Tuesday, July 28, 2009

HVCC Update - NAR Survey Results and Flyer

As part of their Action Plan to deal with the Home Valuation Code of Conduct (HVCC), the National Association of Realtors Research section conducted a survey of Appraiser and Broker members. The purpose of the survey was to provide concrete data and information to bring to the regulators and the NY Attorney General’s office. Nearly 30,000 members participated in the survey.

Appraiser Active posted the preliminary analysis from NAR Research previously. Since then, NAR has prepared a two page flyer summarizing the effects of the HVCC.

NAR Survey Shows HVCC Impacting Housing Markets

An analysis by the National Association of REALTORS® (NAR) indicates that the implementation of the Home Valuation Code of Conduct (HVCC) appears to be having adverse impacts on the housing markets.

Here's the flyer

In other news, the National Association of REALTORS has initiated a targeted call to action in an effort to build Congressional support for H.R. 3044, the bill to mandate an 18 month moratorium on the HVCC. As of today, July 28, 2009, there are 46 co-sponsors of the legislation. If you are a Florida REALTOR, use THIS LINK to participate in the Call to Action. If you wish to participate and are in another state, surf on over to the NAR Action Center and check out the HVCC Links. Alternatively, contact your Member of Congress and ask them to co-sponsor H.r. 3044.

Keep in mind, Appraiser Active maintains links to the most recent HVCC related documents along the left side of this page.

Sunday, July 26, 2009

HVCC - NAR Webinar

On Wednesday, July 22, 2009, NAR Appraisal hosted a Webinar for NAR Designated Appraisers about the HVCC. The entire session is now available online, along with links to everything to all the background documents discussed.

Check out THIS POST for information about the Webinar and the documents referenced during the presentation.

Friday, July 24, 2009

FHFA - Lame Support for HVCC

On Wednesday, July 22, 2009, the Federal Housing Finance Agency (FHFA), released a NOTICE with the title "Strengthening Appraiser Independence and Improving the Valuation Process - Update on Enterprise Implementation of Home Valuation Code of Conduct".

Apparently the release is in response to the drubbing the HVCC has been receiving from nearly every segment of the real estate industry. It's a lame response that glosses over many of the legitimate concerns expressed about the HVCC and the manner of implementation. The FHFA conveniently absolves the GSEs of any responsibility and pats them on the back for their recent actions in issuing alerts to mortgage lenders advocating the use of qualified and experienced real estate appraisers. Appraiser Active is not buying it.

Where was the GSE concern about qualified and experienced appraisers prior to May 1, 2009? As is often mentioned in defense of the HVCC, Fannie Mae, Freddie Mac, the OCC, the FED, the Comptroller of Currency, the FDIC and the NCUA and the OTS all have standards for appraisals, appraisers and maintaining appraiser independence. Who has been asleep at the switch for all these years? Have any heads rolled? We must have missed that.

Completely ignored in the HVCC and any communication from the FHFA, Fannie Mae, Freddie Mac or the New York Attorney General since the announcement of the agreement is any discussion of penalties for the alleged wrongdoers (WAMU, eAppraiseIT) that prompted the investigation and lawsuit. What's up with that?

There is much more to be said. Unfortunately, it's Friday and I've got to get an appraisal out the door TODAY.

Check back for an update to this post.

Thursday, July 23, 2009

HVCC Update - NAR President Charles McMillan

On July 21, 2009, Charles McMillan, president of the National Association of Realtors®, provided an update to members via podcast. A couple of topics were covered, but first on the list was the Home Valuation Code of Conduct (HVCC). Correcting the negative effects of the HVCC are high on the list of NAR priorities.

Earlier this month, I blogged about my meetings with the New York Attorney General’s office and Federal Housing Finance Agency Director James Lockhart.

Since that time, we surveyed members about this issue, and more than 30,000 of you responded. The results tell us that the problems are worse than we thought. Out-of-town appraisers are being used much more frequently; consumers are paying higher costs; and, REALTORS are losing sales.

During the July 4th recess, we asked our federal political coordinators to ask their members of Congress to sign onto a bill that would place a moratorium on the HVCC for 18 months. So far, 22 members of Congress have co-sponsored H.R. 3304. During the August recess, we will ask the FPCs to to do another strong push.

In the meantime, we will be having a special webinar for all State Association Executives on July 27th at 2:00 p.m. Eastern time. We also will be giving AEs a letter that they can ask their own state Attorneys General to sign and send along to the New York Attorney General. It, too, asks for a moratorium on the HVCC.

