Appraisal industry needs adjustment

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What is happening in the Real Estate field? Why are homes that are being sold or refinanced coming in with low appraisals and time delays? There is one reason: The Home Value Code of Conduct (HVCC) cooked up by the New York attorney general (AG Cuomo). It is not a law, but is an agreement with Fannie Mae and Freddie Mac, where your lender sells most of their loans. The National Association of Mortgage Brokers conservatively estimates 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. Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. AMCs are driving honest appraisers and mortgage brokers and real estate agents from the business, eliminating competition, increasing costs to consumers and reducing state revenue. A $350 appraisal now costs upward of $500 — 700 because of the added AMC costs, typically the appraiser receives only half. We have heard of fees as low as $175 and required turn times as low as 24 hours, whch would not allow appraisers to verify items such as the sellers’ motivation to sell and verify concessions to be adjusted. Because of the low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home. The HVCC is also causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time. HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo’s investigation of FannieMae and Freddie Mac. 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. Lenders are not allowing borrowers to transfer appraisals, regardless of the reason. This forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times can also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender. Appraisal Management Companies now order most appraisals, and assign them to the appraiser who bids the lowest price and the fastest turn-time, no matter where they come from or how much knowlege of the local markets they have. Quality is not a requirement. What to do, especially you folks in the Real Estate trades: Google and contact your representitives (employees) and let them know you are not happy with the losses for yourself and your clients. There are various groups trying to get this onorous situation deleted from financing practice. It only costs you money! Truett D. Neathery, Appraiser Auburn, CA