Tuesday, June 30, 2009


Earlier this morning I had the opportunity to talk with a number of associates during their weekly sales meeting at one of the local Coldwell Banker Residential Real Estate offices. Of course, the topic of discussion was appraisals. My invitation was due to their increasing frustration with the Home Valuation Code of Conduct (HVCC), their experiences with appraisers devoid of geographic competence, and their questions about GSE "guidelines".

We talked about all of the above, but spent most of our time working on HVCC Myths and the efforts of the National Association of Realtors to seek a moratorium of the HVCC and work on a better solution to the problems it was intended to correct. Although some written material was provided, I promised to add links to those documents along with others to information that might be useful.

For quick reference, everything added here is also in the LINKS section along the left side of the page.

Let me know if you run across other tools that may benefit real estate professionals doing their best to deal with the HVCC.

Sunday, June 28, 2009

An Alternative View of the HVCC

UPDATED!! - Scroll for UPDATE

Peter Miller, a syndicated columnist who appears in newspapers nationwide, also shepherds the Our Broker site. Our Broker is chocked full of advice and information for real estate professionals and consumers.

Like many, Peter has a slightly different view of the Home Valuation Code of Conduct (HVCC) than Appraiser Active. We spend quite a bit of time railing against the HVCC, so it's time to provide some balance. Peter provides that in his recent post How to Pick on Appraisers.

Peter starts off with:

Many in the real estate community are upset with the newly implemented Home Valuation Code of Conduct (HVCC) and want it suspended or revoked so we can go back to the good-old-says when it was okay to threaten and pressure appraisers.
He goes on to say:

There are a number of points under the Cuomo agreement, but three important
items look like this:

___ Mortgage Brokers are prohibited from selecting appraisers. Since the mortgage broker profits when the loan is originated, it follows that such folks are only going to select appraisers who come up with the “right” price valuation.

___ Lenders are prohibited from using “in-house” staff appraisers to conduct initial appraisals. This is a built-in conflict of interest since the lender (meaning, usually, not a mortgage investor but rather a party that originates a loan and then sells it as quickly as possible) wants appraisers to approve any and all deals, otherwise the lender doesn’t eat.

___ Lenders are prohibited from using appraisal management companies that they own or control. This is another overt and obvious conflict of interest

— and still another way to screw buyers who are not getting the protection for which they paid if an appraisal is less than accurate.

The post is worth a read, and worthy of comment. Appraiser Active is interested in your views and encourages your comments here and on Peter's Our Broker site. I've got a few things to say, but have unfinished appraisals all over my desk. As soon as I put a dent in that stack of work, some comment will be provided in an update.


As long as we're looking at all points of view, the comments to THIS POST by Steve Brown, NAR Vice President and Liaison to Committees, has something for everyone! My comment was one of the first, but dozens have been added expressing their view of the HVCC from every perspective imaginable.

Friday, June 26, 2009

HVCC Moratorium Bill Introduced

UPDATED - Bill Text Added

On June 25, 2009, Representative Travis Childers from Mississippi introduced H.R. 3044. The bill title: To impose an 18-month moratorium on the Home Valuation Code of Conduct.

The text of the bill is not yet available on Thomas, but I'll post the pertinent information when it is available. If you do not want to wait for me, surf on over to THOMAS and type H.R. 3044 into the search box.

There is one co-sponsor as of now; Representative Gary Miller from California. Appraiser Active last mentioned him in THIS post.


To impose an 18-month moratorium on the Home Valuation Code of Conduct.

1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
5 During the 18-month period beginning on the date
6 of the enactment of this Act, the Home Valuation Code
7 of Conduct announced by the Federal Housing Finance
8 Agency on December 23, 2008, shall have no force or ef-
9 fect.

Monday, June 22, 2009

NAR - HVCC Update

Let's see if this helps move things along. The National Association of Realtors sent the following email to State Association Presidents and Association Executives:

TO: State Association Executive Officers
State Association Presidents
FROM: NAR Government Affairs
DATE: 19 June 2009
RE: Fly-In Head's Up

Please note this notice is going to all state executive officers and state presidents. We will be sending Fly-In details on Monday June 22, 2009 to the states who have Members of Congress and/or United States Senators on the House Financial Services Committee or Senate Banking Committee. (list of states at end of memo)

There is growing concern in the real estate industry over the implementation of the Home Valuation Code of Conduct (HVCC) and its effect on the use of appraisal management companies (AMCs) by lenders.