NAR will continue to press Congress and Regulators on this issue. For the latest information, just go to Realtor.org/HVCC.

Links to the podcast and HVCC information from NAR is available right HERE.

Another effort to seek a moratorium on the HVCC is being initiated by the Washington Association of Realtors®. WAR president, Greg Wright, is working with the state Attorney General to generate support from other states in a direct appeal to Attorney General Andrew Cuomo. They're looking for help is securing signatures from other state Attorneys General on the letter, or generating similar letters from other states. Contact information for WAR leaders and staff available HERE.

In related news, H.R. 3044 has 37 co-sponsors. This is up from just 30 yesterday! Congress will be in recess soon. It might be time to pay a visit to your member of Congress and let them know the detrimental effects of the HVCC and how important a moratorium is to you and your business.
UPDATE - July 28, 2009 - H.R. 3044 has 46 co-sponsors!

Monday, July 20, 2009

HVCC - News and Updates - GAA-RAA Webinar

UPDATED! Links Referenced in Webinar
From the National Association of Realtors®

New Member Benefit: GAA-RAA Webinar

As part of the Right Tools, Right Now initiative NAR Appraisal is hosting a FREE Webinar for all GAA and RAA Designees. The topic for this Webinar is "Know your HVCC!" Join us for the Webinar on Wednesday, July 22 at 11:30 a.m. Central Time. GAA and RAA Designees will be invited via email to sign-up and participate in this Webinar.

Read all about it HERE


You may access the full Webinar and all documents referenced right HERE


Here's the links referenced in the HVCC Webinar

Home Valuation Code of Conduct - HERE

National Association of REALTORS® HVCC Page – realtor.org/hvcc

National Association of REALTORS® HVCC FAQs - HERE

National Association of REALTORS® HVCC Myths and Facts - HERE

Fannie Mae HVCC FAQs - HERE

Freddie Mac HVCC FAQs - HERE

Freddie Mac Guide Bulletin 2009-18 HERE (see page 5)

H.R. 3044 – Bill to impose 18 month moratorium on HVCC - HERE

Tuesday, July 7, 2009

Impact of HVCC

UPDATE! - Working RE survey Results

As part of their Action Plan to deal with the Home Valuation Code of Conduct (HVCC), the National Association of Realtors Research section conducted a survey. The purpose of the survey is to provide concrete data and information to bring to the regulators and the NY Attorney General’s office. Posted on the NAR site today:

On Appraisals: The Impact of HVCC

July 6, 2009
By Jed Smith, Managing Director, Quantitative Research

A preliminary analysis indicates that the implementation of the Home Valuation Code of Conduct (HVCC) appears to be having adverse impacts on the housing markets. Appraisal issues associated with the implementation of HVCC have recently been in the news. NAR Research has developed information on the subject through a statistically representative survey of the membership. A preliminary analysis of Realtor® responses includes the following:

  • Approximately 76 percent of Realtors® representing buyers or sellers indicated that the time to obtain a completed appraisal increased after May 1; 69 percent of those reporting increased appraisal times reported an increase of over 8 days.

  • Lost sales were reported by 37 percent of Realtors® attempting to complete home sales, with 17 percent reporting one lost sale and 20 percent reporting more than one lost sale.

  • Reports of lost sales will impact the fallout rate in Pending Home Sales, although some of the sales may ultimately be completed on a delayed basis.

  • An increased use of out-of-area Appraisers was reported by 70 percent of Realtors® seeking to complete a sale.

  • The number of NAR Appraiser members reporting that they obtain over 50% of assignments from AMCs increased from 14 percent to 39 percent after May 1st.

  • Approximately half of NAR Appraiser members reported a reduction in fees received by them, and 70 percent of NAR Appraiser members reported that consumers were paying higher fees.

  • Time for an appraiser to submit an appraisal to the AMC decreased, as reported by 71 percent of NAR Appraiser members.

  • Approximately 85 percent of NAR Appraiser members reported a perceived reduction in appraisal quality.

  • Among Realtor® respondents obtaining an appraisal for a client, 55 percent reported a perceived decrease in appraisal quality.

  • NAR Appraiser members reported a significant number of assignments in unfamiliar geographic areas: for example, 16 percent reported that more than 11 percent of their assignments were in unfamiliar areas.

Isn't it interesting that the survey mirrors what Appraiser Active and countless others have been warning of for the last few months?

