Just a few thoughts on the current uproar about the HVCC. I'm amazed as I watch all this fighting about the HVCC and the havoc it has caused.
First, I think bureaucratic solutions always cause more trouble than they ever prevent. How does putting another middleman in the process do anything other than clog things up. These "management companies" don't add any more quality to the appraisal process than we had in the past. They just siphon off money that should be going to the people who actually do the work. Lenders' own appraisal review departments had already solved most of the inflated/fraudulent appraisal problems. Problems which were already vastly overstated in my opinion, anyway.
Second, I don't think inflated appraisals were ever the real problem in the first place. Sure there was a small minority of appraisers who would hit any value no matter what they had to do to get there, just as there are crooks in any business. That's not a reason to throw the baby out with the bath water. Real estate values went down for a hundred different economic reasons that had nothing to do with the value the homes appraised for in the past.
Another thing I'm finding fairly amusing in this argument is the way that appraisers talking about it and arguing with loan officers and real estate agents in the forums refer to real estate values as if they work the same way the stock market does. They seem to think there is a definite value to a home that can scientifically be established by their appraisal. Everyone knows this is complete bull. I can order appraisals from 5 different appraisers on the same property today and a few days from now I could receive 5 appraisal values that vary as much as 5 to 30 percent from one another with most having reasonable arguments for their value determination. I know that appraisers reading this will maintain that the rules in their appraisal handbooks will prevent these variations, but I will argue that those rules often differ substantially from what real people will pay for a property.
Carl Pruitt
http://FHALoanAdvice.com
http://FHATrainingSource.com
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I agree with your post, as most lenders probably will. I actually had a deal last week where the HVCC appraisal came in low on a purchase loan. I called the AMC and they had the higher value within minutes. Apparently the appraiser made a "mistake". Before HVCC my clients got much better service from the appraisers we used, and the appraisers were specialists in the neighborhoods they were appraising. I never pressured an appraiser to come in with a value, but it did help to know if the value was realistic before my client spent $375.