Mortgage nightmare | HVCC appraisal regulation

Mortgage and Lending with Platinum Funding Group, Inc.NMLS-243033 NMLS 4195

The HVCC code of conduct is the result of a legal settlement with the attorney general of New York. It is applied nationwide. And it should be considered a case study in the value of the legislative process: If the HVCC had been a bill introduced into Congress, it would have never passed without having undergone drastic changes. But it wasn’t a bill and it isn’t a law; it’s a legal settlement by one state’s attorney general, imposed on all 50 states.
Every public policy has unintended consequences. But that doesn’t mean that the consequences are unforeseen. Plenty of people foresaw the unintended consequences arising from the HVCC. Because it didn’t go through a legislative committee system, because it wasn’t passed by two houses, and because it wasn’t signed by a governor or president, those foreseeable but unintended consequences could be — and were — ignored.  As a matter of fact Cuomo was a paid board member of AMCO, an appraisal management company. His buddy is Ed Davidson (a major campaign contributor of Cuomo) and was the CEO of AMCO, which was sold to SIRVA and renamed Valuation Services, LLC. It is reported that Davison has rights to future income from Valuation Services, LLC. (and I wouldn't be surprised if Cuomo does get a couple of bucks from it either, but that's pure conjecture on my part.)
HVCC was supposed to include Independent Valuation Protection Institute, which is a place to report fraud and coercion. That was never funded so AMCs are unregulated. It was rumored that Ed Davidson was to head the IVPI. As it stands, HVCC is nothing but a profit center for the big banks who own them.

After 18 years in the mortgage industry, I can’t believe that such poorly written legislation is being enforced and the only loser is the consumer. All wholesale lenders have an appraisal review process, there is no way to pay off or entice an appraiser to bring in a value that isn’t supported by comps. If you do the appraisal will be cut and the appraiser will be placed on the black list. AMC’s can just as easily enticed, so how does this solve the so called problem? The bottom line is that consumers will pay 3.8 billion dollars more in appraisal fees this year… What a Gong Show!

Comments (45)

Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

I KNEW IT - I have been saying that Cuomo had to be in the back pockets of AMCs! 

In regards to #22 Chris:  SUPPOSEDLY they are supposed to base appraisal on principles of absorption BUT if they are hiring the less experienced and bottom of the barrel then they are NOT going to know what is going on in our markets.  THIS IS SO FRUSTRATING!

I have a feeling that BPOs will have more weight than appraisals soon.  I completed a BPO the other day where the AMC had to argue with me that I should price according to list prices rather than sold prices.  They ignored all the other data and my market analysis.  They also ignored the fact I mentioned that one of my buyers placed a good clean conventional financed offer on one of those listings that WAS ABOVE SOLD PRICES and not accepted.

I hate the fact that the servicing companies have little armchair valuators (who are not in state) but seem to think they know market conditions everywhere and try to sway value or list prices in the name of "quality assurance"

Jul 03, 2009 05:14 AM
David Daniels
Owner of FlyersToYou, Inc. and former Top Realtor - Hemet, CA


I just posted my comment above...and saw yours. I love reading your comments. You're obviously very well-educated...and your comments often have a slightly "sassy" tinge, which I always get a kick out of.

But with all due respect...

Are you saying that a sales comparable from six months ago for $499,900 should be given more weight in determining value than active listings in that same community for like properties which are currently on the market for $429,900??

How can an appraiser or lender ignore the obviously declining market values?

And an unnaccepted offer for a property (regardless of what the offer was) should never be considered when determining value. Maybe the buyer withdrew his offer when he found out he offered too much?? How in the world can we expect appraisers to use THAT offer as justification for anything?

I think it's very easy to dismiss appraisers as not knowing our individual market areas. But it seems clear to me that we come from a biased position in many cases.

And a lot of appraising is determined by tried and true principles that apply in ANY situation (thus, if a valuator is from out of state, he/she is still going to have established guidelines that apply regardless).

A person who appraises cars in Alabama can get pretty darn close to the market value for a 1985 Ford Mustang convertible being sold in New York (let's say that value is $6,000). While it COULD be argued that New Yorkers have a renewed love for classic Mustangs and are willing to pay more, if there's no proof of that fact, and instead he sees Mustangs advertised in New York for $4,000...I don't see how he could possibly bring it in at anything more than $4,000.

