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HVCC-day three

By
Industry Observer with Responsive Pest Control

Good morning all: Today is the third day of HVCC, better known as the Home Valuation Code of Conduct. Until our internal company memo. last Thursday, I honestly didn't know how the new appraisal law would be implemented. Now I do.

In my company, all appraisals will be ordered by one of our senior executives from an approved list. My appraiser is really disappointed. I think his reasoning is all the relationships he built over time (including the one with me) are gone for now. I personally think the good appraisers will do just fine with the new system. Let's face it; they're busy right now.

But as Russ Ravery pointed out here on Active Rain, the new HVCC law will slow down the process and will probably be more expensive for the consumer.  If an appraisal comes in below the value needed, what does a person do then? We probably order a second appraisal increasing the cost and time needed to do the transaction.

To me, it's interesting that the system was correcting itself without intervention. It usually does. Recently, I had to have a client pay for two appraisals as the lender didn't like the first one due to its model. With home values still on the decline, appraisers were often getting very conservative with their reports. It will be interesting to see how long it takes before HVCC is tweaked. I give it about a year. In the meantime, all of us lenders will be utilizing different methods to determine value. Realtors: you may be fielding a few calls from me to see what you see before I submit a loan.

As always, I welcome your feedback. What do you think? What are you seeing? Have a great day today!

Posted by

Paul McFadden

Mark Watterson
Salt Lake City, UT
Utah Real Estate

Normally this type of intervention doesn't help.  I would have to assume it was put in place to either control or eliminate the bad apples.  Time will tell if it does or if it was really a significant problem.

I think it is just more of a distraction from the root cause of financial meltdown than solution to any real issues.

May 03, 2009 03:18 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Mark: I think you're right. Most of the bad apples have been eliminated. The knee-jerk reaction was too little too late. I predict this law will be changed within a year.

May 04, 2009 01:43 AM
GLENN LEACH
Mortgage - Puyallup, WA

If we can't figure out how to work with the new laws within a year, will they have to extend to law another year until we do?  They certainly won't change it BEFORE we figure it out - you think?

May 05, 2009 08:03 AM
Benjamin Smith
Apex Appraisals & Consulting - Powder Springs, GA
Atlanta Area Appraiser

Not rying to be stickler for the details, but it is not a law. It is nothing more than an agreement that was entered over a year ago by Fannie/Freddie and NY AG Andrew Cuomo. If you want to fight this, your aim should be at Fannie and Freddie. Although many have already brought up several lawsuits over the past year.

With that being said, I have had several requests over the past few days from brokers requesting a desktop appraisal. Personally, I think this is a great way to "test the waters" on value before moving forward on a loan file, especially in areas where AVMs are unreliable. While it is not a free service, it is a much more economical way to find out if a deal is likely to go forward prior to paying for the full appraisal.

May 06, 2009 10:17 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Benjamon: Thanks for the thoughts. I actually forward them on to my operations manager. Have a great day!

Glenn: I think you're right. We are an ingenious lot; it seems like we're always having to figure something out. Although this is a hindrance, I don't expect it to stop what we're doing. Thanks for your comment!

May 09, 2009 03:23 AM
James Wirth
Everett, WA

Paul, we're handling it as best as we can also; and I agree with you -- the 'problem' has been fixing itself: the settlement with Washington Mutual fixed it for WAMU and now WAMU as we knew them isn't operating anyway, and other lenders were providing tighter guidelines as well as relying more on desk or field reviews, etc. Unfortunately the timing just couldn't be worse and now we're scrambling to adjust to these new restrictive guidelines.

There are a number of elements to the code of conduct in its current iteration which are harmful to the housing market and economy. I would recommend that we all request that the code be reviewed by industry participants and revised as necessary. There are a number of petitions circulating, we may want to bring them to consumers' attention. Here's one that was recently sent to me, if anyone interested: http://www.petitiononline.com/hvcc/.

United we stand! --James Wirth

May 11, 2009 12:44 PM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

James: Thanks for your comments. I'm about to order my first set of appraisals under the new system. We'll see how it goes. I read that paying for a desk/field review isn't such a bad idea to determine value before ordering an appraisal. Let's stay in touch! Take care.

May 12, 2009 03:02 AM
Sarah Eubanks
Hill Valley Financial Services - Oregon City, OR
Preferred Oregon Loan Consultant & Notary Public

Hi Paul...I hate the new HVCC.  Not only do I miss out on working with a great AR appraiser, Sara Goodwin, but it also is costing my borrowers $80.00 more per transaction.  That is ridiculous particularly given the fact that most of the appraisers are taking a pay cut to have this happen.  Good topic.  :)

May 12, 2009 03:15 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Sarah: please tell it like it is! Lol. My appraisers are getting a little more (475) than what they may have charged previously. Taht being said, no one likes to have their relationships messed with. Most of us never pushed the envelope and appreciated the job our appraisers did. We'll see how long this lasts. Take care.

May 12, 2009 03:53 AM