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Huge FHA News!!! FHA IS ADOPTING HVCC AS OF JANUARY 1ST...GET READY FOR CHANGE!

Yes it is true, just yesterday, September 18th FHA sent out a Mortgagee Letter to all lenders that they are adopting HVCC in most of its current form.

By now most of you know about HVCC, if not please check my previous blogs on the subject. Fannie Mae adopted HVCC (Home Valuation Code of Conduct) on May 1st. as they wanted to insure appraiser independence. In short this means that mortgage brokers can no longer order appraisals from appraisers. It is now being handled by AMC's (Appraisal Management Companies) or the Banks directly. No production staff that is paid commission based upon a loan closing can order appraisals.

Due to this change, what was happening was FHA loans were on the rise BIG time as the brokers still had control over the appraisal process. That will end January 1st. FHA does not want to take on any more risk than they already have and FHA does not want and they are not asking the Federal Goverment to bail them out. They have enough in reserves to deal with any loses they have. So FHA must make sure that appraiser independence is guaranteed to minimize on this lending risk. I am not surprised at all, I really was expecting this from FHA.

What does this mean?

1. Good news for appraisers, the AMC's who normally pay CUT rate fees and who care less about quality appraisal reports and experienced appraisers and more about making money, must pay appraisers based upon normal market rates for completing FHA assignments. However the borrower will wind up paying more for FHA loans as the appraisal fees will be even higher....at least this is my take on the situation as the AMC's will jack up their prices to the banks to pay the appraisers what they should and to make profit for themselves as well.

2. Mortgage Brokers will no longer be ordering appraisal reports. So this repsonsibility will go to the Banks or the AMC's.

3. Appraisal reports will only be good for 4 months rather than 6 months.

4. Good NEWS: FHA will allow appraisal reports to be transferred to another lender rather than having another appraisal report completed.

5. The only way another appraisal report can be completed if someone does not agree with value is the report will have to be flawed in some way and it will have to be proved that flaws exist in the report

6. No one can talk to appraisers about value issues. REALTORS, you can still give Appraisers comparable sales data, that is NOT prohibited, you just cannot talk to them about value. The banks and AMC's can discuss particulars of the assignment, but no one can pressure an appraiser for value PERIOD!

7. As of October 1st only CERTIFIED Appraisers can complete FHA appraisal assignments.

8. FHA will require that the appraiser is knowledgeable in the area that they appraise. So if you find an appraiser coming from way out of the area to do an appraisal, this would be one reason to suspect the accuracy of the report. This has ALWAYS been required of appraisers as part of USPAP ( Competency RULE) but many appraisers would take the job no matter where it was and this is not good, if they have no clue about the area.

9. Banks will be liable for the loans they underwrite, not brokers, so there may be more FHA brokers coming from the picture.

To read more about it click here for the full story:

http://www.mortgagenewsdaily.com/09182009_drastic_fha_guideline_changes.asp

Pass this along, this WILL affect your business as of JANUARY 2010.

Mary Thompson

Your Active Rain Appraiser

www.marytappraisals.com

Posted by Mary Thompson Lake Lanier Appraiser in Georgia on 09/19/2009 01:07 PM

Comments (63)

FHA News, They Are Adopting HVCC as of January 1st in the ActiveRain Channel

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63 Comments on Huge FHA News!!! FHA IS ADOPTING HVCC AS OF JANUARY 1ST...GET READY FOR CHANGE!

SEP

Well, Mary, I'm glad you see some positives here! My experience has been this whole HVCC/AMC process is a nightmare to be avoided at all costs, and we're going to be seeing the legal systems clogged up with associated cases. This comes from being a banker AND a broker.

Great News I hope. With every new change comes unintended consequences. Time will only tell.

HVCC = Government Meddling = Increased Costs for borrowers.

Maybe we should let the DMV do the home loans..... Take a number.

I agree with most of what you are saying. It was only a matter of time before HVCC came to FHA, unless HR 3044 passes.

Great news for the appraisers, on the one hand, you will getting paid what your worth, on the other increased costs for the buyer.

Not sure what # 9 means?

