HVCC: Will Work For Peanuts
The Home Valuation Code of Conduct affects every conventional loan application made after May 1, 2009. It requires brokers and most correspondent lenders to hand over control of the appraisal to the investor themselves, or to order their appraisals through an Appraisal Management Company.
The intent behind this legislation is to keep parties related to the transaction from hitting the electric shock button when an appraiser can’t find value, and rewarding him with a food pellet when he behaves. It’s all about shielding the appraiser from undue pressure.
But here’s the thing we know: the appraisal is the absolute cornerstone of any loan package. Everything else is built around that primary piece of collateral. We count on a great appraiser to drill down to a fair and accurate value, even in tricky neighborhoods and with unique properties. We need accuracy, on time, every time.
Well, here’s the latest joke I’ve been hearing from my appraisers, who I consider the best in the business:
Q: Guess how much the appraisers are being paid by these Appraisal Management Companies?
A: On a $350 conventional appraisal, appraisers will be paid in the neighborhood of $165.
Will Work For Peanuts!
And that’s not funny.
Appraisers’ income will be slashed by more than half. As a result, we are going to see the best appraisers leaving this profession en masse.
Accurate appraisals can take tens of hours of work, and really great appraisers will not do all that work for peanuts. So who will?
The newbies. The ones who phone in a glorified AVM. The ones who are not particularly interested in the detailed work to document the true market value of your listing with unique features, or in a location with few comparables, or in a historic district.
HVCC is going to put the most precious and subjective piece of loan documentation in the hands of people who will work for less than half the industry standard. I think that is nuts.
What do YOU think about HVCC?
The HVCC is well intentioned but poorly crafted. The consequences suffered by appraisers, real estate brokers, mortgage brokers as well as conumers and borrowers will not be pleasant.
Most amazing is the fact that the HVCC resulted from improper influence on appraiser independence by a Federally regulated lender and a rogue Appraisal Management Company. This cannot be reconciled with the apparent endorsement of unregulated Appraisal Management Companies as the “protector” of appraiser independence by the HVCC.
YOU ARE SOOOO RIGHT!!! On what basis are these AMC’s supposed to be policing this independence?? It’s cowboy country, as far as I can tell. Free range profit-taking on the backs of good, trusted, professional appraisers. But the good news of late is that National Assoc of Mortgage Brokers actually withdrew their pending lawsuit. It appears the Administration might actually be backing off from HVCC, at least in its current form, having realized there are some unintended consequences they need to reconsider.
By the way, Frank, sorry for the slow post of your comment. Operator error. I very much appreciate your comment. In fact, I think you deserve a prize for leaving the very first one. Suggestions?
Add A Comment