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Could New Home Appraisal Rules Get Scrapped?

There is an increasing amount of opposition to the new home appraisal rules as many mortgage brokers and real estate agents are serving up criticism that the Home Valuation Code of Conduct (HVCC) guidelines adopted in 2009 are resulting in inaccurate and low-ball appraisals.

The main argument amongst critics is that the new rules have undesirable affects where appraisers are now being overextended, underpaid and forced to churn out appraisals in a hurried fashion. Conversely, many mortgage lenders, including J.P. Morgan and CitiGroup, have vested interests in the appraisal management companies that now play the role of divvying up appraisal assignments, so they naturally are against revamping the current appraisal guidelines.

Implemented last spring by Fannie Mae and Freddie Mac, the Code of Conduct bans mortgage brokers and loan officers from selecting appraisers to valuate homes in the deals which they are brokering. The purpose is to prevent the inflated and sometimes fraudulent appraisals which were partly responsible for an artificial surge in home prices during the past decade.

According to a recent article by Jessica Holzer in the Wall Street Journal , realtors and mortgage brokers have succeeded in inserting language into a House-passed financial-regulation bill that would end the new protocols. The measure would direct federal regulators to come up with an improved set of rules.

Under the new system, appraisal management companies now solicit out appraisal assignments for a fraction of the cost of what the work used to pay - in some cases less than half of the industry’s former compensation rate. As a result, many appraisals end up in the hands of the lowest bidder, and the work is being done by appraisers who have limited industry experience or are lacking of knowledge as it pertains to a specific real estate market and neighborhoods.

“More and more people are leaving the appraisal business than ever before because appraisals are now going out to the lowest bidders, commanding lower pay and fees,” says Bill Schettler, Vice President of Sales at Total Mortage Services, LLC.

Mr. Schettler, who worked six years as an appraiser himself, added, “Unfortunately, because of what the appraisal management companies are paying, many people are no longer able to make a living in the industry and there are more inexperienced people now doing the job. What is happening now is that appraisers have to travel further and further to cover more territory, so they can’t be as familiar with the homes as they were before”

National Association of Mortgage Brokers CEO Roy DeLoach told the Journal that out-of-town appraisers hired by vendors are diminishing homeowner equity through home valuations that aren’t credible: “It’s basically hollowing out the equity in communities whether you intend to sell or not.”

Do you think the current appraisal process should be changed? Have the new HVCC guidelines hurt the industry?

Posted by Total Mortgage Services on 06/18/2010 01:17 PM

Comments (125)

appraisal, appraisal management companies, home appraisal, hvcc, mortgage brokers, mortgage lender, 30year fixed mortgage, fha mortgage, mortgage rates

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125 Comments on Could New Home Appraisal Rules Get Scrapped?

JUN

2010

I'll be interested to read the comments to this post. Very good analysis and YES, the HVCC have hurt the industry.

IMO, creating HVCC was like using a bunker buster bomb to kill a flea.

I don't believe even good intentions went into HVCC. I believe it was created by people who own or have vested interest in the AMCs to better line their pocketbooks under the guise of "it will prevent fraudulent appraisals". Investigate the people who proposed this!

In the meantime appraisers work harder, make less and it is unfortunate to see some of the best have to change their business plans (probably for the better) because they are refusing to work for AMCs.

I understand that rules had to be put in place when no rules seemed to exist and appraisers were like enablers to housing alcoholics. I also think that Lenn's analogy is true but I think the problem was much bigger than a flea and a bunker buster was needed. However, as George Harrison sang, All things must pass. The law of unintended consequences has reared its ugly head on HVCC in too many ways for me to comment about. We have field tested HVCC and it has been found wanting. I have no doubt it will be changed, and some sense of normalcy will be hopefully restored.

Very interesting topic, I would like to see the outcome.

Hear! Hear! to Lenn, Renee, and Joe! Maybe .. maybe .. good intentions were the catalyst behind this attempt to disarm overpriced homes/appraisals, but more bad has come of it then good. Your statement about experienced appraisers now being unable to make a living is right on spot ... and we are now left too many times with inexperienced appraisers with little knowledge for the areas they are asked to appraise ... and little concern or interest in listening to any feedback or info supplied them. It's created havoc in too many cases. It is definitely right that a new look is taken at this issue and .. corrections made.

Gene

The appraisal profession has been hurt. In my market we have seen appraisals go to the lowest bidders who want the job for a free trip to the beach. While I certainly applaud that idea, many out of area appraisers haven't a clue about resort/vacation values.

I believe buyers and sellers alike have been hurt by this new ruling ... aside from the appraisers. Sellers have lost value = money. Buyers are then buying into a market that has been given less value. While that is good for a buyer in the "now", I have seen a "declining market" stigma remain where it should not.

But ... have you noticed? Every time one problem is fixed we seem to end up with 2 or 3 more.

The HVCC was a bad idea to begin with and my cynicism leads me to believe it was more a product of the relationship between legislators and big business than a carefully considered tool to prevent fraud. The unfortunate aspect of our government is that it seldom cuts a program once created.

HVCC is a disaster!! May it be gone quickly, and nothing worse put in its place.

Linda has a point . . . we try to fix one thing, then more pop up (the unintended consequences). These 'quick fixes' are like the story of the little Dutch boy putting his finger in the dyke to try to steam the leak. Unfortunately, too makes leaks ocurred at the same time and the ENTIRE industry broke through.

I would like to see these changed as I see this being challenge as I continue to sell a good bit of new homes.

I am just tired of the errors on the reports from the AMC's. Adding beaurocracy seldom improves things. Appraiser independence is a buzz word, like skin in the game. The implemented solution is worse than the problem it was designed to fix.

Increased cost. Reduced quality.

Sweet set up for the management companies.

I'm going to go out on limb here and actually claim something a wee bit different. I think that the HVCC is a good idea. Yet, I think its regulations and subsequent implementation are a joke--much like all guidelines passed by individuals that have no idea about what they are speaking (see the new GFE). However, the concept is genuine.

Also, I can't believe that special interests would have been able to spin this issue to be more pressing than it already was--and, in all honesty, remains to be. Although, Jamie Diamond (CEO of JP Morgan) is oft called to the White House to whisper into ears. But really? Can that be? I hope not.

Don't get me wrong though, I completely agree with you all that HVCC is a pain in the appraisal. But my company has a solution. We don't have affiliated business agreements (subsidiaries) with AMC's, we use our own pool. We put together a list of appraisers in each market, who over a 10 year time frame had proven, that they were reliable and knowledgeable. Our third party only orders appraisals from that group. This is done in much the same fashion that a major player like Chase, Wells, BoA, and Citi would order their appraisals through an AMC with a pre-determined list of appraisers, we just don't low ball our people and instead...GASP...pay them what they deserve to be paid for their work.

Although I am totally against HVCC and believe it is a disaster, unfortunately, it is here to stay. The toothpaste is already out of the tube. Even if we get legislation voiding HVCC, there is nothing to prevent lenders from requiring that all appraisals be ordered through an AMC in order for a loan to be approved. Instead of appraisals being ordered through an AMC as a Fannie Mae requirement, as it is now, it will become an individual lender requirement. Nothing will change.

I completely agree with Gene & Linda. This is also very true; "...and the work is being done by appraisers who have limited industry experience or are lacking of knowledge as it pertains to a specific real estate market and neighborhoods."

I have had appraisers come from other towns that are one hour or more away who know nothing about this area's market, do a terrible job on the appraisals, and there are no consiquences because they are "in the pool of appraisers". I have seen the most pathetic appraisals done lately that I have ever seen.

Another question I have is this; how in the world can 4 appraisals in a row come in at exaactly $3k below under-contract price? I just had that happen at my office. Strange...

Anyway, something needs to be done to change the current system.

Great Topic! Small business appraisal companies have been hurt by the new process, I don't know about scraping the process, but they certainly need an overhaul on who can get involved in the appraisers paycheck...

comments posted do not necessarily reflect those of WR Starkey.

I am dismayed that even the appraisal fees before the hvcc were low enough at that time. Think about it: one of the biggest risks in a transaction is the appraisal, and everything hinges on a few hundred dollar appraisal? The risk that this cookie-cutter, low-cost approach to crank out appraisals needs to be improved and more resources for the better. I am sad to hear experienced appraisers are leaving. That is the last thing this field needs.

The only thing the new regulations have done is to lengthen the process and make it more difficult to get an accurate appraisal. The intentions were good but the execution leaves something to be desired. What the law should read is that an appraiser must be within a certain radius of the home to be appraised, based on population density. So, in large metro areas where a few miles makes a big difference, an appraiser should be within 10 miles or so. In rural areas, perhaps 30 miles would work.

In addition, appraisals should be portable. I know they're working on fixing that but it's critical.

Yes . HVCC has tremendously hurt the appraisal industry. However, I am one that always likes to remain optimistic in spite of all the negativity surrounding this fiasco! I will just keep myself and others informed, especially those involved in the law making aspect.

JUN

2010

Appraisal rules definitely need some work.

Important topic - thank you! Just got word that an excellent appraiser in my area with many years in the business just shut down. His income dropped drastically since the change in appraisal rules and he can't survive with the fees the appraisal management companies are paying.

As an exclusive buyer brokerage, we always do a thorough written CMA prior to submitting an offer for our clients. We search the MLS and the county property appraiser's website. In the event our client is getting a mortgage, we are frustrated just as the seller is when the appraisal comes back way below the agreed contract price. The recent comparable sales on the CMA don't even appear on some appraisals. And we understand that the appraisers use short sales and bank owned properties. We use them too on our CMAs.

Sure we want our buyers to get the best price possible on their purchase, but low appraisals bring the value in the community down further which isn't good for anyone. When we submit info that easily supports the contract price, the lender tells us there is nothing that can be done. The appraisal is the appraisal!

It's my understanding that the appraisal management companies invoice the lender at one price and pay the appraiser a lower fee. So finding the "cheapest" appraiser is important to the profit line. Is this true?

Paula Howard - Your Special Agent, LLC

Wow, I knew these rules had inexperienced & seldom familiar with the area appraisers because "they were approved" I never knew they were getting paid less, as I think appraisers already weren't getting paid enough for the amount of work required.

AMCs are the HMOs of the appraisal industry. They will destroy the industry.

Devastating.

