Archive for the ‘HVCC’ Category
An Update on HVCC
The Home Valuation Code of Conduct (HVCC), about which we’ve written several blogs, was enacted to provide better, more honest real estate appraisals. To say that the HVCC was and is controversial is a massive understatement, and most real estate appraisers have been counting down the days until November 1, 2010, when the HVCC agreement between Freddie Mac, Fannie Mae, and the New York state attorney general is set to expire.
Unfortunately for appraisers, November 1 may not be a day for confetti and champagne after all. Though that is the expiration date, it doesn’t necessarily mean that HVCC will disappear on that day. Fannie Mae, Freddie Mac, and other lenders are not required to remove HVCC guidelines from seller service agreements after the deadline, and as of right now, the belief within the industry is that the HVCC will linger well after the expiration date.
As they have been since its inception, new problems created by the well-meaning HVCC seem to keep cropping up and the issues appear to be growing. It’s more important than ever to make sure you use an established, licensed appraiser.
By: Present Value
Additional Reading:
HVCC Not Going Away?
The controversial Home Valuation Code of Conduct (HVCC), which you can read about in our previous blog, “New HVCC Appraisal Rules Blamed for Destroying the Housing Market,” was slated to be terminated upon the creation of the new independent Consumer Financial Protection Agency. The new agency would assume responsibility for equal opportunity in credit, real estate settlement procedures, financial disclosures to borrowers, and unfair and deceptive marketing in mortgages and other financial products.
Now, however, the Consumer Financial Protection Agency itself seems to be in jeopardy. Squabbling on Capitol Hill regarding how much power and independence the agency should have is moving the bill closer to the congressional junk heap than to a significant new law.
Senate Banking Committee Chairman Christopher Dodd has set forth the idea of putting the new agency in the Federal Reserve. But Travis Plunkett, legislative director of the Consumer Federation of America, has stated, “I don’t know if we can have an agency like that in the Federal Reserve.” Watering down of the bill to gain bipartisan support looks to kill any true impact the agency might have had.
The HVCC has been universally unpopular among those in real estate appraisal, and the Consumer Financial Protection Agency looked to be the salvation. But unless some compromise can be reached, the HVCC may be here to stay.
By: Present Value
Additional Reading:
Working with HVCC Regulations
A recent article in Banker & Tradesman suggests that consumer confidence in the real estate market is coming back. Coming out of the 2009 Realtors Conference & Expo in San Diego, the article indicates that in spite of the decline of the market, buyers are still looking for vacation and recreational properties.
Industry experts, however, still appear to be concerned about issues surrounding real estate appraisals and the unintended consequences of the implementation of the Home Valuation Code of Conduct (HVCC). As we have discussed in other blog posts, the perceived problem is that appraisers, working for appraisal management companies, are often working outside areas with which they are familiar and may not have access to information about specific markets. Realtors argue that as a result of valuations that sometimes are too low, sales have been delayed and even cancelled.
This Banker & Tradesman article provides some interesting suggestions by realty agents of ways to work with the HVCC changes, including providing appraisers with detailed property comparison information and background materials to help appraisers achieve the most accurate appraisals.
As always, Present Value LLC is both an appraiser and an appraisal management company, which means that it can play the role of the third party required by the HVCC changes and save you the step of having to seek out a separate appraisal management company.
By: Present Value
Recent Articles About HVCC Changes
We’ve written several posts this year about the HVCC changes and how they affect the appraisal industry. You can read those articles here. Over the last two weeks, there have been a couple of articles written about how those changes affect not only appraisers, but home owners.
The Seattle Times published an article that followed one appraiser’s experience of the industry before and after the HVCC changes designed to keep brokers and appraisers from working too closely together went into effect. For this particular appraiser, appraising is a family business and he describes not only his worries for the industry as a whole, but his personal pain as he watches the HVCC changes’ negative effects on the industry he loves.
The article in The Seattle Times briefly mentions the effect of the HVCC changes on consumers, but another article published in the Chicago Tribune goes into a more in-depth exploration of consumers’ worries. This article discusses a man’s experience selling his home in Massachusetts. He had a successful sale, but found that the HVCC rules designed to protect him made the experience more stressful than it had to be.
To read the article in The Seattle Times, click here. The Chicago Tribune’s article can be found here.
By: Present Value
Appraisal Organizations Address Letter to the FHA
A number of appraisal organizations, including the Appraisal Institute, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers, released a memo to the Federal Housing Administration (FHA) regarding the Home Valuation Code of Conduct (HVCC) and FHA’s possible adoption of elements of the HVCC.
The letter calls the FHA to enhance appraiser independence and to more closely monitor mortgage brokers and appraisal management companies. Below are the specific, overarching recommendations made in the letter:
- Recommendation 1: Establish the conditions for mortgage broker participation in the FHA appraisal ordering process.
- Recommendation 2: Supplement state and federal appraiser independence requirements with more robust appraiser independence requirements specific to FHA.
- Recommendation 3: Rescind Mortgagee Letter 97-46.
- Recommendation 4: Develop rules and expectations relating to appraisal management companies.
To view the full letter to the FHA, visit the Appraisal Institute website, here.
