Last week President Obama signed the Dodd-Frank Financial Reform Bill , and while most people are not exactly sure what effect this legislation will have on the financial industry, one thing that it will surely do is have widespread ramifications on the appraisal industry because it will eliminate the Home Valuation Code of Conduct (HVCC) in 90 days.
The HVCC was brought into being in 2009 by the Federal Housing Finance Agency (FHFA). The purpose of the HVCC was to give appraisers increased independence from lenders in an effort to improve the accuracy of appraisals and preclude interested parties from influencing appraisers.
The HVCC did this by having appraisal management companies act as a buffer between appraisers and lenders. Many in the industry felt this squeezed profits on appraisal jobs to the point that veteran appraisers left the industry and appraisal quality suffered.
New standards will be developed over the next 60 days. One change that is certain is that government mortgage behemoths Freddie Mac or Fannie Mae will be able to use appraisal reports from appraisers hired by lenders or mortgage originators. According to the legislation, appraisers must be paid at “market rates”. Originators will continue to be prohibited from threatening, bribing, or otherwise influencing an appraiser to get a more favorable appraisal value.
It remains to be seen exactly what other changes the new rules will engender. As we learn more, we will update this space to let you know.
Were you a fan of the HVCC or not? What changes would you make to the appraisal process? Let us know in the comments section below.
Loading ...
Martin Appraiser
July 26, 2010 @ 11:51 am
The hvcc could have been a positive however the whole exersize just goes to show you can not trust the big banks!!!
The Big banks have always had appraisal managment companies and I have done work for them for years before HVCC. Since the HVCC they raised their appraisal prices and lowered the fees they paid to their appraisers. Also they out sourced their call operations to India. Before hvcc nobody would trust their real estate tranactions to a call center in India why would they now, because they had no choice!!!!! The biggest problem with HVCC was it eliminated the consumers choice. Most big banks have 1 appraisal management company (The big bank typicaly owns part of or the entire AMC. (no Choice!!!!)
What did the HVCC accomplish ? Thousands of small appraisal companies (small business that hire staff, etc) were eliminated.
PS Cuomo who wrote this legislation is on the board / has an interest in an appraisal management company!!!!!!!! He is a criminal, lets prosecute him.
Reply
mike hefffernan
July 26, 2010 @ 3:58 pm
If they let the AMC still stay around they force feed a partner on me? I think the appraisal should be raised to 500 to 600, make it more narrative and limit the number of appraisals that you can complete to try to ensure you are getting a quality report with good information.
Reply
Michael Kraus Reply:
July 27th, 2010 at 9:05 am
Everything I read says that AMCs are still going to have a role in the appraisal process, but I think we will need to wait and see to find out exactly what their role will be.
Reply
HVCC Appraisel Rip Offs!
October 20, 2010 @ 1:35 pm
We recently had our home appraised by the infamous “HVCC”, which costed us nearly $500.00 for a 5 minute walk thru. The final outcome of the Appraisel came in at over $65,000 LESS than what our home was worth just one year ago. How can that even be legal? The Appraiser takes into consideration what other houses are worth in the surrounding area, including foreclosures and short sales? My husband and I love our home and have put over $60,000 in updates into it. I understand fair-market value…but again…how is it fair that a foreclosure or short sale is even considered when Appraising my home? Who makes these rules or guidelines? The HVCC was definitely not created for the benefit of any homeowner….just another scam that will encourage and render even more home-owners homeless. The outcome of what HVCC does doesn’t end with just a bad Appraisel…it has a profound affect on everyone involved…including the Realitors, Brokers, Homeowners and Buyers. Where is the Check and Balance when these new processes and procedures are created? The HVCC is a complete scam and one that will continue to only cause harm and despair!
Reply