The current system is seriously flawed. The same people that were over-appraissing properties are now under appraissing and running scared. It is damaging to the industry, the buyer and the seller. If you are using FHA, there is no appeal process, buyer's and seller's are often stuck with shoddy work.

Not an attack on all appraissers, most are terrific and work hard. It's those few that make you feel so helpless a sthey destroy what everyone has worked so hard for.

moo

This implemented revised version of HVCC was not designed to fix anything, but was permitted because it put oney in the pockets of the largest lenders, who by the way, own AMCs, and can now skim off the top and middle of the valuation fees.

AMCs and the big lenders were found guilty of appraiser pressure and mortgage fraud. They pay their fines and keep going.

Part of the problem with "low ball" appraisals is the strictly enforced concept of bracketing. The final opinion of value needs to bracketed by both the raw sales prices and the adjusted sales prices. This is a concept pushed on appraisers by AMCs. Apparently there are many appraisers that cannot resist the pressure to value a property below the highest comp and above the lowest comp. When you understand this is where AMCs what value placed, there is no opportunity for the appraised value to be higher than the comparables.

As some of you noted, those appraisers that have the gumption to say no, are leaving the business. It does not take 10 years in the business to say no, it takes ethics and morals and the ability to withstand economic distress when the work stop flowing. Believe, the work stops flowing very quickly and then there is almost no opportunity to find new clients and new work, so goodbye to appraising for many people.

The appraisal Industry has been suffering for years, is divided by lenders who do not want this to form a union or control ,REO asset managers now sells this service like they sell BPO's to the highest bidder who spent the most amount of money on there bullshit programs.. We do more work, take more risk and falc for 200 bucks. asset mangers steals 250 for 0 efforts

Mean while the Realtors gets 3000 to 15,000 at close

the originator 2000 to 15,000 st close

Asset Mamager 250 plus a ponit for realtor and lender plus the crap fees

appraiser 200

3000 hrs training, Plus we take on 30 hours every 2 years plus new mandated USPAP and other crap the institute wants for another 20 hr per year.

and crap from home owners and Realtors who only want to close the deal. and are not objectionable nor do they have the knowledge in valuation practice

and the real estate industry expect's this too work.I quit!

Let me tell you how I really feel, LOL

The other thing that seems to be happening since these changes have taken place is that appraisers have now become home inspectors and are making more comments on "defects". As a home inspector, I am not allowed to comment on value. How is an appraiser allowed, or qualified to comment on defects of a property? I know that it has always been a part of the appraiser's job to make some comments on obvious defects and sometimes recommend an inspection, but many now seem to be going further than they should, or are qualified for. In several cases I have seen these appraiser's comments come back to cause second guessing after a home inspection has already been done and in some cases have held up the sales process. Usually, this second guessing is done by the lender's employee, who knows even less about property defects than the appraiser. Sometimes the items sited in the appraisal are relatively minor, but with the limited (or no) understanding of the bank employee they are blown way out of proportion.

Why can't we just leave the determination of value to the experts: the appraiser and the broker; and determination of property conditions to the inspector?

The appraisal Industry has been suffering for years, is divided by lenders who do not want this to form a union or its own control,REO asset managers now sells this service like they sell BPO's to the highest bidder who spent the most amount of money on there bull@&it useless programs.. We do more work, take more risk and falc for 200 bucks. asset managers steals 250 for 0 efforts

Mean while the Realtors gets 3,000 to 15,000 at close

the originator 2,000 to 15,000 st close

Asset Manager 250 plus a point for Realtor and lender plus the crap fees

appraiser 200

3000 hrs training, Plus we take on 30 hours every 2 years plus new mandated USPAP QAB rules/updates which change with the wind or news story's and other crap the institute wants for another 20 hr per year.

Lest not forget the crap from home owners and Realtors and MTG Brokers who only want to close the deal. and are not objectionable nor interested in our job in risk management of investors assets which fuel the housing industry such as CMO's RMBS and CMBS securities nor do they have the knowledge in economics, trending, quantitative and qualitative valuation practice.

and the real estate industry expects this too work.??

I quit in 2002. to broker I love dong appraisal, it can be fun , lots to learn but why would you do anything with a low ROI and high maintenance's

Let me tell you how I really feel, LOL

Mike Rivera,CIB Naples FL

The worst fallout of the new appraisal practices has been that of using the values of distressed properties to appraise sharp, well-maintained properties. As an inspector I see it all the time, as clients often have the appraisal of nice properties before the inspection because the appraisal's more likely to tank the sale! Precisely the reverse of the fraudulent appraisals that inflated the values of trashy properties, but this time preventing nice homes for being sold for what they're worth (i.s., what people will gladly pay for them).

It goes back to the old principle of physics: each action produces an equal an opposite reaction. People tend to over-corrrect, and that's what happened to appraisls, lending, and as a result, property values. Practices that were too loose swung straight over to being equally way too tight.

Also, this and the pre-bubble tendency to over-appraise junk exemplify the unintended consequences of "objective" standards. Like cutting the baby in half to settle the dispute as to whose child in the pre-DNA days. Quality is NEVER 100% objective! There is simply no avoiding subjectivity in order to get an accurate appraisal of a property, like it or not. Appraisals somehow have to allow for this.

Linda has a point..Every time one problem is fixed we seem to end up with 2 or 3 more

"appraisal management companies now solicit out appraisal assignments for a fraction of the cost of what the work used to pay - in some cases less than half of the industry’s former compensation rate. As a result, many appraisals end up in the hands of the lowest bidder, and the work is being done by appraisers who have limited industry experience or are lacking of knowledge as it pertains to a specific real estate market and neighborhoods"

ABSOLUTELY!!! I had this happen on a transaction and the appraiser came in $20,000 below contract. There were 9 mistakes on the appraisal, and the appraiser has only been licensed for one year! We appealed to Wells Fargo (on behalf of the buyer), for dismismal of the appraisal due to the deficiencies and lack of market knowledge of our area (appraiser was from 1 1/2 hours away from subject property), and they refused. This was an FHA appraisal, and therefore is attached to the property for 6 months.

It's things like this that have severely crippled our market.

All I know is that we have had several deals this past year that went south because the appraiser was NOT familiar with the market and the appraisal came out rediculously low. One appraiser even refused to use a property that had sold within the last few days in the very same complex as a comp for our property. His excuse was that it was Too new a sale...What?

Another was flown in from another state to do an appraisal. Give me a break, how does That give us an accurate value when they have no clue what the market is like in our state.

I understand the perhaps good intentions behind HVCC...but it was a knee jerk reaction and it should never have been implemented.

And as Edith Ann would say....That's the truth...phhhhhhhrg

Add another 20 year plus appraiser looking to leave the field of appraising. This is another government program with good intentions by some and bad intentions by others. The low pay is a two fold problem. 1) appraisers with many years invested in the industry are leaving every day due to the low pay, the push for 24-48 hour turnaround which no matter how you look at it reduces quality. 2) New appraisers are blocked from entering the business for many reasons including lower pay 30-50% of what a certified appraiser makes, trainee appraisers are not allowed to do appraisals for many lenders. There will be a shortage of appraisers in the future. This is another big mistake by the people with power and not many have common sense. Follow the money and you will find the big supporters have a financial interest. One other point there are a number of appraisers that lost their license due to poor quality, but they are allowed to own an Appraisal Management Company, ya I would say this plan was well thought out. I will find another profession and watch from the sidelines.....

My husband was a broker then appraiser for many years and he is oh-so happy that he retired before the market collapsed and before HVCC. His territory presented many challenges in finding comps and anyone from out of this area will have no clue as to home values. Something definitely needs to change.

The appraisal system is terrible. I still think they are "fixed". The appraisers can get a copy of the contract. Why? They should go to the property with a blank slate. As far as the measuring of the home all appraisers should measure the same way. As a Realtor when I measure a home it is a little difficult with out a second person. We cannot go off the tax records however I have been told by an appraiser that "his square footage was correct according to the tax records".

What's up with that?

HVCC is a complete disaster! And, having in mind that the BANKS are the OWNERS of the AMC's guess whose interests are protected?

Here are 2 points to ponder: since it is clear that the banks that have vested interests are they skillfully guiding the appraised value down? Less and less buyers are actually able to buy (I have 3 buyers, that are on their second and third property for appraisal issue). Those poor souls missed the government tax credit because of these reasons...which leads me to:

Second, is it in the banks best interest to lend money NOW while the interest rates are low, or is it in their best interests to "make believe" that they are complying with the government's "call for action- we bailed you so that you can lend money", and do whatever possible do lend as little as possible?

Kate Smith, Realtor®, ABR, CRS, E-Pro, TRC, LHM, SFR
ZipRealty, Inc. Licensed in FL

what people will gladly pay for them is obvious by what moves in your market, Real simple when distressed properties and shorts make up 70% + of your markets activity that is the demand drivers of that market.

I've read the comments and appreciate the frustration everyone is feeling...Realtors, buyers, sellers, good appraisers, lenders. I've had 2 deals recently that almost fell apart, but thankfully the buyers (I had the listings) and buyer's agents wanted to pay what they offered b/c they thought it was worth it and they saw the comps supported it. How cool is that?! On one of them, the buyer paid for another appraisal and it came in at the offered price. The appraiser was one with a good reputation and was familiar with the area. He said it was a "no brainer". The other appraiser was actually an appraiser familiar with the area, but he seems bent on single handedly decreasing property values. He has a bad reputation but lenders keep using him. He comes in way short (like $20-25,000) and won't listen to you when you call and tell him the comps in the area that support the offer. I would love to see the rules change and have some way to help the good appraisers persevere through this crazy storm of HVCC rules.

Report to CAR Public Policy Committee from Mr. Robert Clark Director of the OREA California Office of Real Estate Appraisal recent changes and modifications of the USPAP Rules and Guidelines .

A small move in the right direction

The USPAP COMPETENCY RULE has been significantly rewritten and expanded. The changes did not expand the obligations of the RULE, but were intended to enhance "clarity and enforceability." The rule clearly sets forth the requirements for an appraiser to "exercise proper judgment in assessing his or her competency" when considering and completing an assignment

Follow up report from the CAR Legislative Day 2010 Conference in Sacramento Ca re Report to CAR Public Policy Committee from Mr. Robert Clark Director of the OREA California Office of Real Estate Appraisal regarding recent changes and modifications of the UAPAP Rules and guidelines and California B&P Code Section 11319 regarding appraisers required competency to do appraisals in the State of California.

