HR 3044 18 Month Moratorium On HVCC WILL NOT Cure The "Low Appraisal" Disease Issue

Real Estate Appraiser with Accurate Valuations Group, LLC LA St Certified 851 - HR 3044 18 Month Moratorium On HVCC WILL NOT Cure The "Low Appraisal" Disease Issue

I'm reading this morning from the Mortgage New Daily Email about "HR 3044: To Impose 18-month Moratorium on HVCC".  The reasons given for the moratorium are these below as directly quoted:

"In the period of time since its implementation, the HVCC has increased costs to consumers and decreased the quality of appraisals and has provided a level of uncertainty in an ailing housing market. Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo's rule."

However, according to the media generated buzz, the outcry in the past 3 weeks hasn't been so much been about HVCC but the media issue of "Low Appraisals".  Just look at these recent headlines:

Bloomberg: Home-Price Recovery May Be Undermined by Appraisals

Christian Science Monitor: Are low appraisals slowing US home sales?

CNN Money: Appraisers wrecking builder sales?

The Tennessean: Low appraisals nip real estate deals

Steamboat Pilot, CO: Appraisal rules wreck real estate deals

and my favorite of all:

Joe Weisenthal: The NAR's Appalling Fight Against Honest Appraisals

Yes, it's true that if the Appraisal Management Companies (AMC) are sending appraisers from 2 hours away to perform an appraisal on a home just because they must use appraisers from a rotating roster, an appraiser that doesn't know the market in the subject's neighborhood, then that's a problem and could result in a "low appraisal".   However, wouldn't the interpretation of if an appraisal is "low" or not be based on "market expectation"?  And, couldn't the expectation by the seller, buyer, agent and lender be unrealistic in so many of the declining markets across the U.S.?  Absolutely!

I like Ben Goheen's  response to the irresponsible comments NAR's Chief Economist, Lawrence Yun,  made this past week blaming appraisers for the lack of a housing recovery, and I quote:

"Mr. Yun is now insisting that appraisers ignore market conditions so houses can sell – isn’t that convenient?

Since every market is local, nobody can rightfully make generalizations about how foreclosures should or shouldn’t be used as comparables in an appraisal. They may be inconvenient, but they are real and often can’t just be ignored. As a Realtor you just have to be aware how they effect your market when writing an offer."

An 18 Month Moratorium WILL NOT make the Fannie Mae 1004MC Addendum disappear - the 1004 MC is the chief determiner of housing "sub-market" direction and quantification.  An 18 Month Moratorium WILL NOT keep appraisers from interpreting housing markets properly.  An 18 Month Moratorium WILL NOT all of a sudden give appraisers a set of rose-colored glasses to view their local housing markets.  An 18 Month Moratorium WILL NOT keep appraisers from applying "declining markets adjustments" when they are obviously evident and provable by a simple MLS chart.  An 18 Month Moratorium WILL NOT keep appraisers from applying the mandated "listing-to-sales-price-ratio" to the 3 current listings they are now required to use in their reports.  No, an 18 Month Moratorium WILL NOT keep appraisers from obiding by USPAP, lender guidelines, general appraiser liability issues and/or erase common sense.  When an appraiser studies a housing "sub-market" and sees a chart like this below, the appraiser has to do what they have to do - apply declining markets adjustments if warranted.

Bill Cobb is a Louisiana State Certified Residential Appraiser operating as Accurate Valuations Group in the Greater Baton Rouge Market. Bill has 17 years experience as a residential appraiser and carries on the family appraisal career tradition as a third generation appraiser. To learn more about AVG, visit:



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You should be the first to be applauding this news. The appraisal process is a mess, if only for the fact that costs are up and turn times are terrible.

Why would you right a negative article on good news.. please.

Jun 27, 2009 07:14 AM #1

As on honest and fair appraiser who has turned down many appraisal assignments and refused to work with brokers that shop for values or expect guaranteed values, I can say that there are many many appraisals in my area that are coming in unfairly low. I am hearing stories constantly about unreasonable lender requirements for comps that are causing appraisers to use less appropriate or "easy" comps that may not give a fair value to the homeowner. I am seeing reviewers cutting values based on foreclosure or REO comps that sold below market values. There is almost pressure now to under-appraise a property rather than to appraise fairly.

I am hearing stories from my clients that borrowers are having to pay more for appraisals that are rife with errors, use ridiculous comps and are often done by appraisers from 100+ miles away. I am in the SF Bay Area which is a very specialized area due to unique neighborhoods and architectural styles and it is extremely important to know the nuances of the market yet the AMCs don't seem to care. Cheapest and fastest is what they want so they can get a bigger slice.