Sounds like a better version of HVCC. Let's hope that Fannie mae will follow these guidelines.

Hi Mary,

Thanks for the heads up on this, it's the first I've heard about it. Not long ago a moratorium on HVCC was proposed, any news on that?

Mary...

Most of these changes seem reasonable and prudent! We shall have to wait and see!

There is nothing good about this... the bottom line is the banks are charging more to the consumers to get the appraisal..done the costs of appraisals will go up 100 to 200 dollars and that money will go to the third party company usually owned by the bank and maybe a title company... how does that help anyone... and there will be no input on what appraiser to hire.. it is just more BS created to hurt our industry... tell me what the good is..how did it help us on conventional loans??? oh yeah it didn't...

the banks are inching their way into real estate via the back door here... imagine if you got paid 200 bucks on every appraisal done in America whether it closed or not...

Interesting. I have a friend, a 30 year appraiser, who is so fed up with the cut rate places. What used to pay $500 they want him to drive to and do for less than half of that.

Banks will win. AMCs' will win. Gee most of the banks get a piece of the pie from the AMCs.

The customer loses.

The intention was good, but the consequences........far from Priceless.

Thanks for the heads up

Hmmm... depends on who you ask I suppose..

I think it would be wise for RE Agents to become more knowledgable in appraisals to avoid the issues that come / will be coming up...

The intentions are good, but it makes the process more time-consuming and brings in less qualified appraisers to do these important reports. Not all appraisals are ordered just by brokers, and I am sure many banks feel just fine how they order the appraisal. What is the harm of an appraiser saying that they do not agree with a Realtor if a Realtor asks them about value ? The whole process seems like a cluster fudge. Time will tell with what happens.

I have not seen anything good come from the HVCC...in fact it has been just the opposite. I have seen appraisers come from other areas and make horrible mistakes on appraisals, as well as additional time being added on because appraisals do not get done in a timely manner. Everyone loses here especially the buyers. I have seen buyers not get homes due to an incorrect conventional appraisal, while another buyer ends up rpurchasing the home for cash higher than the appraised value. None of this makes any rational sense to me. I can't believe FHA is going to join this mess!

I understand that they are trying to fix a broke system, and I hope that their efforts work, but I feel that this is going to place some undue contrastaints on deals that normaly go so smoothly. I guess we will just have to wait and see. Thanks for the update.

Mary,

FHA is in deep trouble as we know by now and if this change is supposed to help them stem losses, they are barking up the wrong tree. They should carefully look at their program guidelines first.

More drama! I so looked forward to my FHA files! Just another hurdle to get through!

Hi Mary -- I heard they were considering it but didn't know it was certain, so I guess that levels the playing field. NAR is trying to get the HVCC undone. So far, it has not caused me any grief.

CRAP - didn't anyone warn FHA of the debacle going on with conventional appraisals? Overall for me its been "ok" - but there are NO WAY that the consumer is benefitting from the higher costs I see across the board.

Hi Mary - I think most of us Realtors these days feel that when a potential sale goes to the appraiser, we are, for the most part, clueless as to what will happen to it. Since I am very familiar with the property and its comps, I always prepare a list of features and upgrades to the house I'm selling that differentiate it from the others like it in the area. Usually I have seen the interiors of the others and made comparisons, so I may be aware of things the appraiser may not realize.

After I give that information to the appraiser, I am available to answer questions, and then I feel that there is a better chance of getting an accurate appraisal. Those appraisers who are true professionals welcome the input, and I never try to influence them other than to provide information that they can double-check. Also, it means that a lazy or out-of-the-area appraiser will have some good data.

I like hearing from someone like you who can tell us what the business is like from the perspective of a professional papraiser.

This is one of thise only time will tell type situations.

Mary,

Thanks for bringig this to everyone's attention. I think there is significant opportunity for this to improve the quality of loans, but it will come at significant cost for borrowers and apprisers. I suspect this will cause transactiosn to fall through at a slightly lower rate than conventional transactions are seeing at this time due to HVCC. I'm not sure the variations between this and HVCC are large enough to avoid the problems HVCC has caused, but I hope that they will be sufficient.