B&P Code Section 11319 Notwithstanding any other provision of this code, the
Uniform Standards of Professional Appraisal Practice constitute the
minimum standard of conduct and performance for a licensee in any
work or service performed that is addressed by those standards. If a
licensee also is certified by the Board of Equalization, he or she
shall follow the standards established by the Board of Equalization
when fulfilling his or her responsibilities for assessment purposes....

4/22/2010 - OREA is hereby providing notice of changes to proposed regulations that are the subject of a rulemaking action, published on April 23, 2010 in the California Regulatory Notice Register. Changes to the proposed regulations are identified by strikeout and underline notation in the text of the proposed regulations. Comments on the changes to proposed regulations are due to OREA by 5:00 p.m. on June 7, 2010.

The USPAP Competency Rule requires that, prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must determine that he or she can perform the assignment competently. To be competent, the appraiser must be able to properly identify the problem to be addressed, posses the knowledge and experience to complete the assignment competently, and be able to recognize laws and regulations that apply to the assignment. Competency can apply to geographic area, market area, property type, or appraisal methodology.

Mr Clark pointed out to the members of the committee that there had been numerous complaints filed in his office against pooled appraisers for accepting and attempting to complete appraisals in areas out of their areas of geographic competency. In many cases this practice was resulting in inaccurate appraisals of value based on the pooled appraisers lack of complete knowledge of the properties in a geographic area out side of their areas of expertise. He pointed out to the committee that under the current and modified USPAP rules a appraiser had a legal obligation under the law to make every effort to educate them selves as to the property values in a area prior to rendering a opinion of value if they accept a assignment. He went on to say that that effort should include communicating with local Real Estate agents in the Area including the listing agent to be sure that they had the benefit of that knowledge and expertise as incorporated into their research. He went on to say that if members of the committee or other Realtors found in their practice that California appraisers were not complying with the new USPAP COMPETENCY RULE that they should be reported to his office for investigation, education and possible fines if appropriate. Complaint forms can be dow loaded if needed at http://www.orea.ca.gov/html/enforcement.shtml

Other possible reportable violations

Violations of USPAP and/or OREA regulations

Technical errors

Inaccurate value conclusion

Fraud

Failure to provide services as contracted

Inappropriate conduct related to an appraisal assignment

As Realtors we should also make every effort to assist out of town appraisers when needed in helping them become educated and informed as to the needed information and details concerning a subject property associated comps and neighborhood data when necessary. Fred Martin -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

That's good there are going to be less appraisers. Maybe the quality will improve. Also, I agree that they should not have the sales contract beforehand. It's a mess. And hurting real estate. Pray for a change and a better solution!

It is unbelievable what the appraisers are doing now!!!

It is almost like they are out to destroy our transactions!!

Between the appraisers and the home inspectors I have had to revive about

a dozen sales!! That is half of the closings that I have had so far this year.

I have been in Real Estate for 32 years and this is the tuffest market so far,

but I am up for the challenge.

The road to hell was paved with good intentions is the saying right.

The idea of HVCC is good. The execution is where it has failed. A new unregulated entity controls the process. How is such a pivotal part of the transaction trusted to a group that is unregulated, unlicensed, unsupurvised? Every other person invovled is licensed or registered.

HVCC Has Hurt the consumer on many levels.

Appraisers, are leaving in Droves and Who is going to train the new ones. Plus why would you want to become one?

Has anyone noticed that the Gov't has Regulated Appraisal Companies out of business? There are NO More Appraisal Companies any more. Just appraisers.

The appraisers that do work for the HVCC are Pissed! Their pay has been cut in half!!! "You want a $200 appraisal- here it is- this is what they look like"!

If your pay was cut in half- how hard would you work???

Lenders are next. You mentioned, "Mortgage Brokers" in your first sentence.

They are gone now, and the few that are left are so regulated, I don't know how they can get a loan done.

With the changes in the Financial reform and the Federal Reserve wanting to change REG Z. This same post- might be about your favorite Lender after the first of the year!

Umm, I wonder who they will go after Lenders are gone?

Thank goodness the Gov't is protecting the consumer from us!

Our market has been decimated by fraudulent appraisals both before and after the new rules . Before , we had the "house owned " appraisers whose appraisals "came in " where expected for the "house". Now we have the totally uneducated bozos from who knows where that are paid a portion of the inflated appraisal price to come in under market and receive kudos for " leveling " the market . I was told this proudly by a young inexperienced appraiser from another state as we discussed an older historic home that he had gotten lost finding and had mistakenly situated on his appraisal in another neighborhood entirely . When I complained to the "e" lender , I was told that there should not be different values for different neighborhoods ! Now we routinely need 2 to 3 appraisals to close a sale . When will it end ?

So it's fun to jump on appraiser's. There are good appraisers and bad appraisers. I have geo specific knowledge of my market area for 4 years and underappraised a sale in my direct neighborhood that I could walk to. Does that make me a "bad" appraiser?

For those that think less appraisers means better quality, smarter qualified appraisers can succeed in other higher paying fields, what your left with is appraisers willing to work for $175 appraisal. They will have to complete many appraisal in a short period of time or make a very low income. I spend five to eight hours sometimes less (not often) and sometimes more to complete an appraisal. My guess is it won't be quality professionals which stay in this profession. Good Luck

Obviously ... nearly everyone here is against the HVCC.

Mike #28 above did exagerrate a bit on how much everyone else makes versus the appraiser. Appraisers in my area are still get paid the same as before. And lenders don't make what you think if they want to be competitive. Realtors many times have their commissions cut. Not to mention how much time the lender and realtor spend on the transaction in comparison to appraiser.

That said, nearly all banks have their own review process for every appraisal anyway. And if they don't like the value at review, it gets rejected or chopped. That alone takes care of the problem.

Let us order the appraisals with who we believe is the most competent for the job, and let the review confirm their work. Problem solved.

I have had so many bad appraisals lately it is not even funny. The houses were not sold too high, the comps and neighborhood support the sales price, but the appraisal does not.

I meet the appraisers at the house, I bring comps but they are ignored.

Sending appraisers who are totally unfamiliar with an area is like listing with an agent who is not familiar with the area - it is not a good practice.

This is definitely something which needs to be looked at.

Great topic....and I also think that this has set up an "us against them" feeling. I often feel the appraiser who calls me feels an animosity to my price. As if they are now the enforcers who have to "police" the Realtor and mortgage broker.

I've been doing this a while and am perfectly capable of looking at comps and making good judgements on price.

The problem is always with enforcing the laws on the books, changing the people doing the appraisals doesn't make it any different, it was already illegal for an appraiser to lie about value. So enforce it.

I agree with Eric about the compensation amounts stated by Mike, but suffice it to say, I think we're all on the same page. Unfortunately, the AMC's are having to abide by an age-old law called the Mark-to-Market Rule. This forces the valuation of securitized products, i.e. residential homes, to be based on ALL comparables, including the distressed homes in a particular neighborhood. The rules for M2M were adjusted last year (http://www.huffingtonpost.com/2009/04/02/marktomarket-accounting-c_n_182297.html) but unfortunately the HVCC guidelines have not been updated to coincide.

That said, HVCC needs to be fixed... and fast.

Todd Galde

It's a shame. A lot of the good appraisers walked because they could see the writing on the wall and now we're all paying the price.

Interesting post and interesting comments! Some points that I didn't see anybody touch on here is that HVCC is not a legislative ruling (although apparently politically and personally motivated), it is actually a strong-arm tactic by Andrew Cuomo, the Attorney General for New York, toward Fannie Mae and Freddie Mac as private entities to stop fraudulent appraisals. USPAP already had regulations in place that would stop shoddy and fraudulent appraisals; the problem here is that nobody enforced it properly. Another problem is that in accepting HVCC as a practice, there is no equal-ground in the way it's interpreted and implemented; it has caused even more misrepresented valuations and fraud than there was before, just look up the statistics on this one. Some direct lenders choose their "pool of appraisers" based on who will help them get the "highest" value, etc., and there is still plenty of pressure and fraudulent activity taking place; while other lenders use these large, incompetent, greedy Appraisal Management Companies who hire inexperienced, incompetent appraisers, who even come from out-of-state in some cases (violating USPAP), and, the appraisal management companies add an extra two weeks to the process causing significant delays and costs to the consumer. So, on one side we have fraud, and, on the other, incompetency and higher costs; tell me how any of this is good for the consumer!

Like other people have said, they fix one thing only to cause 2 or 3 more problems.

HVCC is a BAD idea. This has cost all of us deals, time & money. The normal price before HVCC for an appraisal was $350.00 and now they cost well over $400.00.

I beleive that we should be able to use whom we choose to do our appraisal and the mortgage company should do an appraisal review. This would make more scent to me.

David Kester

Sr. Mortgage Planner

www.TrustYourLO.com

Who are the AMC's and how did they get this distinction. My guess is if you follow the money you will know why we have the rule.

Everything I'm about to say has already been said. Rediculous. Absolutely they should be changed.

HVCC was a good idea that was taken by some people and turned into a very bad one. More and more appraisers are being way too conservative because they are scared to loose their licenses but this is hurting the industry. They are not familiar with the area and they don't take into consideration any upgrades that have been done to the properties. Comparing a completely remodeled home with distressed properties is a huge mistake that some of them do and we have no choice but accept the low values.

There are a couple issues being talked about here, but I will discuss protecting the value of an appraisal. Here in Canada steps have been taken to ensure that the value is protected, and that the appraisal will be performed competantly. In order to obtain the designation, an appraiser requires a university degree, and must satisfy quite extensive work experience requirements as a candidate member of the appraisal institute, all while under supervision of a designated appraiser. Without this, an appraiser cannot be insured. An appraiser can do quite well here.

In response to the agent saying she brings comps for the appraiser, and they are ignored, well, all I can really say to that is "of course". It would not be appropriate for an appraiser to allow an agent to attemt to steer the appraiser towards a value that worked for the agent. Maybe it is different in the USA, but in Canada it is supposed to be an independent and unbiased valuation, which it would not be if the agent was telling the appraiser what comps to use.

More bureaucratic BS that puts the foxes in charge of the chicken house. Hands off and let us, the American people, figure things out. I'd rather deal with a little under the table shinanigans than have to die under institutionalized stupidity.

