New HVCC (Home Valuation Code of Conduct) appraisal procedures for all real estate transctions after May 1, 2009 seem just know to be coming to light as consumers and real estate professionals alike suffer the fall-out.
Presumably in an effort to create a layer of objectivity to the appraisal process, the Federal Housing Finance Agency (FHFA), along with Fannie Mae and Freddie Mac ordered that all lenders must order appraisals through AMC (Appraisal Management Companies). Basically, a lender now calls an 800 number and gets an appraiser assigned, based on zip codes that the appraiser has registered with the system.
So, what's the problem?
According to the National Mortgage Brokers Association:
1. AMC's are completely unregulated. (Several are under investigation for misconduct)
2. AMC's charge upwards of $150 referral fees, taken from the appraisers' payments and from additional fees passed on to consumers. Estimated increased costs to consumers this year is $2.1 Billion!
3. Appraisers are assigned to a target property from outside their market area, in direct violation of their code of ethics.
4. Because of lack of familiarity with a market area and lower payments paid to appraisers, there is no quality control of appraisers and appraisals. Appraisals are inaccurate and inadequate
5. Worst of all, consumers have no recourse. They cannot protest or contest a faulty appraisal, no one can talk to the appraiser, and consumers may not take an appraisal to another lender if a better deal comes along. Their only recourse is to pay for another appraisal!
I urge all consumers and real estate professionals to contact:
Who will you be contacting?
NY Attorney General Andrew Cuomo's Office: (212) 416-8000, Internet Complaint
Federal Housing Finance Agency (FHFA): (866) 796-5595, director@fhfa.gov
Fannie Mae: (800) 732-6643 Internet Complaint (new HVCC-specific form)
Freddie Mac: (703) 903-2000, Internet Complaint
Senators, Representatives and Governors: Click here for contact information.
There are many decent, hard-working, honest, real estate and mortgage professionals whose businesses are currently stifled due to the recent HVCC mandate, and many decent, hard-working, worthy consumers who are unable to obtain home loans or re-financing due to this issue.
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