UPDATE! - Working RE survey Results
David Brauner of Working RE has posted the results of their survey of real estate appraisers on their experience with the HVCC and working with Appraisal Management Companies. His POST starts with:

A nationwide survey conducted by a leading publication for real estate appraisers, Working RE Magazine, indicates that the Home Valuation Code of Conduct (HVCC) is not working as intended to support appraiser independence and thwart coercion and inflated values.

HVCC removes mortgage brokers from the appraisal ordering process in an effort to put a buffer between appraisers and those ordering appraisals. The result has been a historic shift to appraisal management companies (AMCs), which now handle the bulk of non-FHA appraisal ordering.
Here's a portion of the results:
Question: “With the AMCs you work with, are you asked to re-examine
reportswith the intention of trying to ‘make the deal work’?”

-Always: three percent (3%)

- Often: 12 percent (12%)

- Sometimes: 39 percent (39%)

- Never: 46 percent (46%)

“With the AMCs you work with, do you experience pressure for value?”

- Always: three percent (3%)

- Often: 11 percent (11%)

- Sometimes: 42percent (42%)

- Never: 44 percent (44%)

“In your experience with AMCs, appraiser selection is based solely on obtaining the lowest fee.”

- Always: 50 percent (50%)

- Often: 37 percent (37%)

- Sometimes: 11 percent (11%)

-Never: Two percent (2%)

“Are the fees offered by the AMCs you work with unrealistic given the nature and scope of the assignment?”

- Always: 50 percent (50%)

- Often: 34 percent (34%)

- Sometimes: 13 percent (13%)

- Never: Three percent (3%)

“With the AMCs you work with, do you experience pressure for turn around times yhat is unrealistic given the nature and scope of the assignment?”

- Always: 35 percent (35%)

- Often: 42 percent (42%)

- Sometimes: 19 percent (19%)

- Never: Four percent (4%)

Read the full post HERE.

Saturday, July 4, 2009


Please stay safe this Fourth of July Holiday Weekend. Let's celebrate our freedom and liberty and arrive alive.

Hug a Soldier, Sailor, Airman or Marine!

Ken Harney on the HVCC

Once again, syndicated columnist, Ken Harney, gives consumers the details about how well-intentioned initiatives have negative consequences. His column in today's Washington Post, (and papers across the nation) illustrates the realities of the poorly crafted Home Valuation Code of Conduct (HVCC).

It's by far the hottest controversy in real estate this summer, and it could directly affect the value of your house -- probably negatively -- by tens of thousands of dollars.

The issue involves lowballed appraisals and the new rules guiding appraisers in both price-depressed and rebounding markets. Consider these snapshots:

In San Diego, Steve Doyle, division president for Brookfield Homes, is trying to close out the final 20 houses of a 120-unit single-family subdivision. Prices range from $340,000 to $350,000. But recently there's been a major hitch: Appraisers assigned by banks are coming in with valuations of $60,000 or more under Doyle's selling prices. The appraisers, who Doyle says are inexperienced, unfamiliar with local market trends or both, are using distressed sales -- foreclosures and short sales of existing houses -- as their "comparables." Some of the distressed properties are in poor condition, and all of them offer fewer amenities, Doyle says.


But when the bank sent in an appraiser with little local knowledge, he chose as comparables two short-sale properties that had both closed in the mid-$140,000 range and one inheritance sale around $155,000. The last property was "in horrible condition," Skeens said. "I'd call it dog meat." The deal-paralyzing appraised value that came in for the slam-dunk refi: $149,000.

Complaints about lowballed appraisals -- from builders, real estate agents, consumers and mortgage companies -- have erupted since May 1, when government-backed Fannie Mae and Freddie Mac put their new appraisal rules into effect nationwide. Critics charge that the new system fosters the use of appraisers willing to work for low fees -- sometimes 50 percent below previous standards -- and who are willing to conduct home appraisals far outside their typical areas of activity.

Under the code, appraisers are now routinely assigned by appraisal management companies rather than local mortgage companies or loan officers. The management companies pocket as much as 40 percent to 50 percent of the appraisal fee paid by the consumer.

Two congressmen -- Travis W. Childers (D-Miss.) and Gary G. Miller (R-Calif.) -- have introduced legislation calling for an 18-month moratorium on the appraisal code. In identical letters to Cuomo and to James B. Lockhart III, the top regulator of Fannie Mae and Freddie Mac, the National Association of Realtors also requested a moratorium and complained that the code is raising consumer costs, distorting property values and killing sales.

Asked for comment, Lockhart said through a spokesperson that his agency is "monitoring" the situation, and considers "the views of market participants important."

Well, Mr. Lockhart, "market participants" and warned you about the consequences of the HVCC. For months, "market participants" and Congress have been alerting you to pay attention to the very real problems with the 'agreement". It's time to act on the information.