Brett's posting (#52) was very good. Something to remember is the HVCC was a product of a law suit between the NY AG and a Bank along with the AMC they owned and controlled. Originally it banned banks from owning more than 20% of an AMC or from controlling one. Somewhere between the original and the final agreement this provision was eliminated. The idea was to stop lenders and AMCs from exerting pressure on appraisers. We still have the foxes guarding the hen house. If anything the pressure is worse. Every scumbag lender and appraiser has become an AMC. Turn times are impossible, fees are ridicules, as are the areas they want you to appraise (can't understand why they want to send me 2 counties away and then bring in someone from eastern WA to appraise in my neighborhood). Not to mention the 10 phone calls or emails requesting status updates. I personally turn down 3-4 appraisals for everyone I accept. I need to hit the lottery and retire!!!!

What's wrong with HVCC? Where should I start. . .

Easier to list what's right with it. It is a complete disaster, and between HVCC and the underwriters who are terrified to make a mistake because their jobs are on the line, it has become SOP to expect problems with every deal somewhere between the appraisal and underwriting.

One of my favorite HVCC stories is the appraiser who showed me the email he got from the AMC,

ordering the appraisal. Within the body of the email was the original email from the lender, requesting

the appraisal: it included all of the contact info for that lender.

Very effective at separating the lender from the appraiser.

When I first heard of HVCC, I thought it would be set up like the VA system. The appraisers would all get "their fair share". So I thought it might actually be a good system. I thought it was going to be a centralized government system that the appraisers would apply to and the banks and brokers would place an order and it would be distributed in an orderly system.

What actually happened was on May 1st 2010 when it went into place, all appraisers lost their client base overnight and had to start over. Keep in mind that most of the appraisers are men over 50 that had built their business for over 10-20 years. Most of the appraisers didn't realize what was happening until around February or March of 2010. By the time it went into place, everything became chaos. I know many appraisers that received no business in May and had no idea how to start looking for business.

As a realtor, I met many appraisers at the property that had lost all interest in the business. They were demoralized and demoted instantly, doing more work, making half the money. They had to "rush" to get the orders as they were massly sent out. These AMC companies would call up and ask "how much to do an appraisal today". The AMC companies were also calling requesting value changes. I know of many appraiser that I used to work with that told me it simply was not worth it.

The other thing that really disturbs me is the mass email idea. Can we be any more stupid? Think about the appraiser driving down the road, his phone goes off with an order.....these appraisers are trying to support their families based off of how fast can they accept an order. I would bet there have been many car accidents and fatalities tied to this poorly thought out system. This sytem should be abandoned, it is not a fair way of distributing orders. The appraisals should be "assigned" to an appraiser, period!

Then the "ruthless" banks saw yet another opportunity to further knock them down. Most of them now have their own AMC companies. (But, isn't that is against HVCC?) The loan officers in the banks are telling me what appraiser will come out, so they negated everything HVCC was set up to do, except brokers are out of the loop totally. They have their "favorite" appraisers they want to work with. The only thing in the end that has changed is that the banks now have their share of the appraisers income.

I have a suggestion....since the customer is paying for all fees associated with their transaction; why can't the AMC companies charge the bank or ordering firm an AMC management charge and pay for their services. The appraiser receives their full appraisal fee for the job completed. The bank can pass it along the AMC charge to the customer, which is how they charge them for all other services. Then guess what happens...the banks will choose the AMC company with the least amount of fees, not the appraiser. The appraisers will get paid their full fee. To me it makes perfect sense. I think the individual AMC companies also need to have their fees set so it doesn't go to the "lowest bidder" on the appraiser side.

Just my two cents!

Joanne

http://www.bigredhouses.com

#48 John Sigler's comments illustrate the good intensions...

try to regulate,
recover from all the fraud in the mortgage industry before the market went south in 2005,
recover in spite of the time it may take...
that means we need licensed, smart , well informed resources in each step of the transaction. In our resort area / investment market the criteria for consideration is a bit different - across the street may be assessed in valued higher in some cases. All these little points must be weighed when appraising...not just that the heated square footage of the comps "bracket" the SUBJECT"S heated square footage!

The road to hell was paved with good intentions is the saying right.

There has to be some middle ground we can find. While the intent of HVCC may have been good (curb the fraud), clearly it has turned into a disaster. I like the Canadian model that Tanya suggests.

Stokely Weinberg

Vice President - Sell Fast Forum

www.SellFastForum.com

"die under institutionalized stupidity" "hands off and let us, the american people figure this out"? I don't get that... Not having any oversight or regulation is why the American economy tanked, which has harmed not only America, but a lot of the world. It is why many nations are now more interested in investing in other more stable economies. This attitude has and will continue to bite you in the butt. Hope you enjoy your "under the table shinanigans".

I understand that the seller has the right to check the credentials of the appraiser coming to their home to assure they have local knowledge and access to the local MLS and refuse the appraisor access to their home if the can not meet the minimum criteria to do a thorough and accurate appraisal. I was also told that incidences such as these need to be reported to your State Division of Real Estate.

The market is tough enough when you have a willing and ABLE buyer and the appraisors are not from the local area, don't have access to all the records for the county and MLS and are also in fear of an audit and them not being close to what the auditor would assume was an accurate price.

I would like to see guidelines but in every industry there are the few that ruin it for the many, just like in government. It seems that the solution was thrown together out of panic and the right hand has no idea what the left hand is doing and therefore driving an already scary market even farther down the rabbit hole.

I thought of one last comment, I am now seeing AMC companies with ads on Craigslist, etc. seeking to hiring appraisers. So, paying a reduced fee to the independent appraiser wasn't good enough for some of them. They want to control the appraisers they hire by making them "churn out" appraisals. What kind of experience and service can they attract with this? How independent can that be? Now the AMC companies can dictate and control values of their employees? The whole thing is smokescreen and mirrors!

Joanne

http://www.bigredhouses.com

Post #52 from Brett was the first to accurately mention the origins of the HVCC. It has only become an industry standard because Freddie and Fannie accepted it as a way to avoid investigation/prosecution from the NY Attorney General Andrew Cuomo (democratic presidential candidate aspirant). If you don't think Fannie and Freddie have plenty to hide, you don't know your Rangle from your Dodd!

In a recent transaction, I was contacted by the appraiser to let him in the subject property. During the process, he told me that he did 500+ appraisals each year in prior 3 years before HVCC. That traslate into $200K+ in fee income each year.

Since HVCC, he did about 2/3 at $250 to $325 each depending on the lender. so his income is halved.

In fact many industries are experiencing the same contraction if not the whole economy; so instead of crying foul, shouldn't we demand tax cut, fee cut, public servant pay cut?

We had an Appraisal ordered from Indiana for $500 bucks that contacted an appraiser in Arlington WA to appraise our home in Carnation - Indiana paid Arlington $180 bucks! We applied for a refinance loan on our home. Over the last 14 months we had 6 appraisals. $385K - $340K - $379K - $309K after the $309K appraisal we added a lower half bath and laundry plus 80 sqft to the interior living area. 2 Months ago we had another appraisal that came in at $313K and the interior square footage remained the same as if we added ZERO? I paid for an "Appraisal Review" by an independent local appraiser in Kirkland. It was discovered that the $313K appraisal cut out the following valued added features of our home:

1. Interior staircase access between the lower and upper story!

2. Missed noting a Lower half bath!

3. Missing Additional interior SQFT from a lower level laundry and half bath added.

4. $40K of upgrades to the house and landscaping

We submitted the "Appraisal Review" to the mortgage broker & they protested the $313K appraisal - The Servicer ordered another appraisal which came in at $320 showed 1525sqft instead of 1472sqft and much more.

I think this type of nationalized control is like Eminent domain and it takes equity away from all types of real estate - gives banks control over refi's, new loans and much more! The consumer is getting the shaft – Guess who gets the Gold Mine. - Just some things that make ya go HUM?

Is it possible that banks now realize what "you get what you pay for" really means. No one likes this new set of rules and the main reason is because it does not allow settlements to get to the table. Hope logic prevails........................chris

I was originally negative about HVCC when we saw out of area appraisers coming in that don't know our market. (We're in a seller's market rather than a buyer's market.) My opinion hasn't changed.

. Interior staircase access between the lower and upper story!

2. Missed noting a Lower half bath!

3. Missing Additional interior SQFT from a lower level laundry and half bath added.

4. $40K of upgrades to the house and landscaping

Something doesn't sound right with the above - missing additional SF from a lower level? We measure the exterior of the home - not the interior - how could interior sf on the lower level have been omitted? 40k in upgrades, landscaping? What type of upgrades ? We do not value landscaping.

The SF difference you noted is about 52 SF - come on!!! We are not perfect and no 2 appraisers will have the same SF.

It's funny that we only hear about the low values that "kill the deal" could it be that the home is overpriced and/or you have an uninformed purchaser? Of course not, the realtor couldn't possibly be wrong - it has to be the appraiser

So sick of hearing realtors complain about crap - sure some of it is warranted. Coming from out of the area with no geographical competence, MAJOR mistakes or fraud - but you guys have HUGE commisions on the line. And most of the realtors have had about 1hr of training in appraisals

Face it - sometimes the home is overpriced and the appraisal will come in low. How many realtors have advised the purchaser they are overpaying for a home? You know the home is overpriced - but you raise He** when the appraisal come in low

I'm against the HVCC as much as the next person - but do you think it was much better before? If we came in below contract in the past it was hell to pay - lender screaming, realtor screaming and the purchaser too. Nothing has changed, but my income has been cut in half.

OK - I feel better now - the HVCC needs to be allowed to sunset - appraisers need less pressure to hit value and we need fair compensation.

It doesn't appear that the HVCC produced the buyer protections that appeared to be it's intended purpose. The unfortunate conflicts of interest should be eliminated for the good of the industry.

I am all for creating practices that restore faith in the RE profession.

Steve

HVCC has been a nightmare from the get go. Good, well qualified appraisers have had to shut their doors because Andrew Cuomo cut a deal with Fannie and Freddie. It is downright UNAMERICAN what has happened to appraisers and brokers in the last 2 years. It started with HVCC, it has escalated to an attack on brokers from all angles.

I'm glad to see so many comments from Realtors on this topic. In my market from all appearances, Realtors could not care less about the plight of appraisers or brokers. Most every Realtor I talk to about HVCC is concerned somewhat about a deal they have had to struggle to get done, but for the most part, they are uneducated about the process and pretty much non caring.