To view Present Value’s previous blog posts on HVCC changes and industry reactions, click here, here, and here.
By: Present Value
News About HVCC Changes
There was an article in The New York Times last week about the changes to the Home Valuation Code of Conduct (HVCC) that went into effect in May of this year, which we’ve written about here and here. Essentially, the changes say that only lenders can order appraisals and that rather than going to an appraiser directly, they must order appraisals through an appraisal management company.
During the housing boom, appraisers were occasionally under pressure to overlook property defects, which, in turn, contributed to increasing home prices. Ethical appraisers who refused to overlook defects were in danger of losing work and asked for greater enforcement of laws designed to regulate appraising. The HVCC changes were intended to decrease home appraisal conflicts of interest by putting the entire appraisal process in the hands of those most at risk of losing money – the lenders. But the changes designed to solve one problem seem to have created a whole host of other problems. Some real estate agents argue that the changes block home sales and are asking for the changes to be suspended until 2011. Some appraisers feel that the changes, which were meant to help ethical appraisers, actually hurt them by driving business to inexperienced appraisers.
The changes are fairly new and it remains to be seen how they will affect the industry in the long run. To read the full article and learn about the opinions of those affected by the changes, click here. To read a previous post about how these changes affect Present Value, click here.
By: Present Value
New HVCC Appraisal Rules Blamed for “Destroying the Housing Market”
A recent AP article contends that there is strong backlash against the new Home Valuation Code of Conduct (HVCC) rules that were enacted on May 1, 2009.
“The new guidelines bar mortgage brokers from ordering appraisals themselves, forcing them to do so through a mortgage lender. Lenders may order appraisals through in-house staff or appraisers hired by outside firms known as appraisal-management companies. But neither may talk to the appraisers about the value of the property they’re evaluating.”
Players in the real estate market, including realtors, homebuilders, mortgage brokers, and some appraisers, argue that the rules have created a number of problems, including the undervaluation of properties and delays in sales closings.
The changes state that rather than going to an appraiser directly, lenders must order a real estate appraisal through a third party, such as an appraisal management company. The new HVCC appraisal rules were put in place to prevent conflict of interests that led appraisers to inflate the value of a property, which have been partially seen as responsible for the current crisis in the real estate market. As part of a settlement between New York Attorney General Andrew Cuomo and Fannie Mae and Freddie Mac, the policy was intended to eliminate the pressure appraisers might be under by lenders and brokers to overinflate property valuations to increase profits.
Organizations like The National Association of Mortgage Brokers and The Appraisal Institute have come out against all or portions of the new regulations.
You can find Present Value’s other blog posts on HVCC here.
By: Present Value
Present Value LLC and the upcoming HVCC changes
Earlier this month, we wrote about the Home Valuation Code of Conduct (HVCC) changes that will go into effect on May 1 of this year. You can read the full post here. Essentially, the changes state that lenders seeking a conventional appraisal, as opposed to an FHA appraisal, will be required to find an appraiser through a third party, such as an appraisal management company.
If you’re seeking an FHA appraisal, your interaction with Present Value won’t change. Because the HVCC changes don’t affect FHA appraisals, lenders can still contact Present Value directly. And more good news – if you’re seeking a conventional appraisal, your interaction with Present Value will also remain the same. Present Value LLC is both an appraiser and an appraisal management company, which means that it can play the role of the third party required by the HVCC changes and save you the step of having to seek out a separate appraisal management company. One of the principles to which Present Value adheres is to provide the best possible customer service. As these changes go into effect and people begin to navigate what the changes mean for them, we hope that the lack of disruption in service you’ll experience by working with Present Value will prove our dedication to this principle.
In other news, have you had the chance to check out our introductory video? Click here to watch.
By: Present Value
Recent Posts
Categories
- Appraisal Terms
- Asset Inspection
- barcoding
- business appraisals
- business broker
- Business Valuation
- Buying a Business
- C Corp to S Corp Conversion
- Case Study
- Certified Machinery and Equipment Appraisers
- Custom Appraisal
- economic stimulus package
- equipment appraisal
- Equipment Auctions
- estate planning
- Fannie Mae
- FHA Loans
- Freddie Mac
- Goodwill
- HVCC
- Intellectual Property
- Inventory appraisal
- Inventory Control
- inventory management systems
- investors
- lenders
- loans
- Machinery & Equipment
- Machinery & Equipment Appraisal
- present value
- Press release
- Public-Private Investment Program
- Real Estate
- Real Estate Appraisal
- Sample Reports
- SBA
- SBA SOP changes
- small business
- Small Business Administration
- small business loan incentives
- succession planning
- Tax issues
- Uncategorized
- Valuation Fraud
- Videos
Tags
Recent Comments
- Mortgages Home on Private Mortgage Insurance
- Highlight approved before making offers | Car loans Blog on The Importance of Inventory Appraisals and Asset Verification Services for Businesses and Lenders
- Selling your Business Step by Step Process on Four Methods to Determine a Property Value
- Home Equity Loans in Las Vegas | Shoppings Blogs on Four Methods to Determine a Property Value
- Casey Lafera on Small Business Lending Still Considered Sluggish, According to Federal Reserve