HVCC clarification from Fannie and Freddie

4 Responses

1. Krisstina Wise, The GoodLife Team, Home Valuation Code of Conduct, Real Estate Appraisals | Blog with Krisstina

   24|Jul|2009 1

   [...] UPDATE 07/24: HVCC Clarification from Fannie Mae and Freddie Mac: http://varbuzz.com/hvcc-clarification-from-fannie-and-freddie/ [...]

2. Jim Rake

   25|Jul|2009 2

   Better late than never. It is easy to forget that HVCC guidance was prompted by, among other things, “communications that seek to influence the appraiser to adopt a set valuation”.
   Ever heard a Realtor, not to mention a lender, say they had an appraiser in their pocket, or something to that effect? From 2004-06, I certainly did.
   Putting legislation or guidelines into practice is rarely seamless and without problems. We normally “muddle through” until we get it right…or close to right.

   It’s good to see there’s progress being made, and separation of fact from fiction (“Contrary to some suggestion, the Code does not favor the use of AMCs over independent or in-house appraisers”), and that NAR appears to be in the fight.

3. Transcript of Last Week’s Radio Show | Real Central VA

   27|Jul|2009 3

   [...] Exactly so what the HVCC has done is put a middle man who is a service – one of them is called Fi Serve. The banks then submit a list of acceptable appraisers to that [...]

4. Kevin Rising

   02|Aug|2009 4

   The short answer is no. There is no language in the policy that forces a lender to use an AMC (Appraisal Management Company). However, like may policies and laws for that matter, it has an unintended effect on the market. Or maybe it is intended.

   The reality is that more lenders are using AMC’s since the implementation of the HVCC. Why you ask? It’s cheaper to use an AMC rather than maintain its own list. In exchange for the money lenders save they give up control of the appraisal roster. Doesn’t sound like a big deal, does it? Until you consider these facts.

   When lenders maintained their own list they employed people that knew the local appraiser. The appraiser profession is a tight knit community. They do actually meet and talk with one another. When one of these employees had an appraisal request for a two million dollar property they knew which appraisers were proficient in that type of property. The same goes for a manufactured home on five acres, mutli-family dwelling or the 203K rehab in urban areas. While a 3 year certified appraiser and a 20 year certified appraiser are technically capable of performing all those appraisals in a given state. Some are better at one type of appraisal over another. The local lender roster manager knew who that person was. An AMC does not. When the inexperienced appraiser takes that appraisal request for an AMC he or she is licensed to do the job but may not be competent to complete the task. That is called a USPAP violation. The buyer, seller, lender and real estate agents and the transaction then hang in the balance. The AMC knows the appraiser is licensed. Then its concerns turn to the fee and the turn around time. Let’s face it. An AMC is in business to make money. You can’t fault them for that. But selecting the appraiser is just as important as the seller selecting the Real Estate Agent. You want someone with experience in the market and the property type.

   Second, the lenders are allowed to own a percentage of the AMC. This is just one more reason the lender has to select an AMC over an independant appraiser. The fees they collect from taking a percentage of the appraiser’s fee go to the bottom line of the lender that selected an appraiser from an AMC it owns. It turns the AMC into a profit machine rather than a cost center.