Will HVCC go away. I believe it will in its present form. Eventually the powers that be will have to admit to the utter failure to contain fraud. In my 13 years of brokering loans the quality of appraisals I see has declined tremendously. The fact the appraisal is bad is only one factor, a bigger factor is the delay in getting the crappy appraisal to the lender. The lender gets it, has to go back with a question, all too often has to go back for a review appraisal. All of this costing the borrower in the long run time and money. Not what it was designed to do.

HVCC was designed to prevent overvaluing of properties. It functions as a way to under value properties, slow down the appraisal process, cost the borrower more money for the appraisal and missed closing dates, and run honest experienced appraisers out of the business. I could write a book about the problems with this system.

I had a great appraiser in my area who earned himself all my business, not by being the lowest bidder, but by being fast, accurate, and good with communication. My clients & agents all liked him too. He built up a great relationship with me & other LO's in the area not because he delivered the values we wanted or because of low fees, but because of his good service and attitude.

Then along comes HVCC, and suddenly I am getting appraisals done by strangers who can't spell, or even fill out the forms correctly...they take too long, and make too many mistakes. AND my clients pay MORE for these shoddy appraisals. Often they are from out of the area, too. And yes, my 'old' appraiser is still around, and he gets some of the randomly assigend orders frm the AMC, but he may end up being forced out of business soon, if this all does not change.

HVCC needs to go!

Its interesting that the appraisers, mortgage brokers, realtors all get blamed for this housing crisis. It was Wall Street greed that demanded more deals so the lenders were greedy also they let people buy homes with NO MONEY DOWN.....How stupid is that. Also If the NY AG Cuomo really felt Fannie and Freddie did something illegal why did he back off when they agreed to be his bitches....sounds like blackmail to me....Follow the money when Cuomo's daddy got him a job with Clinton as head of HUD he screwed that up then daddy brought him back to NY sets him up as AG now he wants to be Governor of NY wonder what tricks his daddy has to get him that job. Its been said Cuomo has had or has financial interest in AMC's. I have a lot of questions about the man behind this disaster I believe to be A. Cuomo.

I agree that it is a bad system and is bad for the consumer, thath it should be dramatically overhauled in the least or totally scrapped . But polititicians won't scrap it because there would be political fallout that they were going back to the old system and therefore allowing real estate transactions. any thing new would look like a weakening of the reform spirit by the incumbents. Those who are running for re-election would be accused of giving in to the Washington special interests. It needs a chang, but it won't happen until after the elections at the earliest.

I agree. I also feel we as realtors need more training on appraisals. Would help us price our offers and listings. Forget training us on hip roof and home style out of area Appraisers r like out of area realtors. Not good idea

I never had an appraisal issue I couldn't solve, until this year. Then a VA appraiser came in $9,000 low and would not budge when I discussed the comparables with him. He also specified these crucial repairs to be done at the the seller's expense:

1. Replace damaged siding next to the garage door and paint to match existing siding

2. Replace damaged or missing fence pickets

3. Install new window screens on all windows

Because these are such big health and safety concerns, I guess.

Though appraisers are getting paid less, buyers are paying significantly more than they have in the past for appraisals. It has hit us personally with my son's purchase of his first home. He paid an inflated $550 for a recent appraisal in Florida that came in low and has cost him a delay in escrow closing and costs he hasn't begun to calculate as he still doesn't have a definite COE date. It feels to me like a battle and between the sellers, lenders, and appraisers and innocent buyers are taking the brunt of it.

After doing a number of BPO's I have much more respect for the difficulty of assessing value. I am sure it is not easy to see the appriasal business change for the individual appraiser but I have also experienced the dedication of the newer appraisers and their honest efforts in trying to do their job. We were all new at one time but that did not stop us from doing our best.

Marcy

HVCC going away? Wishful thinking by appraisers and their toothless poorly-finance organizations. Bank lobbyists are swarming congress, the ones Obama said he would not tolerate, bent on keeping the rules as they are and implementing new ones to increase their stranglehold on financing. Banks and title companies own the AMCs and pocket a significant slice of the higher fee charged to the borrower. Mortgage brokers are on their way out, due to S.A.F.E. act, banks don't like to share. They would not share this revenue source any more than BP would get out of the oil business!

Signed: Truett Neathery, Appraiser

Auburn, CA

Great commentary... and very few "wamby pamby" opinions! The HVCC is the real estate/mortgage opinion equivlent to "Democrat/Rebulic", "Gay/Straight" or "Christian/Atheist"............generally subject matters best left out of business marketing. LOL....

That, said,...

1). To a degree appraisers got caught in the cross hairs because they have no collaboration or professional clout. They are all pretty much "one man (woman) bands playing to their own sony. Imagine how many negative legislative situations would transpire for the real estate community without NAR and any number of other organizations.

2). Much like mortgage brokers, the appraisers have taken the "hit" for lousy decisions by the banks. To wit, it was and is the underwriter's job to evaluate the validity and veracity of either the loan package or the appraisal. No mortgage broker or appraiser ever approved or declined a file....yet they have been labeled the "Bad Guys of the Mortgage Mess".

3). We all know that the quality appraisers never worked for the AMC's a day in their life......

4). A few months ago I had to pull a refinance and put it with another lender. Of course, could not use the same appraisal. (Don't get me started). So...two appraisals in two weeks....35K on a 375K value (rate and term refi, 800 plus scores and less than 70% ltv on the LOW appraisal). My deal would have worked in any case, but a great example on how inept appraisers are eroding home equity on paper.

5). Don't know that I share some of the optimism stated above. I would love to see HVCC disappear, but I don't think it will happen. It may (hopefully) be re-written, but I will be nicely surprised if it goes away.

There are lots of great comments on this post, and I found myself having to come back and read them since my last post, which apparently is liked by some of the appraisers on here. I would like to make a comment regarding something Truett Neathery (#82) said above, even though it's off topic a little. I don't believe Mortgage Brokers are on their way out; and, if they are, it isn't because of the S.A.F.E. Act. Every competent, dedicated mortgage broker I have talked to is passing the SAFE test, even though many of the questions are irrelevant and strange. The only thing that I've really seen happen is the part-timers are finally stepping down, and the incompetent, ethically-challenged loan officers have gone, or are going, to bank/direct lender organizations; this was originally spurred on by HVCC, the new Truth in Lending/MDIA and Good Faith Disclosure regulations. Just like anything else, the true professionals will almost always adapt; the saddest part about HVCC is that the truly professional appraisers have little ability to adapt. Now they have unnecessarily lost income, consumers have unnecessarily lost home value and these ripples in the pond are unnecessarily hurting the economy as a whole.

I am of the same opinion as the author of this blog. I have pesonally experienced the effect of the new rules on the recent sale of one of my listings. The property did not appraise to purchase price yet the comps showed that value of the property far exceeded the sales price. I spoke at length to the appraiser who said he tried every way he could to get the property to appraise. He told me that the new rules are putting appraisers in a position of having to fit a round hole in a square box. The rules are so stringent that the appraisers cannot accurately do their job like they used to be able to do. He told me in some cases they do not even use comps; they just use sales. If they want to do the business they have to play by the rules the government put in place. We are getting appraisers sent into our area who do not know which neighborhoods are accurate comps and property values are suffering. Something really needs to be done so local appraisers are appraising properties in areas that they know. Hopefully change will come soon.

JUN

2010

If the real estate agents know their market and know pricing so well why do we see so many price adjustments in the multiple listing service or are listing prices decided by the owners of the home. Just a thought when your so easy to complalin about the value on an appraisal. Remember the appraisal is done for the lender not the agents or buyer.

I had the experience of an out of the area appraiser reporting that a property had a water well. It does not. In fact all the deeds reserve all the underground water to the Public Utility District, and therefore water wells are not allowed in the dubdivision. The lender demanded either a waterr well inspection report or a correction by the appraiser. We finally got the appraisal amendment, but it fook a full week, and caused an understanding escrow company to work some serious overtime to get it closed on time.

Okay I have to get this out. Does anyone know the total wealth of the economy that this new law has destroyed? I bet if we could put a dollar figure on it it would make the stock market crash look insignificant.

Does anyone know if the New York Attorney General who started all this has the backing of the major banks for his run for Governor? I think the intention of this law were good but the closed door meeting made it another what's in it for me.

As usaual the US government goes from one extreme to another when something goes wrong with over regulations. We are getting appraisers from the other side of the Chesapeake Bay (metro Baltimore/Washington area) getting appraisals on the eastern shore of Maryland which mostly agricultural and even worse they are trying to do appraisals at the beach in Ocean City, MD.

More than 2 hours away in some cases and definitely out of their area of expertise. They get it because they are undercutting the fees.

Something needs to change!

Great comments and thoughts. As a third generation appraiser with more than 25 years of appraisal experience under my belt, I am rather well known in my local real estate market, and have been approached by dozens of Realtors looking for my help who are suffering from "bad appraisals."

Unfortunately I walked away from mortgage lending business slightly more than a year ago. I am blessed as I have found clients and users of appraisal services that value my opinion - those in the legal profession and the relocation indusry which comprises 100% of my work. As a result, I work by myself and no longer have 4 or 5 appraisers working for me. I couldn't pay them enough for the quality of work I demanded based on the ridiculously low appraisal fees by these management companies that are similar to what my father was making in 1975 or 1980.

Therein lies the problem. The experienced appraisers are retiring, moving on, and leaving the mortgage lending business.

While I realize "Geograpic Competency" is an major issue and bone of contention, a experienced and well-trained appraiser can do the job correctly whereever they go. They just need to take the time to do the research necessary and have access to the data. This includes interviewing and talking to local real estate professionals in the marketplace.

Unfortunately, I've seen it time and time again, the novice and inexperienced appraiser has built up an ego because we have spent so much time defending our work. Our state appraisal boards are feilding more and more complaints, and appraisers are in fear of doing the right thing now - they have become too conservative. They don't know how to read a market, and what drives values. And true, while we have seen a significant decline in values, the next problem is when the market starts to improve, which I have seen in the Chicago area in pockets, yet the comparable data is all lower priced homes and the appraisers are killing deals. Appraisers must learn how to analyze the market.

