HVCC

So you are probably like the rest of us. Confused and maybe angry at the way things are going under the new HVCC (Home Valuation Code of Conduct) which has acquired the nickname of "havoc". Independent appraisers say that the HVCC is ruining their livelihood. Realtors say it is killing deals that should have gone through. So what's the reason for all this heart ache then?

On May 1st, the HVCC took effect to prevent sweetheart deals between appraisers and loan originators. The cure may be worse than the original problem. Relationships formed by reputable appraisers has become of low value. AMCs (appraisal management companies) have gobbled up a huge share of the market from the independents. Many independents say they would rather get out of the business than hire on with an AMC.

What a mess! Although the Code is only six pages long, it is so confusingly written that questions continue to arise about the meaning and effect of its provisions. Folks who must decide on using their old independent appraiser and taking a lot of risk are often playing it safe and using an AMC instead. From a tiny fraction of the market a few years ago, AMCs today have gained over half the market share and are still gaining.

Problems include:

(1) Lower quality appraisals. Lots of out of the area appraisers are now being selected.

(2) Appraisers fearing the unknowns of the future have mostly all grown more conservative in their figures.

(3) Less money is paid to the appraiser and more is being charged to the customer when an AMC is used. Appraisers are getting 50% (and sometimes even less) of the amount charged on the HUD1.

So everyone is the looser except the big AMCs. What are we to do? Tell your Congressman to support HR 3044, a bill endorsed by the National Association of Realtors. This bill would impose an 18 month moratorium on the HVCC so that these issues can be addressed.