However, I don't know cars that well.

:: smile ::


Jul 03, 2009 05:42 AM
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY

As RR said, the government doesn't solve the problem, it is the problem.

Jul 03, 2009 07:03 AM
Maureen Megowan
Remax Estate Properties - - Palos Verdes Estates, CA
Palos Verdes Real Estate Blog

The problem is that appraisals are now being done by the low bidder, often from areas far away from the property being appraised so you get what you pay for. That is, an inexperienced or incompetent appraiser who can only get work on a low bid basis and who doesn't understand the nuances of your local market.

Jul 03, 2009 07:24 AM
Tim Monciref - Austin, TX
Over 2,000 homes sold…..

I just don't see the problem!  I see several pluses to the system:

  1. You, most likely, will have an appraiser who will be getting less money, thus he can cut out alot of his valuable time in the appraisal process.
  2. You, most likely, will have an appraiser that will not have the time to do a measurement of the home, because it is not cost effective.....and all he/she needs to do is pull the measurements off the very accurate tax records.
  3. You will, most likely, have an appraiser that does not know the neighborhood, so finding comps will be like finding candy.
  4. You will, most likely, have an appraiser that will not want to build a relationship with you for future business.
  5. You will, most likely, have an appraiser that will not care the net effects of the appraisal.
  6. You will, most likely, have an appraiser that after a few weeks to get the go ahead, will be able to appraise the home and have it to the lender within a few hours (happened to me 2 weeks ago)
  7. You will, most likely have an appraiser that never went to see the home to appraise it to save valuable time (happened to me, also, 2 weeks ago)
  8. This system will allow us to extend our contract period from 3-4 weeks to a month and half to two, so it won't be such a rush rush transaction. 
  9. This system will allow us to have extended finance contingencies that will allow our buyers to get out of the deal further down the road.
  10. And the best part, this may allow us to renegotiate the deal when the appraisal comes in below purchase price.

So, I don't get your concern.........  Just my 2 cents for the day. Cheers (Great post, by the way....)

Jul 03, 2009 07:33 AM
Bill Nazur
First Lending Solutions - Riverside, CA Dave from Flyers To You......

You just nailed it on the head.....the industry, and particularly NAR can complain about HVCC until the cows come home, but it will not change the fact that it is here to stay.

Both of your comments hit the nail on the freakin' head! Now if only the masses would listen.......

Jul 03, 2009 09:33 AM
Gene & Kim Quinney
Northwest Equity Home Sales - Tacoma, WA

When a buyer is able and willing to buy and a lender is willing to lend, the appraisal should come in at the sale price. Happy 4th..


Jul 03, 2009 10:41 AM
Tiffany Taylor

Dave, HVCC is not here to stay, in fact, I wouldn't be surprised if it is gone by the end of July.  If the purpose of this legal settlement, (no it's not a law) was to keep Realtors and Mortgage Brokers from pressuring the appraiser into bringing in higher values, then what's to stop them from pressuring an AMC?

If you don't use the "willing buyer" "willing seller" method on any level ever, then how will home prices ever go up?  We are seeing appraisals based on current comps of short sales and foreclosures coming in 20% under value! Why?  I don't understand the logic?  and please don't tell me because we are in a declining market...because that has already been factored in.

The last decade or more of presidential campaigns (democrats and republicans alike) have pushed the American Dream and the need to make owing a home a reality for every american.(bad idea)  It was the fed that sent memos to FNMA and FREDDIE asking them to losen underwriting guidelines and make special programs for minorites etc. FNMA and FREDDIE both warned of the potential danger of this.(email me if you would like copy of NYT article) The housing market is cylical and the only difference with the current one is that a lot more people were able to qualify and purchase a home and thus we have a lot more foreclosures than we did in the last one....only this time we are using our tax dollars to help people who should have never qualified stay in the home they could never afford.  We have seen centuries of housing markets, prices go up then they go down...usually about a 10 year cycle... How did we "police" ourselves before? I'm not against regulation if it is written by someone who understands the loan process and doesn't have their own personal agenda and financial gain in the mix.  Is that too much to ask?