Dan

This should be interesting. It seems that FHA really has become much more populat since HVCC went into effect a few months ago.

There is very little good about this. A possible time saver if switching lenders. Otherwise, by now I think we all know that HVCC is one of the worst concoctions ever conceived, and has done nothing but harm escrows and make borrowers pay higher fees. THOUSANDS of people have signed petitions against it. I figured it was coming to FHA but not this quickly, especially after the outpouring of discontent heard all over the nation.

Let's make it more expensive for the entry level borrowers... They are the ones that will bear the brunt of this.

The best part I can see about this is being able to transfer an appraisal when you need to change lenders. I have a contract right now (I have the sellers) where the buyers started with a mortgage person who simply didn't know what he/she was doing. They are now with a good reputable lender, but are having to pay for a new appraisal!

Mary -

The big lenders are already doing this.

Problem is, there is still considerable latitude in appraised value, or property rating. This year, I have done many FHA deals, many are distressed properties. All were rated "Average" or better, even if repairs were needed.

Within the past week, I have had a couple of appraisers rate the properties involved as "Fair," and, along with that, came a whole boatload of required FHA Compliance Items, including sanded floors, new carpet, and new sheet vinyl in the kitchen because the old vinyl was, "old and worn." Not a hazard, mind you, simply "old and worn," in the opinion of the appraiser.

Assuming individual appraisers will continue to have such latitude, and if appealing this judgment is not likely to be successful, many of these distressed properties, in less than perfect condition, but habitable, will be down rated, the sellers cannot or refuse to pay, and the deals die.

Not a good way out of the current market, I am sure you would agree.

Once an FHA Appraisal is done, it is done, and cannot be overturned if appeal not successful - even by switching lenders. If you happen, through roll of the dice, get an over-zealous appraiser from an AMC - you're stuck, the deal will likely die, the seller cannot sell, and the buyer has to start again finding another property.

And that is not right!

Unfortunately, you cannot standardize this "appraiser discretion," nor is it likely to be appealed - so, now, the FHA Appraisers will wield considerably more power, without oversight.

This greatly concerns me.

DEAN & DEAN'S TEAM CHICAGO

i heard that yesterday from a fha guy. Sad but true. The housing market is never going up in the future

SEP

Does this begin to solve the problem? No, it only increases costs and concentrates power. Want to make FHA loans more viable as an investment you raise the credit scores on the borrowers. Its just that simple. All this stuff is just stuff. Law Makers just do not want to do the correct thing to protect taxpayers, low credit scores do vote.

I love this post! It should have been implemented years ago. I do about 20 or so bpo orders a week and never fails that a listing agent or short sale company will say that they need a certain $ amount in order to get the deal done. I don't know about you, but I am working for the BANK at this point in the game. Bank is my client. The lower that comps get pushed, the more a borrower will get on their 1099 @ end of year.

Thanks for the udpate on this one. We will have to wait to see what happens to the pace of FHA loans. We will get through this together.

Thanks for the heads up on this. I don't if its good news or not. I guess we will have to wait to see what really happens.

Not that real estate has ever been "easy" as I think many agents learned as they rush out and "grab a license" since it looks so easy!

It gets more and more complicated everyday, and yet we are also under pressure by handling short sales and forecloures to take a pay cut as well. More work, less pay...the new American way?

I really have to question the people we send to Washington that come up with these rules? I think they have so lost touch with reality.....

Is it to early for a drink? Oh, yeah, it's only 10am!

Well I knew this would spark some heated commentary....and that is good.

Now as an appraiser, here is my true opinion of HVCC....yes some parts are flawed, no doubt, but overall I LIKE IT. Except for AMC's....I dislike them passionately......for obvious reasons. They care about profit and nothing else in my humble opinion and my direct dealings with them!

Susan N Bingo, you have the right idea!

I like it because it allows appraiser to do what they have trained hard for and went to school to learn and continue to learn every year....and that is to properly value property. We have always been under pressure to reach a number from Lenders, Realtors, Buyers and Sellers. They for the most part felt, we have the appraiser in our back pocket and if they DO NOT give us the number we want, no problem we will find one who will WORK with us! THIS is a big part of what got us into this whole mortgage mess to begin with!

