On May 1, 2009, the government put in to place the HVCC appraisal law which stands for HomeValuation Code of Conduct, which was supposed to help to keep agents and mortgage brokers from being able to talk to appraisers and keep them from swaying the value they put on a home.
But, within that law, there were some things put in by (I’m guessing) some very smart bankers. Now I believe they are being very predatory, almost even more than they were two years ago.
No ,I don’t own a tin foil hat, but they are starting to look comfortable. You see, one of the lines in the new HVCC law was that once the appraisal is ordered it can’t be transferred to a new lender and another appraisal would have to be ordered.
What good does this do forthe consumer? It keeps their mortgage broker from shopping for a better loan with a lower rate. Because even if they found a better loan, that mortgage broker and buyer would have to start the whole process over again and pay for another appraisal and ask for an extension that the seller, more than likely, won’t accept.
So, now that the buyer is stuck with a loan that isn’t the best loan for them and there is nothing they can do. They sit and wait for their close with the irinterest rate lock date slowly getting closer and closer.
I’ve looked at my company’s books over the past month and a half and what I discovered was of the loans that were required to use HVCC approved appraisers only one of them closed on time. All the others closed anywhere from 22-47 days later than their scheduled closed date.
Now, here is where the fun begins…
In talking to every one of the agents in those deals, every one of those buyers lost their interest rate locks during those 22-47 days and now were stuck paying anywhere from 3/8 to acomplete percentage higher than they would have if they had closed on time. That, to me, is the meaning of predatory lending. The worst part is they could have possibly saved even more if their mortgage broker could have found a better loan during the time of inspection and close. But because of the HVCC law, they were unable to do that without adding additional cost and time to the close.
So, is your bank taking advantage of your clients by using the HVCC law and other underwriting delays to make buyers lose their lock?