NAR is taking the following actions: (Target dates in bold)

1. NAR is scheduling meetings with the Director of Federal Housing Finance Agency, Jim Lockhart to raise concerns about implementation of the HVCC and problems with AMCs and ask for an immediate 18 month moratorium. Director Lockhart is the conservator over Fannie and Freddie who entered the consent order with the NY Attorney General. ( June 22, 23, 24, or 25th)

2. Government Affairs will conduct a fly in the week of June 22. Two members from each Association (State AE/State President or FPC as appropriate) to meet with members/staff of the House and Senate Banking/Financial Services Committee. The ask will be to cosponsor the bill (item 3) and to support an 18 month moratorium.

3. Our legislative team will work on getting a bill introduced in Congress asking for a 18 month moratorium. (week of June 22)

4. We will ask the Chair and Ranking Members of the House and Senate Banking [ Reps Frank and Bachus/ Senators Dodd and Shelby] Committees to write Director Lockhart asking him to grant a 18 month moratorium (week of June 22)

5. We will try and get an 18 month moratorium attached to an immediate pending appropriation bill or other similar fast track bill. (June)

6. Staff will talk to the American Bankers Association who heretofore is fine with the AMC system to see if we can negotiate support. (June 19)

NAR will engage a coalition of Appraisal Institute, MBA, Home Builders and other appropriate trade groups.

7. NAR Research is conducting a survey so we have concrete data information to bring to the regulators and the NY Attorney General’s office . The survey will also be run through the State Association. EHS will be released next week and the appraisal issue will be mentioned front and center in NAR's release. Survey release June 22

8. NAR is scheduling a meeting with NYS Attorney General Andrew Cuomo and representatives of NYSAR. (June 29. 30)

9. NAR will conduct a Call For Action if we do not get a moratorium in the next week to 10 days NAR is aware of multiple petitions calling for an end to the HVCC. NAR is taking a more tempered and thoughtful approach of asking for a moratorium during this trouble housing economy.

Sunday, June 14, 2009

Great Post on MATRIX

If you're not reading Jonathan Millers MATRIX, we suggest adding it to your regular reading list. Even if you fail to add it as a daily read, please surf on over and take a look at today's Guest Post by Martin Tessler, CRE. He comments on a June 9, 2009 Wall Street Journal article, Appraisals Roil Real Estate Deals.

It's not a long post, but it includes these gems:

A significant issue not quelled by the Code is that it allows if not encourages lenders to outsource the selection to appraisal management companies or AMC’s who will charge the appraisal firm anywhere from 30%-40% of the fee for administration, overhead and, pardon the sarcasm, quality control. Exacerbating the problem is that lenders can own stakes in AMC’s. Thus, the conflict of interest is ever present.

Reports are prevalent that AMC’s shop around for the lowest appraisal fees that frequently end up on the desks of appraisers who are geographically distant from the subject property’s market, are not fully familiar with the local market and thus present sales that are not directly relevant.

(emphasis is mine)

Read the ENTIRE ARTICLE. While you're there, spend some time looking around and peruse his PODCASTS.

Friday, June 12, 2009

Competency Wins ONE!!

The story below sent to me by a Pennsylvania State-Certified Residential Appraiser.

The HVCC strikes again.

Got a frantic call yesterday morning. Could I do a rush purchase appraisal at XXXX and have the report back by Monday? I pull it up on MLS - lakefront, $500,000 sale price. I tell them yes - but it means giving up a planned weekend and my fee would be lotsa beaver pelts - complex rush assignment.

I figured they'd scream and walk away. Not so - got the order - check came this morning. So I call the Realtor's office to set appointment - the person at the appointment desk says the Realtor wants to know where I am from. I laughed and told her and said "why? Is she worried about competency?" She fell all over herself apologizing, I said no offense - if she isn't she should be thanks to the HVCC.

A few minutes later the Realtor calls back, all apologetic. Yes, she was worried about competency. She hopes I took no offense. It seems I am the second appraiser to try to get an appointment. The first one, she refused to give him access to the property. The reason? The appraiser was coming from a town 4 1/2 hours away. When he tried to set the appointment, he told the Realtor she would have to meet him there because he didn't have a lockbox key. Oh - and could she provide him all the sales she used to do her CMA and he should use to do the report? Oh, and could she provide assessment records for the subject and all sales? Oh, and did she have a map of XXXXX?

The Realtor blew a gasket, asked him if he'd like her to write the report for him and just give it to him to sign, too? Then she refused entry and called the lender and raised bloody h***. Her stance is she has a fiduciary duty to the seller, her office has a fiduciary duty to the buyer - and that includes not letting an appraiser complete the assignment who is not competent to do so. Not once was value mentioned - what WAS mentioned was "knowing the market, understanding just what is involved with these lakefront properties, understanding the motivations of buyers and sellers at this particular guard gated lakeside community".

