As we sit here in mid- July, most if not all Americans are still waiting for the federal government's stimulus package to actually help achieve the goals it set forward at the beginning of the calendar year. There are multiple reasons why many Americans are still unable to benefit from the program, but many of them are closely related to the lower values given to most homes. While it is clear that many homes were overvalued in previous years, many in the real estate business have pointed to the HVCC (the new Home Valuation Code of Conduct) as a major roadblock. So what does the HVCC do? To make a long story short, the HVCC restricts who can perform the appraisal on a given property, and puts it in the hands of a national company. This sounds like a great way to prevent appraisers from giving inflated values in order to continue to earn business from real estate and mortgage companies. The problem with this is that often an appraiser is assigned to a locality they have zero knowledge in. Many involved in real estate believe this had lead to improper home values. Prior to the HVCC, lenders used local appraisers who had the local knowledge necessary to give the home its full value.
Why was the HVCC created? It was put into action in order to improve the home valuation process, but unfortunately it is had more negative effects. These negative effects have clearly hindered, not aided the stimulus package designed by the government to help those who could not afford their homes. Not only has the HVCC halted relationships between companies that have done business with each other for years, but it has also taken away any motivation for appraisers to perform the detailed work necessary to offer the proper evaluation of a given property. Their accountability now has been seriously diminished and therefore the quality of their work has suffered as well according to many real estate agents and loan officers.
While the HVCC had good intentions in its goal of keeping appraisers from overvaluing homes and bringing stability to what was otherwise a chaotic residential real estate market; one must wonder if now this was the best time to make this change. In the midst of the worst housing crisis in American history common sense would point to trying to get more refinances and purchases done. If those in power truly wanted to help those in financial trouble, they could have first tackled the millions of Americans who are about to lose their homes to foreclosure or short sale and then concerned themselves with regulating the industry. Has it not been enough to completely change the entire mortgage approval process? One must seriously wonder if anyone in power has any idea of what is really going on.
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