Jul 03, 2009 11:26 AM
Christianne O'Malley
Dickson Realty - Reno, NV
Exceptional Service - Delivering Results in Reno!

Wow! I had no idea that Cuomo was in the AMC's pockets! I can't wait to spread this info and am anxiously awaiting how this all comes out...because it always does...

Jul 03, 2009 11:40 AM
Roland Woodworth
eXp Realty - Clarksville, TN
eXp Realty

Tiffany.. it is amazing that they would even pass something lilke this to begin with.

Jul 03, 2009 04:26 PM
David Daniels
Owner of FlyersToYou, Inc. and former Top Realtor - Hemet, CA


Perhaps I should clarify a couple things:

1.) My ex-wife is an underwriter and former loan officer
2.) My son is a loan originator
3.) My daughter's mom is a loan processor
4.) My closest friends are either Realtors or in the mortgage business
5.) I've been licensed forever...and up until starting FlyersToYou 8 years ago, I spent 15 years in the mortgage industry running huge operations, and then hopped the fence over to real estate sales as a top producer for 10 years.

I bring all of that up so that no one draws any conclusions about my being biased toward anything BUT what's best for the industry.

But let me share some other facts:

My son, in the early stages of his career 4 years ago, was awestruck and mesmerized by several of the loan officers at his company. They were 25 years old and making $500,000/yr. They drove fancy cars, lived the "fast life"...and were the most successful people he'd ever met.

How they earned their livings, however, was no better than the Bernie Madoffs of the world. They churned refis over and over again ad nauseum. In one year, they'd refinance a single borrower three times, and while they offered their customers "no-cost refis", they were doing so at above available market rates, and earning 3 points on the back end. $800,000 loans at 3 points = $24,000. It was very common to hear young punk loan officers bragging about the fact that they won't touch a deal unless they netted $15,000 to themselves. So with one borrower, they made $45,000 a year. With 20 borrowers, they earned almost a million. Meanwhile, they were sticking it to their customers because they could.

Fortunately, almost all of them are out of the business now. Except for the few that went on to charge $3,500 for loan mods, until that became more regulated (there's that word again).

I also know at least 200 Realtors personally who manipulated the system for personal gain. They'd have a loan turned down by ABC Mortgage, and shop it around to DEF, GHI, JKL Mortgage, until finally XYZ mortgage would do the deal in a (shall we say) less than professional manner? The appraisal was rigged, the borrowers didn't qualify, but the deal was done regardless....and everyone was thrilled not only at how easy this business could be, but at how much one could make while doing it.

By the way, before anyone jumps in and hammers me for calling ALL agents or lenders crooked, trust me, that is NOT what I'm doing. I also am fortunate to know many of the best, most professional people I can imagine working in ANY industry, and they happen to be lenders and real estate agents.

Nonetheless, it wasn't they who caused the mess we're in. But with the magnitude of our economic crisis what it is today, there was an awful lot of BS going on out there. Yes, yes, I know...Wall Street made loans available that they shouldn't have. I hear the blame being placed squarely on the shoulders of the investment banking world until I'm blue in the face. That somehow justified agents increasing values at the astronomical rate of 100% per year....while loan officers made loans of $350,000 to a couple where the husband works at Walmart, and the wife at the local flower shop.

And now...none of can stand that we're being regulated?? LMAO!

NAMB's best argument toward getting rid of HVCC is that it's causing greater expense to borrowers nationwide, yet where was NAMB when their members routinely charged 3 points overage on every transaction? NAMB brings up the time delays hurting the consumer by not letting them take advantage of historically low rates, yet where they when their members upped the rate on loans so they could pocket an additional ten grand? By the way, borrowers today STILL enjoy historically low rates, and had the market recently gone down instead of up, NAMB would have been thrilled with the extra 30 days it takes to process a loan. NAMB argues that HVCC is causing appraisals to come in low, yet no one decries the fact that every agent I know is now a "short-sale expert"...and is out there vigilantly adding to the more than 60% of housing inventory being some sort of short sale...and listed at some ridiculously low price.

But we, as an industry can't believe what HVCC is doing to our values when the home doesn't even have a kitchen??

