In response to a law suit filed from New York against Fannie Mae and Freddie Mac, there are new regulations on the horizon called the HVCC (Home ValuationCode of Conduct). In short, these new rules are not good for anyone in the Real Estate business. I am copying an email I recieved yesterday from the CEO of alamode, a website managing company. As a highlight you need to know that the new rules forbid contact in any manner between the Realtor or the mortgae professional and the appraiser. Also, all appraisals will be ordered by the lender (that is the big bank, not the local guy). This is goingto create inumerable problems for everyone involved.
ACTION ITEM - go to this website http://mercury.alamode.com/clicktrack.aspx?adcode=HVCC_Agent&url=http://www.alamode.com/HVCC-RE and state your opinion so that these rules will NOT come into force.
Here is the mail I recieved:
To: All agents and REALTORS®
Re: New regulation we need to stop
From: David Biggers, Chairman, a la mode, inc.
The last time I sent a memo to all the agents in the country was when we were soliciting matching donations to our $250,000 pledge in the wake of Hurricane Katrina. You responded wonderfully. Today's reason for this memo, a regulatory call to action, is just as significant. In the same way that a hurricane destroys a broad swath indiscriminately, there are new regulations being handed down from Washington which will wreak havoc on a wide scale in the real estate industry, and real estate agents will be directly harmed. Like with Katrina, I hope you'll respond again, and help me stop this damage to our businesses.
The new regulations came out of a lawsuit brought by the New York Attorney General involving coercion of appraisers by large institutions. In the settlement agreement, the GSEs (Fannie Mae and Freddie Mac), and the Office of Federal Housing Enterprise Oversight (OFHEO) agreed to change national appraisal rules - in exchange for the Attorney General's office terminating its investigation of the GSEs.
Unfortunately, while we believe the agreement has the best of intentions, the hastily written embedded regulations (called the "Home Valuation Code of Conduct", or HVCC) do not solve the problem and in fact severely punish agents, mortgage brokers, appraisers, and ultimately consumers. If there ever was a case of the cure being worse than the disease, this is it.
The two portions of the HVCC that most affect you are:
"The lender will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by... mortgage brokers and real estate agents..." and
"...any person... who is compensated on a commission basis upon the successful completion of a loan... shall be forbidden from... any communications with an appraiser"
Why every agent should be concerned about the proposed HVCC:
- Agents are specifically singled out as being "the problem", and are banned from even talking to appraisers at all; that's a RESPA "death sentence" for every relationship you've ever built
- It shifts power toward large institutions and away from agents, since the lender alone becomes the sole point of contact for the borrower in critical areas
- Your role as the prime coordinator of the transaction will be severely damaged, and handed to the lender
- Buyers will wind up paying for a separate appraisal for every potential lender, driving up closing costs, reducing competition, and ultimately pushing housing affordability even lower - directly affecting your homebuyers
- The business relationships that you've spent years building with mortgage brokers are made worthless overnight, as borrowers will be forced to lock in with one lender almost immediately
- The entire regulation is biased toward the large institutions and against independent appraisers, mortgage brokers, and agents
- If this becomes law, what part of your value-added role will come under attack next?
As you can see, this isn't just about appraisers. The draconian measures in the HVCC absolutely exclude you from properly assisting buyers and sellers during the appraisal, one of the most important (and stressful) areas of the transaction. As the market slows down and you're under fee pressure, is this the time to find that you've had the core of what you do - guiding and counseling buyers and sellers through your industry knowledge and business contacts - taken away from you in the dark of the night?
I don't think so. That's why the whole industry needs your help. And you can do it with just a few clicks and perhaps a phone call or two.
It would be easy to think that this is an appraisal issue, and appraisers can deal with it themselves. I think I've shown above that it's very damaging to agents specifically, but I believe also that there's a bigger issue here. Back when I first personally donated $150,000 to the REALTOR® Relief Fund (click here for the news story), we had just entered the agent software market, having spent 20 years serving appraisers. The money that went to benefit agents and their families in the affected areas ultimately came from appraisers, and those same appraisers stepped up to the plate again in matching my additional $250,000 challenge.
You can return the favor to those appraisers - and safeguard your own career - by simply visiting our website and using our convenient form to send your comments to the powers-that-be. Agents outnumber appraisers roughly 10-to-1, and your voice will have a huge impact on the OFHEO, Fannie, Freddie, and Congress. All you have to do is visit our political action page by clicking here: http://mercury.alamode.com/clicktrack.aspx?adcode=HVCC_Agent&url=http://www.alamode.com/HVCC-RE. (Remember: If left unchanged, it harms you too.)
I mentioned that we were comparative newcomers to the sales side of the real estate business in 2005. But today, over 35,000 agents use our websites and tools. And all told, over 100,000 agents, appraisers, and mortgage brokers use our products. Unfortunately, all the software in the world won't make this latest problem go away. But 100,000 people collectively voicing their opposition to poor regulations - now that can indeed make a difference. Join me in sending a message to Washington, without making any donation or spending any money at all, by just using your mouse. Join us now in sending a clear message by visiting http://mercury.alamode.com/clicktrack.aspx?adcode=HVCC_Agent&url=http://www.alamode.com/HVCC-RE.
Thanks for reading this, and thank you in advance for your help.
Dave Biggers
Chairman
a la mode, inc.
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