It has put our profession to shame. Not too many people think highly of our profession for this very reason. Also there were many people who would call us and say "can you give us a ball park" number on this home and of course they wanted this FREE, so they would not have to pay for an appraisal if the deal would not work...

Well I say, we are professionals like any other profession and you would not expect a Doctor or Lawyer or Realtor to do something for free. I know Realtors do alot for FREE and it is not RIGHT, anyone who works as hard as well all do, needs to be paid for their time.

If you are dealing with a well trained appraiser and one who is familiar with the area, there is no reason at all that they cannot develop an accurate opinion of value BUT having said that, Realtors CAN play a role, by following the advise of SUSAN N above, provide data to appraisers who may not know about the interiors of the comparables or any special circumstances of the deal that would not show up in courthouse data, etc., etc. We have NO problem with that kind of data whatsoever.

In today's market it takes MUCH longer to prepare an appraisal report and in my 16 year career, I feel that I am better at my job than ever before because I am really analyzing the numbers closely in this declining market. I feel that I have a better understanding of this market on a month to month basis than I ever did before, because in the OLD days everything was going up in value, so there was less concern for RISK to an lender and less analyzing that had to be done.

Appraisers must advise the Banks/Clients what is going on including issues with the house, including need for renovations and upgrades. We report, the underwriter decides what to do with that information.

As I noted in a previous post....Appraisers DO NOT determine market value, the MARKET does.

I totally agree that the borrower gets hurt with HVCC with the higher fees involved and the delayed closing and more hurdles to jump, but that is the world we are in right now and we either learn to deal with it or we go do something else.

Also I know it HURTS when you have to pay for an appraisal on your home only to find out that the value is not there.....but that is the cost of doing business. At least they now know what the home is worth. They just have to know that appraisals cost money and they are an integral piece of the loan pie. They may "lose that appraisal money" but that is the wrong thing to tell someone. They did not LOSE that money, they found out what their home was worth and now they can either improve the home or wait until we start seeing increases in the homes.

You may say, hey they cannot afford to spend this money up front and not get that loan that they need to improve their home or to buy that first home, etc. Well my feeling on that is if they cannot afford the appraisal, they likely cannot afford the home or the new loan commitment.

It is kind of like going to the doctor, you have to pay money to find something out. You are not sure what is wrong with you, may be NOTHING at all, but you pay for the doctors time to find out or to Rule out anything that could be wrong.

I know getting a loan is NOT that serious, but to some people it is and they need to know that it will cost them in order to find out what they need to know. No longer should appraisers be expected to provide free services.

I am excited about the prospect that appraisers for once will be able to truly value property without outside influences or FEAR of losing their JOBS, as it should have been done from the very start.

Okay, now you can HANG me if you want for what I said, but I wanted to be honest about my feelings on the subject.

Thanks for all your commentary and I wish for all of you the ability and the good fortune to make it through all of this. Those here on Active Rain likely will do just that and my hat is off to you in a BIG way!

Interesting... I liked this statement "FHA will require that the appraiser is knowledgeable in the area that they appraise" ... I have heard from lenders I work with that they are looking at their list of appraisers and deleting those that they feel are not "professional" so there is a good likelhood that they will have a good appraiser. I guess I would want the buyer to know if the lender has its own list (which has been screened) or whether they simply use some appraising service that has not veted the appraisers.

Great post about the new rules. Lots of change is coming and buyers and sellers also need to know. Especially that appraisal reports are only good for 4 months

Sounds good (sort of) on paper but I am highly suspicious of the actual results being what is intended. As to appraiser fees: they are NOT going back to the "standard market rate" just because ths is written in to the mortgagee letters. Nor are appraisers working for AMCs going to be putting the amount of their actual fees anywhere in the report other than the invoice page (which is promptly removed by the AMC, never to be revelaed to the client). We all know how the AMCs work (which is the way they will continue to work): the pressure on appraisers will be subtle but effective: do the report for the amount WE are willing to pay, don't talk about it with anyone but us or find work elsewhere. End of story.

