Face it: the real estate business is NOT booming. We have many serous market issues, banking and financial problems and other headaches.
Now a new "detour" or "red tape" type of headache appears to be headed towards all of us in the business.
It's the the "Home Valuation Code of Conduct," and, in my opinion, it's been under the radar. I haven't seen a mention of it in main-stream media.
But like it or not "HVCC," apparently is coming our way and very soon. On May 1, 2009, the Home Valuation Code of Conduct becomes effective. And by whom: Fannie Mae and Freddie Mac is by whom!
From an article in the recent New England Real Estate Journal, Entitled: " Understanding HVCC: Good intentions gone awry, by Patricia Amidon MAI, (4-10-16-09) , " We are all painfully aware of the tactics that have been used to coerce the ( residential) appraiser ranging from non-payment of an invoice to blacklisting to the extent that very fine appraisers have been forced out of the business because they remained true to their professional ethics. We all agree that this is an untenable situation."
The intent of the HVCC is to protect the the independence of the ( residential ) real estate appraiser from pressure to arrive at a particular value from those with an interest in the deal closing. ( Such as bankers, mortgage brokers, agents, lawyers, buyers, sellers etc.)
This regulation is an outgrowth of an agreement made between by the Attorney General of New York Fannie Mae, Freddie Mac and the Office of Federal Housing Oversight.
This agreement also created the creation of the Independent Valuation Protection Institute (IVPI) an agency that was to act as a clearing house for complaints from appraisers and users of appraisal services. (Yet, the most recent HVCC makes no mention of the IVPI). ??
Many users ( banks, mortgage firms and financial institutions ) of appraisal services are under the impression that the only way to order an appraisal after May 1, 2009 is through an Appraisal Management Company.
From the same article mentioned above" " many ( AMCS) dictate the fee and turnaround time to the appraiser, a fee that is substantially below a meaningful level that adequate compensates the appraiser for the time and analysis that must go into the report. not to mention the time it took to train to become a qualified appraiser."
..."AMCs are beginning to spring up around the country...and with few exception consisting of states that have passed legislation, many are unregulated."
Fannie and Freddie have released FAQs on the HVCC which are available on-line at www.freddiemac/singlefamily/hvcc_faq.html.
I'm all for improving the real estate business and the property transactional system. However in this present time I see it either as a "detour" or just more "red tape" we are all going to have to deal with.
So my recommendation is to stockpile on aspirin.
Bill McInerney
BUYING OR SELLING? CALL BILL MCINERNEY 617 816 3933
1 comment:
Bill,
Your remarks regarding the functional inutility of the HVCC are right on the mark!
First you mention that it is not even worthy of mention in local media. The reason for this is the same reason the media do not note the planes that don't crash: it's not news!
The imposition of the HVCC does not affect the public in any tangible way. ANd that is the irony! If its imposition does not affect the public, why was its imposition necessary in the first place?! Many appraisers agree with this question.
There there is the issue of its failure to protect the independence of the residential appraiser. The HVCC does not! While mortgage brokers and real estate brokers are not supposed to harrass appraisers to make or reach a specific number, the AMCs will do it for them! The HVCC specifically permits the AMC to "ask" the appraiser to justify why they used or did not use specific comps. Assuming the appraiser is honest and competent the reason for not using a sale is because it was not comparable! The AMC "requesting" the appraiser to consider more sales, with no increase in the fee for the appraiser's time, is an aeffective form of harrassment, just one more subtle that those of the past.
The IVPI makes not sense and appears to be part of the HVCC because somebody with enouth clout was able to get it included. It serves no purpose, has no funding, and is a duplication of many of the functions now held by the various states. I believe it is there as the first step in the federalization of the real estate appralsal licensing and certification functions.
There will be hearings in the near future to see of Congress can determine who and what are to blame for the current economic meltdown. Guess who, with the smallest lobby and the most fractured industry of all in the mortgage-lending continuum, will likely take the yeoman's share of the blame!
Thanks!
Timothy C. Andersen, MS, MAI
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