You don't find that funny?

The only really sad thing resulting from HVCC is the elimination of the really experienced and professional appraisers who did a great job. They can;t work for $200, and are now exploring other lines of work. THAT is a damn shame. It's also a shame that there are really GREAT agents who are leaving the business because they can't survive in our new market. It's a crying shame that the best loan processors are no longer in the business because there's no money to pay them. It's awful to watch the single moms who worked their way up the ladder to become Senior Underwriters out looking for work because their companies have closed their doors.

But to blame HVCC is ludicrous.

We, as an entire industry, acted like unsupervised kids without a babysitter for 5 years. We made truckloads of money while doing so. And now that someone realized we probably need a babysitter so we no longer have free rein to break the furniture, rip the carpet to shreds, and use magic markers all over the walls, we're upset.

The HVCC babysitter will not be going away any time soon (you and I disagree on that point). Some form of babysitting has to remain intact. Free for alls in this industry should have stopped a long time ago, but they didn't. It's time they do now.

Lastly, regarding how will prices ever go up if we abandon the "willing buyer, willing seller" rule? We're not abandoning it. They're still entitled to pay whatever they want for the home. But the lending world will now forever have checks and balances in place to prevent the widespread abuse that got us where we are today. 100% inflation per year?? Those days are over. Will prices go up when a normal real estate market returns? Yeah...but don't hold your breath. That won't be for another 8-10 years.

In the meantime...if you want...present a seminar to your local Realtor community and show them why the constant listing and promoting of short-sales and price reductions are ruining this industry FAR more than HVCC ever could. And tell them to quit signing petitions to revoke HVCC, as with the standards of practice as they are today, that will not help in any sort of housing recovery.

Also, write a letter to NAMB informing them that the reason they're on time out now is because they refused to behave and earn any semblance of respect whatsoever over the last 5 years.

Whew, now THAT was a long read (sorry).


Jul 03, 2009 06:14 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Boy, this sure started some hefty debate.  I have to say I agree with Tim's take on the whole thing.

Also, how is this helping the consumer?

Jul 03, 2009 07:26 PM
Tiffany Taylor President, Platinum Funding Group, Inc.


 I too, only mention this in an attempt to eliminate any ideas that I am "biased toward anything BUT what's best for the industry."

1.) My Brother is the Vice President for a very large wholesale investor.

2.) My Father owns the largest Independently owned Mortgage Bank in Ca.

3.) My Mom works as a Loan Officer for my company.

4.) My closest friends are in the Industry and have been for 20+ years.

5.) I have an MBA from Chapman University in Business Economics, and have 18 years in the Industry. I've been an Escrow Officer, Underwriter, Real Estate Broker, and I founded Platinum Funding Group in 1998.

With that in mind, I appreciate and understand your indignation at the industry and although I didn't participate in the behaviors that your Son witnessed four years ago, I did hear about it in the papers.  My point is, like you said "those days are gone" and so are the 25 year olds (thank god).  Those of us left have experience, integrity and the borrowers best interest at heart. The "exotic programs" are gone! The underwriting guideline have been tightened, and are becoming ridiculous.......BUT WHAT DOES ALL of THIS HAVE TO DO WITH HVCC?   ARE YOU SAYING YOU LIKE THIS "LEGAL SETTLEMENT" BECAUSE EVEN BAD REGULATION IS A GOOD THING?  Is it okay with you that the Borrowers that are still making there payments on time (despite the fact that they lost their equity) should have to pay more in appraisal fees?  Not to mention, that they are spending their tax dollars paying for people that either bought more than they could afford hoping that prices would continue to go up, or others that are (once again) taking advantage of the system and are enjoying living for free (for 18 months on average) that it takes to get them out from the time they miss their first payment.

Like I said I'm not against regulation and higher standards in our industry. If it is written by someone who understands the loan process and doesn't have their own personal agenda and financial gain in the mix. There is no need to "attempt" to correct a problem that no longer exists, and let the Consumer and the Appraisers pay for it, while the politicians get fatter. 