This is nothing other than more perfume on a pig. If they wanted real reform of the HVCC as it affects appraisers, they would have mandated that the FHA-rostered appraiser's fee appear separate from the AMC's fee on the HUD-1.

Sounds like at least some positives coming out of it. What I am wondering is if this will effect the time frame of getting things done for closing.

Joan:

You wrote:

I liked this statement "FHA will require that the appraiser is knowledgeable in the area that they appraise"...

I agree that this is what we all want, but that standard is called "geographic competency" and was referred to by Mary in her post. USPAP already requires this and it is a major tenet of adherence to the Uniform Standards. It does not appear to have been much of a hindrance to the geographically incompetent appraisers who all you agents have been running into since HVCC took affect. Why should we expect it's going to change now?

Appraisals are not an exact science as any two appraisers can come up with a different evaluation. The only thing I disagree with when it comes to appraisals is that many people say "this is now what your home is worth" when an appraisal comes in. If the market determines value, why do we rely so heavily on appraisers who only give an "opinion" of value? In my opinion, appraisals should be based on a range of value, not on a specific number, as the number given can change by one more comparable closing tomorrow, or a different appraiser with a different opinion.

Seems to me just one more problem trying to get to the closing table. HVCC seems to pick appraisers who will put more money in the pocket, not the appraiser who does the best job. Who will make the call as to the appraiser being knowledgeable of the area. Is it if they are a member of our MLS, they are knowledgeable, even if they are hundreds of miles away?

Mary Lou Cherry

Hi Mary,

Thanks for your post. It was enlightening to hear all of the sides to this debate, and it truelly is a heated topic. Seems like everyone has their own opinion.

I am one of those Realtors who believes that everyone needs to butt out and let the appraiser do their job. At least here in NC Appraisers go through good training and know what they are doing of they have a license. Too many opinions in the pot really does mess things up. I believe you are right when you say that the Appraisers don't make the values, the MARKET does. This is true and we need to remember this.

That being said, I am really missing my Appraiser, who was very professional and always did a bang up job. Did I always agree with him? Not always. But he was good and he always tried to be fair in the process and pricing. He was reliable and he was accurate whether I liked it or not. This was why I always called him. Now I am getting a different person every time, and yes, they are even from other states! I cannot believe that a SC Appraiser can know and understand NC markets. This really should not be allowed and has hurt one closing, but only slightly, I have to admit. I would really like to hear your opinion on working in another state. How do you feel about that? Maybe it is more fair than I think.But I don't think I could fairly market a home in another state.

My big concern is the added fees to closings as well, but I do agree with you that if someone will loose a home over $100 or $200 then they are in no position to buy a home. Still, it doesn't make it fair that we should be paying more for a service so that a bank can pocket money for, and that the Appraiser is working hard and fairly for.

Thanks for the post!

Finally some good news for appraisers! Unless the AMC's can somehow interpret the phrase "customary and reasonable rate" to mean what they've always paid, then we appraisers are in for a nice little raise. I do a lot of FHA appraisals for AMC's now, and to make full fee on them would be a godsend. I've sacrificed a lot to continue doing the job I love for half the pay, but even then I've been wondering how I can make it in the long term.

Alison, I am reading the statement as saying that the AMC's do have to bill their services separately and disclose that the fee is for management of the appraisal, not for the appraisal itself. I'm sure the AMC's are calling emergency meetings and strategizing on how they can continue to gouge us, but it gives me no small amount of pleasure to think that they've been shaken up. They can no longer be invisible, hiding their very existence under the heading of "appraisal" and then taking an undisclosed chunk of the fee. They'll finally have to step out into the light as a separate closing cost and be accountable for their fees. At this point AMC's are offering appraisers anywhere from $175 to $395 per appraisal, so presumably their fees run from about $100 to $300. One would hope that the ones charging $300 will no longer be able to operate as usual once they're forced to disclose their fees. Talk about airing dirty laundry! What's been quietly coming out of our unprotected hides will now be subject to scrutiny and competition. It's the closest thing to AMC fee regulation that we'll see, I'm sure.

