ANOTHER ONE BITES THE DUST WITH A BAD HVCC APPRAISAL. If you are a home owner who has tried to purchase or refinance a home, a Realtor, or a mortgage broker, then you know what HVCC is and You know when you've been burnt by a bad HVCC appraisal.
If you are not one of the above parties to a real estate transaction, then you may be oblivious to the damage HVCC and AMC (appraisal management companies) have done to the value of real estate. When we should be working so hard to help home owners recover from the housing disaster, HVCC is throwing a wrench into it.
HVCC is a deal Cuomo cut with Fannie and Freddie in lieu of filing a lawsuit. It stands for home valuation code of conduct, many in our industry think the acronym stands for "Home Valuation At Cheapest Cost". AMC's came into being to be a buffer between a loan originator and the appraiser. As a result they collect in my market a $360 fee, pay the appraiser substantially less than that, because afterall, they need to be profitable, then they throw an appraisal request "out there" for grabs.
My experience is that 100% of the time appraisals are taking longer and are defective. Fraud involving appraisals has NOT declined. So, here is my ANOTHER ONE BITES THE DUST, and, I'm just mentioned the obvious, there are more errors than this.
The borrower purchased a home one and half years ago from an estate for $87,500. The property has multiple parcels, totaling .9 acres. He had made improvents on the home. Here are the mishaps by the appraiser.
He has the lot listed as .09 acres. Oops, already not good at math! He made no adjustment for the small, regular lots, but made a negative adjustment to the one property that is the same approximate size.
He called the location rural, when it is suburban. (Why, so he could go over 8 miles away for comps). It is clear to the writer that this appraiser has a pre conceived notion of value and went the distance to prove it.
Our subject has a full basement, yet he adjusted $3500 for a comp with a full basement, and only $1000 for those with NO basement.
Our subject has 3 bedrooms, half his comps are 2 bedrooms. One comp he listed as 4 rooms with 3 bedrooms. What do you suppose the other room is - a kitchen or a living area???? Maybe they eat out all the time!
Brick, ranch style homes in the same neighborhood are selling between $115,000 and $138,000. The value of the subject according to this appraiser . . . . . $82,000!!!!!!!!!! Less than the bargain price of a year and half ago.
The logical question would be: Can't we go back, point out these things and have the value corrected; ask the appraiser to use the proper comps, use the right neighborhood, use consistent adjustments. Yes, absolutley, and he will do that, but he will not change his mind about his value, because after all, to do so would mean that he must not know what he is doing. Changing the value would be embarrassing.
And so, another one bites the dust. Another homeowner can't take advantage of a lower rate because HVCC is really home valuation at the cheapest cost. Another homeowner won't have that extra $150/month to be spending and helping the economy. Another AMC got paid $360 for absolutely nothing (well, they did "review" the appraisal before submission.
SUNSET HVCC!
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