Jul 03, 2009 07:46 PM
David Daniels
Owner of FlyersToYou, Inc. and former Top Realtor - Hemet, CA


You bring up a valid point. The bad loans are finally gone, the bad loan officers are finally gone (well, at least a BUNCH of them are)...many of the bad "everythings" are finally leaving the industry so that perhaps the cream WILL rise to the top...and we can begin our road to recovery.

And no, by the way...I am not saying that I like any additional regulation if it's not necessary. I hate the fact that an industry that's responsible for the American consumer's major purchase of a lifetime has been allowed to operate so "willie-nillie" for years. Hell, used car salesman had more of a conscience that what I've witnessed.

And the cleanup happens.

Guidelines have tightened to the point of near impossibility (those will remain in place whether HVCC stays or goes). Review appraisals will create hits on value just as much as HVCC appears to, although it's become fairly convenient to attack HVCC anyway. Consumers will pay more in appraisal fees, yet no one seems stimulated or concerned enough to actually pitch in $200.00 to "lessen that particular blow". Heck, in the last two weeks, I've read blog after blog after blog here about Realtors who, while advising sellers to reduce their price by $45,000 wouldn't EVER entertain the idea of pitching in $200.00 of their $12,000 commission toward the buyer's increased appraisal fees. My conclusion is that I guess the increased appraisal fees really aren't that big a deal after all? If they were interfering with a successful close, someone would pitch in, but's such a nominal amount anyway that who really cares??

I don't see ANYONE clamoring for the title company to reduce their premiums, or the home inspector to reduce his...or escrow, or homeowner's insurance, or termite company, or home warranty, or notary, or WHOMEVER (you can fill in the rest of THAT list). NO ONE'S fees are going down. But HVCC comes along, and it increases the costs to borrowers by a couple hundred bucks....and all hell breaks loose?? LOL!

If I were selling real estate, I'd explain to my buyer that the increased cost "assures" them of an unbiased, unprovoked, unthreatened, unethical, unimaginable appraisal that simply came in at value because it "needed to". EVERY buyer I know would be thrilled to tears knowing that no one's going to artifically influence the value of the home he/she wants to purchase, and if asked whether they want the appraisal inflated for a couple hundred bucks in savings....or accurate for a little more, they'll choose to pay the couple hundred bucks every single time. I'm not going to debate here whether they actually are getting what they're paying for, ok? I already addressed some of that above.

But remember, they already know tons of people who found out too late that their homes weren't worth ANYWHERE near what they paid. If a couple hundred bucks gives them peace of mind, we should embrace it, not fight it. It's all a matter of perspective, I guess.

And no...I don't think it's fair that ANY of us have to pay increased taxes to bail ANYONE out for ANYTHING that THEY DECIDED TO DO! We all know people who shouldn't have bought their home for $500,000. They couldn't afford it. They also shouldn't have gone out and spent the rest of their money (you know...the money they didn't have to put down) buy ATC's, Jet-Skis, RV's, Plasma TV's, Harley-Davidsons, new SUV's, etc. They put themselves in financial hell....and we have to bail them out with higher taxes???? Who in the world believes THAT's fair???

Definitely not me!

A dear friend of mine hasn't made a payment on his home for almost 15 months, and the lender hasn't even filed an NOD. He think it's the coolest thing! Can you imagine?? 3,500 square feet, beautiful pool and spa, RV parking, etc....and instead of paying their housepayment of $3,600/mo., they're living there scott free. And once the NOD is filed, you're right....they'll be there another year and half before ever being forced to move. Meanwhile, you and I will somehow have to pay for them giving all appearances to their neighbors that nothing's wrong. That they're still fine, upstanding people. Of course, a couple months before they actually LOSE the home to foreclosure, they'll list and apply for a short-sale due to hardship. I hope the lender just laughs.

And even today....right now as we speak, they taking their $3,600/mo housepayment, and instead of paying their mortgage, they're going out to dinner, or buying a 2nd 50" plasma TV for the bonus room.

My brain honestly cannot wrap itself around these kinds of things.

