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HVCC?????!!!!!

By
Real Estate Agent with Exit 1 Stop Realty

I've heard recently about the HVCC. After doing some very basic reading, I'm trying to ascertain how this could possibly help the current real estate market. It would be great if someone "in the know" would explain, and perhaps get some discussion going. If anyone knows of good resources I could check, I'd be very grateful. Until then, if you have information, opinions, etc. let's hear from you. Appraisals are getting very tricky, and determining a fair (to everyone) price is becoming more and more difficult.

BTW - The rain has stopped in St. Augustine, and I'm seeing sun... Will this last?!!!

Comments (7)

Kimberly Dotseth
Blend Real Estate, broker/owner - San Diego, CA
Try Our "Cancel Anytime" Listing!

Margo, it's the Home Value Code of Conduct, and it's going to kill the market! It's already killed two deals of mine since May 1. Both appraisers were out of town and did their work only online.  They had ZERO idea of comps, the neighborhood, the trends, the good or the bad, of San Diego. They neither live or work here.  Strangely, the lenders rejected both appraisals as being too out of whack and the lenders were out of state!  God, if they knew, then you'd think the appraiser would know.  The lenders felt that there were too many adjustments used on the bad comps to "make it work."  The comps made it "not" work, because they were so stand out inappropriate.

Normally, you could ask a lender to call the appraiser to discuss why certain comps were used or not used. Not anymore. No calls to the appraiser at all.

I was asked by the lender in one of the deals to find comps for the appraiser, and that's the first time in 18 years that has happened. Which I did, and spent two hours on it, but then upon receiving my work, the lender said I was a conflict of interest.  Convoluted? Yes.

As I understand it, lenders can have no direct contact with hiring or speaking to appraisers. So they have to go to (new?) third party appraiser manager type of businesses. Like asset managers, except for appraisers.  And these third party vendors hire the appraiser.

Of course the vendor has to be paid, so expect another $150 to $200 to be added to the appraisal cost. And your buyer will have to prepay the appraisal with a credit card. Everyone's got to get paid! (except us)

My opinion is, what motivation does any appraiser have to get it right if they've already been paid? In my two deals, buyers paid $650 and $550 for appraisals that were junk. They're out the money. I am horrified.

If it doesn't appraise, fine! But both of these would have appraised. It's not a matter of influencing the appraiser, which I have never done even as a former mortgage broker, it's education in these two cases.

So sparing everyone the gory details, the deals are cancelled.  And I have warned some of my listing clients that they need to prepare for lower valued appraisals, presumably because of an over abundance of caution on the part of the appraisers (who may not know the market).

How do I know? I am living it.

Cheers,

Kimberly

May 24, 2009 06:52 AM
Margo Currie
Exit 1 Stop Realty - Saint Augustine Beach, FL

Thanks so much, Kimberly, for your insightful response. Unfortunately, what you have experienced is very similar to what I have heard! Who in the world initiated this idea? I'd love to know how this will affect our local appraisers. How can out of town appraisers have any idea of the value of properties here, especially sight unseen?

May 24, 2009 07:00 AM
Anonymous
Cecilia

After 25 years of appraising R.E. I let my license expire this past February. Too much regulation. I was honest before licensing, I continued to be honest. Had very few problems with "lender pressure", etc. Most of the time speaking directly to the interested parties and explaining the situation actually would make everyone happy (well - relatively, anyways!).

The link that follows, below, gives a pretty good idea of how HVCC affects the appraisers. Consider someone like me who worked from home, just myself - independent fee appraiser. An appraisal that would have brought me $350.- "back in the day" would now bring me a maximum $210.- but more likely less than that. I probably wouldn't last very long on the list, either, because turning an appraisal assignment in 24-48 hrs is not normally enough to do an adequate job. Especially in a market as sensitive as the current one.  E&O insurance costs a fair penny, MLS subscription fee goes up, software w/update service goes up - and so on - so the only $$$ going down is the appraiser's pay. Simple math.

