HVCC Petition

Roxy

Since April 2009 the procedure for any non FHA mortgage application submitted by a mortgage

broker or a mortgage banker which may act as a mortgage broker for a particular loan ( which

happens quite often), the loan originator (broker company personnel) are not allowed direct contact

with the appraiser. A system was established of AMC's to avoid any influence in the appraisal process.

An AMC could be 1500 miles away from a property and selects an appraiser on a rotating basis for the job.

This could result in someone from a few counties away ( or another state) getting the assignment.

The AMC takes their profit off the top of the fee charged, leaving the local appraiser with a smaller

fee for the same if not more work and with a performance standard of a 48 hour turn time.

With these constraints, the appraiser may not give the usual diligence required to perform the job

 properly. Any area plagued with a high percentage of REO's and short sales of the total sales will

find more appraisals coming in short of contract values since the distressed sales ARE the market.

Any appraiser will tell you that that is what they are charged with in a residential appraisal which

requires financing.

Most however, would analyse the comps available and would attempt to match comps which were not

distressed sales if the subject is not a distressed sale.

The fact that the large bank lenders are coming up with values below contract prices can be from

them following HVCC as a policy, or it could be a survival tool. If the bank is currently attempting to

 slow the credit available for real estate lending, a very conservative appraisal bias might be evident

in the appraisal orders from that bank.  Another way to stem the lending would be to raise the rates

 to reduce applications.

I hope this long winded answer helps.

I just wanted to post an e mail I received today regarding the HVCC Petition.

It is self explanatory......

Rob Gorman

We have HVCC on the ropes so we need your help more than ever!   On Wednesday, October 21st, the National Association of Mortgage Brokers used this petition hvccpetition.com to help convince the House Financial Services Committee to pass an amendment that will finally put an end the mess that HVCC has been making of the real estate and lending industries.  More than the 102,000 signatures on the petition, it was the pace at which the petition is growing and the HVCC horror stories signers included with their electronic signatures.  Now more than ever we need everyone to rally behind this cause to make absolutely certain it continues to gain the momentum necessary to make it through the House and Senate votes that are forthcoming.  Please, please, Please, sign this petition if you haven't done so already and more importantly, send it to everyone you know in any sector of the real estate and lending industry as well as to all the current, past and future clients in your database.  The new petition website makes it abundantly clear how all homeowners are losing equity and being harmed directly by HVCC as well as how it is blocking any chance at the real estate recovery our economy needs so desperately.  Everyone you send to hvccpetition.com will be indebted to you for looking out for their best interest.  We won the first of three battles which is more than anybody thought could happen and if we get serious and rally together now for one last massive push we should be able to put HVCC behind us forever.  Thank you for your time, effort and support.   Click here to see our interview with the president of NAMB  thinkbigworksmall.com/mypage/player/tbws/19036/-4592      hvccpetition.com     Frank Garay and Brian Stevens Co-Hosts of the TBWSDaily.com real estate news program  tbwsdaily.com "Concerned advocates for a better real estate industry"

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Roxy

A challenge for appraisers anywhere HVCC or not is that they may not have enough information available to them to know that a comp is gutted. In the situation you describe, the fact that it was an HVCC ordered appraisal or not may not be relevant. An appraiser does not go into comps. If they do enough local work, they may have appraised the comp as well when it sold and if it was gutted it should not have been used. In addition, if the gutted property was not listed in the MLS or if the listing didn't contain details of it being gutted, an appraiser would have no way of knowing it was gutted based on data available to them.

This is where the real estate or lending professional with specific knowledge of an appraiser using an inappropriate comp should speak up and have a review performed to determine if more suitable comps should be used. If there was a lack of suitable comps and an inferior (gutted) comp had to be used with the knowledge that it was gutted a substantial adjustment would be in order for the gutted comp to bring it to parity to the subject with all the bells and whistles. Or a wider geographic area could have been utilized to gain more comps.

If there are numerous gutted comps in the area, you begin to see the challenge if an appraiser only does 1 appraisal every few months in the county. If the county, however, is where the majority of an appraisers work is done, it is likely they would have agents who could readily tell them of the number of gutted homes selling and to be watchful for them as comps. This type of infomation sharing is not what regulators wanted to avoid. They wanted the practice of telling appraisers what number they needed a house to appraise for to cease.

The unintended consequence  you descibe could be a failed new home sale which effects many more than the builder/seller  and buyer of the one house. It impacts us all with a market which is not functioning properly.

Rob