I know how you feel about regulations...but if I was in charge...I'd implement a new regulation that said the moment a borrower fell behind by 60 days, the lender had the ability (NOD filed or not) disconnect all essential services from the property. Gas, water, electricity, trash, etc. Make the property uninhabitable. Problem is, the occupants would beat the house up, steal the appliances, thrash everything within baseball-bat distance, and the lender would wind up with perhaps an even greater nightmare on their hands than they have now. After all...all of us are going to bail them out anyway, so why not at least protect the property's condition by allowing the borrower and his family to stay??? It's all so incomprehensible.

Every rule I can think of needs to be re-written...and I guess the only thing that you and I actually disagree on, is whether new regulations should be implemented in an effort to at least TRY and correct what they see as "the problem".

Are they right? Ideally, yes....but in practice, no...(not yet). Am I glad they're finally at least trying?? You bet I am.

And since some of those officials are not as familiar with the inner workings of real estate, should they go to NAR for advice? That's one of the most laughable thoughts I could ever possibly imagine. NAR doesn't have a clue either, and have already demonstrated how effective they are at running their side of the business. They define impotence.

Should the government go to NAMB for advice? Come on Tiffany, look at how pathetic your industry's national association is. They, too, are in complete denial over their role in this mess. They ALL knew (EVERY SINGLE ONE OF THEM!!!!) what was going on in the mortgage industry (hell, overage has been "blessed" for over 30 years now). Crooks have made fortunes, and many have served as part of the leadership dais for NAMB. Good fronts don't mean anything to me anymore. Suits and ties do not a good lender make. And in the last five years, the thing they got the most pissy about was when they had to disclose their own cheating of the system (YSP), but the banks didn't have to (SRP). They were right in principle, of course....but to try to pass that whole thing off as anything but thugs whining because they couldn't steal and pilfer anymore...and someone else just amazingly ridiculous.

So if ...

a.) the industry is completely incapable of policing itself...and b.) the industry's leadership ALSO doesn't have a clue....then they either let the professionals on the street (like you) handle it, or they let people in New York with an interest in the solution do it.

I'd rather they talk to you and your family about it. But until you distance yourself away from the industry affiliations supposedly acting on your'll never stand a chance. The government will (and should) laugh right in their faces....and send them on their way.

And for YOUR voice not to be sad.


Jul 03, 2009 08:59 PM
Timothy Andersen
Timothy C. Andersen, Inc. - Palm Beach Gardens, FL


Wait a minute!  Every one of these posts are negative on the HVCC, and some are downright malicious.  It's time someone from within the industry spoke in its favor and described for all the nay-saying ninnies all of the positive aspects of the HVCC and its beneifts to the loan consuming public.

Ok, here goes:  Oh, hold on a second!  There aren't any!  Sorry!  My egalitarian side got ahead of my pragmatic side.  I hate when that happens!

What started out as really an appraisal industry problem has now metastised into an industry-wide problem with both industries taking it in the shorts.  Clearly there were abuses by the lending industry against the appraisal industry, but the HVCC is not the proper response to that problem.  The folks who spawned the idea were indeed werll-intentioned, but the golem that is today's result is not the solution to the problem, either.

While I am an appraiser, I support the NAMB's attempt to get the HVCC suspended or repealed.  I also laud the NAR's and the AI's attempts to have the HCVV struck down.  Legislation by attorney general fiat is wrong and not part of the law-making process the founding fathers envisioned.


Jul 04, 2009 03:09 AM

I accidentially wound up on this blog.  I am a homeowner that has been screwed big time by this all of this hvcc crap.  We live in a small beach community in Los Angeles county, Manhattan Beach.  We put our home up for sale and got two offers within the first week.  We accepted one, went through the escrow process and appraisal process..blah, blah, blah.  Our appraisal came in 225,000 less than the agreed price.  Buyers said we're paying what the house was appraised at, we said no way.  The appraiser was completed flawed.  Comps used were miles east, terrible spec homes and bank owned home.  The comps were not comps at all.  The appraiser was from out of town and did not know the area and spent about 2 seconds in our custom built gorgeous cape cod home.  But then again, if he did not know the area why didn't he take comps closer to the beach???  Very suspect.  The whole thing reeks.  We're screwed now because BofA will keep that appraisal on file for the next buyer. 

The bank manager even said the comps were terrrible comps but there was nothing she could do about it.   We just lost a few hundred grand and who knows if we can sell it now.  Not a good time for us to lose our life savings...can anyone help.  Any advice on action we can take would be greatly appreciated.

