I received an email from the Ohio Association of Realtors® today giving us an update on the complaints with the HVCC (Home Valuation Code of Conduct). The program which began May 1 has received many, many complaints throughout the U.S. by Realtors®, lenders and appraisers. (Read more here.)
Here’s the news update we received:
A July 10 lender bulletin from Freddie Mac says appraisers “must be familiar with the local market,” select “appropriate comparable sales, ” and certify them as “most similar” to the property in question. The bulletin also says appraisers are not required to use distressed properties in their comparable sales analyses unless they represent a good number of the properties on the market. The bulletin is in response to the new HVCC which is being criticized for causing a shift among lenders to appraisal management firms outside the local market and for weakening home sales.
This is a welcome change but it doesn’t address the issue of increased buyer fees to cover the extra layer of costs to pay the middle-man management firms required by the new law. Nor does it address the reduced fees that appraisers receive because of the 3rd party taking a piece of the action. When local appraisers have refused to work for half the money, the 3rd party management companies have had to broaden their range in order to find appraisers willing to work for less money.
It “may” help with undervalued appraisals which have been causing canceled home sales or artificial reduced prices due to buyers and sellers having to renegotiate their Purchase Contract when an appraisal comes in too low. Efforts are still underway by the NAR and some lender groups to eliminate this program for the benefit of buyers and sellers … and the real estate market in total.
I feel the old system would be fine if enforced. One out every 10 or 20 loads should get kick out for complete review. If they find poor work by the appraiser, underwriter or anyone they would apply the rules and give warning or worse.
They system did not enforce it own rules and laws and now we have another to deal with rather than just monitor systematically for good performance and to eliminate any coercion.
I agree they threw the baby out with the bath water. For the few people who committed fraud, they are now punishing all the law-abiding folks which were the majority. The gov’t just doesn’t live in the real world to know enough about how their programs do far more damage than good.
Elaine:
Government lack of policy causes the crisis, government , Attorney General Cumo’s litigation causes an unforseen problem, at least unforeseen in their eyes, instead of inforcing their already good rules. They over react to lack of action and policy directives to make broader home owner ship by our past President Clinton and the Congressional banking committee, Barry Frank Chairman.