work correctly. Blaming appraisers and the HVCC is called diverting the attention to another so you can escape. It like throwing a rock from the bush to make a sound else where so you can escape the bad guy. If that sounds ridiculous, you should re read these comments you all have been making. Yeah-lets rally the troops up guys and have a call to action to stop this evil thing called the HVCC so we can still make way to much money off the consumer.

Mike Allen | Contact or Connect with this Member

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Regarding the HVCC, I just feel it needs remodeling. It was a knee-jerk reaction to the mortgage problem and pressure on appraisers to "hit the number". Yes, there are bad actors in both the mortgage business as well as the appraisal ranks but a little finesse would have been worthwhile. An 18 month moratorium is appropriate. When you take the ability away for appraisers to get orders from mortgage brokers and make the funnel that much smaller by making lenders the keepers of the power, it is crippling. AMCs are not the answer either. A well written and researched appraisal can take 5-8 hours sometimes. For those guys who do 2-3 a day, you're doing your customer a pretty good disservice. They are relying on you to give them guidance and the benefit of your research. How're you going to get that information in a usable form in 2-3 hours, including driving out to the site for the inspection, taking pics of your comps and learning about the area? You're not. Maybe in Michigan, a $200 fee for an appraiser is considered good but in California, it's just not. Appraisers who used to make a good living dealing with mortgage brokers, just lost their livlihood from over about 20 years. Lender's lists and AMCs lists are full out here. So now the HVCC has just contributed to the unemployment problems too. Great job Coumo. Paul feels that $300 is too much to pay for a good appraisal. Sure it is if you're doing 4 a day, not researching anything, sitting at your desk looking at MLS pictures and comps, and slapping them together. Give me a break. I don't care if a person's been doing it for 10-15 years, the work still needs to be done and done well. An underwriter is relying on you. Give them some information to work from.

Mike Miller | Contact or Connect with this Member

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To comment on Paul Earley's replies.. It's pretty obvious this individual will work for Walmart wages and believes everyone else should too. Sorry pal, I didn't get a college degree and study 3 years as an apprentise to make $20/hr. I will tell anyone in Detroit to their face that $200 is not enough for a job that takes 6-8hrs to complete considering most of those unemployeed in Detroit were making close to $40+ an hour anyways. They'd probably tell me I'm a fool to work that cheap with all the liability that's included in my line of work, including the costs of running my business and continuing eduction. So you go right ahead and slave for $15-$20 and wonder why you're not getting ahead in life while us that have morals and will not work for the slavemasters make a good living. I've been appraising now for 14 years and believe this HVCC is the worst idea ever. There was no problem with communicating with my clients. We had more then enough rules set before the HVCC started, this POS only made things worse. We all hope people like Paul will find another line of work. We don't need people undercuting our wages anymore. You're as bad as the illegals coming up from the south willing to work for below minimum wage....

Mike Miller | Contact or Connect with this Member

on

To comment on Paul Earley's replies.. It's pretty obvious this individual will work for Walmart wages and believes everyone else should too. Sorry pal, I didn't get a college degree and study 3 years as an apprentise to make $20/hr. I will tell anyone in Detroit to their face that $200 is not enough for a job that takes 6-8hrs to complete considering most of those unemployeed in Detroit were making close to $40+ an hour anyways. They'd probably tell me I'm a fool to work that cheap with all the liability that's included in my line of work, including the costs of running my business and continuing eduction. So you go right ahead and slave for $15-$20 and wonder why you're not getting ahead in life while us that have morals and will not work for the slavemasters make a good living. I've been appraising now for 14 years and believe this HVCC is the worst idea ever. There was no problem with communicating with my clients. We had more then enough rules set before the HVCC started, this POS only made things worse. We all hope people like Paul will find another line of work. We don't need people undercuting our wages anymore. You're as bad as the illegals coming up from the south willing to work for below minimum wage....

Paul Earley | Contact or Connect with this Member

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I do not work for minimum wage -I get paid just fine. You concentrated on a few comments that I made- I will not take back regarding fees-all fees for real estate transactions are excessive. You ignored the fact that I do not like to work for free by providing comp checks-please read my post. Why do all appraisers hide behind the "if I do the report in less than 5-8 hours-it is a junk report". Just a thought-type faster. I do not necessarily think the HVCC is good but better than the brokers pressuring appraisers to raise value- but you do not work for any brokers that pressured you for value-or maybe you just hit the high value and no one complained-just a thought. I will not be leaving the industry anytime soon. I do take offense to your comments. At least I am calling a spade a spade but you hide behind how ethical you are and how long it takes to produce a quality report-I do hate the 8 hour turn times from time of inspection just like every appraiser. My main point is that the consumer should pay for what they get (whining that the borrower paid for an appraisal but did not get the loan really irks me) and that appraisers are not killing deals-news flash-we are in a declining market. By the way, you are ignorant in matters of economics as illegal immigrants are necessary for low price produce and other menial jobs that keep prices down that snobs like you do not want to do.