Lastly, I am also in favor of the HVCC in principle. I am thrilled to no longer spend half my day doing free "comp searches" that result in no work, and fielding calls from loan officers who will reward or punish based on my willingness to commit fraud for them (and I never was into that, so my business has actually gone up considerably since the HVCC was enacted).

I will hope against hope that the HVCC will eventually adopt these requirements across the board.

Mary - great post! I see opportunity here! What will allow someone to determine if an appraisal value, which is lower than expected, is somehow flawed?

Appraisal Review !

I love doing reviews - determining if the best comps were used, was the appraiser geographically competent, was the report rife with errors (like ZONING!), did the appraiser measure the market properly (decline, etc)

Well Realtors - instead of ordering a new appraisal - a desk review would be a bettter option! The review can determine both USPAP adhearance, comps udes, analysis made, etc.

Before thinking about ordering that second appraisal then - perhaps lenders, Realtors, or homeowners will now be looking to see if the original appraisal (possible facilitated by an appraisal management company) - had serious flaws.

80% of the appraisals I review do not make an analysis of the contract, do not properly reports zoning, and are often noting more than canned comments for descriptive areas.

Zoning - why is that a big deal? Well, an appraiser who puts "001" as zoning when it is actually R-6 shows their lack of understanding of research and reporting. They have not considered the land "as vacant" for highest and best use. Sure, sure - it is likely single family use! But are the minimum lot requirements met, etc? And if they can't properly report zoning classifications (which in Central Florida are ALL ONLINE FOR FREE) - can I trust that they did the proper amount of research when collecting comparable sales data?

Well just when you thought the government might clean up the HVCC mess, they only make things worse. It does sound like there are some overlaying requirements that might be better. Who owns these HVCC's and makes all the money?

I am not sure this is a good thing its taking one thing from extreme of giving loans to everyone to jumping through hoops more and more sigh,,,, more recovery yet to be felt .. and more govt ideas

Excellent post Mary! Thank you for sharing and pointing out how Susan N's practices can be duplicated with other agents in the field. Excellent tips from Richard D. too! Folks, stay informed, but focus on what you can control. Seek the opportunities that come with change and avoid the doom & gloom pessimists like the plague. Remember, misery loves company!

This change does look like it will be a good thing for appraisers, who basically have been getting ripped off by the 3rd party companies. And I am glad they will have to disclose how much they are charging rather then being able to hide it like with the fAnnie Mai appraisals now. Everything sounds good, except that the client will have to pay more!

Joan: "Interesting... I liked this statement "FHA will require that the appraiser is knowledgeable in the area that they appraise" ... I have heard from lenders I work with that they are looking at their list of appraisers and deleting those that they feel are not "professional" so there is a good likelihood that they will have a good appraiser. I guess I would want the buyer to know if the lender has its own list (which has been screened) or whether they simply use some appraising service that has not veted the appraisers." According to HVCC the lenders cannot just remove an appraiser they do not like so to speak, they must advise them in writing why they are removing them and it has to be for a good reason, like violating USPAP, etc.

I agree AMC's just look for a license and that is about it.

Allison: "This is nothing other than more perfume on a pig. If they wanted real reform of the HVCC as it affects appraisers, they would have mandated that the FHA-rostered appraiser's fee appear separate from the AMC's fee on the HUD-1." Totally agree with this concept.

I agree that this is what we all want, but that standard is called "geographic competency" and was referred to by Mary in her post. USPAP already requires this and it is a major tenet of adherence to the Uniform Standards. It does not appear to have been much of a hindrance to the geographically incompetent appraisers who all you agents have been running into since HVCC took affect. Why should we expect it's going to change now?

Agree again, it is the AMC's that are not being reviewed more closely as to how they select appraisers. If they paid appraisers their normal fee then they would have to chose based upon competency and turn times rather than who has the lowest fee. You get what you pay for in this world!

Jennifer: "Appraisals are not an exact science as any two appraisers can come up with a different evaluation. The only thing I disagree with when it comes to appraisals is that many people say "this is now what your home is worth" when an appraisal comes in. If the market determines value, why do we rely so heavily on appraisers who only give an "opinion" of value? In my opinion, appraisals should be based on a range of value, not on a specific number, as the number given can change by one more comparable closing tomorrow, or a different appraiser with a different opinion."