Chip you are so correct. I have over 20 years exp. I don't do AMC work unless it is full fee which are very very few. Nearly all of my work is REO and estate appraisals. I know 3 other appraisers with over 20 years exp. that refuse to do discount AMC work. The typical AMC company does not care about quality they expect a large profit off the appraisers work and 24-48hr turn around. My clients request 7-10 day turn and expect quality reports. In todays market it is much more difficult to determine value. You are also correct a good quality appraiser can appraise any where they have access to research and a phone, a bad a appraiser couldn't appraise the house next door to him or her.

Good Post. It is about time .Low-ball appraisals need to end.

Let's be straight forward on this subject. HVCC was implemented by Fannie & Freddie from what can be summed up as financial blackmail. Andy Cuomo initiated investigations and in the end threatened further litigation against the GSEs. It was only at the end that the FHEOjumped on board to give HVCC "federal rule status".

Andy Cuomo's eyes on future political office(s) is no doubt an underlying reason to pursue what he claims is the number one issue, coercive relationships between lenders & appraisal vendors. I would argue that point... I have been mortgage banking for 25 years and I (as well as many of my colleagues), have only ever requested that appraisers support real market value with a technically accurate and industry compliant appraisal report. Now, thanks to HVCC, I cannot assign my very best appraiser, I just get to accept the assigned appraiser... good or bad, experienced or not, we just get what card we are dealt. Now, explain to me how not using the best appraiser, but the best priced appraiser benefit's my consumer client?

HVCC is a road block to properly serving consumer clients. I hate to see more federal oversight ('cause God knows how efficient federal bureaucracies are), but if it means killing HVCC, in the end it will benefit the consumer.

Interesting posts and great topic. One item I did not see discussed (maybe I missed it as I did not read every comment) is the change in underwriting guidelines. We have seen more changes in underwriting guidelines and the underwriter/lender requirements of the appraiser than ever before. I have been appraising for 20+ years and lately have seen some "lender requirements" that are quite surprising. The appraiser is only allowed by USPAP to discuss the appraisal with their client not the agent or any other party unless their client gives permission. This often means the guidelines the appraiser is using is being portrayed as coming from the appraiser when in fact it is not. I have seen underwriters require repairs on items we have not seen before, but when required to go out and reinspect to be sure the repair is done the agent is under the belief the appraiser ordered the repair when in fact it came from the underwriter not the appraiser. Underwriters have the last say, they can waive any appraisers requirement and add any new ones. Since the appraiser is not allowed to discuss the appraisal without the ordering clients permission they often just end up with the blame for what the lender/underwriter is requiring. "Appraisal fees" have gone up for the most part but what the appraiser is paid has gone down with the bank owned AMC's or other middle men getting 30 - 70% of the fee. FHA rules are moving targets when you talk to the HUD homeownership centers (HOC's) on specific issues and are different by different areas of the country. Santa Ana interprets them quite differently from the other HOC's. All this causes more confusion, mistrust and difficulties in the market. Word is FHA is putting together a new handbook for appraisal requirements which will be helpful, however getting one interpretation of their rules from them and not different ones depending on who you speak to at the HOC's or which HOC your area is covered by would go a long way in providing appraisal uniformity and less confusion. One other item that has further complicated the valuation process is listings homes well below the price the realtor is expecting to get for the home which we are often seeing in our area. Agents list a home low to gain interest and then see multiple offers which results in a sales price above the list price while overall statistics show a declining market in the same area. This puts underwriters in a tizzy. Conventional wisdom is out the window as the "rule" by underwriters has been the listings represent the high end of value in a declining market. Appraisers can explain till they are blue in the face but some underwriters still go by "conventional wisdom". These are interesting times. Hopefully we will see the market not only for sales but for the rules that oversee them find some stability soon. We are seeing many markets with stabilizing values and even increasing values, however as long as the underwriters continue to change and rewrite the rules confusion will remain. Appraisals are ruled by "scope of work" rules which means the lender has requirements that must be met in the appraisal which MAY affect the outcome. One lender will allow no value to any addition that was not permitted regardless if it was done in a professional manner by a licensed contractor while another will allow value as long as it was done in a good professional manner. So in this case "does it have value", depends on the lenders definition of value. I am heartened by the thread in these comments that the appraiser is a working partner in the valuation/sales process not the enemy. There are well qualified professionals in every link of the process and unfortunately there are also those who are not well qualified in each link of the process. Folsom Appraiser

As an appraiser, my experience before the HVCC was that mortgage originators/loan officers simply shopped for appraisers that would hit the number and overlook the problems, and help close deals. The LOs would remain loyal to those appraisers for as long as they kept greasing the skids for their loans, and it left no room for honest appraisers. An honest appraiser, no matter how competent, cannot compete with a yes-man that consistently and reliably makes money for his clients. It's just human nature to work with people that make things easier, not harder. So the old system rewarded crooked appraisers - all the written rules in the world aren't going to matter when there are bills to be paid, mouths to feed and lifestyles to be maintained. The separation between loan originators and appraisers has to remain because they've proven that they cannot police themselves. But now the new system is very flawed in a different way. Sweatshop AMCs taking 1/2 or more of the fee, requiring turn-times that compromise the integrity of the appraisal, and placing very limiting rules on the way we perform the appraisals.

The truth is this: Whenever someone that makes money off of the appraiser's work is in charge of doling out the work, abuses will happen. The answer? Outside of a national registry and blind rotation VA-style, my vote is to keep the HVCC but regulate AMC fees and turn-times so that appraisers aren't a like bunch of starving dogs trying to keep the crumbs coming in by doubling their production (yes, which means going out of area) and cutting their quality. It wouldn't fix everything, but it would fix a lot.

For those of you who don't understand why an appraiser doesn't use the comps that you provide or the ones that you think are patently obvious...check and see if they adhere to these requirements and it may explain a few things. I've received many alternative comps from realtors, LOs and homeowners and they just don't understand what constitutes a usable comp. We used to have some leeway to use our own judgment before AMCs came along, but now it's iron-clad:

Comps must be:

-Located within 1 mile.
-At least 2 sales must have closed within the past 90 days, the third within 6 months.
-Gross living area must be within 25% of the subject's gross living area (GROSS LIVING AREA IS EVERYTHING AT OR ABOVE THE THRESHOLD OF THE FRONT DOOR! NO BASEMENTS CAN BE COUNTED IN GLA, EVEN IN SPLITS AND TRI-LEVELS!). Some require a 20% max difference.
-Single differences cannot exceed a 10% value of the sale price. That means that on a $200k house I cannot give more than a $20k credit for, say, remodeling, lot size or view.
-Total differences cannot exceed 25%. That's all the adjustments added up.
-The sales must bracket the subject in price and GLA. You can't have all inferior or all superior comps, even if it's just a thousand dollar difference or 50 square foot difference. At least one comp has to be bigger, one has to be smaller, one more expensive and one less expensive.

Then there are individual rules from each AMC that just go on and on and further limit which comps we can use. Sometimes I think they'd like to prepare the appraisals themselves and just have us sign them! We're the ones with the the hundreds of hours of classes, thousands of hours of apprenticeship, license, insurance, data, experience, eyes on the street, etc...yet some minimum wage phone jockey (usually in another state or country) with a checklist is telling us how to do our jobs. And for this we're offered $200. Is it a wonder that quality suffers? That frustrations are running high?

I had an appraiser tell me there were no good comps on my condo listing and he was going to go a few towns over!!!! These are people lives we are talking about! And mine I might add!

You're kidding right? This has been a much heated debate here on AR & elsewhere. I've had one appraisal come in $30K lower than the sales price because of lack of comps. If no houses are selling in a particular area what are we to use then? The lenders have tried to 'stick their finger' in a once lucrative pie & have ended up ruining a once smooth flowing wheel. Appraisals never took 2 weeks for an appraiser to make an appt before? Why now? I also interview the appraiser to find out what area, how long he's been around, etc before I'll meet him. If he's inexperienced you might as well just fight the appraisal right away even before it's done! Save time, start the fight early!

HVCC was supposed to be consumer orientated but I estimate that an appraisal now costs the buyer an additional $100 to $150. Great example of too much government inteference. An FHA appraisal in my area now costs $500 which is totally ridiculous.

Part 3 of my complaint being what happened with the appraisal industry's own guidelines about arms length transactions vs foreclosures or short sales? The appraisers are not even adding value for a distressed sale so the norm then becomes a foreclosure or below market short sale. Appraisers left their cajones at home on that one! We used to ADD value on these comps & it's just not being done anymore much to the industry detriment.

Maybe there were no sales in your condominium complex in the past 6 months that were similar to your unit? It happens all the time. Then it's the appraiser's job to find similar units in similar complexes that have similar neighborhood influences and market appeal, even if they're further away. Would you rather the appraiser use a more dissimilar comps just because they're closer?

There's not an AMC around that will allow an appraiser to take 2 weeks to set the appointment so that's either an exaggeration or there's a breakdown somewhere else in the process. We have 24 hours to get the inspection appointment set or we're not in compliance with the AMC rules and we're off the rotation. Even private lender panels aren't going to allow 2 weeks.

Appraisal prices have gone up because greedy AMCs want more profits. The appraisers aren't getting that money, believe me.

I don't think the HVCC was for consumers at all. It was created in response to the permeating fraud that was happening between loan originators and appraisers that was resulting in too many loans being made to people who couldn't afford the payments (mostly refinances - the appraiser would get the LO his 80/20 and the lax rules or outright fabrication would make the borrower look worthy of the loan) and the foreclosure epidemic when said borrowers inevitably defaulted on their loans. FNMA and FHMLC agreed to the HVCC in exchange for not being prosecuted for their crimes. FHA later adopted the separation rule because it became evident that the mortgage originators and appraisers were continuing to collude when the number of FHA loans suddenly shot way up (along with defaults).

As for distressed sales - REOs are highly discouraged from being used as comparables by both AMCs and lenders unless they're driving the market. Short sales are to be avoided if possible, but a lot of the time that's most sales and therefore they are directly competetive to the subject and are valid comparables. I've always been of the belief that the sale price in an arms-length transaction is the best indicator of market value, so unless there are very high seller concessions then the number on the contract is generally the market value. I can only remember a handful of times that I've come in below contract price, and all those times were when the sale wasn't arm-length (landlord selling to renter and taking advantage of the renter's lack of market knowledge, family selling to family and writing in a fake sale price to try to create instant equity for financing purposes, that kind of thing).

You know, I don't tell realtors how to do their jobs...

Elizabeth You stated.........