Ed Connor | Contact or Connect with this Member

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AMC's are making appraisers add REO, foreclosure, off-market and short sales to their reports. They are trying to lower report values. Why? To make it look the the appraisers are to blame and to make it appear to the outside observer that they are fighting fraud? Or is it that they are trying to destroy a profession so their AVM models can take ALL the fees. They sure are doing their best to hire the least experienced appraisers at the Walmart prices they pay. Wake up! The banks are the cause of the meltdown and the HVCC was born of fraud and price fixing between WAMU and eappraiseit. So the perps get rewarded??!! If the banks had skin in the game and were responsible for the loans they wrote they'd have practiced proper due diligence in their underwriting standards and those liar loans and 125% LTV's wouldn't hve gone through and the bubble wouldn't have happened. It was the banks greed that caused the meltdown and it's the banks greed continued through these AMC's in skimming fees and charging the consumer more in monopolizing the mortgage loan process that is taking more and more of our tax dollars and depleting individual states incomes. This disaster is the banks fault alone, get rid of anything that allows them more power in the mortgage process. History shows they will do anything for the quick buck and their schemes will ruin the economy again and for years to come.

Lynn Maina | Contact or Connect with this Member

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I consider HVCC a joke when an underwriter conditions for a review of an appraisal that was done under HVCC.......now why use HVCC if we are also getting reviews ???????please people stop the insanity and lets get on with doing our job and getting this nation back on its feet....HVCC will not do that.....let us use our appraisers and then we can review if need be.........get a clue

Ed Connor | Contact or Connect with this Member

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Not only are the AMC's lowering appraised values by forcing inclusion of off-market, non-arms length transcation, in the appraisal report, but they're holding on to appraisals for weeks after they're submitted, forcing borrowers to lose their locks and pay more fees. You're supposed to be able to transfer an appraisal between banks but the banks are not allowing it. The want to keep the borrower they've hog-tied. Fair?

Charlotte Norton | Contact or Connect with this Member

on

Looks like there will be plenty of work for Paul when the rest of us appraisers---the ones with a clue and a shred of dignity---end up leaving the profession.

Bruce Marcom | Contact or Connect with this Member

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I use to hunt for bad appraisers for the state and the percent of appraisers that need their license yanked is suprisingly low. The HVCC was created on the pretense that appraisers were being pressured by lenders to do unethical things. This is bogus, there are only a hand full bad appraisers in the US the percent is less than 1%. HVCC was created as a knee jerk reaction to all the bad loans and forclosures that have happen in the last 3 years. Fannie Mae has to blame someone so, the appraiser is on the top of the hit list. But appraisers dont cause bad loans or foreclosures, LOs putting people in homes that dont belong in them do. There are actually more bad LOs than bad appraisers but even that percent is low too. Most appraisers when they get a call from a LO or processor that ask them to do something illegal or unethical will just tell them no and hang up on them. The violators I did catch didnt belong in any professional business period. I caught more LOs doing bad things than appraisers, I had to report them to another dept that handeled LOs. I had an appraiser send me an email written to him by a LO that offered him a bribe to bum the appraisal. Dum for doing it, super dumb for emailing it. He is in jail now. I had been working for myself these last few years, HVCC prevented most of my clients from ordering from me, and in Jan 1, 2010 when FHA incorporates HVCC rules, that will kill the rest of what little business I have left. I dont do work for AMCs, I dont believe in doing assignments to the lowest bidder or giving part of the fee I earned to some other middleman because he pressed a fax button. Besides the only way a profession appraiser could live off of AMCs fees if he had a bunch of trainees pumping out 100s of reports a month to make money above his over head. Doing that many reports using trainees or not, the quality suffers and u/w conditions go up, turn around time increases. Some people may be ok with losing half their income or more, but if a doctor or lawyer or other professional lost that much of his income he wouldnt "settle" when he could go find other work that made as much as he was making before. I may not make 100k-200k anymore, but I will be damed if I will settle for 30k a year because FannieMae says I should. I am seeking a career outside of appraiser business right now, leave all this sillyness behind me.

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