Agree appraisals not an exact science. Range of values would be nice, but since loans are based on a specific number they need to know the exact dollar value of the home. Also when it comes to sales, they want to make sure the home is worth at least that exact number. AS for opinion, yes it is based upon their analysis an opinion, BUT that opinion is based upon the market data they are analyzing. As for another comp closing in the future, it can go either way, down or up. As part of the process if we feel the market is declining on a monthly basis by a certain percentage, then we make a time adjustment to the comparables from the date they closed to the date we perfomed the appraisal. The effective date of most appraisals is the date we "inspect" the home. The only time we forecast a value into the future is when the client asks us for this value, like a Relocation Appraisal for example. But banks want CURRENT value for most transactions.

Jerri: "Now I am getting a different person every time, and yes, they are even from other states! I cannot believe that a SC Appraiser can know and understand NC markets. This really should not be allowed and has hurt one closing, but only slightly, I have to admit. I would really like to hear your opinion on working in another state. How do you feel about that? Maybe it is more fair than I think.But I don't think I could fairly market a home in another state." I like how you think!! Unless an appraiser actively appraises in another state, maybe they are close to the border of each state for example, then I do not see a problem, but they must have good knowledge and good data of the properties in each state/county, etc.

Elizabeth:"Finally some good news for appraisers! Unless the AMC's can somehow interpret the phrase "customary and reasonable rate" to mean what they've always paid, then we appraisers are in for a nice little raise. I do a lot of FHA appraisals for AMC's now, and to make full fee on them would be a godsend. I've sacrificed a lot to continue doing the job I love for half the pay, but even then I've been wondering how I can make it in the long term." Time will tell how this is interpreted but if I was an appraiser working for the AMC's I would be on the horn to them Monday and saying okay I want to see your revised contract with FEES for FHA....watch them squirm. Then I would contact HUD if they balk at your normal fees and see who can put pressure on them to do as HUD intended!! I hope they are shaken up, they need a reality check and they need to stop screwing appraisers!

RICHARD "Mary - great post! I see opportunity here! What will allow someone to determine if an appraisal value, which is lower than expected, is somehow flawed? " Appraisal Review !"

BINGO! COULD NOT AGREE MORE! I have been offering review services ever since HVCC took effect. I have helped a few borrowers who had really poor appraisals. One person even got our local news channel involved and because of the review letter I wrote for her to rebut the appraisal, they got another appraisal done and they got their loan! Here was the deal, the other appraiser "cloned" another report of a property in the same general area and much of what was on that report was not changed and was used for the person's property that I was revewiing...SAD but TRUE. They even had wrong addresses for the comps. I counted 24 errors in that report and outlined them all for the homeowner. There was NO WAY the bank was not going to get another appraisal done on her home!

JEFF "Excellent post Mary! Thank you for sharing and pointing out how Susan N's practices can be duplicated with other agents in the field. Excellent tips from Richard D. too! Folks, stay informed, but focus on what you can control. Seek the opportunities that come with change and avoid the doom & gloom pessimists like the plague. Remember, misery loves company!"

A BIG AMEN TO THIS COMMENT...THANKS JEFF

JIRIUS: "This change does look like it will be a good thing for appraisers, who basically have been getting ripped off by the 3rd party companies. And I am glad they will have to disclose how much they are charging rather then being able to hide it like with the fAnnie Mai appraisals now" Totally Agree

Thanks again everyone......Take care!

I'm not sure what to think about this change with FHA. We shall soon see what happens.

Hi Mary, Well it just sounds like more complications with all the new rules. I just hope the consumer does not have to pay more, when it trickles down; but I just have a feeling the consumer will have to pay and endure more.

1 more thing: I do think it is good that they are going to get appraiser who is "knowledgable in the area", because I beleive before, it was not like this. They would just send any appraiser , anywhere, and he may not be "knowledgable in the area"

thanks for sharing!

Thank youso much for this info, I am re-blogging your post, it would be nice if they would address the issues HVCC creates before adopting it and all of it's problems!!!

It does help to have contact with the appraiser if you know the condition is rough and you want to check what needs repairs...but otherwise hopefully things go smooth.