"I've always been of the belief that the sale price in an arms-length transaction is the best indicator of market value, so unless there are very high seller concessions then the number on the contract is generally the market value"

Are you sure you want to say that? The contract price on a property your appraising should not be the indication of market value rather the adjusted comparable sales within the market should be telling you the market value.. Your job is to determine the market value of the home. Not the contract.

I know your not alone in the appraisal field that think this way. I don't agree with your approach. I have over 20 years in the business. I don't believe you should be influenced by the sales price in the contract. Just my opinion but you might want to rethink that position, your client is the lender not the buyer, seller, the listing agent or the buyers agent. Your suppose to be the disinterested party to the sale. This is a pending sale not a closed sale. If your theory is true why do we need appraisal professionals.......maybe we don't.

I do like your last line but the realtors don't listen ....... I will accept all the information they want to provide thats no more influnce than reading the MLS info but I will not allow them to tell me how to do my job.

And I don't think that that the pending contract can be completely discounted when an unrelated buyer and seller, both well-informed and acting in their own best interest, both represented by real estate professionals in a sale offering that was advertised in the market for a sufficient amount of time, etc. etc., come to an agreement regarding a sale price. That's the situation that we as appraisers are trying to predict for our clients. When such a transaction is right in front of us we can't just wave it off and say it doesn't count for anything.

I'm not saying it's the be-all, end-all of the market value...the work still needs to be done, but I think it should be given due consideration. If you come in low with value then you're saying that the buyers are paying too much for the property. Why on earth would they want to do that? I believe it's one of the Laws of Real Estate that, if presented with multiple identical properties, buyers will invariably purchase the one that costs the least. So if a buyer is paying more for a house than other houses that appear to be similar, then there must be a reason. Why not talk to the agent or borrower and find out? Chances are the property they're buying is superior to the others in some way, and it's our job to figure it out and make adjustments where warranted. I just don't think it's logical to assume that there are buyers lining up to overpay for houses, especially in this market when they have nothing but choices.

JUN

2010

Great article and right on target. Our state was barely touched by the real estate bubble yet we have lost 66% of our appraisers in the past year. The renewal period ends at the end of this month. I fully expect to see a full 75% wash out rate by the end of the month.

For experienced appraisers (those with 3 or more years experience) it's a no brainer. Why would anyone with any degree of intelligence take a 50% pay cut AND agree to walk away from nearly every client that they may have spent 5-30 years building a working relationship with. The only appraisers accepting AMC assignments are half wits who don't know the difference between being paid for their time and paying someone else for the priviedge to go to work each day.

Residential appraising in the post HVCC world is truly a dead end career. Unfortunately homeowners will pay the price for this loss of experience for decades to come. Experienced appraisers will not come flooding back into the profession? once Washington finally decides that HVCC was merely an expensive political ploy for enriching failing banks.

TMS,

Excellent discussion here!

Too bad Cuomo didn't talk to many of you prior to taking his action!

Many someone should forward this post to him!

Lucky :)

I agree the system is terrible. I have had two bad appraisals so far this year. One I was able to provide comps to the appraiser and he raised up the value $20,000. How could he be so far off the first time. The second deal fell through. This appraiser valued the home exactly at the list price, $104,900. I am not even sure he even walked though the property. He refused to change his appraisal. He could not be bothered to do one more minute of work on this appraisal. Its a shame because now this property sits on the market for over 90 days.

To Bad Cuomo does not listen to anyone. He was told many times what would happen.He didn't care then he doesn't care now. This guy has never admitted to being wrong about anything, although his list of things he has done right is a very short list. He had a mission. He loves headlines this gave him power, control and headlines. New York do yourself a favor do not elect him your next Governor................

Lets hope that they can work through this intelligently, we know that won't happen so hopefully it will at least get better.

Great Comments....

There's not much more I can add .....Only that we need everyone's HELP to get the HVCC removed!

The Financial Reform/Wall Street Reform is due to be back for discussion in the Senate (after they finish the BP conversations!). Include/burried within this is HR4173/HR4312 & S3217 - Appraiser Independence - Remove HVCC...

The HR4173/HR 4312 (Title XIIII Subtitle F) is to be combined with S3217 -CALL you Senators 866-544-7573 - this # will connect you to Your State Senator. Call them, write them, tell them to Include the Appraiser Independence - remove HVCC.

The CaCAP (California Coalition of Appraisal Professionals) - has great information on their web site. www.CaCap.org - join, download letters - check out the letter Rep Gary Miller has written. Check out this site even if you are not from CA! - check out similar organization in your area!

The National Association of Independent Housing Professionals - www.NAIHP.org - is another organization working on related issues. Check out their site also. They have been meeting with legislators on HVCC & other issues.

The only way WE can get REFORM is to Contact our Legislators & get them to understand the issues!Most of them have no real IDEA what HVCC is......THe more WE send them letters & Call.....They only work on issue that they RECEIVE THOUSAND of CALL ABOUT....

As an appraiser...HVCC has done little to change any problem....I just heard that OUR Legislators have REMVOVED any Changes for the CREDIT RATING AGENCIES from the Financial/Wall Street Reform/Recovery ACT!!!!!!...yet HVCC...is alive....... CALL YOUR SENATORS & CONGRESS REP'S!!!!

As an Appraiser - We NEED EVERYONE's HELP with this ISSUE!!!!!!!!

Elizabeth's list of requirements in comment #95 was an eye-opener. How many properties that aren't in new tract subdivisions could meet those requirements for comparables? That is insane.

Great post topic, and timely.

Cheers,

Robin

This is a great topic, one which I hope will go away or at least turn around by 2011! I would like to address comments #96 and #97.

Maybe there were no suitable comps for your condo at the time, I do not know all of the details. Sometimes it is necessary to go outside of the area for comps as long as it is a competing area and the comps are similar to the subject. It also has to be addressed adequately in the report and explain why this was necessary. If it is explained thoroughly within the report and not all comps are outside of the area, this usually, not all the time is acceptable to the uw. Again the key is the need and the explanation in the report.

I also do not know why it would take 2 weeks to schedule an appointment to do an appraisal, but again I do not know all the details. The thing here is geographical competence. I have lived and traveled in the great state of Texas for over 35 years. San Antonio, Austin, Houston, Dallas/Ft.Worth, Amarillo and more. All of these cities have suburbs and surrounding little towns. I consider my geographical area to be San Antonio, Austin and the surrounding suburbs and little towns which very well may be in other counties, but no more than a 75 - 100 mile radius. Some may think this is too far, but this is my comfort zone so to speak. I am also comfortable in areas outside that radius but choose to stick with my zone. Have I had some appraisals come in low because of this? No. But I have had appraisals come in low because of the market for that area.

To all the appraisers out there and others who care whats going on with HVCC, Check out F.A.C.T. Foundation Appraisers Coalition of Texas. Call Amy Ables 512-828-7455.

Robin what Elizabeth printed are guidelines. It is the appraisers judgement when to exceed those guidelines but that does require the appraiser to explain in detail the reason for exceeding those guidelines. The items that Elizabeth listed are guidelines not rules. When the need to fill all those guidelines is not available in the market some appraisers try place a square peg in a round hole.

JUN

2010

Wow! It's discussions like this one that keep me reading ActiveRain on a regular basis. The idea of removing the option for lenders to hand pick their appraisers seemed like such a good idea at the time. How did we end up with this mess? With the HVCC and the new GFE and HUD-1, it is clear that no one was really looking out for the consumer.

Paul is correct they are just guidelines and explanations can be written for all of them. But, Elizabeth is also correct; trying to complete an appraiser within those guidelines or explain why you had to go outside the guidelines can drive an appraiser crazy. Especially when the guidelines can be 4-5 pages.

Here are some other guidelines or exceptions my reports have been rejected for (that later became guidelines).

•1. Appointments must be scheduled within 12 hours of accepting assignment. (Homeowner not calling back is not an excuse)

•2. Inspection must be done within 48 hours of accepting assignment. (Homeowner works or is on vacation is not an excuse)

•3. Report must be delivered within 24 to 48 hours of inspection. (Nights and weekends count. Even though AMC has no one working Saturday or Sunday)

•4. You must log on the AMC site twice each day to update status on all appraisals. (Even if nothing has happened since last update)

•5. Must answer emails asking for updates within 1 hour. (Even if you have updated site or are in the field)

•6. No pictures with people in them. (Standard)

•7. If you use an MLS picture because of gated entry, long private drive or people in it, include your original picture showing why MLS picture was used. (Help me understand, I can't use my picture because kids were playing in front yard but I can use my picture with kids to explain that I can't use my picture with kids?)

•8. No pictures with pictures of people in them, either photos or art work. (The picture of the kids or the Mona Lisa has to come off the wall)

•9. Must include pictures of all rooms including ½ baths. (without being in the mirror and must show both fixtures)

•10. Pictures of all 4 sides of the home (Explanation required for condos that you used 4 sides of building)

•11. Explain why "Opinion of Value" is more than 5% above or below average value for the market area or city.

•12. Must include off market date, closing date, type of sale (typical, short REO, Estate, RELO) days on market, original list price and sales price on all comparable gridded.

•13. IF short sales or REOs are more than 10% combined of active, pending and closed sales in the market area must include one of each.

•14. If short sales and REO's are included, explanation that price difference is typical for market is not acceptable. Must include detailed paired sales to prove amount of adjustment.

•15. 1004 MC (to begin with this is a bad form). A. Must explain why with only 6 truly comparable sales in the past year, you cannot honestly fill in the check boxes as to decreasing, stable or increasing market trends. B. If there are no sales within subject plat or condo, explain why. (not that there were none but why there were none)

•16. Any request for correction or explanation must be submitted within 2 hours of time request sent. (Doesn't matter they sent it at 8 am eastern time, which is 5 am where I am)

This is just a sample of some of the ones I have seen. As you can guess, I don't do work for some of these AMCs anymore. Some by their choice some by mine.

As far as 2 weeks or more to get an appraisal, that sounds about right. With all the hands it has to go through now, I am surprised it isn't longer.

Dana (#110) - You're right! This is a discussion I can't stop reading. You're also right in the fact that nobody seemed to care about the consumer when these things were all created & implemented; the only one's who even came close to winning here were the politicians with all the PR they tried to get out of their "good deeds." The funny thing is, taking appraisal ordering completely out of the hands of the loan officer did far more harm than good; most loan officers and appraisers always behaved in legal and ethical manner before.

