More Knee jerk legislation

[Jeff Tumbarello]

We have went from inflated apprasials to deflated apprasials
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HVCC Call to Action

Contact your Representatives and Senators today
to let them know that the HVCC Increases Costs for Consumers and Results in Poor Quality Appraisals.

FEDERAL CALL TO ACTION

As of May 1, 2009, the housing GSEs (Fannie Mae and Freddie Mac) no longer purchase loans from lenders "accepting appraisal reports completed by an appraiser selected, retained, or compensated in any manner by any third party." Lenders may only accept appraisal reports from a pre-approved list of appraisers or unregulated Appraisal Management Companies.

This new requirement, called the Home Valuation Code of Conduct (HVCC), is bad for consumers and must be repealed. Call your federal Representatives and Senators today and tell them how the HVCC is impacting your business and ask them to help repeal the HVCC.

If you do not know the phone number for your Representative in Congress, you can call the House operator at (202) 224-3121. The operator will connect you to your member.

If you don't know who you Representative is, you can look it up at the following site: http://www.house.gov/. The "Find Your Representative" function is on the top left corner of the page. You will need the name of your Representative prior to calling the House operator.

Contact information for your Senators can be found at the following site: http://www.senate.gov/general/contact_information/senators_cfm.cfm

TALKING POINTS

While the intent to curb fraudulent appraisals is laudable, the Home Valuation Code of Conduct (HVCC) negatively affects consumers by increasing the costs of home appraisals, reducing consumer choice, and adversely impacting a homebuyer's ability to obtain a reliable and quality home appraisal.

Now that the HVCC has been implemented, there are numerous stories about higher costs for appraisals, poor service, the inability to use one appraisal for more than one lender, the poor quality of appraisals, and the inability to make corrections to inaccurate information on an appraisal report. Your Representatives in Congress need to hear your stories.

HVCC Results in Poor Quality Appraisals and Increases Costs for Consumers

It is important to ensure that home appraisals are high-quality and accurate. Rules to prohibit improper influence on appraisers and ensure appraisal independence should not unintentionally increase the cost of obtaining a mortgage loan for consumers.

HVCC has violated both of these principles.

Unlicensed and inexperienced individuals are performing property inspections on behalf of Appraisal Management Companies (AMCs) and this is evidenced in the poor quality of the appraisal reports.
AMCs are taking up to 40 percent of the total appraisal fee and are not being regulated to ensure that their appraisers are licensed and competent.
Mortgage loans are being denied due to inaccurate appraisals following implementation of HVCC. As a result, borrowers are being forced to apply with other lenders who in turn have to charge the consumer an another appraisal fee to proceed with the transaction. This costs consumers a great deal of money and time.
The HVCC has increased the time to fund loans for consumers which necessitates longer rate locks or extensions of existing locks.
HVCC Regulations Are Not Applied Equally To All Origination Channels

While the HVCC changes the standards of who may perform appraisals, the Federal Reserve decided against doing this when reforming Regulation Z.

The Board addressed this issue and declined to find that "any particular procedure for ordering an appraisal necessarily promotes" fraudulent appraisals. Rather, the Board found that "coercion of appraisers" whether by lenders or brokers "is an unfair practice," and determined that appraisal regulations should apply equally to lenders and brokers alike.

The evidence does not support applying appraisal regulations differently to lenders and brokers, as is done in HVCC.

The Fed's standard makes more sense - apply appraisal standard to all involved in the real estate transaction without favoring one origination channel over another.

HVCC Is Not An Effective Way to Prohibit Inflated Appraisals

The HVCC has resulted in increased costs and low-quality, unreliable home appraisals.

There is no indication that the HVCC has actually worked to prohibit improper influence on appraisers and ensure appraisal independence.

Comments

In addition, NFMP and the Florida. Association of Mortgage Brokers are gathering stories reflecting issues with HVCC. If you or your borrower experienced any issues in implementing the requirements of HVCC within the loan process, please email your stories to [email protected]. All stories provided will be forwarded to our federal lobbyist and used in the fight against HVCC