Jun 29, 2009 07:30 AM #2

You are right Bill.  I want to see the HVCC go away but it's not the reason for the decline in property values.

Jun 29, 2009 11:39 AM #3

Excellent points. As a fellow appraiser, 2nd generation real estate agent, and more real estate experience than 75% of the Realtors in my area,  I do not like all parts of the HVCC, mainly the one that makes us quasi-soclialized and dependent on being on a list that has no bearing on ability. However, I do like the fact that the HVCC has created a dissconnect allowing me to do my job without any interference and get paid for my job - no more telling a mtg. broker to order an appraisal instead of a lookup. I know my market area like the back of my hand and I can tell when an inexperinced appraisser has been in it because I will see a home sell at such price that can be easily substituted at a lower price. I expected a price drop due to the HVCC since appraisers would without pressure be able to do their job without the risk of losing a client. I have seen it happen and I have lost clients when I did my job right and they didnt like the results. The Realtors have forgotten that they are to serve their client, not their wallet.  I started tracking our trends in 2006 on after a series of reports by Mr. Yun that were severly innaccurate. I have an extensive accounting and economics background and he has routinely been inaccurate. The HVCC just needs some revisions not a moratorium. Someone tell me what happens during and after the moratorium?  And what purpose would it serve. Either get rid of it or change it.

Jun 30, 2009 12:43 AM #4


I get your reasoning to a certain extent. But, an appraiser 2 hours away isn't what is happening. How about my last appraiser from another state. Yes, numbers are what should tell the story, but 2 blocks away from a home in Oro Valley (our Beverly Hills of Tucson) is a place called Catalina. Catalina has historically low priced homes due to its reputation of a mix of SFR & tons of mobile homes. The homes that are 2 blocks away are very nice homes, but it doesn't matter in this situation-Catalina is still considered a mobile home squatters delight. When someone from out of state doesn't know that and pulls in a Catalina with an Oro Valley the results are devastating to the appraisal. And it was! So, before you think that an out of state, city appraiser is ok--I professionally disagree with you. Unless, you can tell me the value difference between a Catalina Mountain View and a West Tucson Mountain View--one out of state appraiser did and deducted $20K for the lack of West Tucson Mountain Views. Oh, by the way--Tucson Mountain isn't consider "Mountain Views" here in Tucson.


Jul 13, 2009 02:02 AM #5

Speaking as a mortgage broker, HVCC's biggest impact has been a much higher fee for appraisals, and complete lack of communication.   I had to terminate my relationships with several excellent, honest, professional, and affordable appraisers due to HVCC.  Each of my former appraisers were terrific.  I told them what the borrower thought the house was worth, and if they didn't feel the market supported the price, they gave me their honest opinion.  There was no "hit this number or else"... I've been in this business 20+ years.  I've been an underwriter before I opened my own company.  I understand that inflated appraisals are toxic to this business.  All I want is a solid appraisal, at a fair cost to my client.  Thanks to HVCC, that is no longer possible.

Jul 28, 2009 12:17 PM #6


you are exactly right.  throw on top of that the lack or portabilty and the whole thing is a mess.  i encourage everybody to get the word out to contact their congress person and ask them to support the bill HR 3044.

Jul 29, 2009 07:59 AM #7
Alix Pinzon
Open Mortgage, LLC NMLS # 2975 - Downey, CA

Appraisal fees should be up, considering the extra 45 minutes required to complete the 1004MC.  Appraisers should be getting fees around $450 for a typical single family, but as a result of the greed and market share grab by the Appraisal Mangement Companies (AMC's), most Appraisers are only getting $200-230. 

Complaining won't create any changes.  It's up to Appraisers to turn down this sweatshop priced work, and move onto a better career, where they'll truly be appreciated.  I've learned that talking to Agents, or Mortgage Brokers about this issue is a complete waste of time, as most of them don't give a rats behind about anyone except themselves. 

Not until most of the worthy Appraisers have left the profession, and the industry is left in shambles, will someone with the power an ability to reverse this idiotic rule.  Andrew Cuomo is a politician, not an Ecomomist, not a Realtor, not a Mortgage Broker, and sure as hell not an Appraiser.  He had no business playing God with the industry, and in the end he'll have egg on his ugly face.

I've said it before, and I'll say it again. the only thing that needed to be done to correct the major lender pressuring problems, was and will eventually be, better (in-house) reviews by the Lenders, and "real enforcement" by the State Appraisal Regulators.

Oct 19, 2009 06:49 AM #8
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