Posts Tagged ‘HVCC’
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
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
HVCC: The Comp Check Killer
In a recent blog post, “Comp Check: The Code Red of Real Estate Appraisal,” we discussed the dubious practice of comp checks, and promised a future blog with an overview of new laws that were enacted to prevent comp checks. The future is now.
Just a short recap: A comp check is something a lender requests of a real estate appraiser. It’s essentially an undocumented, unofficial examination of properties similar to one that’s on the market. If the comp check matches the price range the lender was hoping for, the appraisal goes through official channels. If not, the matter is dropped and the appraiser gets nothing. Except the promise of future work from the lender.
So what’s been done to put a halt to this unethical practice? The passage of the Home Valuation Code of Conduct (HVCC). Almost a year ago, New York Attorney General Andrew Cuomo announced an agreement with Fannie Mae and Freddie Mac to establish the HVCC. Right out of the gate, the HVCC reads, in part:
“No employee, director, officer, or agent of the lender … shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery, or in any other manner … “
This would appear to be nothing but good news for appraisers. Well, yes and no. HVCC seems to have caught lenders off guard; many are unsure how to be HVCC-compliant. This is driving lenders to stop using independent appraisers and start using appraisal management companies (AMCs). Some lenders even believe that HVCC requires them to. But this means that most independent appraisers are being punished for the actions of a select few. And anyway, using an AMC doesn’t guarantee HVCC compliance – a great number of AMC appraisers either were or will be independent appraisers.
So does the passing of HVCC mean that comp checks are a thing of the past? Of course not. Speeding is against the law. Will everyone drive the speed limit? The one thing HVCC will do is make this gray area a little less so. Lenders who attempt to have comp checks done will now be in violation of HVCC, so they’ll likely think twice about asking for them.
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
Upcoming HVCC Changes
The Home Valuation Code of Conduct (HVCC) dictates rules regarding the interaction between appraisers and the lending industry. A copy of the full HVCC can be found here. On May 1, 2009, changes to the HVCC will go into effect. 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.
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