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Post-HVCC Implementation: Are appraisers still feeling the pressure?

Real Estate Appraiser with Brian J. Davis & Associates

Pressure House As most of you know by now, the Home Valuation Code of Conduct went into effect on May 1st. Its primary purpose is to insulate the appraiser from outside influences that would apply pressure to the appraiser to inflate values.

Unfortunately, I have been receiving complaints from our members (ICAP) regarding lenders and AMC’s asking appraisers to reconsider their values. Some of the lenders and AMC’s have even created a form for this purpose. It appears that these forms are being completed by lenders agent or the borrower in most instances. Clearly the borrower is unhappy with the value conclusion and they are looking for a higher value.



The HVCC allows the homeowner to now receive a copy of the appraisal before the closing.  I’m afraid this has added fuel to the fire. In some instances, the homeowner has a legitimate complaint if they feel the appraiser made an error or omission regarding the improvements, but others are going so far as to rewrite the appraiser’s sales comparison analysis to show the appraiser how to get a higher value. Although as appraisers we appreciate all the help we can get when gathering data, this is going a little too far.

I am also being told that certain AMC's are sending the appraiser a list of sales, calling them comparables, and asking the appraiser to write an explanation as to why they did not use any of these in the appraisal. This list usual shows up after the appraisal has been completed not before, so it is not part of the original scope of work, such as in relocation appraisals.

I have been corresponding with Fannie Mae regarding some of the new problems that the HVCC has created.I would like to provide them with examples of this latest form of pressure aimed at appraisers. I can only assume that lenders are trying to skirt around the requirements of the HVCC by having their agents or their clients (the borrower) engage the appraiser. In politics this is known as plausible deniability.

The lender should be filtering this information and determining what should be passed along to the appraiser. Requests to an appraiser for corrections, additional comments, more explanation and additional market data in the form of sales, listings, etc. has always been acceptable practice.

However, I am concerned about the lender, AMC or homeowner who is sending the appraiser sales data and asking the appraiser to consider using them in the appraisal and if not, provide an explanation as to why the appraiser did not use these sales instead of those reported in the appraisal.

Finger Please email any value dispute/reconsideration of value forms you have received to tj@tjmccarthy.com  and I will pass them along to Fannie Mae. We need to work together as an industry to stop this before it gets out of hand.

AUTHOR: TJ McCarthy, SRA - Tim (TJ) McCarthy serves on the Illinois Real Estate Appraisal Board This email was originally sent to members of the Illinois Coalition of Appraisal Professionals – ICAP.

Harry F. D'Elia III
WEDO Real Estate and Beyond, LLC - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

Thanks for the post. I am sure you will have disgruntled buyers going forward.

May 16, 2009 01:48 AM
Eilean Foster
Keller Williams Realty Atlantic Shore - Egg Harbor City, NJ
Real Estate Agent

Now Brian, why should you appraisers be denied the *Joy* of the pressures that the realtors experience from a seller who still believes their property is worth more due to ....... pick the top 10 "reasons" given! 

What I find ironic, is that with all the data put out in the media, 8% house values lost since 2008, etc; why is it that a home owner actually believes they have "lost equity" when it was never cash in hand!?

In my own area, perhaps technically I have lost equity due to the lower pricing of homes sold here, but even with that "lost equity" my home is still valued higher then I originally paid for the property - so just how did I lose?!

So I guess it's just time for a reality check!  Any improvements made during ownership must be seen as what they are - the price of home ownership!  Basic maintenance and upgrades that must be made in order to enjoy a home!  If a homeowner chooses to tweak the property, then they must accept that they enjoyed that "tweak" while they owned; now someone else gets too - without having to pay for it a second time!


May 16, 2009 01:58 AM
Eric Villaverde
DoubleTree Home Inspection Services L.L.C. - Phoenix, AZ

Many appraisers are feeling the crunch. Also, they are upset about changes in their business plans in mid stream. Bammmmo

May 16, 2009 02:35 AM
Sara Goodwin
Estimation Nation Corporation - Portland, OR
Portland, Oregon Appraiser

Absolutely.  Some of the AMCs are still up to their  old tricks. Now they like to do it with a phone call rather than an email so that there's no paper trail... but others still have their old blatantly fradulant appraisal request forms with the ''Minimum Value Needed" line still plainly present on the request form.  I'm giving them until 6/1 to start reporting them. 

I now get calls and emails from borrowers more frequently... and sometimes just days after I turn in the report.  Anything from "why didn't you use this sale [that's 1,000 square feet larger and two years old]?" to "why didn't you use the value of the cost approach.  That seems more accurate [or at least more generous]".

My new favorites are the brokers that have been coming out of the woodwork lately saying 'I have an FHA appraisal that I need a value check on'.  And so I politely tell them to send over a request with the FHA number attached to it and I can proceed with an appraisal report. I never hear from them again. You and I both know that those were never intended to go through the FHA pipeline, right?

May 16, 2009 04:51 AM
Michael Zollo
Coral Springs, FL
Certified Residential Appraiser, South Florida, FH

I had a broker call me the other day, needing a follow up appraisal for a FHA deal. He had the BA**S to ask if I could work off the 1st appraisers report. I told him I was too busy rearranging my sock draw. The games are still going on!


May 16, 2009 01:02 PM
Tom Horn
Thomas Horn, Real Estate Appraiser - Alabaster, AL
Appraising The American Dream

Did we think the old dogs would tuck tail and leave?  With the advent of new obstacles, new schemes will be employed to get what they want.  I don't mean to be negative but they will find ways to get what they want (ie: comp checks, reconsiderations, etc.)

May 18, 2009 10:23 AM
Jesse Skolkin
Independent New York State Certified Real Estate Appraiser - Fresh Meadows, NY

The next time I get a list of sales from a lender or Appraisal Management Company (which are just passing them along from the lender) which are actually comparable to the subject will be the first.  I guess the more things change, the more they stay the same.

May 18, 2009 11:30 PM
David Mescon

A few years back, a major bank, which had been a client of mine for nearly twenty years, asked me to "reconsider" the value of a single family residence I had appraised for refinance purposes.  This request came from, of all people, a review appraiser."   I was provided with a list of nineteen "comparables," and was asked to either use, or comment on why I did not use, each one of these sales.  All of the sales I utilized in my analysis were from within the subject's tract home subdivision, and most were model match sales.  All of the sales the client provided me with were from a proximate, but higher priced subdivision and were less physically similar to the subject property than the sales I used.  To make a long story short, I ended up analyzing each of these nineteen sales in detail, and writing a corresponding, detailed explanatilon for each one explaining why that sale was not utilized in my analysis.  A few days after complying with this absurd request, I was informed the bank would no longer be needing my services.  Nineteen years, and five figures a month to zero in just one honest step.  By the way, the "comparables," were provided to the bank by a realtor who was a friend of the borrower.

May 31, 2009 07:23 AM

Brian, the point you bring up is valid. As a software vendor serving the appraisal industry, we want to do our part in improving ValueLink (our appraisal management company software) so that issues like this can be highlighted easier. If you or any other appraisers have any feedback/suggestions on how to improve our package, please visit our website www.spurams.com and contact us to provide feedback. We look forward to hear from you.

Feb 01, 2011 02:06 AM