John (#111) - That list of guidelines amazes me! I knew it was bad on the appraiser's side, but I had no idea it was that ridiculous. As for the two week thing, I've always seen the most delays coming from the inefficient/incompetent AMC's; I've had to wait as long as 3 1/2 weeks for an appraisal report to make it back to me before.

I am very frustrated with the HVCC rules. This bill was supposed to protect the consumer. The fees are much higher and the values are coming in lower. The appraisers are coming from all over the state and do not know the area's they are appraising. This bill has hurt the consumer with higher fees and inaccurate appraisals. Lots of errors! I feel for the borrowers!

Johns list is accurate but that is why after 20 years of having been a professional appraiser I refuse to work for AMC's. These guidelines are created by individuals with no knowledge of appraising or 1 or 2 years of appraising which is probably more dangerous. I currently only do REO and Estate appraisals for full fees along with 7-10 days to complete the report. Friends of mine with over 20 years also refuse the discounted AMC work many have left the profession or retired. I can't retire so I am currently retraining in another professional profession should the REO work and estate work fall out for some reason. I can understand some people have families and other reasons to accept AMC work but appraisals are hard enough without having to deal with Johns list and some unqualified AMC employee treating you like *****. If this continues older very qualified appraisers will leave the profession as they are currently doing. Entry is blocked into the appraisal industry. How much can a supervisor appraiser pay a trainee when the full fee is $200? Many AMC firms will not accept an appraisal signed by a trainee. Not to mention the new college requirement for certification. The writing is on the wall all one has to do is read it.

JUN

2010

I never really understood all the comments, about HVCC bring down the market values!

WELL let me tell you - I sure do NOW!

I just did a review on a Purchase..the "Appraiser/Form filler" - simple pulled up the lowest recent sales...property is 9,000 sqft lot & highly upgraded- not many sales of this size lot & condition - cause the majority of the lots are 5,000 - 7,000 sqft. THEY used 2 - 5,000 lots & sales $410K & $415K that were at the bottom end of the market......they did find 1 - 9,000 sqft - $410K- - priced the same as the 2 smaller sqft lots!!!! ALL noted on the Grid as Good Condition ( they were not updated or very little & all had similar GLA as the subject) - Lots were adj $4,000. - THAT"S ALL !!!???? Even the Subject was noted as GOOD on the Sale Comp Grid ..but noted as Upgraded in the Improvement section....

Now how can a 9,000 sqft 100% flat total lot utility...be compared to a 5,000 sqft lot with only a $4,000 adj???? ... & how does the 9,000 sqft that was priced the same as the other 2 - 5,000 sqft lot...how are these comparable to the subject???.....

is it me ...or was there no QC done on this ...or is this the way the AMC's want the "FormFillers" to "Appraise"???

I easily found 2 recent sales on 7,000 sqft lots, similar condition & gla ...$460K.... so the sellers & the market are going to loose $50K -....... The Lender Response: "The appraisal was reviewed and rebuttals were submitted at various level inside the company and with the appraisal service. There is too many sales to the contrary"""" WHAT this was not a "cookie cutter home"....... Not to mention the Form Filler - said the market was DECLINING @ 9% over the last 12 months....I included a Graph of sales from 2007 - YTD 2010....the market looked stable to me!!!!

I say Good Luck on getting the housing market stablized!!

JUN

2010

HVCC has really hampered efficiency, and destroyed the hard work for the industry many good appraisers have done. For them to take a 50% pay cut, just so they can get the job while some middle man who does nothing to earn those fees is just wrong. AMCs have absolutely no value other than a leech taking hard earned money from someone else.

I had an appraiser I dealt with as a lender years ago. When I asked him about value, he would always give me what he could support. Sometimes my loans received the value, and other times it wouldn't. I never pressured him to make value, and people who did, he did not give it, if it wasn't supported. That is one honest appraiser, and there are many more out there. If I was asked to do something illegal in my job, I would not do it. That is the way honest people do their jobs. HVCC has just created a lot of bureaucracy that hampers efficiency. Borrowers pay higher fees, appraisers get less fees, and AMCs collect for doing little. Whereas an appraisal once takes 2 days from date of order, now takes up to 2 weeks.

Hope this changes, since it won't get better with this kind of inefficiency.

On a different note... $450-$500 for 4 hours of scoping it out and 4-5 hours (now) of the paperwork ...does not sound underpaid to me. Let's see BPOs take a good day or so if done right..for a measley $50 sometimes $75

Just sayin'

Mary, some people might argue that a real estate agent makes far too much money considering the time and effort involved in selling a house, too. Breaking our jobs down into 1-hour or 1-day increments and then dividing by fee isn't the way to determine the worth of what we do. Appraisers have a larger overhead than you might believe (data costs, E & O insurance, office space, equipment, phone/fax/internet/ and supplies, gas and vehicle maintenance, continuing education, licenses that expire every 2 years...) but what people are really paying for is our expertise, training and experience, just like you're paid for yours and just like any other professional is paid for theirs. It takes over a hundred hours of classes and thousands of hours (in other words - years) of apprenticeship before a wannabe appraiser can even sit for the state exam. As of 2007 all new appraisers must have a college degree. What does it take to get a real estate license? As for BPOs, well...I'd be willing to sell a house for a lot less than 3.5%, but it's not what I'm trained for and I wouldn't really know what I was doing, would I? Realtors doing valuations is just another way for the lending industry to save money, and it will come back to bite them.

Mary as a real estate agent are you sure you want to open that can of worms? Appraising as Elizabeth says takes 100's of hours of class room, minimum 2 years exp., and a college degree. A salesman license? Well I know because I also have a brokers license. As I indicated above I don't do work for AMC's my full fee is $350-375 for REO and estate work which does not fall under HVCC. While you refer to the appraiser scoping the house out it involves much more detail than walking through and commenting on the drapes, furniture and carpet. Most AMC'sare paying the appraiser $175-$200 with excessive demands and most of the expenses Elizabeth refers too are fixed no matter what they are paid per appraisal or the volume they get per month. Many AMC's send an appraisal order to 10-15 appraisers at the same time who ever accepts it first gets the job. Our profession has been reduced to this. As I said many appraisers will change careers because they are professionals and expect to be treated as a professional and paid as a professional. Elizabeth did a good job breaking down what an appraiser faces everyday, Mary for you to make the comment above shows you know very little about the appraisal profession just as the people that designed HVCC. I still don't know why some real estate agents feel like they know how to value a house better than most appraisers at the same time when asked if they measured the house before determining the value for a listing or BPO they say measuring a house is a specialized skill they are not qualified to measure a house or the one I love no that would open me up to liability. What makes you qualified to value a home, your salesman license? This is not a slam on all real estate agents there are some very good agents which I work with and don't hesitate to call up to discuss a property at times but when an agent questions the pay of an appraiser it shows a lack of knowledge of the required qualifications and the conditions the appraiser works under.

Mary - I have to agree with Elizabeth and Paul here. The other point that needs to be made is that there isn't a single good Realtor out there who does BPO's without the expectation of getting REO business from the Bank or Management Group they are completing them for. Could you make a good living just doing BPO's for $50 a piece? Your payoff for doing this "favor" should be the potential for real business. From what I understand, that only covers time and travel costs and a Coke at the gas station on the way. Just because an appraiser does one HVCC appraisal, it doesn't mean they'll get a chance at doing another one or even open the door for them to do more unless they bribe the AMC company somehow to make sure they're picked more often (which I'm pretty sure is happening, too).

Remember that the only thing HVCC has really accomplished is a destruction of free enterprise for good appraisers, poor appraisal quality, declining real estate values, and increased costs and delays to consumers. Whether you think those things are important, or not, I'm sure you've noticed fewer dollars in your wallet and more consumers being harmed since HVCC's implementation.

JUL

2010

Most of the comments listed are apparently written by real eatate agents. You no longer have any control over picking the appraiser. Just because appraisals come in low does not make it a bad appraisal. Most lenders still have a panel of appraisers they choose and set up with the AMC's. HVCC has been good for the most part and the more recent AMC's have much higher fees. I have been an appraiser for over 20 years and it was about time that real estate agents were taken out of the process of picking appraisers to suite their needs.

AUG

2010

After being pre-approved and given a go on a great piece of property selling for 1/2 of its tax value (then told no because of not being able to get an appraiser out to look at a piece of property), I am very discouraged with the whole appraisal process. Apparently, the home is much larger than all the rest in the neighborhood and appraisers are refusing to appraise the property indicating there are no real "comps" to compare with. The house is gorgeous and in beautiful shape. There are homes in closeby neighborhoods that sell in the millions, but local appraisers claim they cannot use them. I am really upset over this whole thing and cannot understand why they cannot just use the largest properties in the neighborhood or the other surrounding houses within a few miles or so.

CC, I'm sorry to here about your situation. Maybe I can shed a little light on what could be happening.

First and foremost, all properties can be appraised. Complex properties with few and far-flung comps have to be approached carefully, and the appraisal has to be very thorough and well-supported. Then there's all the driving, and no matter how well-done there will be lender stipulations afterwards wanting this, that and everything explained and repeated. Overall, these types of properties can take 3 or 4 times the hours of a typical appraisal. The problem is that no one is offering a higher fee to cover the appraiser's extra work. We can't help but do some simple math and realize that we can do 3 or 4 regular appraisals in the time it will take do this one, and it's just not cost-effective. I turn down complex work regularly for this reason. Sure, I'll make a bid for what I think is reasonable compensation for the project, but it's rarely accepted.

Do you know what the fee is that the appraisers who have turned down appraising your property are being offered? Not the Appraisal Management Company, the appraisers themselves. It could be the answer to the issue of no one wanting to touch the assignment.

DEC

2010

The whole HVCC thing is the terrible. I think the original intent was good but it has completely backfired. The quality of work from appraisers who are contracted by the AMCs is awful because they now have no accountability.

<a href="http://www.mortgages.com">Mortgage</a>

JAN

2011

I just have to say, that AMC's were created because of the unethical appraisers and banks. AMC's have to exist because of what has happened and those people can't work for free. I feel for appraisers who now can't get paid what they use to, but why should the homeowner have to pay more? The homeowner is the one who has suffered the whole time, and now they have to pay more!? They have lost their homes, lost value because of falsified appraisals, and now because appraisers need a babysitter the homeowner is getting screwed again! Wake up and point the fingers at the real "bad people."

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