<a href="http://matrix.millersamuel.com/?p=4520">Hre's that link</a>

I think we all agree that HVCC is a curse - whoever put it together did not have the best interests of anybody involved in R.E. in mind, and I include the general public in that, too.

Sorry to hear about the trouble on your end - I really didn't think we appraisers would be the only ones hamstringed by this.

Best,

Cecilia (in S.Cal.)

http://TheStupidAppraiser.info

May 24, 2009 10:49 AM
#3
Margo Currie
Exit 1 Stop Realty - Saint Augustine Beach, FL

Thank you, Cecilia for an appraiser's opinion! I thought it would have to affect more than just the realtors, but it seems devastating to the independent appraisers. I wonder if there is anything that could be done to rectify this... I guess just writing to the politicians. Again, thanks, and best of luck.

May 24, 2009 01:10 PM
Margo Currie
Exit 1 Stop Realty - Saint Augustine Beach, FL

I just followed Cecilia's link and read all the comments including clicking on MATRIX. Very interesting...

May 24, 2009 01:25 PM
Anonymous
AJ Hollman

Don't worry about cost to your client (up front actual $ cost), the AMCs are only charging end user clients about $50 more than you are probably used to. WORRY ABOUT THE QUALITY, and get ready for a wild ride. Appraisers are almost always picked by the AMC based on the lowest bidder model with all appraisers considered equal as long as they meet the minimum requirements under law. That is only my opinion as an appraiser, but it is based on actual interaction with just about every major AMC you can think of. A rookie appraiser working in a volume sweatshop is placed at equal or nearly equal consideration with a 10 year veteran. If you are negotiating with these AMCs over the phone as an appraiser, they NEVER ask how many years you have been in the business, if you have an appraiser that specifically knows the neighborhood/City, how long your firm has been around, what qualifications you have above and beyond State/Federal requirements, etc...

Driving from Miami to Palm Beach County to work on the appraisal? No problem, as long as you charge $150-175 to the AMC. Never been to the neighborhood, city, or even County? No problem, as long as you are willing to work for the lowest fee in the area. Denver to Miami, no local MLS access/contacts/knowledge? No problem, just charge the lowest fee and you have an order, 10 orders, 20 orders, just hand them in within 48 hours. These AMCs have absolute power right now, and I'm sure you know how that story goes.

This is madness and this is NOT regulation that is going to help anyone. Type "another big win for big banks" into Google, you might need to cross reference with "HVCC". You will see a couple of thousand words on the subject that I wrote when they released these rules back in January. This started because Eappraiseit and WAMU were going to get sued for perceived collusion...and the solution is the HVCC which pushes the vast majority of appraisals through a dozen bank/title company owned AMC profit centers including Eappraiseit. This is the deffinition of insanity! These new rules vitually guarantee collusion on a massive scale, it is just a matter of time, and it is starting already.

I was freaking out but at this point my company is doing really well with FHA appraisals. For FHA the lender is liable for the appraisal's quality. If they made that rule part of Fannie Mae requirements, you would see THOUSANDS of loans being attacked due to poor appraisal work and the quality would improve. I'm shocked and amazed at the poor quality work I see on a regular basis from these low bid appraisers. As a Realtor and appraiser, I'm just happy that I can fight my own appraisal battles. I feel for the home owners and Realtors out there because as badly as this impacts appraisers, you people are giong to be the real losers in this scenario.

May 24, 2009 02:53 PM
#6
Margo Currie
Exit 1 Stop Realty - Saint Augustine Beach, FL

Thank you so much for your response. This question has been getting some interesting and enlightening responses. So far, none of the comments has been positive regarding the HVCC. I wonder if any realtors out there have been impacted by this. If anyone has, please share your experiences. Evenyually it will affect all of us in one way or another.

May 24, 2009 04:29 PM