Thursday, October 8, 2009

HVCC - Will be Mentioned in Congressional Hearing


Today the House Committee on Financial Services, Subcommittee on Housing and Community Opportunity will start a hearing in the early afternoon. Although the subject of the Subcommittee Hearing is "The Future of the Federal Housing Administration’s Capital Reserves: Assumptions, Predictions and Implications for Homebuyers", at least one of the several witnesses will discuss the Home Valuation Code of Conduct (HVCC).

The prepared testimony John Councilman, Federal Housing Committee Chair, National Association of Mortgage Brokers, includes these comments:

All the emphasis is mine.


The HVCC is a highly controversial shift in appraisal policy that is the result of a joint agreement reached between the GSEs, the Federal Housing Finance Agency (“FHFA”), and New York Attorney General, Andrew Cuomo. The HVCC purports to enhance the independence and accuracy of the appraisal process. However, what the HVCC truly accomplishes is an increase in consumer costs, a decline in appraisal quality, the extension of closing deadlines, and the virtual extinction of independent appraisers.

.....

The impetus behind these new appraisal policies – the HVCC and the new FHA guidelines – is the perception that appraisers were being pressured or improperly influenced by mortgage originators. However, the HVCC is failing to provide any greater protection for appraisers. Appraisers are still subjected to significant pressure and undue influence, but instead of coming from mortgage originators it is now coming from the Appraisal Management Companies (“AMCs”) that were granted a virtual monopoly over the appraisal process by the HVCC.


In fact, a growing number of appraisers are reporting that the pressure and attempts to improperly influence their professional judgment is far worse under the AMC dominated regime prescribed by the HVCC than it ever was when appraisers were permitted to work directly with originators. Specifically, appraisers are reporting that AMCs are requiring them to prepare appraisals in violation of the Uniform Standards of Professional Appraisal Practice (“USPAP”) and generally accepted appraisal guidelines.


Today, unlike when an appraiser had multiple mortgage broker and/or loan officer clients, the HVCC has restricted their work to be on behalf of only one or possibly two AMCs. Under this construct, if an appraiser fails to comply with any AMC "request,” they will no longer receive appraisal assignments from possibly their only client. With many knowledgeable and skilled appraisers unwilling to work under such conditions and consequently leaving the profession, the appraisers that remain willing to work for the AMCs are generally far less qualified and experienced. This has resulted in a rapid decline in appraisal quality since the implementation of the HVCC, which directly contradicts the widely purported view of HVCC proponents that turning over virtually exclusive authority for appraisal ordering to thirdparty AMCs would produce more accurate appraisals.



The prepared testimony of each witness is available on the House Committee on Financial Services website. The hearing will be web cast as well.

It would be nice if the NAR testimony made some of the same points. Unfortunately, it's pretty vanilla and much less forceful.

By the way, H.R. 3044 is stuck at 110 cosponsors. Follow the links and encourage your member of Congress to support the bill.

4 comments:

Anonymous said...

The "perception" - give me a break - I never met a mortgage broker that did not need a value up front or put pressure on to hide defects. - AMC's have their issues but to say that MB pressure has been replaced with an equivalent amount of the same type of pressure from AMC's is pure bunk. So unfortunate that someone in your position is doing such heavy lobbying to get MB's their stranglehold on the appraisal process back - You are better than this sir - shame.

Anonymous said...

As a recently retired appraiser I would like to state that I would greatly prefer to cope with lender pressure than AMC pressure. I had no problem turning down orders from mortgage brokers who "sought value". AMCs on the other hand are an entirely different beast. They had a multitude of discrete ways to obtain higher values. My favorite trick was one that asked us to review 45 other sales after we turned in the report. When we refused to "review" the comps based on the fact that they were attempting to alter our value we were dropped like a hot potatoe from their roster. They were a prominant AMC.

A rose by any other name is still a rose and a rogue by any other name is still a rogue. The simple fact is with mortgage brokers you must deal with one thing...a little pressure to hit a number. With AMC you must deal with pressure to hit a number, wondering if you will ever be paid (and the majority do not pay), and giving up 50% or more of your fees.

To be brutally honest, I would spend the night digging for worms to feed to my family before I work with another bottom feeding AMC.

Sebastian said...

In Response to first comment: I am Certified Appraiser in Fl and I can assure you AMC are a scam. How can you sit there and write about pressure from brokers where it is up to you as a Certified Appraiser to take this responsibility and decline this order or even report this matter to proper authorities? You must be one of those appraisers who are working with one AMC and getting all the orders. I am registered with a dozen of them and not getting any work at all. At this point I'm working with some major lenders and if this is going to slow down I will leave the profession but I can assure so will you. You remained me of a voucher who didn't have any balls to stand and turn croocked brokers away. In all respect majority of the brokers I have worked with in the past were professional and did a good job for the costumer. In your case, it must have been the QUALITY OF THE APPRAISER that attract certain crowd of croocks. Did you possibly make this circle of friends? Now you thriving popping 3 or 5 a day $ 100 each but I can assure you you will go out of business, after while my friend they just don't pay. Wish you good lock my friend I may get out business due to people like you however I can fall back on my good old college degree. Take Care

Sebastian said...

In Response to first comment: I am Certified Appraiser in Fl and I can assure you AMC are a scam. How can you sit there and write about pressure from brokers where it is up to you as a Certified Appraiser to take this responsibility and decline this order or even report this matter to proper authorities? You must be one of those appraisers who are working with one AMC and getting all the orders. I am registered with a dozen of them and not getting any work at all. At this point I'm working with some major lenders and if this is going to slow down I will leave the profession but I can assure so will you. You remained me of a voucher who didn't have any balls to stand and turn croocked brokers away. In all respect majority of the brokers I have worked with in the past were professional and did a good job for the costumer. In your case, it must have been the QUALITY OF THE APPRAISER that attract certain crowd of croocks. Did you possibly make this circle of friends? Now you thriving popping 3 or 5 a day $ 100 each but I can assure you you will go out of business, after while my friend they just don't pay. Wish you good lock my friend I may get out business due to people like you however I can fall back on my good old college degree. Take Care
TO EDITOR: GREAT ARTICLE !!!