Jul 12, 2009 11:25 AM
Tiffany Taylor
Platinum Funding Group, Inc.NMLS-243033 - Irvine, CA
Platinum Funding Group


I'm sure you are wondering why this happening. Well... "The alleged collusion was between WaMu and an appraisal management company called eAppraiseIT.” The New York attorney general Cuomo initially probed business ties between lenders and appraisal management companies. But the “legal settlement" says these ties should be encouraged. Now a bank can own a stake of as much as 20 percent of an appraisal management company. From what I understand, this part of the settlement was added to the final draft over a weekend. (hmmmm)

Think about that. Banks, always hungry for fee income (especially now, when they're reluctant to lend), are allowed to own minority stakes in appraisal management companies -- and suddenly, the appraisal management companies are charging higher fees to consumers while paying less to appraisers.

It makes you wonder. If New York's attorney general investigated a huge bank and an appraisal management company for collusion, why did the investigation result in a legal settlement that allows banks to partially own appraisal management companies? If the targets of the investigation were a big bank and a big appraisal management company, why did the settlement restrict the activities of small mortgage brokers and independent appraisers?

The legal settlement was supposed to result in creation of a watchdog agency called the Independent Valuation Protection Institute, with a hot line to field complaints about appraisers. The hot line has been yet to be created. (This is crazy, AMC's are completely unregulated)

An online petition calling for the reconsideration of the Home Valuation Code of Conduct (HVCC) has had tremendous support from both real estate industry professionals as well as consumers, particularly homebuyers and Sellers whose lives have been devastated by the unintended consequences of HVCC.

The petition was launched June 1 at The petition, with over 50,000 signatures and comments detailing the ruinous personal impact HVCC has had on consumers and industry professionals and will be delivered to New York Attorney General, Andrew Cuomo, Federal Housing Finance Agency Director, James B. Lockhart and the House Financial Services Subcommittee.

I could tell you my own personal HORROR stories with HVCC, but I'm sure you can imagine, and it will only cause me to get all worked up... Let's just say that I have had 20+ Borrowers that have had to pay for more than one appraisal, and the values have varied in some cases by more than $250,000. (for example 1st appraisal came in at $380,000 and the second appraisal came in at $575,000)

My advice to you is just that, I would demand a second appraisal and I think it will prove to be well worth the money spent... Good luck to you...


Jul 12, 2009 06:58 PM

I am currently in the middle trying to buy a home.  I was suppose to close last thursday but guess what is holding up my deal?  The appraisal!  its not back yet.  Not only did I have to pay for it up front but now I am having to pay more money to extend my lease since I didn't close on time. It is a nightmare!

Oct 27, 2009 07:54 AM
Appraiser Inactive


There is no limit to the amount of ownership a bank can have in an AMC.  Most of the appraisers in the country filed complaints during the HVCC comment period.  The only thing that was changed because of the comment period was that banks were allowed complete ownership in the end rather than having limited ownership.  No need to ask who was pulling the strings to have HVCC passed.  Not only did banks succeed in forcing the majority of the competition (mortgage brokers) out of business; they also racked up billions of dollars in profits by laying claim to 50% or more of every appraisal completed in the U.S.

Recently read that an appraiser threatened to blow Cuomo's head off.  Maybe he should also add every major bank to his hit list as well.

Jan 03, 2010 04:05 PM
Appraiser Inactive

HVCC is a little like a cow with two udders...a cash cow if you will. AMCs feed off of one udder while banks feed off the other. Borrowers and appraisers are forced to feed the cow and shovel it's [beep] around the clock. Any leftover milk is sent to the cheese manufacturer [Andrew Cuomo] who in turn sells it for political gain. The cash cow had it's day but it's time to shove a stick of dynamite up it's [beep]. AMCs and banks are bloated, appraisers are tired, and the cheeseman needs a new job shoveling [beep] for a change.

Any appraisers out there that would be willing to join an AMC boycott for 30 days or more? April 1st (1004MC day) or May 1st (HVCC hell day would be a fitting start dates.


Jan 07, 2010 10:33 AM