It seems I got the job, despite fee, because said lender is friendly with a LO from a good client (with whom I can now have no contact thanks to HVCC). The lender called him and asked him if he knew someone local, competent to complete an assignment involving a waterfront residence. He gave them my name and phone number and warned them I wouldn't come cheap, but I was worth the money. Well, well.

So - now I wonder - what idiot appraiser is willing to drive 4 1/2 hours one way and be in really over his rubbers for probably less than full fee And how come whoever ordered the appraisal didn't check out the appraiser's competency to perform such an appraisal?? 4 1/2 hours away - yeah, right - sure he's competent to appraise in this area - especially considering he didn't know where the property was, didn't know it was lakefront, had no idea it was guard gated with a chunk of change initiation fee (often used as a bargaining chip and concession), doesn't have MLS or assessment records access and expected the Realtor to do his work for him.

What we have here is a Realtor who stood up for her seller and another agent's buyer to ensure competency. Good for her - I hope more will do so. Until these AMC's stop shopping for fee and turn time, until they are regulated, until they select appraisers based on quality, knowledge, competency and experience in a given market, the HVCC will continue to damage the real estate market - and especially the consumer.

Three cheers for a gutsy Realtor - may there be many more like her!

From a southern Pennsylvania Appraiser and offered by Appraiser Active with no comment. We'll leave that to you.

Questions-Professional and Geographic Competency

Over the last few weeks, dozens of Realtors, Borrowers and Sellers have contacted me and Appraiser Active relating horror stories about appraisers with an apparent lack of Professional or Geographic Competency. Their tales disclose appraisers from over 100 miles away accepting and completing assignments, appraisers with no access to the local Multiple Listing Service doing the same, and appraisers routinely using short sales and properties marketed as "pre-foreclosures" as Comparable Sales.

Although such stories are not new, they are becoming much more prevalent since the implementation of the Home Valuation Code of Conduct (HVCC). Appraisers are bound by something called the Uniform Standards of Professional Appraisal Practice (USPAP). Within the USPAP are a number of Rules and Standards; among them the Competency Rule.

Mike Kennedy, a New York State Certified Residential Appraiser, suggests Real Estate Agents, Appraisers, and Loan Originators should supply owners and borrowers (and their Listing Agents) with a "flash card" to phone interview ANY Appraiser contacting them for access PRIOR to setting an appointment to help determine the competency level of the appraiser.

Here's his list of questions, with a couple of minor modifications:

  • what license do you hold, what is the number?
  • when did you first obtain your license?
  • are you a licensed or certified appraiser, or are you a trainee appraiser?
  • where are you from?
  • when was the last time you appraised a property in my neighborhood?
  • do you know any of the local long term Realtors or Agents in this area?
  • after visiting the property how long will it be until the report is delivered to the lender?
  • do you have any idea approximately how much my home is worth? ballpark? (you may not get an answer to this question)
  • do you have access to the local Multiple Listing Service? Does my Assessor know you? (my Assessor-County Property Appraiser knows me, but only because I ran against her in the last election. This answer to this question is important in locations where the Assessor is THE source of property and sales data)
  • please give me a general physical description to enable me to recognize you at the appointment

The appraiser's answers will help you gauge his/her Competency to accept and complete the assignment. If the Lender does not insist on Professional and Geographic Competency, the borrower should. After all, they are entitled to a copy of the appraisal report and will be responsible for repaying the loan.

Here is reprint of the COMPETENCY RULE from the 2008-2009 Edition of the Uniform Standards of Professional Appraisal Practice. My emphasis on the points that may be of interest.


Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently; or alternatively, must:

  1. disclose the lack of knowledge and/or experience to the client before accepting the
  2. take all steps necessary or appropriate to complete the assignment competently; and
  3. describe the lack of knowledge and/or experience and the steps taken to complete the
    assignment competently in the report.

Comment: Competency applies to factors such as, but not limited to, an appraiser’s familiarity with a specific type of property, a market, a geographic area, or an analytical method. If such a factor is necessary for an appraiser to develop credible assignment results, the appraiser is responsible for having the competency to address that factor or for following the steps outlined above to satisfy this COMPETENCY RULE.

The background and experience of appraisers varies widely, and a lack of knowledge or experience can lead to inaccurate or inappropriate appraisal practice. The COMPETENCY RULE requires an appraiser to have both the knowledge and the experience required to perform a specific appraisal service competently.

The COMPETENCY RULE requires recognition of, and compliance with, laws and regulations that apply to the appraiser or to the assignment.