There goes the appraisal business. Looks like it's time for me to get a 9 to 5. Thanks for the post.

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Wow Mary. Does this also mean that they will take much longer to get them done as well?

Everyone of these new rules made to help the public; always end up harming the people they are trying to help. Delays and paying more--that is just what this market needed.

Love reading a well rounded discussion that happens here every day, and no many others places on the web.

Just another hurdle we have to overcome. Appraisals are killing deals not only conventional but FHA also. Its hard to determine value in this market and if values are still declining or stabalizing. Market value to me is what someone is willing to pay for the property. Banks own the AMC's which makes no sense since the appraisal is suppose to be completly independent of any influences. But the owner of the AMC is the lender go figure. Appraisals are not what got the housing market in trouble it was lenders who created crazy loan programs with no qualifications. They were just giving loans away to anyone with a credit score regardless of anything else. I beleive the HVCC has good intentions but its results are obvious and it is not helping the industry it is only hurting it. The market is already correcting itself not because of the HVCC but because of responsible lending practices. Banks are actually qualifying people and this will result in a stable housing market and people buying and staying in their homes.

I too don't feel there's much good news here. I do have a better suggestion to your point, "So if you find an appraiser coming from way out of the area to do an appraisal, this would be one reason to suspect the accuracy of the report." My suggestion would be if the appraiser needs the Realtor to access the home for them and you discover that the appraiser is unqualified, DON'T LET THEM IN THE HOME! SEND THEM AWAY!

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I didn't like the news when it came out last Friday at all. I have always liked being an independent appraiser and receiving my work from Realtors, lenders or brokers whom I have built a relationship and trust with and FHA was the last one standing. Now it will go into some mystery rotation handled by a computer instead of a person and if a lender's approved appraiser list is closed than so is your work. Since AMC's are not regulated anyone thinking they are going to get a fee increase is kidding themselves as appraisal fees are under constant pressure to go down and will do so. There is no enforcement of the exsiting rules and regs anymore than there was before HVCC. And now with Fannie & Freddie requiring MISMO XML as of March 1, 2010 the handwriting is on the wall for AMC's to utilize AVM's instead of appraisers for 90% of the loans within 2 years, especailly with most states medium price range now under the $250,000 diminimus threshold. Doing appraisals for lending purposes is a dying industry that will soon consist of staff evaluators on an hourly wage and computers. And based on the current bills being considered by the treasury dept and congress mortgage brokers are right behind us.

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Nice post. A glimmer of hope about the fees. We will have to wait & see what the AMCs interpretation is of a std fee in the area. It seems like its worded a bit vague.

I see some AMCs only wanting county names for areas that an appraiser covers. In my area in AZ some counties are nearly as large as some states back east & it may not be typical to be competent in a whole county. I find some AMCs wanting an appraiser to cover a whole county, even though they may only have good experience in 2 or 3 cities in that county. The work will go to the appraiser who says yes I can do the whole county, even though some locations in the county are an hour or more drive away & they may not be familiar with parts of the county.

I also see some AMCs going to the use of one particular Software. So if you are trying to get enough work by working for several AMCs, you may have to have several different software packages. All at around $500 ea. Fun.

Wells Fargo and Bank of America have bought the servicing on 46% of the loans in the last few months. The rules are changing in favor of the Big Banks...you know the ones that are too big to fail. It is not good to have oligopolies or monopoloies. These new laws are only strenghtening the big banks.

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You make it seem like this is something to smile about? Appraisals costing twice as much, lousy processing time, lousy turn around time. I wish it would all just go away, it's not best for the consumer that's for sure.

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So let me see if I understand this. HVCC was created by Barney Frank who is/was dating an exec at FNMA. Sen. Frank wanted the to use appraisal management companies (AMCs) because WAMU got caught infleuncing (AMCs) so we now all have to use AMCs. Isn't there enough rules/laws already? We just need to enforce the rules that we have already had. If an appraiser is infleunced, take away the license. If a lender tries to infleunce, fine them and take away their license. If it is fraud, go after them. All these new laws are costing the consumer and hurting the housing market.

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