In addition to the disaster that is the HVCC, there is mounting evidence that the source of pressure on appraisers (what the HVCC was supposed to prevent) has shifted from loan originators to Appraisal Management Companies. Here in the Sunshine State there is also evidence of banks violating appraiser independence standards and pressuring appraisers to lower value estimates.

Stay tuned.

Friday, July 3, 2009

HVCC Update - NAR President Charles McMillan

Charles McMillan, President of the NATIONAL ASSOCIATION of REALTORS®, has just posted an Appraisal Update on the NAR Voices of Real Estate blog.

Here's what he had to say:

I just returned to Texas after a whirlwind trip to the east coast, where I met with the New York Attorney General’s office and officials from the Federal Housing Finance Agency and Fannie Mae. The topic: appraisals, and specifically the concerns and perspectives that you, our REALTORS and appraiser members have raised about the implementation of the HVCC.

First and foremost, I want to thank all of you for sharing your comments on the Voices of Real Estate blog this past week. Steve Brown’s entry, “All’s Not Quiet on the Midwestern Front” has received more than 120 comments – all of them very insightful. In fact, your thoughts were so important to the discussion that we shared them directly with the staff from the New York Attorney General’s office as prime examples of the problems we are seeing. We also shared the results of a recent survey of members, which highlights the overall impact of appraisal challenges on the mortgage transaction.

Those of you who have met me know that I don’t pull any punches. So, let me give you my honest assessment of my meetings:

1. All of the officials we met with wanted to hear about our experiences, and they conceded that there are problems.
2. All agreed that we can and should immediately address gaps in communication and education to help resolve how the HVCC is being applied.
3. How we resolve other more fundamental problems is not yet clear and will likely require a longer-term effort.

So what’s next?

First, in the weeks ahead NAR will be working closely with everyone in the industry, including Fannie Mae, Freddie Mac, the Appraisal Institute and government officials, to clarify the HVCC and how it should be applied. As many of you noted in your comments on this blog – pointing fingers is not the solution, we have to work together to improve the process for everyone.

Second, NAR is working with Congress to move legislation that would place an 18-month moratorium on the Home Valuation Code of Conduct, so that we can consider how best to modify the HVCC and to resolve additional concerns that many of you have raised about it and other appraisal issues in the current environment.

As always, we will keep you posted on our efforts on this blog and on Realtor.org. I encourage you to check out our HVCC Myths and Facts for more information. We also will be updating our FAQ to answer many of the questions you have raised in your e-mails and posts.

Of course, we encourage you to continue to share your thoughts and experiences with us whenever you can. With your participation, we will move the housing market forward, “United Toward Tomorrow.” – Charles McMillan, 2009 NAR President

Thursday, July 2, 2009

Behind the Scenes - Appraiser Discipline

What are those boxes and stacks of papers?

The photo shows a portion of the 65+ cases that will be considered by the Florida Real Estate Appraisal Board Probable Cause Panel on Monday, July 6, 2009. The fourth box is on the other side of the room, out of the picture, in the "unread" corner.

Under the Florida Appraisal License and Certification Statute, Chapter 475, Part II, the Florida Real Estate Appraisal Board (FREAB) has the authority to grant and deny registrations and certifications. The FREAB is also tasked with the responsibility to discipline appraisers. The discipline imposed may include suspension (up to 10 years), revocation, fine (up to $5,000 for each offense), reprimand and probation. Like all regulatory boards in Florida, disciplinary procedures are conducted in compliance with applicable laws and rules. These include Chapter 455 and Chapter 120.

There's no reason to bore you with the details. The purpose of this post is to demonstrate that the complaints are real, the investigations are thorough, and the appraisers under scrutiny are really under scrutiny. Florida Appraisers that fail to comply with the law, rules of the FREAB and the Uniform Standards of Professional Appraisal Practice are disciplined by the FREAB.

As a past member of the Florida Real Estate Appraisal Board, yours truly has the opportunity to participate as a member of the FREAB Probable Cause Panel. The panel includes a current and past member of the FREAB that meet to consider complaints and cases and determine Probable Cause. If Probable Cause is found, an Administrative Complaint is filed against the licensee. The Probable Cause Panel meets once a month and July is my month!

Although I've made it through 3/4 of the stack, posting is likely to be light over the weekend! In addition to all the reading, I've got a race to watch and will be rooting for the Blue Oval Boys. It would be nice to see Carl Edwards or David Ragan in the winner's circle.