If an appraiser is offered the opportunity to perform an appraisal service but lacks the necessary knowledge or experience to complete it competently, the appraiser must disclose his or her lack of knowledge or experience to the client before accepting the assignment and then take the necessary or appropriate steps to complete the appraisal service competently. This may be accomplished in various ways, including, but not limited to, personal study by the appraiser, association with an appraiser reasonably believed to have the necessary knowledge or experience, or retention of others who possess the required knowledge or experience.

In an assignment where geographic competency is necessary, an appraiser preparing an appraisal in an unfamiliar location must spend sufficient time to understand the nuances of the local market and the supply and demand factors relating to the specific property type and the location involved. Such understanding will not be imparted solely from a consideration of specific data such as demographics, costs, sales, and rentals. The necessary understanding of local market conditions provides the bridge between a sale and a comparable sale or a rental and a comparable rental. If an appraiser is not in a position to spend the necessary amount of time in a market area to obtain this understanding, affiliation with a qualified local appraiser may be the appropriate response to ensure development of credible assignment results.

Although this Rule requires an appraiser to identify the problem and disclose any deficiency in competence prior to accepting an assignment, facts or conditions uncovered during the course of an assignment could cause an appraiser to discover that he or she lacks the required knowledge or experience to complete the assignment competently. At the point of such discovery, the appraiser is obligated to notify the client and comply with items 2 and 3 of this Rule.

USPAP 2008–2009 Edition
©The Appraisal Foundation

Thanks to Michael Kennedy for the list of questions. Here's Mike's contact information if you would like to take advantage of his expertise:

Michael E. Kennedy
New York Certified Residential Appraiser



email MEK2@frontiernet.net

phone/fax (845)782-1996

Wednesday, June 10, 2009

Three US Representatives Get It (kinda)


On June 3, 2009, the House Committee on Capital Markets, Insurance, and Government Sponsored Enterprises held a Hearing on Fannie Mae and Freddie Mac. The first part of the hearing was over two hours, but three speakers stand out for their questions to James Lockhart.

HERE is the Video

If you have the time, watch/listen to the entire Hearing. Otherwise move the timer to

1:22 for Representative Juddy Biggert, (R) Illinois
1:45 for Donald Manzullo, (R) Illinois (The BEST, by far)
1:57 for Gary Miller, (R) California

NAMB - HVCC Call to Action

The National Association of Mortgage Brokers (NAMB) has distributed a Call to Action concerning the Home Valuation Code of Conduct (HVCC).

June 9, 2009


To: All Mortgage Brokers, Real Estate Agents, Appraisers, Lenders, Home Builders, Title Agents, and Consumers

From: Marc Savitt, President- National Association of Mortgage Brokers

After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, James Lockhart, Director of FHFA (GSE Regulator), and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.

In order for this “Call to Action” to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing everyday, until advised to stop by NAMB. This will NOT be a one day action!

We have received hundreds of e-mails through the hvcc@namb.org e-mail address outlining specific cases where the HVCC has created delays and additional costs to consumers. NAMB has categorized and compiled a report of the examples received, which was sent to FHFA Director James Lockhart. Please use your own examples in your conversations with legislators, regulators, or their staff. Also, please visit the NAMB HVCC Resource Center for additional information and documents on the HVCC.

Who will you be contacting?

Also, please contact your local TV and Newspaper outlets.

Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties. For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.

Talking Points:

1) NAMB conservatively estimates (breakdown below) that the HVCC is costing consumers over 2.8 BILLION dollars a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.

2) Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.

3) AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.

4) HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo’s investigation.

5) No Portability! Consumers are “trapped” with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.

Read the entire Call to Action HERE

Sunday, June 7, 2009

HVCC Update - No AMC Work for Appraiser Active

It's been quite a while since the last post. Believe it or not, the reason is the stack of work accumulating on my desk and the floor surrounding it. Although I've collected plenty of links to stories about the HVCC, the disastrous effect it's having on real estate transactions and established professional relationships, business must come first. Especially when the fees and report delivery dates are individually negotiated.

There are a number of petitions concerning the HVCC floating around, along with some very worthwhile efforts. Time and workload has not permitted checking all of them out, but I'll get around to it. However, one of the efforts is being spearheaded by Brian Davis over at Appraisal Scoop. The blog is probably on your reading list (it's on mine!), but just in case you have not visited, go on over, read and participate in Brian's "SPEAK UP! on the HVCC's Unintended Consequences" initiative.

For the past two weeks I've been collecting my own stories form Realtors, Mortgage Brokers, Borrowers and Sellers. After a get a few of these appraisals out the door, I've got a few things to write. Until then.....