CNC Mortgage Blog

MAY 5, 2009

Last year New York state and Washington Mutual went to court over the value of some appraisals that WAMU had ordered and that the appraisers felt pressured to come up with a value. WAMU lost and New York prevailed.

So as of May 1, 2009 most of the banks have adopted the Home Valuation Code of Conduct (HVCC). In essence this means that we no longer have contact with the appraisers, we can’t suggest a value to the appraiser and the appraiser does not know the amount of the loan that is being applied for.

It is too bad that we will lose contact with appraisers with the new HVCC for ordering appraisals. The appraisal will now be ordered by the bank from their list of registered appraisers and we won’t know until we receive the appraisal who did it or what value they came up with.

When we could have contact with appraisers we could ask for a rush, consult about a valuation before spending the customer’s money and use the appraisal at a second bank if the first bank did not approve the customer.

This is how I foresee we will handle the situation.

Appraisals need to be paid when we apply at a bank so we will need to have received the $350 for the appraisal and the credit report from the customer previously.

The customer can no longer pay at the door when the appraiser arrives.

We can not pay the appraiser either.

We can receive payment from the borrower either by check, cash, paypal or the customer’s credit card.

This new system is supposed to protect the banks from pressures of loan officers who want to raise the value of a property to be able to get a higher loan. It is also supposed to protect the borrower so that they don’t get a loan that is too big for the real value of their property.

These new procedures make the loan process a bit more awkward, I hope the customers understand that it is not the brokers who are making these rules.

UPDATE May 15, 2009

The system is not taking off well. We were able to get appraisals with a trusted appraiser for $325. With the new system, it will cost the customer $350 if we use US Bank, $390 if we use Wells Fargo, Everbank or others.